Routing # 256078446
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MORTGAGE
VA Loan Rates, How VA Loans Can Save You Money
What you'll learn: Are VA rates lower? Who sets VA rates? How do you lock in the lowest VA rate?
EXPECTED READ TIME: 5 MINUTES
April 2, 2021 | Updated December 4, 2023
Mortgages backed by the Department of Veterans Affairs (VA) are well known for giving eligible borrowers the opportunity to purchase a home with little, and oftentimes, no down payment. A lesser known benefit is that VA loan interest rates offers competitive interest rates are some of the best in the industry. Read on to get answers to your questions about VA mortgage rates.
Are VA mortgage rates lower?
Good news for VA-eligible borrowers: VA loan rates are competitive when compared to conventional or Federal Housing Administration (FHA) loans. A lower interest rate can reduce monthly payments and save you thousands of dollars over the life of your loan. Of course, it also depends on other factors such as your credit score and loan term.
Who sets the current interest rate for VA home loans?
The VA sets military requirements and backs the loans, but lenders are responsible for setting current VA mortgage rates. Market factors, like competition, often keep the rates similar between different lenders. Even if rates are similar, it’s worth shopping around to compare rates and different lenders’ experience and dedication to serving military families.
For example, you may find that a credit union has lower rates and better service because it is a nonprofit, service-focused entity.
Do you pay points on a VA loan?
Sometimes a lender might quote a lower rate, but that may include you having to "buy the rate down" – also known as paying a discount point or two. One discount point is equal to one percent of the loan.
For example, imagine you were quoted the following rates on a VA loan of $500,000:
|
|
Lender A |
Lender B |
|---|---|---|
|
Interest Rate |
6.5% |
6% |
|
Discount Points |
0 |
2 |
|
Cost-to-Buy Rate |
$0 |
$10,000 |
The 6 percent rate sounds more attractive on the surface, and it has the potential to save you thousands of dollars in interest over the life of the loan. However, the upfront cost is an important consideration. You would have to weigh if having a lower rate is worth adding $10,000 to the loan’s closing costs.
If you're planning on staying in your home for many years, paying discount points on a VA loan could be a smart financial decision, so long as you can afford the upfront expense.
How do you get the best VA loan rates?
Various factors will determine your quoted VA loan interest rate (or any mortgage rate, for that matter). These include:
- Credit Score: Your credit score is a number based on the information in your credit history. The calculation takes into account several factors including how much debt you have, the type of debt, and your repayment history. Typically, the higher your credit score, the lower your VA loan rate.
- Down Payment Size: Just because VA loans don’t require a down payment doesn’t mean it wouldn’t be advantageous to put as much down as you can. A higher down payment usually secures a lower rate, and reduces the size (and cost) of the loan.
- Debt-to-Income ratio (DTI): DTI is a ratio that helps lenders better understand your ability to afford a home based on how much of your income is already used for paying off debt. It’s calculated by dividing your debt payments by your pre-tax income. Often, the lower the DTI, the lower the interest rate.
- Loan Term and Type: There are many different types of VA loans, including fixed-rate, adjustable-rate mortgage (ARM), larger jumbo loans, and refinance loans. The duration of your loan is another factor. VA loan 15-year rates are typically lower than VA loan 30-year rates.
How do you lock in a VA mortgage rate?
As you begin the mortgage process, your loan officer will likely quote you a VA loan rate. Bear in mind, rates move with the market and can change within a single day.
Locking in your rate means you tell your mortgage lender you would like to hold the quoted rate. So, even if rates fluctuate before you close, your rate is set and there will be no adjustments.
Of course, rates can change before you close on your home. If you lock and then rates go up or down, you still get the rate you locked in.
What are VA loan rates right now?
As you’ve learned, rates are based on more than just economic factors. The best way to receive an accurate rate is to get a customized quote or contact a lender to discuss your situation.
Who is the #1 VA lender?
Beyond rates, it's smart to work with a lender who specializes in VA loans so they can help you every step of the way. They are here to help confirm your VA eligibility, compare loan options, and discuss closing costs. And remember, rates aren’t everything. Choose a professional who answers your questions and makes the mortgage process smooth and stress-free.
SIMILAR ARTICLES
VA Fixed-Rate vs. VA Adjustable-Rate Mortgage
What type of VA loan is right for you? A fixed-rate or adjustable mortgage? There are benefits to both. Discover your options so you can decide which mortgage is your best choice.
VA Loans – What Makes Them Great?
See advantages of the VA home loan and explore some of the numbers behind the millions of military families who've already reaped its benefits.
Buying Your First Home With a VA Loan: Getting Started
Unsure where to begin as a first-time homebuyer in the military? Read our three-step guide to becoming VA loan-eligible.
The VA Loan Process in 8 Easy Steps
From eligibility to closing, learn the 8 simple steps for obtaining a Veterans Affairs (VA) home loan.
Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 96.5%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.125 discount point, which equals 1.125 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 0.625 discount point, which equals 0.625 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
Routing #256078446
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