VA Mortgage Rates: Compare Today’s Rates
Jamie Johnson5-minute read
October 31, 2020
If you’re looking to buy a house, it’s worth taking the time to find out if you’re eligible for a VA loan. VA loans typically come with lower interest rates than conventional mortgages.
They also tend to be more forgiving when it comes to things like your debt-to-income ratio and credit score. And if you don’t have a 20% down payment, a VA loan won’t require you to take out primary mortgage insurance.
So, what exactly are the current VA mortgage rates and how do you know if you’re getting the best deal on your loan? That’s exactly what this blog post will outline.
Current VA Mortgage Rates
Historical VA Rates
Given that the VA does not require a down payment and is flexible when it comes to credit history, you might assume that VA rates are higher. But on average, VA loan rates are actually lower than most conventional mortgages.
When you compare the average 30-year VA loan to a 30-year conventional loan, you’ll see that VA loans tend to be between .25 – .42 points lower than conventional mortgages. At first glance, this may not seem like a big difference, but it can save home buyers thousands of dollars in interest over the life of the loan.
And it’s not just the lower rates that will save you money. VA loans also tend to come with fewer fees and lower closing costs in general.
Benefits Of A VA Loan
Here are some of the biggest benefits of taking out a VA loan:
- Lower interest rates than what you’ll receive with a conventional mortgage
- Flexible underwriting and lower credit requirements
- There’s no down payment required
- If you forgo a down payment, you aren’t required to take out primary mortgage insurance
- Current homeowners who are eligible can refinance their conventional mortgage into a VA loan and earn a lower interest rate
Am I Eligible For A VA Loan?
Unlike a conventional mortgage, not everyone is eligible to apply for a VA loan. These loans are available to veterans, active duty service members, and current and former National Guard and reserve members. Surviving spouses are also eligible for a VA loan.
If you’re interested in taking out a VA loan, you’ll first need to apply for a Certificate of Eligibility (COE) through the U.S. Department of Veteran Affairs. This will show your lender that you qualify based on your service experience. You can apply for a COE online or by mail.
The following individuals are eligible for a VA loan:
- Active duty service members
- Current or former National Guard or Reserve members
- Discharged members of the National Guard
- Surviving spouses of service members
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Is The House I Want To Buy Eligible For A VA Loan?
Once you’ve obtained your COE and qualified for a VA loan, you also need to ensure that the property you’re looking to buy is eligible. There are certain restrictions on the types of property you can purchase with a VA loan.
That’s because the Department of Veterans Affairs wants to ensure that current and former service members are living in homes that are safe and sanitary. So, any VA-backed home must meet the minimum property requirements.
Here is an overview of some of these requirements:
- Safe mechanical systems
- Property heating
- Adequate and stable roofing
- Any crawl space and basements must be dry
- There are no termites on the property
- Any lead-based paint must be removed
The home must also be purchased as your primary place of residence. VA loans aren’t intended for vacation homes or rental property.
It’s a good idea to work with a real estate agent who has experience with VA loans. That person will be able to help you find a home that meets the VA’s minimum property requirements.
Can I Change Over To A VA Loan From A Conventional Mortgage?
What if you currently have a conventional mortgage but know you could have qualified for a VA loan? Well, you always have the option to refinance your conventional mortgage into a VA loan.
You’ll refinance your loan through the VA’s cash-out refinance loan program and the steps to do this are similar to taking out a VA loan.
You’ll start by finding a lender and applying for your COE. From there, you’ll submit the following information:
- A copy of your W-2 for the past 2 years
- Copies of your most recent paycheck stubs
- Your federal income tax returns from the past 2 years
- Any other information requested by your lender
From there, you’ll follow your lender’s procedures for closing on your refinance. You will have to pay closing costs and you may have to pay a VA funding fee at closing.
Should I Choose A 15-Year, 20-Year Or 30-Year VA Loan?
If you’re new to applying for a VA mortgage, then you may wonder what loan terms are the most favorable. Each type of loan comes with its own benefits and disadvantages so it’s really about figuring out what is the right fit for you.
Here is an overview of some of the trade-offs that come with each loan type with regard to flexibility, home equity, and interest.
15-Year VA Loan: Pros and Cons
- Because the loan is shorter, you’ll build equity in your home faster
- You’ll earn a lower interest rate on your home
- A 15-year loan provides a faster path to homeownership
- 15-year loans come with higher monthly payments
- Borrowers may have to buy a smaller home to afford the monthly payments
- The higher payments mean there’s less money to put toward other expenses
20-Year VA Loan: Pros and Cons
- A 20-year loan is a faster path to homeownership than a 30-year mortgage
- The payments are lower than a 15-year mortgage
- Your interest rate will be somewhere in between that of the 15- and 30-year loans
- Your payments will still be higher month-to-month, giving you less flexibility in your budget
- You’ll have less money to put toward things like home renovations
- You may have to purchases a smaller house to swing the monthly payments
30-Year VA Loan: Pros and Cons
- A 30-year loan comes with lower monthly payments
- You can always pay your loan off faster by paying more as you’re able
- Since the payments are lower, you’ll be able to qualify for a larger home
- Your interest rate will be higher than it would on a 15- or 20-year mortgage
- It’ll take longer for you to gain equity in your home
- Because the payments are more affordable, many borrowers end up overextending themselves
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