VA Mortgage Rates

One major benefit for military veterans and their families is access to better mortgage rates when purchasing a home. VA mortgage rates are significantly lower than most civilian loans because they are backed by the Department of Veterans Affairs (VA).

Military veterans are encouraged to apply for a VA loan when purchasing a home, saving thousands of dollars on interest fees, closing costs, and private mortgage insurance. In this article, we’ll explore the benefits of VA mortgage rates, discuss how VA loans work, and look at trends in VA loan interest rates.

What’s Different About VA Mortgage Rates?

Mortgage rates refer to the interest charged on the total amount of the loan used to purchase a home. VA mortgage rates are usually much lower than traditional prime mortgage rates. This is an effect of the VA backing a portion of your loan, making your transaction less risky for private lenders.

While VA mortgage rates fluctuate based on the current interest rate, they typically range about one-half to 1 percentage point lower than rates for a conventional mortgage. Before deciding on a loan, check with lenders to determine the current VA mortgage rate.

Here’s a look at how VA loan rates compare to conventional mortgage rates:

*Rates reflect time of publication

How Do VA Mortgage Rates Save You Money?

VA loans offer lower interest rates, saving you money in monthly payments. Lower mortgage rates mean you’ll pay less over the loan’s lifespan since more of your payments go toward the principal of the loan.

Also, since most VA loans don’t require any money down when you sign for the loan, you’ll pay less upfront. Some borrowers struggle to come up with the cash for a down payment and resort to taking out another loan or skipping other payments to save enough funds. With the VA option, you won’t have to worry about saving up enough money just to take out a loan.

Skipping private mortgage insurance (PMI) is another cost-saving factor with VA loans. Many conventional borrowers have to roll the price of PMI into their mortgage, increasing their monthly payments and the total of their loans. Since VA mortgage rates don’t include this, they’re automatically lower than conventional loans.

Trends in VA Mortgage Rates

VA Mortgage rates fluctuate depending on the current housing market and interest rates set by the Federal Reserve. After peaking in October of 2023 at 8.01%, 30-year fixed mortgage interest rates have continued to decrease, along with VA mortgage rates.

Texas and Florida topped the list for the number of VA loans originated in 2023. With mortgage rates at their peak in 2023, fewer vets refinanced their homes through a VA loan in the same year. In 2022, 45% of loans went to refinancing, while only 19% refinanced in the following year.

What Is a VA Loan?

A Veterans Affairs (VA) loan is a government-backed mortgage loan available for servicemembers, veterans, and their surviving spouses. While many of these loans are offered through VA-approved lenders, the funds come from private, not government organizations.  Traditional banks, credit unions, and private mortgage lenders offer VA loans.

The VA loan program began in 1944 as part of the GI Bill of Rights. A VA loan is a lifetime benefit, so you can use it multiple times for various mortgages. Here are more key benefits of using a VA loan:

• Lower interest rates: Since the VA backs your loan, lenders give you better rates.
• No money down: Unlike other mortgages, VA loans don’t require a down payment. 
• Limited costs and fees: VA loans have limited closing costs, and certain fees associated with purchasing a home are waived. 
• Exempt from PMI: Taking out a VA loan means you don’t need private mortgage insurance (PMI), which lenders usually require if you don’t put at least 20% down.
• Effective for different properties: A VA loan allows you to purchase multiple property types, including single-family homes, condos, and new construction. 
• Compatible with low credit: VA loan vendors are often willing to provide funds for individuals with lower credit scores.

How Do You Secure a VA Loan?

To secure a VA loan, you must prove your service record and receive a Certificate of Eligibility (COE) from the Department of Veterans Affairs. Veterans with the following time and character of service requirements are eligible for a COE:

• Active duty service members
• Veterans 
• National Guard or Reserves
• Surviving spouses (who fulfill specific requirements)

Typical eligibility requirements include the following types of service:

• 90 consecutive days of active duty in wartime
• 181 consecutive days on active duty in peacetime
• 6 years in the National Guard or Reserve or 90 days under Title 32 orders with 30 consecutive days served

Once you meet all requirements, the VA issues you a Certificate of Eligibility. You’ll use this to pursue lenders and shop for the best VA mortgage rates.

When you apply for a VA loan, lenders are flexible about credit, but they do look at your monthly income and debt-to-income ratio to ensure you have sufficient funds to repay the money. Working with a lender to get pre-approved for your mortgage simplifies the application process because you’ll submit information about your income, debts, and assets.

VA Loan Limits

Caps on VA loans have greatly increased in the past few years, adjusting to keep up with housing market trends and economic fluctuations. While many veterans may qualify for no cap, vets purchasing an additional mortgage through a VA loan are subject to a regular loan limit of $766,550 and a high-cost limit of $1,149,825, depending on the property’s location.

Veterans are not subject to a loan limit under the following conditions:

• No previous VA loan
• The former VA loan is paid off, and the property is sold
• Property in foreclosure under a VA loan was repaid

Even with a loan limit, vets can still purchase property that exceeds the limit’s value if they’re able to make a down payment to cover the difference. However, veterans can’t use a VA loan to purchase a rental or vacation property, regardless of the limit.

Which VA Loan Is Right for You?

Multiple types of loans offer low VA mortgage rates and assist vets in purchasing, improving, or refinancing a home. Here’s a look at the different VA loans available:

Purchase Loan

A Purchase Loan allows you to buy an existing house or newly constructed home with no down payment. Veterans can also use this loan to buy a condo, duplex, or manufactured home.

Cash-Out Refinance

Vets can use this loan to refinance up to 90% of their home’s value or cash out of their home’s equity. Cash-out Refinance Loans can be used by vets without a current VA loan.

Interest Rate Reduction Refinance Loan (IRRL)

An IRRL simplifies the refinancing process and, in many cases, may not require you to verify your income or get an appraisal. To qualify for an IRRL, you’ll need a current VA loan.

Refinancing through an IRRL also requires you to find a rate lower than your existing one and may come with time restrictions that determine the length of the new loan.

Native American Direct Loan (NADL)

Veterans or spouses of veterans who are Native American qualify for a specific VA loan used to buy or improve a home on federal trust lands. You can also use an NADL to refinance an existing Native American Direct Loan.

Overcome Debt Before You Get a VA Mortgage

It’s a good idea to get your debt under control before you apply for a VA loan. Saving money through low VA mortgage rates is an effective way to restart your finances after ending large debt balances.

With TurboDebt, you can become debt-free in as little as 12 months using our customized debt repayment plans. We’ll work with you to set up an affordable monthly payment so you don’t have to take out another loan or declare bankruptcy.

Break free from debt and put more money toward home payments at lower VA mortgage rates! Contact us today to learn how we can help you get out of debt and prepare to buy your dream home.