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How To Determine VA Loan Rates: Eligibility And Understanding Rate Changes

Did you know that military borrowers can make use of VA-guaranteed mortgages when buying or refinancing homes? VA pays an amount based on how many days a borrower served when they cannot repay a loan, and the lender has to foreclose.

Are you a retired employee? Read our article on whether retired employees can collect workers’ compensation benefits.

VA Loan Rates

Since the federal government backs VA home loans, lenders can enjoy competitive interest rates. VA loans require no down payment, no mortgage insurance, and lenient credit requirements for active-duty military, veterans, and their surviving spouses. Buying a home or refinancing one requires veterans to understand how VA loans work.

The VA does not determine interest rates. Instead, the VA loan rate is determined by your lender based on your unique financial circumstances.

Current VA Mortgage Rates

Market conditions determine VA loan rates daily. You can compare them for each type of loan below. Check here to get the updated rates.

VA Mortgage Rates For Credit Scores Of 620-639

VA Loan TypeInterest RateAPRPoints
30-Year Fixed VA Purchase6.9900%7.473%1.8750($5531.25)
30-Year Streamline (IRRRL)7.5000%  7.805%1.5000($4425.00)
30-Year VA Cash-Out7.5000% 7.986%1.5000($4425.00)

VA Mortgage Rates For Credit Scores Of 640-659

VA Loan TypeInterest RateAPRPoints
30-Year Fixed VA Purchase6.8750% 7.379%1.8750($5531.25)
30-Year Streamline (IRRRL)7.5000%7.779%1.2500($3687.50)
30-Year VA Cash-Out7.5000%7.961%1.2500($3687.50)

VA Mortgage Rates For Credit Scores Of 660-679

VA Loan TypeInterest RateAPRPoints
30-Year Fixed VA Purchase6.8750%7.379%1.8750($5531.25)
30-Year Streamline (IRRRL)7.5000%7.754%1.0000($2950.00)
30-Year VA Cash-Out7.5000%7.936%1.0000($2950.00)

VA Mortgage Rates For Credit Scores Of 680-699

VA Loan TypeInterest RateAPRPoints
30-Year Fixed VA Purchase6.8750%7.379%1.8750($5531.25)
30-Year Streamline (IRRRL)7.5000%7.729%0.7500($2212.50)
30-Year VA Cash-Out7.5000%7.910%0.7500($2212.50)

VA Mortgage Rates For Credit Scores Of 700-719

VA Loan TypeInterest RateAPRPoints
30-Year Fixed VA Purchase6.8750%7.355%1.6250($4793.75)
30-Year Streamline (IRRRL)7.5000%7.729%0.7500($2212.50)
30-Year VA Cash-Out7.5000%7.910%0.7500($2212.50)

VA Mortgage Rates For Credit Scores Of 720 Or more

VA Loan TypeInterest RateAPRPoints
30-Year Fixed VA Purchase6.6250%7.109%1.7500($5162.50)
30-Year Streamline (IRRRL)7.3750%7.577%0.5000($1475.00)
30-Year VA Cash-Out7.3750%7.757%0.5000($1475.00)

VA Loan Rate Assumptions

Veterans must consider some assumptions about the VA loan rates when looking at special rates.

First, the availability of a particular rate will depend on the borrower's credit score and loan details. There may be a restriction on jumbo loans for first-time buyers. That said, it is important to remember that interest rates can change at any time, and your loan officer cannot guarantee them until they are locked in.

Second, the rates are based on an owner-occupied primary residence — not manufactured homes — with a default credit score of 720, including applicable charges (and VA Funding Fee). They also assume active military service for 181 days (non-reserves) with no service-related disabilities or prior VA loan application.

Lastly, additional facts are also considered when calculating loan rates and APRs based on the loan type.

Fixed-Rate Purchase Loan Assumptions. A 30-day lock period, no down payment, and a loan amount of $295,000 are also assumed in current advertised rates for fixed-rate purchase loans.

Streamline (IRRRL) Loan Assumptions. A 60-day lock period is in addition to the assumptions outlined above for IRRRLs.

Cash-Out Loan Assumptions. Assuming a loan-to-value ratio of less than 90% and a 60-day lock period, current advertised rates for Cash-out loans follow these assumptions.

Jumbo Loan Assumptions. For Jumbo purchase loans advertised today, the assumptions include 45-day lock periods for Jumbo IRRRLs, cashouts, and a $750,000 loan amount.

How VA Loans Work

VA loans appear to work equally well as other home loans. A loan application must be filled out, a credit report must be reviewed, and you must have enough money saved for closing costs to repay the loan.

However, there are some major differences between VA and conventional or FHA loans, particularly in how costs and fees are assessed and paid.

The history of your military service must be verified. Military borrowers who have served a sufficient amount of time are eligible for VA home loans.

A mortgage insurance policy isn't required. A mortgage insurance policy covers lenders if you default on your payments and they have to foreclose on your home. Some low-down-payment loan programs do not require any down payment. On any VA loan type, mortgage insurance is not required.

The VA will charge you a funding fee. One of its downsides is paying the funding fee for a VA loan. It is typically rolled on top of the loan amount, even if you do not make a down payment, to offset the cost of the VA loan program to taxpayers.

The closing costs you pay to your lender cannot exceed 1%. For VA loans, lenders may charge no more than 1% of the loan amount. The VA's closing costs are significantly lower than those of other government-backed loans, which means you will save money at closing.

Limits on federal loans don't apply to you. In contrast to conforming loan limits for conventional loans, VA loans have no current maximum limits. However, some lenders may set their own. For a single-family home, most states currently have a conforming loan limit of $647,200.

Pros Of A VA Loan

  • No down payment needed
  • No limits on loans
  • Income limit is not applicable
  • Not necessary to purchase mortgage insurance
  • A 1% cap is imposed on lender costs
  • Refinance options that do not require income verification or appraisals

Cons Of A VA Loan

  • The applicant must have served in the military to qualify
  • Requirements for appraisals are tougher
  • Refinancing takes a longer time than conventional loans
  • There is a 3.6% funding fee for VA loans
  • FHA and conventional loans have higher appraisal costs
  • Second homes and investment properties are not eligible for financing

The Takeaway

Getting an interest rate lock at the right time is crucial, so finding a lender who understands your needs and the factors that shape interest rates on VA loans is vital.

Lenders sometimes offer extremely low-interest rates that are almost impossible to qualify to entice borrowers. You want a lender who can provide an accurate and realistic quote within your financial means. Most lenders provide total transparency regarding interest rates, with no hidden fees or costs.

Applying for cash benefits from Social Security can seem overwhelming for some people. Check out our article on how to find the right disability lawyer for you. Visit Disability Help’s blogs page  to read more articles.

Chloe Powers
Chloe works with policymakers on behalf of Disability Help to support their work at a strategic level, ensuring the conditions are in place for creative individuals and organizations to grow, reach their potential and effect relevant, sustainable change.
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