VA Loan Rates Today

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Lower VA lending rates have increased demand for these loans. If you’re shopping for a new VA loan or a refinance today, you can expect some delays as loan officers adjust to higher demands and new Covid-19 precautions.

Some lenders’ sites have gone down, and this makes comparing quotes difficult. So I have created this page where we’ll post today’s VA loan rates from the five leading lenders.

VA Interest Rates Today

These VA mortgage rates are effective on September 25, 2020:

Veterans United

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USAA

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Navy Federal Credit Union

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Quicken/Rocket Mortgage

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PenFed

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What Are VA Loans and How Do They Work?

VA loans help current and former service members buy homes with affordable monthly payments and without having to come up with cash for down payments. The Department of Veterans Affairs backs and regulates this lending program.

Borrowers with lower credit scores, sometimes as low as 580, can still get a VA home loan with no down payment, although the lenders can set their own lending rules.

For most current and former service members, a VA loan can beat the mortgage rates on an FHA or conventional mortgage. Plus, VA loans do not require private mortgage insurance (PMI) which borrowers pay on behalf of their lenders.

These loans do require a VA funding fee paid upfront, and borrowers and lenders must follow the VA’s rules, but this loan program’s immediate and long-term savings compensate for this expense.

What to Know About Interest Rate Quotes

Interest rates like today’s VA loan rates quoted above provide a helpful guideline when you’re shopping for a loan. But homebuyers should understand they may not qualify for the quoted rates.

Home loans are personalized to each homebuyer. As an applicant, your credit score, your loan amount, the loan options you choose, your loan type, and your loan term will impact your actual mortgage rate.

Whether you’re refinancing your current loan or buying a new home can also affect your actual mortgage rate. And, some lenders quote rates with discount points applied. To get a discount point you’d need to pay an additional 1 percent of your loan upfront — more cash out of pocket.

To find out for sure what rate you would get on your VA loan, you’d have to get quotes or start an application process. However, quoted rates from lenders, like the ones above, will help you detect trends in the mortgage market.

Interest Rates and Monthly Payments on a VA Loan

Interest rates have a direct and ongoing impact on your monthly mortgage payment. A higher interest rate will increase your ongoing payment and your total amount paid in interest throughout the life of your loan.

For example, with a fixed rate, $150,000 loan over 30 years, you would pay:

  • At 3.5 percent: $674 a month and $242,484 repaid over 30 years.
  • At 4.5 percent: $760 a month and $273,610 repaid over 30 years.
  • At 5.5 percent: $852 a month and $306,606 repaid over 30 years.

These monthly payments do not include property taxes or homeowners insurance premiums which often get tacked on by your lender. With a fixed-rate mortgage, this payment should not change until you pay off the loan.

Other Factors Affecting Loan Payments

Along with your interest rate, the following factors affect your monthly payments:

  • Loan Add-ins: Your home purchase price will create the bulk of your loan amount. But some borrowers add in loan origination fees and closing costs. Others also finance the VA funding fee. This will increase your monthly payments and could also throw your loan-to-value balance out of whack. If you sold the home right away the purchase price may not pay off your mortgage loan.
  • Taxes and Premiums: Separate from your loan, you’ll have to pay property taxes and homeowners insurance premiums. Many homeowners apply these charges to their monthly payments. Your lender places the money into an escrow fund and then uses the fund to pay your annual property taxes and insurance premiums.

Fixed-Rate vs. Adjustable Rate Mortgage Loans

Some lenders offer adjustable-rate mortgages as well as fixed-rate mortgages for VA borrowers:

  • A fixed rate mortgage locks in an interest rate based on today’s VA loan rates. The rate stays the same throughout the loan term of 10, 15, 20, or 30 years, even as rates across the broader mortgage market fluctuate.
  • An adjustable-rate mortgage (ARM) locks in a rate for a while, often five years. Then after the intro period, the annual percentage rate (APR) could change from year to year. As the rate changes, so would your payment.

An ARM begins with a lower rate during its introductory period. If you’re planning to sell the home within a few years an ARM could save you money on interest. Since active-duty military service members move a lot, ARMs can have an appeal to VA loan borrowers.

Refinancing with a VA Lender

The VA’s IRRRL program stands for Interest Rate Reduction Refinancing Loan. An IRRRL must provide a lower interest rate compared to the homeowner’s current VA loan rate — or it must convert an adjustable-rate to a fixed-rate loan. Not all lenders are authorized to write IRRRL loans.

You can access an IRRRL only if you already have a VA loan for the same property you’d like to refinance. And, an IRRRL should be easier to secure because all the paperwork from your original VA loan still applies: Your Certificate of Eligibility and your agreement to use the home as your primary residence, for example.

However, you would still need to pay the VA funding fee, and it could be higher the second time around.

You could also use a VA lender to get a cash-out refinance. A cash-out refinance could replace your existing mortgage even if it’s not a VA loan. For example, if you got an FHA loan to buy your home prior to joining the military, you could use a VA loan to refinance it now that you’ve enlisted and met the VA loan requirements.

These loans let you cash out your home equity — the part of your home’s value you actually own — to use on home improvements, to pay off other debt, or for any other reason.

VA Jumbo Loans and Refinances

Home shoppers in most counties in the United States could borrow up to $510,400 and still get backing from the Department of Veterans Affairs with no need for a down payment. Some counties with hotter real estate markets have higher loan limits.

Qualified borrowers who need even more buying power can look for a VA Jumbo loan. You’d need a FICO credit score of around 660 to qualify, and your lender could also require a down payment. Veterans United, whose rates we quoted above, has Jumbo loans for new purchases and refinances.

Not all mortgage lenders have VA Jumbo loans. While it’s possible to find a safe and solid home within the VA’s loan limit, borrowers should consider their own personal limits, too. How much home can you afford? Even if the VA would back you for more, it’s important to get a loan you can afford.

A mortgage calculator could help you find your price range. Use today’s mortgage interest rates and enter different loan amounts and loan terms (30-year, 15-year) to see monthly payments. Remember to tack on a couple of hundred extra dollars for taxes and insurance premiums.

Loan Limits for VA Borrowing

Who can qualify for a VA loan? You’d need a Certificate of Eligibility from the Department of Veterans Affairs. Service members can get a certificate if they have served:

  • 181 days on active duty during peacetime.
  • 90 days on active duty during a time of war.
  • 6 years in the National Guard or Reserves.

Spouses of service people killed in the line of duty can also get a Certificate of Eligibility and borrow with backing from the VA.

Other Limits to VA Home Loans

Borrowers must agree to use their homes as their primary residence which means you couldn’t use a VA loan to finance a rental property or vacation home. You’d need a conventional loan to finance a real estate investment.

A VA borrower’s spouse can fulfill the residency requirement if the borrower is away for deployment or other work.

VA-backed loans must also pay for single-family dwellings, and they must meet safety requirements. An inspector will confirm the new home meets these requirements. Fixer-uppers don’t tend to work well for this reason.

The point of VA loans is to help veterans and active duty service members access safe and affordable housing at reasonable purchase rates (or refinance rates) without the need for a down payment.

Best VA Lenders

We’re posting today’s mortgage rates for VA borrowing above. These lenders lead the nation in VA-backed loans and they specialize in these loan products. But all sorts of other lenders have authorization from the VA, including some in your neighborhood.

If you’re a first-time homebuyer who wants to use the VA allotment, I’d recommend going with a VA lender that specializes in these loans and VA refinances. But if you’ve bought a home before and know the deal, shop around with some other lenders if you’d like.

Closing Costs on a VA Home Loan

Borrowing with no down payment makes VA loans almost unique. You will still have closing costs to deal with, though.

Closing costs include legal fees, inspector fees, the VA funding fee, a loan origination fee of up to 1 percent (allowed by the VA but charged by the lender).

If you can pay these charges — which could reach $6,000 to $7,000 — out of pocket, you’d be off to a great start with your new loan. But not every borrower can afford to spend this much cash upfront.

The home’s seller could help pay closing costs but is not required to do so. The seller can’t pay your VA funding fee, but he or she could pay other costs, up to 6 percent of the home’s purchase price. For a $200,000 home, 6 percent equals $12,000. I recommend negotiating closing costs as part of your offer to buy the home.

Some lenders will chip in and pay the closing costs in exchange for an increase in your interest rate. This will add more long-term cost, but it’s still good to be buying your own home instead of continuing to rent. Normally, a lender will pay closing costs up to 1 percent of your loan in exchange for a 0.125 percent increase in your interest rate.

Is a VA Loan a Good Deal?

Getting a home loan with backing from the Department of Veterans Affairs is an unusually good deal. All former and current service members who want to buy a home as a primary residence should consider this program.

Buying a home with no down payment and no private mortgage insurance would be impossible with a conventional loan or a USDA or FHA loan.

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