VA loans are mortgages, backed by the US Department of Veterans Affairs, for active and retired members of the military and their spouses.
A VA loan has several advantages over other types of mortgages, including lower interest rates, more flexible credit and down payment requirements and no private mortgage insurance requirement.
For buyers looking to take advantage of their VA loan benefit, here’s what you need to know about the current VA mortgage rate trends.
Current VA loan rate trends
In 2022, mortgage rates increased at the fastest pace in three decades as the Federal Reserve repeatedly raised its benchmark interest rate to bring down inflation. While VA loans have lower rates than conventional loans, they rise and fall with overall economic trends. In October, average VA rates for a 30-year fixed loan were in the high 7% range.
Experts say the Fed may be done with interest rate hikes, but that doesn’t mean mortgage rates will drop anytime soon. Inflation is still too high, and the Fed won’t start the process of cutting rates anytime soon. As a result, mortgage rates will remain elevated well into 2024.
What are VA loans?
VA loans are home loans backed by the US Department of Veterans Affairs that are available only to borrowers with qualifying military service purchasing a primary residence. The VA isn’t the lender but rather insures the loan in case the borrower fails to pay the money back.
Though no down payment is required for VA loans, you’ll have to pay a VA funding fee — between 1.4% and 3.6% of the loan — depending on how much you put down and whether you’ve taken out a VA loan in the past. You can roll that fee into the loan amount, eliminating the upfront payment but adding long-term costs.
Who qualifies for a VA loan?
To determine if you qualify for a VA loan, you’ll need to request your Certificate of Eligibility (COE) from the VA via the administration’s eBenefits portal. While eligibility requirements vary based on service dates, a borrower generally should meet one of the following requirements:
- Current service members who are active for at least 90 days of continuous service
- Veterans who served for at least 181 continuous days of service (or fewer if you were discharged for a disability due to your service)
- National Guard members who served for 90 days of active-duty service or six years of service followed by an honorable discharge
- Surviving spouses of veterans missing in action, a prisoner of war, died while in service or died from a service-related disability
Like other government-secured loans, a VA mortgage is typically easier to qualify for than a conventional loan (assuming you meet the military service requirements). While each lender has specific credit score requirements, the VA has no official minimum credit score requirement.
VA loan versus 30-year fixed loan
Even if you’re a qualifying service member or veteran, a VA loan isn’t the only option for financing a home purchase: You can also compare conventional loans and FHA loans. Each loan can help you buy a house, though they have different requirements and fees attached. VA-backed loans tend to offer lower borrowing costs, as well as more flexible credit requirements. Here’s a rundown of these different types of mortgages:
Comparison of mortgage types
| VA loans | FHA loans | Conventional loans | |
| Minimum down payment | None required | 3.5% of purchase price (or 10% if your credit score is between 500 and 579) | 3% of purchase price |
| Minimum credit score | None, although you’ll need to meet a lender’s requirements | 580, although some lenders will accept as low as 500 | 620 |
| Mortgage insurance requirement | None | Upfront premium, plus an annual premium for the life of the loan in most cases | Required until you accumulate 20% equity in the home |
| Additional fees to note (other than closing costs) | Funding fee of 1.4% to 3.6% of loan amount | None | None |
How to apply for a VA loan
1. Request your certificate of eligibility: Before proceeding with an official application for a VA loan, you’ll need to get your COE through the VA’s eBenefits portal. If you have questions, call 877-827-3702 to contact a federal home loan specialist. The call center is open Monday through Friday, from 8 a.m. to 6 p.m. ET.
2. Know your loan limits: There’s no loan limit for first-time homebuyers. If you have used a VA loan before, however, there is a certain threshold based on the county where you’re hoping to buy.
3. Get preapproved: A preapproval letter will demonstrate to sellers that you’re a qualified buyer and can help you set the stage to make an offer on a home.
4. Compare multiple lenders: Since every lender is different, some companies offer special incentives for VA borrowers. Compare interest rates and look for other offers, such as discounted appraisal fees and lender fees.
5. Have the property appraised: The VA’s appraisal standards are a bit more rigorous than for a conventional loan, so you might not be able to buy a fixer-upper. It will need to meet a certain set of minimum property conditions.
6. Close on the loan: After a lender officially approves your application, you’ll need to close on the loan, which involves signing documents and paying closing costs.
What factors determine VA loan rates?
A VA loan interest rate is determined by a range of factors that impact all home loans: Your credit score, the size of your down payment and your debt-to-income ratio. But VA loan rates are also affected by broader economic conditions, such as inflation and recent rate hikes from the Federal Reserve.
Each lender evaluates your finances differently, so you want to shop around. By comparing offers from multiple lenders, you’ll find the loan with the best interest rate and lower fees.
How do I find the lowest VA loan rate?
As with all home loans, shopping around with different mortgage lenders is critical to securing the lowest rate possible. The more lenders you interview, the better your chances of finding a lower rate. According to Freddie Mac, prospective homeowners can save thousands over their loan life just by getting multiple quotes.
Pros
-
No down payment required: Almost all types of home loans require a down payment, but if you take out a VA loan you can put 0% down to buy a home.
-
Lower credit score requirements: Most conventional loans require a credit score of 620, but some lenders accept lower credit scores with VA loans.
-
Lower interest rates: VA loans generally have lower interest rates and APRs than conventional loans.
-
No mortgage insurance is required: No matter the size of your down payment, private mortgage insurance isn’t required for VA loans. Conventional loans, on the other hand, require PMI until you reach 20% equity in the home.
Cons
-
Narrow eligibility requirements: If you aren’t an active service member, retired service member of the spouse of one, you don’t qualify for a VA loan.
-
VA funding fee: There is a one-time funding fee that other types of loans don’t require.
-
Primary residences only: In most cases, you can only use a VA loan to buy a primary residence and not a second home or an investment property.
Current mortgage and refinance rates
| Product | Interest rate | APR |
|---|---|---|
| 30-year fixed-rate | 8.04% | 8.06% |
| 30-year fixed-rate FHA | 7.28% | 8.22% |
| 30-year fixed-rate VA | 7.48% | 7.60% |
| 30-year fixed-rate jumbo | 8.04% | 8.06% |
| 20-year fixed-rate | 7.90% | 7.92% |
| 15-year fixed-rate | 7.17% | 7.22% |
| 15-year fixed-rate jumbo | 7.14% | 7.16% |
| 5/1 ARM | 7.04% | 8.14% |
| 5/1 ARM jumbo | 7.03% | 8.06% |
| 7/1 ARM | 7.18% | 8.19% |
| 7/1 ARM jumbo | 7.19% | 8.09% |
| 10/1 ARM | 7.56% | 8.16% |
| 30-year fixed-rate refinance | 8.17% | 8.19% |
| 30-year fixed-rate FHA refinance | 7.30% | 8.26% |
| 30-year fixed-rate VA refinance | 7.48% | 7.70% |
| 30-year fixed-rate jumbo refinance | 8.20% | 8.21% |
| 20-year fixed-rate refinance | 8.19% | 8.21% |
| 15-year fixed-rate refinance | 7.32% | 7.36% |
| 15-year fixed-rate jumbo refinance | 7.36% | 7.39% |
| 5/1 ARM refinance | 7.14% | 7.98% |
| 5/1 ARM jumbo refinance | 7.23% | 7.79% |
| 7/1 ARM refinance | 7.18% | 8.13% |
| 7/1 ARM jumbo refinance | 7.24% | 8.05% |
| 10/1 ARM refinance | 7.64% | 8.16% |
Updated on October 25, 2023.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country.
FAQs
Yes, you can refinance with a VA loan. You can borrow more money based on your equity with a VA cash-out refinance, or you can opt for a VA IRRRL (Interest Rate Reduction Refinance Loan) to score a lower interest rate that saves you money. It’s important to note that the funding fee on an IRRRL is just 0.5% of the loan amount (or 1.0% for unaffixed manufactured homes).
If you take out a VA loan, you’ll have to pay a one-time funding fee when you close on your home. You can pay the fee upfront or finance it over time by rolling it into your mortgage. The amount of the fee will depend on the type of loan and the size of the loan. For instance, if your down payment is less than 5%, your fee will cost 2.3% of the loan. If you make a down payment between 5% and 10%, the fee will only be assessed at 1.65% of your loan. If you put down 10%, the fee is 1.4%.
There are some exceptions to the VA loan funding fee requirement. For example, an active duty service member who has received a Purple Heart doesn’t have to pay the funding fee. Keep in mind, however, that you’ll still have to pay other standard lender fees that all buyers must pay when purchasing a house, such as closing costs.
You can use CNET’s mortgage calculator to help you determine how much house you can afford. The CNET mortgage calculator factors in variables like the size of your down payment, home price and interest rate to help you figure out how large of a mortgage you may be able to afford. Using the CNET mortgage calculator can also help you understand how much of a difference even a slight increase in rates makes in how much interest you’ll pay over the lifetime of your loan.
Alix is a former CNET Money staff writer. She also previously reported on retirement and investing for Money.com and was a staff writer at Time magazine. Her work has also appeared in various publications, such as Fortune, InStyle and Travel + Leisure, and she also worked in social media and digital production at NBC Nightly News with Lester Holt and NY1. She graduated from the Craig Newmark Graduate School of Journalism at CUNY and Villanova University. When not checking Twitter, Alix likes to hike, play tennis and watch her neighbors’ dogs. Now based out of Los Angeles, Alix doesn’t miss the New York City subway one bit.
Katherine Watt is a CNET Money writer focusing on mortgages, home equity and banking. She previously wrote about personal finance for NextAdvisor. Based in New York, Katherine graduated summa cum laude from Colgate University with a bachelor’s degree in English literature.
