VA Loan Mortgage Rates

Aug 17, 2022 | Mortgage Guides

Comparing Current VA Loan Mortgage Rates

A VA loan can help you qualify for affordable homeownership if you are a U.S. veteran or service member. These government-backed mortgages allow individuals in the military to purchase or refinance properties, even with a bad credit history. VA loans save you money initially and offer additional financial benefits and services throughout the homeownership process.

In this guide, you’ll learn more about how VA mortgage interest rates work, how they compare to conventional loans, and tips on how to find the best rates available. Understanding these aspects allows you to take advantage of the offers and services exclusive to VA loans.

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What Is a VA Loan?

The Department of Veterans Affairs insures VA home loans. They offer affordable loans to active-duty and retired service members, veterans, and military spouses who cannot qualify for conventional mortgages. These non-conventional loans have relaxed credit requirements and allow applicants to purchase a home without a down payment.

Furthermore, these affordable loans do not charge private mortgage insurance (PMI), making monthly payments easier to manage. A VA loan might be ideal for a low-income, first-time homebuyer or military service member.

Who Is Eligible For A VA Loan?

The Department of Veterans Affairs determines who qualifies for a VA loan. Being a military service member is not always enough. You must also be eligible for the following terms:

  • You are an active-duty service member and have achieved:
  • 90 days of wartime service; OR
  • 181 days of peacetime service
  • You have achieved six years of service under the National Guard or Selected Reserve.
  • You are the surviving spouse of a service member who died in the line of duty.

Applicants must submit a Certificate of Eligibility (COE) demonstrating their proof of service. Active-duty service members can have their statements notarized by a personnel officer or unit commander.

Veterans must submit DD Form 214, which verifies military discharges. Surviving spouses with access to a Certificate of Eligibility must also present their marriage license and spouse’s death certificate.

Pros & Cons of a VA Loan

VA loans benefit veterans and other eligible military members who do not qualify for a conventional loan. However, they have their fair share of drawbacks as well. Below are a few advantages and disadvantages of VA loans.

VA Mortgage Benefits

  • No down payment is required: Unlike other mortgages for below-median-income borrowers, VA loans do not need a down payment.
  • No minimum credit requirement: While VA loans do not set a credit minimum, lenders favor borrowers with a credit score of at least 620. They also accept higher debt-to-income (DTI) ratios – 50 percent on an adjustable-rate mortgage (ARM) and 60 percent on a fixed-rate mortgage.
  • The VA does not charge PMI: This government-backed loan doesn’t require applicants to pay private mortgage insurance. PMI can cost between 0.5 and 2.25 percent on conventional loans.

VA Mortgage Drawbacks

  • The VA funding fee: This fee must be paid upon closing. It can cost between 1.25 and 3.3 percent of the total loan. Requesting to roll the amount into your loan can increase your VA mortgage rates and overall borrowing amount.
  • Property limits: Unlike conventional loans, VA loans cannot be used for investment properties or vacation homes. Veterans cannot purchase vacant land or co-ops, either—only primary residences.
  • Lower interest rates are still expensive: Regarding mortgages, 30-year fixed-rate loans cost more. Alas, it’s more challenging to secure a lower interest rate on a 30- or 15-year VA loan than on a conventional loan. Still, these loans can save veterans substantial cash in the long run.

Insights on Current VA Mortgage Rates

Whether buying or refinancing a VA mortgage, comparing interest rates among potential lenders is critical. Comparing VA mortgage rates and finding the best fit for a lender can help finance your dream home for less. Be sure to weigh your loan options using current interest rates and APR, as well as consider FHA approval for the property you’re interested in.

As of April 2023, the national average 30-year VA mortgage interest rate is 6.10 percent, and the average APR is 6.21 percent. Regarding 30-year VA refinance refinances, the average interest rate is 6.20 percent, and the average APR is 6.40 percent.

We’ve collated the information in the table below to help you visualize up-to-date VA mortgage rates available on the market based on loan type. These percentages are based on comprehensive surveys by of some of the largest mortgage lenders in the nation.

Conventional Loan Mortgage Rates | Wesley Mortgage

For further insights on VA loan rates, use Wesley Mortgage’s mortgage calculator. Users just have to input their financial details to receive personalized estimates of their monthly mortgage payments and amortization schedules based on their interest rates and loan terms.

VA Loan Rates vs. Conventional Loan Rates

The primary difference between VA and conventional mortgage loans is that the former is for active-duty military members. Also, no down payment or mortgage insurance exists because the U.S. Department of Veterans Affairs backs VA loans.

‍However, the two home loans have a few more striking differences.

  • Financial History: Compared to conventional mortgages, VA home loans have no minimum credit score requirements or maximum DTI ratios. With that in mind, a typical VA loan officer will more likely approve a credit score of at least 620, the minimum requirement for conventional lenders. ‍Similarly, VA lenders prefer borrowers with a DTI ratio of no higher than 41 percent, compared to the conventional requirement of 36 percent. Despite this, qualifying for a VA mortgage loan with a poor financial history is not always simple either – lenders set standards to protect themselves from risk; thus, you may be eligible with one but not another.
  • Funding Fees: Both types of loans charge an origination fee, but VA loans also charge a funding fee. This fee protects lenders if a borrower defaults. It is a one-time up-front charge between 1.4 and 3.6 percent of the total loan amount. Your final fee cost depends on whether you make a down payment and what amount.‍ If you cannot afford the fee up-front, you can request to roll it into your loan. However, doing so can increase the monthly payments and interest rates. Only veterans who receive disability compensation can avoid paying a VA funding fee.
  • Mortgage Insurance: Conventional loans charge private mortgage insurance (PMI) to borrowers who make a down payment of less than 20%. The amount of PMI varies across lenders and other deciding factors. On the other hand, VA loans don’t charge mortgage insurance. Instead, you pay a funding fee. However, a sizable down payment can reduce this funding cost, lowering the interest rate.

What Factors Influence VA Loan Interest Rates?

Several factors affect how your lender determines your final VA mortgage rate. Some are beyond the lender’s control, such as economic changes and housing market complications. Others involve your financial history.

Below are the primary elements that impact VA loan rates:

Market Conditions

Supply and demand within the housing market can impact interest rates. When there are fewer properties under construction or up for resale, low demand pushes VA loan rates downward. Similarly, mortgage rates drop when people rent instead of buy property.

‍When availability rises during periods of economic growth, increased spending skyrockets consumer demand. The more competitive the housing market, the higher interest rates climb. As the economy fluctuates, these rates become subject to change.

Credit Score

While VA home loans accept low to no credit ratings, a better credit score will secure lower rates. The current nationwide average is 688.

‍There are several methods of improving your credit score, such as:

  • Making debt payments on outstanding bills
  • Reviewing your credit report and noting errors
  • Lowering your credit limit

Loan Type & Structure

Different types of VA loans offer varying rates. For instance, how much interest you pay will depend on whether you’re applying for a VA Purchase Loan or VA Streamline IRRRL (Interest Rate Reduction Refinance Loan).

‍Refinance rates on an IRRRL will decrease the amount you pay on your existing VA home loan. Borrowers can also lower their rate by refinancing from a 30-year fixed VA loan into an adjustable-rate mortgage if preferred.

Discount Points

Borrowers can “buy down” their interest rate with discount points. A single discount point equals 1% of the loan’s total. You can “buy” a discount point by paying a fee to your loan officer upon closing.

‍Discount points are most beneficial to a buyer looking into a 30-year fixed VA loan. Because you pay more upfront, these points allow the buyer to reduce the principal and save on interest over the life of the loan.

How To Get The Best VA Mortgage Rates

A VA loan rate is lower than that of a conventional loan. However, your interest and monthly payments will vary by lender, loan type, and financial history. Whether you take out a loan with a private lender, the Navy Federal Credit Union, or USAA, below are a few helpful tips for getting the best rate.

Improve Your Credit Rating

Despite the relaxed credit requirements on a VA home loan, improving your credit rating can have a tremendous impact. If your credit rating is lower than 620, a few ways you can raise it are:

  • Pay your utility, water, and other bills on time.
  • Review your credit report for errors and have them amended.
  • Pay outstanding debts.
  • Make smaller, more frequent payments on your credit cards.

Compare Lenders

VA rates and fees will vary depending on factors such as the house price, your financial history, and the bank you choose for your loan. As a rule of thumb, compare quotes with at least two to three lenders, taking into account their offers and requirements.

Request estimates of both the interest and annual percentage rates (APR). The interest rate will be added to your monthly payment, whereas an APR represents what you’ll pay every year.

When calculating the APR, consider lender fees, closing costs, property appraisals, and other associated dues. You can use online tools such as a mortgage calculator or determine your APR by the following steps:

  1. Add the total interest to other fees.
  2. Divide this number by the loan amount.
  3. Divide this number by the total days in your term.
  4. Multiply this number by 365 to get your APR. Multiply your APR by 100 to convert this into a percentage.

Make A Sizable Down Payment

While applying for a VA loan without a down payment is possible, you might benefit from putting down at least 5 percent. Alternatively, you can buy discount points to lower the rate of your funding fee and monthly payment. The advantages of making a larger down payment are:

  • Reducing closing costs and origination fees
  • Reconciling a low credit rating
  • Paying off your mortgage sooner

Get A 15-Year Fixed Instead Of A 30-Year Fixed VA Loan 

Many first-time VA borrowers will apply for a 30-year fixed loan. In fact, 90% of homeowners prefer them. A 30-year loan term allows borrowers to build savings with a relatively low monthly payment. However, it may cost veterans more than a 15-year fixed VA loan.

The initial balance on a 15-year fixed VA loan will be higher. However, the mortgage becomes more affordable over time.

Veterans who want to build equity on a fixed-rate mortgage might prefer to apply for a 15-year term. Though interest is higher, more payments go toward the principal balance, saving them thousands of dollars.

By contrast, veterans who prefer a 30-year VA loan can reduce the interest by making early payments, given that the lender does not charge a prepayment penalty.

VA Loan Mortgage Rates | Wesley Mortgage

Frequently Asked Questions About VA Loan Rates


How Do Lenders Determine VA Mortgage Rates?

Current VA mortgage rates are not set by the USAA or the Department of Veterans Affairs. Instead, lenders determine loan rates according to economic circumstances and your financial history. The higher your credit rating, annual income, and debt-to-income ratio, the better your rates will be.

How Much Does a VA Loan Cost?

How much a current VA loan costs will depend on your mortgage rate and funding fee. You can lower your rates by making a down payment of at least 5% or purchasing discount points upon closing.‍

VA refinance loans might charge lower fees compared to traditional loans. Also, if you are a disabled veteran, surviving spouse, or have received a Purple Heart, you may be exempt from these fees.

Are 30-year Fixed-Rate VA Loans Better Than 15-Year VA Loans?

While a 30-year VA loan is more common, it might be more expensive. Get the best 30-year term rates by working with a real estate agent who can connect you with the perfect lender.

With each lender, request an estimate that includes your APR. You can also use online tools to calculate the APR yourself.

How Do You Get a Better Interest Rate With the VA?

There are several ways to reduce your mortgage rate. First, compare quotes and calculate your APR with different lenders. Consider whether you prefer a loan from the USAA or with a private lender.

Note that these rates will often change depending on the housing market’s performance. VA refinance rates may be lower if you already have a conventional mortgage.

Bottom Line

A VA mortgage may be a suitable loan option if you are a military member struggling to secure low rates on a conventional loan. Get the best VA rates by improving your credit, contacting several lenders, and calculating your APR.

Are you interested in applying for a VA mortgage today? Consult with experts at Wesley Mortgage! We also provide helpful online tools and resourceful information you can use to determine what type of mortgage best suits your needs.

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