Military families have access to VA loans, which are one of the most beneficial mortgage options in the country for homebuyers.
VA loan benefits include $0 down payment, no PMI and borrower-friendly credit requirements. Beyond that, VA loan rates are incredibly competitive, unlocking the potential to own a home for millions of military personnel and veterans.
VA loan rates vary based on a variety of factors, so read on to learn how to secure the best rates when you finance your home.
Current VA Loan Average Market Rates
| Date | Product | Rate |
|---|---|---|
| 12-20-2023 | VA 15 Year Fixed Purchase | 5.685% |
| 12-20-2023 | VA 30 Year Fixed Purchase | 5.839% |
| 12-20-2023 | VA 15 Year Fixed Refinance | 6.083% |
| 12-20-2023 | VA 30 Year Fixed Refinance | 5.854% |
How we source rates and rate trends
What Affects VA Loan Rates?
When you apply for your VA loan, lenders will consider the following to determine your rate.
- Credit score: Your credit score is the first factor a lender will look at to establish your VA loan rate. While the VA does not enforce a minimum credit score, some lenders do. Many lenders often require a credit score of 620 or better. The higher your score is, the better the VA loan rate you’ll qualify for.
- Length of the loan: Whether you opt for a 15- or 30-year mortgage will affect your monthly payments and interest rates, which we’ll discuss in-depth below.
- The market: The current housing market will also determine your VA loan rate. Since private lenders issue these loans, they set the rates, which change daily.
- Loan Type: Lenders often have different rates available for VA purchase, streamline refinance or cash-out refinance.
Adjustable-Rate vs. Fixed-Rate Mortgages
When it comes to VA loans and other mortgage products, you can choose whether you want a fixed rate, an adjustable-rate or a hybrid adjustable rate.
- Fixed-rate: As the name implies, this type of mortgage lets you lock in an interest rate, which will remain unchanged unless you refinance. Fixed rates may be higher than adjustable-rate mortgage rates, but they’re typically the cheaper option over the life of a 30-year mortgage.
- Adjustable-rate: An adjustable-rate mortgage, or ARM, is a bit riskier, as rates change with the market. ARMs typically come with better initial interest rates and access to lower rates if the market improves. However, market volatility means your rate can also increase. Fortunately, VA ARMs come with government protection which limits increases to 1% at a time, with a maximum increase of 5% over the length of the loan.
- Hybrid adjustable-rate: A hybrid ARM provides you with a fixed interest rate for a specific time, like five years. After that, the mortgage rate becomes adjustable. This type of mortgage gives you the potential to secure lower VA loan rates with the temporary security of a fixed-rate mortgage.
How to Qualify for the Best VA Loan Rates
With a fair idea of what factors shape your VA loan rates, you may need to do some work on your finances before applying for a mortgage.
Establishing your VA loan eligibility is only step one in obtaining a VA home loan. Once you’re eligible, you’ll have to find a lender who will approve your application.
While a decent credit score may be enough to get you a VA loan, an excellent score will get you better rates. If you plan to get a VA loan or another type of mortgage, start working to build a solid credit score.
Here are some surefire steps you can take to get your finances on track for mortgage approval and competitive VA loan rates:
- Track your credit score: A free service like Credit Karma can help. You can access your credit score and resources to improve your credit on this site, and you’ll receive alerts to changes in your report. While these free scores give you a good idea of your credit picture, they won’t necessarily match what lenders see, as each of the major credit bureaus has its own method of calculating credit scores.
- Boost your score: Settle any issues you encounter on your report, make your payments on time and utilize credit wisely to see improvements to your score. The effort you put into boosting your credit score – and the resulting lower interest rate – can save you hundreds, if not thousands, of dollars over the length of your mortgage.
- Pay down debt: The less debt you have, the less it will weigh down your monthly expenses and impact your debt-to-income ratio (DTI). Aggressively attacking your debt and paying outstanding bills can improve your finances drastically. It also frees up more of your future income to pay down your mortgage faster.
- Watch the market trends: VA loan rates are generally lower than those for comparable conventional mortgages, but they tend to follow the same trends. Track the housing market to see if rates are particularly high or low when you shop for your VA loan.
How Much Could You Save With a Good Interest Rate?
It may not seem like much, but even a half-percent difference in your VA loan interest rate can go a long way over a 30-year mortgage term.
For example, if you borrow $250,000 for 30 years and have an interest rate of 4.50%, you will pay a total of $206,016.78 in interest by the end of your loan term. If your rate is 5% you’ll pay $233,139.46 in total interest.
That half-percent increase translates to an extra $27,122.68 over the course of your 30-year loan. Plus, your monthly payments will be higher – $1,342.05 per month instead of $1,266.71 per month with the lower 4.5% interest rate. That’s a $75.34 difference in your monthly cash flow.
These differences become much larger when you can shave 1% or more off your interest rates.
Scroll to the bottom to see our VA loan interest rate comparison tables for a 15-year and 30-year VA loans.
15 Year vs. 30 Year VA Loan Rates
In addition to the type of VA loan you choose, the length of your mortgage will affect your rates.
Just as there are pros and cons to fixed and adjustable-rate mortgages, both 15- and 30-year term lengths come with costs and benefits. The key is deciding which benefits meet your needs best.
If you opt for a 15-year mortgage, you can expect lower interest rates, but the length of your mortgage is half that of a 30-year mortgage, meaning your monthly payments will be higher.
But, you’ll also gain more equity in your home over a shorter time, which can be a beneficial long-term financial strategy. But, it can skyrocket your debt-to-income (DTI) ratio.
Conversely, a 30-year mortgage comes with lower monthly payments and higher interest rates, which can cost you tens
of thousands of dollars.
To select the ideal mortgage length, look at your financial goals, income and needs, weighing the short and long-term consequences of each type of mortgage.
VA Loan Interest Rates Assumptions
- $250,000 purchase price
- 15-year and 30-year mortgage
- No down payment; no PMI
- Property Tax $2,400 / year ($200/mo)
- Homeowners insurance $1,200 / year ($100/mo)
- No homeowners association (HOA) fees
Comparing 15 Year Mortgage Interest Rates
| Comparing 15-Year Mortgage Interest Rates ($250,000 Loan; No Downpayment) | 3.50% | 4.00% | 4.50% | 5.00% |
|---|---|---|---|---|
| Monthly mortgage payment | $1,787.21 | $1,849.22 | $2,215.48 | $1,976.98 |
| PMI (none required with VA loan) | $0.00 | $0.00 | $0.00 | $0.00 |
| Property taxes (per month) | $200.00 | $200.00 | $200.00 | $200.00 |
| Homeowners insurance (per month) | $100.00 | $100.00 | $100.00 | $100.00 |
| Total monthly payment | $2,087.21 | $2,149.22 | $2,212.48 | $2,276.98 |
| Total annual payment amount | $25,046.48 | $25,790.64 | $26,549.80 | $27,323.81 |
| Total interest paid (life of loan) | $71,697.14 | $82,859.57 | $94,246.98 | $105,857.13 |
| Total of 180 payments | $375,697.14 | $386,859.57 | $398,246.98 | $409,857.13 |
Comparing 30 Year Mortgage Interest Rates
| Comparing 30 Year Mortgage Interest Rates ($250,000 Loan; No Downpayment) | 3.50% | 4.00% | 4.50% | 5.00% |
|---|---|---|---|---|
| Monthly mortgage payment | $1,122.61 | $1,194.54 | $1,266.71 | $1,342.05 |
| PMI (none required with VA loan) | $0.00 | $0.00 | $0.00 | $0.00 |
| Property taxes (per month) | $200.00 | $200.00 | $200.00 | $200.00 |
| Homeowners Insurance (per month) | $100.00 | $100.00 | $100.00 | $100.00 |
| Total monthly payment | $1,422.61 | $1,494.54 | $1,566.71 | $1,642.05 |
| Total annual payment amount | $17,071.34 | $17,922.46 | $18,800.56 | $19,704.65 |
| Total interest paid (life of loan) | $154,140.22 | $179,673.77 | $206,016.78 | $233,139.46 |
| Total of 360 payments | $512,140.22 | $537,673.77 | $564,016.78 | $591,139.46 |
If you take advantage of the VA home loan program, make sure to do what it takes to improve your credit score ahead of time so that you qualify for the best interest rate.
Equal Housing Opportunity. The Department of Veterans Affairs affirmatively administers the VA Home Loan Program by assuring that all Veterans are given an equal opportunity to buy homes with VA assistance. Federal law requires all VA Home Loan Program participants – builders, brokers, and lenders offering housing for sale with VA financing – must comply with Fair Housing Laws and may not discriminate based on the race, color, religion, sex, handicap, familial status, or national origin of the Veteran.
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Bob channey says
Ryan, Great article great information. As far as Credit worthiness iam in good shape. Never had VA loan, very low house expense. My problem is getting certificate of eligibility, I have sent in two Applications at different times for Certificate of eligibility with my dd214 with no response. I understand about the virus going on. Any words on helping me get the certificate of eligibility.
Ryan Guina says
Hello Bob,
Thank you for your comment. I was able to get the Certificate of Eligibility with the assistance of my lender. Many lenders, especially lenders that process a lot of VA loans, are able to pull the COE directly from the VA. This saves everyone a lot of time.
Have you tried obtaining the COE through a lender, or just through the VA?
Another option is to request it through the eBenefits website. You can sign up for a free account if you do not already have one.
I hope this points you in the right direction!
Jerry Johnson says
Hey does the VA Loan Support Lenders also deal in picking up existing Reverse Mortgates?