VA Mortgage Rates – How are They Calculated?

VA Mortgage Rates

VA Loans are guaranteed by the U.S. Department of Veterans Affairs but are issued by private lenders. All lenders approved by the VA can offer VA loans to eligible veterans, service members, and their spouses to fulfill their mortgage needs.

Veterans should know about the VA Mortgage Rates before they borrow loans from lenders. This guide will help you learn about the VA mortgage rates and other loans offered by banks to military veterans.

What Determines Mortgage Rates

The closing rates for VA loans may vary from lender to lender, so one should approach multiple lenders and then compare their closing rates.

This is the ultimate way of determining the best rates of loans. The following factors are considered while evaluating mortgage rates for military veterans and others.

1. Your Credit Score

A credit score is important when borrowing money from the market. Even if you are planning to apply for a government or private grant, you need to show your credit score.

The higher your credit score, the lower interest rates you will be asked to pay against your borrowed money.

Ensure you have maintained a good credit score to increase your value in the market. If your credit score is not well, you should try to increase it by repaying the EMIs on time.

2. Your Loan Amount

Loan rates are also considered based on the amount you will borrow from the lender. Interest rates for VA loans are not determined by the loan amount but by factors such as credit score, market conditions, and the lender’s policies.

If you borrow small loans, you will be asked to pay higher rates against the borrowed money.

3. Your Down Payment

You can pay your loan amount upfront to lower the interest rates. If you pay a good amount against your borrowed amount, the lender will lower the interest rates itself.

4. Your Home’s Location

The location of your home plays a vital role in determining the closing rates against your loan. The VA mortgage rates may vary from home to home, depending on the location.

5. Term of Mortgage

The term of a mortgage loan is the years you require to repay the borrowed amount. When you choose a shorter term to repay the loan, the interest rates against the borrowed amount will be lowered.

If you choose a 15-year term to repay your loan amount, the interest rates on the loan will be low compared to a 30-year term.

6. Current Financial Market

Since the financial market keeps on changing, the closing rates against your loan will be different from time to time. So the final rates will be determined at the time of borrowing the loan as per the market’s condition.

Who is eligible for VA Mortgage Loans

The following branches of services allow you to apply for VA Mortgage Loans.

  • Army
  • Navy
  • Marine Corps
  • Air Force
  • Coast Guard
  • Military Spouse
  • Other VA Eligible Candidates

The condition of the property required to a VA Mortgage Loan

VA loans require that the property meets certain minimum property requirements for safety and structural integrity, not specifically the conditions listed, like painting or a dry basement.

What are the benefits of VA Loans?

VA Loans help military veterans become the owners of their property. VA loans are provided to Veterans at lower interest rates than other loans. The key benefits of VA loans are listed below:

  • Lower mortgage rates than other types of loans.
  • No down payment is required.
  • Credit Score requirement is flexible or a low credit score is accepted.
  • As of 2020, the VA loan program removed loan limits for veterans with full entitlement, but there are still loan limits for those without full entitlement.
  • VA loans do not have a prepayment penalty, allowing borrowers to pay off the loan early without a fee.
  • Easy to sell out the property borrowed through VA loans as the properties will be assumable.
  • No private mortgage insurance is required at the time of borrowing the loan.

VA home loans are ideal for veterans without homes and attract first-time home buyers. If you fall under the above-listed branch of services, you do not need to pay upfront or a down payment when buying a new home.

Present VA Mortgage Rates

Closing VA mortgage rates are determined by each lender based on market conditions, borrower’s creditworthiness, and other factors, not a lender’s network. After surveying the market, the rates on the VA mortgage loan will be finalized. The rates start at 6.12% for the current month i.e. December 2021. The above-listed factors are considered while evaluating the final rates against your loan.

Today’s Mortgage Rates

Note: Rates may vary from lender to lender. The following table is prepared from our lender’s network.

ProgramMortgage RateAPR
15 Year Fixed VA6.53%6.91%
30 Year Fixed VA6.89%7.13%
5/1 ARM VA6.99%7.09%

Frequently Asked Questions:

Question 1: Why are VA loans good for Veterans

VA loans are exclusively available for military veterans and their spouses. The interest rates on VA loans are lower than those on standard loans, which is why VA loans are a good option for Veterans who want to buy a new property or home.

Question 2: Who sets the rates of VA Loans

Banks and mortgage companies set VA loan interest rates for veterans. The rates may vary from lender to lender, so one should approach multiple lenders when borrowing VA loans to buy a new home or property.

Question 3: How often should VA rates change

VA loan rates change more frequently than standard loans as they depend upon the market. Sometimes, the rates change twice daily according to the market’s condition.

Question 4: How do Veterans close their VA loans

Veterans can close their VA loans just like any other bank loan. The lender asks for no special requirements to close the VA loans.

Question 5: What is good for Veterans? VA Loans or Conventional Loans

VA loans are good for Military Veterans as they offer low interest rates compared to conventional loans.

The Bottom Line:

VA Mortgage Rates vary from lender to lender and are based on the market. With higher market competition, some lenders offer loans at lower interest rates.

Before you apply for the VA loan, you should know about the current mortgage rates offered by multiple vendors and then compare the rates to get the best deal.

Everything you need to know about VA Mortgage Rates is described in the article. Start exploring the list of lenders, compare their rates and select the one that suits your requirements.

See Also

Business Grants for Veterans

What is HVRP

Grants for Disabled Veterans

Dental Implant Grants for Veterans

Dental Insurance for Veterans

Current Version
December 31, 2021
Written By
Shubham Grover
March 29, 2024
Updated By
Andrea Morales G.

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