If a VA loan is an option for you when purchasing a home, you should take it. Often with lower interest rates than conventional loans, VA loan rates and terms can help qualified veterans get more home for their money. This can lower monthly payments that are free of the cost of personal mortgage insurance, (PMI) and require no down payment.
The fact that VA loans are backed by the U.S. Government gives approved lenders confidence when lending through the VA, offering qualified borrowers very competitive interest rates and terms on home loans. This assurance keeps rates for VA loan borrowers competitive, enabling them to get in to a home affordably.
VA Loan Rates
Even if you meet the criteria for a VA loan, you will still need to meet criteria set by the lender to get the very best rate on a VA loan. There are items that can affect your credit score including:
- The higher your credit score, the lower your interest rate. This is as true with a VA loan as a conventional loan. With a VA loan, you will be more likely to obtain a loan if you have less than stellar credit because the loan is guaranteed, without the purchase of PMI.
- The duration of the loan can affect the interest rate based on whether it is a 15 or 30-year loan.
- Your debt-to-income ratio, (DTI) is a big factor of how much you can afford, per month, on a mortgage. The lower this percentage, the more house you can afford.
- The current market conditions in your area can have an effect on VA loan rates. The VA will guarantee loans, up to $417,000, if you meet the criteria for a home of this value. However, in states, such as California, where homes in some areas can barely be purchased for the VA’s maximum loan amount, the VA will make considerations based on the market value of homes in the area and loan more than the maximum amount of $417,000.
Do Recent Trends Affect VA Loan Rates?
Just as home values ebb and flow throughout the year, so do interest rates and knowing when to lock in your rate can save your thousands of dollars over the life of the loan. Before you even begin to search for homes, watch the trends in interest rates. One-half of a point can mean a savings of more than $40,000 over the life of a thirty year, $400,000 mortgage.
Some lenders require that you pay a fee to lock in a favorable interest rate, while others do not. Most of them will require a completed contract before they will lock in your rate. Staying on top of trending interest rates is a very effective way to add value to the purchase of a home with a VA loan.
There is not a magic formula for getting the best VA loan rate but you can watch recent market trends for an idea. Buyers who inform themselves will get the best deal on their new home. Getting your finances in order and having a plan can save you thousands of dollars in lower interest rates over the life of the loan by watching trends in interest fluctuations and attending to the health of your credit score.
Working with a lender who specializes in VA loans will help you navigate the steps you must take to get the best deal on your home. Finding a home through Movoto that fits what you want and need in a home that is priced in your purchasing range, will help you move toward getting a completed contract and closing.
Do you meet the Requirements for a VA Loan?
You must meet the eligibility requirements for a VA loan before you apply and get the items together to prove that you are eligible. This means that you must have served for 90 days during a time of war, 181 days during times of peace, six years of national guard or reserve duty, or be a qualifying spouse of a deceased veteran and not remarried.
If you don’t have it, you will need a copy of your Copy of your DD214 if you are separated from the military, or a Certificate of eligibility (COE) to apply for a VA loan. Although you don’t need to wait to get it to begin your home search you merely need to know what price home you can afford.  A qualified loan officer should be able to give you a ballpark loan amount based on your debt to income ratio and other information they have gathered from you. With this information in hand, you will have a clear idea of how much house you can afford.
You must also meet the income requirements of a VA loan and must have stable income that can pay for all of your monthly expenses including a new mortgage. The VA also requires that a borrower have enough income remaining every month, after paying major expenses, to feed, clothe and transport yourself and your family. The requirement of residual income, above and beyond major expenses, keeps foreclosures on VA loans low because borrowers are prepared.
2 Point Highlight
If VA loan and it is an option for you, when purchasing a home, you should take it.
There is not a magic formula for getting the best VA loan rate but you can watch recent market trends for an idea.
