Mon. Jan 25th, 2021

Since 1944, the U.S. Department of Veterans Affairs has helped service members, veterans and their families become homeowners with the VA loan program. If you have VA loan eligibility, you could get a government-backed mortgage loan with no down payment.

VA loans can offer savings and a fast track to homeownership for borrowers with military service. This guide covers the fundamentals of VA loans and offers recommendations for the top VA lenders so you can find the best VA loan.

  • What are the best VA loan lenders?
  • Are VA loans better than conventional loans?
  • How can you choose the best VA loan?

What Are the Best VA Mortgage Lenders of 2020?

Best for bad credit

Carrington Mortgage Services makes a range of mortgages, including refinancing, available to borrowers nationwide. The company, which provides conventional and government-backed mortgages, has funded $22 billion in home loans since 2011.

Before You Apply

  • Mortgage types: ARMs, conventional, FHA, home equity loans and HELOCs, jumbo, refinance, USDA, and VA
  • Minimum FICO credit score: 500
  • Maximum loan amount: $2.5 million
  • Better Business Bureau rating: A+

Best Features

  • Accepts applicants with credit scores as low as 500

  • Offers conventional loans with down payments as low as 3%

See full profile

Best for product selection

Guild Mortgage, founded in 1960, specializes in home loans and serves borrowers nationwide. The lender’s full suite of products includes conventional and government-backed mortgages and home equity loans.

Before You Apply

  • Mortgage types: ARMs, conventional, FHA, jumbo, manufactured home, refinance, reverse, USDA and VA
  • Minimum FICO credit score: 600
  • Maximum loan amount: varies
  • Better Business Bureau rating: A+

Best Features

  • Receives strong customer service ratings from the Better Business Bureau

  • Offers a broad range of mortgage products

  • Provides special mortgage programs for first-time buyers and manufactured homebuyers

See full profile

Best for low APR

New American Funding is a national mortgage lender with a variety of home loan options. The lender has processed more than $27 billion in mortgages.

Before You Apply

  • Mortgage types: ARM, cash-out refinance, conventional, FHA, HELOCs, jumbo, reverse, USDA and VA
  • Minimum FICO credit score: 500
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A+

Best Features

  • Provides multiple mortgage options, including low and no down-payment loans

  • Offers fixed- or adjustable-rate mortgages

See full profile

Best for VA loans

Veterans United Home Loans provides mortgages to veterans and military families in all 50 states and Washington, D.C., and specializes in VA loans. In 2019, Veterans United Home Loans generated the largest number of VA loans in the nation.

Before You Apply

  • Mortgage types: ARMs, conventional, FHA, refinance, USDA and VA
  • Minimum FICO credit score: 660
  • Maximum loan amount: $1.5 million
  • Better Business Bureau rating: A+

Best Features

  • Requires no military service

  • Sets no minimum loan amount

See full profile

Best for online service

Caliber Home Loans of Coppell, Texas, offers mortgages nationwide, including conventional, refinance, jumbo and adjustable-rate loans. Government-backed options are FHA, USDA and VA. Caliber has been in business since 2008 and is solely focused on home loans.

Before You Apply

  • Mortgage types: conventional, FHA, jumbo, refinance, USDA and VA
  • Minimum FICO credit score: 580
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A

Best Features

  • Offers a first-time homebuyer program

  • Accepts mortgage applicants with FICO credit scores as low as 580

See full profile

Best for low costs

Chase, one of the nation’s largest banks, offers mortgage and refinance loans for qualified borrowers. Home equity loans and HELOCs are also available.

Before You Apply

  • Mortgage types offered: ARMs, conventional, FHA, jumbo, refinance and VA
  • Minimum FICO credit score: 620
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A+

Best Features

  • Accepts down payments as low as 3%

  • Receives high marks from the Better Business Bureau

See full profile

Best for fair credit

NBKC Bank is a Kansas City-based mortgage lender. It originates home loans in every state.

Lender Highlights

  • Mortgage types: ARMs, conventional, Department of Veterans Affairs, FHA, refinancing
  • Minimum FICO credit score: 620
  • Maximum loan amount: undisclosed
  • Better Business Bureau rating: A+

Best Features

  • Some fair-credit borrowers eligible

  • Simple online process for applicants

  • VA loans with no lender fees

See full profile

Best for low down payment

PNC Bank is one of the largest U.S. banks, serving more than 8 million customers in all 50 states. PNC offers most types of mortgages.

Before You Apply

  • Mortgage types: ARMs, conventional, FHA, first-time homebuyer program, home equity, HELOC, jumbo, refinance, USDA and VA
  • Minimum FICO credit score: undisclosed
  • Maximum loan amount: $5 million
  • Better Business Bureau rating: A+

Best Features

  • Offers multiple types of mortgages

  • Provides no or low down-payment mortgages

  • Supplies an online home ownership cost tool

See full profile

Best for large loan amounts

Bank of America serves roughly 66 million customers in all 50 states. The lender offers conventional, Federal Housing Administration, Department of Veterans Affairs and jumbo loans, as well as home equity lines of credit and mortgage refinancing.

Lender Highlights

  • Mortgage types: ARMs, conventional, FHA, first-time homebuyer program, home equity lines of credit, refinancing, VA
  • Minimum FICO credit score: 600
  • Maximum loan amount: $5 million
  • Better Business Bureau rating: A+

Best Features

  • Wide variety of mortgages

  • Annual percentage rate or closing cost discounts for qualifying Bank of America and Merrill Lynch clients

  • No closing costs and no annual, balance transfer and cash advance fees for HELOCs

See full profile

What Are Today’s VA Loan Rates?

Locking in a low mortgage rate today can save you thousands over the life of your loan. Compare your mortgage rate offers with national average trends.







Loan Types

This Week’s Rate

Last Week’s Rate

30-year fixed-rate mortgage 2.87% 2.9%
15-year fixed-rate mortgage 2.34% 2.38%
30-year fixed-rate jumbo mortgage 2.89% 2.93%
5/1 ARM 2.99% 3.03%
5/1 jumbo ARM 2.86% 2.85%

*Rates as of Jan. 1, 2021

How Do VA Loans Work?

The VA doesn’t lend money with VA loans, but it does offer a guarantee. You borrow from a private VA mortgage lender, and the government guarantees payment for a portion of your mortgage. If you default on your loan, the government will pay back the lender.

With this guarantee, lenders may offer more favorable terms for VA loans compared with conventional mortgages because they are guaranteed repayment. For example, VA loans are typically offered with no down payment.

You can use a VA loan to buy a home, make energy-efficient improvements to your home or refinance a mortgage. However, you can only use VA loans to buy your primary residence. This program is not available for vacation or investment properties.

You do not have to be a first-time homebuyer to use a VA loan. You can use this program more than once because it’s a lifetime benefit.

Can You Get a VA Loan?

VA loan eligibility requires borrowers to meet VA loan requirements for loan qualification. The VA loan program is available to active-duty service members, veterans, past and present members of the reserves or the National Guard, and surviving spouses of service members who died in combat. To be eligible, applicants must meet a minimum length of service:

  • 181 days of active-duty service during peacetime
  • 90 days of active-duty service during wartime
  • Less than 90 days of active-duty service if discharged for a service-related disability
  • Six years in the reserves or the National Guard

Veterans with a dishonorable discharge are not eligible. Surviving spouses who have remarried may not be eligible.

Those who served with other organizations may be eligible to use VA loans:

  • U.S. Public Health Service officers
  • Cadets at the U.S. military, Air Force or Coast Guard academies
  • Midshipmen at the U.S. Naval Academy
  • Officers of the National Oceanic and Atmospheric Administration
  • Merchant seamen with World War II service

When you apply for a VA loan, you will need to present a Certificate of Eligibility, or COE, from Veterans Affairs to the lender to show you qualify for the program. You can apply for a COE online through the VA. Your lender may also be able to pull up your COE as you apply.

In addition to military service requirements, you must meet the VA mortgage lender’s income, credit score and other requirements to qualify for the mortgage. While the VA has no minimum credit score, lenders do: typically a minimum of 620.

The lender will also consider your debt-to-income ratio, which is your monthly debt payments compared with your earnings. Most lenders prefer a DTI of 43% or lower.





VA Funding Fees
Type of veteran Down payment Percentage for first VA loan Percentage for subsequent VA loan
Active duty None
5 percent or more
10 percent or more
2.15 percent
1.5 percent
1.25 percent
3.3 percent
1.5 percent
1.25 percent
Reserves or National Guard None
5 percent or more
10 percent or more
2.4 percent
1.75 percent
1.5 percent
3.3 percent
1.75 percent
1.5 percent

Are VA Loans Better Than Conventional Loans?

For many veterans, VA loans are the most affordable choice. This is why:

You can put 0% down. If your loan is within the VA guarantee limits, you can take out a mortgage with no down payment. This feature can be especially helpful for first-time homebuyers who haven’t saved much money.

“Someone who just gets out of the military in their early 20s might not have that much money saved up, so they can’t make a down payment,” says Bob Blackhurst, Realtor with BHHS Fox & Roach Real Estate Agents & Associates in Greenville, Delaware. “With no-down-payment VA loans, these veterans can become homeowners right away.”

You don’t have to buy private mortgage insurance. Private mortgage insurance is typically required for mortgages if your down payment is less than 20% of the property value. This insurance pays back the lender if you default on your loan.

However, with VA loans, you do not need to buy private mortgage insurance. This is a significant savings, as private mortgage insurance can cost between 0.5% to 1% of the original loan amount each year.

You could qualify with fair credit. The VA does not require a minimum credit score for loans, but the lenders offering them typically do. Because of the VA guarantee, you may be able to qualify with a lower credit score than you would with a conventional mortgage. VA mortgage lenders typically have minimum credit score requirements that range from 580 to 620 FICO.

If your credit score is too low for a VA loan, you may be able to qualify for an FHA loan. If you make a down payment of at least 10%, you could qualify with a FICO credit score as low as 500. A 3.5% down payment is required if your FICO score is higher than 580.

Sellers can help with closing costs. Closing costs are typically between 2% and 5% of the purchase price. With VA loans, the seller can agree to pay for some of your closing costs: up to 4% of the purchase price.





VA Cash-Out Fees
Type of veteran Fee for first-time use Fee for subsequent use
Active duty 2.15 percent 3.3 percent
Reserves or National Guard 2.4 percent 3.3 percent

Is a VA Loan Really Worth It?

VA loans work for many veterans, but consider the disadvantages before you commit.

You’ll pay a VA funding fee. The VA charges a fee when you take out a VA loan. If you’re not making a down payment, the funding fee ranges from 2.15% to 3.3% depending on whether you served on active duty military, in the reserves or the National Guard. If you’re able to make a down payment, you might save with a different type of loan that doesn’t require a funding fee.

“The funding fee is the primary disadvantage of the VA loan,” says Stephen Janocha, a mortgage loan originator who specializes in VA loans at AnnieMac Home Mortgage. “It’s a steep upfront charge.” He also notes that the fee stays the same, regardless of your credit score, which can be an advantage or disadvantage, depending on your credit history.

They’re only available for primary residences. You can only use VA loans to buy your primary residence. You can’t use this program to buy a vacation home or an investment property.

You can’t buy a fixer-upper in major disrepair. You can only use a VA loan to buy properties that are livable and that meet the VA’s minimum property requirements. Unlivable properties will be rejected during inspection. Sellers will be asked to make necessary repairs before the purchase is complete.

“If a home needs work before it can be lived in, ask the seller if they’d make the repairs first,” Blackhurst recommends. “Let them know if they don’t make the repairs, you can’t buy their property.”

How Can You Apply for a VA Loan?

The VA application process is nearly identical to applying for a conventional mortgage, except for VA forms.

You’ll need to submit your COE to prove you meet the service requirements for a VA loan. If you’re a veteran, you also must submit your DD Form 214, Certificate of Release or Discharge from Active Duty.

How Can You Choose the Best VA Loan?

Many VA lenders are looking for your business. To narrow down your search to the best mortgage lenders, consider these five key factors:

  • Interest rates
  • Closing costs
  • Product offerings
  • Eligibility requirements
  • Customer service

Lenders charge different interest rates on their VA loans. Compare VA loan rates by getting rate quotes from lenders. By shopping around, you could get a lower VA loan rate, which means you’d pay less to borrow money.

You can choose from both fixed- and adjustable-rate VA loans. With a fixed-rate loan, your interest rate and monthly payments always stay the same. With an adjustable-rate VA loan, your interest rate and monthly payment could change over time, according to a benchmark rate and the rules for your mortgage.

Lenders can charge a number of closing costs to set up your loan. Common VA loan closing costs include the funding fee, origination fee and administrative fees.

When you add these costs, the loan with the lowest interest rate might not be the best VA home loan overall. An APR represents the annual cost of a loan once you factor in all the expenses. Look at APRs to get a true apples-to-apples cost comparison.

VA loans are available with the same terms as conventional mortgages, typically either 15- or 30-year fixed mortgages. Loan options depend on the VA mortgage lender.

VA loan requirements are consistent when it comes to military service, no matter the lender. However, VA loan lenders could have different credit and financial requirements. Most lenders have a minimum credit score and a maximum debt-to-income ratio to qualify.

Finally, check how a lender rates in customer service. Lenders that don’t offer good customer service might not be worth getting a loan with – even if they offer better mortgage rates.

Janocha says he believes that customer satisfaction is the most important factor in picking a lender. “Your lender should be someone you trust and feel comfortable doing business with. They also should be easy to contact. Every horror story in this industry seems to come down to a lender who wasn’t accessible during a key part in the process,” he says.

What Are Some Other VA Home Loan Programs?

The VA offers several programs in addition to the standard VA home loan program. If you have a home loan, you may be able to refinance with the VA for a better interest rate or to cash out your home equity. Native American and disabled veterans can receive additional benefits; state VA offices provide access to other benefits. As with the standard VA home loan program, you must meet VA loan requirements to use these programs.

Interest Rate Reduction Refinance Loan

The Interest Rate Reduction Refinance Loan program, also known as a VA Streamline Refinance loan, can refinance your VA loan. With the IRRRL program, you replace your current VA loan with a new one with different terms to lower your monthly payments.

VA Cash-Out Refinance Home Loans

With VA cash-out refinance loans, you can borrow against your home equity. You will pay off your VA loan and add the balance and the amount you cash out to a new VA loan.

Native American Direct Loan

Native American veterans who want to live on federal trust land – such as lands in tribal trusts, Alaska Native corporate villages and Pacific island territories – can use the Native American Direct Loan program. If you are eligible, you can use this VA direct loan to purchase, improve or build a home on federal trust land. You can also use the NADL program to refinance a VA loan.

Adapted Housing Grants for Disabled Veterans

The VA offers three grants to help veterans with certain disabilities create an adapted home to accommodate disabilities: the Specially Adapted Housing grant, the Special Housing Adaptation grant, and the Home Improvements and Structural Alterations grant.

Your state may offer additional benefits for veterans. For example, many states offer an exemption from property taxes for eligible veterans or low-interest home loans to resident veterans. Check with your state’s VA agency to see what additional housing benefits are available.

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