WHAT IS A VETERANS VA LOAN?
A Veterans VA loan is a mortgage loan that’s backed by the U.S. Department of Veterans Affairs. These loans are reserved for military service members, veterans, and their spouses. The VA home loan program is one of the lowest-cost, most valuable mortgage loan options currently available.
Benefits of a Veterans VA loan
VA loans come with a number of significant benefits to home buyers, particularly when compared with other types of mortgage programs.
Just a few VA loan advantages include:
- No down payment required: Most other loan programs require at least 3% down ($9,000 on a $300,000 house).
- Competitively low-interest rates: Rates on VA loans are some of the lowest you’ll find. This saves you both monthly and in the long run.
- Closing costs are limited: You can’t be charged an origination fee of more than 1%, and sellers can contribute a large portion of your closing costs.
- No prepayment penalty: This means you can pay off the loan or refinance quickly without an added fee.
- No private mortgage insurance (PMI) is required: The majority of other loan products require mortgage insurance, which adds upfront and monthly fees.
VA loans are also assumable, which means if you eventually sell the house, the buyer can take over your loan, too — a huge perk, given the low rates and other benefits VA loans come with.
VA mortgage rates 2022
When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than loans for the average consumer.
| VA | Conventional | FHA | |
| August 2021 | 2.88% | 3.19% | 3.23% |
| July 2021 | 2.94% | 3.27% | 3.27% |
| June 2021 | 2.92% | 3.25% | 3.23% |
| May 2021 | 2.98% | 3.30% | 3.25% |
| April 2021 | 2.95% | 3.25% | 3.23% |
| March 2021 | 2.72% | 3.02% | 2.99% |
Source: Ellie M originator insight report.
