Best VA Loan Lenders 2023

Forbes Advisor compiled a list of V.A. lenders that excel in several areas, including low fees, convenience, and flexibility. Interest rates are expressed as annual percentage rates (APRs) based on current market rates and compared to the national average. The lenders on this list all had a minimum star rating of four.

Tips for Comparing VA Loans

V.A. loans have many advantages, including no payment options, lower interest rates than conventional mortgages, minimum borrower qualifications, and the ability to borrow up to 100% of the home's value.

However, many lenders will set their criteria. For example, they may apply a minimum credit score, usually in the 580-620 range, as well as a minimum debt-to-income ratio and down payment. For borrowers, this means finding lenders that offer V.A. loans that match their financial needs.

Not all lenders offer V.A. loans, so this is the first question to answer when shopping around. Then, ask about their requirements (credit score, DTI, down payment) and what interest rates they offer for V.A. loans. Price comparisons often lead to lower interest rates, so gather as much information as possible. You can use a loan estimate from one lender to negotiate a lower rate with another lender.

Keep in mind that all V.A. loans also carry a financing fee. This one-time payment is 2.3% of the total loan amount for first-time V.A. borrowers and 3.6% for those who previously used the V.A. home loan program. V.A. borrowers who pay a 5% down payment can get a discount on this fee, and some lenders are exempt.

Procedures

Forbes Advisor surveyed 12 mortgage lenders across the U.S. doing business online and in person.

Our scoring methodology captures over 10 data points, covering interest rates, lender fees, discounts, affordability, and borrower needs.

The best lenders for V.A. borrowers excel in historically significant areas, including low-to-average credit score requirements, low lender fees, and low interest rates.

The weightage assigned to each category is as follows:

• Loan cost: 30%

• Speed: 20%

• Credit Requirements: 20%

• Types of Loans Offered: 20%

• Accessibility and Availability: 10%

Specific features considered in each category include APR, average interest rate, origination fee, minimum credit score requirements, rebates, and customer service availability.

When the lender considers alternative credit information, we offer bonus points worth up to 5% of the score.

To learn more about our rating and review methodology and editorial process, see our guide to how Forbes Advisor rates mortgage lenders.

Current VA Mortgage Rates

The current rate on a 30-year fixed V.A. loan is 6.38%, up from 6.22% a week ago.

The maximum 52-week rate for a V.A. Fixed Rate Mortgage was 6.40%, and the minimum 52-week rate was 5.65%.

V.A. mortgage rates are, on average, lower than mortgage rates for conventional loans and, in some cases, may even be lower than FHA loan rates. This is because V.A. loans are government-backed and, therefore, viewed as low-risk by lenders.

However, some fees and closing costs are associated with V.A. home loans. It's best to visit several lenders to get the best deal.

What is a V.A. loan?

The mission of the V.A. Home Loan Program is to help eligible military veterans and family members acquire, keep, or modify a home. The VA has guaranteed millions of loans for existing and new construction homes since the program's inception. Among other benefits, V.A. loans allow veterans to get a home loan with no money down.

If you qualify for a V.A. home loan, you can work directly with the V.A. to help apply for and service your loan (V.A. With a private lender (V.A. Backed Loan) or through a direct loan.

How does a V.A. home loan work?

With a V.A. direct loan, the V.A. acts as your mortgage lender. You will apply for your loan through the V.A. and service it with them. That being said, most V.A. loans are financed by private lenders.

In the case of a VA-backed loan, a private lender, not the V.A., originates and finances your loan. Depending on the lender, lenders follow V.A. standards and possibly other means and are guaranteed prompt recovery of some or all of their V.A. losses. This encourages lenders to offer competitive interest rates and loan terms.

The most significant advantage of a V.A. loan is that you cannot put any money down. Because the V.A. guarantees the loan, lenders can rely on V.A. loan financing for borrowers who choose to forego a down payment.

Types of V.A. Loans

There are four main types of VA-backed home loans:

Purchase Loan: If you meet the eligibility requirements, this home purchase loan requires no down payment and competitive interest rates. According to Fannie Mae and Freddie Mac, you can borrow up to the loan limit.

NADL: You can also refinance an existing NADL to another NADL to lower your rate.

Interest Rate Reduction Refinance Loan (IRRRL): Veterans can refinance their existing V.A. loan with a lower interest rate on a new VA-backed mortgage. Also called a "streamline" refinance, this loan typically helps lower monthly mortgage payments.

Cash Out Refinance Loan: For veterans who need cash, this loan allows borrowers to refinance their existing mortgage and use their home equity to pay for expenses such as home repairs and college payments. It will enable some money to be converted into cash and pay off a loan with a higher interest rate.

In addition, the V.A. offers some particular VA-backed loans:

Energy Efficiency Mortgage (EEM): This loan allows veterans to make energy improvements and upgrades to their residences, such as installing insulation, upgrading the furnace, or adding storm doors. This loan is an "add-on" combined with another VA-backed purchase or refinance loan.

Adapted Home Loan: This program provides grants to service-connected disabled veterans who need to build, remodel, or adjust a home to accommodate their disability.

Manufactured Home Loan: Provides financing for purchasing a manufactured home and the land on which the house will stand. Eligible veterans can also refinance an existing VA-backed loan into a manufactured home.

V.A. Loan Requirements

A V.A. loan can be a great option if you're looking to buy your first home or need more funds for a large down payment. However, the V.A. has set specific minimum eligibility requirements.

How do you qualify for a V.A. loan?

Service members, veterans, and surviving spouses who meet V.A. criteria are eligible for VA-backed loans. However, lenders require a Certificate of Eligibility (COE) to demonstrate that borrowers meet V.A. requirements. You can get a COE through your lender, online, or by mail by filling out and submitting this form.

Here are some V.A. requirements:

• Must be a current or former member or surviving U.S. Armed Forces or National Guard spouse.

• Must fulfill the prerequisites for the bare minimum of service,

• Vary based on your branch of service and other factors.

• Must be a U.S. citizen or permanent resident alien.

• Must satisfy the credit and income requirements of the lender.

• You must use the property as your primary residence.

In addition, you will need to meet your lender's credit and income requirements to qualify for a V.A. loan.

What is the minimum credit score for V.A. loans?

The VA does not set minimum credit score requirements to qualify for loans. However, lenders typically apply their credit standards to V.A. loans, which may differ from other loan products.

What are the down payment requirements for a V.A. loan?

VA-backed loans have no minimum payment requirements. However, the less money you put into a VA-backed loan, the higher the rate you will pay in V.A. loan financing fees. 

See the chart below for V.A. purchase loan financing fee amounts based on the down payment.

V.A. Loan Financing Fees

While VA-backed loans have many benefits for eligible veterans, they typically require borrowers to pay a V.A. loan financing fee.

As required by law, financing fees help V.A. finance its loan program. Financing fee amounts depend on the type of loan, the veteran's military status, and whether the borrower is a first-time or repeat homebuyer. However, your maximum repayment is 3.6% of the total loan amount.

In many cases, financing fees apply if the borrower decides to forego the down payment. Borrowers can roll the financing fee into the total loan amount or pay it in advance.

That being said, you may qualify for a finance fee waiver if:

• You are a veteran who is disabled as a result of your service.

• Otherwise, you would be eligible to collect service-connected disability pay, but you have elected to receive retirement or active duty pay.

• You are the surviving spouse of a veteran who died of service or a service-connected disability, and you are receiving Dependent and Indemnity Compensation (DIC).

• You are a veteran whose eligibility for disability compensation is determined based on a pre-discharge examination or classification or current classification based on recent medical evidence, such as treatment or service records.

• You serve on active duty and can show proof of receiving a Purple Heart before the loan deadline.

It's worth noting that if you pay a financing fee but receive V.A. compensation for a service-connected disability, you may be eligible for a refund as long as the effective date of your compensation Has a due loan date. Or earlier.

How to Apply for a V.A. Home Loan

Buying a home can be complicated, and committing to a home purchase through a VA-backed loan is no different. But don't worry. Stay organized and follow these steps to help buy a home with a V.A. loan.

1. Request your COE. You must obtain a certificate of eligibility. Lenders need this as proof that you qualify for a V.A. loan.

2. Review your finances. Once approved for your COE, take a hard look at your financial situation to ensure you're in an excellent position to buy a home. For example, understand your credit profile, review your monthly expenses, and determine how much of a mortgage you can afford.

3. Lenders' Shop. To get your loan, you'll likely have to go to a private lender that offers V.A. Housing experts say it's best to visit at least three lenders to ensure you get the best deal.

4. Start the prequalification and pre-approval process. Prequalification gives you an estimate of the loan you may qualify for and helps the lender assess your creditworthiness. With pre-approval, the lender checks your financial situation, verifies your service history against your COE, and verifies other personal information, such as your employment status.

5. Sign the purchase agreement. Talk to your real estate agent about including an escape clause that allows you to void the contract if the home's appraisal is less than the purchase price. Also, ask for advice on having other contingencies enabling you to cancel the contract, such as if the property fails a home inspection. These are also essential factors in closing the loan.

6. Get a home inspection and appraisal. Experts strongly recommend having the home inspected by a reputable home inspection company to determine if there are any significant defects or other concerns. A VA-approved appraiser will also evaluate the home to ensure that the property's condition meets basic V.A. requirements. The appraiser will also provide a home equity option.

7. Prepare to close. Your lender must provide a closing disclosure for your review three days before your due date. This document will fully summarize your loan terms, fees, closing costs, and monthly mortgage payment estimate. Your lender may also request additional information or documentation.

8. On Closing Day, review all documents carefully before signing. You can hire a real estate attorney to help you with this. Depending on the size of your lender's loan and how organized they are, you can expect to get to the point where you get pre-approved in about 45 days. After everything is signed off, it's time to move into your new home!