With over two years of experience writing in the housing market space, Robin Rothstein demystifies mortgage and loan concepts, helping first-time homebuyers and homeowners make informed decisions as they navigate the home loan marketplace. Her work has been published or syndicated on Forbes Advisor, SoFi, MSN and Nasdaq, among other media outlets.
Amy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers, insurance companies, payment companies and leading personal finance websites. Amy also has extensive experience editing academic papers and articles by professional economists, including eight years as the production manager of an economics journal.
Robin Rothstein,
With over two years of experience writing in the housing market space, Robin Rothstein demystifies mortgage and loan concepts, helping first-time homebuyers and homeowners make informed decisions as they navigate the home loan marketplace. Her work has been published or syndicated on Forbes Advisor, SoFi, MSN and Nasdaq, among other media outlets.
Amy Fontinelle
Amy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers, insurance companies, payment companies and leading personal finance websites. Amy also has extensive experience editing academic papers and articles by professional economists, including eight years as the production manager of an economics journal.
Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a number of outlets, including Yahoo Finance, MSN, Fox Business, and GOBankingRates.
Reviewed
Chris Jennings
Chris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a number of outlets, including Yahoo Finance, MSN, Fox Business, and GOBankingRates.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
U.S. Department of Veterans Affairs (VA) loans come with significant benefits, especially if you don’t have a large down payment or your debt-to-income ratio (DTI) is higher than what conventional mortgage lenders require. You’ll also typically need to be a member of the U.S. armed forces or a veteran to qualify.
Read more
Show Summary
- Best VA Loan Lenders April 2024
- Flagstar Bank
- Guaranteed Rate
- Navy Federal Credit Union
- PenFed Credit Union
- PNC
- LoanDepot
- Rocket Mortgage
- Veterans United
- Guild Mortgage
- Summary: Best VA Loan Lenders
- Tips for Comparing VA Loans
- Current VA Mortgage Rates
- What Is a VA Loan?
- Types of VA Loans
- VA Loan Requirements
- VA Loan Funding Fee
- VA Loan Closing Costs
- VA Loans Pros and Cons
- How To Apply For a VA Home Loan
- Methodology
- Frequently Asked Questions (FAQs)
Best VA Loan Lenders April 2024
Forbes Advisor compiled a list of VA loan lenders that excel in various areas, including offering low fees, convenience and flexibility. Lenders’ mortgage rates were based on recent market rates and compared to the national average. The lenders we compiled for this list had a minimum four-star rating.
- Flagstar Bank – Best For Low Credit Score Requirements
- Guaranteed Rate – Best For Low Lender Fees
- Navy Federal Credit Union – Best For Exclusive Military Home Loan Benefits
- Penfed Credit Union – Best Credit Union For Open Member Eligibility
- PNC – Best For Ease Of Access
- LoanDepot – Best For Fast Online Preapproval
- Rocket Mortgage – Best Online VA Lender
- Veterans United – Best For Customer Service
- Guild Mortgage – Best For Quick Closing Times
Summary: Best VA Loan Lenders
Tips for Comparing VA Loans
VA loans have a number of benefits, including no-down-payment options, lower interest rates than conventional mortgages, lower minimum borrower qualifications and the ability to borrow up to 100% of the home’s value.
However, many lenders will institute their own standards. For example, they might apply a minimum credit score—usually in the 580 to 620 range—as well as a minimum debt-to-income ratio and down payment. For borrowers, this means shopping around for lenders that offer VA loans that match your financial needs.
Not all lenders offer VA loans, so that’s the first question you need answered when you start comparison shopping. Next, ask what their requirements are (credit score, DTI, down payment) and what interest rates they offer for VA loans. Comparison shopping often leads to lower interest rates, so be sure to collect as much information as you can. You can use a loan estimate from one lender to potentially negotiate a lower rate with another lender.
Keep in mind that all VA loans also charge a funding fee. This is a one-time payment which is 2.3% of the total loan amount for first-time VA borrowers and 3.6% for people who have previously used the VA home loan program. VA borrowers who put 5% down can get a discount on this fee and some borrowers are exempt.
Current VA Mortgage Rates
VA mortgage rates tend to be lower, on average, than mortgage rates for conventional loans and can also be lower than Federal Housing Administration (FHA) loan rates in some cases. This is because VA loans are government-backed loans, and so lenders view them as lower-risk.
However, VA home loans come with their share of fees and closing costs. It’s best to meet with several lenders to make sure you’re getting the best deal.
What Is a VA Loan?
The mission of the VA home loan program is to assist servicemen, veterans and eligible family members in obtaining, retaining or adapting a home. The VA guarantees millions of loans for existing and newly-constructed homes since the program’s inception. Among other benefits, VA loans allow for veterans to obtain home loans with no down payment.
If you are eligible for a VA home loan, you can either work directly with the VA to assist with applying for and managing your loan (VA direct loan) or with a private lender (VA-backed loan).
How Does the VA Home Loan Work?
With a VA direct loan, the VA acts as your mortgage lender. You’ll apply for your loan through the VA and manage it with them as well. That said, most VA loans are funded through private lenders.
In the case of a VA-backed loan, a private lender—not the VA—originates and funds your loan. Lenders follow VA standards—and possibly other standards, depending on the lender—and are guaranteed to recover all or some of their losses from the VA should you go into foreclosure. This gives lenders the incentive to provide competitive interest rates and loan terms.
One of the biggest benefits of a VA loan is that you have the option of putting zero money down. Because the VA guarantees the loan, lenders can feel confident about financing VA loans for borrowers who choose to forgo making a down payment.
Types of VA Loans
There are four main VA-backed home loan types:
- Purchase loan. If you meet the eligibility requirements, this loan requires no down payment to buy a home and competitive interest rates. You can also borrow up to the Fannie Mae and Freddie Mac conforming loan limits.
- Native American Direct Loan (NADL). This loan provides eligible Native American veterans and their spouses financing to purchase, build or improve a primary residential property on federal trust land. 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 VA loan to a new VA-backed mortgage with a lower interest rate. Also called a “streamline” refinance, this loan typically helps to lower monthly mortgage payments.
- Cash-out refinance loan. For veterans who need cash, a cash-out refinance lets borrowers refinance their current mortgage and convert some of their home equity to cash for expenses such as home repairs, college payments and to pay off debts with higher interest rates.
Additionally, the VA also offers some specialized VA-backed loans:
- Energy-Efficient Mortgage (EEM). This loan allows veterans to make energy improvements and updates to their residence, such as installing insulation, upgrading a furnace or adding storm doors. This loan is an “add-on,” meaning it is combined with another VA-backed purchase loan or refinance.
- Adapted housing loan. This program provides grants to veterans with service-related impairments who need to build, remodel or adapt a home to accommodate their disabilities.
- Manufactured home loan. Provides financing for the purchasing of a manufactured home and the land on which the home will be affixed. Eligible veterans can also refinance an existing VA-backed loan on a manufactured home.
VA Loan Requirements
If you’re looking to buy your first home, or you don’t have the funds for a large down payment, a VA loan could be a great option. However, the VA has set some minimum eligibility requirements.
How Do You Qualify for a VA Loan?
Servicemembers, veterans and surviving spouses that meet VA criteria are eligible for VA-backed loans. However, lenders require a certificate of eligibility (COE) to prove that borrowers meet VA requirements. You can get a COE through your lender, online or by mail by completing and sending in this form.
Here are some of the VA’s requirements:
- Must be a current or former member of the U.S. military or National Guard or surviving spouse
- Must meet the minimum length of service requirements, which vary depending on your branch of service and other factors
- Must be a U.S. citizen or permanent resident alien
- Must meet the lender’s credit and income requirements
- Must use the property as your primary residence
Additionally, you’ll have to meet your lender’s credit and income requirements in order to qualify for a VA loan.
What Is the Minimum Credit Score for VA Loans?
The VA does not set minimum credit score requirements in order to qualify for VA loans. However, lenders usually apply their own credit standard for VA loans, which might differ from other loan products they offer.
What Are the Down Payment Requirements for a VA Loan?
VA-backed loans do not have minimum down payment requirements. However, the less money you put down on a VA-backed loan, the higher the rate you will have to pay on the VA Loan funding fee. The amount of the fee will also depend on whether you have used a VA loan before.
See the chart below for VA purchase loans’ funding fee amounts based on down payment.
| Down Payment | Funding Fee | |
|---|---|---|
|
First Time Using VA Loan
|
Under 5%
|
2.3%
|
|
5% or more
|
1.65%
|
|
|
10% or more
|
1.40%
|
|
|
Repeat VA Loan Borrower
|
Under 5%
|
3.60%
|
|
5% or more
|
1.65%
|
|
|
10% or more
|
1.40%
|
VA Loan Funding Fee
Though VA-backed loans come with a host of benefits for eligible veterans, they do typically require borrowers to pay what is known as a VA loan funding fee.
Required by law, the funding fee helps the VA fund its loan program. The amount of the funding fee varies depending on the loan type, your military category and whether you’re a first-time or repeat home buyer. The most you’ll pay is up to 3.6% of the total loan amount.
In many cases, the funding fee applies if you choose to forgo making a down payment. You can choose to roll the funding fee into the total amount of the loan or pay it up front.
VA Funding Fee Exemptions
It’s worth noting that if you pay the funding fee but end up receiving VA compensation for a service-related disability, you may be eligible for a refund as long as the effective date of your compensation is on or before your loan closing date.
VA Loan Closing Costs
Most of the closing costs associated with VA loans apply to any type of mortgage, but a couple of the fees are unique and some are capped. Here are some of the closing costs you might encounter when taking out a VA loan:
- VA funding fee. This fee helps cover the cost of the VA loan program and its government guarantee to lenders. Unless you are exempt, it costs between 1.4% and 3.6% of the loan amount.
- VA appraisal fee. Like all home appraisals, a VA appraisal makes sure the home is worth at least as much as you’ve agreed to pay for it. What’s unique about this appraisal is that it also makes sure the home meets the VA’s minimum property standards for being safe and sound.
- Lender fees. On a VA loan, lenders can’t charge more than 1% of the loan amount in fees, including those for loan origination, loan processing, lender appraisals, rate lock, escrow and closing.
- Title search and insurance. Lenders require borrowers to pay for a professional title report confirming that a thorough search of public records has been performed and the homeowner will have undisputed ownership. They also require title insurance to protect themselves in case something was missed in the title search.
- Buyer’s inspection. This cost is also optional, but if you’re purchasing a home, it’s a good idea to pay a few hundred dollars for a professional home inspection. The inspector will look for problems with the home’s roof, HVAC, plumbing, electrical, site drainage, and so on—things that could cost you a lot of money to fix.
- Pest inspection. Lenders usually require a professional pest inspection to make sure the home doesn’t have an infestation or significant damage from wood-destroying insects such as termites or carpenter ants.
- Recording fees. These are charges imposed by your local government for creating official documents to memorialize who owns the home and who has a lien against it. These documents help to protect your property rights (and the lender’s).
- Transfer taxes. If you’re buying a home, your local government might charge a transfer tax due to the change of ownership. The fee is usually a percentage of the home’s value and varies significantly by location.
- Hazard insurance. You must have homeowners insurance and, if required, flood insurance in place before you can close on the home.
VA Loan Discount Points
Discount points are an optional expense you can pay in exchange for a lower interest rate. Points are considered prepaid interest, and one point is equal to one percent of your loan amount, or $1,000 on a $100,000 loan. You can expect an interest rate reduction of perhaps 0.25 percentage points, depending on the lender and market conditions.
Pro Tip
Many types of mortgages allow you to roll points into your mortgage—in other words, to finance them—but VA purchase loans do not. If you want to buy points, you’ll need cash to pay for them at closing. On a VA IRRRL, you may be able to roll up to two points into your loan.
VA Loans Pros and Cons
| Pros | Cons |
|---|---|
|
No down payment required
|
Must be an eligible service member, veteran or surviving spouse
|
|
No private mortgage insurance (PMI)
|
VA funding fee costs 1.4% to 3.6% of the loan amount unless you’re exempt
|
|
Easy to refinance if rates drop
|
The home must be your primary residence
|
Alternatives to VA Loans
If you aren’t sure whether a VA loan is a good choice, comparing it to the alternatives may help:
- Conventional mortgage. Doesn’t have a funding fee but requires at least 3% down and will usually require PMI until your equity reaches 20%. May be used for a second home or investment property.
- FHA loan. Doesn’t have a funding fee but does have an upfront mortgage insurance premium as well as monthly mortgage insurance premiums. Requires at least 3.5% down. May be a good choice if your credit score is between 580 and 620.
- USDA loan. Doesn’t require a down payment but won’t be an option unless you can’t qualify for other loans. There are also income and location restrictions.
How To Apply For a VA Home Loan
Buying a home can be an intricate process and making the commitment to purchase a home through a VA-backed loan is no different. But not to worry. Stay organized and follow this series of steps to help guide you through the VA loan home-buying journey.
- Apply for your COE. It’s vital that you obtain a Certificate of Eligibility. Lenders require it as evidence that you qualify for a VA loan.
- Review your finances. Once you are approved for your COE, take a comprehensive look at your financial situation to make sure you are in a good position to buy a home. For instance, understand your credit profile, review all your monthly expenses and determine how much of a mortgage you can afford.
- Shop for lenders. To get your loan, you will likely need to go through a private lender that provides VA loans—as opposed to the VA—such as a bank, mortgage or credit union. Housing experts state that it’s best to meet with at least three lenders to ensure you’re getting the best deal.
- Start the prequalification and preapproval process. Prequalifying gives you an estimate of what loan you can qualify for and helps the lender assess your creditworthiness. With a <
Methodology
Forbes Advisor reviewed 12 mortgage lenders that do business both online and in person throughout the United States. The lenders we reviewed represent some of the largest mortgage lenders by volume, which include banks, credit unions and online lenders.
Our scoring methodology included capturing more than 10 data points, which covered interest rates, lender fees, discounts, accessibility and borrower requirements.
The best lenders for VA borrowers excelled in areas that are historically important for this group including low- to average-credit score requirements, low lender fees and low interest rates.
The following is the weighting assigned to each category:
- Loan costs: 30%
- Speed: 20%
- Credit requirements: 20%
- Loan types offered: 20%
- Access and availability: 10%
Specific characteristics taken into consideration within each category include APR, average interest rate, origination fees, minimum credit score requirements, discounts and customer service availability.
We also offered bonus points up to 5% of the score when a lender considers alternative credit data.
To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.
Frequently Asked Questions (FAQs)
How many times can you use a VA loan?
Your VA loan entitlement is what allows you to get a VA loan with no down payment, and you can use it more than once.
If you’ve never had a VA loan before or if you’ve completely paid off a previous VA loan and sold the home, you’re eligible to use your full entitlement. If you have an outstanding VA loan, you may have remaining entitlement that you can use to get a second VA loan.
Do VA loans require PMI?
VA loans don’t require PMI. Even if you put down 0%, you won’t have to pay any kind of monthly mortgage insurance premiums on a VA loan.
If you’re eligible, is a VA loan a better choice than a conventional loan?
A VA loan can be a better choice than a conventional loan if you don’t want to put any money down and don’t qualify for a down payment assistance program. If you can put down 20% or more, a conventional loan may be a better option because you’ll avoid the VA funding fee.
