Military members and veterans have access to one of the best home-buying programs around – the VA home loan. Eligible service members and even their surviving spouses can use the VA loan to buy a personal residence with no money down, no private mortgage insurance (PMI) requirement, and better rates than they can get with a conventional home loan.
The best part? It’s often easier to qualify for a VA mortgage when you compare to other types of home loans. In fact, you may be able to get a VA home loan with a credit score as low as 620 provided you can prove your income and ability to repay the loan.
To compare rates based on the state you live in, use this helpful tool.
The program has evolved through the years and has helped over 18 million service members, veterans, and surviving spouses purchase their dream home. Let’s take a deeper look at the benefits and why it makes sense to look into buying your next home with a VA Loan if you can qualify.
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The 8 Best VA Loans for 2020
These are the best VA mortgage lenders based on several factors including the number of VA home loans they service each year, personal experience, and their reputation in the military and financial community:
- Veterans United
- PenFed Credit Union
- Navy Federal Credit Union
- Quicken Loans
- Wells Fargo
1. Veterans United
Veterans United is the largest VA loan provider in the United States and in the world. This loan provider boasts an AAA rating from the Better Business Bureau (BBB), and they have mostly five-star reviews on third party review sites like Trustpilot.
Veterans United offers an array of resources on VA loans on their website, and you can even start the VA home loan or VA home refinance process through their online platform. If you prefer, you can also begin building your VA loan quote over the phone.
Why We Like Veterans United: We like that they focus all their efforts on home loans for veterans. This makes them VA home loan specialists, but it also means they can offer the lowest loan rates and best terms available today.
Other Details to Consider: The only real downside of working with Veterans United is the fact that they don’t offer other types of home loans to compare to. If you also want to consider other options outside of a VA loan, such as a FHA home loan, you’ll need to look for another loan provider.
USAA is the largest military financial organization in the U.S., which makes them a great option if you prefer to have all of your finances under one roof. Their VA Loan rates are always competitive, and they offer a broad range of resources and home loan tools you can utilize to find the best loan option for your needs.
Also be aware that USAA offers a variety of financial products and services, including checking, savings, investments, insurance, credit cards, and loans, including auto and home loan.
Why We Like USAA: USAA offers a wide range of VA loan products, ranging from 30-year fixed-rate mortgages to 15-year loans and 5/1 adjustable rate mortgages. They also make it easy to get prequalified for a VA home loan online.
Other Details to Consider: USAA offers a broad range of loans and banking products to military members and veterans, so VA loans aren’t their main focus.
3. PenFed Credit Union
Another military-financial organization, Pentagon Federal Credit Union, offers an excellent suite of financial services and online tools to help you. Their interest rates are generally among the most competitive. PenFed also offers full-service banking, loans, credit cards, and other financial services.
Why We Like PenFed Credit Union: PenFed offers a VA loan resource page on their website where you can apply for a VA home loan, estimate your costs, and confirm your eligibility. You can even get prequalified online, and this lender offers 30-year and 15-year fixed rate VA mortgages.
Other Details to Consider: Note that you’ll have to join PenFed Credit Union to apply for one of their VA home loans. Your military affiliation as a veteran means you are eligible, but you’ll still have to take steps to sign up.
4. Navy Federal Credit Union
Navy Federal Credit Union is another military-affiliated financial institution that aims to serve the military community. This credit union offers a broad range of banking products ranging from checking and savings accounts to credit cards and personal loans.
VA home loans are also available, and Navy Federal Credit Union advertises some of the lowest rates on the market today.
Why We Like Navy Federal Credit Union: Navy Federal Credit Union offers fixed-rate VA home loans in 15-year or 30-year terms. You can access a ton of mortgage affordability tools online, and you can even begin the loan application process from the comfort of your home.
Other Details to Consider: Like other military-affiliated credit unions, you’ll need to take steps to join Navy Federal before you apply for one of their VA home loans.
While LendingTree isn’t a traditional VA lender, this website makes it extremely easy to shop around for a home loan, including VA loans, with multiple providers. LendingTree is a loan marketplace, so you’ll provide your information once and receive loan offers from several companies as a result.
Why We Like Lending Tree: We like LendingTree because this platform makes it easy to compare several lenders in terms of their loan rates and terms in one place. You also get the benefit of only having to fill out a loan application once, versus having to shop around and compare quotes with multiple lenders on several different loan websites.
Other Details to Consider: Since LendingTree doesn’t specialize in VA loans or even home loans, you may not have access to all the best VA loan tools. Also remember that LendingTree won’t be your actual lender. This website is a third party platform that connects you with a lender who will facilitate your loan.
6. Quicken Loans
Quicken Loans is one of the top mortgage providers in the United States, but they offer an array of different loan products — and not just VA loans. If you do want a VA loan, however, you can reach out to this lender for fixed rate VA home loans in 30-year, 25-year, and 15-year terms.
Quicken Loans offers competitive rates on all their mortgage products, including their VA loans. They are also known for their ability to process the bulk of your loan paperwork online, and you may even be able to complete your home closing from the comfort of your own house.
Why We Like Quicken Loans: Quicken Loans has an excellent reputation within the home loan community, and they’ve received numerous awards from third party ranking agencies like J.D. Power.
Other Details to Consider: Quicken Loans doesn’t specialize in VA loans, so you may need to reach out to a VA loan expert if you have questions they can’t answer.
7. Wells Fargo
Wells Fargo is another big bank that offers credit cards, checking and savings accounts, loan products, and home loans. You can also use this lender to apply for government-regulated home loans like FHA loans and VA loans.
In terms of their VA loan products, you should understand that Wells Fargo offers access to the same VA loans with the potential for no money down as any other loan provider.
Why We Like Wells Fargo: Wells Fargo can be a good fit for a VA loan if you prefer to do all your banking in one place. They also make it easy to apply for a VA loan online or over the phone.
Other Details to Consider: Note that Wells Fargo isn’t currently offering any VA refinance loans right now, other than the VA Interest Rate Reduction Refinance Loan (IRRRL).
If you’re looking for a VA loan and want to take care of the bulk of the transaction online, you should check out loanDepot. This online lender offers competitive mortgage rates and terms with a fast, online approval process.
While loanDepot doesn’t focus solely on VA loans, they do focus the bulk of their business efforts on home loans in general. Since you can check and compare their rates online, loanDepot is worth considering if they are offering lower VA loan rates than you can find elsewhere.
Why We Like loanDepot: loanDepot is a direct lender, so the company that accepts your application and processes your loan is the same company that will oversee your VA loan from start to finish.
Other Details to Consider: Note that loanDepot offers a broad range of home loan products, so they can be a good company to consider if you’re considering mortgage options other than VA loans.
Guide to Shopping for a New VA Home Loan
1. Decide if the benefits are right for you
VA home loans come with an array of benefits that make them more affordable and easier to qualify for. Consider these main advantages before you choose a VA loan over another type of home loan.
No Down Payment Required
The biggest claim to fame of the VA loan is the ability to purchase a home with no money down. You can even roll the funding fee and any closing costs into the loan if you wish, making this a true no-money down home purchase. Whether that is the right financial decision or not is a different story, as making a down payment decreases your monthly mortgage payment and gives you instant equity in your home.
Competitive Interest Rates
Interest rates on VA loans are often competitive with conventional mortgages and other home loans. I have exclusively used a VA mortgage for both of my home purchases in the last 10 years, as well as for two mortgage refinance loans.
VA loans were anywhere from 0.125% to 0.25% lower than conventional loans in each instance – before accounting for buying points or credits on a loan.
VA home loans also don’t have a requirement for Private Mortgage Insurance, or PMI. Most lenders require homebuyers pay PMI when they don’t make a down payment of 20% or more.
PMI is not required for VA Loans since the loans are backed by the U.S. government. Avoiding PMI is a big deal, as it can easily add 0.5% – 1.5% of your loan amount to your monthly mortgage payment.
VA Loans Can Be Easier To Qualify For
Because they are backed by the government, lenders are often more willing to approve these loans. This makes it easier to qualify for most borrowers. While the VA does not have a set minimum credit score, most lenders do require homebuyers to have a credit score of at least 620.
Limitations on Closing Costs
The VA sets limits for closing costs, making VA Loans more cost-effective for many buyers.
VA Home Loans Are Easy to Refinance
Finally, refinancing a VA Loan is super-easy with a Streamline Refinance. Also called an Interest Rate Reduction Refinancing Loan, or IRRRL, the streamline refinance is a quick, easy, and inexpensive way to refinance a VA Loan. Because you have already gone through the underwriting process, the VA does not require a new appraisal, credit underwriting, or requalification for a streamline refinance. You can even roll the closing costs right into your new loan if you wish. To top it off, closing costs are often lower with a streamline refinance since less work is required. I was able to lower my mortgage payment by $300 per month with my last refinance.
2. Understand the disadvantages
There are a few downsides to VA home loans, starting with the fact the VA requires them to be used for the veteran’s personal residence. This means you cannot use a VA loan to buy a vacation home, undeveloped land, or a rental property.
However, you can use a VA home loan to buy up to a 4-unit home if you plan to live in one of the units.
Finally, the VA assesses a Funding Fee when you use a VA Loan. This fee varies depending on:
- The type of loan
- The amount of your down payment
- Your military status
- Whether or not you have previously used a VA Loan (the VA assess a higher funding fee for subsequent uses)
That said, the funding fee is waived for veterans with a VA service-connected disability rating.
3. How to qualify for a VA home loan
There are two things you need to know about qualifying for a VA Loan – eligibility and qualifying for the mortgage itself. Loan eligibility is based on military service, or for unmarried surviving spouses of those who died on active duty.
In general, you are eligible if you have 90 days of active duty service during a named conflict, 181 consecutive days of active duty during peacetime, or 6 years of service in the Guard or Reserves. VA Loans require a Certificate of Eligibility (COE), which certifies you are, in fact, eligible. This can be obtained directly from the VA, or your lender can obtain it for you. I had the lender request it on my behalf for my last home purchase, which saved me time. (There is no charge to obtain a COE).
Qualifying for the actual mortgage is between you and the lender. In general, most lenders require borrowers to have a credit score of 620 or greater. However, the better your score, the lower your interest rate and the easier it will be to qualify for your loan.
Most lenders will look at the following factors:
- Credit history
- Credit score
- Debt to income ratio
4. How to get the best VA mortgage rates
VA home loan rates will vary by many factors, including the lender, your credit history and score, your income, your debt-to-income ratio, the price of your home, your down payment amount (if any), local factors, and more. Loan rates can also vary day to day, based on economic factors. That’s part of the reason it’s always a good idea to compare several lenders before choosing your VA loan provider.
When I have applied for a VA home loan in the past, I create a spreadsheet to track the lender and loan terms, such as duration (15 year vs. 30 year mortgage), interest rate, closing costs, cost of points (if any), and other factors. This helps me track the best overall offer.
I recommend getting at least 3-5 quotes before choosing your lender. However, it’s not a bad idea to get a few more quotes if you have the time and patience. I checked VA Loan rates with seven different lenders before deciding to go with Veterans United for my most recent mortgage.
When shopping for a new VA Loan, I recommend you do several things:
Shop Around for the Best VA Loan Rates
You can usually do this by contacting companies directly or using online aggregators that compile rates in comparison charts. Keep in mind that any publicized interest rates are sample rates based on set presets for home price, location, down payment, and credit score. Your actual interest rate will vary based on your specific situation, and interest rates can change from day to day.
Check the VA Lender’s Background
Next, consider the lender’s background. I prefer to work with experienced VA loan companies since their loan processors know exactly what is needed and how to efficiently navigate the loan process.
I can’t stress this enough. Buying or building a house can be a stressful time, especially if you are up against a short timeline.
I was able to close my most recent loan with Veterans United in less than a month. That is fast for any mortgage, whether it is a conventional mortgage or a VA loan. (They can be slightly more complicated than conventional mortgages, due to VA requirements).
Look Into Local VA Mortgage Lenders
Finally, don’t discount local lenders. I had an offer from a local lender that matched the offer from Veterans United. I chose Veterans United because they were more experienced with the VA Loan process, and their underwriting system is handled entirely online. Their reputation gave me the confidence to go with them, and the online underwriting process was very convenient for me.
Remember, closing on a home can be a stressful and busy time. So you need to factor that into your home-buying calculus. That said, local lenders might offer the best combination of low interest rates and in-person services. So it’s always good to check with a local lender before choosing your VA loan provider.
Which Company is the Best VA Loan Provider?
This is the part you’ve been waiting for. Where should you get your VA Loan?
While many lenders offer VA home loans, some are definitely superior to others. This becomes evident when you are up against a short timeline. The last thing you want to do is work with an inexperienced VA lender when you don’t have much time to spare.
I have purchased two homes in the last eight years and refinanced two other times. I used a VA home loan for all of these transactions because I was able to obtain great service and very low interest rates.
The two companies I used were USAA for my first purchase and both refinances, and most recently, I used Veterans United, which is the largest VA mortgage lender in the U.S. (USAA is the second largest VA Loan provider, and the largest military financial organization). I have nothing but great things to say about both organizations, so I would start your search there.