Are VA Loan Rates the Same as Conventional Rates?
Home loan interest rates are determined by the rate charged on mortgage-backed bonds or securities. This sets the current market rate for the mortgage industry, and serves as the baseline for setting both VA and conventional home loan rates.
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Significance
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The market rates for conventional loans and VA loans are always the same. However, VA loan rates are not credit-score driven, whereas conventional loan rates are. On a conventional loan, the better a borrower's credit score, the better the rate. Conversely on a VA loan, the market rate is typically the standard.
Considerations
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When comparing VA and conventional home loan interest rates, buyers should also find out about buying interest rates down. Both conventional and VA buyers can buy a market rate down with additional upfront capitol, reducing their payment.
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Misconceptions
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VA loan products are not available to all consumers. Only veterans who are active duty, retired or honorably discharged service members are eligible for VA loans. Consumers who are not a member of these categories must seek out conventional or FHA loan products when shopping for a home loan.
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