# What Is the Interest Rate on a VA Loan?

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If you’re a veteran looking to purchase a home, you may be wondering what the interest rate is on a VA loan. Here’s what you need to know.

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## The Interest Rate

The interest rate on a VA loan is one of the many benefits of the VA loan program. This program is designed to help veterans and active duty service members afford a home. The interest rate on a VA loan is usually lower than the interest rate on a conventional loan.

### How the Interest Rate Works

The interest rate is the cost of borrowing money from a lender. When you take out a loan, you agree to pay back the principal amount of the loan plus interest. The interest rate is expressed as a percentage of the loan amount and may be fixed or variable.

Fixed-rate loans have an interest rate that does not change over the life of the loan. The monthly payment for a fixed-rate loan remains the same for the entirety of the loan term.

Variable-rate loans have an interest rate that can fluctuate over time. The monthly payment for a variable-rate loan may increase or decrease as the interest rate changes.

The interest rate on a VA loan is determined by several factors, including:

* The type of VA loan (e.g., fixed-rate or adjustable-rate)

* The type of lender (e.g., bank, credit union, or mortgage company)

* The length of the loan term

* The Veteran’s credit score

* Current market conditions

### The Interest Rate and Your Mortgage

Your mortgage rate is a reflection of market conditions and your credit score. If you have good credit, you’ll likely get a lower rate than someone with a lower credit score. In addition, if market interest rates are low, you’ll probably be offered a lower rate than if rates are high.

The interest rate on your VA loan is just one factor that affects the cost of your mortgage. Other factors include:

– The size of your down payment. The larger your down payment, the lower your monthly payments and the less interest you will pay over the life of your loan.

– The length of your loan term. A shorter loan term (such as 15 years) will have higher monthly payments, but you’ll save money on interest over the life of the loan.

– The type of VA loan you choose. Some VA loans have variable interest rates that can change over time, while others have fixed rates that stay the same for the life of the loan.

## The Interest Rate and You

The interest rate is one of the most important factors in deciding whether or not to get a VA loan. A low interest rate means you’ll have a lower monthly payment. A high interest rate means you’ll have a higher monthly payment.

### How the Interest Rate Affects You

Assuming you have the minimum required credit score for a VA loan, the interest rate is the single biggest factor that affects how much your monthly mortgage payment will be.

Here’s an example: If you’re buying a $250,000 home with no money down, your loan amount will be $250,000.

If your interest rate is 4.5%, your monthly mortgage payment will be $1,013. If your interest rate is 5%, your monthly mortgage payment will be $1,066. That’s a difference of $53 a month, or $636 a year.

Over the life of a 30-year loan, you’ll end up paying an extra $18,360 in interest if your interest rate is 5% rather than 4.5%.

The difference in monthly payments may not seem like much, but it can add up over time – especially if you’re tight on budget.

### What You Can Do to Get the Best Interest Rate

There are a few things that you, as a borrower, can do to get the best interest rate on your VA loan. The first thing is to make sure your credit score is as high as it can be. Lenders use credit scores to help determine what kind of risk they are taking on when they lend you money, and the higher your score, the lower the risk. You can get free credit scores from a number of sources, including Credit Karma and Annual Credit Report.

The second thing you can do is to shop around for rates. This is especially important if you are not using a VA-approved lender, as they are not bound by the same rules and regulations. You can use an online tool like Credible to compare rates from multiple lenders at once.

Finally, you can try to negotiate for a lower interest rate. This is more likely to be successful if you have good credit and if you are willing to put down a larger down payment. If you are unsure about how to negotiate, Credible can help connect you with an experienced loan officer who can guide you through the process.