Oct. 11, 2021
GET A HOME WITH VA PRE-APPROVAL
Re/Max Lava Luxury agent Peggy Kent just closed a home for a veteran that spent 21 years in the Air Force.
A VA mortgage loan is a military benefit that doesn’t require a down payment or mortgage insurance. However, your credit score and credit history may still affect whether a lender is willing to offer you a loan with zero down payment.
Our guide to the best VA loan lenders covers the type of loans available, a step-by-step guide to the application process, and the Veterans Affairs (VA)’s service requirements.
Our Top Picks for Best VA Loan Lenders
Best VA Loan Lenders Reviews
- 24/7 customer service
- Borrow money to pay for energy-efficient improvements
- No-obligation credit counseling service
- Access to over 6,000 real estate agents
- High fees and rates
- In-person service in 18 states
Minimum Down Payment
$0 for qualifying borrowers
Veterans United offers every mortgage loan product available under the VA loan program — fixed and adjustable loans, IRRRL loans, cash-out refinance loans, and jumbo loans — except home equity loans and HELOCs. The lender also offers VA energy efficient mortgages, allowing veterans to borrow additional money to pay for qualified improvements like solar heating, cooling systems and storm or thermal windows.
Lender fees and rates are slightly higher than other lenders’. To get a rate quote, you can fill out an online form or call Veterans United to speak to a loan specialist. You can also check your eligibility for $0 down payment on the lender’s Complete Guide to VA Home Loan section — one of the many educational features available on the website.
Why we chose it: We chose Veterans United for its wide array of loan products, online approvals and 24/7 help over the phone.
Quicken Loans - Best Online Loan Lender
- Fully online application process
- Loan approval for DTI ratios as high as 60%
- Instant employment and income verification
- Custom fixed-rate loan terms
- Higher fees and average mortgage rates
- No branch offices
Minimum Down Payment
0% on VA loans
Quicken Loans by Rocket Mortgage has over 3,000 mortgage brokers available to help. Applying for a mortgage can start with either a phone call or by filling out a fully online loan application. It’s worth noting that if you choose to talk to a loan officer, you will speak to the same person throughout the loan process. Quicken’s website also lists common interest rates and loans
Quicken doesn’t offer home equity loans or home equity lines of credit because they’re a non-depository lender. However, it does offer a full selection of custom fixed-rate VA home loans through its YOURgage loan program, where you can pick any term from 8 to 29 years. For eleven years running, Quicken has also been the highest-ranked lender in the J.D. Power U.S. Primary Mortgage Origination Satisfaction Study.
Why we chose it: We chose Quicken Loans by Rocket Mortgage for its online convenience, high customer satisfaction and custom fixed-rate loan terms.
Best for Low Fees
- Access to the USAA Real Estate network
- No underwriting or documentation fees
- USAA Home Learning Center
- High customer satisfaction ratings
- Must be a military or military spouse
- Lacks a fully online application process
- No cash-out refinances
Minimum Down Payment
$0 for qualifying borrowers
USAAcharges no fees, except for the VA-mandated 1% origination fee on home loans.
USAA also pays for the appraisal, title, and VA funding fee for its streamlined mortgage refinance loans (IRRRL), meaning no additional out-of-pocket expenses for its customers. The bank also offers VA jumbo loans up to $3 million.
USAA’s online platform allows customers to determine loan eligibility, upload documents, estimate how much they qualify for and get pre-approved. However, the application cannot be finalized online. This lender favors phone service and employs dedicated loan officers to guide customers through every step of the borrowing process.
Why we chose it: We chose USAA Bank for its low origination fees, quick online prequalification process and strong suit of banking products.
Navy Federal Credit Union
Best for First-Time Home Buyers
- Low rates compared to other lenders
- Lock in your rate with Freedom Lock
- Real Match Guarantee
- No-down payment home loans
- Membership is limited to current and former military, their spouses, and certain federal employees, contractors, and retirees
- No customized rates before you apply
Minimum Credit Score
Minimum Down Payment
$0 for qualifying borrowers
Navy Federal Credit Union offers two types of mortgage products — the HomeBuyers Choice Mortgage and the Military Choice Mortgage — designed for members of the military or military families who don’t meet the minimum requirement for a VA loan or are first-time homebuyers.
The HomeBuyers Choice program is a fixed-rate 30-year loan with no mortgage insurance premiums and 100% financing. The Military Choice Mortgage has the same advantages as the Homebuyers Choice, but with special interest rates and origination fees for active-duty and veteran borrowers. In both cases, the funding fee can be waived for a higher interest rate, reducing the cash needed for the closing costs.
Why we chose it: We chose Navy Federal Credit Union for its mortgage products designed for first-time homebuyers. We also liked the lender’s consideration of alternative credit data and rate match guarantee.
PenFed Credit Union
Best for Low Rates
- No lender fees
- Up to $2,500 in lender credits (only applies to purchase loans)
- Member discounts on asset protection programs, home security systems, tax preparation services, and car, life or home insurance
- Serves members in all 50 states, Puerto Rico, Guam, Germany, Spain, Italy, Okinawa, and the UK
- Additional fees apply to VA loans — except the lender fee
- Alternative data is not considered
Minimum Down Payment
$0 on VA loans
As a credit union, PenFed has the autonomy to offer lower, more competitive rates for its VA loans. However, though PenFed has low rates and no lender fees, some additional charges apply, including the VA funding fee, title, appraisal, and tax services fees.
Anyone that opens a savings account can apply for a VA loan, since PenFed has an open national membership charter.
PenFed also has several conventional financing options for customers who aren't eligible for VA loans or military members looking to purchase a second home. We especially liked the educational efforts of the PenFed Foundation, a non-profit focused on financial literacy, short-term financial assistance, credit-building, and homeownership. Its assistance and resources are accessible to active-duty service members, veterans, and Wounded Warriors.
Why we chose it: We chose PenFed Credit Union for its competitive mortgage rates, no lender fees and member discounts of up to $2,500.
Best for Online Loan Accessibility
- Dedicated VA loan specialists
- Specialized in VA loans and military borrowers
- Licensed in 50 states and Washington, DC
- High credit score requirements
- Rates are not disclosed online
- No home equity loans and HELOCs
Veterans First Mortgage stands out for its online loan accessibility. Military customers who might be deployed overseas can take advantage of their online loan application, track and upload documents, and e-sign essential papers. The lender offers both VA new purchase loans and refinance loans (IRRRLs and cash-out).
Though Veterans First rates are slightly higher than others on our list, they’re still competitive, and total loan costs tend toward the lower end of the spectrum.
General information about fees — including the VA loan funding fees — can be found on its website. Still, borrowers looking for more in-depth information regarding any of its loans must call or fill out a form so that a loan officer can get in touch with them.
Why we chose it: We chose Veterans First Mortgage for its fully online application process, which is particularly important for military members who are deployed overseas, as well as the lenders’ decades of experience in VA loan originations.
Best for Comparing VA Loan Rates
- Access to many other financial products, even debt relief programs
- Easy-to-use mobile app
- Partners with 1,500 potential lenders
- Receive competing quotes from multiple lenders with a single form
LendingTree is a lending marketplace that offers borrowers the chance to shop for at least three lenders and compare VA loan rates and closing costs all in one place. This comes in handy with rarer loans, such as ARMs (adjustable-rate mortgages), since using a marketplace can help you consolidate offers.
Not only is LendingTree free to use, accessing competing offers won’t affect your credit score, while still allowing you to comparison shop. With LendingTree, borrowers can get a quick idea of the mortgage rates available by choosing the type of loan, home value, down payment and inputting their credit score.
Why we chose it: We chose LendingTree for its personalized VA loan rates and easy-to-use user interface.
New American Funding
Best for Low Credit
- Low minimum credit score
- English/Spanish bilingual agents
- Lends to people with "nontraditional credit"
- Branches in 31 states
- Not available in New York State or Hawaii
- Loan fees and rates are not disclosed online
New American Fundinguses manual underwriting to comprehensively look at each borrower’s financial situation, lending to borrowers with credit scores as low as 580. NAF also evaluates creditworthiness by looking at “nontraditional credit,” such as on-time utility bills and rent payments.
NAF features a wide selection of loan products, including cash-out refinance mortgages, and accepts applications in person, by phone, or online and documents can be uploaded and signed electronically.
NAF offers a 14-day closing guarantee and often works with down payment assistance programs to help customers fund the down payment and closing costs. NAF also has first-time home buyer programs. Despite this, lender fees are not significantly lower than other lenders.
Why we chose it: We chose New American Funding for its low minimum credit score of 580 and down payment assistance programs. We also liked that they have bilingual agents (English/Spanish) available.
Best for VA Streamline Refinancing
- No home appraisal and no income verification for IRRRLs
- Borrowers with fair credit may be eligible
- Visit brick-and-mortar branches or set up online appointments
- Online support to upload documents, provide an e-signature and track your loan
- No home equity loans or HELOCs
- No option to pre-qualify online
- Requires a 3% down payment
Freedom Mortgage offers home purchase loans, refinance loans (IRRRLs) and cash-out refinance loans to veterans with lower credit scores if they meet other financial and income criteria.
Freedom Mortgage’s VA Interest Rate Reduction Refinance Loan (IRRRL) program, also called a streamline refinance program, is also available. The benefits of a VA streamline refinance include lower rates, better terms, low funding fees, no income verification, and no home appraisal. Savings will depend on your current interest rate, the new interest rate, the closing costs and more.
Why we chose it: We chose Freedom Mortgage as one of our best VA loan lenders for its VA IRRRLs, also called streamline refinances, that include easy credit qualification, lower rates, and faster closings
Other VA loan lenders we considered
When we looked at the VA lending industry, we found that many of the biggest or most talked-about lenders didn’t necessarily offer the best products, though they might excel in other areas. Here is the list of the other VA lenders that we considered:
- Online application available
- No origination fee or prepayment penalty
- 98% recommended status on LendingTree
- Branch locations in nine states: Arizona, California, Florida, Iowa, Illinois, Kansas, Ohio, Texas and Missouri
- No mortgages rates available on its website
- No information on the minimum down payment, credit scores or DTI ratios
- Large selection of government-backed loan options in all 50 states, including State Housing Finance Agency Loans
- Multiple online tools, including a Mortgage Information Center and several calculators
- Wide selection of conventional loans for purchase and refinance
- Specialty products include loans for construction and renovation, multiple properties, high balances and a jumbo adjustable-rate option
- High number of complaints in the CFPB
- Home equity line of credit charges an annual fee of $75
- Posts current rates on its website
- Home Insight® Tracker helps borrowers track and update their application
- PNC Bank services most of its home loans
- Mortgage application can't be completed online
- In-person service not available in every state
- Does not publish minimum credit requirements
- Published rates assume a 700 credit score, and it can't be customized
- Has digital income, asset and employment verification
- Over 200 affiliated branches nationwide
- Proprietary software allows for a fully digital mortgage
- Rates and fees not available online, only by speaking with a loan officer
- No home equity loans or lines of credit
- VA loans not a major focus
- Loan eligibility criteria not disclosed
- Low credit requirement of just 580 for VA loans
- Collaborates with many down payment assistance programs
- Services its own loans
- Not licensed in New York or New Jersey
- Loan origination fees can be high for conventional loans
- Nationwide reach, but physical branches in just 25 states
- Doesn't disclose fees
Fairway Independent Mortgage
- Large variety of eligible property types for VA loans
- Offers fixed- and adjustable-rate VA mortgages, as well as VA cash-out refis and VA IRRRLs
- Rates not disclosed online without an application with personal information
- Not available in Alaska or West Virginia
- Rates and fees are generally middle of the road, rather than low
- Minimum credit score for VA loans is 580, though shown rates assume a score of 680
- Online application, documentation, and loan management
- Below industry average in JD Power's 2020 Primary Mortgage Origination Satisfaction Study
- Limited VA loan offering
- No home equity products
- Offers VA 15- and 30-year fixed-rate, VA IRRRL and VA Cash-out Refinance mortgages
- Streamlined underwriting process
- Allows 100% funding of the property
- Rates and fees not available online
- Sparse consumer education resources
- Quick processing times don't necessarily apply to government-backed loans
- VA loans, VA IRRRL, and VA refinance loans are a focus area for the NBKC
- Features customized rates and fee estimates without needing to input personal information
- Application process and loan tracking can be done fully online
- Best for borrowers with fair to good credit - minimum credit score of 640 for VA loans
- Home equity products and construction loans only available in the Kansas City area
- No home renovation loans
- Lack of transparency around fees
North American Savings Bank (NASB)
- Considers alternative credit data in some cases
- Specializes in VA lending
- Ample educational resources and clearly outlined qualification requirements
- No online resources for application or loan tracking
- High origination fee of $995 on all home loans except VA mortgages
- Branch network limited to 11 offices in Missouri
- No renovation mortgages or home equity products
VA Loans Guide
How do VA loans work?
VA loans are mortgage loans issued by private lenders but guaranteed by the Federal government through the Department of Veteran Affairs. As part of the guarantee, the government will repay part or all of the loan if the borrower defaults.
VA loans also offer several benefits to qualifying military service members.
Who's eligible for a VA Loan?
The VA home loan program and its military benefits are available for:
- Active-duty military members
- Past and present members of the National Guard
- Surviving spouses of military personnel who died in combat
A VA home loan does not have a minimum credit score, but most participating VA loan lenders require a minimum credit score of 620. Our advice? Always check your credit report and your debt-to-income ratio before applying for a loan and improve it if you can.
For more information, read our 5 tips for getting a VA loan as well as our guide on how to remove items from your credit report.
Veterans and active-duty service members need to have served at least 90 days during wartime, or 181 days during peacetime. National Guard members must have served at least 90 days of active-duty service during wartime or six years of creditable service in the Select Reserves or Guard.
Once you have been deemed eligible, you must apply for a Certificate of Eligibility (COE). The COE proves to the VA mortgage lender that you meet the VA’s eligibility requirements.
Types of VA loans
The U.S. Department of Veterans Affairs offers four different loan types — (purchase loan, interest rate reduction refinance loan (IRRRLs), cash-out refinance loan, and Native American direct loan — each with its own set of requirements and limitations. Evaluate all loan options before deciding which best VA mortgage lender suits your needs.
Used to purchase a primary residence, make energy-efficient upgrades to an existing home, or buy property to construct a house, purchase loans can be fixed-rate or adjustable-rate. Fixed rate loans mean monthly payments remain the same through the life of the loan, whereas adjustable-rate loans feature interest rates and mortgage payments that may change.
Purchase loans can’t be used to buy an investment home, vacation house, rental property, or a fixer-upper in need of significant repairs. The VA itself no longer places maximum loan limits, but your VA mortgage lender might. In most U.S. counties, the maximum loan amount for 2021 is $548,250 but it can be as high as $822,375 in more expensive areas.
Interest Rate Reduction Refinance Loan (IRRRL)
Designed to refinance an existing VA mortgage, a streamlined refinance can get you a lower interest rate, reduce the loan term, or go from a variable-rate to a fixed-rate mortgage.
Cash-out refinance loan
A VA cash-out refinance replaces an existing VA loan and changes its terms to take advantage of home equity. The cash-out option also serves to refinance a non-VA-backed loan into a VA-backed loan.
Native American Direct loan (NADL)
NADL is the only VA loan that is managed and funded directly by the government entity. Veterans who are Native American (or whose spouses are Native American) are eligible for this loan. It can be used to buy, build, or improve a home on federal trust land.
As of July 1, 2021, there is no limit to the amount of money that can be borrowed with this program (aside from the limitations imposed by creditworthiness, DTI, and general Fannie Mae/Freddie Mac conforming limits, though borrowers can access higher limits if they choose to make a down payment).
How do you choose the right VA loan?
When shopping for a VA loan, consider the advantages and disadvantages of this type of loan. For example, although VA loans offer lower interest rates than a traditional mortgage, they are not necessarily the best choice for buying, improving, building, or refinancing rental properties. Read below to find out more about the pros and cons of VA loans.
Advantages of VA loans
- Lower interest rates and credit score requirements than required for conventional loans
- Higher chances of approval despite high debt amount
- No down payment, meaning fewer out-of-pocket costs
- No need for private mortgage insurance (PMI) or mortgage insurance premium (MIP)
- More lenient refinance options than conventional loans
- Access to mortgage relief options like mortgage modifications or a forbearance period
Disadvantages of VA loans
- Lenders may have additional requirements for homebuyers since the VA only covers up to 25% of the county loan limit should the borrower default (minus the amount of entitlement that’s already been used)
- Closing costs aren’t covered
- The VA funding fee is non-negotiable
- VA loans may exceed the market value of the home after adding up the funding fee
- VA loans cannot be used for rental properties
- The home must pass VA safety requirements, including inspections for termites, water quality, and more
Choosing the Right Lender
When shopping for a VA loan lender, we recommend the following steps.
First, choose a lender that can address your economic needs. If you’ve had financial trouble in the past, focus on VA lenders with lower credit minimums. Second, get prequalified, as this lets you know if you’re eligible for a VA loan and how much you can borrow with the lender. Finally, compare quotes from at least three different companies, since this lets you see how much you’d be spending if you committed to a specific lender.
VA loan terms, rates, monthly payments, and closing costs vary significantly from provider to provider, so having multiple quotes can help you choose the one that hits all your financial goals.
- Choose lenders that work with your economic needs in mind
- Get prequalified
- Compare quotes from at least three lenders
How to apply for a VA loan
After confirming eligibility for a VA loan, take the following steps to apply:
- Gather the information you need to apply for your Certificate of Eligibility You can apply online through your lender using a WebLGY system, or by mail by downloading a VA Form 26-1880
- Submit your loan application. The lender will request a VA appraisal of the house. The lender reviews the appraisal and your credit income and decides if they accept your loan application
- Apply for your COE and contact your state’s regional VA loan center to start the process directly with the government, in the case of Native American Direct Loans.
Once your lender accepts your application, they'll work with you to select a title company (or entity) to close on the house.
If you have any questions that your lender can’t answer, please call your VA regional loan center at 877-827-3702. You can also watch a video about VA home loans and how to apply.
What are the costs associated with VA loans?
The VA Funding Fee is an upfront mortgage insurance provision added to the mortgage amount. The fee can range from 1.4% to 3.6% of the loan, but the exact percentage will depend on the down payment, loan type, and whether it is your first time using a VA-backed loan.
The funding fee is added to the mortgage amount and can be either financed over the term of the loan or paid upfront at closing. It may be waived for veterans on a service-related disability or active-duty service members who can prove to be Purple Heart recipients at closing time.
Other closing costs associated with VA loans include:
- Real estate commissions
- Brokerage fees
- Loan origination fees
- Discount points
- Title fees
VA mortgage lending rules allow a property seller to make “seller’s concessions," that is, contribute to the veteran’s closing costs for up to 4% of the total loan amount. The veteran can also cover closing costs through a gift from a family member.
To help calculate how much you'd pay for a new mortgage, check out our mortgage calculator.
If you're looking into refinancing, our mortgage refinance calculator can give you an idea of how much you'd pay.
VA Loan mortgage rates
Mortgage rates for VA loans are typically lower than conventional mortgages and even FHA loans. However, interest rates are set by private lenders, not the federal government, and are subject to daily market fluctuations. Rates will also vary slightly for each VA loan type (fixed, streamline, cash-out and jumbo) and term (15-year or 30-year).
As of October 2021, the VA loan mortgage rates from some of our featured lenders range from 2.519% to 3.834% APR. Many lenders list their mortgage rates online, but others give you the option to file for an online quote or contact one of their representatives for more information.
**This article is from a currently published article at https://money.com/best-va-loans/