Types Of Mortgages Available
One of the first steps to narrowing down the list of lenders youre considering is figuring out what type of mortgage you need.
If you have blemishes on your credit report, like a bankruptcy, then an FHA loan is likely to be easier to qualify for than conventional loans. Other loans, such as USDA and VA loans, offer 100% financing with no down payment required. If you want to take advantage of any of these government-backed loan programs, then youll need to find a lender that offers these types of loans.
The loan repayment term can also impact the lender you choose. Most lenders offer 15-year or 30-year mortgages, but if you want a 10-year mortgage or a 40-year mortgage, your options will be more limited.
Are Va Loans Better Than Conventional Loans
In many ways, VA loans are more affordable than conventional loans. However, these loans may not be the best option for some people.
Because the VA does not control VA loan rates, lenders can still charge high interest rates. You’ll need to do your due diligence to find the best VA mortgage lender rates.
While VA loans do not require a minimum down payment, they may not be the most affordable option for borrowers with lower credit scores. If you do not have a shining credit report, you may want to also consider mortgages with down payment assistance programs, as these can make your loan more affordable upfront.
Top Va Loan Lenders: Freedom Mortgage Was #1 Again In 2021 But That Could Change
If youre curious who the top VA loan lenders were last year, wonder no longer. The biggest was Freedom Mortgage, a direct lender based out of Boca Raton, Florida that topped the list for the second straight year.
Somewhat amazingly, they also claimed the #2 spot for FHA loans, despite not being a household name like say Rocket Mortgage.
Speaking of, Rocket Mortgage, formerly known as Quicken Loans, snagged the second spot, though it was behind by a large margin.
Rounding out the top three was Veteran United Home Loans, which was about $7 billion behind Rocket.
That brings us to number four, Pennymac, which does a lot of correspondent business with smaller mortgage bankers and credit unions.
Coming in fifth was United Wholesale Mortgage, which relies only on mortgage brokers to bring in business. They are also a fierce crosstown rival of Rockets.
Both Navy Federal and USAA also made the list, banks that exclusively serve U.S. military and their family members. You can see the full top-10 list below.
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Comparing Rates And Fees
A difference of 0.25% to 0.50% doesnt sound like a lot but can save you thousands of dollars over the loans life. But securing the lowest interest rate isnt the only factor you need to consider when comparing mortgage lenders. Two lenders can advertise the same mortgage rate but charge wildly different funding fees and closing fees. A low rate with high closing costs can eat away at the savings you thought the low rate provided.
Using this Home Loan Comparison Calculator, you can enter in all the variables of each offer and see a side-by-side comparison. When entering a VA loan, make sure to add the VA loan funding fee to the Upfront Fees field.
Best Overall: Veterans United
Veterans United takes our top honors as the best overall VA mortgage lender. Its easy to see why. Its the largest VA mortgage lender in the country and one that specializes entirely in working with veterans.
For example, the company works with senior members of all branches of the US military, including the Army, Navy, Air Force, and Marine Corps, to help them stay on top of developments affecting veterans. They also offer their Veterans United Lighthouse program. Not only does it help veterans to build and improve their credit, but it also provides a network of real estate agents nationwide who are knowledgeable in VA home purchases.
Why We Like Veterans United: Having the status of the largest VA mortgage lender in the country means veterans are trusting their home financing needs to Veterans United more than any other lender. We also like that the company focuses entirely on VA loans, so they arent distracted by other loan programs.
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Va Loan Eligibility Requirements
The VAs certificate of eligibility kicks off the VA loan underwriting process. This document verifies your VA eligibility based on your military service history.
Lenders can help you get your COE in just a few minutes. Or you can retrieve it yourself from the Department of Veterans Affairs eBenefits portal.
Service requirements for getting a COE include:
- Serving on active duty in the Air Force, Army, Coast Guard, Marines, or Navy, for 90 consecutive days during a time of war
- Serving on active duty in the Air Force, Army, Coast Guard, Marines, or Navy during peace time for 181 consecutive days
- Serving in the National Guard or Air Force or Navy Reserves for six years
Surviving spouses of service members killed in the line of duty can also qualify for a VA home loan.
The COE tells lenders youre eligible for a VA loan. But you still have to meet the lenders requirements for employment, credit, debt-to-income ratio, and other factors.
When you have a COE and you meet the lenders qualifications, getting a loan pre-approval should be easy.
Best For Low Rates: Usaa
USAA tends to be on the low end of the interest rate spectrum with VA loans. But theres a lot more to USAA than just VA loans. Its a full-service financial provider offering a wealth of financial services designed specifically for veterans. In addition to banking, insurance, and investments, the company specializes in auto insurance, where it consistently ranks at the top of the list for the entire industry.
USAA provides the full range of VA loans, including fixed and adjustable-rate mortgages, as well as jumbo loans. Meanwhile, their USAA Home Learning Center will help to educate veterans on the many details of the mortgage lending process.
Why We Like USAA: Not only does USAA provide low rates, but they also offer a wide variety of financial services for veterans. That includes banking, insurance, and investments.
- Consistently low mortgage rates.
- Offers a full range of financial services, especially car insurance programs that may very well be the best in the country.
- Also offers conventional loans, which are sometimes more beneficial for veterans than a VA loan will be.
- USAA has a strong reputation, including an A+ rating from the Better Business Bureau.
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Best Overall: Veterans United Home Loans
Veterans United Home Loans specializes in just one thing: VA loans. Thats one reason why it earned the top spot on our list. Veterans United was the third-largest originator of VA loans in 2020 and 2021 . It offers excellent interest rates and has garnered solid reviews.
However, there is no consumer mobile app, which may irritate some users. And if your credit score is lower than the recommended 620, you may benefit from Veterans Uniteds program, but you may not qualify for a loan.
High-volume VA lender with low rates and good ratings
Program to help low-credit borrowers build their credit to buy a home
Relatively high recommended minimum credit score
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Best Va Loan Lenders Faq
What is a VA loan?
VA loans are mortgages backed by the U.S. Department of Veterans Affairs, intended to help active-duty service members, veterans and their families to become homeowners.
Because these loans are backed by the VA, they come with considerable benefits for borrowers, including:
- No down payment
- No private mortgage insurance
- Flexible credit and DTI requirements
- No loan limits
What are the VA loan eligibility requirements?
To qualify for a VA loan, youll need to meet both the VAs service requirements and the individual lenders requirements.
Service requirements include:
- Serving on active duty in the Air Force, Army, Coast Guard, Marines or Navy, for 90 consecutive days during a time of war
- Serving on active duty in the Air Force, Army, Coast Guard, Marines or Navy, during peacetime for 181 consecutive days
- Serving in the National Guard or Air Force or Navy Reserves for six years
Surviving spouses are also eligible, provided they are not remarried.
A VA loan officer can help you request your Certificate of Eligibility , which is the first step in the VA home loan application process. Your COE includes details about your military service and the amount of your VA home loan benefit.
Are VA loans always better than conventional loans?
When it comes to mortgages, there are no one-size-fits-all answers since every borrower has different needs.
This means that its likely to be the best mortgage option for qualifying borrowers.
How many times can you use a VA loan?
How To Choose The Best Va Mortgage Lender
Many banks, online lenders, and credit unions offer VA loans. To find the right lender:
- Look for several lenders that offer loans guaranteed by the VA.
- Get pre-approval or prequalification from each lender to find out the rates and terms of the loan they would provide. Ideally, look for lenders that pre-approve you without a hard credit inquiry. That will help to protect your credit score.
- Choose a loan with the lowest total cost. Make sure you factor in the interest paid over time as well as the upfront fees and application fees. While the VA funding fee is always the same, other costs can vary considerably from one lender to another.
It is best to get quotes from several mortgage lenders as each can set their own terms and interest rates as long as they conform to broad VA guidelines for issuing loans.
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Va Mortgage Lender Faq
Do VA loan rates vary by lender?
You bet! Rates can vary considerably even among the best VA lenders. Thats why its so important to compare estimates from at least 3-5 companies before choosing one.
Do most VA loans get approved?
Probably its easier to get approved for a VA loan than pretty much any other type of mortgage. However, lenders can impose their own standards. So if youre on the borderline of qualifying, you may have to shop around for a VA lender that can help you.
Can I get a VA loan with a 500 credit score?
In theory, yes. The VA says, Unlike many loan programs, a lower credit score, bankruptcy or foreclosure does not disqualify you from a VA home loan. But you may have to really hunt to find a lender offering VA loans with a 500-579 score. Most mainstream lenders only go as low as 580, though one on our list says it considers applications from those with a 550 score.
What is a good VA loan rate?
VA loan rates are typically the lowest on the market below FHA, USDA, or conventional loans in almost every case. So if you qualify for a VA loan, you have a head start on getting a low mortgage rate. That said, rates vary a lot even between the best VA lenders. In our sample, average 30-year fixed rates ranged from 2.76 percent to 3.06 percent in 2020. The better your credit, the lower rate youre likely to get. Making a down payment can help lower your interest rate, too.
What lenders specialize in VA loans?Where can I find a VA construction loan lender?
Best For Low Fees: Usaa
- $0 for qualifying borrowers
USAA charges 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 , meaning no additional out-of-pocket expenses for its customers. The bank also offers VA jumbo loans up to $3 million.
USAAs 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.
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How We Chose The Best Mortgage Refinance Companies
Our methodology considered:
- Lenders that provided a quality customer experience with online tools, pre-approval, discounts, or exclusive refinance programs
- Lender size, reputation, and complaints. We consulted the Mortgage Bankers Association, J.D. Powers U.S. Primary Mortgage Origination Satisfaction Study and the NMLS
- Consumer feedback and expert input
Are Va Loan Interest Rates Lower
VA loans often have lower interest rates and easier qualifying requirements than conventional mortgages not guaranteed by the VA. Eligible service members and their families can qualify for a loan with no down payment, and they don’t have to pay private mortgage insurance . PMI is required on some other types of loans with a down payment below 20%.
However, the VA does charge a one-time VA funding fee, which varies depending on your service record, whether you’ve gotten a VA loan before, and the size of your down payment. The funding fee is between 1.4% and 3.6% of the amount you’re borrowing. However, veterans receiving disability compensation are exempt from this fee.
It’s important to consider the funding fee as well as the interest rate when comparing VA loans to other loan options.
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Comparing The Best Va Mortgage Lenders
The bottom line:Bank of America is a worthwhile option, especially if you’re already a Bank of America customer or live in a state with a good homebuyer assistance program.
The pros of Bank of America:
- Available in all 50 states
- Down payment and closing cost assistance programs
- You may receive a discount on fees if you’re already a Bank of America customer
- A+ rating from the BBB
The cons of Bank of America:
- Doesn’t accept alternative forms of credit you must show your credit score
- You can’t refinance into a VA mortgage unless you’re already a Bank of America customer
The bottom line:Carrington is a particularly good VA mortgage lender if you have a low or no and need to apply with alternative data.
The pros of Carrington:
The bottom line:Fairway Independent Mortgage is good if you have a low credit score and/or want to close digitally instead of in person.
The pros of Fairway Independent:
- Available in all 50 states
- Qualify for a VA mortgage with a low credit score
- Accepts alternative forms of credit, such as proof of paying bills
- A+ rating from the BBB
- Option to close on your mortgage digitally instead of in person
The cons of Fairway Independent:
- Rates aren’t posted online
The bottom line:Movement Mortgage is an especially good option if you have a credit score as low as 580 and don’t qualify for a VA loan elsewhere.
The pros of Movement Mortgage:
The cons of Movement Mortgage:
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 or mortgage insurance premium
- 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
- Closing costs arent 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.
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How To Compare Va Lenders
Not all lenders offer VA loans, which means youll need to start by finding a lender who does. Youll typically be able to find out whether a lender offers VA mortgages by checking its website.
A lender familiar with VA mortgages can help you confirm your eligibility and request your Certificate of Eligibility .
Shopping around can help you find a lender who matches your financial needs and potentially save you thousands of dollars.