Even though the U.S. Department of Veterans Affairs backs VA loans, they’re administered through private lenders. This means that the rates and requirements can vary between financial institutions. If you’re a present or former member of the U.S. military (or their spouse), use these VA loan tips to secure the best possible rates.
1. Learn More About VA Loan Types
Not all VA loans are the same. The VA has several loan programs that may provide better rates and terms.
For example, the VA permits borrowers to bundle energy-efficient home improvements with their VA loan, which may lower your rates. Similarly, if you or your spouse have Native American ancestry, you may qualify for a loan to buy or build a house on designated land.
2. Correct Errors in Your Credit Report
Some lenders approve VA loans for those with credit scores as low as 580, though you’ll get the best rates if you have strong credit. Check your credit report regularly to identify any errors that could be dragging your score down.
3. Check for Additional State Programs
Federally backed VA loans may not be your only option. Some states offer state-level programs that offer additional benefits. For example, Florida’s Salute Our Soldiers Military Loan Program offers 30-year fixed-rate mortgages below the market rate. Check with your state to find the best rates and options.
4. Compare Lenders
One of the most important things you can do is compare the rates and terms from at least three different VA lenders. This ensures that you find a lender who offers the most competitive interest rates or can offer you additional options to secure an affordable loan.
5. Make a Down Payment
While VA loans don’t require a down payment, you might consider making a small down payment to improve the rates your lender offers. Some mortgage lenders will reduce your interest rates if you pay a particular sum.
6. Pay Down Debt
Before approving you for a loan, lenders will thoroughly evaluate your finances, including your credit score and debt-to-income ratio. Lenders associate debt with risk, which may raise your interest rates. Paying down your debt can lower your debt-to-income ratio and help you secure a lower rate.
The interest rates a lender offers aren’t set in stone. Ask the lender if there’s room to negotiate or waive certain fees to make the process more affordable. Don’t be afraid to be direct — you may be surprised by their willingness to accommodate your requests.
This is why it helps to shop around so you can gently nudge lenders to compete with one another to secure your business.
Helping Veterans Achieve the American Dream
Nikkael Home Loans proudly salutes America’s veterans and their families. We offer VA loans with competitive interest rates and relaxed credit requirements so you can achieve the American dream you’ve fought to defend.
To learn more about your loan options, request rates online today to get started.