How to find the best VA lender: A step-by-step guide

For eligible military members, veterans and their spouses, a VA loan is a low-cost financing option that can make it easier to buy a home or refinance a mortgage. This type of loan has some universal requirements, but mortgage lenders set their own rates, so it pays to comparison-shop to get the best deal.

Many lenders offer VA loans, and some even specialize in them. Here’s how to get started finding the best VA mortgage lender for you.

What to look for in a VA mortgage lender

Many banks, credit unions and online lenders offer VA loans. So what distinguishes them?

To help you find the best VA mortgage lender for your needs, consider these factors:

• Experience: There are VA lenders and then there are expert VA lenders, as the names of two of the leaders in the field — Navy Federal Credit Union and Veterans United Home Loans — imply. Find out how long the lender has been doing VA loans, how many VA loans it originates per year, what percentage of its business/loan portfolio is dedicated to them. The point is, you don’t want a rookie or an institution that treats VA loans as a sideline — these mortgages are too complicated for that.
• Support: All mortgages require lots of paperwork, but VA loans require some unique ones, mainly dealing with the borrower’s eligibility and military status. Try to get an idea of how well-versed an institution’s loan officers are in the finer points of VA loan procedure. Will they help you obtain your Certificate of Eligibility (COE), the right DD-214 form and other specialized docs?
• Fees: All VA loans come with standard VA funding fees. Is the lender up on the current structure and how much you’ll pay? And beyond that, what fees does the lender itself charge: loan origination fees, discount points, etc.? Do they clearly distinguish which is theirs and which is the VA’s?
• General features: Don’t forget to consider factors you’d consider with any lender: convenience, responsiveness, account services and of course, how competitive their interest rates are.

4 steps to find the best VA mortgage lender

Step 1: Confirm you qualify for a VA loan

To obtain a VA loan, you must have a Certificate of Eligibility (COE) based on your or your spouse’s military service, and you must be buying a primary residence, not an investment property or second home.

While the U.S. Department of Veterans Affairs (VA) doesn’t impose minimum credit score requirements, VA lenders can and do, so you’ll need to meet these standards to qualify. These typically include a credit score of at least 620 and a debt-to-income (DTI) ratio of 41 percent or less.

Step 2: Crowdsource VA lender recommendations

Social media can be a handy way to get a short list of lenders quickly, but we also suggest getting recommendations from comrades and fellow service people — including relatives if you’re from a military family — especially those who have gotten a VA loan recently.

Ask your referrers what their experience was like. Was it a smooth process? Was the lender able to answer their questions, guide them through the paperwork? If they don’t mind disclosing, the cost of the loan is also useful information to have. If more than a few people recommend the same lender, odds are it’s a worthy lead.

Once you’ve asked around, done your homework and have your list of best places to get a VA loan, you can see how each measures up to the next two yardsticks: experience and cost. From there, you can whittle down your list until you find the lender that meets your needs and preferences.

Step 3: Comparison-shop to find the best VA loan rate and terms

Remember that, while the VA sets certain mortgage criteria and fees, the mortgage rates and costs can and do vary by VA lender. So, as with any loan, it’s important to do your research before you lock in a rate. In fact, a 2023 Freddie Mac report revealed that borrowers who comparison-shopped for mortgages saved money versus those who didn’t — at least $600-$1,200 annually.

Be sure to get the APR, or annual percentage rate, not just the interest rate, from each lender. The APR is the total cost of the loan, including all the lender fees, and is typically a better basis for comparison than just the interest rate.

As part of your search for the best place to get a VA loan, consider these factors when comparing loan offers:

• Interest rate: The interest rate on your VA loan will depend on a few variables, including your credit score, the loan term length and current economic conditions.
• Annual percentage rate (APR): In addition to the interest rate, be sure to check out the loan’s APR. This figure represents the total cost of the loan, including all the lender fees, and is typically a better basis for comparison than just the interest rate.
• Repayment terms: Shorter loan terms typically mean higher monthly payments but less interest over the life of your loan. On the other hand, loans with longer repayment terms come with a lower monthly payment but a higher interest rate.
• Closing costs: VA loan closing costs vary by lender, usually ranging from 1 percent to 6 percent of your loan amount.

Step 4: Close on your VA loan

Once you’ve been preapproved for VA financing and have had an offer on a home accepted, stay in communication with your lender as you move toward closing. At least three business days prior to the closing date, your lender is required to provide you a closing disclosure with a finalized list of closing costs, which might include:

• Origination fee
• VA funding fee
• Any discount points
• Credit check fee
• Title search and title insurance costs
• Recording fee

Benefits of getting a VA loan

VA loans are more popular than ever, thanks to their offer of 100-percent financing, lower interest rates and less-stringent eligibility requirements than conventional loans.

Some of the benefits of a VA loan include:

• There is no down payment required.
• There are no limits on how much you can finance.
• No mortgage insurance is imposed.

FAQ about VA lenders

• Which lender is the best for VA loans?

  There are many great options for the best VA loan lenders. Among them, Veterans United Home Loans remains a top pick for its availability in all 50 states and fast closing times. Other trusted names include Cardinal Financial, LowRates.com and Navy Federal Credit Union.
  

• How do VA loan rates compare to conventional loan rates?

  Lenders tend to charge lower rates for VA loans than they do on conventional loans, making them a good way for eligible borrowers to secure a lower monthly payment and/or save money in the long run.
  

• Which lenders have the lowest VA mortgage rates?

  Lenders can set their own interest rates and other loan details when offering VA loans, and they’ll compete to draw in customers. That means that the lender with the lowest available rate will change regularly. Check out Bankrate’s best VA mortgage lender picks, which evaluates not just interest rates, but their service record, too.
  

• What factors affect your VA loan approval?

  Even if you meet the basic eligibility criteria with regards to military service, you still have to qualify for a VA loan based on your financial profile (which will also determine the interest rate you’re offered). Factors that influence your approval odds include: your credit score, debt-to-income ratio, the value of the home, and your overall income.