A VA Loan Still Beats a Conventional 30-Year on Rate
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The VA loan still beats the conventional 30-year on rate. In FreeRateUpdate’s lender network, the best advertised VA purchase rate was five eighths of a point below the best conventional 30-year on August 1, and on September 28 it was still three eighths of a point lower.
Both rates went up in that time. The best conventional 30-year moved from 6.125% to 6.5%, and the best VA from 5.5% to 6.125%. On September 28 those best rates came with points, 1.998 on the conventional loan and 1.639 on the VA loan, and they’re advertised interest rates, not APRs or quotes.
| Date | Best VA | Best conventional 30-year | Gap (percentage points) |
|---|---|---|---|
| July 11 | 5.25% | 5.875% | 0.625 |
| August 1 | 5.5% | 6.125% | 0.625 |
| September 1 | 5.5% | 5.99% | 0.49 |
| September 19 | 5.875% | 6.25% | 0.375 |
| September 28 | 6.125% | 6.5% | 0.375 |
What the lower rate is worth
Take two $280,000, 30-year fixed loans at the September 28 rates, one of them a VA loan for a buyer who has a Certificate of Eligibility and qualifies with the lender, both paid on schedule with no refinancing or extra payments. The VA principal and interest payment is about $1,701 a month against $1,770, a saving of about $68.
The scheduled interest the VA loan saves, not counting points or any funding fee rolled into the loan, comes to about $24,700. And in this example, unlike a 15-year loan, it saves that money with a smaller monthly payment.
Reviewed by Paige Sutton, NMLS #1888684
