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Besides credit scores, the second most asked question that I get is about the interest rate for a VA home loan. The great thing about a VA home loan is that the interest rate will almost always be lower than any comparible loan that has 100% financing.
Interest rates are always a touchy subject because everybody always wants the lowest rate but many people don't realize that closing costs can also figure into your APR. Most interest rates that you find in the newspaper or on the internet require at least 20% down for a conventional loan. The advantage to a VA Loan is that you can normally get an interest rate similar to these with a VA loan. Brokers and banks are usually paid or charged a fee based on the rate that is charged to you (the borrower) and it is reflected on the Good Faith Estimate and the final HUD-1 Settlement Statement at closing. VA loans will pay the bank or broker more than a conventional loan at the same rate and many lenders, such as myself will pass these savings on to you. One comment I hear from non-VA lenders is "VA lenders only originate VA loans because they make more money on them". However, like I said before some VA lenders pass this savings on to you. From an interest rate standpoint, if you are putting very little money down then a VA home loan may be in your best interest.
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