30-Year Fixed-Rate VA Mortgages: A Guide

30-year fixed-rate mortgages are one of the most popular types of home loans, but they’re not accessible for everyone due to the need for a sizable down payment and a strong credit history. VA loans solve this problem for veterans and military members, allowing them to secure a house with less stringent requirements.

This article outlines everything you need to know about 30-year fixed-rate VA mortgages, including advantages and disadvantages and current market rates.

What is a 30-Year Fixed-Rate VA Mortgage?

There are three things to unpack regarding 30-year fixed-rate VA mortgages: fixed-rate mortgages, government-backed mortgages, and 30-year loan terms.

Let’s break down each component in turn.

Fixed-rate mortgages maintain the same interest rate for the entire loan term, regardless of what the rest of the economy is doing. This makes them different from adjustable-rate mortgages, which offer an initial introductory rate for a certain period before periodically adjusting interest rates in line with market conditions.

VA mortgages are a type of government-backed home loan. In the case of government-backed mortgages, the state commits to covering payments if the borrower can’t make them. This gives extra reassurance to the mortgage lender, making home loans obtainable for people who usually struggle to obtain them, such as those with a poor credit history or insufficient funds for a large down payment.

In the case of VA mortgages, they’re only available for active-duty military members and veterans. Using a VA loan, these borrowers can obtain a mortgage without a down payment or private mortgage insurance (PMI).

Finally, a 30-year mortgage has a 30-year loan term.

How do 30-Year Fixed-Rate VA Mortgages Work?

The Department of Veterans Affairs (VA) backs VA loans. However, mortgage companies still provide mortgages rather than VAs.

As a result, only some lenders offer this kind of product. Fewer lenders offer VA mortgages than conventional loan types, but various providers are still on the market.

Eligibility Requirements

VA loans are only available for active-duty military members and veterans. They should have served either:

90 consecutive days on active duty during wartime
181 consecutive days on active duty during peacetime
6 years in the Guard or Reserve
90 days under Title 32 orders

Borrowers must be able to show a Certificate of Eligibility (COE) from the VA, which can be accessed online immediately and at no cost.

This proves that the VA will back up the loan to the mortgage lender.

Generally, even if you’ve previously bought a home through the VA loan program but then sold it, you can still buy another home through the initiative (but there may be some restrictions).

Also, veterans with a non-VA loan may be able to refinance it into a VA loan to reduce their monthly payments.

Those still determining whether they qualify can call the Department of Veteran Affairs at (800) 827-1000 or contact them online. Additionally, the Consumer Financial Protection Bureau (CFPB) has a tool to help you find a housing counselor to discuss VA loans.

VA Loan Limits

Another critical aspect of VA loans is loan limits. Some borrowers don’t have full entitlement to the perks of a VA mortgage—this may be the case if they have already defaulted on a VA loan or have a VA loan and want to take out a new mortgage for another property.

In these cases, borrowers may be unable to access their full entitlement and may have to pay a down payment (although it will likely still be below that required for conventional mortgages).

The Certificate of Eligibility outlines a borrower’s entitlement, and there may also be some variations depending on the county a borrower is buying in.

30-Year Fixed-Rate VA Example

Let's turn to an example to help clarify how 30-year fixed-rate VA mortgages work—a veteran who buys a house for $250,000.

Because they’re opting for a VA loan, they don’t have to cover a down payment, so the sale price and the loan principal are the same.

An additional cost of a VA loan is the funding fee, which is between 1% and 3% of the loan value. In this case, that fee would be around $5,375. This is then added to the purchase price, up to $255,375.

Without considering interest, the loan principal split across the 30-year loan term would be $709.375 monthly.

Let’s say the mortgage interest rate is 7%. This would bring the monthly principal and interest payments to $1,663.

There’s no PMI to worry about, but VA borrowers must still pay taxes and insurance. According to estimates from Veterans United, taxes would be $250 each month, and the monthly insurance cost would be $73. The monthly funding fee is $36.

This means that the total cost of monthly payments would be $1,663 + $250 +$73 + $36 = $2,022.

VA Loans vs Conventional Loans

It might seem a no-brainer for those eligible for a VA loan to opt for them, but there are times when a conventional loan could make sense.

The main advantage of a VA loan is that it doesn’t require a down payment or private mortgage insurance (PMI). However, PMI only applies to borrowers with a down payment of 20% or below. If veterans and military members can afford a down payment above 20%, there’s minimal incentive to choose a VA loan.

Plus, VA loans sometimes have higher interest rates, fewer lenders offer them, and borrowers must pay a VA loan funding fee.

AlThiseans that some borrowers are better off going with a conventional loan.

However, VA loans are likely the better choice for those who can’t afford a typical down payment but are eligible for VA loans. Plus, VA loans sometimes have lower interest rates depending on the borrower and market conditions.

Another unique perk of VA loans is their more lenient credit requirements.

Fixed-Rate vs. Adjustable-Rate Mortgages

Fixed-rate mortgages aren’t the only type of VA home loan available. Veterans and military members can also opt for adjustable-rate VA loans or VA ARMs. These feature an interest rate fixed for a limited period and then adjust periodically in line with market conditions (unlike fixed-rate mortgages).

While VA ARMs are less common than fixed-rate VA mortgages, some lenders offer them.

Types of VA Loans

A VA purchase loan is the primary type of VA mortgage. It allows veterans and service members to buy a new or existing homes, including condominiums, manufactured homes, and duplexes.

Then, there are VA refinancing loans, allowing borrowers to convert an existing mortgage into a VA loan.

The most common choice is a VA interest rate reduction refinance. This allows borrowers who currently have a VA loan to refinance to a new VA loan with a better rate.

Then there’s the VA cash-out refinance, which lets borrowers take equity out of their homes. Veterans and service members may qualify even if they didn’t buy their homes with VA loans.

Finally, a VA energy-efficient mortgage gives borrowers up to $6,000 to cover home improvements to make their property more energy-efficient. The money can be used as part of a home purchase or refinance toward items like:

Heat pumps
Solar panels
Cooling systems
Thermal windows

Pros and Cons of 30-Year Fixed-Rate VA Loans

Pros	Cons
Chance to buy a home with no down payment	Sometimes, they have higher interest rates than conventional loans
Chance to buy a home with no PMI	Require a VA loan funding fee
Limit closing costs	May be fewer lenders to choose between
Right to prepay mortgage without penalty
Support during financial difficulties

Is Now a Good Time for a 30-Year Fixed-Rate VA Mortgage?

On FreeRateUpdate, you can keep up with the average daily mortgage rates for conventional fixed-rate mortgages. We post the latest rates every weekday.

Consider a 30-Year Fixed-Rate VA If:

You meet the eligibility criteria as a veteran or active service member.
You’ve checked that you have enough entitlement to buy the purchase you want.
You’d struggle to obtain a conventional loan due to your inability to cover the down payment.
You’ve compared VA loans to conventional home mortgages and found that a VA loan would be the most cost-effective choice.

FAQS

What is a VA Guaranty?

A VA guaranty gives mortgage lenders protection against a borrower defaulting. The Department of Veterans Affairs provides this guarantee, which helps veteran and service member borrowers to secure more preferable terms.

How do VA Loans Compare to FHA Loans?

FHA loans require a minimum down payment of at least 3.5%, while VA loans have no minimum down payment. FHA loans require buyers to pay mortgage insurance payments, unlike VA loans.

What are the Risks of VA Loans?

VA loans are among the safest home loan products available. They have measures to help borrowers avoid default, such as supplemental servicing. However, as with any loan, there is a risk of being unable to make payments during financial difficulty.