VA loan interest rates have remained in the 5.75% -6.0% range over the past few weeks for a standard 30-year fix. What will the rest of 2026 bring? Can homebuyers expect rates to decrease even more? Let’s take a quick look at the current projections.
The Federal Reserve is responsible for setting monetary policy in the United States, which includes deciding on interest rates. Due to a variety of economic factors, they have been gradually raising rates in recent years. However, the Fed started rate cuts started in Q4 of last year, and are expected to continue into 2026.
The government-backed organization Fannie Mae recently stated in their summer forecast that it expects the average rate for a 30-year fixed mortgage to drop in the low mid 5% range this year. As for 2026, VA rates have dropped a bit from last month and are sitting in the 5.8%-6.1% range now depending on borrower down payment, credit score, etc.
Update: As of March 2026, VA mortgage rates are at the lowest level since 2022. Homebuyers that have purchased in the last few years may want to consider a Streamline VA Refinance.
Many economists suggest strong job numbers and hotter inflation data are leading financial markets to forecast a less aggressive rate-cutting path by the Federal Reserve. The Fed recently kept its benchmark interest rate steady but continued to suggest that rate cuts are coming.
Nevertheless, Fannie Mae economists are predicting existing-home sales to trend upward this year. Its Home Purchase Sentiment Index recently showed 65% of homeowners say now is a “good time to sell,” a rising percentage.
How Are VA Mortgage Rates Determined For Individual Veterans?
VA mortgage rates are determined by a variety of factors, including the borrower’s credit score, loan term (15 year fix or 30 year fix) and the loan to value. However, unlike conventional loans, VA loans are backed by the Department of Veterans Affairs (VA), which can offer more favorable terms to eligible veterans.
The most important consideration is the borrower’s credit score. The higher the credit score, typically the lower the interest rate offered on a VA loan. This is because a higher credit score is seen as a lower risk for the lender, making them more likely to offer a competitive interest rate.
For VA loans, a credit score above 720 is often considered A+. However, Vets with lower credit scores below 620 can see their interest rate 1/8% – 0.25% higher.
Additionally, the loan term can also impact VA mortgage rates. A shorter loan term (such as a 15-year fix) will come with a lower interest rate compared to a longer term (such as a 30-year fix). This is because the lender will be receiving payments for a shorter period of time and therefore is willing to offer a lower rate.
The loan-to-value (LTV) ratio is also taken into consideration when determining VA mortgage rates. LTV refers to the amount of the loan compared to the value of the home. Typically, lenders prefer borrowers with a lower LTV ratio, meaning they have more equity in their property.
For example, if a borrower wants to do a VA 100% cash-out refinance, their interest rates will often be slightly higher when compared to the borrower doing the same refinance up to 80% or 90% loan-to-value. Again, this is all based on the risk associated with the loan.
The same thing applies to purchase loans, borrowers putting down 5%-10% will often see lower interest rates compared to those financing 100% LTV. This is why it’s recommended for VA homebuyers to save up a little money for their down payment if possible. It can potentially save them thousands of dollars in interest over the life of the loan.
When it comes to VA loans, each lender will have their own rates and fees based on a variety of factors including credit score, debt-to-income ratio, and loan amount. Of course, the best part is none of the VA programs require monthly mortgage insurance or PMI from the borrower.
The Department of Veterans Affairs does have guidelines that lenders must follow when setting interest rates and closing costs for VA loans. These guidelines aim to ensure that veterans and active-duty service members receive fair and competitive terms.
VA offers an assortment of programs like cash-out and streamline refinance, along with standard purchase and VA Jumbo purchase loans. Please connect with 7 days a week to get a quick rate quote or to learn more about the programs available.