The Best VA Mortgages of 2021

Last year, the Department of Veterans Affairs backed an impressive 624,000 loans for active-duty soldiers, veterans, reservists, National Guardsmen and their families. If you’re eligible for the VA mortgage loan program, you can take advantage of the best VA loans to secure a home loan with no down payment and no private mortgage insurance.

In this article

    Finding the best VA loan lender can make this service benefit that much easier to take advantage of, so you’ll need to do your homework and research lenders before locking in a rate. Start with the lenders outlined below, each of whom offers different perks to borrowers who qualify.

    Impact of COVID in VA loans

    Because of the economic effects of COVID-19, mortgage rates across all lending products have plummeted to historic lows. While this does create a more favorable time to buy, some lenders have tightened the parameters for lending requirements. The reason for this is economic turmoil like high unemployment rates make the market riskier for lenders. What this means for you is that some lenders might require you to have a higher credit score and a better financial profile than normal to gain approval.

    The best VA loans of 2021

    The best VA loans at a glance

    LenderAPRLoan TermMin. Credit ScoreMin. Down PaymentSimpleScore
    USAA3.08% APR360 months6203% 3.8/5
    Navy Federal Credit Union2.34% APR360 monthsNot Specified0% 3.4/5
    Veterans United2.80% APR360 months6600% 3.8/5
    Rocket Mortgage3.28% APR360 months6203% 3.4/5
    New American Funding2.81% APR360 months5003% 4/5
    PenFedVaries360 months6203% 3.5/5

    Best bank – USAA

    As a top military lender, USAA is marching in the right direction when it comes to delivering flexible and competitive VA loan options.

    J.D. Power Rating
    5/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore USAA 3.8
    Perks 4
    Credit Impact 3
    Customer Satisfaction 5
    Product Variety 4
    Fees 3

    USAA offers a straightforward path for veterans and eligible servicemembers to gain access to VA loan options. Known as one of the best lenders for military members and their families, USAA is a no-brainer when it comes to the best VA loan companies of 2020. Rates are slightly higher with USAA than a few of the other options on the list but they’re still competitive. If you’re looking for a shorter-term loan, be aware that the rates on a 30-year VA loan with USAA are better than the rates on the 15-year VA loan.

    Best credit union – Navy Federal Credit Union

    This credit union delivers a ton of flexibility, including 100% financing, while still maintaining affordable rates.

    J.D. Power Rating
    5/5
    Min. Credit
    Not Specified
    Min. Down Payment
    0%
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore Navy Federal Credit Union 3.4
    Perks 4
    Credit Impact 4
    Customer Satisfaction 5
    Product Variety 3
    Fees 1

    With its best VA loan rates just above the 3% mark, Navy Federal Credit Union is one of the best credit unions offering VA loans. Navy Federal offers a ton of flexibility when it comes to VA loans and similar mortgage products. APRs on 30-year loans are quite competitive at well below the 3% mark. The credit union also offers fixed-rate loans, adjustable-rate mortgages (ARMs) and 100% financing loans through the Military Choice program.

    Best customer satisfaction – Veterans United

    It’s hard not to unite behind Veteran’s United with incredibly low rates for 30-year loans.

    J.D. Power Rating
    5/5
    Min. Credit
    660
    Min. Down Payment
    0%
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore Veterans United 3.8
    Perks 3
    Credit Impact 3
    Customer Satisfaction 5
    Product Variety 4
    Fees 4

    Offering plenty of options and the best VA loan rates at the moment, Veterans United is a lender that should be considered by homebuyers. With a 5/5 rating with J.D. Power, it’s time to get excited about Veterans United. With a near-perfect rating, Veterans United is a major player in the VA loan niche. This lender offers low rates, 24/7 support to assist soldiers overseas and the myriad of different customer service options available.

    Best application process – Rocket Mortgage

    Rocket Mortgage could be a major player in the VA loan funding world, but the slightly higher rates make it a less desirable choice for homebuyers seeking low VA loan rates.

    J.D. Power Rating
    5/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore Rocket Mortgage 3.4
    Perks 4
    Credit Impact 4
    Customer Satisfaction 5
    Product Variety 3
    Fees 1

    While customers love the 100% online aspect of Rocket Mortgage’s business, the best VA loan rates this lender offers are quite a bit higher than most of the rest of the industry. Rocket Mortgage offers a completely online process for applying and receiving VA loans. Still, you can’t look past the higher than normal interest rates with this lender. With the APR on a 30-year mortgage under 3%, this lender’s rates are higher than the other lenders on this list, but the convenience of the online process may outweigh the downside of the slightly higher rates.

    Best for bad credit – New American Funding

    Approaching its two-decade birthday, New American Funding has proven itself as a worthy option in the VA loan lending industry. The company should be on your shortlist for rate shopping.

    J.D. Power Rating
    N/A
    Min. Credit
    500
    Min. Down Payment
    3%
    SimpleScore
    4 / 5.0
    close
    SimpleScore New American Funding 4
    Perks 4
    Credit Impact 4
    Customer Satisfaction N/A
    Product Variety 5
    Fees 3

    New American Funding is a solid VA loan option with competitive rates and extensive customer service support to guide you through the process. Created in 2003, New American Funding is a lender based out of Tustin, CA, with branches in 34 states. The lending rates on VA loans are quite competitive, and this lender also offers extensive customer service options, including branch locations, social media, phone and contact forms.

    Best for lender credit – PenFed

    When you look at the great rates, lender credits and helpful customer service, it’s easy to see that PenFed marches to the beat of a different drum.

    J.D. Power Rating
    N/A
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.5 / 5.0
    close
    SimpleScore PenFed 3.5
    Perks 3
    Credit Impact 3
    Customer Satisfaction N/A
    Product Variety 4
    Fees 4

    PenFed offers great low rates, lender credit options and flexible lending choices, making the lender one of the best VA loan options. PenFed is a credit union that’s been in business since 1935 and is based out of Virginia. While you may not have heard of this lender before, it’s a major player, servicing over 2 million customers with $25 billion in assets. When looking at the VA loan options through this lender, it’s hard to ignore the incredible interest rates it offers on most loan terms and types.

    What is a VA loan?

    A VA loan is a mortgage loan backed by the Department of Veteran’s Affairs (VA). But, while these loans are backed by the VA, you still apply and receive the mortgage loan through a private lender. The perks to the VA backing these loans are that the backing lowers risk to the private lender, so you can get a VA loan with less than perfect credit, no down payment and no private mortgage insurance (PMI).

    Who is eligible for a VA loan?

    VA loans are only available for some active service members, veterans and some military service member families. The VA lays out all of the specific eligibility criteria on its website. For the most part, though, a VA loan is available to all active-duty service members, veterans who have met the service requirements, surviving spouses, as well as National Guard and reservists who have fulfilled a six-year commitment or served for at least 90 days of active duty (not including TRADOC time).

    Additional requirements for a VA loan

    • Certificate of Eligibility (COE) — To get a VA loan, you will need to obtain a COE.
    • Applicants can apply for a COE through the eBenefits Portal.
    • Veterans will need a copy of their DD-214.
    • Active duty, National Guard and Reserve soldiers will need a statement of service signed by their commander, personnel officer or readiness NCO.
    • Surviving spouses will need a copy of their significant other’s DD-214 and will need to fill out a request through Dependency & Indemnity Compensation (DIC) (if they are receiving benefits from the DIC). Spouses not receiving DIC will need additional paperwork outlined here.

    [ More: How to Refinance into a VA Loan ]

    Pros and cons of a VA loan

    Looking at the VA loans pros and cons can help you and your family decide if this type of loan is ideal for you or not. While you may be eligible for a VA loan, you could be better suited for a more traditional form of mortgage funding in some cases.

    Pros

    Cons

    • VA funding fee
    • Not available to dependents (except surviving spouses)
    • Only available for primary residences

    How to apply for a VA loan

    Prepare the necessary documents.

    Much like you would when applying for a conventional loan, you need to get together all of your documents to show to prospective lenders. The list includes asset documents, bank statements, proof of income, tax returns, gift letters from anyone that gave you money for a down payment and any other documents required by the lender.

    Obtain your COE.

    Where applying for a VA loan differs from a conventional mortgage is the need for a Certificate of Eligibility. The COE proves to the private lender you are eligible to receive a VA loan. You can apply for your COE through the eBenefits Portal.

    Shop lenders.

    Once you have all your paperwork ducks in a row, it’s time to shop lenders. Find the lender that has the best option available for you.

    [ Read: When Veterans Should Use a VA Loan ]

    Complete your application.

    Once you’ve decided on a lender, fill out your application. If your lender has any questions or asks for additional documentation, get them what they need as quickly as possible.

    How to choose the best VA loan for you

    • Know what you’re looking to buy. If you start talking to lenders before you go house shopping (which is smart to do), you should have a good idea of what you’re looking to buy. Knowing the area, the price range and the type of house should be plenty to get the conversation started.
    • Shop for more than just rates. While getting the best VA loan rates is extremely important, it’s not 100% of the equation. When you’re comparing lenders, look at more factors, including customer support, repayment terms, origination fees, default protections and the overall reputation in the industry.
    • Consider conventional options. Chances are that the VA loan is going to be the best bet for you, especially if you’re concerned about the size of the down payment and private mortgage insurance. However, there will be some occasions where a traditional mortgage might be a better fit, especially if you’re planning on putting down a sizable down payment.
    • Be wary of adjustable-rate mortgages (ARMs). ARM’s may look attractive with a low introductory rate. However, that rate doesn’t last forever. Once the intro period is over, the rate is subject to change once per year with the ebbs and flows of the market. This means your rate could skyrocket after the intro period, and your payments unexpectedly go through the roof.

    VA loan FAQ

    No, VA loans do not require a down payment. However, if you do make a down payment, you can get your VA funding fee lowered.

    While there is no concrete credit score you need to qualify for a VA loan, many lenders cite looking for at least a 660 for approval.

    Yes, you can apply for a VA construction loan to build a home with your funding benefits.

    We welcome your feedback on this article and would love to hear about your experiences with the mortgages we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Methodology

    SimpleScore

    We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore

    We break down each of these five factors and their rating criteria for our review of the best mortgage companies.

    Why do some brands have different SimpleScores on different pages?

    Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores because they offer more than one financial solution — like home loans, auto loans, personal loans and more.

    For instance, in our Bank of America Mortgage Review, we give the company a 3.8 out 5 based on our five rating factors for mortgages. In our Bank of America Auto Loans Review, we give the company a 4.4 out of 5 based on our rating factors for auto loans. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of a brand’s services and how it compares to competitors’ services.

    Perks

    Mortgage lending companies that provide more perks receive a higher score from us.

    Hard/Soft credit checks

    We know that credit checks affect your score –– that’s why we favor companies that offer soft credit checks or hard credit checks when you want to see your pre-approval rates.

    Customer satisfaction

    We use the J.D. Power 2019 Mortgage Origination Satisfaction Study℠ to find out how customers rate their experience with each company. (If a company is not included in J.D. Power’s study, we skip this rating factor and average the remaining factor scores.)

    Product variety

    Mortgage lenders that offer more products for their home loans are given higher scores.

    Fees

    Fees can add up fast. Companies that don’t require as many fees for your home loan receive a higher score with us.

    Jason Lee

    Contributing Writer

    Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill sets with the rest of the world. Follow Jason on Facebook here

    Reviewed by

    • Angelica Leicht
      Angelica Leicht
      Mortgage Editor

      Angelica Leicht is an editor at The Simple Dollar who specializes in mortgages, mortgage refinancing, home equity loans, and HELOCs. She is a former contributing editor to Interest.com and PersonalLoans.org.