VA MORTGAGE INTEREST RATES EXPECTED TO DROP IN 2025
Homeownership is part of the American dream for many, yet buying a home eludes millions of Americans. Veterans can face economic barriers that prevent them from purchasing a home; however, the VA offers home loans that help make homeownership obtainable for our nation’s heroes. As 2024 winds down, the VA mortgage interest rates for 2025 are being forecasted. Get to know what to expect with the new year ahead of the 2025 homebuying season.
2025 VA Mortgage Loan Interest Rates Overview
Although rates have been elevated in recent years, Veterans can expect VA mortgage interest rates to be around 6% in 2025.
This comes at a time when rates have been above 6% on average as the Federal Reserve continues to combat inflation and other issues facing the economy.
By doing so, VA home loans have seen mortgage rates remain elevated; however, Fannie Mae is now forecasting lower rates in 2025 for 30-year fixed mortgages.
Why Rates Should Drop
There are plenty of encouraging signs pointing to lower VA mortgage interest rates, including more Americans having employment, better data surrounding inflation, and the Federal Reserve pointing to the possibility of three upcoming rate cuts.
Why Rates Might Not Drop
Despite Fannie Mae showing strong home sales and expects the trend to continue into 2025, not everyone is sold:
- Some reports have economists suggesting the Fed won’t cut rates as aggressively.
- Furthermore, housing market reports show slower homebuying rates in recent months.
- Finally, Fannie Mae’s Home Purchase Sentiment Index showed that a rising number of homeowners (65%) believe it’s time to sell.
Factors Influencing 2025 VA Mortgage Rates
Several things go into your VA mortgage interest rate. Sure, there are outside economic factors; however, many personal variables also come into play, including:
- Your credit score
- The amount of money you borrow
- Your loan’s term
If you have a favorable credit score, expect a lower interest rate and vice versa.
Although VA mortgage interest rates are provided with favorable terms, having a credit score higher than 720 will still benefit you, whereas scores under 620 negatively impact your rates.
VA loans that have shorter terms also have lower interest rates. For example, if you have a 15-year fixed-rate loan, your interest will be lower than a 30-year fixed mortgage.
Furthermore, you’re going to pay more if you borrow more money. The more equity you have upfront in your property through your down payment, the less money you need, the lower your loan-to-value (LTV) ratio is, and ultimately, the lower your interest will be.
Finally, VA mortgage interest rates vary by lender. It’s a good idea to get multiple rates and compare them to find the right mortgage for your needs.
Although the VA sets guidelines for lenders, always compare multiple companies and be sure to inquire about programs for Veterans that can help you save—this includes when you refinance.
VA mortgage interest rates hit highs not seen in over two decades in 2023. Since then, Veterans have been looking for relief.
Although 6% may not be the lowest rate we’ve seen, 2025 feels promising for a return to form making homebuying more affordable across the board.
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BY BUDDY BLOUIN
Buddy Blouin is a Contributing Writer at VeteranLife.com
Buddy Blouin is a Contributing Writer at VeteranLife.com
