Mortgage rates rose this week, with the average 30-year fixed rate passing the 7% threshold once again. Most fixed mortgage rates are higher than they were a week ago, while some adjustable mortgage rates declined slightly.
Mortgage interest rates are twice as high as they were at the beginning of 2022, which continues to have a tangible effect on mortgage affordability and housing sentiment. Mortgage rates are widely expected to fall through 2023 but have remained elevated during the spring homebuying season. Here are the current mortgage rates, without discount points unless otherwise noted, as of May 18:
- 30-year fixed: 7.03% (up from 6.94% a week ago).
- 20-year fixed: 6.89% (up from 6.8% a week ago).
- 15-year fixed: 6.3% (up from 6.25% a week ago).
- 10-year fixed: 6.4% (up from 6.33% a week ago).
- 5/1 ARM: 5.73% (down from 5.75% a week ago).
- 7/1 ARM: 5.84% (down from 5.87% a week ago).
- 10/1 ARM: 6.16% (up from 6.13% a week ago).
- 30-year jumbo loans: 7.11% (up from 7.03% a week ago).
- 30-year FHA loans: 6.05% with 0.06 point (up from 5.96% a week ago).
- VA purchase loans: 6.24% with 0.05 point (up from 6.22% a week ago).
With a VA loan, you borrow from a private VA mortgage lender, and the government guarantees payment for a portion of your mortgage. If your loan is more than $144,000 and you default, the VA will pay the lender up to a quarter of the loan amount.
This guarantee reduces risk for lenders and allows borrowers to obtain competitive terms.
You will need to meet service or discharge criteria to qualify for a VA loan. You may also be eligible as a spouse of a veteran or in other situations. When you apply, you will need to present a Certificate of Eligibility from the VA to the lender to show you qualify. You can apply for a COE online, by mail or through your lender using the VA’s web-based system.
You must also meet the VA mortgage lender’s income, credit score and other requirements. The VA sets no minimum credit score, but lenders typically expect a score of at least 620. The lender will also consider your debt-to-income ratio.
|VA Funding Fees|
|Rates for veterans, active-duty service members, and National Guard and Reserve members|
|Down Payment||Funding Fee|
|Less than 5%||2.3%|
|More than 5%||1.65%|
|More than 10%||1.4%|
|After First Use||Less than 5%||3.6%|
|More than 5%||1.65%|
|More than 10%||1.4%|
VA purchase loan: Put no money down and borrow up to the conforming loan limit in most areas – more in some high-cost locations – to build, buy or improve a home. You won’t need private mortgage insurance.
VA renovation loan: If a home doesn’t meet the VA’s minimum property requirements, you may be able to borrow a VA rehab loan. This mortgage includes funding that can be used toward repairs and improvements. Many lenders do not offer this type of VA loan.
VA refinance loan: An interest rate reduction refinance loan, often called a streamline refinance, replaces your VA-backed loan with a new one that has different terms to reduce or stabilize your mortgage payments. Pay attention to your closing costs, dividing estimated costs by expected monthly savings, to determine whether to proceed.
VA cash-out refinance loan: This loan may help you take cash out of your home equity to pay off debt, remodel or help with college expenses. Borrowers can also refinance a non-VA loan into a VA-backed loan. You can borrow up to the conforming loan limit with no down payment in most areas, but keep refinancing costs in mind.
|VA Cash-Out Fees|
|Type of veteran||Fee for first-time use||Fee for subsequent use|
|Reserves or National Guard||2.4%||3.3%|
Native American Direct Loan: If you’re a veteran and either you or your spouse is Native American, this program may help you buy, build or improve a home on federal trust land. An NADL may also be refinanced to reduce your interest rate.
Annual percentage rate. The APR reflects the interest rate, plus fees and closing costs, to tell you the true cost of borrowing. Compare quotes from VA lenders. You can compare APRs on loan estimates, which break down how much of a loan you will pay off after five years.
Products. Options depend on the lender. However, VA loans often have the same terms as conventional mortgages, with fixed or adjustable rates and terms up to 30 years.
Eligibility requirements. VA loan criteria are consistent when it comes to military service, but VA lenders could have different credit and income requirements.
Applying for a VA loan is nearly identical to applying for a conventional mortgage, except for VA forms.
You will need to apply for and receive your COE to prove that you meet the service requirements. If you’re a veteran, you must also submit your DD Form 214, Certificate of Release or Discharge from Active Duty. Also, a VA-certified appraiser inspects the home to make sure it meets the VA’s minimum property requirements and is acceptable for a loan.
- You don’t need a down payment.
- You don’t have to buy private mortgage insurance.
- You could qualify with fair credit, with VA mortgage lenders typically requiring minimum FICO scores from 580 to 620.
- Sellers can help with closing costs.
- You’ll pay a VA funding fee ranging from 2.3% to 3.6% if you’re not making a down payment.
- You can only use the loan to buy a primary residence, not a vacation home or investment property.
- You may be subject to VA loan limits if you have remaining entitlement. The standard VA loan limit for borrowers with remaining entitlement is $726,200 in 2023, up from $647,200 during the previous year.
- It’s more challenging to buy a fixer-upper in major disrepair.
While VA loans offer the most benefits for the majority of eligible homebuyers, there may be circumstances in which another option is better..
You can consider a conventional mortgage for a home that doesn’t meet the VA’s property requirements, since conventional loans have a less stringent appraisal process. You can’t use government-backed loans for second homes or investment properties, while you can use conventional loans.
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
To recap, here are the picks: