Veteran Loan Center
Not a government agency. VA Approved Lender. Mortgage Research Center — NMLS #1907.
Just like conventional loans, VA loans can come as fixed- or adjustable-rate mortgages (ARM) and last up to 30 years. Before deciding to finance a home with a VA loan, learn about the different types of loans available so you know what you'd like before you talk to a VA-approved lender. Get acquainted with different loan types be reading the information below.
Adjustable-rate mortgages have a fitting name. The initial interest rate of an ARM tends to be below the market rate. For the remainder of the loan's life though, the interest rate may go up or down. ARMs come in hybrid forms too, meaning the interest rate is initially fixed for at least three years. After that, the interest rate may change annually. For hybrids, there are caps on the first adjustment made and caps on the interest rate for life of the loan. Remember, it's possible to refinance a loan with a VA Streamline to go from an ARM to a fixed-rate mortgage.
Fixed-rate mortgages also have a fitting name. When military homeowners decide to get a fixed interest rate, that's what they'll get: an interest rate that is set. Interest rates for VA loans are similar to, but usually lower than, traditional mortgages. The VA's guarantee of up to 25 percent of each loan allows VA loan borrowers to negotiate their rates. If the market interest rate drops and a fixed rate is then higher, military homeowners can refinance with a VA loan to lower their rate.
Common loan lives are 15 and 30 years. Before you get a VA loan and lock in an interest rate, you can actually run some rough number to see how much you'd be paying for 15 or 30 years. This gives you an idea of which length is better for you and how you'd like to parcel out your payments. To get a better idea of what your loan could look like, talk to a VA loan specialist.
