Compare Current Mortgage Rates in Virginia

Mortgage lenders consider many factors when they set mortgage rates, and the factors generally fall into three categories: economic environment, business considerations, and borrower qualifications.

Economic environment

The Federal Reserve uses the federal funds rate to control the money supply in response to economic conditions such as inflation and recession. As the rate increases to ward off inflation and decreases to ease recession, lenders also tend to increase and decrease the rates they charge consumers.

Adjustable-rate mortgage loans are more heavily influenced by a different national rate, called the prime rate. The prime rate is the average rate some of the country’s largest banks charge their best-qualified borrowers. Lenders use the federal funds rate as a base for the prime and then add a margin of about 3%.

Supply and demand is another factor impacting mortgage rates, and it’s influenced by economic conditions such as the employment rate, housing prices, and financial markets. Lenders tend to increase their rates when demand is high and decrease them when demand is lower.

Business considerations

Pricing is a marketing function for lenders just as it is for other types of businesses. Lenders use low mortgage rates — promotional or otherwise — to entice borrowers. They might do so by structuring the loan in a way that can make it difficult to know whether you’re getting a good deal.

Borrower qualifications

Lenders publish rates on their website, but if you look at the fine print, you’ll see that they’ve made certain assumptions, such as a particular (and usually excellent) credit score and advance interest payments called points. 

The rate you get depends on how qualified you are, as determined by factors like:

• Credit score
• Down payment
• Loan-to-value ratio
• Loan type
• How much you borrow
• Loan term
• Home type
• Home location

Virginia doesn’t have a state agency for homebuyers, but it does have a commonwealth-created organization called Virginia Housing that provides mortgage loans and grants that can benefit first-time homebuyers.

Loan programs

In addition to offering VA, FHA, and USDA loans backed by the federal government, Virginia Housing offers the following mortgage loan programs just for Virginia homebuyers:

• Virginia Housing Conventional: A 30-year fixed-rate loan for first-time and repeat buyers. It requires a credit score of 640 and a 3% down payment, but it offers the lowest possible mortgage insurance and allows down payment assistance from multiple sources, including gifts, Virginia Housing grants, and secondary loans.
• Virginia Housing Conventional — No Mortgage Insurance: With 3% down and a 660 or better credit score, first-time and repeat homebuyers can finance a purchase and some of their closing costs with this 30-year fixed-rate loan. Mortgage insurance is not required, and borrowers can use gifts, down payment assistance, and secondary financing for their down payment.
• Virginia Housing Plus Second Mortgage: This is a second mortgage for first-time buyers as well as repeat buyers. It lets you finance your down payment and, with a credit score of at least 680, some closing costs for a Virginia Housing Conventional loan. You can borrow 3% to 5% of the purchase price. 
• Virginia Housing Loan Combo: This program packages a low-cost Virginia Housing mortgage loan with a down payment grant and a free homebuyer class.

Grants

Virginia Housing has two grants available to first-time homebuyers. These are outright grants, so you never have to pay back the funds.

Down payment assistance grant

First-time homebuyers who take out an eligible Virginia Housing loan can qualify for a down payment grant of 1% of the home purchase price, depending on the loan. The grant has income restrictions and requires that your mortgage loan be locked before you can reserve the funds.

Closing cost assistance grant

This grant is for first-time homebuyers purchasing a home using a VA loan backed by the U.S. Department of Veterans Affairs or a rural housing loan backed by the United States Department of Agriculture, obtained through Virginia Housing. It can reduce your out-of-pocket closing costs, including the rural housing guarantee fee or VA funding fee, by up to 2% of the purchase price.

Getting the best mortgage rate in Virginia is a matter of leveraging the factors lenders consider when determining how much to charge you for a loan:

• Increase your credit score: While you can take out a conventional loan with a credit score as low as 620, a higher score will earn you a better rate. According to MyFICO, raising your score from the 620-639 range to 640-659 will save you nearly $43,000 in interest on a 30-year, $300,000 loan obtained in Virginia. 
• Make a bigger down payment: You can buy a home with little or no money down, depending on the loan, but you’ll get a better rate with a large down payment. Put down 20% or more to avoid mortgage insurance, which will reduce your annual percentage rate even more. 
• Compare rates from multiple lenders: Once you’ve optimized your financial position, ask for rate quotes from several different lenders to see which one offers you the best deal. Make sure to compare apples to apples — the same type of loan, for the same loan term.
• Get the shortest loan term you can afford: Short-term loans have lower interest rates because there’s less chance that a borrower will default. Opting for a 15- or 20-year mortgage instead of a 30-year loan will result in higher payments but significant savings on interest over time.
• Buy discount points: A discount point is 1% of your loan amount that you pay at closing as an advance interest payment in exchange for a lower interest rate. This can save you money if you’ll own your home long enough to break even — that is, save more in interest payments than you paid in points. A mortgage calculator can do the math for you.
• Think twice before locking in a rate: Until you lock in the rate quoted by your mortgage lender, it’s subject to change. If you’re reasonably sure rates will drop in the short term, hold off. 

Whether you’re a first-time buyer or have owned several homes, you have several mortgage options for your next purchase. 

Conventional

• Standard loan type eligible for purchase by Fannie Mae and Freddie Mac
• Available with fixed or adjustable rate
• Minimum credit score: 620
• Minimum down payment: 3%
• Terms available: 10 to 30 years

FHA

• Government-insured loans for creditworthy borrowers who don’t qualify for conventional loan
• Available with fixed or adjustable rates
• Minimum credit score: 500
• Minimum down payment: 3.5% with a credit score of 580 or higher, 10% with a credit score of 500-579
• Terms available: 15 to 30 years

VA

• VA-guaranteed loan for veterans and active-duty military and their eligible family members
• Available with fixed or adjustable rates
• Minimum credit score: Varies by lender but typically 620
• Minimum down payment: Down payment not required
• Terms available: 15 to 30 years

USDA

• USDA-guaranteed loan for low- to moderate-income borrowers purchasing in rural-designated area
• Fixed rates only
• Minimum credit score: 640
• Minimum down payment: Down payment not required
• Terms available: 30 years

Jumbo

• Large loan that exceeds the conforming limit for conventional loans
• Available with fixed or adjustable rates
• Minimum credit score: Varies by lender, but typically at least 700
• Minimum down payment: Varies by lender, but typically 20% or more
• Terms available: Up to 30 years