Home Loans with the Lowest Interest Rates

Buying a home often involves shopping around for the best mortgage rates. It only makes sense to go with the lender that offers you the best deal and most attractive loan terms. But with rates climbing higher in the past few months, doing this type of investigative research is becoming increasingly important for buyers. If you’re looking to get a good deal, it’s important not only to compare lenders, but also loan programs. Below, we’ve discussed the different types of home loans that offer the lowest interest rates.

What Type of Loan Has the Lowest Rate?

Of all the different types of loans out there, the ones that have the best rates are usually VA loans. The VA loan program is part of the GI Bill of Rights. However, these loans are only given to individuals who are currently or have served in the U.S. armed forces, as well as some surviving spouses.

If you’re looking for a low-interest rate option, but have no military affiliation, you may need to search elsewhere.

What Other Low Interest Home Loans Are Out There?

Getting a low-interest rate on your mortgage can save you a lot of money in the long run. Shopping around and comparing your options may seem time-consuming, but it will pay off eventually. These options usually offer lower rates:

USDA

The type of loan with the next to lowest rate is the USDA loan. USDA loans are also backed by the federal government. While the rates may not be quite as low as a VA loan, they’re still substantially lower than conventional mortgages. They can even be lower than FHA rates. However, there are a few caveats.

First, you have to buy a home in an eligible rural area in order to qualify. The whole purpose of the program is to encourage people to move to rural areas. Secondly, your income cannot exceed the allowed amount, since this option is meant for individuals who take home a low to moderate salary.

FHA

If moving to a rural area doesn’t appeal to you or you cannot qualify for a USDA loan because of your income, consider an FHA loan. FHA rates are backed by the federal government. For this reason, FHA rates are sometimes lower than conventional mortgages. However, this is only the case if the buyer has good credit, stable income, and is deemed to be generally low risk.