Rates Top 7%, but VA Loans Can Keep Veteran Buyers in Play

Mortgage rates have climbed back above 7%, cutting purchasing power and putting more pressure on sellers to find buyers who can still make the numbers work. One group may have more room than it realizes: veterans and eligible military-connected buyers who can use Department of Veterans Affairs financing.

As of October 15, 2026, the average locked rate for a 30-year VA mortgage was 6.90%, compared with 7.29% for a conforming loan, according to Optimal Blue data cited by Realtor.com News. On a $415,000 balance, that 0.39-percentage-point difference works out to roughly $109 less per month in principal and interest, or more than $1,300 per year.

That financing advantage matters to sellers because a smaller monthly payment can help preserve a buyer’s budget when higher rates would otherwise force a lower offer. It does not guarantee approval or a smooth closing, but it can keep qualified veteran buyers active while other borrowers retreat.

Higher rates are shrinking the workable buyer pool

The recent rate movement has been substantial enough to change what buyers can afford. Mortgage rates rose from 6.66% in late August to 7.03% by September 24. Realtor.com estimated that the increase erased about $11,500 in purchasing power for a buyer operating with a fixed monthly budget.

For sellers, lost purchasing power can appear as fewer showings, lower initial offers or buyers asking for price reductions and closing-cost assistance. Homes that were priced near the top of a buyer’s range can suddenly fall outside it even when the buyer’s income and savings have not changed.

VA financing can soften that effect for eligible borrowers. Approved buyers may be able to finance the full purchase price without a required down payment and avoid monthly private mortgage insurance. Preserving cash can help buyers cover closing, moving and post-purchase expenses instead of exhausting their reserves before they receive the keys.

VA eligibility may be more common than sellers assume

The challenge is that many veterans do not fully understand the benefit. In a 2026 survey commissioned by VA lender NewDay USA, only 32% of current and former service members knew that a VA loan could be available without a down payment. Almost four in 10 were unsure, while 30% did not know whether they qualified for VA financing at all.

VA loans are already important among military-connected purchasers. National Association of Realtors data showed that 55% of veterans who bought homes in 2025 used VA financing. Among surveyed borrowers who had previously used the program, 47% said they could not have purchased without it.

For a seller, that means the visible pool of buyers may understate actual demand. A veteran who assumes a large down payment is necessary might delay shopping, target a lower price range or never seek preapproval. Better awareness could return some of those buyers to the market, particularly in communities with a sizable military or veteran population.

Sellers cannot control whether prospective buyers understand their benefits. They can, however, make sure their listing agent does not casually discourage VA-backed offers or treat them as automatically weaker. The financing label alone says little about the borrower’s income, approval status, reserves, proposed timeline or ability to close.

A zero-down offer is not automatically a weak offer

Sellers often use down-payment size as shorthand for financial strength. That shortcut can be misleading with VA financing. An eligible buyer might put little or nothing down because the program permits it, not because the buyer lacks income or has failed to prepare.

Compare offers using the terms that affect the transaction: purchase price, requested seller credits, earnest money, financing and appraisal conditions, inspection terms, lender readiness and proposed closing date. Ask for clear documentation of preapproval and have the listing agent confirm that the lender has reviewed the buyer’s eligibility and financial file.

Property condition and valuation still matter. Before accepting any financed offer, sellers should discuss known repair issues, likely appraisal concerns and the consequences if the home does not support the contract price. That review is more useful than rejecting a VA offer based on assumptions about delays or complexity.

Apply the same written standards to every offer. A conventional buyer with a larger down payment may still request costly credits or have a fragile approval. A VA buyer may present cleaner terms and a dependable lender. Financing type is one part of the risk assessment, not the entire decision.

Net proceeds and timing should drive the decision

The strongest headline price does not always produce the strongest seller outcome. A $415,000 offer with substantial credits, repair demands or a longer carrying period can net less than a slightly lower offer with limited concessions and a predictable closing. Sellers should request an estimated net sheet for each serious proposal rather than comparing prices alone.

Rate pressure also affects days on market. If a home sits while buyers lose purchasing power, the seller may face another price cut, additional mortgage payments, taxes, insurance and maintenance. A well-qualified VA buyer who can close on workable terms may be more valuable than waiting for a hypothetical conventional buyer at a marginally higher price.

The practical takeaway is not that sellers should prefer one loan program. It is that they should recognize how VA financing can preserve demand in a market where rates above 7% are sidelining other borrowers. Evaluate the borrower, the property, the timeline and the expected net proceeds. That produces a clearer decision than judging an offer by its down payment alone.