News · Oct. 14, 2026
Mortgage rates hit 7.40%: what it means for VA loan buyers in Chicago
Short answer
Mortgage rates rose again in early October 2026. Freddie Mac’s weekly average for a 30-year fixed loan hit 7.40% on Oct. 8, up from 7.28% a week earlier and 6.30% a year ago. VA loan rates were lower: Optimal Blue’s 30-year VA average was 7.13% the same day. For a Chicago buyer financing $400,000 with a VA loan and the funding fee rolled in, principal and interest at 7.13% is about $2,754 a month.
This week’s numbers
| Measure | Rate | Source |
|---|---|---|
| 30-year fixed, conventional average (week of Oct. 8) | 7.40% | Freddie Mac |
| 30-year fixed, a week earlier | 7.28% | Freddie Mac |
| 30-year fixed, a year earlier | 6.30% | Freddie Mac |
| 15-year fixed (week of Oct. 8) | 6.73% | Freddie Mac |
| 30-year VA, locked rates (Oct. 8) | 7.13% | Optimal Blue, via CNBC |
Averages, not quotes. Your rate depends on credit, points and the lender. Freddie Mac publishes a new average every Thursday.
What it costs on a $400,000 Chicago home
| Loan | Down payment | Loan amount | Rate | Principal and interest |
|---|---|---|---|---|
| VA, first use | $0 | $408,600 (with 2.15% fee) | 7.13% | about $2,754 |
| VA, disability-exempt | $0 | $400,000 | 7.13% | about $2,696 |
| Conventional, 5% down | $20,000 | $380,000 | 7.40% | about $2,631 plus PMI |
The conventional payment looks lower, but it needs $20,000 down and adds private mortgage insurance until you reach 20% equity. The VA buyer keeps that cash and never pays monthly mortgage insurance. Taxes and insurance are extra in every case. VA vs. conventional in full.
What to do in a 7% market
- Get two or three Loan Estimates on the same day. Freddie Mac’s chief economist noted that shopping for multiple quotes can save borrowers thousands.
- Ask the seller for a rate buydown instead of a price cut. Seller-paid points are a closing-cost credit. How seller credits work.
- Look for assumable VA loans. Many Chicago-area sellers have VA loans from earlier years at much lower rates. How assumptions work.
- Hold off on an IRRRL unless your current rate is well above today’s. Check your break-even.
Common questions
What are VA loan rates in October 2026?
Optimal Blue’s 30-year VA average was 7.13% on Oct. 8, 2026, below Freddie Mac’s 7.40% weekly average for conventional 30-year loans.
Are VA loan rates lower than conventional rates?
Usually. On Oct. 8, 2026 the 30-year VA average was 7.13% versus 7.40% for the conventional average, and VA loans have no monthly mortgage insurance.
What is the payment on a $400,000 VA loan at 7.13%?
With the 2.15% funding fee financed, the loan is $408,600 and principal and interest is about $2,754 a month, before taxes and insurance.
Sources
What will your VA funding fee be?
Enter a price and down payment to see the 2026 fee, or check whether you are exempt.
An independent guide. Not affiliated with or endorsed by the U.S. Department of Veterans Affairs, and not a lender. General information, not legal, tax or financial advice.