How a VA loan payment is calculated
VA loans are available to eligible veterans, service members and surviving spouses. They require no down payment and have no monthly mortgage insurance. Instead there is a one-time VA funding fee, which most borrowers add to the loan.
The formula
Loan amount = price − down payment + funding fee
Worked example
On a $350,000 purchase with no down payment and a 2.15% first-use funding fee, the fee is $7,525 and the loan is $357,525.
The funding fee is lower with a down payment of 5% or more and higher on later uses. The VA changes the fee table from time to time, so confirm the current rate.
How to use this calculator
Enter the purchase price, any down payment, the interest rate and the loan term, along with the funding fee that applies to you. Add property tax and home insurance to see the full monthly payment. If you are exempt from the funding fee, set it to zero.
More examples: the funding fee on a $350,000 purchase
The fee is a percentage of the loan, so a down payment lowers it twice: the rate drops and the loan it applies to is smaller.
| Situation | Fee rate | Loan before fee | Funding fee | Loan with fee added |
|---|---|---|---|---|
| First use, no down payment | 2.15% | $350,000 | $7,525.00 | $357,525.00 |
| Later use, no down payment | 3.3% | $350,000 | $11,550.00 | $361,550.00 |
| 5% down ($17,500) | 1.5% | $332,500 | $4,987.50 | $337,487.50 |
| 10% down ($35,000) | 1.25% | $315,000 | $3,937.50 | $318,937.50 |
What the fee adds to the monthly payment
At an example rate of 6.5% over 30 years, principal and interest on the $357,525 loan are about $2,260 a month. A borrower who is exempt from the fee borrows $350,000 and pays about $2,212. Adding the first-use fee to the loan costs about $48 a month in this example.
Who is exempt from the funding fee
- Veterans receiving VA disability compensation.
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC).
- Active-duty service members who have received the Purple Heart.
What changes the result
- First or later use: with less than 5% down, the fee is 2.15% on first use and 3.3% on later use.
- Down payment: 5% or more down lowers the fee to 1.5%, and 10% or more lowers it to 1.25%.
- Exemption: an exempt borrower pays no funding fee at all.
- Interest rate and term: these set the principal and interest payment, the largest part of the monthly cost.
Common mistakes
- Leaving the funding fee out of the loan amount. When it is added to the loan, you pay interest on it.
- Using the first-use rate when you have had a VA loan before.
- Assuming no down payment means no cash at closing. Closing costs commonly run 2% to 5% of the loan.
- Reading “no VA loan limit” as “any amount”. The lender still has to approve the loan based on your income and debts.
- Forgetting property tax and home insurance, which a VA loan does not remove.
Related calculators
Compare another low down payment option with the FHA loan calculator. Estimate the fees due at closing with the closing cost calculator, and check the price your income supports with the home affordability calculator.
Frequently asked questions
Who does not pay the funding fee?
Veterans receiving VA disability compensation and some surviving spouses are exempt.
Is there a VA loan limit?
Borrowers with full entitlement have no VA loan limit, though the lender must still approve the amount.
Do VA loans have PMI?
No.
How much is the VA funding fee on a second VA loan?
With less than 5% down, the fee on a later use is 3.3% of the loan, compared with 2.15% on first use. On a $350,000 loan that is $11,550 instead of $7,525.
Does a down payment lower the VA funding fee?
Yes. With 5% or more down the fee is 1.5%, and with 10% or more it is 1.25%. No down payment is required, so this is a choice.
What happens when the funding fee is added to the loan?
You borrow more and pay interest on the fee over the life of the loan. In the example above, adding the $7,525 first-use fee raises principal and interest by about $48 a month at 6.5% over 30 years.
Is the result from this VA loan calculator a loan offer?
No. It is an estimate from the numbers you enter. Your lender confirms your eligibility, your funding fee and the amount you can borrow.