How the calculator works
A VA-backed loan is made by a private lender and guaranteed by the Department of Veterans Affairs. It has no private mortgage insurance and no monthly mortgage insurance premium. Most borrowers instead pay a one-time VA funding fee.
- Base loan = price minus any down payment (or, for a refinance, the new loan amount).
- Funding fee = base loan × the rate for your loan purpose, down payment and prior VA loan use (table below). It is 0 if you are exempt.
- If you finance the fee, it is added to the loan. Otherwise you pay it at closing.
- Monthly payment = principal and interest on the total loan, plus property tax, homeowners insurance and any HOA charges.
VA funding fee rates
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
| Loan type | Fee |
|---|---|
| Cash-out refinance, first use | 2.15% |
| Cash-out refinance, after first use | 3.3% |
| Interest rate reduction refinance (IRRRL) | 0.5% |
| Loan assumption | 0.5% |
| Manufactured home (not permanently affixed) | 1% |
If your only previous VA loan was for a manufactured home, you still pay the first-use rate.
Worked example
You are using your VA home loan benefit for the first time to buy a $400,000 home with no down payment, at 6.25% for 30 years.
- Funding fee: $400,000 × 2.15% = $8,600. Financed, the total loan is $408,600.
- Principal and interest: about $2,516 a month.
- With $6,000 a year in property tax and $1,800 in insurance, the payment is about $3,166 a month.
- Put 5% ($20,000) down and the fee drops to 1.5% of $380,000, or $5,700. Principal and interest falls to about $2,375.
- If this were your second VA loan with no down payment, the fee would be 3.3%, or $13,200.
At the same rate, an FHA loan on that home with 3.5% down would cost about $3,245 a month in year one, because of FHA's upfront and annual mortgage insurance. Actual VA and FHA rates usually differ, so compare real quotes.
Edge cases
- Down payment. VA doesn't require one as long as the price isn't above the appraised value, but a lender may ask for one if your remaining entitlement doesn't cover enough of the loan. The maximum VA loan is the lower of the appraised value or the price.
- Credit score. VA doesn't set a minimum, but many lenders do, and they review income, debts and assets.
- Closing costs. On a purchase, only the funding fee can be financed. Other fees are paid at closing, and the seller may pay some. Estimate them with the closing cost calculator.
- Condos and co-ops. See FHA and VA loans for NYC condos and co-ops.
What to do next
Check your price range with the home affordability calculator, compare the FHA loan calculator and the USDA loan calculator, and get your Certificate of Eligibility (COE), the proof lenders need. You can request it online from VA, and your lender may be able to get it for you through VA's online system.