How a VA loan payment is worked out
A VA loan is a mortgage backed by a guaranty from the US Department of Veterans Affairs, arranged through an ordinary private lender rather than the VA itself. The guaranty is what lets a lender accept no down payment at all, as long as the sale price does not exceed the home's appraised value, and it stands in for the mortgage insurance a low-down-payment loan would otherwise need. The monthly principal-and-interest part uses the same amortising formula as any repayment mortgage, covered in more general terms by our Mortgage Calculator:
What makes a VA loan distinct is what feeds P. Start with the price minus the down payment, the base loan, then add the VA funding fee if it is financed, which is the default both here and in most real closings. Run the calculator's own defaults through it: a $350,000 home, 0% down, a first-time VA loan at 6.00% over 30 years. The base loan is the full $350,000, the funding fee at 2.15% adds $7,525, and the final loan amount financed is $357,525. That returns a monthly principal-and-interest payment of $2,143.54, the same figure shown above by default before any property tax or insurance is added.
The VA funding fee, and why it exists
The VA loan programme is designed to fund itself rather than draw on general tax revenue, and the funding fee is how: a one-time percentage of the loan, paid once at closing, that keeps the guaranty programme running for the next borrower. It replaces the ongoing mortgage insurance premium charged on other low-down-payment loans, rather than sitting alongside one.
The fee is set in law, not by any individual lender, and it depends on two things: whether this is your first VA loan or you're using the benefit again, and how much you put down. Verified against VA.gov and the VA's own circular on funding fee rates, the current purchase-loan schedule is:
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% or more | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Put down at least 5% and first use versus subsequent use stops mattering, since both land on the same tier. Below 5% down, using the benefit again costs noticeably more, 3.30% against 2.15%, which is one more reason a larger down payment can be worth it even on a loan that doesn't require one.
Why there's no monthly mortgage insurance
This is the VA loan's other headline feature, and it holds regardless of the down payment: a VA-backed loan never carries a monthly mortgage insurance premium, private or otherwise, no matter how small the down payment is. The one-time funding fee above is the entire cost of the guaranty; there is nothing recurring behind it. That is a genuinely different shape of cost to an FHA or a low-down-payment conventional loan, both of which charge mortgage insurance every month for as long as the loan carries enough risk to require it, on top of any upfront premium. The "VA against FHA-style and conventional" table further down puts real numbers next to that difference for the same purchase.
The funding fee exemption
Some borrowers pay no funding fee at all, and it is worth checking before assuming the fee applies. Verified against VA.gov: veterans receiving VA compensation for a service-connected disability are exempt, as are veterans who would qualify for that compensation but draw retirement or active-duty pay instead, service members with a Purple Heart awarded on or before closing, those with a pre-discharge proposed or memorandum rating confirming eligibility, and certain surviving spouses receiving Dependency and Indemnity Compensation. The exemption switch above applies it exactly, dropping the fee to $0 regardless of first or subsequent use or down payment.
Who qualifies, at a high level
Eligibility runs through military service rather than income or credit alone, though a lender still underwrites the loan itself. In broad terms it covers veterans who meet a minimum length-of-service test that varies by era of service, active-duty service members currently serving, National Guard and Reserve members meeting their own service and activation rules, and certain surviving spouses of service members who died in service or from a service-connected disability. Confirming your own standing takes a Certificate of Eligibility (COE), the document a lender uses to verify VA loan eligibility, obtainable through a lender, directly on VA.gov, or by mailing VA Form 26-1880. Affordability itself is judged mainly through residual income, the money left over each month after the mortgage, other debts, and estimated living costs, using regional VA tables rather than a simple income multiple; this calculator does not model that residual-income test, so it is worth checking with a lender alongside the numbers above.
VA against FHA and conventional financing
The comparison table above runs the same price, rate, and term through three shapes of financing, so the mortgage-insurance difference is visible on its own rather than buried under other assumptions. The FHA-style column assumes a minimum 3.5% down payment, the typed upfront MIP rate added to the loan, and the typed annual MIP rate charged every month; the conventional column assumes a minimum 3% down payment, no upfront premium, and the typed PMI rate charged every month only while the down payment stays under 20%. At the calculator's own defaults, 0% down, that puts the VA loan's total monthly payment at $2,143.54 against roughly $2,215 as FHA-style and roughly $2,191 as conventional, almost entirely down to the monthly premium neither VA borrower ever pays. Over 5 years that gap alone runs into several thousand dollars, and it keeps compounding over 10, all before weighing it against the VA funding fee, which is paid once rather than every month. Real FHA and conventional quotes can carry a different rate than the VA rate entered above, so treat this as an honest mortgage-insurance comparison rather than a full quote-for-quote one.
Seller concessions, honestly
A seller can contribute money toward a VA purchase, including covering the funding fee itself, but concessions of that kind are capped at 4% of the home's VA-determined value; ordinary seller-paid closing costs and discount points sit outside that cap and are not limited the same way, so a seller covering closing costs on top of a 4% concession is normal, not a loophole.
Questions people ask
Do I really need $0 down for a VA loan?
Zero down is genuinely available on a VA loan, the programme's headline feature, provided the agreed sale price does not exceed the home's appraised value; if it does, the difference is typically paid in cash. Putting money down is still allowed and lowers both the loan amount and the funding fee tier, but it isn't required the way it is on most other financing.
What is the VA funding fee and can it be avoided?
It's a one-time percentage of the loan, paid at closing or financed into the loan, that funds the VA loan guaranty programme rather than drawing on general tax revenue. It replaces monthly mortgage insurance rather than sitting alongside it. It can be avoided entirely if you qualify for the funding fee exemption; otherwise it's a standard part of a VA purchase loan.
Am I exempt from the funding fee?
Veterans receiving VA compensation for a service-connected disability are exempt, along with veterans who would qualify for that compensation but draw retirement or active-duty pay instead, Purple Heart recipients, certain pre-discharge disability ratings, and certain surviving spouses receiving Dependency and Indemnity Compensation. A lender confirms exemption status against your Certificate of Eligibility during underwriting.
Why is there no monthly mortgage insurance on a VA loan?
The VA's guaranty to the lender takes the place of the mortgage insurance a low-down-payment loan would otherwise carry, so no monthly premium is ever charged, regardless of down payment. The one-time funding fee is the full cost of that guaranty rather than a smaller ongoing charge on top of it.
What's the difference between first use and subsequent use?
First use is the first time your VA loan entitlement backs a loan; subsequent use is any time after, including if a previous VA loan was paid off or entitlement was restored. Subsequent use only costs more at the lowest down-payment tier, below 5% down, where the fee rises from 2.15% to 3.30%. At 5% down or more, both cost exactly the same.
Who qualifies for a VA loan?
Eligibility generally covers veterans meeting a minimum length-of-service requirement that varies by era, active-duty service members, National Guard and Reserve members meeting their own service rules, and certain surviving spouses. A Certificate of Eligibility, obtained through a lender or directly on VA.gov, confirms individual standing, and the lender still runs its own credit and affordability review on top of it.
Can the seller pay my closing costs and funding fee?
Yes, within limits. Concessions that cover things like the funding fee or paying off buyer debts are capped at 4% of the home's VA-determined value. Ordinary seller-paid closing costs and discount points are not counted against that 4% cap, so a seller can often cover both without hitting the limit.
This calculator gives an estimate for a standard VA purchase loan and is not financial, legal or lending advice. Eligibility, exemption status, residual income and the exact funding fee on any real loan are determined by a VA-approved lender against your Certificate of Eligibility, not by this page. Speak to a VA-approved lender before making a decision.