How to calculate a VA loan payment with the funding fee
Take the VA loan in the answer above: a $360,000 home with $0 down, at 6.50% a year over 360 monthly payments.
- Start with the funding fee, a one-off charge on the price less the down payment, rounded to the cent. For a first use of the benefit with 0% down the statute sets its rate at 2.15%, and here the fee is added to the loan. $360,000 − $0 = $360,000 $360,000 × 2.15% = $7,740 $360,000 + $7,740 = $367,740 borrowed
- Divide the annual rate by twelve to get the rate for one month. It does not come out exactly, so the figure below is rounded; the calculator keeps the exact twelfth. 6.50% ÷ 12 ≈ 0.5417% a month
- Put it into the standard loan payment formula, where P is the amount borrowed, r the monthly rate and n the number of monthly payments. P × r ÷ (1 − (1 + r)^−n) = $367,740 × 0.5417% ÷ (1 − (1 + 0.5417%)^−360) = $2,324.37
- This calculator rounds each month's interest to two decimal places and uses the smallest payment that brings the balance to exactly zero after 360 payments. Here that is the same figure: $2,324.37 a month.
- In the first month the interest is the balance times the annual rate, divided by twelve and rounded to two decimal places, and the rest of the payment repays the loan. $367,740 × 6.50% ÷ 12 = $1,991.93 interest $2,324.37 − $1,991.93 = $332.44 repaid $367,407.56 still owed
- Every month repeats that on a smaller balance, and the last payment, $2,320.46, only clears what is left. Over 360 payments you pay $836,769.29 in all, and everything above the amount borrowed is interest. $836,769.29 − $367,740 = $469,029.29 interest
Property tax, home insurance and any association fee come to $500 a month, the yearly bills divided by twelve. Add that to the $2,324.37 instalment and you have the $2,824.37 a month in the answer above; a VA loan has no monthly mortgage insurance on top.
No deposit, no monthly insurance, one fee
A VA loan is the only mainstream way to buy a house in the United States with nothing down and no monthly mortgage insurance. Both of those are unusual and the second is the one that matters most over time: a conventional or FHA borrower at a small deposit pays an insurance premium every month for years, and a VA borrower pays none at all.
What pays for the guarantee instead is a single funding fee, charged once at closing and usually added to the loan. Over a full term the trade is almost always in the borrower's favour, which is why the comparison is worth making rather than assuming.
The fee depends on three things, and one of them is the date
The rate is set by the deposit, by whether the entitlement has been used before, and by when the loan closes. Nothing down attracts the highest rate, five per cent lowers it, ten per cent lowers it again, and a repeat use at nothing down currently costs more than a first use.
The dependency almost nobody knows about is the last one. The statute writes its table as rows each carrying a window, and the rates in force are legislated to step down to lower ones in June 2034. That is in the law today; it is not in the Department's summary page, and it is not in most calculators. This page reads the table by date so that it stays right rather than becoming wrong on a particular morning.
The exemption
A borrower receiving compensation for a service-connected disability pays no funding fee at all, and there are other exempt categories. On a typical purchase that is several thousand dollars, so the box is worth ticking and worth checking.
Whether it applies is the Department's determination and not something a calculator can work out. It is recorded on the certificate of eligibility, which is also where entitlement is confirmed.
What this page does not model
Eligibility of any kind, entitlement already used on another property, the rules for a loan assumed from somebody else, interest rate reduction refinances, and Native American Direct Loans are all outside it. There is no loan limit here because a borrower with full entitlement does not have one, and closing costs other than the funding fee are not included.
Common questions
Is a VA loan calculator the same as a VA mortgage calculator?
Yes, and a VA home loan calculator is the third name for it. They all mean a purchase loan guaranteed by the Department of Veterans Affairs, which is what this page prices.
Is there really no mortgage insurance?
None. Not at nothing down, not at any deposit. The funding fee replaces it, and it is charged once rather than monthly.
Should I put money down if I do not have to?
Five per cent cuts the funding fee substantially and ten per cent cuts it again, so a deposit does more here than simply reducing the loan. Whether that beats keeping the cash depends on what else the money is for.
Is there a limit on how much I can borrow?
Not for a borrower with full entitlement. The limits that used to apply were removed, and what binds instead is what a lender will advance on the income and the property.
Is anything I type stored?
No. The calculation happens on the server as part of rendering the page, nothing is written down, and the access log for this site drops the query string precisely so that the numbers you enter are never recorded.
Sources
The fee table is read from the statute rather than from the summary page, because the summary does not carry the dates the rates change on.
How the payment is worked out
The funding fee is charged on the price less the deposit, at the rate the statute sets for that deposit band, that use of the entitlement and that closing date. Financed, it is added to the loan and can push the loan above the price, which the programme allows.
There is no loan limit for a borrower with full entitlement, so the page does not ask for one. Eligibility, entitlement and the certificate that proves them are the Department's business and not something arithmetic can determine.