VA Loan Calculator
VA loans require no down payment and no private mortgage insurance for eligible veterans, active-duty service members, and surviving spouses — making them the most powerful home-buying benefit available to eligible borrowers. Instead of PMI, VA loans carry a one-time funding fee of 2.15% of the loan amount for first-time use with 0% down (2024 rate per VA.gov), which is typically financed into the loan. The non-obvious advantage: VA loans consistently carry the lowest average interest rates of any major loan type — historically 0.25–0.5% lower than conventional rates according to Freddie Mac's Primary Mortgage Market Survey — so the no-PMI and lower-rate combination saves eligible borrowers thousands of dollars per year.
How it's calculated
The VA Home Loan program is guaranteed by the U.S. Department of Veterans Affairs, which allows VA-approved lenders to offer favorable terms with no down payment requirement and no PMI. The guarantee reduces lender risk, which is why rates run lower than conventional.
The VA funding fee replaces PMI as the program's cost-recovery mechanism. For first-time use with 0% down, the fee is 2.15% of the loan amount. For subsequent use, it rises to 3.3%. With a 5% or more down payment, the fee drops to 1.5% (first use) or 3.3% (subsequent use). Service members receiving VA disability compensation of any percentage are exempt from the funding fee entirely, a significant savings. The funding fee is added to the loan balance if not paid at closing, which slightly increases your monthly P&I.
A worked example
You are a first-time VA loan user buying a $400,000 home with 0% down. Your base loan is $400,000. The funding fee at 2.15% is $8,600, financed into the loan for a total balance of $408,600. At 6.25% for 30 years, P&I is $2,516.75 per month. There is no PMI. Compare to a conventional loan on the same home with 5% down ($20,000): base loan $380,000 at 6.75% with 0.9% PMI gives P&I of $2,464.78 plus PMI of $285 = $2,749.78 per month, and you had to bring $20,000 to closing. The VA loan costs $233 less per month even with the higher balance, and required no down payment.
Common mistakes to avoid
- Assuming VA loans are harder to get than conventional. VA loans have no minimum credit score set by VA (though lenders set their own, typically 580–620) and no maximum DTI set by VA — making them accessible to borrowers who might not qualify conventionally.
- Paying the funding fee out of pocket when you may be exempt. Veterans with a VA disability rating of any level are exempt from the funding fee. Surviving spouses of veterans who died in service or from service-connected disability are also exempt. Always verify your status before closing.
- Not shopping lenders. VA rates vary by lender even within the same loan type. The CFPB recommends comparing at least three lenders to ensure you get the best rate and fees.
- Using a VA loan on a home that fails VA appraisal. VA appraisals include minimum property requirements (MPRs) beyond standard market value. Homes with major safety or structural issues can fail VA appraisal, so inspect thoroughly before making an offer.
- Confusing VA loan entitlement with a loan limit. VA removed loan limits for eligible borrowers with full entitlement in 2020 — you can borrow as much as a lender will approve with no down payment, assuming your income and credit qualify.
Frequently asked questions
Who is eligible for a VA home loan?
Eligible borrowers include veterans, active-duty service members, National Guard and Reserve members who meet service requirements, and surviving spouses of veterans who died in service or from a service-connected disability. VA.gov's eligibility page has the specific service duration requirements for each category.
What is the VA funding fee and can it be waived?
The VA funding fee is a one-time charge of 2.15% of the loan amount for first-time use with 0% down (2024 rates). It can be financed into the loan or paid at closing. The fee is waived entirely for veterans receiving VA disability compensation of any rating and for eligible surviving spouses.
Do VA loans have PMI?
No. VA loans have no private mortgage insurance requirement, regardless of your down payment. This is one of the program's most significant financial benefits. The VA funding fee (paid once) serves a similar cost-recovery function for the program but is far less expensive than years of monthly PMI.
Are VA loan rates really lower than conventional rates?
Yes, historically. Freddie Mac's Primary Mortgage Market Survey data consistently shows VA loan rates averaging 0.25–0.5% lower than conventional rates. The VA guarantee reduces lender risk, which translates directly into better pricing for borrowers.
Can I use a VA loan more than once?
Yes. You can use VA loan benefits multiple times as long as your entitlement is restored. Entitlement is typically restored when you sell the home and repay the prior VA loan in full. For subsequent use with 0% down, the funding fee increases to 3.3%. See our affordability calculator to plan your next purchase.