How VA loans differ
VA home loans, guaranteed by the Department of Veterans Affairs, need no down payment (with full entitlement) and have no monthly mortgage insurance, even with nothing down. Instead there's a one-time funding fee, which can be added to the loan or paid at closing.
Entitlement is the amount VA will guarantee for you. With full entitlement, VA sets no loan limit, as long as you can afford the loan and the appraisal supports the price. If part of your entitlement is tied up in another VA loan, your lender may ask for a down payment. VA's loan limits page explains how this works, and the eligibility page covers the service requirements and the Certificate of Eligibility (COE) your lender will ask for.
The funding fee
For a purchase, the fee depends on your down payment and whether you've used a VA loan before:
- Less than 5% down: 2.15% the first time, 3.3% after that.
- 5% to less than 10% down: 1.5%.
- 10% or more down: 1.25%.
Veterans receiving VA compensation for a service-connected disability, surviving spouses receiving Dependency and Indemnity Compensation, and some others are exempt. Tick “exempt” above if that's you. VA lists every exemption on its funding fee page.
How the calculator works it out
The base loan is the price minus your down payment. The calculator picks the fee rate from your down payment as a share of the price and the “first VA loan” box, and multiplies it by the base loan:
funding fee = base loan × fee rate
With “Add the upfront funding fee to the loan” ticked, the fee is added to the amount borrowed and the payment is worked out on the total. Unticked, it's shown as a cost at closing, and the loan is just the base amount. Either way the monthly payment has no mortgage insurance line, so what you see is principal and interest, plus any property tax and homeowners insurance you enter.
Worked examples
All use a $400,000 home at 6.5% over 30 years, before taxes and insurance.
No down payment, first use
The fee is 2.15% of $400,000, or $8,600. Added to the loan, that's $408,600, and the payment is $2,582.63 a month. Paying the $8,600 at closing instead makes the payment $2,528.27 and saves about $10,970 of interest over 30 years. If you're exempt, you get the $2,528.27 payment with no fee at all.
No down payment, later use
On a second or later VA loan with less than 5% down, the fee is 3.3%: $13,200, for a loan of $413,200 and a payment of $2,611.71.
5% and 10% down
With $20,000 down, the base loan is $380,000 and the fee drops to 1.5%, or $5,700, whether or not it's your first use. The loan is $385,700 and the payment $2,437.89. With $40,000 down, the fee is 1.25% of $360,000, or $4,500, for a loan of $364,500 and a payment of $2,303.89.
A shorter term changes the picture more than the fee does. With nothing down on a first use over 15 years, the payment is $3,559.34, but total interest is about $232,080, against about $521,150 over 30 years.
Pitfalls and things to check
- Down payment bands are thresholds. Just under 5% down pays the higher fee, so check how close you are.
- Add property tax and homeowners insurance in the “Taxes, insurance” section. They're part of your real monthly cost even without mortgage insurance.
- The results leave out lender fees and other closing costs. VA limits seller concessions to 4% of the home's reasonable value; your lender can explain what the seller may pay.
- The results don't check eligibility. VA and your lender both have credit, income and occupancy requirements.
- The fees shown are VA's purchase fees. For a refinance, check VA's funding fee page.
Common questions
Does a VA loan have PMI?
No. VA loans have no monthly mortgage insurance, whatever the down payment. The funding fee takes its place.
Who doesn't have to pay the funding fee?
Veterans receiving VA compensation for a service-connected disability, and several other groups listed on VA's funding fee page. Your lender can confirm whether you qualify.
Should I finance the funding fee?
Financing means less cash at closing but more interest over the loan. Untick the box above to compare both.
What credit score do I need?
VA's eligibility page doesn't set a minimum score; it says you must meet credit requirements from both VA and your lender. Ask your lender what theirs are.
Is VA cheaper than FHA or conventional?
It depends on your rate and down payment. Put them side by side in compare mortgages, or check the FHA calculator. The affordability calculator also handles VA loans.
Funding fees from VA Circular 26-23-06 (in effect for loans closed before 9 June 2034), current as of 21 September 2026.