What makes a VA loan different
VA loans are a benefit for eligible veterans, service members and certain surviving spouses. Their two standout features are no required down payment and no monthly mortgage insurance — a meaningful saving compared with FHA or low-down conventional loans, which charge insurance for years.
In place of ongoing insurance, the VA charges a one-time funding fee that helps keep the program self-sustaining. Most borrowers finance this fee rather than pay it in cash, so this calculator adds it to the base loan and amortizes the larger total to estimate the monthly payment.
How the funding fee fits in
The chart shows how the total loan divides between the base amount you are financing for the home and the funding fee rolled on top. The fee is a percentage of the base loan, so a larger purchase or a smaller down payment makes it bigger in dollar terms.
Because the fee is usually financed, you pay interest on it over the life of the loan. That is the trade-off for avoiding both a down payment and monthly insurance.
Why the fee rate varies
The funding fee is not a single flat number.
- It is lower if you make a down payment, and lower still at 10% or more down.
- First-time use of the benefit carries a lower rate than subsequent uses.
- Veterans receiving compensation for a service-connected disability are typically exempt from the fee entirely.
- A common first-use, zero-down rate is around 2.15%, the default used here.
Caveats
Funding fee rates are set by the VA and change periodically, and eligibility and exemptions depend on your service record. The estimate covers principal, interest and the financed fee only — it excludes property taxes, homeowners insurance and any HOA dues. Confirm your figures with a VA-approved lender. This is general information, not financial advice.
Formula
loanBase = price − down; fundingFee = loanBase·rate%; loan = loanBase + fundingFee; payment = amortized(loan)Frequently asked questions
- Does the VA funding fee vary?
- Yes. It depends on the down payment and whether it is your first VA loan. A common first-use rate with no down payment is 2.15%.