VA Loan Payment & Funding Fee
Last reviewed: May 2026
A VA mortgage calculator estimates monthly payments and total costs for a Veterans Affairs home loan — one of the most favorable mortgage programs available. VA loans offer zero down payment, no PMI, competitive interest rates (typically 0.25–0.5% lower than conventional), and flexible qualification standards. Over 24 million veterans and active-duty service members are eligible, yet many don't fully understand the financial advantages.1
| Feature | VA Loan | Conventional (20% down) | FHA (3.5% down) |
|---|---|---|---|
| Down payment | 0% | 20% | 3.5% |
| PMI/MIP | None | None (at 20%) | For life of loan |
| Funding fee | 1.25–3.3%* | None | 1.75% upfront + 0.85%/yr |
| Typical rate (2025) | 6.0–6.75% | 6.5–7.25% | 6.25–7.0% |
| Credit score min | No VA minimum** | 620–680 | 580 |
| DTI limit | No hard cap*** | 43% | 43–50% |
*Funding fee varies by service type, down payment, and usage. Waived for disabled veterans. **Lenders set their own minimums, typically 580–620. ***Residual income test used instead.
The funding fee is a one-time charge that funds the VA loan program. First-time use with 0% down: 2.15% of the loan amount ($7,525 on a $350K loan). Subsequent use: 3.3%. The fee drops with larger down payments (1.25% at 10%+ down) and is waived entirely for veterans with service-connected disabilities. The fee can be financed into the loan, so it doesn't require upfront cash — but this increases your balance and total interest.2
Beyond zero down and no PMI, VA loans offer: no prepayment penalty, assumable loans (a buyer can take over your VA loan at its existing rate — extremely valuable in rising rate environments), and the VA appraisal process includes a Minimum Property Requirements inspection for buyer protection. VA loans also have the lowest foreclosure rate of any loan type, partly due to the VA's loss mitigation programs that help struggling borrowers avoid default. Use our Mortgage Calculator for side-by-side comparisons.3
Eligible borrowers include active-duty service members (90+ consecutive days), veterans (minimum service requirements vary by era), National Guard/Reserve members (6+ years or 90+ days of active duty), and surviving spouses of service members who died in service or from service-connected disabilities. You can use VA loan benefits multiple times — there's no one-time limit. Your entitlement can be partially or fully restored after paying off a previous VA loan.4
VA loans, guaranteed by the U.S. Department of Veterans Affairs, are among the most powerful mortgage products available. They offer zero down payment, no private mortgage insurance (PMI), competitive interest rates (typically 0.25–0.50% below conventional loans), and more flexible credit requirements. These benefits are available to active-duty service members, veterans, National Guard and Reserve members with qualifying service, and eligible surviving spouses. The VA does not lend money directly — private lenders issue the loans, and the VA guarantees a portion, reducing lender risk and enabling the favorable terms.
| Feature | VA Loan | Conventional (5% Down) | FHA Loan |
|---|---|---|---|
| Down payment | 0% | 3–20% | 3.5% |
| PMI/MIP | None | Required until 20% equity | Required for life of loan |
| Funding fee | 1.25–3.3% (can be financed) | None | 1.75% upfront + annual |
| Typical rate (2025) | 6.0–6.5% | 6.25–7.0% | 6.25–6.75% |
| Min credit score | 580–620 (lender varies) | 620–680 | 580 |
| DTI limit | Up to 60% (with compensating factors) | 43–50% | 43–57% |
While VA loans have no PMI, they do charge a one-time funding fee that ranges from 1.25% to 3.3% of the loan amount, depending on your down payment, service category, and whether it is your first VA loan or a subsequent use. First-time VA borrowers with no down payment pay 2.15%, dropping to 1.5% with 5% down and 1.25% with 10% or more down. The funding fee can be rolled into the loan amount, requiring no cash at closing, but this increases your loan balance and total interest paid. Veterans with service-connected disabilities are exempt from the funding fee entirely, saving thousands of dollars.
VA entitlement is the amount the VA will guarantee — currently up to 25% of the conforming loan limit ($766,550 in most areas for 2025, higher in high-cost counties). With full entitlement, there is no maximum loan amount — you can purchase a home at any price with zero down, though lenders will still evaluate your ability to repay. If you have used part of your entitlement on a previous VA loan that has not been repaid or restored, your remaining entitlement may limit your no-down-payment purchasing power. Entitlement can be restored when you sell the property and pay off the VA loan. Check your home affordability with our Home Affordability Calculator.
The combined benefits of no down payment and no PMI produce enormous savings. On a $350,000 home, a conventional buyer putting 5% down ($17,500) pays approximately $140/month in PMI until reaching 20% equity — typically 7–10 years, costing $11,760–$16,800 in PMI alone. The VA buyer pays zero PMI and keeps the $17,500 down payment invested or in reserves. Even after the VA funding fee ($7,525 for first use with 0% down), the VA buyer saves $10,000–$15,000 over the first decade compared to the conventional borrower. Factor in the typically lower interest rate, and total savings can exceed $20,000 over the life of the loan. Compare your mortgage options with our Mortgage Payment Calculator.
VA loans are restricted to primary residences — you must certify that you intend to occupy the property. However, you can purchase a multi-unit property (up to 4 units) with a VA loan, live in one unit, and rent the others. This "house hacking" strategy lets veterans build rental income while using the VA loan's zero-down, no-PMI advantages. A duplex purchased for $400,000 with zero down, where rental income from the second unit covers a significant portion of the mortgage, can be an exceptional wealth-building strategy. Explore this approach with our House Hacking Calculator and Rental Property Calculator.
VA borrowers have access to two specialized refinancing programs. The Interest Rate Reduction Refinance Loan (IRRRL), commonly called a "VA streamline," allows rate-and-term refinancing with minimal documentation — no appraisal, no income verification, and no credit underwriting in most cases. This makes it one of the fastest, lowest-cost refinance options available when rates drop. The VA Cash-Out Refinance allows borrowing up to 100% of the home's appraised value, compared to 80% for conventional cash-out refinances. This extra equity access can fund home improvements, debt consolidation, or other needs. Both programs include a funding fee (typically 0.5% for IRRRL, 2.15–3.3% for cash-out), which can be financed into the new loan. Compare refinancing options with our Refinance Calculator.
VA loans are assumable, meaning a qualified buyer can take over your existing loan — including its interest rate — instead of obtaining new financing. In a rising rate environment, this can make your home significantly more attractive to buyers. If you have a 3% VA loan from 2021 and current rates are 6.5%, your assumable loan saves the buyer hundreds per month compared to market-rate financing. The buyer does not need to be a veteran, though non-veteran assumers do not receive a VA entitlement restoration. Assumption requires lender approval and typically takes 45–90 days. This feature adds genuine resale value that conventional loans simply do not offer.
The VA funding fee is a one-time charge that helps sustain the VA loan program and varies based on service type, down payment amount, and whether it is the borrower's first VA loan. For first-time use with no down payment, the funding fee is 2.15% of the loan amount — on a $350,000 loan, this adds $7,525 to the total cost. The fee drops to 1.5% with a 5% down payment and 1.25% with 10% or more down. Subsequent use (after the first VA loan) carries a higher fee of 3.3% with no down payment. Veterans receiving VA disability compensation are completely exempt from the funding fee, as are surviving spouses of veterans who died in service or from service-connected disabilities. The funding fee can be financed into the loan rather than paid upfront, though this increases the total loan amount and monthly payment. Purple Heart recipients, regardless of disability rating, are also exempt from the funding fee as of recent legislative changes.
→ Even a small down payment reduces the funding fee. 5% down drops the fee from 2.15% to 1.5%. 10% down drops it to 1.25%. The savings may exceed the opportunity cost of the down payment.
→ Check for funding fee exemption. Veterans with any service-connected disability rating (even 0%) are exempt from the funding fee entirely — saving $5,000–$11,000+.
→ Get your Certificate of Eligibility (COE) first. Apply through eBenefits or your lender. Having your COE ready speeds up the process significantly.
→ Compare VA rates to conventional. VA rates are typically lower, but not always. Get quotes for both to ensure you're getting the best deal.
See also: Mortgage Calculator · Home Affordability · House Hacking · Closing Costs