VA Loan Calculator

The payment formula

Principal and interest come from the standard amortization formula M = P × i / (1 − (1 + i)^−n), where P is the total financed balance (home price minus down payment, plus the funding fee), i is the monthly interest rate and n is the number of monthly payments.

Because interest is charged on the remaining balance, the first payment goes almost entirely to interest. On a $326,880 balance at 6.5% — a $320,000 base loan with a $6,880 funding fee — about $1,771 of the first payment is interest and only around $296 reaches the principal.

How the VA funding fee works

The funding fee is a percentage of the base loan — the price less your down payment — not of the home price. The tiers below are the VA rates current as of 2026.

First use, purchase or construction: 2.15% with a down payment under 5%, 1.5% at 5% to 9.99% down, and 1.25% at 10% or more down. Subsequent use: 3.3% under 5% down, 1.5% at 5% or more down, and 1.25% at 10% or more down. Cash-out refinances are 2.15% first use and 3.3% subsequent use; an interest rate reduction refinance loan (IRRRL) is 0.5%. Veterans with a 10% or higher service-connected disability rating, and certain surviving spouses, are exempt and pay no fee.

Why VA loans skip mortgage insurance

The VA guarantee replaces mortgage insurance. Because the government promises to cover part of the debt if the borrower defaults, lenders can offer the loan without private mortgage insurance even at zero down. The funding fee is the price of that guarantee.

Compared with a conventional loan that charges PMI below 20% down, the VA route usually carries a lower rate and no monthly insurance premium, so a veteran-style payment can come in lower even with the fee financed into the balance.

Assumptions behind the numbers

The schedule assumes equal monthly payments with interest charged on the outstanding balance, the funding fee financed into the loan at the same rate, no extra payments and no early payoff. The rate you enter is a nominal annual rate compounded monthly.

The estimate covers principal and interest only. Property taxes, homeowners insurance and HOA dues are separate costs you would add on top, so this page is the right tool for comparing VA payment math rather than a full escrow estimate.

Comparing a VA offer with a conventional one

The comparison that matters is not the rate on its own but the payment including everything the loan carries. A VA loan can go to zero down, which raises the balance and therefore the monthly payment, while the funding fee is financed into that same balance and earns interest for the whole term.

Put the funding fee where it belongs before comparing. It is charged on the base loan rather than on the price, and it is normally financed instead of paid at closing; a borrower who pays it in cash has a smaller balance and a smaller payment for thirty years, which is why the fee is printed separately above the schedule.

The VA advantage shows up in what is missing rather than in the rate: no monthly mortgage insurance premium, where an FHA loan at the same price would carry one for the life of the loan. Compare the two totals, not the headline rates.