VA Loan Calculator with Service-Based Funding Fees: Check Your VA Eligibility

VA loans are hands-down the best mortgage product on the market. They require no down payment, and they are lenient about credit scores and income levels.

Our VA mortgage calculator shows your buying power when you use this powerful loan product.

With zero down payment and no monthly mortgage insurance, you might be surprised how much house you can afford.

VA mortgage eligibility

VA loans are typically available to those who meet the following qualifications:

• Eligible military service (typically 2 years on active duty or 6 years in the Reserves or National See our eligibility guide)
• A credit score of 620 or higher (although some lenders accept lower scores)
• A debt-to-income ratio of 41% or less (higher DTI acceptable with compensating factors)
• 1-2 years of consistent employment history (most likely 2 years if self-employed)
• A property that meets VA standards and will be used as your primary residence

These are general guidelines, however, and home shoppers should get a full qualification check and pre-approval letter from a VA lender.

Many buyers are eligible but don’t know it yet.

VA mortgage calculator: Fees and definitions

The above VA mortgage calculator shows costs associated with VA loans or with home buying in general. But many buyers don’t know exactly what each cost means or why it exists.

Here’s a breakdown of each cost, as well as a few terms you should know about before applying for a VA loan.

Principal and interest: This is the amount of your monthly mortgage payment that goes toward paying off the loan balance plus the interest due each month. This remains constant for the life of your fixed-rate mortgage loan.

Property tax: The county or municipality in which the home is located charges a certain amount per year in taxes. This cost is split into 12 installments and collected each month with your mortgage payment. Your lender collects this fee because the county can seize a home if property taxes are not paid.

The calculator estimates property taxes based on averages from tax-rates.org.

Homeowners insurance: Lenders require you to insure your home from fire and other damages. Insurance premiums are collected with your mortgage payment, and the lender sends the money to your insurance company each year.

HOA/other: If you are buying a condo or a home in a Planned Unit Development (PUD), you may need to pay homeowners association (HOA) dues. Lenders factor this cost into your total payment.

You may put other home-related fees such as flood insurance into this field, but don’t include things like utility costs.

Funding fee: The Department of Veterans Affairs charges a “funding fee” on new VA loans. The fee is typically wrapped into the loan amount but can be paid in cash if the homeowner chooses.

The funding fee helps support the VA loan program. The VA insures lenders against loss when they issue VA loans. That’s why lenders are able to offer zero-down loans at such low interest rates.

Funding fee percentage: The funding fee amount is reflected as a percentage of the loan amount. It varies based on down payment and whether you’ve used a VA loan before. The fee ranges from zero (for service-disabled veterans) to 3.6% (for a repeat use of the VA loan benefit). See the chart below.

VA loan use: Higher funding fees apply if you have used a VA loan to purchase or refinance property before.

Loan term: The number of years it takes to pay off the loan (assuming no additional principal payments). VA loans are typically 30 or 15 years.

Service type: VA funding fees used to vary based on the type of military service the borrower performed. But thanks to VA loan changes in 2020, all new borrowers pay the same fees based on their down payment and whether or not they’ve used the program before. A few select classes of VA borrowers are exempt from the funding fee.

Down payment: This is the dollar amount you put toward your home cost. VA loans require no down payment, but an applicant can choose to make one if they wish. Making a down payment will lower your VA loan payments month to month.

A little-known fact is that making a small down payment on a VA loan can flip your status from “denied” to “approved.” If you’ve been denied, try putting down just 1-2% and see what happens.

The down payment can even come from a down payment gift or eligible assistance program.

Interest rate: The mortgage rate your lender charges. You can experiment with the mortgage payment calculator above to see how much a lower rate could save you on your monthly payments. Shop at least three lenders to find the best rate.

Certificate of Eligibility: To use the VA loan program, you’ll need a Certificate of Eligibility (COE) from the VA. You can apply for a certificate online. The certificate tells lenders you can take advantage of your VA lending benefits. A COE is required for all VA mortgages except the IRRRL loan, since it refinances an existing VA loan for which you already used your certificate.

Origination fee: This is the fee your lender charges to set up your mortgage. The VA allows lenders to charge a loan origination fee up to 1% of the loan amount. This fee will be part of your closing costs.

Closing costs: Like any real estate transaction, buying a new home or refinancing with a VA loan requires closing costs. Closing costs include the VA funding fee, loan origination fee, home appraisal, attorney’s fees, and other costs like prepaid interest, taxes, and insurance.

The home seller is allowed to pay up to 4% of the loan amount in closing costs if the buyer negotiates this into the purchase contract.

Loan officer: A mortgage loan officer from your lender, bank, or credit union will help guide you through the loan process. Even online lenders often assign a specific loan officer to your case. First-time homebuyers, especially, should communicate regularly with their loan officer to make sure they fully understand the terms and details of their loan.

Cash out refinancing: The VA offers a cash-out refinance loan to help with home improvement costs or other needs such as debt consolidation. Some VA cash-out loans allow you to refinance up to 100% of the home’s value.

VA IRRRL: The VA also offers a streamline refinance, or “IRRRL” (Interest Rate Reduction Refinance Loan). This loan is loan designed to lower your interest rate without getting cash out. The ability to use the IRRRL is a big benefit of buying a home with a VA mortgage.

VA funding fees

Below is a chart of VA funding fees when purchasing or refinancing a home.

VA loan limits

VA loan limits used to be more or less the same as conventional loan limits. However, starting January 1, 2020, those limits have been repealed.

VA-eligible borrowers can now get 100% financing on any home purchase — as long as they qualify for the loan based on factors like credit, income, and debt.

Keep in mind that most lenders will set their own limits. If your lender does not allow a big enough loan for your home purchase, shop around.

Learn more about VA loans

Learning about VA loans is easy. See our VA loan guide for everything you need to know about the program. Additionally, see our other articles on this powerful loan program.

• VA loan limits repealed in 2020
• VA loan military service eligibility
• Which is better? FHA or VA loans?
• Guide to VA loans and other military benefits
• About VA loan rates

Apply for a VA home loan

New home buyers with military experience are checking into VA loans because of their fantastic benefits. Many veterans are eligible and able to buy now; many just don’t know it yet.

Check your eligibility now, and become a homeowner with zero down payment, a low interest rate, and at an affordable monthly payment.

Sources:
Property tax averages: http://www.tax-rates.org/taxtables/property-tax-by-state
VA funding fees: http://www.benefits.va.gove/homeloans
http://www.freddiemac.com/research/insight/20180417_consumers_leaving_money.page

By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.