How to Calculate Your Monthly VA Loan Payment
Home loans backed by the US Department of Veterans Affairs are some of the best financing options for active-duty service members and eligible veterans looking to purchase property or refinance their existing mortgage.
Our VA loan calculator can help you estimate how much your monthly payments could be with VA-backed financing, allowing you to customize several unique variables to ensure the most accurate results.
Here is a breakdown of the fields you'll need to complete to use the Mortgage Research Center VA loan payment calculator effectively:
Home Value
For purchase loans, your home value will be the total amount you plan to spend on your purchase. For a VA IRRRL, you can use this field to enter the remaining principal balance on your mortgage. For a VA cash-out refinance, enter the remaining balance on your mortgage plus the amount of cash you intend to take out.
Down Payment
VA loans do not require you to make a down payment. If you're planning to use the 100% financing benefit of VA-backed mortgages, you can leave this field at $0. If you plan to put cash down to reduce the amount you need to borrow and lower your monthly payments, you can enter that here as either a fixed dollar amount or a percentage of your purchase price.
For refinance loans, leave this field blank.
Note: Making a down payment of 5% or 10% can reduce the rate of your VA funding fee when buying a home.
Interest Rate
Interest rates can vary based on factors including your credit score, current debt load, and whether you choose to make a down payment on your purchase. VA loans commonly come with some of the lowest interest rates on the market.
If you've spoken to a lender and been quoted an individualized rate, you can enter it here. Otherwise, this field will be auto-generated based on current market averages for your selected loan type.
Loan Term
Your loan term is the number of years over which you plan to repay your mortgage. Most homeowners opt for a 30-year term. 15-year mortgages will result in higher monthly payments but can significantly reduce the lifetime interest you'll pay and build equity faster.
Loan Type
The MRC VA loan calculator lets you select from three types of mortgages designed to meet different financing needs:
- VA Purchase Loan – A VA purchase loan is a 0%-down financing option for buying a home.
- VA Interest Rate Reduction Refinance – A VA interest rate reduction refinance lets you lower the interest rate on an existing VA mortgage with minimal paperwork required.
- VA Cash-Out Refinance – A VA cash-out refinance lets you refinance an existing loan – regardless of whether you obtained it through the VA – and receive cash back at closing based on your built-up equity.
Military Type
Military type refers to your military service that qualifies you for a VA Certificate of Eligibility. Options include regular military (any branch) or Reserves/National Guard. If you’re qualifying as the surviving spouse of a veteran, you can select that here as well.
VA Specifics
These are variables specific to VA-backed loans that can impact the size of your upfront funding fee. If either of these scenarios applies to you, be sure to select the appropriate options to generate the most accurate cost estimate.
I am VA Disabled 10% or more
Borrowers with service-related disabilities who have a disability rating of 10% or more are exempt from paying the funding fee on VA-backed loans.
I have used a VA Loan before
First-time borrowers pay a smaller funding fee on cash-out refinances and most purchase loans than those who have previously used their benefit.
Property Tax Rate
Property taxes are paid annually to local governments and special tax districts. They are assessed as a percentage of your home's value. Our VA loan calculator assumes a tax rate of 1.2%, but you may pay more or less depending on where your property is located. Property taxes are typically included in your monthly mortgage payment.
Homeowner’s Insurance
Lenders require borrowers to carry suitable homeowner's insurance to protect against any damage to the property securing their loan. The MRC VA payment estimator assumes an annual policy cost of 0.35% of your property's value. However, actual costs can depend on your location and choice of insurance provider. Like property taxes, homeowner's insurance is usually included in your monthly mortgage payment.
Principal and Interest
Principal and interest costs typically comprise the bulk of a borrower's monthly mortgage payments. This represents the actual repayment of the loan, including interest charges due to the lender as compensation for funding the mortgage.
VA Funding Fee
Most borrowers will incur a VA funding fee that varies based on the type of loan, down payment amount, and whether they’ve used their VA mortgage benefit in the past. Purchase loans with a down payment smaller than 5% have a funding fee of 2.15% of the loan amount for the first use and 3.3% for subsequent uses.
Other Costs to Consider
Here are a few other expenses that you might incur when using a VA loan to purchase a home or refinance your existing mortgage:
Closing Costs
Closing costs are expenses incurred by your lender and other service providers during the home buying and financing process. These include costs such as title insurance, underwriting fees, and lender discount points.
VA closing costs generally run between 2% and 4% of a home’s purchase price, not including the VA funding fee.
VA Appraisal
The loan underwriting process involves obtaining an appraisal to verify the home's value and ensure it meets the VA's minimum property requirements for being "safe, sound, and sanitary."
Because VA loans require a more in-depth appraisal than most conventional mortgages, you can expect to pay a slightly higher appraisal fee. Costs will vary by location, with HomeGuide reporting a nationwide estimate of between $425 and $900.
HOA Dues
HOA dues are assessed on properties located within homeowners associations. These costs are generally not included in your monthly mortgage payment and must be paid separately. The frequency of dues will vary by association, with some due monthly, annually, or at other intervals in between.
VA Loan Rates
VA loan rates tend to be lower than the rates on conventional mortgages, thanks to the federal backing of the VA home loan program. However, actual rates can depend on numerous factors, including your credit score, whether you make a down payment, and the lender you choose to work with.
To ensure you’re getting the best rates possible, take the time to apply with a minimum of three different lenders – particularly those who fund both VA and conventional loans. You can then use your loan estimates to negotiate lower rates and closing costs by encouraging the mortgage providers to compete against each other for your business.
VA Loan Eligibility
The Department of Veterans Affairs sets loan eligibility requirements for all agency-backed mortgages, although some criteria are left up to the discretion of individual lenders. Here’s an idea of what you can expect when applying for a VA home loan:
Credit Score
While most types of mortgages have fixed credit score requirements, the VA does not set a universal minimum for the loans it insures. Instead, lenders are empowered to assess borrowers based on their unique individual situations. As a result, the credit score needed for a VA loan will depend on the mortgage company you choose.
Standard lender-imposed minimums range from 580 to 640. However, borrowers with lower scores may still be able to qualify with specific providers.
Debt-to-Income Ratio
Your debt-to-income (DTI) ratio represents the portion of your monthly qualifying income allocated to installment debt obligations, including the payment on the mortgage you're applying for. Like credit score requirements, the VA does not set a program-wide maximum DTI ratio. Different lenders will accept different debt levels, with most looking for a figure between 40% and 50%.
Certificate of Eligibility
Borrowers must qualify for a Certificate of Eligibility (COE) in order to obtain a VA loan. Active-duty servicemembers are required to have served at least 90 consecutive days. Similarly, National Guard and Reserve members must have at least 90 days of active duty in most cases.
The requirements for honorably discharged veterans vary based on their dates of service but typically require at least 24 continuous months of active duty.
If you're unsure whether you qualify for a Certificate of Eligibility, you can view the complete requirements – along with the exceptions and alternative qualification methods – directly from the VA.
Property Type
VA loans are intended to provide affordable home financing for service members, veterans, and certain surviving spouses. As such, only homes you plan to live in as your primary residence qualify for a VA mortgage. You cannot take out a loan for a second home or investment property.
You can, however, purchase a multifamily residence with up to four individual units so long as you intend to occupy one of the units.
VA Loans vs. Conventional Loans
Borrowers eligible for a VA home loan will often find rates and monthly payments lower than comparable conventional mortgages. This is due to the VA insuring lenders against loss and the fact that VA loans do not require ongoing mortgage insurance – even when making a 0% down payment.
In contrast, conventional lenders require all borrowers with less than 20% equity to pay for risk-based private mortgage insurance (PMI).
Most borrowers, however, will pay a VA funding fee of either 2.15% or 3.3% on purchase loans, whereas conventional mortgages have no similar upfront expense. As such, applicants with exceptional credit or who plan to sell after a couple of years may encounter lower overall costs by going conventional. On the other hand, borrowers with service-related disabilities who qualify for a funding fee waiver will almost always find VA loans preferable to conventional financing.
Homebuyers looking to purchase a fixer-upper property may have better luck with conventional lenders as property requirements are less restrictive than VA loans, which generally require homes to be "move-in ready" to qualify for financing.
Refinancing a VA Loan
The VA offers two options for homeowners looking to refinance: a low-doc streamlined loan that you can use to change your terms and lower your interest rate and a cash-out option that allows you to tap into your built-up equity.
VA Interest Rate Reduction Refinance Loan (IRRRL)
For most borrowers, refinancing an existing VA mortgage is more straightforward than other types of financing, thanks to the agency's low-doc interest rate reduction refinance loan (IRRRL).
The IRRRL is only available to borrowers who currently have a VA-backed mortgage but allows you to refinance without needing to obtain an appraisal, undergo an in-depth credit check, or reverify your income in most cases. As a result, IRRRL loans can often close sooner and with less paperwork than other refinance options.
All interest rate reduction refinance loans have a funding fee of 0.5%, except for borrowers who meet the requirements for a VA funding fee waiver.
VA Cash-Out Refinance
The VA cash-out refinance is available to all borrowers with a Certificate of Eligibility, regardless of the type of mortgage they currently have. This means you can get a cash-out on an existing VA loan to withdraw your built-up equity or use it to refinance another type of mortgage into the VA program.
While many lenders impose a maximum loan-to-value of 90% for cash-out refinances, it may be possible to withdraw up to 100% of your home’s equity with certain mortgage providers.
The VA funding fee for a cash-out refinance is 3.3% for borrowers who have previously used their VA benefit to obtain a loan. First-time borrowers refinancing into the VA program can qualify for a lower funding fee of 2.15%.
What to Do Next
Our VA mortgage loan calculator provides you with an estimate of how much you could expect to pay each month for a VA-backed loan. While the loan calculator results are accurate based on the data you enter, your actual payments will likely differ as a result of several factors, including the interest rate you qualify for, localized taxes and insurance costs, and the total amount you need to borrow.
To get a personalized loan estimate, contact a VA-affiliated lender today. They can help you start the preapproval process.
