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A VA loan is a type of mortgage for qualified service members, veterans and surviving spouses. These loans don’t require a down payment and often have competitive interest rates, making it easier to buy a home.
If you believe you qualify and are interested in shopping for a VA home loan, an essential step is figuring out how much your monthly mortgage payment will be.
NerdWallet's VA loan calculator factors in the amount you're borrowing, interest rate and other costs to estimate how much you'll pay each month and over the course of the loan.
Getting ready to buy or refinance a home? We’ll find you a highly rated lender in just a few minutes
Just answer a few questions to get started on a personalized lender match
VA funding fee: How much you'll pay
The VA loan calculator automatically factors in your VA funding fee. The fee is a percentage of the loan amount and varies according to the amount of your down payment and whether this is your first VA mortgage. If you've had a VA loan before, then the next loan is considered "subsequent use."
Fees for a first-time VA purchase loan are 2.15% with a zero to 4.9% down payment, 1.5% with a down payment of 5% to 9.9%, and 1.25% with a down payment of 10% or more. Borrowers who have had a VA loan before and are putting down less than 5% will pay a fee of 3.3%.
Down Payment | Funding Fee for First Use | Funding Fee for Subsequent Use |
|---|---|---|
0%-4.9%. | 2.15%. | 3.3%. |
5%-9.9%. | 1.5%. | 1.5%. |
10% or more. | 1.25%. | 1.25%. |
» MORE: Learn about the VA funding fee
Other VA loan costs to consider
You may pay some closing costs that the VA mortgage calculator does not include, such as fees for the credit report, title insurance, VA appraisal and other services.
However, there are some fees you'll avoid with a VA loan. The U.S. Department of Veterans Affairs, which backs VA mortgages, prohibits certain charges, including a lender's fee for attorney services, escrow fees and mortgage broker commissions. The VA also limits the origination fee a lender charges to no more than 1% of the loan amount.
» MORE: Learn about VA loan closing costs
Determining eligibility for a VA loan
Veterans and active-duty military members who meet length-of-service requirements are eligible to apply for VA loans. Some surviving spouses are also eligible. You'll need a VA certificate of eligibility to prove that you qualify. You can get the certificate through the VA or ask a VA-approved lender to obtain it for you.
VA loan borrowing limits
VA loan limits vary by county. You can view the 2023 limits in your area using NerdWallet’s tool.
How to lower your VA mortgage payment
If the calculator estimates a higher monthly VA mortgage payment than you would like, you can:
Extend the loan term. If you selected a 15-year term at first, try a 30-year term. A 30-year fixed-rate mortgage will have a lower monthly payment than a 15-year fixed-rate mortgage, but you'll pay more interest over the life of the loan.
Downsize your wish list. Buying a smaller house with fewer amenities means less money borrowed — and a lower monthly payment.
Put money down. While a VA loan typically requires no down payment, making one will reduce the size of your mortgage and reduce the VA funding fee, too. And this results in a lower monthly payment.
Look for a better interest rate. Shop at least three VA-approved lenders to ensure you're getting the lowest possible interest rate.
» MORE: See NerdWallet's picks of best VA mortgage lenders
VA loan pros and cons
VA loan benefits:
A down payment is generally not required.
Average VA mortgage rates are typically lower than average rates for conventional and FHA mortgages.
VA loans don't require mortgage insurance.
VA loans may be easier to qualify for than conventional loans when it comes to credit scores and debt-to-income ratios.
VA loan drawbacks:
Most borrowers must pay a VA funding fee.
Not all lenders offer VA loans.
You cannot use VA loans to purchase investment property; however, you can buy a second home if the new home will be your primary residence.
Getting ready to buy or refinance a home? We’ll find you a highly rated lender in just a few minutes
Just answer a few questions to get started on a personalized lender match
Frequently asked questions
How do I use NerdWallet's VA mortgage calculator?
Enter the price you expect to pay for a home and your down payment. VA loans typically don't require a down payment, but paying a chunk of money upfront will lower your monthly mortgage payment and make you a more competitive buyer in a hot real estate market.
Enter an estimated interest rate. Unsure? Check current VA mortgage rates to see what lenders are offering.
Choose a loan term of 15 or 30 years. You'll pay less interest over the life of the loan with a 15-year term. Your monthly payment will be lower with a 30-year term because the repayment of the loan is stretched over a longer period.
Select whether this is your first VA mortgage. Your answer will affect the amount of your VA funding fee, a one-time charge most borrowers must pay.
Check the results. The "total monthly cost" estimates your monthly VA mortgage payment, including estimated costs for property taxes and home insurance. The "total cost" is how much you'll pay over the life of the loan, including the VA funding fee.
For more detail, select the "Monthly" or "Total" box under "Breakdown of costs." Some VA borrowers roll their funding fee into the total loan amount. If that’s your plan, take the funding fee amount, found under the "Total cost breakdown," and add it to the amount you expect to spend on a home under "Mortgage details." That will adjust your monthly payment to include the financed VA funding fee.
» MORE: See how much house you can afford
What credit score is required for a VA loan?
The VA does not set a minimum credit score for VA loans, but most lenders have their own requirements, which typically range from 580 to 660.
Can my VA loan payment go up?
Your monthly VA mortgage payment could go up if your property taxes and homeowners insurance premiums, which are often included in your monthly payment, increase. Your monthly payment could also go up if you have an adjustable-rate VA mortgage, and the interest rate resets higher.
What is the 4% rule for VA loans?
The Department of Veterans Affairs mandates that a seller can’t pay more than 4% of the total loan in closing costs, including the funding fee. However, sellers are allowed to pay discount points.
How much do I need to make to buy a $300K house with a VA loan?
A $300,000 mortgage with a 30-year term, 6% interest rate and no down payment would cost a first-time VA borrower approximately $2,124 per month, plus variable costs like homeowners association fees. Ideally, this monthly payment combined with your other monthly debts should not account for more than 36% of your gross monthly income.
For example, if you have $1,000 of debt obligations each month (such as your student loan or car payment), then your gross income should be at least $8,678 per month, or about $104,100 per year in order to comfortably afford this VA mortgage.
More calculators to help you shop for mortgages
See how much home you can afford.
Calculate your debt-to-income ratio, or DTI. Lenders consider your DTI to help determine whether you qualify for a loan and the interest rate to offer you.
See how much of your mortgage payment goes toward principal and interest with a mortgage amortization calculator.
Not sure if a VA loan is right for you? Learn the best mortgage type for you.
I am a mortgage expert with a comprehensive understanding of VA loans, catering specifically to qualified service members, veterans, and surviving spouses. My expertise is rooted in first-hand experience and in-depth knowledge of the intricacies of VA loans and the associated processes.
Now, let's delve into the concepts covered in the provided article:
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VA Loan Overview:
- A VA loan is a type of mortgage for qualified service members, veterans, and surviving spouses.
- These loans do not require a down payment and often have competitive interest rates.
-
VA Funding Fee:
- The VA loan calculator factors in the VA funding fee, which is a percentage of the loan amount.
- The fee varies based on factors like down payment and whether it's a first-use or subsequent-use loan.
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Other VA Loan Costs:
- There are additional closing costs not included in the VA mortgage calculator, such as credit report fees, title insurance, VA appraisal, and other services.
- Certain charges, like lender's fees for attorney services, escrow fees, and mortgage broker commissions, are prohibited by the U.S. Department of Veterans Affairs.
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Determining Eligibility:
- Veterans and active-duty military members meeting length-of-service requirements are eligible.
- Some surviving spouses may also qualify, requiring a VA certificate of eligibility for verification.
-
VA Loan Borrowing Limits:
- VA loan limits vary by county, and there are tools available to check the limits in specific areas.
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Adjusting VA Mortgage Payment:
- Strategies to lower VA mortgage payments include extending the loan term, downsizing housing choices, making a down payment, and seeking a better interest rate.
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Pros and Cons of VA Loans:
- Benefits include no down payment, lower average interest rates, no mortgage insurance, and potentially easier qualification regarding credit scores and debt-to-income ratios.
- Drawbacks include the requirement for most borrowers to pay a VA funding fee and the fact that not all lenders offer VA loans.
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FAQs:
- Information on using NerdWallet's VA mortgage calculator.
- Credit score requirements for VA loans.
- Factors that can cause an increase in monthly VA mortgage payments.
- The 4% rule for sellers in terms of closing costs.
- Calculations on how much income is needed to buy a house with a VA loan.
If you have any specific questions or need further clarification on any of these points, feel free to ask.
