What is the biggest advantage of a VA loan over a conventional loan?

The biggest advantage is 100% financing with no down payment and no private mortgage insurance (PMI). Eligible veterans, service members, and surviving spouses can borrow the full purchase price of the home without putting any cash down and without paying the monthly PMI that conventional loans require below 20% equity. VA loans also have more flexible credit and debt-to-income requirements, and there is no upfront mortgage insurance premium comparable to FHA's 1.75% MIP — though there is a one-time VA funding fee.

What is the VA funding fee and how much is it?

The VA funding fee is a one-time charge applied to most VA loans to help cover the program's cost. For first-time use with less than 5% down, the fee is 2.3% of the loan amount (3.6% for subsequent use). With 5% to 9.99% down it drops to 1.65%, and with 10% or more down it is 1.4%. The fee is typically financed into the loan. Veterans receiving VA disability compensation for a service-connected condition are exempt from the funding fee entirely.

Why does a VA loan have no PMI if the down payment is 0%?

Because the VA guarantees a portion of the loan (typically 25% of the loan amount up to the conforming limit) on behalf of the borrower, the lender is protected against loss without needing private mortgage insurance. This is the core benefit of the VA program — the government's guarantee replaces the PMI that a conventional borrower would pay. On a $400,000 loan, avoiding PMI saves roughly $150 to $300 per month versus a conventional loan with 5% down.

Is a VA loan always cheaper than a conventional loan?

Not always. VA loans are usually cheaper monthly because there is no PMI, but the funding fee adds to the loan balance and the interest accrues on that larger amount. If you put down 20% or more on a conventional loan, you avoid PMI entirely and may get a slightly lower interest rate, which can make conventional cheaper over the long run — especially if you plan to stay in the home for many years. The calculator shows the monthly payment and total cost for both so you can compare directly.

Can I use a VA loan more than once?

Yes, VA loan entitlement is reusable. Once you pay off a VA loan (by selling the home or refinancing), you can restore your entitlement and use it again. However, the funding fee is higher for subsequent use — 3.6% with less than 5% down versus 2.3% for first-time use — which makes putting down at least 5% more attractive on a second or later VA loan. Partial entitlement also allows you to have more than one VA loan at a time in certain situations.

Who is eligible for a VA loan?

VA loans are available to active-duty service members, veterans, National Guard and Reserve members (after meeting service requirements), and eligible surviving spouses. Generally, you need at least 90 days of active duty during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves, or 90 days under Title 32 with at least 30 of those days consecutive. You must obtain a Certificate of Eligibility (COE) from the VA to prove your entitlement to the lender.

VA Loan vs Conventional Mortgage Calculator

A VA loan vs conventional mortgage comparison tool is a free online tool that compares VA loans with conventional mortgages. It shows funding fee vs PMI, monthly payment, and total cost to see which saves you more. Free, no sign-up required.

Loan Details

Home Price?The purchase price of the home you're considering buying.

VA Funding Fee?Enter your va funding fee.

Conventional Down Payment?Enter your conventional down payment.

VA Interest Rate?Enter your va interest rate.

Conventional Interest Rate?Enter your conventional interest rate.

Loan Term?The length of your mortgage in years. Common terms are 15 or 30 years.

End of inputs

VA vs Conventional Loan

Metric	VA Loan 0% down, no PMI, funding fee financed	Conventional Loan 20% down, no PMI
Monthly P&I	$2,453.36	$1,970.30
Funding Fee	$9,200.00	$0.00
Total Monthly	$2,453.36	$1,970.30
Down Payment	$0.00	$80,000.00

$483.06/month difference. VA finances $409,200.00 with $0 down; conventional needs $80,000.00 down and finances $320,000.00.

Key Insights

VA requires $0 down and finances a funding fee of $9,200.00 (2.30%) into the loan, for a total balance of $409,200.00.

Conventional requires $80,000.00 down at closing with no PMI; the financed balance is $320,000.00.

Monthly payment difference is $483.06/month. Conventional wins on monthly cost thanks to the larger down payment.

Guide

How to Use This Calculator

1Enter the home price you are considering for purchase.
2Set the VA funding fee percentage. The default is 2.3% for first-time use with less than 5% down; disabled veterans should set this to 0% (exempt).
3Set the conventional down payment percentage. The comparison uses 20% down by default so conventional has no PMI, making the comparison fair on a monthly basis.
4Enter the VA interest rate and the conventional interest rate from your lender quotes. VA rates are often slightly lower than conventional rates for the same borrower.
5Choose the loan term (commonly 30 years). Both scenarios use the same term so the comparison is apples-to-apples.
6Review the side-by-side metrics: monthly P&I, total monthly payment, and the down payment required for each. The VA scenario shows the funding fee added to the loan; the conventional scenario shows the cash needed at closing.
7Read the AI Insight panel for a personalized interpretation of the funding fee cost, monthly savings, and break-even between the two options.

Formula

How It's Calculated

Both scenarios use the standard amortizing-loan monthly payment formula:

M = P × [r(1+r)^n] / [(1+r)^n − 1]

Where:
- M = monthly principal & interest (P&I)
- P = loan amount (principal financed)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of payments (years × 12)

VA SCENARIO (0% down, no PMI):
  downPayment  = $0
  baseLoan     = homePrice
  fundingFee   = baseLoan × fundingFeeRate   (e.g. 0.023 = 2.3%)
  totalLoan    = baseLoan + fundingFee
  monthlyPI    = monthlyPayment(totalLoan, vaRate, years × 12)
  totalMonthly = monthlyPI                    (no PMI)

CONVENTIONAL SCENARIO (20% down, no PMI):
  downPayment  = homePrice × convDownPercent  (e.g. 0.20)
  loanAmount   = homePrice − downPayment
  monthlyPI    = monthlyPayment(loanAmount, convRate, years × 12)
  totalMonthly = monthlyPI                    (no PMI at 20% down)

WINNER: the scenario with the lower totalMonthly payment.

Example — $400,000 home, 30-year term:
  VA: 0% down, 6.00% rate, 2.3% fee → totalLoan $409,200,
      monthly P&I ≈ $2,458.32
  Conv: 20% down, 6.25% rate → loan $320,000, down $80,000,
        monthly P&I ≈ $1,972.04

Here conventional has the lower monthly payment, but VA requires $0 down
and saves $80,000 in upfront cash. The VA borrower can invest that cash
or keep it as reserves. Over 30 years VA also pays interest on the
funding fee, which narrows the total-cost gap.

Glossary

Key Terms

FAQ

Frequently Asked Questions

Related Calculators

VA Loan Calculator

Estimate VA loan payments with funding fee (2.3% first use, 3.6% subsequent). Zero down payment option for veterans.

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