1. Principal and interest — your core payment.
The P&I payment is calculated on your total financed amount. If you roll the funding fee into the loan, your financed amount is slightly higher than the purchase price minus your down payment. At 6.1% on a $350,000 home with 0% down and 2.15% funding fee rolled in, the total loan is roughly $357,525 — and the P&I payment is about $2,170 per month. This is the only part of your payment that pays down your balance.
2. No PMI — the biggest VA advantage.
On a conventional loan with less than 20% down, you'd pay private mortgage insurance (PMI) — typically $100 to $300 per month. On an FHA loan, you'd pay annual MIP that can last the full 30 years. With a VA loan, there is no PMI and no annual mortgage insurance of any kind. That absence can save you $50,000 or more over the life of a 30-year loan compared to an FHA alternative.
3. The VA funding fee — a one-time cost.
The VA funding fee is a one-time fee paid to the Department of Veterans Affairs. It funds the VA loan program and keeps it available for future generations of veterans. The fee ranges from 1.25% to 3.3% of your loan amount depending on your down payment and whether this is your first VA loan. Most borrowers roll it into the loan rather than paying cash at closing. Veterans with a service-connected disability rating are exempt entirely.
4. Down payment reduces your funding fee.
While you're not required to put anything down, adding even 5% drops your first-use funding fee from 2.15% to 1.50% — a savings of $2,275 on a $350,000 loan. Adding 10% brings it to 1.25%. Run the numbers both ways: sometimes putting a modest amount down more than pays for itself through the reduced funding fee and lower monthly payment.
5. Taxes and insurance — your escrow.
Like all mortgage types, VA lenders require an escrow account for property taxes and homeowners insurance. These are collected monthly alongside your P&I. The calculator uses your estimated annual tax rate and insurance premium to show the true monthly cost of ownership — not just the loan payment. Typical property tax rates run 0.5% to 2.5% depending on state and county.
