VA Funding Fee vs. PMI Calculator

A one-time fee versus a recurring cost: how to actually compare them

A VA-guaranteed home loan and a conventional loan with less than 20% down solve the same underwriting problem, low or no down payment, in two very different ways.

A VA loan charges a one-time funding fee, a percentage of the loan amount paid at closing or financed into the loan. A conventional loan instead charges private mortgage insurance (PMI), a recurring monthly premium that continues until you build enough equity.

Comparing "one number" to "another number" is not quite fair, since one is paid once and the other adds up over months or years, so this tool totals the PMI cost across the time it would actually be charged instead.

The VA funding fee schedule is based on two things: whether this is your first use of VA loan eligibility or a subsequent use, and how much you put down.

First-time use with less than 5% down runs 2.15% of the loan amount; putting at least 10% down drops that to 1.25% for both first and subsequent use.

Subsequent use with less than 5% down is notably higher, 3.30%, since the VA loan guarantee program is funded in part by charging more on repeat use with a small down payment.

Veterans receiving VA disability compensation, along with Purple Heart recipients and certain surviving spouses, are exempt from the fee entirely, a genuinely significant carve-out worth confirming before you assume you owe it.

PMI, by contrast, is priced primarily on credit score and loan-to-value ratio, and is typically a flat percentage of your original loan amount charged monthly, commonly ranging from well under 0.5% a year for a borrower with excellent credit to 1.5% a year or more for a borrower closer to the minimum qualifying credit score.

Federal law requires your servicer to automatically cancel PMI once your loan balance is scheduled to reach 78% of the home's original value, or the midpoint of your loan term, whichever comes first, so this tool calculates exactly how many months that takes on a standard amortization schedule at your assumed rate, rather than assuming a fixed number of years.

That amortization-only timeline is a floor, not a guarantee of how long you will actually pay PMI. Extra principal payments or the home appreciating enough to reach 20% equity based on a new appraisal can both end PMI sooner, either by requesting cancellation once you hit 20% equity or, on some loans, through a new appraisal.

Those paths are not counted in the total shown here, since how much and how fast a specific home appreciates is not something this tool can responsibly estimate, but they are worth knowing about if your total PMI cost matters to your decision.

Neither option is universally cheaper. A large funding fee on a subsequent-use, low-down-payment VA loan can exceed years of PMI on a conventional loan with a stronger credit profile, while a first-time VA borrower with a low credit score may find the funding fee is a bargain next to what PMI would have cost them.

Running your own numbers, not a rule of thumb, is the only way to know which applies to you.