VA Home Loan Calculator
Active duty military members and veterans can use this calculator to quickly estimate their loan funding fee and the monthly loan payments on their mortgage.
For your convenience current San Diego VA mortgage rates are shown beneath the calculator.
Current San Diego 30-YR Fixed Mortgage Rates
The following table highlights current San Diego VA mortgage rates available to active duty military, honorably discharged veterans and their spouses. By default 30-year purchase loans are displayed. Clicking on the refinance button switches loans to refinance. Other loan adjustment options including price, down payment, home location, credit score, term & ARM options are available for selection in the filters area at the top of the table.
The Fundamental Guide to Understanding VA Loans
Buying a home is an expensive investment that requires careful financial planning and ample savings. You must have enough income and a good credit profile to obtain a mortgage. Though building credit is a challenge for everyone, it can be more difficult if you serve in the military.
Upon returning from service, military members usually struggle with low credit scores. They have a hard time securing traditional conventional loans to afford a home. But to support veterans and active service members, the government created a special VA loan program to provide accessible home financing.
Our guide will discuss the advantages of VA loans, how they work, and the requirements needed by veterans and active-duty members. We’ll also compare VA loans with conventional mortgages, and talk about its benefits and drawbacks. With assistance from the VA loan program, qualified borrowers can ultimately achieve their homeownership goals.
What are VA Loans?
Mortgages guaranteed by the U.S. Department of Veteran Affairs are called VA loans. These are special mortgages exclusively offered to veterans, active-duty members, and qualifying military spouses. It’s an incentive that comes with flexible credit standards and cheaper rates than common conventional loans. VA loans also provide 100% financing, which means borrowers are not required to make a down payment to secure the mortgage.
Furthermore, VA loans do not charge mortgage insurance premium (MIP) unlike other government-backed mortgages such as FHA loans. However, VA home financing requires a VA funding fee to compensate for U.S. taxpayer’s costs. Though VA loans are part of the federal program, the government usually does not offer them as direct loans. VA loans are issued by VA-sponsored lenders such as banks, mortgage companies, and credit unions.
The VA loan program primarily assists returning veterans and service members in obtaining affordable housing. It serves as a lifeline for military members who cannot meet strict credit standards and high down payments required by traditional mortgage lenders.
A Brief History of the VA Financing Program
First established in 1944, the VA loan program was developed under the Servicemen’s Readjustment Act, more widely known as the GI Bill. The law aimed to uplift the financial disposition of returning military without issuing bonus checks. Under the GI bill, U.S. World War II veterans were granted unemployment insurance, college and trade school education, and housing benefits.
By 1950, Congress amended the rules to cover more service members. This included surviving spouses of veterans who died on the line of duty or as a result of a service-related debility. The benefits were granted to widows as long as they did not remarry. In 1966, the Readjustment Benefits Act extended the program to all veterans and military members, including personnel who served during peacetime. Toward the end of 1966, around a fifth of all single-family homes were built and financed thanks to the VA loan program.
The VA loan program guaranteed an estimated 13.9 million mortgages from 1944 to 1993. Today, over 24 million VA loans have been issued by the program, assisting families in building homes for years to come.
Blue Water Veterans Act of 2019 Impact on VA Loans
VA loans have become more appealing thanks to the Blue Water Navy Vietnam Veterans Act of 2019. Officially implemented in January 1, 2020, this legislation eliminated the conforming loan limit for veterans. It allowed qualified military borrowers to purchase homes in high-cost markets regardless of home price. Forbes reported that over 1.2 million VA loans originated in 2020 alone. This is more than all VA loans purchased in two previous fiscal years combined.
Compared to 2019, homebuyers who used VA loans increased to 11.4% in 2020, while VA loan refinances increased to 241% in 2020. The refinancing boom was largely prompted by record low rates due to the COVID-19 crisis, as the Federal Reserve kept benchmark rates near zero to stimulate market activity. With low market rates, many veterans and active military are expected to take advantage of their VA loan benefits.
Other Types of VA Loans
Apart from home purchase loans, the VA program also provides other types of home financing options for veterans and active service members. These include the following:
VA Renovation & Home Improvement Loans
Borrowers who need to purchase or refinance a home that needs repairs can take advantage of VA renovation loans. It focuses on the alteration and improvement of a property, which is a viable option if you’re planning to buy an old fixer-upper. Like the VA home purchase loan, it requires no down payment and comes with affordable rates. A VA renovation loan can be combined with a VA purchase loan. But note that this can only cover common home improvements within similar houses of the same value in an area. VA-sponsored lenders are given free reign to decide what are acceptable common repairs.
Homeowners with a current VA loan can benefit from the VA Interest Rate Reduction Refinance Loan (IRRRL) program. Refinancing allows borrowers to shift from an adjustable-rate mortgage into a fixed-rate loan to secure a low rate. It can also make mortgage payments more manageable by reducing their current monthly amount. Obtaining a lower rate allows borrowers to reduce their loan’s total interest costs to boost savings.
The IRRRL option does not require credit background checks unlike traditional refinances. It also does not entail home appraisals. To be eligible, borrowers should have an existing VA mortgage or a record that proves you live in or used to live in a home secured by a VA loan. You must also present your Certificate of Eligibility (COE) as verification you served in the military.
VA Cash-Out Refinance
You can tap home equity while refinancing your VA loan by applying for a VA cash-out refinance. Historically, the loan-to-value (LTV) limit for VA cash-out refinances was set at 100% in previous years. But in August 1, 2019, Ginnie Mae announced they reduced the limit for VA cash-out refinances to 90% LTV. This limit is still higher compared to FHA loan refinances, which only allows up to 80% LTV. You may benefit from refinancing when rates significantly fall to reduce your original loan’s rate.
Native American Direct Loan (NADL)
The NADL program offers home financing specifically for Native American veterans and veterans with Native American spouses. It helps qualified borrowers to purchase, build, or renovate residential property on Federal Trust Land. The program also allows borrowers to refinance a current NADL loan to obtain lower interest rates. As a requirement, the applicant’s Native American group or tribal organization must be a participating party in the VA direct loan program. The property must also be a primary residence of the veteran.
Specially Adapted Housing (SAH) Grants
Service members and veterans who endured service-related disabilities are entitled to Specially Adapted Housing (SAH) grants. The grant focuses on assisting members in purchasing, constructing, and remodeling a home to meet adaptive needs. Modifying a home typically requires widening hallways, building ramps, and installing wheelchair friendly facilities. This helps disabled veterans achieve independent living, which is otherwise difficult without structural accessibility.
Some states offer additional resources for veterans. To know more about these options, you can explore different state VA offices.
VA Loan Documents and Requirements
To be eligible for a VA loan, the government imposes service requirements for active-duty members and veterans. They also offer opportunities for military spouses who are eligible for the VA program. Prospective borrowers must satisfy the following basic conditions:
- You’re an active-duty military member.
- You’re a veteran who was honorably discharged with minimum service requirements.
- You’ve served at least 90 consecutive days during wartime,
- OR you’ve served at least 181 consecutive days during peacetime.
- You served for more than 6 years in the National Guard or Reserves.
- You’re the spouse of a military member who died in the line of duty.
- You’re the spouse of a military member who died with a service-related disability.
To know the detailed requirements for VA loan eligibility, visit the U.S. Department of Veterans Affairs site.
Next, you must gather the following documents to be evaluated by your lender:
- Certificate of Eligibility (CEO)
- Copy of social security card
- Copy of military ID or driver’s license
- Paystubs in the past month
- W-2 tax return forms from the past 2 years
VA-sponsored lenders may also request the following documents, depending on your situation:
- Social Security Awards Letter
- Divorce decree or child support orders serving as proof of alimony
- Recent retirement statement, IRS 1099, and retirement income
- Schedules and discharge documents if you have bankruptcy filed in the past 7 years
Though the VA program is more considerate with credit qualifications than conventional loans, it’s important to maintain a good employment and credit record. You must provide a stable source of income and proof of stable employment. Ideally, VA-sponsored lenders prefer borrowers with at least 2 years of full-time work. For self-employed or part-time workers, expect to submit additional documentation such as a list of your current clients or any state or business license that you hold. Thus, it’s best to avoid work gaps to ensure higher chances of loan approval.
Certificate of Eligibility
Active-duty members and veterans must submit a Certificate of Eligibility (CEO) as proof of military service. This is a primary requirement for all VA loan applications. To secure a copy of your CEO, you can request online by visiting the VA eBenefits site, or obtain a copy through your lender. You may also request a copy by accomplishing VA Form 26-1880 and sending it to your closest regional VA loan office.
How VA Loans Work
There are special advantages to VA loans that you cannot receive with conventional mortgages. VA loans come with flexible credit standards, allowing you to qualify even with a low credit score. Since it’s backed by the government, VA-sponsored lenders can offer more competitive rates at favorable terms. The VA guaranty provides security for lenders in case borrowers have trouble paying back their mortgage.
If you have limited funds for a down payment, VA loans provide 100% financing. This means borrowers are not required to offer a down payment, making it accessible for more veterans and active service members. However, consider making a small down payment to reduce your loan amount. Doing so lowers the total interest charges over the life of the loan. Making a down payment also helps reduce your VA funding fee rate, which maximizes your savings.
Though the VA program is more tolerant with credit scores, many VA-sponsored lenders prefer borrowers with a FICO credit score of at least 620. Other lenders may even require at least 650. Like most loans, you’ll have better chances of loan approval if you have a higher credit rating.
Next, you must meet the required debt-to-income ratio (DTI). DTI ratio is a percentage that compares your total monthly debts relative to your gross monthly income. A higher DTI ratio suggests greater risk of defaulting on a loan. It indicates a borrower is overleveraged and unfit to take on more debt. On the other hand, a lower DTI ratio signifies a borrower has enough income to make consistent monthly payments. Thus, keeping within the required DTI limits will improve your chances of loan approval.
Two Main DTI Ratios
Front-end DTI: This is the portion of your income that pays for housing-related costs. It includes monthly mortgage payments, real estate taxes, mortgage insurance, homeowner’s association fees, etc. For VA loans, most lenders refer to the back-end DTI as the basis for their evaluation.
Back-end DTI: This is the portion of your income that pays for housing-related expenses together with other debt obligations. It includes car loans, credit card debts, student debts, etc. The back-end DTI limit for VA loans is 41%. But in some cases, you may qualify with a higher DTI if you have residual income.
For VA loans, lenders assess each borrower based on their employment background and overall financial standing. If the lender approves any loan above the 41% back-end DTI limit, they should be able to justify their decision. Basic housing and sustenance allowance count towards qualifying for a VA mortgage.
Once your eligibility is verified and your mortgage is approved, you’ll also receive what’s called your entitlement. The entitlement is the dollar amount guaranteed on your VA loan in case you default on your payments.
Two Types of VA Loan Entitlement
Basic Entitlement: Up to $36,000 for loans with less than $144,000, or 25% for mortgages of that amount or more.
Bonus Entitlement: Up to 25% of the Federal Housing Finance Agency (FHFA) loan limit minus the basic entitlement. To know the conforming loan limit in your area, visit the FHFA site.
If you need to buy a home that costs over $144,000, you can use the bonus entitlement. For example, if the conforming loan limit for your county is $647,200, 25% of that loan amount would be $161,800. To determine the bonus entitlement, you must subtract the basic entitlement fee ($36,000), which leaves you with $125,800 in bonus entitlement funds.
What about loan limits? With a new VA loan, you can borrow as much money as you need that your lender is willing to approve. Just note that lenders impose their own criteria for how much borrowers can obtain. As of 2020, eligible veterans and service members with full entitlement no longer have a VA loan limit. However, loan limits take effect if you currently have remaining entitlement on a VA loan or if you’ve previously defaulted on your VA loan.
The VA program also allows you to have two VA loans at once, provided that you’re selling your current home backed by a VA loan, while purchasing a new house with a VA loan. Once you’ve officially closed the sale on the first house, you’ll only maintain one VA loan.
If you have an existing VA loan but want a better rate and term, you can refinance your mortgage. This can be done through the interest rate reduction refinancing loan (IRRRL) program. Borrowers who want to access their home equity can also take VA cash-out refinances which grant up to 90% LTV.
The VA Funding Fee
VA loans require a VA funding fee to offset the cost of the loan to U.S. taxpayers. This keeps the program running for future borrowers. The VA funding fee is the trade-off you make for the zero down payment option and low rates. While it doesn’t charge additional mortgage insurance, the VA funding fee is an extra cost. It’s based on the VA funding fee rate which ranges between 1.4% to 3.6% of your loan amount.
VA funding fee rates vary per borrower. This is determined by your loan amount, down payment, the type of VA loan you’re getting, and if you’ve used your VA benefit before. You can elect to pay your VA funding fee as a one-time closing fee or roll it into your monthly mortgage payments. Financing it into your mortgage increases the loan amount, which results in higher interest charges over the life of the loan.
For example, if your loan amount is $320,000, your VA funding fee can cost between $4,480 to $11,520. If we finance it into your mortgage, your principal loan balance will increase to $324,480 up to $331,521. The higher loan amount will increase your monthly mortgage payments and your total interest charges. In certain cases, a higher funding fee rate can make your loan more expensive than a conventional mortgage.
To reduce your VA funding fee rate, consider saving up for a down payment. While making no down payment at all is an attractive proposition, it results in higher monthly payments and interest charges. Aim to save at least 5% down payment to substantially reduce your VA funding fee rate.
VA Funding Fee Rates
To determine your VA funding fee rate, refer to the following tables. This information is taken from the U.S. Department of Veterans Affairs official VA funding fee and loan closing costs page. As of January 1, 2020, active military members, veterans, and personnel of the National Guard and Reserves should adhere to the following rates.
VA-backed Purchase and Construction Loans
|If your down payment is…||Your VA funding fee will be…|
|First use||Less than 5%||2.30%|
|5% or more||1.65%|
|10% or more||1.40%|
|After first use||Less than 5%||3.60%|
|5% or more||1.65%|
|10% or more||1.40%|
Qualified members who only used a VA-backed or VA direct home loan to purchase a manufactured property in the past still need to pay the first-time funding fee.
VA-backed Cash-out Refinance Loans
|First use||After first use|
Note that refinancing fee rates do not change based on your down payment amount. Borrowers who used a VA-backed or VA direct loan to purchase a manufactured house must only apply the first-time use funding fee.
Native American Direct Loan (NADL)
|Type of use||VA funding fee|
Note that the VA funding fee rate for NADL loans do not change based on your down payment amount or if you’ve used your VA benefit before.
Other Types of VA Home Loans
|Loan type||VA funding fee|
|Interest Rate Reduction Refinancing Loans (IRRRLs)||0.50%|
|Manufactured home loans (not permanently affixed)||1%|
|Vendee loan, for purchasing VA-acquired property||2.25%|
Note that the VA funding fee rate for these loans do not change based on your down payment amount or if you’ve used your VA benefit before.
VA Funding Fee Exemptions
While it’s a mandatory fee, there are certain situations where the VA funding fee is waived. This is not required for veterans and military members who are receiving VA disability compensation. Service members who were injured on the line of duty are generally exempted from the VA funding fee. Borrowers are not required to pay this amount under the following conditions:
- If you’re qualified to receive disability compensation while receiving active-duty or retirement payments.
- If you’re a qualified to receive disability compensation due to a pre-discharge claim, along with a proposed memorandum rating before the loan’s closing date.
- If you’re the spouse of a veteran who died on the line of duty or from a service-related disability.
- If you’re the spouse of a veteran who was severely disabled and you are receiving a Dependency and Indemnity Compensation (DIC).
- If you’re an active-duty service member with evidence of receiving the Purple Heart distinction before or during the closing date of the loan.
The Basics of Conventional Loans
To understand how different VA loans are, let’s take a closer look at common conventional loans. Conventional mortgages are the most widely purchased type of home loan in the U.S. In 2020, 64% of U.S. homebuyers chose conventional mortgages to finance their home, according to the National Association of Realtors. Meanwhile, 16% of homebuyers reported securing an FHA loan, while only 14% of homebuyers used VA loans. Since VA loans are exclusive to veterans and military members, it’s not surprising it takes a lower market share.
Unlike VA mortgages, conventional loans are not directly sponsored by the government. These loans are typically bundled into mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. Conventional loans are offered by banks, credit unions, and mortgage companies. Since conventional mortgages do not receive direct federal funding, private lenders take on most of the risks of financing. To alleviate this risk, conventional lenders enforce strict credit standards and background checks before approving mortgages. They also come with higher rates compared to government-backed loans.
Conventional lenders carefully assess your creditworthiness or ability to repay a loan. To qualify for a conventional mortgage, borrowers must have a good credit score. Most lenders prefer a credit score of 700 and above, though a score of 680 is also approved. Lenders offer more competitive rates to borrowers with high credit scores. Meanwhile, borrowers with low credit ratings are offered higher subprime mortgage rates. Thus, it’s imperative to maintain a sterling credit score to obtain the best term and rate.
For the DTI requirements, expect conventional lenders to impose much lower limits. For the front-end DTI ratio, conventional lenders prefer a front-end DTI no higher than 28%. For back-end DTI, most lenders ideally require a 36% limit. But depending on compensating factors and the strength of your credit profile, it can be up to 43%, and in some cases, up to 50%.
Conventional loans require a higher down payment than VA loans. While a minimum of 5% down is accepted, most borrowers generally make a down payment of at least 10%. However, note that making a down payment below 20% of the home’s value requires private mortgage insurance (PMI). For this reason, conventional loan borrowers are encouraged to pay 20% down to avoid this added cost.
Private Mortgage Insurance (PMI)
PMI is an extra cost intended to protect your lender in case you fail to make mortgage payments. This type of insurance only benefits your lender and does nothing for you if you default on your loan. To avoid this added fee, make sure to save at least 20% down payment for a conventional mortgage. PMI typically costs around 0.25% to 2% of your loan amount. It’s paid for a limited period, which is removed once your loan-to-value ratio reaches 78%.
To summarize the differences between VA loans and conventional mortgages, we created the chart below:
|Requirements||VA Loans||Conventional Loans|
|Credit score||Flexible credit standards |
But lenders prefer 620 & above
|700 & above is ideally preferred by lenders |
680 is also approved by lenders
|Rates||Lower rates thanks to federal backing||High credit scores come with lower rates |
Low credit scores come with higher rates
Making a higher down payment reduces your rate
|Front-end DTI||Back-end DTI is the main basis||Should not be over 28%|
|Back-end DTI||Ideally 41%, can be higher with residual income||Should ideally be 36% |
With compensating factors, can be 43% up to 50%
|Down Payment||Down payment is not required |
At least 5% down lowers VA funding fee rate
|20% removes PMI |
10% is the average down payment
3% is the minimum for a 97-3 loan
|Costs||Requires VA funding fee|
Ranges from 1.4% to 3.5% of loan amount
No prepayment penalty
|PMI is required with less than 20% down |
PMI is 0.25%-2% of the loan amount
PMI is canceled once LTV ratio reaches 78%
May come with prepayment penalty
The Disadvantages of VA Loans
While there are many benefits to VA loans, it also comes with a few drawbacks. The first major disadvantage is the VA funding fee. This cost becomes more expensive if you don’t make a down payment at all. The VA funding fee rate also increases with subsequent use of your VA benefit. The high rate can make your VA loan more expensive than a conventional loan. If this is the case, consider taking a conventional loan with a much lower rate even if you need to make a down payment.
Furthermore, VA loans do not come with standard property appraisals unlike conventional loans. This means spending for additional home inspection. While you may skip this process and check it yourself, it’s best to get a professional with a trained eye. You must be sure the property is free from any structural damage for your safety. With proper inspection, you can avoid buying a house with expensive repairs.
Finally, VA loans are only eligible for primary residences. You must live in the property in order to secure the mortgage. VA loans cannot be used for investment property and vacation houses.
The following chart summarizes the advantages and drawbacks of taking a VA loan:
|You can qualify with a low credit score of 620.||Requires a VA funding fee.|
|Down payment not required, 100% financing.||No down payment increases the VA funding fee rate.|
|VA loan rates are lower than conventional loans.||The funding fee rate increases each time you use your VA benefit.|
|Past bankruptcies and foreclosures do not |
permanently affect your chances of securing VA loans.
|VA appraisals do not come with property inspections, |
you need to check the house or spend for inspections.
|Does not require mortgage insurance.||Not eligible for vacation homes or rental property.|
Estimating the Cost of Your Mortgage
Now that you understand how VA loans work, the next step is to determine your mortgage costs. Though a zero down payment option sounds beneficial, you must know how this impacts your mortgage. You should also consider how the VA funding fee affects your loan costs with subsequent use.
Let’s presume you’re buying a house priced at $350,000. You obtained a 30-year fixed-rate VA loan at 3% APR. The following chart compares your mortgage payments on the first use of your VA benefit with no down payment and with less than 5% down. It also includes results for subsequent use without down payment and with less then 5% down.
30-Year Fixed-rate VA Loan
Home Price: $350,000
Interest Rate: 3% APR
Annual real estate taxes: $2,400
Annual homeowner’s insurance: $1,000
|Loan details||First use, zero down||First use, less 5% down||Subsequent use, zero down||Subsequent use, less 5% down|
|VA funding fee||$8,050||$7,647.50||$12,600.00||$11,970.00|
|Monthly principal & interest payment||$1,509.55||$1,434.08||$1,528.74||$1,452.30|
|Monthly property taxes & HOA||$283.33||$283.33||$283.33||$283.33|
|Total monthly mortgage payment||$1,792.88||$1,717.41||$1,812.07||$1,735.63|
|Total interest costs||$185,389.17||$176,119.71||$187,745.04||$178,357.79|
In this example, if you make a down payment on the first use, your VA funding fee will be $8,050. When financed into your mortgage, it increases your principal loan amount to $358,050. This results in a monthly principal and interest payment of $1,509.55. When we add property taxes and HOA fees, your total mortgage payment will be $1,792.88. In contrast, if you pay less than 5% down, your VA funding fee will be $7,647.50. This increases your loan amount to $340,147.50, which is $17,902 lower compared to not making a down payment at all. It also results in a lower total monthly mortgage payment of $1,717.41, which is cheaper by $75.
For the first use, when it comes to total interest charges, you’ll spend $185,389.17 without a down payment. But with less than 5% down, your total interest costs will be $176,119.71. Hence, making a down payment will save you a total of $9,269 interest costs.
Next, notice how the VA funding fee increases with subsequent use of the VA benefit. This is because the fee rate increases from 2.3% to 3.6% after the first use.
In this scenario, If you don’t make a down payment, your VA funding fee will cost $12,600. When financed into your mortgage, it increases your principal loan amount to $362,600. This results in a monthly P&I payment of $1,528.74. The total monthly mortgage payment will be $1,812.07 when we add property taxes and HOA fees. Meanwhile, if you pay less than 5% down payment, your VA funding fee will be $11,970.00. This increases your loan amount to $344,470.00, which is lower by $18,130 compared to no down payment. It results in a lower total monthly payment of $1,735.63, which is more affordable by $76.44.
Finally, savings are more evident when we compare total interest costs. For subsequent use with no down payment, your total interest charges will be $187,745.04. But with less than 5% down, your total interest costs will be $178,357.79. Making a down payment saves you $9,387.25 over the life of the loan.
This example shows borrowers will maximize their savings if they elect to make a small down payment. It’s worth making a higher down payment to lower your VA funding fee rate. After first use of your VA benefit, note the importance of tracking how high the funding fee increases. Consider the higher cost so you can prepare your finances.
The VA loan program is a valuable financing incentive for veterans, active service members, and qualified military spouses. It makes homeownership possible for military personnel who otherwise cannot qualify for traditional conventional loans. More often, returning service members have a hard time building credit after fulfilling their duties. But with flexible credit standards, cheap interest rates, and a no down payment option, qualified borrowers are able to afford homes.
Unlike other government-backed mortgages, VA loans do not come with mortgage insurance premium. Instead, it requires a VA funding fee that helps keep the loan available for future borrowers. The VA funding fee is an added cost based on your loan amount, the type of VA loan you obtained, and if you’ve previously used your VA benefit. The VA benefit is rolled into your mortgage payments if you do not pay for it upon closing. This increases your principal loan amount, which results in higher monthly payments and interest charges. However, as an exception, veterans receiving disability benefits are not charged a VA funding fee.
Borrowers can reduce their VA funding fee by electing to pay a down payment. Making a small down payment can help reduce the funding fee rate, which results in lower monthly payments and reduced interest costs.
San Diego Borrowers: Are You Unsure Which Loans You'll Qualify For?
We have partnered with Mortgage Research Center to help San Diego homebuyers and refinancers find out what loan programs they are qualified for and connect them with San Diego lenders offering competitive interest rates.