VA Loan Calculator with Closing Costs
Loan Details
Estimated Monthly Payment
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Understanding Your VA Loan with Closing Costs
The VA loan program, guaranteed by the U.S. Department of Veterans Affairs, offers significant benefits to eligible service members, veterans, and surviving spouses, including the potential for no down payment and no private mortgage insurance (PMI). However, like most home loans, VA loans do come with closing costs and other expenses that need to be factored into your total financial picture. This calculator helps you estimate your monthly mortgage payment, including the VA Funding Fee and an estimate for closing costs, property taxes, and homeowners insurance.
Key Components of the Calculation:
- Loan Amount: The principal amount borrowed to purchase the home.
- Interest Rate: The annual interest rate on your loan.
- Loan Term: The total number of years you have to repay the loan (typically 15 or 30 years).
- VA Funding Fee: A one-time fee paid to the VA to support the program. It can be financed into the loan amount. The fee varies based on the type of service, down payment amount, and whether it's a first-time or subsequent use of the benefit. This calculator uses a general percentage, but it's crucial to verify the exact fee for your situation.
- Property Taxes: Annual taxes assessed by your local government on the property's value. These are typically paid monthly into an escrow account.
- Homeowners Insurance: Insurance that protects your home against damage from events like fire, theft, and natural disasters. This is also typically paid monthly into an escrow account.
- Estimated Closing Costs: These are one-time fees charged by lenders and third parties to process your mortgage. They typically include appraisal fees, title insurance, origination fees, recording fees, and more. This calculator uses a percentage of the loan amount for estimation.
How the Calculator Works:
The calculator first determines the total loan amount by adding the initial loan amount and the financed VA Funding Fee. Then, it calculates the monthly principal and interest (P&I) payment using the standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]</cod
Where:
M = Monthly Payment (Principal & Interest)P = Principal Loan Amount (including financed VA Funding Fee)i = Monthly Interest Rate (Annual Rate / 12)n = Total Number of Payments (Loan Term in Years * 12)
After calculating the P&I, the calculator adds the monthly property taxes (Annual Taxes / 12), monthly homeowners insurance (Annual Insurance / 12), and the estimated monthly portion of closing costs (Estimated Closing Costs % * Loan Amount / 12). Note that the closing costs are estimated as a monthly figure to give a sense of ongoing impact, though they are paid upfront at closing.
Example Scenario:
Let's say a veteran is purchasing a home with a desired Loan Amount of $350,000. They have secured an Interest Rate of 3.75% over a Loan Term of 30 years. The VA Funding Fee for their situation is 2.15%, and they estimate Annual Property Taxes of $4,200 and Annual Homeowners Insurance of $1,500. They also estimate Closing Costs at 3% of the loan amount.
- Financed VA Funding Fee: $350,000 * 0.0215 = $7,525
- Total Loan Amount (P): $350,000 + $7,525 = $357,525
- Monthly Interest Rate (i): 0.0375 / 12 = 0.003125
- Total Number of Payments (n): 30 * 12 = 360
- Monthly P&I: $357,525 [ 0.003125(1 + 0.003125)^360 ] / [ (1 + 0.003125)^360 – 1] ≈ $1,657.65
- Monthly Property Taxes: $4,200 / 12 = $350.00
- Monthly Homeowners Insurance: $1,500 / 12 = $125.00
- Estimated Monthly Closing Costs: ($350,000 * 0.03) / 12 = $1,050 / 12 = $87.50
- Total Estimated Monthly Payment: $1,657.65 + $350.00 + $125.00 + $87.50 ≈ $2,220.15
This example demonstrates how the calculator provides a comprehensive estimate by incorporating all these crucial elements. Remember that this is an estimate, and actual costs may vary. Consult with a mortgage professional for precise figures.