VA vs. Conventional Comparison

Enter your loan details to see which loan costs less over your planned timeline — and when the VA funding fee pays for itself.

How long do you plan to stay?5 years

years

VA LoanConv.

Principal Paid (5yr)$25,556$22,300

Interest Paid (5yr)$126,140$129,389

Funding Fee / PMIConv. PMI cancels mo. 131 at 80% LTV

$8,600$13,863

Down Payment Opp. CostWhat the $20,000 down payment would have grown to if invested at 5%/yr over 5 years. VA requires $0 down, so this cost is $0.

$0$5,526

5-Year Total$160,296$171,078

BREAK-EVEN ANALYSIS

VA wins after Month 37 (3yr 1mo)

The VA funding fee ($8,600) is a one-time upfront cost — think of it as a head start that conventional gets. But because VA has a lower interest rate and no monthly PMI, it saves you money every month. Those savings add up, and by Month 37 they've fully paid back the funding fee. From that point on, VA costs less for as long as you stay.

The conventional down payment ($20,000) is also included as an opportunity cost — cash tied up in a down payment can't be invested. At 5%/yr, that money has a real cost over time, which works in VA's favor and is factored into both totals above.

If you sell before Month 37: conventional would have been the cheaper choice overall.

Cumulative Cost Over 5 Years

How the VA vs. conventional comparison works

This calculator runs a side-by-side 5-year total cost comparison between a VA loan and a conventional loan for the same purchase price. The VA loan has no private mortgage insurance (PMI) requirement regardless of down payment, but it does carry a one-time VA funding fee. The conventional loan avoids the funding fee but typically requires PMI when the down payment is below 20% of the purchase price.

The key inputs are purchase price, down payment, interest rate, loan term, and whether you qualify for VA loan exemptions. The calculator adds the VA funding fee (per M26-7 Ch. 8 rates) to the VA loan's upfront cost, then offsets it against the PMI savings over the comparison period. The break-even month is the point where cumulative VA loan costs fall below cumulative conventional loan costs — after that month, the VA loan saves money every month.

The comparison is most useful for service members evaluating whether the no-PMI benefit of a VA loan offsets the funding fee over their expected time in the home. A shorter hold period favors the VA loan if PMI savings accumulate quickly; a longer hold period amplifies the advantage even further. Opportunity cost of any down payment difference between scenarios is noted in the output.

Source: VA Lender's Handbook M26-7, Ch. 8 — Borrower Fees and Charges and the VA Funding Fee

How the VA vs. conventional comparison works