Loan Types

Veterans Day Math: A $0-Down VA Loan Beats a 3.5%-Down FHA Loan by $72 a Month

On a $415,000 home at 7.18%, a $0-down VA loan costs about $72 a month less than FHA, and $133 less for fee-exempt veterans. Here's the full math.

By Shivam Kaushik · Updated November 11, 2026 · 5 min read

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Here’s the Veterans Day math most veterans never get shown. On a $415,000 home at 7.18%, a VA loan with $0 down costs about $72 a month less than an FHA loan, even though the FHA buyer puts $14,525 down. For a veteran with a service-connected disability rating, who pays no VA funding fee, the gap grows to about $133 a month.

Quick answers

VA loan, $0 down, first use: about $2,872/month (principal and interest, 2.15% funding fee rolled in).
FHA loan, 3.5% down: about $2,944/month (principal and interest plus first-year annual MIP).
VA, funding fee exempt: about $2,811/month.
Cash at closing: the VA buyer keeps $14,525 that the FHA buyer spends on the down payment.
Why it works: VA loans have no monthly mortgage insurance. FHA charges it for the life of the loan when you put less than 10% down.

The side-by-side: same house, same rate

To keep this fair, we used the same $415,000 price (Realtor.com’s October 2026 national median list price) and the same 7.18% rate (Freddie Mac’s Nov. 5 average) for both loans. Real VA and FHA rates are set by each lender and often come in a bit under the conventional average. Holding the rate equal shows the effect of the fees alone.

	VA (first use, 0% down)	VA (fee-exempt)	FHA (3.5% down)
Down payment	$0	$0	$14,525
Upfront fee	VA funding fee 2.15% = $8,923	$0	FHA upfront MIP 1.75% = $7,008
Total loan (fee rolled in)	$423,923	$415,000	$407,483
Principal & interest	$2,872	$2,811	$2,760
Monthly mortgage insurance	$0	$0	≈ $184 (0.55% a year)
Monthly total	≈ $2,872	≈ $2,811	≈ $2,944

Our calculations. Fee rates come from the VA funding fee chart and HUD’s FHA premium schedule (Mortgagee Letter 2023-05: 1.75% upfront, 0.55% a year for most 30-year loans with less than 5% down). FHA MIP is figured on the base loan in year one and falls slowly as the balance drops. Taxes, homeowners insurance and closing costs are not included.

Over 30 years, it’s closer than you’d think, but VA still wins on cash

If you keep each loan the full 30 years, total principal and interest comes to about $1.034 million for the first-use VA loan. The FHA loan totals about $1.039 million once roughly $44,900 of annual MIP is added. That’s about $4,800 apart, and the VA buyer also kept $14,525 in the bank on day one.

For a funding-fee-exempt veteran, lifetime payments drop to about $1.012 million, roughly $26,600 less than the FHA loan, again with no down payment.

Fun factThe VA funding fee isn’t one fixed number. It’s 2.15% on first use with less than 5% down, but 3.3% if you’ve used the benefit before and put less than 5% down. Put 5% down and it drops to 1.5% (first or later use). Put 10% down and it’s 1.25%.

Who pays no VA funding fee at all?

According to the VA, you don’t pay the fee if any of these apply:

You receive VA compensation for a service-connected disability.
You’re eligible for that compensation but receive retirement or active-duty pay instead.
You’re a surviving spouse receiving Dependency and Indemnity Compensation (DIC).
You’re a service member with a proposed or memorandum rating, issued before closing, finding you eligible for compensation based on a pre-discharge claim.
You’re on active duty and show proof of a Purple Heart on or before closing.

On our $415,000 example, being exempt saves $8,923 upfront and about $61 a month.

Myth buster“My VA benefit is a one-time thing.” It isn’t. Many veterans can use their VA home loan benefit more than once, for example after selling a home and paying off the earlier VA loan. A later use with less than 5% down does carry the higher 3.3% funding fee.

When FHA can still make sense for a veteran

The property doesn’t meet VA standards and the seller won’t make repairs.
You’ve already used your benefit on a home you still own and have limited remaining entitlement.
A co-borrower who isn’t a veteran or your spouse needs to be on the loan. That’s harder with VA.

Otherwise, for most eligible buyers, the no-mortgage-insurance setup makes VA the cheaper monthly option.

What this means for you

Veterans and service members: get your Certificate of Eligibility early and ask each lender for a VA quote and an FHA or conventional quote. Compare them on our VA loan calculator and FHA loan calculator.
If you have a disability rating: make sure the lender has your award letter. It removes the funding fee, the single biggest VA cost.
Military spouses and surviving spouses: surviving spouses receiving DIC are also funding-fee exempt.
Already in an FHA loan? If you’re VA-eligible, a VA refinance can drop the monthly MIP. Our guide on removing FHA mortgage insurance covers the options.

For the full fee chart, read the VA funding fee explained. For how FHA stacks up against other loans, see FHA vs. conventional.

FAQ

Is a VA loan cheaper than an FHA loan?

Usually, month to month. VA loans have no monthly mortgage insurance, while FHA charges 0.55% a year on most low-down-payment 30-year loans for the life of the loan. In our $415,000 example at the same rate, VA came out about $72 a month cheaper, with $0 down.

How much is the VA funding fee in 2026?

For a purchase loan with less than 5% down: 2.15% on first use and 3.3% after first use. With 5% or more down it’s 1.5%, and with 10% or more down it’s 1.25%. These rates have been in effect since April 7, 2023.

Can the VA funding fee be rolled into the loan?

Yes. Most borrowers finance it into the loan, which is what our example assumes. That adds a little to the monthly payment instead of to cash at closing.

Do disabled veterans pay the VA funding fee?

No. Veterans receiving VA compensation for a service-connected disability are exempt, as are some other groups listed by the VA, including surviving spouses receiving DIC.

Sources: U.S. Department of Veterans Affairs, VA funding fee and closing costs; HUD Mortgagee Letter 2023-05 (FHA annual MIP); Realtor.com October 2026 housing report; Freddie Mac Primary Mortgage Market Survey, Nov. 5, 2026. Calculations by Keys & Coffee. This article is general education, not financial advice. Keys & Coffee is not a lender.

Written by

Shivam Kaushik· IMSHIVA

Founder & Director, QuibbleTech Solutions Pvt Ltd · Editor, Keys & Coffee

Shivam Kaushik is the founder of QuibbleTech Solutions Pvt Ltd and the editor of Keys & Coffee. He is not a licensed loan officer or financial adviser. Every guide here is written in plain English and checked against official sources such as the CFPB, HUD, Fannie Mae, Freddie Mac and the Federal Reserve. For advice on your own loan, talk to a licensed lender.

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Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.