VA Loan Calculator (Estimate Monthly Payments)
This VA loan calculator can be used to calculate the periodical cash outflow in the form of installments, total interest outflow, including the VA loan funding charges, etc.
VA Loan
[L x J x (1+J)^N]/[(1+J)^N-1]
- L is the loan amount
- J is the rate of interest per annum
- N is the number of period or frequency wherein loan amount is to be paid
About VA Loan Calculator
The administration of Veterans offers housing loan guaranty benefits and several other kinds of home-related programs to eligible people such as surviving spouses, service differently-abled person, etc. and services such as to purchase, repair, build, retain a home for personal occupancy. Sometimes VA funding fees are charged to upkeep the program as there are chances of default. There could be other charges like taxes and insurance as well. This calculator is similar to the mortgage calculator only difference is there are VA loan funding charges. The formula for Calculating VA loan amount is per below:
Mathematically it can be calculated :
Wherein,
- L is the loan amount
- J is the rate of interest per annum
- N is the number of period or frequency wherein the loan amount is to be paid
How to Calculate using the VA Loan Calculator?
One needs to follow the below steps in order to Calculate the monthly installment amounts.
Step #1 – First of all, determine the loan amount required. Banks usually provide more loans amounts to those who have a good credit score and less amount to those who have a lower credit score. First, we shall enter the principal amount:
Step #2 – Multiply the loan amount by the rate of interest.
Step #3 – Now, we need to compound the same by rate until the loan period.
Step #4 – We now need to discount the above result obtained in step 3 by the following:
Step #5 – After entering the above formula in excel we shall obtain periodically for VA loan installments.
VA Loan Calculator Examples
Example #1
- Mr. William and Mrs. William were settled in the United States. Mr. William was working in a multinational company and Mrs. William was working as a part-time tuition teacher in a small academy.
- They had planned to purchase a house after 2 years in their favorite locality. But after 1-year Mr. William passes away in a car accident and Mrs. William is now the surviving spouse.
- She learns about the VA loans offered by the administration of veterans and approaches them for housing loans. She was told that she would be offered 100% financing, however, she is also be charged VA loan funding which is 2% of the loan amount.
- The value of property is $125,000. She opts for 30 years mortgage loan and the rate of interest applicable for her is 7.76% and the installments shall be paid on a monthly basis.
Based on the above information, you are required to calculate the monthly installment amount.
Solution:
We need to calculate the EMI amount, for that first we shall calculate the loan amount which is 125,000 *100% which is 125,000. There are VA funding charges which are 3% of the loan amount and therefore the total loan amount would be 125,000 + (125,000 x 3%) which is 128,750.
The number of periods it is required to be paid is 30 years but since here Mrs. William is going to pay monthly hence the number of payments that he shall be required to be paid is 30*12 which is 360 equally installments and lastly, the rate of interest is 7.76% fixed which shall be calculated monthly which is 7.76%/12 which is 0.65%.
Now we shall use the below formula to calculate the EMI amount.
= [128,750×0.65%x(1+0.65%)^360]/[(1+0.65%)^360–1]
= 923.27
Therefore, the EMI amount for Mrs. William for 30 years on the loan amount 128,750 shall be 923.27
Example #2
- Mr. A is a veteran service member and is differently-abled. He is leaving in a house in New York City for around 30 years and his house has been quite old now.
- He enquires for home repair and reconstruction and learns that the total cost would be around $75,000. He is not earning quite that much and doubts if any private bank would lend him the money.
- He learns about the VA loan facility from a friend and puts forward his application for a loan amount of $75,000 with all the supporting and quotations that he received from the vendor.
- His loan is approved only for 90% and rest he has to make arrangements. He opts for 15 years and the rate of interest applicable is 12.36% fixed on the entire tenure with monthly payouts. You are required to calculate the total interest outgo on this VA loan amount.
Solution:
We need to calculate the EMI amount, for that first, we shall calculate the loan amount which is 75,000 * 90% which is 67,500. The number of periods it is required to be paid is 15 years but since here Mr. A is going to pay monthly hence the number of payments that he shall be required to be paid is 15*12 which is 180 equally installments and lastly the rate of interest is 12.36% fixed which shall be calculated monthly which is 12.36%/12 which is 1.03%.
Now we shall use the below formula to calculate the loan amount.
= [67,500 x 1.03% x (1 + 1.03%)^180 ] / [ (1 + 1.03%)^180 – 1 ]
= 825.81
Therefore, the EMI amount for Mr. A for 15 years on the loan amount $67,500 shall be $825.81
Total interest outgo equals to ($825.81 * 180) – $67,500 which is $81,146.22
Conclusion
VA loans are best for those who can qualify as this VA loans offer better security and loans at competitive interest rates. Also, up to a certain limit, there is no requirement for a down payment as well which is a unique feature of VA loans. There is no insurance requirement and hence the expenses of insurance burden on home loan buyers reduce. There is no requirement as such that home loan buyers should be buying home for the first time. VA loans are generally for residency and cannot be obtained for investments. A lot of paperwork is required in the VA loan amount.
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