VA Loans in San Diego: True Cost vs. FHA

Why VA matters in San Diego specifically

With Naval Base San Diego, Marine Corps Base Camp Pendleton, MCAS Miramar, and several other installations in the county, a huge share of local homebuyers are eligible for a VA loan. That volume means local lenders are genuinely fluent in VA financing — but it also means it's worth understanding the mechanics yourself rather than taking a single loan officer's word for which program is cheapest.

How the VA loan works

The headline feature is $0 down with full entitlement — post-2020, there's no county loan limit on a VA loan for a borrower with full entitlement remaining. Unlike FHA or low-down-payment conventional loans, VA loans don't carry a monthly mortgage insurance premium at all. Instead, most borrowers pay a one-time funding fee, rolled into the loan rather than paid in cash. Veterans with a service-connected disability rating are exempt from the funding fee entirely.

The exact funding fee tiers

As of the va.gov schedule (confirmed unchanged as of 2026-06-08), the VA funding fee for a purchase loan is:

• Less than 5% down, first use: 2.15%
• 5%–9.99% down: 1.50%
• 10% or more down: 1.25%
• Less than 5% down, subsequent use: 3.30%
• Exempt (service-connected disability): 0%

VA vs. FHA vs. conventional — a worked comparison

Take an $850,000 San Diego purchase — comfortably under the county's $1,104,000 conforming loan limit, so all three programs apply cleanly. Using each program's own rules and this site's fallback rate assumptions (conventional 6.50%, FHA 6.25%, VA 6.15% — a live quote from your own lender will differ), here's the estimated principal, interest, and mortgage insurance over a 30-year term:

• VA, $0 down: funding fee (2.15% first use) of about $18,275, financed into the loan — no monthly mortgage insurance at all. Estimated principal + interest: roughly $5,290/month.
• FHA, 3.5% down: upfront MIP of 1.75% (about $14,354, financed) plus ongoing annual MIP. At this loan size, the loan crosses FHA's $726,200 high-balance threshold with a loan-to-value above 95%, which lands on the 0.75% annual MIP tier — about $513/month, for the life of the loan at this down payment. Estimated principal + interest: roughly $5,138/month, plus that $513 MIP — about $5,651/month total.
• Conventional, 20% down: no mortgage insurance, but requires $170,000 down versus VA's $0 or FHA's roughly $29,750. Estimated principal + interest: roughly $4,299/month — the lowest monthly payment of the three, but only because of the much larger cash requirement up front.

The useful comparison for most eligible buyers is VA against FHA, since both allow a low down payment: in this example, VA comes out roughly $360/month cheaper than FHA — despite financing a larger loan — because FHA's ongoing mortgage insurance outweighs the difference in loan size. These are illustrative estimates built from public program rules and this site's fallback rates, not a lender quote — your actual rate, closing costs, and entitlement status will change the real numbers.

BAH as a qualifying-income factor

Basic Allowance for Housing (BAH) counts toward qualifying income on a VA loan application. San Diego's FY2026 BAH rates (MHA CA038, spot-verified against travel.dod.mil 2026-06-22) include, for example, an E-5 with dependents at $3,975/month ($3,147 without dependents), and an O-3 with dependents at $4,518/month ($4,248 without). This is one factor a lender weighs when calculating what you qualify for — not a statement of what you can or should afford, which depends on your full financial picture.

Related reading

Financing is only part of the monthly picture — a property's Mello-Roos exposure can add hundreds a month on top of principal, interest, and insurance, and it's worth checking before you make an offer.