Example methods and network devices for tunnel-based routing calculation. One example method may comprise establishing a tunnel between a first tunnel interface and a second tunnel interface; establishing a first session for routing information exchange between a first tunnel endpoint and an underlay network device; establishing a second session for routing information exchange between the first tunnel interface and the second tunnel interface over the tunnel. In response to receiving first routing information over the first session, the underlay network device may be configured to be a next hop to reach the second tunnel endpoint by updating a routing table to include a first entry. Further, the underlay network device may be retained as the next hop by updating the routing table to include a second entry to override second routing information that advertises, over the second session, the second tunnel interface as the next hop.