Systems, methods, and non-transitory computer-readable storage media for forwarding tables for virtual networking devices. The system first identifies local virtual machines hosted on a local host connected to the system, the system having virtual tunneling capabilities. The system then generates a forwarding table for the system. Next, the system populates the forwarding table with local entries including bindings for the local virtual machines hosted on the local host and adds a default route in the forwarding table pointing to a default forwarder function, wherein the default route is configured to handle all non-local traffic relative to the system and the local host.