A load-balancer instance is instantiated in a network virtualization edge (NVE) in a software defined network (SDN). A forwarding table in the NVE is modified to indicate that a next hop for a packet having a destination address of the load-balancer instance is to be resolved by the load-balancer instance. From a portion of the packet, and using the load-balancer instance, a value usable to select a singular next hop to a first real server in a pool of real servers managed by the load-balancer instance is determined. The packet is forwarded, using the modified forwarding table, the packet through an underlay of the SDN such that the packet tunnels from the NVE to a first NVE, the second NVE hosting the first real server.