MILITARY & VA
Does a VA loan require PMI?
By Steve Lockhart
The short answer
The short answer is no, and it is worth pausing on what that means, because mortgage insurance is one of the most misunderstood and expensive parts of home buying. With a conventional loan under 20 percent down, you pay private mortgage insurance, often for years.
Full answer
The short answer is no, and it is worth pausing on what that means, because mortgage insurance is one of the most misunderstood and expensive parts of home buying. With a conventional loan under 20 percent down, you pay private mortgage insurance, often for years. With an FHA loan, you pay an annual mortgage insurance premium, frequently for the life of the loan. A VA loan carries none of that monthly insurance, on any down payment amount, including zero down.
In place of monthly insurance, the VA charges its one-time funding fee, which can be financed into the loan balance. If the fee is financed, the monthly impact is spread across the life of the loan, and the total is still usually far less than years of monthly PMI or FHA premiums. And for the many borrowers who are exempt, veterans receiving VA disability compensation, qualifying surviving spouses, and active-duty Purple Heart recipients, the fee disappears altogether, leaving a loan with no down payment and no insurance cost of any kind.
The comparison lands hardest for first-time buyers. On a $400,000 Las Vegas purchase, the difference between a VA loan and a conventional or FHA loan with insurance can change the monthly payment by a couple of hundred dollars, every month, for years. That is real spending power, whether it stays in the budget or gets put toward the home itself.
We run the comparison with your exact numbers, because the point is not that VA always wins; it is that the insurance line, or its absence, should never be a surprise.
Go a little deeper
Frequently asked
Questions service members often follow up on
Is the funding fee cheaper than PMI over time?
Usually, yes. A financed funding fee lands as a small monthly addition for the life of the loan, while PMI is a recurring premium that lasts years and often survives long after you have built equity. The exact comparison depends on your price and terms, so we run it.
Can I cancel the funding fee later like PMI?
No, and that is by design: the fee is a one-time, upfront cost, so there is nothing to cancel. If you are exempt, it is never charged at all, which makes the funding fee the friendlier cousin of PMI.
Do I still pay homeowners insurance on a VA loan?
Yes, homeowners insurance is required on every mortgage, VA included, and it is a different product entirely. The VA advantage is the absence of mortgage insurance, the lender's insurance, not the insurance on your house.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: show you the insurance math on every loan type before you choose. We compare the VA's one-time fee against PMI and FHA premiums on your exact purchase, so the decision is made on dollars over time, not on the reputation of a program.
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