Do VA Loans Require PMI?

An image of an open bank vault door that has large PMI letters overlying the picture VA loans are a popular mortgage option for veterans and those in active service. One of the most attractive features of these loans is the lack of private mortgage insurance (PMI) requirements, which can add to the monthly payment amount. This article will answer the question: Do VA Loans Require PMI?

We'll explain how PMI works and provide a detailed overview of what is required for VA loan borrowers. You'll also learn about potential exemptions and alternatives to paying PMI.

VA Loan: What is it?

When considering a mortgage, veterans and active-duty military personnel may want to consider getting a VA loan. VA loans come with many benefits, including the fact that they do not require a down payment. However, service requirements must be met to be eligible for a VA loan. Additionally, those who want to get their loan must pay a funding fee and obtain a VA certificate of eligibility. Unlike other forms of mortgage insurance, the VA does not specify a mortgage insurance requirement for VA loans.

Regarding entitlement, veterans may be able to borrow up to a certain percentage of the loan amount. Requirements for a VA loan may vary, but those receiving VA compensation may have an advantage. Overall, VA loans are helpful for those who have served our country and want to become homeowners.

VA Loan Eligibility Requirements

Meeting eligibility requirements is a critical component of applying for a VA loan. This loan option is attractive for many because it can result in a lower monthly mortgage payment and eliminates the need for monthly mortgage insurance.

To qualify for a VA loan, you'll need to find a VA lender and provide documentation to demonstrate that you meet eligibility requirements. In addition to meeting income and credit score requirements, you'll need to be able to pay closing costs and, if you opt for a VA cash-out refinance, have less than 20 percent of the loan remaining. Fortunately, many types of VA loans are available, making it possible for many individuals to purchase a home without needing to pay mortgage insurance.

Exploring VA Home Loan Benefits

The VA loan is one of the most beneficial for veterans, service members, and their families. Homebuyers can take advantage of no down payment requirement and competitive interest rates.

But do VA loans require mortgage insurance (PMI)? This article will answer that question and explain how PMI works with VA loans. We'll also discuss options available to borrowers who cannot make a full down payment or meet other requirements to avoid PMI.

Do VA Loans Require PMI?

VA loans are one of the many benefits the United States Department of Veterans Affairs (VA) offers active military personnel, veterans, and their families. These loans require no down payment and have competitive interest rates, making them an attractive option for those who qualify. However, one question that often arises when considering a VA loan is whether or not it requires private mortgage insurance (PMI).

The good news for those looking into VA loans is that they do not require PMI. Unlike conventional loans, which typically require PMI if the buyer puts less than 20% down on a home, VA loans do not have this requirement. This can save buyers thousands of dollars over the life of their loan since PMI can add up to hundreds of dollars per month.

Instead of PMI, all VA loans require a funding fee upfront.

VA Funding Fee

If you're a veteran looking to buy a home, you may have heard about the VA Funding Fee. This is a one-time fee that's paid upfront by veterans who are getting a VA loan. The purpose of this fee is to help offset the costs of the VA loan program, which is designed to make it easier for veterans to buy homes. 

The amount of the VA Funding Fee varies depending on several factors, including whether you're purchasing or refinancing your home and whether it's your first time using a VA loan. Generally speaking, first-time buyers can expect to pay anywhere from 1.4% to 2.3% of their loan amount as a funding fee, while those who have used VA loans before can expect to pay slightly less.

It's important to note that not all veterans are required to pay the VA Funding Fee.

Advantages of No PMI with VA Mortgages

VA loans are a popular and beneficial option for eligible veterans or active-duty military members. One of the most significant advantages of VA loans is that they do not require private mortgage insurance (PMI). Instead, VA loans offer a substitute called the funding fee, a one-time fee paid upfront or added to the total loan amount. This eliminates the need for monthly PMI payments and can save borrowers hundreds of dollars each month.

Not having to pay PMI also means that homebuyers may be able to afford a more significant loan amount or have lower monthly payments than conventional loans. Additionally, because the government backs VA loans, lenders may offer more favorable terms, such as lower interest rates and flexible credit requirements.

VA Loans vs. Conventional Loans: PMI Requirements

When it comes to VA loans and conventional loans, one of the most important differences lies in PMI requirements. VA loans have no private mortgage insurance (PMI) requirement, while conventional loans often require PMI.

This means that VA loan holders don’t have to worry about paying for PMI, while conventional loan holders must include it in their monthly payments. However, conventional loan holders can pay a lump sum for PMI at the start of their loan, which means that the monthly payments for a VA loan and a conventional loan may be similar.


VA loans have become an increasingly popular option in today's housing market among veterans and active-duty military members. These loans offer several advantages, such as low-interest rates and flexible terms, making it easier for individuals to purchase their dream homes. One of the most significant benefits of VA loans is that they do not require private mortgage insurance (PMI).

For unfamiliar people, PMI is an insurance policy that homebuyers must pay when they take out a conventional home mortgage with a down payment amount that is less than 20% of the home's value. This insurance protects the lender in case the borrower defaults on their loan. However, PMI can be pretty costly, adding expenses that borrowers need to pay over the life of the loan.

Fortunately, VA loans do not require PMI, so veterans and military members don't need to pay this extra expense. This can allow them to save significant monthly payments, freeing up their budget for other expenses. This benefit can benefit those who are just starting and need to save as much as possible.

VA loans offer several other benefits, such as no down payment and flexible credit requirements, making them an excellent option for anyone purchasing a home. However, it's essential to remember that VA loans are only available to those who have served in the military. For those who haven't served and need to pay PMI with a conventional loan, other loan products that don't require this extra expense are available.

In conclusion, VA loans are an excellent option for veterans and active-duty military members looking to purchase their dream homes. With several benefits, including the lack of PMI, VA loans can help borrowers save money and make homeownership more accessible. However, it's essential to explore all your options and weigh the benefits and drawbacks of each loan product before making a final decision.