Do VA Loans Have PMI? What You Pay Instead
Do VA loans have PMI? No. VA loans have no private mortgage insurance (PMI) and no monthly mortgage insurance, even with 0% down, because the Department of Veterans Affairs (VA) guarantees part of the loan. Instead, a borrower who is not exempt pays a one-time VA funding fee.
This article explains why the guaranty takes the place of PMI and what the funding fee costs. It also compares the fee with PMI and FHA mortgage insurance on one $300,000 example, so you can see how long each cost lasts and which insurance and lender rules still apply.
Check your VA home buying eligibility. Start here (Nov 6th, 2026)Why do VA loans have no PMI?
PMI protects the lender if a borrower stops paying. According to va.gov, it is usually required on a conventional loan with less than 20% down. FHA loans have their own version, called the mortgage insurance premium (MIP).
A VA loan relies on the VA guaranty instead. Under 38 U.S.C. 3703, a borrower with full entitlement gets a guaranty of 25% of any loan above $144,000. Say a veteran with full entitlement borrows $300,000 from a VA-approved lender. In that case, the guaranty is $75,000 ($300,000 x 25%).
The federal government promises to pay the lender part of the loan if default and foreclosure occur. As a result, the VA program requires no mortgage insurance on top of that promise. VA’s Buyer’s Guide says the guaranty “allows borrowers NOT to pay for mortgage insurance for the life of the loan.”
This holds at any down payment, so a VA loan with 0% down and one with 15% down both carry no PMI. Still, the guaranty protects the lender, and a borrower who defaults can lose the home. No PMI is one of several benefits of a VA loan, along with no required down payment in most cases.
What you pay instead: the VA funding fee
The VA funding fee is a one-time charge required by 38 U.S.C. 3729. VA says it helps lower the cost of the loan for U.S. taxpayers, since the program requires no down payment or monthly mortgage insurance. These va.gov rates apply to purchase loans closed from April 7, 2023, until June 9, 2034:
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Refinance fees differ. A VA Streamline Refinance, also called an Interest Rate Reduction Refinance Loan (IRRRL), carries a 0.5% fee. Meanwhile, a VA cash-out refinance carries 2.15% on first use and 3.3% after first use.
The fee is a percentage of the loan amount, so a down payment lowers it twice: through a lower rate tier and a smaller loan. For example, say a veteran on first use buys a $300,000 home with 0% down. The fee is $6,450 ($300,000 x 2.15%). After first use, the same loan carries a $9,900 fee ($300,000 x 3.3%).
You can pay the fee at closing or add it to the loan. If the veteran above finances the $6,450, the loan becomes $306,450. At 7.24% for 30 years, that financed amount adds about $44 a month to principal and interest, before property taxes, homeowners insurance and HOA dues.
That rate is Freddie Mac’s Primary Mortgage Market Survey (PMMS) 30-year average for October 29, 2026. PMMS reports conventional rates, so a VA rate from a lender will differ. For the full charts, see our VA funding fee guide.
Who does not pay the VA funding fee
According to va.gov, you are exempt if any of these describes you:
- Veterans receiving VA compensation for a service-connected disability.
- Anyone eligible for that compensation who receives retirement or active-duty pay instead.
- Surviving spouses who receive Dependency and Indemnity Compensation (DIC).
- Service members with a proposed or memorandum rating, received before the closing date, based on a pre-discharge claim.
- Active-duty members who provide evidence of a Purple Heart on or before the closing date.
Your Certificate of Eligibility (COE) shows your status in its funding fee field: exempt, non-exempt, or contact the Regional Loan Center. You can request a COE online at VA.gov, through a lender, or by mail with VA Form 26-1880.
PMI vs. FHA MIP vs. the VA funding fee on a $300,000 home
After “do VA loans have PMI,” the next question is usually cost, so here is one example across all three loan types. Say a buyer picks a $300,000 home with 5% down ($15,000), so the base loan is $285,000 on a 30-year fixed term. For the VA column, the borrower is on first use and is not exempt.
The table shows only mortgage insurance and the funding fee. So it assumes no interest rate, and it leaves out principal, interest, property taxes, homeowners insurance and HOA dues.
| Cost | VA loan | FHA loan | Conventional with PMI |
|---|---|---|---|
| One-time charge | $4,275 (1.5%) | $4,987.50 (1.75%) | $0 |
| Monthly insurance, first year | $0 | About $118.75 (0.50% a year) | About $85.50 to $199.50 |
| When the monthly cost ends | No monthly cost | End of the mortgage term | At 80% on request, 78% automatically |
The FHA figures come from HUD Handbook 4000.1, revised August 12, 2026. It sets a 1.75% upfront premium and a 0.50% annual MIP for this loan size, term and 95% loan-to-value ratio. Because FHA bases the annual MIP on the outstanding balance, the $118.75 falls slowly over time.
The PMI range uses the estimate on Freddie Mac’s “Breaking down PMI” page, read in October 2026: about $30 to $70 a month per $100,000 borrowed. Multiplying by 2.85 gives $85.50 to $199.50. However, your own premium depends on your credit and your loan, so treat this as an illustration.
What the example shows
On these figures, the FHA upfront premium alone is higher than the VA funding fee, and FHA then adds a monthly premium. Meanwhile, the PMI borrower pays nothing upfront in this example. Even so, $4,275 equals about 22 to 50 months of PMI at those monthly amounts, assuming a flat premium.
Keep in mind that a financed fee also builds interest. At the same 7.24% PMMS rate, financing $4,275 over 30 years adds about $29 a month. If the borrower is exempt, the VA fee is $0, so the only cost in that column disappears.
When a VA loan may not cost less
A conventional loan with 20% down carries no PMI and no funding fee. By comparison, a non-exempt veteran who puts 20% down on the same home pays a $3,000 VA funding fee ($240,000 x 1.25%). In that case, the rate and closing costs decide which loan costs less.
Rates vary by lender and borrower, so compare Loan Estimates line by line. For fuller comparisons, read conventional vs. VA loan and VA vs. FHA.
Check your VA mortgage rates. Start here (Nov 6th, 2026)How long PMI and FHA MIP last
The Homeowners Protection Act sets the PMI rules for single-family primary homes on loans closed on or after July 29, 1999. The CFPB summarizes three end points:
- 80% on request. You can ask your servicer in writing to cancel PMI when your balance reaches 80% of the home’s original value. You also need a good payment history, no junior liens and evidence that the value has not declined.
- 78% automatically. The servicer must end PMI on the date the balance is scheduled to reach 78% of original value, as long as you are current.
- Loan midpoint. PMI must end the month after the midpoint of the amortization schedule, which is 15 years on a 30-year loan, if you are current.
Original value generally means the lower of the sales price or the appraised value at purchase. So on a home with a $300,000 original value, those balances are $240,000 (80%) and $234,000 (78%). Different rules apply to lender-paid mortgage insurance and to some high-risk loans.
FHA works differently. Under the 2026 HUD chart, a loan with a term above 15 years and a loan-to-value ratio above 90% pays annual MIP for the whole mortgage term. At 90% or below, the annual MIP lasts 11 years.
A VA loan has no premium to cancel, because the funding fee is charged once. For this reason, an eligible homeowner with PMI or FHA MIP may look at a VA cash-out refinance. That loan requires full underwriting, a VA appraisal and the funding fee unless the borrower is exempt. An IRRRL cannot do this, since it refinances only an existing VA loan.
What still applies on a VA loan
Even though the answer to “do VA loans have PMI” is no, other housing costs and lender rules remain. These still apply:
- Homeowners insurance. The lender must make sure hazard insurance is in place before closing and kept for the loan term, per VA Pamphlet 26-7.
- Flood insurance. It is required when the home is in a special flood hazard area.
- Property taxes. VA does not require an escrow account, although a lender may choose to use one.
- Credit score. VA sets no minimum credit score. Lenders set their own.
- Debt-to-income ratio (DTI). VA uses 41% as a guide and has no hard limit. Residual income, the money left each month after major expenses, is the main test.
- Down payment. VA requires none unless the price is above the VA reasonable value or the loan is a graduated payment mortgage. A lender may also require one if you have reduced entitlement.
- Closing costs. On a purchase, only the funding fee can be financed. You pay other fees at closing, unless the seller covers them.
A COE also does not approve a loan. It confirms eligibility, and then you must still meet the credit and income standards.
FAQ: Do VA loans have PMI or other mortgage insurance?
How much is PMI on a VA loan?
PMI on a VA loan is $0, because the program has no PMI at any down payment. The related cost is the VA funding fee, a one-time charge of 1.25% to 3.3% of the loan on a purchase. Exempt borrowers pay no fee.
Is there mortgage insurance on a VA loan?
No. VA states that its home loan program does not require monthly mortgage insurance. Homeowners insurance is a separate requirement, since it covers the property against damage.
What is the difference between the VA funding fee and PMI?
PMI is usually a monthly premium for insurance that protects the lender, and it can end as you pay down the loan. In contrast, the VA funding fee is a one-time charge that goes to VA. You can finance it, and some borrowers are exempt.
Can I avoid the VA funding fee?
You avoid the fee only if you are exempt, although a larger down payment lowers it. A seller may also pay it, but VA counts that toward the 4% limit on seller concessions. If you later receive a compensation award effective before closing, you may qualify for a VA funding fee refund, but VA does not guarantee one.
Do you need PMI on a VA loan with less than 20% down?
No. The 20% threshold comes from conventional loans. A VA loan has no PMI at 0%, 5% or 10% down, though a smaller down payment can raise the funding fee.
Next step: check your funding fee status
So, do VA loans have PMI? No, and the cost to plan for is the one-time funding fee, unless you are exempt. Your exemption status decides whether that fee is $0.
Start by checking the funding fee field on your COE. Next, ask each lender for a Loan Estimate, so you can compare rates and fees on the same terms.
