Updated August 2026 — Here’s a question that comes up in nearly every first conversation with a veteran buyer: “Do I need mortgage insurance on a VA loan?” The answer is no — and it’s no at every down payment level. Not at 5% down. Not at 3% down. Not at zero down. Never. The VA’s guaranty to the lender eliminates the need for private mortgage insurance entirely, regardless of how much you put down at closing.
That’s the headline. But the full picture is a bit more nuanced, and understanding it will save you real money. VA borrowers don’t pay PMI, but they do pay a VA funding fee — a one-time upfront charge (not a monthly cost) that keeps the VA loan program self-sustaining without taxpayer appropriations. For most veterans, that trade-off is strongly in their favor. And for veterans with a service-connected disability rating of 10% or higher, even that fee disappears entirely.
I’m Duane Buziak, NMLS #1110647, an independent mortgage broker serving veterans and active-duty military across Virginia, Florida, Tennessee, and Georgia. As a broker with access to 500+ wholesale lenders, I’ve helped veterans navigate this exact question hundreds of times. If you’re exploring your options and don’t want a hard inquiry on your credit report yet, our NoTouch Credit Pull lets you get a real pre-qualification picture with no hard inquiry, no commitment, and no credit hit — a true soft-pull mortgage pre-qualification built specifically for veterans. Read on for a complete breakdown of exactly what VA mortgage insurance requirements look like, what you actually pay, and who pays nothing at all.
Why VA Loans Have No PMI — And What That Trade-Off Is Worth
Private mortgage insurance exists for one reason: to protect lenders when a borrower puts down less than 20%. If you default, PMI pays the lender’s loss. It’s not for you — it’s for them. You pay the premium; they collect the benefit.
The VA’s guaranty replaces that protection entirely. The federal government promises to cover a portion of the loan if the veteran defaults, which means no private insurer is needed. According to VA.gov, this guaranty is what makes zero-down VA loans possible without requiring PMI — the lender’s risk is already covered by the government’s backing.
This distinction matters enormously in practice. Conventional PMI is a recurring monthly charge that continues until you reach 78–80% loan-to-value ratio. On a 30-year mortgage with minimum payments, that can take years. Under the Homeowners Protection Act, as explained by the CFPB, PMI cancels automatically at 78% LTV, but you can request cancellation at 80% — neither of which happens quickly when you’ve put down 5% or less.
The VA funding fee, by contrast, is a one-time upfront charge. You pay it once at closing (or roll it into the loan), and you’re done. No monthly drag on your budget for years on end.
It’s also worth distinguishing three separate cost structures veterans often hear about when comparing loan types:
Conventional PMI: Recurring monthly charge, required when LTV exceeds 80%, cancels at 78–80% LTV. The rate varies based on credit score and down payment.
FHA MIP (Mortgage Insurance Premium): FHA loans require both an upfront MIP and an annual MIP paid monthly. Per HUD.gov, for most FHA borrowers who put down less than 10%, that annual MIP continues for the life of the loan — it never cancels. This is a recurring cost that VA borrowers never face.
VA Funding Fee: One-time upfront charge. Not monthly. Not recurring. Paid once and done — or waived entirely if you qualify for an exemption.
When a veteran compares VA to FHA, the funding fee looks expensive upfront. When you factor in that FHA’s annual MIP runs for the life of the loan with no cancellation option for low-down-payment borrowers, the VA structure wins decisively over any meaningful holding period.
The VA Funding Fee: One-Time Cost, Real Math
The VA funding fee is not mortgage insurance. It’s a congressionally mandated charge that sustains the VA home loan program without requiring taxpayer appropriations. Think of it as the cost of keeping the program available for the next generation of veterans.
Current funding fee tiers, per the VA.gov funding fee table, break down as follows:
Purchase loans, first use: 2.15% with no down payment; 1.5% with 5–9.9% down; 1.25% with 10% or more down.
Purchase loans, subsequent use: 3.3% with no down payment (the same tiered reductions apply for down payments).
IRRRL (Interest Rate Reduction Refinance Loan): 0.5% — the lowest fee in the program.
Cash-out refinance: 2.15% for first use; 3.3% for subsequent use.
Now let’s run the math on a real scenario. A veteran purchasing a $350,000 home with no down payment on their first VA loan use pays a 2.15% funding fee: 2.15% × $350,000 = $7,525.
That $7,525 can be paid at closing or rolled into the loan balance. If rolled in, the new loan balance becomes $357,525. Depending on the interest rate, rolling in $7,525 typically adds roughly $35–45 per month to the payment over a 30-year term — though the exact figure varies with market rates, which change daily.
Now compare that to a conventional borrower putting 5% down on the same $350,000 home. They’d bring $17,500 to closing and carry a $332,500 loan — but they’d also pay monthly PMI every single month until they reach 78–80% LTV. On a 30-year loan with minimum payments, that’s years of monthly PMI charges before automatic cancellation kicks in. The VA borrower pays once and moves on. The conventional borrower pays every month for years.
The break-even math strongly favors VA in most scenarios. The one-time funding fee is typically recovered in PMI savings within a few years of homeownership — often much sooner.
On the no-out-of-pocket closing options front: rolling the funding fee into the loan means you don’t need cash at closing to cover it. That’s a meaningful advantage for veterans who want to preserve savings or who are purchasing with limited liquid assets.
Who Pays Zero: The Funding Fee Exemption
Here’s where the VA benefit becomes genuinely exceptional. Certain veterans and surviving spouses owe nothing — not PMI, not a funding fee. Zero upfront insurance-related costs of any kind.
Per VA.gov’s funding fee and closing costs page, the following individuals are fully exempt from the VA funding fee:
Veterans receiving VA disability compensation for a service-connected disability — any rating of 10% or higher qualifies. This is the most common exemption category and one of the most underutilized benefits in the entire VA loan program.
Veterans rated eligible for compensation but receiving military retirement pay or active-duty pay instead — they still qualify for the exemption.
Surviving spouses of veterans who died in service or from a service-connected disability, including those receiving Dependency and Indemnity Compensation (DIC).
Purple Heart recipients serving on active duty are also exempt.
How do you confirm your exemption status before closing? Your Certificate of Eligibility (COE) will reflect your disability status. A good broker should verify this proactively before your loan closes — not after — to make sure you’re not inadvertently charged a fee you don’t owe. If you’re rated at 10% or higher and your COE doesn’t reflect that, the exemption needs to be documented and confirmed with the VA before closing.
The exemption stacks with additional state-level benefits. Veterans in Virginia, for example, may qualify for a full property tax exemption if they hold a 100% permanent and total service-connected disability rating. According to the Virginia Department of Taxation, qualifying veterans are exempt from local real property taxes on their primary residence — a benefit that can be worth thousands of dollars annually depending on the jurisdiction. Florida, Tennessee, and Georgia each have their own versions of disability-related property tax relief that may apply to qualifying veterans in those states.
If you’re unsure whether you qualify for a funding fee exemption, a soft pull mortgage broker pre-qualification through our NoTouch Credit Pull can help you get clarity without triggering a hard inquiry on your credit file.
Broker vs. Direct Lender: How Your Savings Get Protected or Eroded
The VA funding fee is set by Congress and is identical regardless of where you get your loan. A 2.15% fee is 2.15% whether you go through a broker or a direct lender. That part is non-negotiable.
What IS negotiable: origination fees, rate markups, discount points, and closing costs. And this is exactly where the difference between a broker and a direct lender shows up in your actual bottom line.
A direct lender — including VA-specialty lenders — offers you one rate sheet from one institution. Their pricing is what it is. A broker shopping 500+ wholesale lenders finds the most competitive rate and fee structure available for your specific profile on that specific day. On a $350,000 loan, even a quarter-point difference in rate can translate to meaningful savings over a 30-year term.
There’s also a credit access issue that doesn’t get discussed enough. Veterans United requires a 620 FICO minimum. A veteran with a 540 credit score cannot get a VA loan there — full stop. At VaLoansPro.com, the floor is 500 FICO. That veteran qualifies. They pay the same VA funding fee as anyone else. But they have access to financing that a single-shelf direct lender simply cannot provide.
Here’s how the options compare side by side:
| Provider | FICO Minimum | Lender Type | Loan Shelf | Fees |
|---|---|---|---|---|
| VaLoansPro.com | 500 | Independent Broker | 500+ wholesale lenders | Broker-negotiated, shopable |
| Veterans United | 620 | Direct Lender | Single shelf (VA specialty) | Published origination fees |
| Rocket Mortgage | Varies (no public VA-specific floor) | Direct Lender | Single shelf | Hard pull required before real pricing |
| Movement Mortgage | 580 (VA) | Direct Lender | Single shelf | Standard origination fees |
The NoTouch Credit Pull at VaLoansPro.com means you can explore your options across that 500+ lender network with no hard inquiry mortgage pre approval process — no credit hit, no commitment, just a real picture of what you qualify for before you decide to move forward.
What VA Actually Requires: Insurance, Appraisals, and Flood Zones
Eliminating PMI doesn’t mean VA loans have no insurance requirements at all. There are two things veterans need to understand clearly.
First, VA does require homeowner’s insurance (also called hazard insurance) as a condition of the loan. This is not unique to VA — every mortgage program requires it. It protects the physical structure of the home, and the lender requires it because the home is collateral for the loan. This is standard, expected, and completely separate from mortgage insurance.
Second, flood insurance. VA does not require flood insurance unless the property is located in a FEMA-designated Special Flood Hazard Area. You can check any property’s flood zone status using the FEMA Flood Map Service Center. If the home sits in a high-risk flood zone, flood insurance will be required — not by VA specifically, but as a federal lending requirement that applies across loan types. For condo purchases, the HOA’s master insurance policy and any condo association requirements add another layer to review separately.
Third, the VA appraisal. Every VA purchase requires a VA appraisal conducted by a VA-approved appraiser. The appraisal confirms both market value and that the property meets VA Minimum Property Requirements (MPRs). MPRs cover basic safety, soundness, and sanitation standards. This is a protection for the veteran, not the lender — the VA wants to make sure the home is livable and structurally sound before you commit to it.
The MPR process sometimes raises questions about which homes qualify for VA financing. Properties that need significant repairs or don’t meet basic habitability standards may not pass the VA appraisal, which is worth factoring in during your home search.
8 Questions Veterans Ask About VA Mortgage Insurance
Does a VA loan require mortgage insurance?
No. VA loans do not require private mortgage insurance (PMI) at any down payment level, including zero down. The VA’s guaranty to the lender replaces the protection that PMI would otherwise provide, eliminating the need for any private insurer.
What is the VA funding fee and how much is it?
The VA funding fee is a one-time upfront charge that sustains the VA loan program. For a first-time VA user with no down payment on a purchase loan, the fee is 2.15% of the loan amount. Rates vary by loan type, down payment, and whether it’s your first or subsequent VA loan use — see the full table at VA.gov.
Who is exempt from paying the VA funding fee?
Veterans receiving VA disability compensation for a service-connected disability (any rating of 10% or higher) are fully exempt. Surviving spouses receiving DIC, Purple Heart recipients on active duty, and veterans eligible for compensation but receiving retirement pay instead are also exempt. Your Certificate of Eligibility should reflect your exemption status.
Is the VA funding fee a monthly charge or one-time?
It is a one-time charge, paid either at closing or rolled into the loan balance. There is no monthly VA funding fee. Once it’s paid (or waived for exempt veterans), there is no recurring insurance-related charge on a VA loan — ever.
Can I roll the VA funding fee into my loan balance?
Yes. The VA allows the funding fee to be financed into the loan, which means you don’t need cash at closing to cover it. On a $350,000 purchase with a 2.15% fee ($7,525), rolling it in brings the loan balance to $357,525. This is one of our no-out-of-pocket closing options for veterans who want to preserve their savings at closing.
Do I need PMI if I make a down payment on a VA loan?
No. PMI is never required on a VA loan, regardless of how much you put down. Whether you put down 0%, 5%, or 10%, there is no PMI requirement. Making a larger down payment on a VA loan does reduce your funding fee percentage, but it does not trigger or eliminate any PMI requirement because PMI was never part of the equation.
How does VA loan cost compare to FHA mortgage insurance?
FHA loans require both an upfront MIP and an annual MIP paid monthly, and for borrowers who put down less than 10%, that annual MIP continues for the life of the loan per HUD.gov guidance — it never cancels. VA borrowers pay a one-time funding fee (or nothing if exempt) and face no recurring mortgage insurance charges. Over a typical holding period, VA’s structure is significantly less expensive than FHA’s permanent MIP.
What insurance does the VA actually require me to have at closing?
VA requires homeowner’s (hazard) insurance on every loan — this is standard across all mortgage programs and protects the physical structure. Flood insurance is required only if the property is in a FEMA Special Flood Hazard Area. If you want to start exploring your options with a mortgage pre approval without hard pull, our NoTouch Credit Pull gets you real pre-qualification information with no credit impact and no commitment required.
Putting It All Together: Your VA Insurance Cost Checklist
Here’s the clean mental model before you talk to anyone. VA loans involve no PMI, ever. They do involve a one-time VA funding fee — currently 2.15% for first-time users with no down payment on a purchase — which can be rolled into the loan. Veterans with a service-connected disability rating of 10% or higher pay no funding fee at all. Homeowner’s insurance is required (as it is on every mortgage). Flood insurance applies only if the property is in a designated flood zone. That’s the complete picture.
On a $350,000 purchase, a first-time VA user with no disability rating pays $7,525 in funding fees — once. A conventional borrower at 5% down pays monthly PMI for years before reaching the LTV threshold for cancellation. The math favors VA in the vast majority of scenarios, and for exempt veterans, it’s not even close.
Your next step: start with a NoTouch Credit Pull at VaLoansPro.com. No hard inquiry, no commitment — just a real look at what you qualify for across 500+ wholesale lenders. If you want to see how our pricing stacks up against what you’ve been quoted elsewhere, ask about our Dare to Compare pricing challenge. Learn more about our services and see what the broker advantage actually means for your VA loan.