Private mortgage insurance (PMI) is the monthly charge a conventional loan adds when your loan-to-value ratio (LTV, the loan balance divided by the home’s value) is above 80%. On a $300,000 loan it can run well over $100 a month. By Duane Buziak, NMLS #1110647, a VA loan specialist licensed in Virginia, Florida, Tennessee, and Georgia.
Several structures avoid that charge, but none is free. Each moves the cost into a one-time fee, a higher rate, a second loan, or a larger down payment. The seven options below are ranked with the VA loan first, and each includes the trade-off. Every figure is an illustration unless it is linked to a source, and all rates, fees, and program terms are as of 2026 and can change. As an independent broker with access to 500+ wholesale investors, I can price several of these side by side instead of showing you one company’s shelf.
1. Use a VA Loan
A VA loan carries no monthly mortgage insurance of any kind and allows 0% down for eligible borrowers. In place of PMI there is a one-time VA funding fee, which is not mortgage insurance and does not recur. As of 2026, VA.gov’s funding fee table lists 2.15% for first use with less than 5% down, 1.5% with 5% to under 10% down, and 1.25% with 10% or more. Veterans receiving VA disability compensation and certain others are exempt.
Suppose you buy a $400,000 home with 0% down. The first-use fee is $400,000 x 2.15% = $8,600, and financing it makes the loan $408,600. A conventional loan with 5% down ($20,000) borrows $380,000. If its PMI were 0.7% a year (a hypothetical figure), that is $2,660 a year, or about $222 a month. Over a seven-year hold the PMI would total roughly $18,600, against a one-time $8,600. The trade-off is a larger principal balance on the VA loan, so you need to compare full payments, not only the insurance line.
- Request your Certificate of Eligibility through VA.gov or have your broker pull it.
- Start a NoTouch Credit Pull, our soft credit pull mortgage pre-qualification. It shows your options with no hard inquiry, unlike a standard pre-approval that dings your score on day one.
- Have the broker shop wholesale investors for rate and fees on the same file.
The common mistake is treating the funding fee as PMI, or assuming VA loans are only for high scores. VA sets no minimum score; investors set their own, and my access reaches borrowers down to 500 FICO, though approval is never guaranteed. Measure the total monthly payment against the PMI-bearing alternative, and funding fee dollars against cumulative PMI over your expected hold.
2. Put 20% Down on a Conventional Loan
PMI exists to protect the investor when equity is thin, so a loan at 80% LTV or below does not require it. The mechanism is simple arithmetic, which makes this the most predictable option for non-veterans.
For example, imagine a $350,000 home. Twenty percent down is $70,000, leaving a $280,000 loan with no PMI. If closing costs run about 3% ($10,500, an assumed figure), you need $80,500 in cash. Compare that to a 5% down purchase, where $17,500 down plus costs leaves roughly $52,000 more in your account. That liquidity gap is the real price of skipping PMI.
Loan size matters too. The 2026 baseline conforming limit is $832,750 per FHFA, which applies in most counties across Virginia, Florida, Tennessee, and Georgia. Higher-cost counties, such as parts of Northern Virginia, have higher limits.
To get there, build a dedicated savings plan with a target date. Confirm whether gift funds are allowed under the program rules, which on conventional primary residences usually require a gift letter and documented transfer. If you are selling a home, equity from that sale is the other common source. Then confirm you will still hold reserves after closing.
The mistake is draining every account to hit 80%. A roof repair in month three then becomes a credit card balance. Measure LTV at closing and remaining reserves in months of full housing payments. I like to see at least two to three months left, more if income is variable.
3. Choose Lender-Paid Mortgage Insurance
With lender-paid mortgage insurance (LPMI), the insurance premium is built into a higher interest rate instead of a separate monthly line. The insurance is still being paid, just inside the rate. Because it is baked in, it never cancels the way borrower-paid PMI does.
Here is a hypothetical comparison, not a current quote. On a $320,000 loan, Quote A is 6.50% plus $130 a month in PMI. Quote B is 6.875% with LPMI. Principal and interest on A is about $2,023, so A totals about $2,153 a month. B is about $2,102. Quote B saves roughly $50 a month, or about $4,200 over a seven-year hold. But if A’s PMI would cancel around year ten and you keep the loan for thirty years, B’s higher rate costs you for the entire term, and the advantage reverses.
- Request borrower-paid PMI and LPMI quotes on the same loan amount from several wholesale investors.
- Calculate the monthly difference.
- Estimate the month PMI would drop off, using your expected payoff and appreciation.
- Pick the quote that wins over your realistic hold, not your hoped-for one.
The common mistake is choosing LPMI with no plan to sell or refinance, then carrying the higher rate for decades. Measure the break-even month between the two quotes and total interest paid over the expected hold. This is a comparison where shopping matters, because the rate premium for LPMI varies by investor.
4. Use a Piggyback 80-10-10 Loan
A piggyback loan keeps the first mortgage at 80% LTV by adding a second lien that covers part of the down payment. In an 80-10-10, you borrow 80% on the first, 10% on the second, and put 10% down. Since the first loan never exceeds 80%, no PMI applies to it.
For example, imagine a $300,000 purchase. The first loan is $240,000, the second is $30,000, and you bring $30,000. Using hypothetical rates of 6.5% on the first (30 years) and 9% on the second (20 years), the first costs about $1,517 and the second about $270, a blended payment near $1,787. A single 90% loan of $270,000 at 6.5% with PMI of roughly 0.6% a year would run about $1,707 plus $135, or $1,842. The piggyback wins by about $55 a month in this illustration, though the margin depends entirely on the second lien’s pricing.
Piggyback availability is narrower than it used to be, so confirm which investors offer it before you plan around it. Then compare the second lien’s rate, term, and any prepayment terms, and model the blended payment against the PMI version.
The classic mistake is overlooking an adjustable rate or balloon term on the second lien. A line of credit that resets upward can erase the savings. Measure the blended monthly payment now and under a higher-rate scenario, and the second lien’s rate against the monthly cost of PMI.
5. Pair VA Financing with Dynamo or Turbo DPA
Down payment assistance (DPA) reduces the cash you must bring to closing, and some programs accept borrowers in the 580 to 600 FICO range. The goal is to keep cash in your account while still avoiding PMI, since a VA loan already has no monthly mortgage insurance.
Per program specs as of 2026, Dynamo DPA offers 2.5% or 3.5% assistance with a 580 FICO minimum, and Turbo DPA offers 3.5% or 5% with a 600 FICO minimum and up to 101.5% combined LTV. Imagine a 600 FICO borrower on a $350,000 purchase using Turbo DPA at 3.5%: $350,000 x 0.035 = $12,250 toward down payment or closing costs. At Dynamo’s 2.5% on a $382,500 home, assistance would be $9,562.50. Verify current terms before relying on either number.
- Check your FICO score, occupancy, and the property’s state against program eligibility.
- Ask whether your investor participates in the DPA program in your state.
- Structure the DPA alongside the VA loan and review the combined terms.
Two mistakes are common. One is assuming every state or investor offers DPA. The other is ignoring how the assistance is structured: a second lien, a forgivable amount, or a repayment trigger on sale or refinance can change your payoff math. Measure cash to close before and after DPA, plus the combined LTV. Duane Buziak reviews both before you commit.
6. Remove PMI Later or Refinance Into a VA Loan
If you already have a conventional loan, PMI is not permanent. Under the Homeowners Protection Act, you can request cancellation when the balance reaches 80% of the original value, and it ends automatically at 78% on schedule, as explained by the CFPB. Servicers may require a good payment history and, in some cases, a new appraisal if you are asking early based on appreciation.
Veterans have a second route: refinancing a conventional loan into a VA loan to drop PMI. Suppose you owe $320,000 and pay $150 a month in PMI. A first-use VA refinance fee of 2.15% is $6,880, and assuming $4,000 in other costs, the total is $10,880. If your principal and interest stay the same, saving $150 a month breaks even in about 73 months. The refinance only makes sense quickly if the rate also drops, or if you expect to stay six years or more.
- Ask your servicer for its PMI cancellation rules and a payoff statement.
- Order a current appraisal if you are relying on appreciation.
- If you are a veteran, price a VA refinance and compare total costs, including the funding fee.
- Run the break-even before deciding.
The most common error is refinancing without comparing closing costs to the PMI savings. Measure months to break even and the monthly PMI eliminated. If you are close to 80% already, requesting cancellation costs far less than a new loan.
7. Consider USDA or Non-QM Programs Carefully
USDA loans replace PMI with a guarantee fee: an upfront fee plus an annual fee that is paid monthly. As of 2026, verify the current percentages on the USDA program page. USDA also requires an eligible rural property and household income within limits. Some non-QM programs, including bank statement and DSCR loans, can be structured without mortgage insurance when the down payment is large enough, but they usually trade that for a higher rate.
For example, imagine a self-employed borrower whose tax returns understate cash flow. With 12 to 24 months of bank statements and 20% down, a bank statement loan can qualify income from deposits and carry no PMI. The cost shows up as a rate above conventional pricing. DSCR loans are built for investment properties and qualify on rental income, so they do not apply to a primary residence purchase.
The most expensive misconception is that FHA or USDA are free of mortgage insurance-type costs. FHA charges mortgage insurance premium (MIP), an upfront plus annual charge described on HUD’s FHA loan page, and on many FHA loans it lasts for the life of the loan. USDA’s guarantee fee is the same idea under a different name.
- Confirm USDA property and income eligibility, or identify which non-QM program fits your documentation.
- Get the all-in monthly figure, including guarantee fees or the higher rate.
- Compare it to the VA alternative if you are eligible.
Measure the all-in monthly cost, not the headline rate. A veteran with a choice will usually find the VA loan cheaper than either path.
How a Broker Compares to Direct Companies on a VA Loan
These figures reflect house-verified minimums as of 2026. Always confirm against a current Loan Estimate, because rates and fees change.
- VA Loans Pro by Duane Buziak: FICO minimum of 500 (approval not guaranteed); independent broker; shops 500+ wholesale investors; fees are broker-negotiated and shop-able.
- Veterans United: FICO minimum of 620; direct lender with a single VA-specialty shelf; origination fee tends to be on the higher side.
- Movement Mortgage: FICO minimum of 580 on VA; direct lender with a single shelf; fees set by that one company.
- Rocket Mortgage: no public VA-specific floor; direct lender with a single shelf and a hard credit pull; fees set by that one company.
Each of those companies is large and capable, and a direct company can offer a smooth single-point process. A broker’s edge is leverage: 500+ wholesale investors competing for one file, rather than one rate sheet. NoTouch Credit Pull gives a digital, soft-pull entry point, so you do not give up convenience. On credibility, Duane Buziak is a Scotsman Guide Top Originator ranked #114 nationally and was named VA Broker of the Year for 2024 to 2025.
Eight Questions About Avoiding Mortgage Insurance
Does a VA loan require PMI?
No. A VA loan has no monthly mortgage insurance, only a one-time funding fee that exempt borrowers do not pay.
What is the VA funding fee in 2026?
For first use with less than 5% down, it is 2.15% of the loan amount, dropping to 1.5% at 5% down and 1.25% at 10% down, per VA.gov. Subsequent use with no down payment is higher.
Can I get a VA loan with a 500 credit score?
Sometimes. VA sets no minimum score, and I have access to investors that go as low as 500 FICO, but approval depends on the full file and is never guaranteed.
Can I get mortgage pre-approval without a hard pull?
Yes. A NoTouch Credit Pull is a mortgage pre approval without hard pull, so there is no hard inquiry while we review your options.
Is an FHA loan PMI-free?
No. FHA uses upfront and annual mortgage insurance premium (MIP), which is the same kind of cost under a different name.
When does PMI come off a conventional loan?
You can request removal at 80% of the original value, and it ends automatically at 78% on schedule, according to the CFPB.
Is lender-paid mortgage insurance worth it?
It can be if you will sell or refinance within several years, because the higher rate costs less than PMI over a short hold. If you keep the loan long term, borrower-paid PMI that cancels is often cheaper.
How does a broker differ from a direct company like Veterans United?
A broker shops many wholesale investors for your file, while a direct company offers its own single shelf. Veterans United’s minimum is 620 FICO, and my access reaches 500.
Where to Start Based on Your Eligibility
If you are a veteran or active-duty service member, check VA eligibility first. It is usually the strongest no-PMI path, and a Certificate of Eligibility settles the question quickly. If you are not VA-eligible, compare 20% down, LPMI, and piggyback math on the same loan amount, and let the break-even months decide.
The fastest way to see real numbers is a NoTouch Credit Pull through VA Loans Pro by Duane Buziak. It is a soft credit pull mortgage review, so you get a no credit hit mortgage application while I price your file across wholesale investors. Learn more about our services
Disclaimer: This article is for general information, is not financial or legal advice, and does not guarantee any rate, fee, or approval. Rates, fees, and program terms are subject to change; consult a licensed professional about your situation. Examples are hypothetical. Equal Housing Lender. Duane Buziak NMLS #1110647, Company NMLS #376205.
About the author: Duane Buziak, NMLS #1110647, is an independent VA loan broker licensed in Virginia, Florida, Tennessee, and Georgia. He is a Scotsman Guide Top Originator ranked #114 nationally and was named VA Broker of the Year for 2024 to 2025.