Does a VA Loan Have PMI With No Down Payment?

The Quick Read: No. A VA loan carries no PMI at zero down, and none at any other down payment level. The VA guaranty protects the lender, so a private insurer isn’t needed. Most borrowers pay a one-time VA funding fee instead, and veterans who are exempt pay nothing at all.

That one-time fee is the part people confuse with PMI. It isn’t recurring, and it isn’t mortgage insurance. Below: how the no-PMI feature works, what the funding fee does, who skips it, and how to confirm your own paperwork is clean. Lendmire’s VA loan programs are built around this structure.

Why Doesn’t a VA Loan Need PMI?

PMI exists to protect a lender when a buyer puts little money down. On a conventional loan, the lender wants insurance against default, and the borrower pays for it every month.

A VA loan swaps that private insurance for a federal guaranty. The VA guaranty protects the lender if the loan goes bad. Because the lender is covered, it doesn’t ask you for monthly mortgage insurance.

VA says so directly. VA News explains that the funding fee is what lets borrowers have features like no down payment and no monthly private mortgage insurance. A second VA News piece states that the program never requires monthly mortgage insurance.

Across the wholesale programs Lendmire places VA files with, the envelope is the same: 100% financing, no mortgage insurance of any kind, and no VA loan limit when you have full entitlement. Everything is subject to lender guidelines and full file review.

What Does “No Down Payment” Actually Mean?

It means the loan can cover the full price, as long as the price isn’t above the appraised value. The VA appraisal sets that value and checks minimum property requirements. If the home appraises below the contract price, you have a gap to deal with.

Zero down changes the mortgage insurance picture. It doesn’t remove underwriting. You still need a Certificate of Eligibility (COE) from VA, and VA’s rules decide your service eligibility. The lender still reviews your credit, income, and debts.

Credit has a floor too. VA itself sets no minimum score, but the wholesale programs Lendmire works with start at a 580 decision score. Lenders may set a higher floor.

Underwriting leans on residual income, which is the money left each month after your major obligations and living costs. The 41% debt-to-income figure is a guideline, not a cap. A higher ratio needs residual income well above the standard table.

With only partial entitlement left from an earlier VA loan, a down payment may be required. Speak with a loan officer about your specific entitlement.

What Do You Pay Instead? The VA Funding Fee

Most VA borrowers pay a funding fee. It is a one-time charge on VA-guaranteed loans used to buy, build, improve, or repair a home, or to refinance. It is not a monthly payment. The federal consumer-finance regulator also notes that most VA borrowers pay it.

The fee is a percentage of the loan amount. Three things set it: whether this is your first use of the benefit, how much you put down, and the loan type.

Subsequent use with 5% or more down uses the same 1.5% and 1.25% tiers as first use. These are program figures, subject to lender guidelines. VA News confirms the structure: roughly 2.15% for first-time use and up to 3.3% for repeat use.

Paying it in cash or financing it

You can pay the fee at closing or roll it into the loan. The VA Buyer’s Guide says it may be paid in cash or included in the loan.

Here’s the tradeoff. Financing it keeps cash in your pocket at closing. But it raises your loan balance, so you carry interest on it over time. Paying cash avoids that, but you need the money upfront.

On a purchase, the funding fee is the only cost that can be financed. Other fees and charges can’t be rolled in. Refinance loans follow different rules and may include other allowable fees.

Someone else can pay it

If you aren’t exempt, any party can pay the fee, including the seller or the lender. Family can cover it with gift funds. That makes the fee negotiable in practice, which many buyers don’t realize.

Who Doesn’t Pay the Funding Fee at All?

Many borrowers are exempt. Per the Buyer’s Guide, you skip the fee if you are a veteran receiving VA compensation for a service-connected disability. The same goes for a veteran who would be entitled to that compensation but receives retirement or active duty pay instead.

VA News adds that Purple Heart recipients still on active duty are exempt, along with others. Certain surviving spouses are also covered. VA keeps the full list, so check it directly.

Your exemption status shows on your COE. An exempt borrower pays no upfront fee and no monthly mortgage insurance. That’s about as lean as a mortgage gets.

You can start at VA’s eligibility page to see how the COE process works.

PMI vs. MIP vs. Funding Fee: Key Terms Defined

PMI (private mortgage insurance): Monthly insurance on a conventional loan with a low down payment. It protects the lender, and you pay for it.

MIP (mortgage insurance premium): FHA’s version. FHA charges both an upfront premium and a monthly one.

VA funding fee: A one-time charge on a VA loan. It is paid at closing or financed. It is not monthly.

Guaranty: VA’s promise to repay the lender part of the loss if a loan defaults. It replaces private insurance.

Entitlement: The amount of guaranty you have available. Full entitlement means no VA loan limit applies.

Residual income: What’s left of your monthly income after major obligations. It is the controlling test on a VA file.

How Does VA Compare on Mortgage Insurance?

Conventional PMI can generally be cancelled once you reach 80% loan-to-value (LTV, your loan balance against the home’s value) under the Homeowners Protection Act. VA has nothing to cancel because it never charges it.

What Still Costs Money With Zero Down?

No PMI doesn’t mean no cost. Several things remain.

• The funding fee, unless you’re exempt. It is often the largest single closing cost.
• Closing costs. The VA appraisal is one of them. Costs vary by property and lender.
• Homeowners (hazard) insurance. “No PMI” doesn’t mean no insurance of any kind. Your lender requires it.
• Taxes, HOA dues, and maintenance. They still apply every month.

Think of it this way: a VA loan removes a monthly line from your payment. It doesn’t make the house free. Skipping PMI usually helps, but the total cost also depends on your loan terms and how long you stay in the home. A VA loan isn’t automatically a more affordable option for every buyer. It’s a strong one for many.

Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.

How Do You Confirm There’s No PMI on Your Paperwork?

Check your Loan Estimate early and your Closing Disclosure before you sign. Both are standard consumer mortgage documents. Look at the monthly payment breakdown.

You should see principal and interest, plus taxes and homeowners insurance. You should not see a mortgage insurance line. If one appears, ask your loan officer to explain it in writing before you move forward.

The funding fee shows up in the closing costs and loan terms, not in the monthly payment as insurance. It’s disclosed in writing at application. VA rules under 38 CFR 36.4312 require the lender to explain the obligation fully and in writing.

Questions worth asking your lender:

• Is my funding fee exempt, and where does that show on the disclosure?
• Am I paying it in cash or financing it?
• Can the seller cover it?
• Is any line item labeled mortgage insurance?

Edge Cases Worth Knowing

Refinancing. The IRRRL, VA’s streamline refinance, carries a lower 0.5% fee unless you’re exempt. VA’s regulations also set that 0.50% figure. A VA cash-out refinance carries a 2.15% fee on first use and 3.3% after. Refinance fees can be rolled into the loan.

Native American Direct Loan. This is a separate VA direct program with its own fee schedule, listed in the Buyer’s Guide.

Occupancy. VA loans are for a home you live in as your primary residence.

Non-veteran co-borrowers. Your lender can explain how a joint loan affects entitlement and the guaranty.

Myths and Facts

Myth: The funding fee is PMI. Fact: It’s a one-time charge, paid at closing or financed. It never recurs.

Myth: Zero down means no cost. Fact: The fee, closing costs, and ownership costs remain.

Myth: Everyone pays the fee. Fact: Many borrowers are exempt.

Myth: You can roll all closing costs into a VA purchase loan. Fact: Only the funding fee.

Myth: VA is the lender. Fact: Private lenders make the loan. VA guarantees part of it.

If you are buying a home and want to see whether a VA loan fits your file, Lendmire can help you compare the options and what each one asks of the file.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. VA News: VA funding fee, who pays and who is exempt

2. VA News: Borrowers can deduct funding fees

3. CFPB: What is a VA loan?

4. VA Home Loan Guaranty Buyer’s Guide

5. VA: Eligibility

6. eCFR 38 CFR 36.4312

7. VA’s regulations