Do VA Loans Require Mortgage Insurance? (Complete Guide)

The short answer is no — VA loans do not require monthly mortgage insurance (PMI) like FHA or conventional loans do. That’s one of the biggest reasons veterans save thousands over the life of their mortgage.

Instead, the VA uses something called the VA Funding Fee, a one-time charge that helps sustain the program for future borrowers.

What Makes VA Loans Different?

A VA Loan is a mortgage backed by the U.S. Department of Veterans Affairs (VA), available exclusively to eligible veterans, service members, and surviving spouses.

These loans are provided by private lenders but guaranteed by the federal government, meaning lenders take on less risk — and you get better terms.

According to the U.S. Department of Veterans Affairs (VA.gov), this government guarantee eliminates the need for private mortgage insurance (PMI) entirely.

Do VA Loans Require Mortgage Insurance?

No, they do not.

Traditional loans require mortgage insurance when your down payment is less than 20%, but VA loans are exempt. The VA guarantee acts as the lender’s protection, replacing the need for PMI.

Here’s what this means for you:

Feature	VA Loan	FHA Loan	Conventional Loan
Mortgage Insurance	None required	MIP (Upfront + Monthly)	PMI if <20% down
Down Payment	$0 down	3.5% minimum	3–20%
Credit Score	580+ typical	580+	620+
Refinance Option	VA IRRRL (no PMI)	FHA Streamline (with MIP)	Conventional Refi

(Source: VA.gov, ConsumerFinance.gov)

→ Estimate your monthly savings with no PMI: www.LoanFactory.com/quote

The VA Funding Fee Explained

While VA loans don’t require ongoing mortgage insurance, most borrowers pay a one-time VA Funding Fee.
This fee helps keep the program running without using taxpayer dollars — and can often be rolled into your loan amount instead of paying upfront.

VA Funding Fee Rates (as of 2025)

Loan Type	First Use	Subsequent Use	With 5%+ Down
Purchase Loan	2.15%	3.3%	1.5%
Refinance (IRRRL)	0.5%	0.5%	—
Exemption	0% (Disabled Veterans, Surviving Spouses)	—	—

(Source: VA.gov Funding Fee Table)

Check your VA funding fee exemption status: www.LoanFactory.com/apply

Why VA Loans Don’t Require Mortgage Insurance

VA loans eliminate mortgage insurance because:

Government Guarantee: The VA promises to cover a portion of the loan if the borrower defaults.
Lower Risk for Lenders: This guarantee allows lenders to offer better rates without PMI.
Built-In Protection: The one-time funding fee replaces the monthly insurance cost — saving borrowers hundreds per month.
Veteran Benefits: The program is designed to make homeownership affordable for veterans who’ve served the country.

According to Refiguide.org, this structure helps veterans save an average of $1,200–$2,500 per year compared to similar FHA or Conventional loans.

→ Calculate your savings instantly: www.LoanFactory.com/mortgage_calculator

Eligibility Requirements for a VA Loan

To qualify for a VA loan (and enjoy the no-PMI benefit), you must meet these key requirements:

Be an eligible veteran, active-duty member, or surviving spouse.
Obtain a Certificate of Eligibility (COE).
Plan to live in the home as your primary residence.
Meet credit and income standards set by the lender.
The home must pass a VA appraisal for safety and value.

(Source: Benefits.va.gov)

Example: How Much You Save Without PMI

How Much You Save Without PMI

Let’s compare two buyers purchasing a $400,000 home with 0% down:

Loan Type	Monthly PMI/MIP	Monthly Payment (Est.)	Annual Extra Cost
FHA Loan	~$250/month	$2,850	$3,000/year
Conventional (5% down)	~$180/month	$2,720	$2,160/year
VA Loan (No PMI)	$0/month	$2,550	$0/year

Even after factoring the VA funding fee, borrowers often save tens of thousands over the loan’s life.

(Source: VA.gov)

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So, do VA loans require mortgage insurance?
Absolutely not. That’s what makes VA loans one of the most powerful benefits for U.S. veterans — no PMI, no hidden fees, and flexible terms designed to make homeownership easier.

With Loan Factory’s AI-powered MOSO platform, you can apply online, compare lenders, and close faster — all while keeping more money in your pocket.