No—VA-backed home loans do not require monthly private mortgage insurance (PMI) or a monthly mortgage insurance premium, even when an eligible borrower buys with no down payment. Most borrowers instead pay a one-time VA funding fee unless they qualify for an exemption.
That distinction matters because the funding fee and mortgage insurance affect a loan differently. One is generally charged once at closing; the other can add a recurring amount to a monthly mortgage payment. The right comparison is still the complete cost of each loan—not one fee by itself.
Updated July 29, 2026.
Do VA loans require mortgage insurance?
VA loans do not require monthly PMI or MIP. The Consumer Financial Protection Bureau explains that the VA guaranty replaces mortgage insurance and performs a similar risk-protection function for the lender.
This rule does not depend on putting 20% down. An eligible borrower may finance a VA purchase with no down payment when the sales price does not exceed the appraised value and the borrower, property, entitlement, lender, and program requirements are met. A down payment can still affect the VA funding fee and the amount borrowed.
Mortgage insurance should not be confused with homeowners insurance, flood insurance, title insurance, or optional mortgage-protection life insurance. Those products cover different risks, and homeowners insurance—and flood insurance when applicable—may still be required.
VA funding fee vs. monthly mortgage insurance
The VA funding fee is not a monthly PMI charge. It is a one-time program fee that helps reduce the cost of the VA home loan benefit to taxpayers. The Department of Veterans Affairs states that the program generally does not require a down payment or monthly mortgage insurance.
| Feature | VA funding fee | Monthly mortgage insurance |
|---|---|---|
| How it is charged | One time, generally at closing | Usually included with the monthly mortgage payment |
| Applies to a VA loan? | Usually, unless the borrower is exempt | No monthly PMI or MIP is required by the VA program |
| Can it be financed? | Yes, the VA funding fee may be added to the loan | Not applicable to a VA-backed loan |
| Can a down payment change it? | Yes, for a VA purchase loan | No monthly VA mortgage insurance applies at any down payment level |
Financing the funding fee can reduce the cash needed at closing, but it increases the loan balance and the interest paid over time. Paying it in cash avoids adding it to the mortgage but requires more money at closing. Compare both structures on the Loan Estimate.
How much is the VA funding fee in 2026?
The current VA schedule bases the purchase-loan funding fee on the down payment and whether the borrower has used the VA home loan benefit before. As of July 29, 2026, the VA lists the following purchase and construction loan rates:
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% or more | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
The fee is calculated from the loan amount, not the home’s purchase price. Different rates apply to IRRRLs, cash-out refinances, loan assumptions, and certain other VA loan types. Verify the current rate and your exemption status with the VA and your lender before relying on an estimate.
Illustrative example: If a first-time VA user has a $300,000 purchase-loan amount and puts down less than 5%, a 2.15% funding fee would equal $6,450. If financed, the starting loan balance would increase by that amount. This is an educational illustration, not a Loan Estimate.
Who may be exempt from the VA funding fee?
Some eligible borrowers do not have to pay the funding fee. According to the VA, exemptions may include:
- A Veteran receiving VA compensation for a service-connected disability
- A Veteran eligible for service-connected disability compensation who instead receives retirement or active-duty pay
- A surviving spouse receiving Dependency and Indemnity Compensation
- A service member with a qualifying proposed or memorandum disability rating before closing
- An active-duty service member who provides evidence of receiving the Purple Heart before or at closing
Your Certificate of Eligibility may show funding-fee status, but the lender must verify the exemption before closing. If a disability decision is pending, discuss the timing and documentation with the lender. Do not assume an exemption until it is confirmed.
How should Brevard County buyers compare the total cost?
The absence of monthly PMI can be valuable, but it does not automatically make a VA loan the lowest-cost option in every situation. Interest rate, discount points, lender fees, the funding fee, loan term, down payment, taxes, homeowners insurance, flood insurance, and expected time in the home all affect the result.
For a home in Melbourne, Palm Bay, Viera, Rockledge, Cocoa, Titusville, or elsewhere on Florida’s Space Coast, the VA mortgage-insurance rule is the same. Local property expenses can still vary. In particular, insurance and flood-zone considerations can materially change the monthly housing budget even when the loan has no PMI.
When comparing a VA loan with conventional or FHA financing:
- Request Loan Estimates based on the same purchase price, loan term, and lock period.
- Compare the interest rate and annual percentage rate.
- Review cash to close, including whether the VA funding fee is paid or financed.
- Compare the full monthly payment, including taxes, insurance, association dues, and any mortgage insurance.
- Review total payments and costs over the period you realistically expect to keep the loan.
The CFPB’s Loan Estimate explainer shows where an upfront VA funding fee and other loan costs appear. A side-by-side review is more reliable than comparing advertised payments from different assumptions.
Frequently asked questions
Do VA loans have PMI with zero down?
No. The VA program does not require monthly PMI or MIP, including when an eligible borrower makes no down payment. Qualification and appraisal requirements still apply, and most non-exempt borrowers pay a VA funding fee.
Is the VA funding fee the same as PMI?
No. Both help address lender or program risk, but the VA funding fee is generally a one-time charge. PMI is typically a recurring premium associated with certain conventional loans.
Can a lender charge monthly mortgage insurance on a VA loan?
A VA-backed loan should not include monthly PMI or MIP required by the VA program. If a disclosure appears to show mortgage insurance, ask the lender to identify the exact charge and confirm whether it is the one-time VA funding fee, another insurance product, or an error.
Does making a down payment help on a VA loan?
It can. A down payment reduces the amount borrowed and may lower the purchase-loan funding-fee percentage. Whether that use of cash is beneficial depends on the borrower’s budget, other obligations, and loan comparison.
Can the seller pay the VA funding fee?
Seller credits or concessions may be available within VA rules and the negotiated contract. The VA distinguishes ordinary closing-cost credits from seller concessions and limits certain concessions. Ask the lender and real estate professional to structure any credit correctly and show it on the Loan Estimate.
Review your VA loan costs side by side
If you are buying on Florida’s Space Coast, use Morgan Financial’s VA loan resources to learn about eligibility and the purchase process. For a comparison based on your property, entitlement, exemption status, and financing goals, contact Morgan Financial and request matching VA and non-VA scenarios.
This article is for educational purposes only and is not financial, legal, tax, or insurance advice or a commitment to lend. Loan approval, terms, and program eligibility depend on borrower, property, lender, and program requirements. Verify current requirements with a licensed mortgage professional and the relevant government agency.
