The short answer is no — VA loans don't require private mortgage insurance (PMI). Because the U.S. Department of Veterans Affairs guarantees a portion of the loan, lenders face less risk, so qualifying homebuyers can purchase with no money down and no monthly mortgage insurance fee (VA Loan Benefits Explained).
That benefit doesn't mean the program is free of cost. VA loans use a fee structure that's different from conventional financing: instead of monthly mortgage insurance, borrowers generally pay a one-time VA funding fee. Understanding how this fee works — and how it relates to the VA's loan guarantee — is the key to seeing the long-term savings of a VA loan. As a Senior Loan Officer who works with Veterans and Active-Duty Service Members every day, I'll walk through exactly how this trade-off works.
What is the VA funding fee?
The VA funding fee is a one-time program charge paid by most approved VA loan borrowers. It helps support the VA home loan program so other Veterans and their families can receive the same benefit (VA Loan Benefits Explained). Because it's calculated as a percentage of your total loan amount, it's paid once rather than every month for years — which is a key difference from PMI.
You don't have to pay the funding fee upfront or at closing. Eligible borrowers may instead finance it into the mortgage loan balance, which increases the total loan amount and, in turn, generally raises the monthly mortgage payment (VA Loan Benefits Explained). The exact amount varies based on your down payment, whether it's your first time using the benefit, and other factors — so there's no single figure that applies to everyone.
Why do VA loans skip PMI?
Private mortgage insurance exists to protect the lender when a borrower puts down less than 20%. With a conventional loan, putting down under 20% typically triggers a PMI requirement. VA loans don't carry that cost because the VA guarantees at least a portion of the loan, which reduces the risk lenders take on when they fund your mortgage (VA Loan Benefits Explained). That guarantee — not the funding fee — is what removes PMI from the equation.
The VA's backing is the engine behind two big VA advantages at once: a zero-down-payment purchase and no monthly mortgage insurance. On a conventional loan, those two things rarely come together — the low down payment is exactly what usually triggers PMI. On a VA loan, the government guarantee lets you have both (Who Qualifies For a VA Loan?). The funding fee is a separate program charge that helps sustain the VA home loan program; it's not a substitute for PMI.
Who can use a VA loan?
VA loans are designed for Veterans, Active-Duty Service Members, or their Surviving Spouses. To qualify, you'll need to provide proof of your Military service and meet the eligibility requirements set by both the VA and your VA-approved lender (VA Loan Benefits Explained). The key document is a Certificate of Eligibility (COE), which confirms your length and character of service and determines the amount of entitlement available for a guarantee on your loan (VA Loan Requirements 2026).
Eligible borrowers with full VA entitlement may qualify for VA financing with no down payment, subject to property valuation, lender requirements, and other applicable program guidelines (Who Qualifies For a VA Loan?). Depending on the purchase price, the appraised value, and the specifics of the transaction, a down payment may still be necessary. You'll also need sufficient income, a suitable credit profile, and to occupy the property as your primary residence.
Who is exempt from the VA funding fee?
Some borrowers never pay the funding fee at all. You may be exempt if you have a service-connected disability — specifically, Veterans receiving VA compensation for a service-connected disability, Veterans who qualify for disability compensation but receive retirement or active-duty pay instead, certain Surviving Spouses, and eligible Active-Duty Service Members who have received the Purple Heart (VA Home Loan Calculator).
This is the detail that makes the PMI-versus-funding-fee comparison so important. On a conventional loan, disability or no disability, you'd pay PMI with a low down payment. On a VA loan, a service-connected disability can remove the funding fee entirely — leaving you with no PMI and no funding fee, and a zero-down purchase to boot. Your Certificate of Eligibility can help confirm whether you're exempt, and the VA itself is the final authority on your status (Who Qualifies For a VA Loan?).
Is a VA loan right for you?
The real question isn't whether VA loans have PMI — they don't. It's whether the program's cost structure fits your situation. For most eligible borrowers, the answer comes down to the trade-off between a one-time funding fee and years of monthly mortgage insurance. Because the funding fee may be financed into the loan balance rather than paid at closing, you avoid a large cash outlay upfront while still keeping the zero-down benefit that PMI would normally block on a conventional loan.
A VA loan may be the strongest fit if you're a first-time homebuyer or prefer to keep your savings intact for other goals, since you don't need a 20% down payment to avoid mortgage insurance. As with any mortgage, your own credit profile, income, and loan amount all factor into the terms you may qualify for — there's no single answer that fits every borrower, and rates and terms are subject to change based on current market conditions and underwriting.
Getting started with a VA loan
If you're a Veteran, Active-Duty Service Member, or Surviving Spouse considering a VA loan, the best first step is a conversation with a lender who works with the VA program every day. I'm Arielle Yeatter, Senior Loan Officer at CrossCountry Mortgage, and I help borrowers across Florida — I'm licensed as NMLS #1361210 in the state — navigate VA, FHA, and Conventional loan options so they can compare what actually fits their situation.
My goal is to break the financing piece down in plain terms, connect you with the facts, and help you make a decision with confidence. When you're ready, we can walk through your Certificate of Eligibility, talk through the funding fee and how it applies to your situation, and review a pre-approval so you know your path forward. Rates and terms are subject to change, and approval depends on full underwriting and proper documentation — but the first step is simply starting the conversation.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. CrossCountry Mortgage, LLC (“CrossCountry”) does not guarantee the quality, accuracy, completeness, or timeliness of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by CrossCountry. CrossCountry its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort, or other tortious action.
Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC NMLS3029 (www.nmlsconsumeraccess.org).
CrossCountry Mortgage, LLC is not affiliated with or acting on behalf of or at the direction of the Veteran Affairs Office. Certificate of Eligibility required for VA loans.
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