If you pay car insurance, you know that monthly payments can be frustrating, especially when you\u2019re still paying off the financing on your car even after years of making payments\u2014the same applies to PMI. However, if you\u2019re a veteran or active duty service member, you may be able to avoid paying PMI insurance and significantly reduce your mortgage costs with a VA home loan.<\/p>\n
Read on to learn more about the relationship between VA loans and mortgage insurance and gain a better understanding of what PMI is and how it can increase the costs of homeownership in the long run. To navigate directly to specific answers, use the links below.<\/p>\n
KEY TAKEAWAYS<\/h3>\n- VA loans are a popular alternative to traditional mortgage loans because they offer favorable terms, saving you money and making it easier to secure a loan.<\/span><\/li>\n
- Unlike traditional mortgage loans that require monthly private mortgage insurance (PMI) payments, there is no PMI requirement for VA loans.<\/span><\/li>\n
- There is a VA funding fee that\u2019s due at closing time, and that fee is based on several factors including the loan type and amount, your down payment, and whether you\u2019re a first-time home buyer.<\/span><\/li>\n<\/ul>\n<\/div>\n
Do VA Loans Have PMI?<\/h2>\n
No, VA loans do not require PMI. <\/b>PMI is required on most loans because it is a form of protection for the lender. But, since the Department of Veterans Affairs backs VA home loans<\/a>, this already reduces the risk to the lender because if a VA borrower defaults on their loan, the VA guarantees a portion of the loan.<\/p>\nThis guarantee is known as entitlement. VA entitlement<\/a> is more or less a substitute for the typical down payment. Through the VA entitlement, the VA insures up to 25% of the loan amount.
\nDownload the Griffin Gold app today!<\/h3>
Take charge of your financial wellness and achieve your homeownership goals
\r\nUse invitation code: GRIFGOLD<\/b> to register.<\/p>![](\"https:\/\/griffinfunding.com\/wp-content\/uploads\/2024\/02\/apple-icon.svg\")
<\/a>![](\"https:\/\/griffinfunding.com\/wp-content\/uploads\/2024\/02\/google-store.svg\")
<\/a><\/div><\/div>\nPrivate Mortgage Insurance Explained<\/h2>\n
As mentioned, private mortgage insurance (PMI) is an insurance policy that is designed to protect the lender, should a borrower default on their loan. PMI is charged at an annual rate and is included in your monthly mortgage payment. In some cases, you may be able to pay PMI upfront in a lump sum as part of closing costs.<\/p>\n
That said, PMI is not necessarily paid over the entire life of the loan. Once you establish enough equity (typically over 20%), you can typically apply to remove PMI.<\/p>\n
Down Payments & PMI<\/h3>\n
Down payment is an important aspect of the home buying process, especially when it comes to paying PMI. This is because a down payment is one way to increase the equity in your home, and reduce the mortgage lender\u2019s risks. So, if you pay a down payment of 20% or higher <\/b>on a traditional mortgage<\/b>, you will likely not have to pay PMI<\/b>.<\/p>\nLoans Requiring PMI<\/h3>\n
Many types of loans\u2014both private and government-backed mortgages\u2014require PMI. And even the types of loan that don\u2019t have PMI typically require some other type of mortgage insurance.<\/p>\n
Regardless of which type of loan you apply for, you\u2019re likely going to have to pay some kind of fee or PMI that will reduce the lender\u2019s level of risk\u2014meaning the funding fee for VA loans<\/a> and PMI requirements serve a similar purpose. However, paying a one-time VA funding fee tends to be less expensive than potentially making years of PMI payments. You can use our VA loan calculator<\/a> to figure out how much you can save when you\u2019re not making monthly PMI payments.<\/p>\nTypical PMI Costs<\/h3>\n
Typically, PMI is between 0.5% to 2% of your total loan amount. Let\u2019s take a look at how this would be applied to your mortgage loan.<\/p>\n
For example, let\u2019s say you have a $300,000 mortgage loan. With PMI of 1%, that would be $3,000 per year. When broken down into 12 months (and added to your monthly mortgage payment) this would be an additional $250 per month.<\/p>\n
On the other hand, if you choose to pay PMI as part of your closing costs, you would need to make a lump sum payment on top of your closing costs. Or a third payment option is a hybrid solution, where you would pay a lump sum portion at closing and the rest of your PMI as monthly payments that are factored into your monthly loan payment.<\/p>\n
Your mortgage lender can help you break down the specifics based on your situation to help you determine which PMI payment option is best given your financial situation.<\/p>\n
![\"\"](\"https:\/\/griffinfunding.com\/wp-content\/uploads\/2020\/11\/image3.jpg\")
<\/p>\n
VA Funding Fee<\/h2>\n
So do VA loans have PMI? The answer is no\u2014but there is another fee associated with VA loans that you may need to pay. This is known as the VA funding fee<\/b>.<\/p>\n
The VA funding fee is a fee put in place by the U.S. Department of Veterans Affairs in order to sustain the VA loan benefits program. This fee helps offset costs to taxpayers and is fairly low\u2014between 0.5% and 3.3% of the loan amount. The VA funding fee varies depending on the borrower\u2019s service history and the loan type.<\/p>\n
However, not all VA loan borrowers have to pay the VA funding fee. For example, those who are eligible for or are currently receiving disability pay due to a service-related injury are exempt from paying the VA funding fee on their loan.<\/p>\n
VA Funding Fee vs. PMI<\/h3>\n
There are several key differences between the VA funding fee and PMI:<\/p>\n
VA funding fee<\/b><\/p>\n\n- One-time fee<\/li>\n
- Required for most VA home loans<\/li>\n
- Ranges from 0.5% to 3.3%<\/a> (depending on your down payment, whether it\u2019s your first time using a VA loan, and the type of VA loan you\u2019re using)<\/li>\n<\/ul>\n
PMI<\/b><\/p>\n\n- Annual fee<\/li>\n
- Not required for VA home loans<\/li>\n
- Typically averages about 0.5% to 2% annually<\/b><\/li>\n<\/ul>\n
Benefits of Avoiding PMI<\/h2>\n
The main benefit of avoiding PMI is that it can significantly reduce your mortgage payments. You can use the money you save to make extra payments on your mortgage or cover other necessities such as home repairs and maintenance, which are usually unexpected costs of homeownership.<\/p>\n
Additionally, not having to pay PMI by using a VA purchase loan<\/a> means that you also enjoy all the benefits of VA home loans. This includes not having to make a down payment and possibly qualifying for a lower interest rate than you would with a conventional loan\u2014all of which can save you even more money on your mortgage.<\/p>\nVA Loan Eligibility Requirements<\/h2>\n
While there are many benefits of securing a VA home loan, not everyone is eligible. There are specific VA loan requirements<\/a> that must be met in order to be eligible through the Department of Veterans Affairs, including:<\/p>\n\n- You have served 90 consecutive days of active service during wartime or 181 consecutive days during peacetime<\/li>\n
- You have completed 6 years of service in the National Guard or Reserves<\/li>\n
- You are the surviving spouse of a service member who died in the line of duty or due to a service-related disability<\/li>\n<\/ul>\n
![\"\"](\"https:\/\/griffinfunding.com\/wp-content\/uploads\/2020\/11\/image1.jpg\")
<\/p>\n
There are also VA loan eligibility<\/a> requirements for your mortgage lender. At Griffin Funding, our VA home loan requirements include:<\/p>\n\n- Obtain a Certificate of Eligibility (we can help you obtain your COE)<\/li>\n
- Proof of income<\/li>\n
- Minimum 500 FICO score<\/li>\n
- 2-year waiting period for foreclosures, short sales, and Chapter 7 bankruptcies<\/li>\n
- 1-year waiting period for Chapter 13 bankruptcies<\/li>\n
- Completion of pest inspection and VA appraisal<\/li>\n<\/ul>\n
To find out if you qualify for a VA home loan, speak with one of our knowledgeable loan specialists.<\/p>\n
VA Loan Limits<\/h3>\n
There is no limit on the amount you can borrow with a VA home loan, only how much you can borrow without a down payment.<\/p>\n
As of 2020, individuals who still have their full entitlement (or have fully restored it) are no longer subject to loan limits<\/a>. The Blue Water Navy Vietnam Veterans Act of 2019 has also authorized changes to VA home loans as of January 1, 2020. Qualifying veterans can now purchase a home valued up to $1,500,000 with zero down payment as long as they meet the requirements.<\/p>\nHowever, if you have previously defaulted on a home loan, you will be held to FHFA 2024 loan limits<\/a> (updated Nov 28, 2023). In most counties, the loan limit is $766,550. However, in more competitive housing markets with higher costs of living, the loan limit may be higher.<\/p>\nVA Closing Costs<\/h3>\n
While you may not have to pay PMI, there are still closing costs associated with VA home loans<\/a>. Some of these closing costs may include:<\/p>\n\n- Loan origination fee<\/li>\n
- Recording fee<\/li>\n
- Appraisal fee<\/li>\n
- Title insurance<\/li>\n
- Taxes<\/li>\n<\/ul>\n
Many of the closing costs can be negotiated between the buyer (you) and the seller. However, some closing costs, such as brokerage fees and real estate professional commissions, must be covered by the buyer when using a VA loan. Additionally, VA loans require that a seller pay no more than 4% of the home loan in seller\u2019s concessions.<\/p>\n
For more information on VA home loans, visit VA.gov<\/a> or contact us to review your loan options with one of our loan specialists.<\/p>\nFind Out If a VA Home Loan Is Right for You<\/h2>\n
If you are a veteran or service member, it\u2019s likely that a VA loan will provide you with the greatest benefit when purchasing or refinancing a home. And, when you apply<\/a> for a VA home loan with Griffin Funding, you\u2019ll also enjoy the advantages of our cutting-edge technology, highly competitive loan rates, and dedication to exceptional customer service. Reach out today to learn more about VA loans and see how much VA loans can save you on mortgage insurance.<\/p>\n","protected":false},"excerpt":{"rendered":"
Do VA Loans Have PMI?<\/h2>\n
No, VA loans do not require PMI. <\/b>PMI is required on most loans because it is a form of protection for the lender. But, since the Department of Veterans Affairs backs VA home loans<\/a>, this already reduces the risk to the lender because if a VA borrower defaults on their loan, the VA guarantees a portion of the loan.<\/p>\n This guarantee is known as entitlement. VA entitlement<\/a> is more or less a substitute for the typical down payment. Through the VA entitlement, the VA insures up to 25% of the loan amount. Take charge of your financial wellness and achieve your homeownership goals As mentioned, private mortgage insurance (PMI) is an insurance policy that is designed to protect the lender, should a borrower default on their loan. PMI is charged at an annual rate and is included in your monthly mortgage payment. In some cases, you may be able to pay PMI upfront in a lump sum as part of closing costs.<\/p>\n That said, PMI is not necessarily paid over the entire life of the loan. Once you establish enough equity (typically over 20%), you can typically apply to remove PMI.<\/p>\n Down payment is an important aspect of the home buying process, especially when it comes to paying PMI. This is because a down payment is one way to increase the equity in your home, and reduce the mortgage lender\u2019s risks. So, if you pay a down payment of 20% or higher <\/b>on a traditional mortgage<\/b>, you will likely not have to pay PMI<\/b>.<\/p>\n Many types of loans\u2014both private and government-backed mortgages\u2014require PMI. And even the types of loan that don\u2019t have PMI typically require some other type of mortgage insurance.<\/p>\n Regardless of which type of loan you apply for, you\u2019re likely going to have to pay some kind of fee or PMI that will reduce the lender\u2019s level of risk\u2014meaning the funding fee for VA loans<\/a> and PMI requirements serve a similar purpose. However, paying a one-time VA funding fee tends to be less expensive than potentially making years of PMI payments. You can use our VA loan calculator<\/a> to figure out how much you can save when you\u2019re not making monthly PMI payments.<\/p>\n Typically, PMI is between 0.5% to 2% of your total loan amount. Let\u2019s take a look at how this would be applied to your mortgage loan.<\/p>\n For example, let\u2019s say you have a $300,000 mortgage loan. With PMI of 1%, that would be $3,000 per year. When broken down into 12 months (and added to your monthly mortgage payment) this would be an additional $250 per month.<\/p>\n On the other hand, if you choose to pay PMI as part of your closing costs, you would need to make a lump sum payment on top of your closing costs. Or a third payment option is a hybrid solution, where you would pay a lump sum portion at closing and the rest of your PMI as monthly payments that are factored into your monthly loan payment.<\/p>\n Your mortgage lender can help you break down the specifics based on your situation to help you determine which PMI payment option is best given your financial situation.<\/p>\n So do VA loans have PMI? The answer is no\u2014but there is another fee associated with VA loans that you may need to pay. This is known as the VA funding fee<\/b>.<\/p>\n The VA funding fee is a fee put in place by the U.S. Department of Veterans Affairs in order to sustain the VA loan benefits program. This fee helps offset costs to taxpayers and is fairly low\u2014between 0.5% and 3.3% of the loan amount. The VA funding fee varies depending on the borrower\u2019s service history and the loan type.<\/p>\n However, not all VA loan borrowers have to pay the VA funding fee. For example, those who are eligible for or are currently receiving disability pay due to a service-related injury are exempt from paying the VA funding fee on their loan.<\/p>\n There are several key differences between the VA funding fee and PMI:<\/p>\n VA funding fee<\/b><\/p>\n PMI<\/b><\/p>\n The main benefit of avoiding PMI is that it can significantly reduce your mortgage payments. You can use the money you save to make extra payments on your mortgage or cover other necessities such as home repairs and maintenance, which are usually unexpected costs of homeownership.<\/p>\n Additionally, not having to pay PMI by using a VA purchase loan<\/a> means that you also enjoy all the benefits of VA home loans. This includes not having to make a down payment and possibly qualifying for a lower interest rate than you would with a conventional loan\u2014all of which can save you even more money on your mortgage.<\/p>\n While there are many benefits of securing a VA home loan, not everyone is eligible. There are specific VA loan requirements<\/a> that must be met in order to be eligible through the Department of Veterans Affairs, including:<\/p>\n There are also VA loan eligibility<\/a> requirements for your mortgage lender. At Griffin Funding, our VA home loan requirements include:<\/p>\n To find out if you qualify for a VA home loan, speak with one of our knowledgeable loan specialists.<\/p>\n There is no limit on the amount you can borrow with a VA home loan, only how much you can borrow without a down payment.<\/p>\n As of 2020, individuals who still have their full entitlement (or have fully restored it) are no longer subject to loan limits<\/a>. The Blue Water Navy Vietnam Veterans Act of 2019 has also authorized changes to VA home loans as of January 1, 2020. Qualifying veterans can now purchase a home valued up to $1,500,000 with zero down payment as long as they meet the requirements.<\/p>\n However, if you have previously defaulted on a home loan, you will be held to FHFA 2024 loan limits<\/a> (updated Nov 28, 2023). In most counties, the loan limit is $766,550. However, in more competitive housing markets with higher costs of living, the loan limit may be higher.<\/p>\n While you may not have to pay PMI, there are still closing costs associated with VA home loans<\/a>. Some of these closing costs may include:<\/p>\n Many of the closing costs can be negotiated between the buyer (you) and the seller. However, some closing costs, such as brokerage fees and real estate professional commissions, must be covered by the buyer when using a VA loan. Additionally, VA loans require that a seller pay no more than 4% of the home loan in seller\u2019s concessions.<\/p>\n For more information on VA home loans, visit VA.gov<\/a> or contact us to review your loan options with one of our loan specialists.<\/p>\n If you are a veteran or service member, it\u2019s likely that a VA loan will provide you with the greatest benefit when purchasing or refinancing a home. And, when you apply<\/a> for a VA home loan with Griffin Funding, you\u2019ll also enjoy the advantages of our cutting-edge technology, highly competitive loan rates, and dedication to exceptional customer service. Reach out today to learn more about VA loans and see how much VA loans can save you on mortgage insurance.<\/p>\n","protected":false},"excerpt":{"rendered":"
\nDownload the Griffin Gold app today!<\/h3>
\r\nUse invitation code: GRIFGOLD<\/b> to register.<\/p><\/a><\/a><\/div><\/div>\nPrivate Mortgage Insurance Explained<\/h2>\n
Down Payments & PMI<\/h3>\n
Loans Requiring PMI<\/h3>\n
Typical PMI Costs<\/h3>\n
<\/p>\nVA Funding Fee<\/h2>\n
VA Funding Fee vs. PMI<\/h3>\n
\n
\n
Benefits of Avoiding PMI<\/h2>\n
VA Loan Eligibility Requirements<\/h2>\n
\n
<\/p>\n\n
VA Loan Limits<\/h3>\n
VA Closing Costs<\/h3>\n
\n
Find Out If a VA Home Loan Is Right for You<\/h2>\n