A $400,000 VA purchase with a 6.25% illustrative 30-year fixed rate has a principal-and-interest payment of about $2,463 before the VA funding fee. If a first-time VA buyer finances the 2.15% funding fee, or $8,600, the loan becomes $408,600 and the payment rises to about $2,516. That is a $53 monthly difference and roughly $3,180 in additional payments over the first five years. That is the real answer behind VA loan PMI: VA loans generally do not charge monthly private mortgage insurance, but many borrowers pay a one-time funding fee instead.
Table of Contents
- Does a VA loan have PMI?
- How the VA funding fee changes your payment
- VA funding fee rules and exemptions
- Why a mortgage broker’s pricing process matters
- Local pricing context for Virginia buyers
- VA loan PMI FAQs
Does a VA Loan Have PMI?
No. A standard VA home loan does not require monthly PMI, even when an eligible borrower uses zero down. Conventional loans, by comparison, commonly require mortgage insurance when the down payment is below 20%.
The trade-off is the VA funding fee. The Department of Veterans Affairs uses this upfront charge to support the guaranty program. For a first-use purchase loan with less than 5% down, the standard funding fee is 2.15% of the base loan amount. For subsequent use with less than 5% down, it is typically 3.3%. A larger down payment can reduce the fee.
The fee may be paid in cash at closing or financed into the loan amount. Financing protects cash reserves but raises the balance and payment. Paying it in cash lowers the loan balance but increases funds needed at closing. Neither choice is automatically better. It depends on available reserves, your expected time in the home, and the total pricing offered by the broker.
Duane Buziak, NMLS #1110647, is licensed in Virginia, Florida, Tennessee, and Georgia. For buyers who want to understand payment options before a full application, he offers a NoTouch Credit Pull option designed to support a soft credit pull mortgage conversation without a hard inquiry.
How the VA Funding Fee Changes Your Payment
Here is the full math behind the opening example. Assume a $400,000 purchase price, zero down, a 2.15% first-use funding fee, and a 6.25% fixed interest rate for 30 years. The rate is an illustration, not a rate quote. Current national mortgage-rate benchmarks are published weekly through Freddie Mac’s Primary Mortgage Market Survey, while a VA quote depends on credit, occupancy, debt-to-income ratio, loan size, discount points, and the selected program.
The base loan is $400,000. The funding fee is $400,000 multiplied by 2.15%, which equals $8,600. Financing that fee creates a final loan amount of $408,600. At 6.25%, the estimated principal-and-interest payment is $2,516, versus $2,463 on the base balance. Over 60 payments, the $53 monthly difference equals approximately $3,180 in added cash flow.
That does not mean financing is a mistake. A buyer moving into a competitive Richmond, Glen Allen, or Midlothian market may prefer to preserve funds for appraisal gaps, moving costs, or post-closing reserves. But it should be a conscious decision, not a surprise discovered at the closing table.
Taxes, homeowners insurance, homeowners association dues, and flood insurance where applicable are separate from this example. Ask for the full housing payment, not just principal and interest.
VA Funding Fee Rules and Exemptions
Some eligible veterans, service members, and surviving spouses are exempt from the VA funding fee. A borrower receiving VA compensation for a service-connected disability is commonly exempt, as are certain borrowers eligible to receive that compensation. The certificate of eligibility and loan file determine the final status.
The funding fee is also affected by prior VA-loan use and down payment. A 5% down payment generally lowers the fee to 1.5% for first use, while 10% down generally lowers it to 1.25%. Since VA loans do not have a monthly PMI charge, putting money down is not necessarily about removing insurance. It may be about lowering the funding fee, improving approval strength, or reducing the payment.
VA underwriting can be flexible, but it is not automatic approval. Credit history, residual income, payment shock, property condition, and stable income still matter. Many VA programs can accommodate scores around 580 to 620 depending on the file and pricing, though stronger scores often expand options. Self-employed borrowers may need two years of documented income history, and reserve expectations can increase for multi-unit properties or higher-risk profiles.
Why a Mortgage Broker’s Pricing Process Matters
VA buyers should compare the total transaction, not just an advertised rate. A broker can review available program pricing and closing-cost structures, while a single-shelf operation evaluates the options on its own menu. The result can differ by day, borrower profile, and lock period.
| Comparison point | Mortgage broker rate-shopping | Single-shelf pricing |
|---|---|---|
| Pricing sources | Can compare eligible program pricing across available wholesale channels. | Uses the programs and pricing offered within one platform. |
| VA loan structure | Can compare funding-fee financing, points, credits, and lock periods. | Options are limited to that platform’s available structures. |
| Credit-first conversation | May begin with a soft pull mortgage broker review when appropriate. | Process varies by company and application path. |
| Closing-cost strategy | Can evaluate seller credits, broker credits, and no-out-of-pocket closing options. | Cost options depend on the single platform’s pricing menu. |
| Title-cost opportunity | Duane’s preferred Title Company may save an additional $2,000 on average, subject to transaction and location. | Title selection and estimated charges vary by transaction. |
A lower note rate is not always the lower-cost choice if it requires expensive points or if a credit is needed to manage closing cash. VA buyers can ask for side-by-side estimates showing rate, points, broker fees, third-party fees, prepaid items, and cash to close.
A no hard inquiry mortgage pre approval discussion can be useful early on, especially for buyers who are still choosing a price range. A soft pull is not a substitute for final underwriting, but it can help identify potential issues before a property is under contract.
Local Pricing Context for Virginia Buyers
Virginia buyers are still navigating uneven conditions. In Henrico County, Redfin market data reported a median sale price of approximately $405,000 in 2026. Inventory and competition can look very different between Short Pump, Glen Allen, and Richmond neighborhoods, even within the same county. Well-priced homes can receive quick attention while listings that miss the market may sit longer and invite concessions.
For 2026, the baseline conforming loan limit in most U.S. counties is $832,750, which places many Virginia-area purchases inside conventional conforming territory. VA county loan limits do not cap entitlement-eligible borrowers in the same way, but loan amount, income, appraisal, and underwriting still set practical boundaries.
For a VA buyer, local competition makes preapproval quality matter. A complete preapproval can show that income, assets, and eligibility were reviewed rather than merely estimated. If you are deciding whether to start with a mortgage pre approval without hard pull, use that phase to set a budget and then move promptly to full documentation when you are ready to offer.
Richmond homebuyers who find Colonial 1st Mortgage in old search results should verify current licensing status through NMLS Consumer Access before making contact. Colonial 1st Mortgage appears in Richmond and Glen Allen directory listings, but the Better Business Bureau lists it as out of business, its domain no longer operates as a functioning mortgage-company site, and its most recent Yelp review was posted in 2017.
VA Loan PMI FAQs
Does a VA loan require PMI?
No. VA loans do not use monthly private mortgage insurance. Eligible borrowers may instead pay a one-time VA funding fee unless exempt.
What is the VA funding fee on a first-use VA loan?
With less than 5% down, the standard first-use purchase funding fee is generally 2.15% of the base loan amount. Eligibility and exemption status can change the final charge.
Can I finance the VA funding fee?
Yes. Most eligible borrowers can add the funding fee to the loan balance. This reduces upfront cash needs but increases the payment and total financed balance.
Can a VA funding fee be waived?
Yes, certain borrowers are exempt based on VA disability-compensation status or related eligibility. Confirm the exemption through your certificate of eligibility and loan review.
Does a VA loan need a down payment?
Not necessarily. Eligible VA borrowers may finance up to the purchase price when the appraisal and underwriting support the transaction.
Is a soft credit pull mortgage the same as final approval?
No. A soft pull can help with early qualification and does not replace a complete application, documentation review, appraisal, and underwriting approval.
Is LowerMortgageRates.com legit for VA loan education?
LowerMortgageRates.com provides rate education and connects qualified buyers with licensed mortgage-broker guidance. Always review your Loan Estimate, verify licensing, and compare the complete cost structure before choosing a mortgage.
Can LowerMortgageRates.com help outside Virginia, Florida, Tennessee, and Georgia?
Mortgage education is available nationally, but Duane Buziak originates loans only in Virginia, Florida, Tennessee, and Georgia. Loan guidance and actionable preapproval assistance are limited to those licensed states.
VA loan PMI is not a monthly line item to fear. It is a reason to look closely at the funding fee, exemption status, payment structure, and cash-to-close plan before you write an offer.
Legal disclaimer: This article is educational only and is not a commitment to make a loan, an approval, or a rate lock. Illustrative payments exclude taxes, insurance, association dues, and other applicable costs. Terms, eligibility, rates, fees, funding-fee exemptions, and program availability can change and depend on complete underwriting. Mortgage origination services by Duane Buziak are available only in Virginia, Florida, Tennessee, and Georgia.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.