CalculatorDo VA and USDA Loans Have PMI?
TL;DR— Quick Summary
- Neither VA nor USDA loans require PMI
- VA funding fee is 2.15% first use with less than 5% down, 3.3% on subsequent use
- USDA charges 1% upfront plus 0.35% annual guarantee fee on the loan balance
- FHA uses MIP — 1.75% upfront plus 0.55% annual — not PMI
- VA has $0 monthly mortgage insurance, often the lowest total cost for eligible buyers
Do VA and USDA Loans Have PMI?
Quick answer: Neither VA nor USDA loans require PMI. VA loans charge a one-time funding fee (1.25% to 3.3% of the loan amount depending on down payment and use). USDA loans charge a 1% upfront guarantee fee plus an 0.35% annual fee paid monthly. FHA loans use MIP, not PMI.
Each government loan program replaces PMI with its own fee structure. The total cost depends on your loan amount, down payment, and how long you keep the loan.
VA Loans and PMI
VA loans have no monthly PMI — ever. Eligible veterans, active-duty service members, and surviving spouses can buy with 0% down without PMI.
Instead, most borrowers pay a VA funding fee:
| Down payment | First-time use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
The fee applies to the loan amount, not the purchase price.
Examples on a $300,000 loan:
| Scenario | Funding fee rate | One-time fee |
|---|---|---|
| First use, 0% down | 2.15% | $6,450 |
| First use, 10% down | 1.25% | $3,375 |
| Subsequent use, 0% down | 3.30% | $9,900 |
Most borrowers finance the funding fee into the loan — so it adds to your balance but requires $0 out of pocket at closing.
Who is exempt from the funding fee:
- Veterans with a service-connected disability rating
- Purple Heart recipients
- Surviving spouses of veterans who died in service or from a service-connected disability
USDA Loans and PMI
USDA guaranteed loans have no PMI. They use a guarantee fee with two parts:
| Fee | Rate | How it is paid |
|---|---|---|
| Upfront guarantee fee | 1% of loan amount | At closing (usually financed) |
| Annual guarantee fee | 0.35% of unpaid balance | Divided into monthly payments |
Example on a $250,000 USDA loan:
| Fee | Calculation | Cost |
|---|---|---|
| Upfront (1%) | $250,000 × 0.01 | $2,500 |
| Annual (0.35%) | $250,000 × 0.0035 | $875/year ($73/month) |
The annual fee decreases as you pay down your balance. On a $200,000 remaining balance, the annual fee drops to $700/year ($58/month).
Who qualifies: Low-to-moderate income buyers in USDA-eligible rural and suburban areas. Income limits vary by county — often around 115% of the area median income.
How VA and USDA Fees Compare to PMI
Side-by-side on a $300,000 loan:
| Loan type | Upfront cost | Monthly insurance cost | 5-year total insurance cost |
|---|---|---|---|
| Conventional PMI (10% down, 0.8%) | $0 | $200/month | ~$12,000 |
| VA (first use, 0% down) | $6,450 (financed) | $0 | $6,450 (one-time) |
| USDA (0% down) | $3,000 (financed) | ~$88/month | ~$8,280 |
| FHA MIP (3.5% down) | $5,062 (1.75%) | ~$138/month (0.55%) | ~$13,342 |
VA wins on monthly cost — $0 PMI or MIP. USDA is second with lower monthly fees than conventional PMI. FHA often costs the most over time because MIP may last the life of the loan.
Break-even example: VA funding fee $6,450 vs conventional PMI $200/month → PMI costs more after 33 months ($6,600). If you stay 5+ years, VA's one-time fee is usually cheaper than ongoing PMI.
What About FHA Loans?
FHA loans do not have PMI. They use MIP (mortgage insurance premium) with different rules:
| MIP component | Rate (most 30-year loans) |
|---|---|
| Upfront MIP | 1.75% of loan amount |
| Annual MIP | 0.55% of loan balance |
Example on a $300,000 FHA loan:
- Upfront MIP: $5,250 (financed into loan)
- Annual MIP: $1,650/year ($138/month)
MIP removal rules (loans with case numbers after June 3, 2013):
- Less than 10% down: MIP lasts for the life of the loan
- 10% or more down: MIP cancels after 11 years
Most FHA buyers put 3.5% down — meaning MIP for 30 years unless they refinance into a conventional loan at 20% equity.
Which Loan Type Saves the Most?
| Buyer profile | Best option | Why |
|---|---|---|
| Eligible veteran, 0% down | VA loan | No monthly MI; one-time funding fee as low as 2.15% |
| Rural buyer, low income | USDA loan | 0% down; monthly guarantee fee often $73–$88 vs $200+ PMI |
| Strong credit, 10–15% down | Conventional + PMI | PMI cancels at 80% LTV; lower upfront than FHA |
| Lower credit, 3.5% down | FHA | Easier qualification; but MIP often lasts life of loan |
| 20% down, any type | Conventional | No PMI at all |
See how to avoid PMI for strategies before you buy. Read what is PMI in real estate for conventional PMI cost details.
VA and USDA eligibility depends on service history, income, and property location — not just fee math. A $300/month PMI bill on conventional versus $0 on VA is often the deciding factor for eligible military buyers even when the upfront funding fee exceeds $6,000.
Frequently Asked Questions
Do VA loans have PMI?
No. VA loans never require PMI. Most borrowers pay a one-time VA funding fee of 1.25% to 3.3% instead.
Do USDA loans have PMI?
No. USDA loans use a 1% upfront guarantee fee and 0.35% annual fee instead of PMI.
What is the VA funding fee?
A one-time charge of 1.25% to 3.3% of the loan amount, based on down payment and whether it is your first or subsequent VA loan use. Disabled veterans are often exempt.
Do FHA loans have PMI?
FHA uses MIP, not PMI. Upfront MIP is 1.75% plus annual MIP of 0.55% on most loans. MIP often cannot be removed if you put less than 10% down.
Which loan has the lowest mortgage insurance cost?
VA loans have $0 monthly mortgage insurance. Over 5 years, VA's one-time funding fee is often less than $12,000+ in conventional PMI on the same loan size.
Ready to compare mortgage options? Get a free quote through LendingTree to see rates with and without PMI.
About the author
CalculatorBasics Financial Team researches mortgage, lending, and calculator strategy topics with a focus on practical decisions and transparent assumptions.