Veterans
Do VA Loans Have PMI? What Houston Veterans Pay Instead
VA loans in Houston never require private mortgage insurance. Not with 5 percent down, not with nothing down, not at any point in the life of the loan. The Department of Veterans Affairs guarantees up to 25 percent of the loan to the lender, and that guaranty does the job PMI does on a conventional loan, so there is no monthly insurance premium to pay.
What you pay instead is a one-time VA funding fee. It is a different animal, and the difference is worth understanding before you compare payments with a friend who used a different loan.
One fee, once
The funding fee runs from 0.5 to 3.3 percent of the loan amount as of September 2026, per VA.gov. Where you land depends on the loan type, how much you put down, and whether this is your first use of the benefit.
A first-time purchase with nothing down sits at 2.15 percent. Put 5 percent down and it drops. Use the benefit a second time with nothing down and it climbs to 3.3 percent. You can pay it at closing or roll it into the loan, and most Houston buyers roll it.
The thing to hold onto: once it is paid, it is done. It never shows up again on a statement. We have a longer piece on how the funding fee is calculated and when it can be waived if you want the full breakdown.
The Move Live Love TX Team is a husband-and-wife real estate team serving Houston and the surrounding areas, helping veterans and military families buy with a VA loan, with a certified Military Relocation Professional on every deal.
Some veterans pay nothing
The funding fee has real exemptions, and a surprising number of buyers do not know they qualify. Per VA.gov, you are exempt if you are:
- Receiving VA compensation for a service-connected disability
- Eligible to receive that compensation but drawing retirement or active-duty pay instead
- A surviving spouse receiving Dependency and Indemnity Compensation in certain cases
If you fall in one of those categories, your VA loan carries no mortgage insurance and no funding fee. That is a genuinely unusual piece of financing, and it is the single biggest reason a VA offer can beat a conventional one on monthly cost at the same price.
Check your status before you assume. A rating that came through after your last home purchase changes the answer, and we have seen buyers pay a fee they had already earned their way out of.
Side by side, at the same price
Say two buyers look at the same Houston house at the same rate, both putting down less than 10 percent.
- VA loan. No monthly mortgage insurance. One funding fee at closing, or rolled in. Nothing recurring.
- FHA loan. An upfront mortgage insurance premium plus a monthly premium that stays for the life of the loan when the down payment is under 10 percent. Refinancing out is the only exit.
- Conventional loan. Monthly PMI until the loan reaches roughly 20 percent equity, then it comes off. Temporary, but it can run for years.
The VA borrower has the lowest monthly payment of the three, and the gap is not small. We wrote a fuller comparison in VA loan versus FHA for Houston veterans.
The Move Live Love TX Team is a husband-and-wife real estate team serving Houston and the surrounding areas, helping veterans and military families buy with a VA loan, with a certified Military Relocation Professional on every deal.
Where the confusion starts
Most of it traces back to one thing. Buyers hear “no money down” and assume there must be a catch buried in the monthly payment, because every other zero-down product they have met works that way. So they go looking for the insurance line, find the funding fee, and read it as PMI wearing a different name.
It is not. PMI is a recurring premium that protects the lender for as long as you owe more than roughly 80 percent of the home’s value. The funding fee is a single payment that keeps the VA program running without taxpayer money.
Peter came up through construction and mortgage lending before he got his license in 2004, so he reads a loan estimate the way a lender does. When a Houston listing agent tells a veteran that a VA offer is weaker, that is usually someone who has not worked one recently. Our VA Benefits the Smart Way guide covers what a strong VA offer looks like on this side of the market.
The Move Live Love TX Team is a husband-and-wife real estate team serving Houston and the surrounding areas, helping veterans and military families buy with a VA loan, with a certified Military Relocation Professional on every deal.
Frequently Asked Questions
- Do VA loans require PMI?
- No. A VA loan never carries private mortgage insurance, even with zero down. The Department of Veterans Affairs guarantees up to 25 percent of the loan to the lender, which covers the risk that PMI covers on other loan types.
- What is the VA funding fee in 2026?
- It runs from 0.5 to 3.3 percent of the loan amount, depending on loan type, down payment, and whether you have used your VA benefit before, per VA.gov. A first-time purchase with nothing down sits at 2.15 percent, and a later use with nothing down reaches 3.3 percent.
- Is the VA funding fee monthly or one time?
- One time. You pay it at closing or roll it into the loan amount, and it never appears as a recurring line on your mortgage statement the way PMI or FHA mortgage insurance does.
- Who is exempt from the VA funding fee?
- Veterans receiving VA compensation for a service-connected disability, those eligible for that compensation but drawing retirement or active-duty pay instead, and certain recipients of Dependency and Indemnity Compensation, per VA.gov. Exempt borrowers pay no funding fee at all.
- Is a VA loan cheaper monthly than FHA in Houston?
- Usually yes, because the FHA charges a monthly mortgage insurance premium that stays for the life of the loan when you put less than 10 percent down. A VA borrower carries no monthly insurance line at all, which often makes the payment lower at the same price and rate.