What Is PMI on a Mortgage, and Does a VA Loan Have It?

Short answer: PMI, or private mortgage insurance, is insurance you may have to buy on a conventional loan when you put down less than 20 percent. It protects the lender, not you. You can usually ask to cancel it when your balance is scheduled to reach 80 percent of the home's original value, and it generally ends on its own at 78 percent. A VA purchase loan does not require PMI.

Jennifer Rodriguez is a Realtor® and Military Relocation Professional (MRP®) in Northwest Las Vegas helping military families buy with a VA loan.

Here's what most people don't realize: the word "insurance" makes PMI sound like it covers you. It does not. Once you know who it protects and when it ends, comparing loans gets a lot easier.

What is PMI on a mortgage?

PMI is insurance a lender may require on a conventional loan when your down payment is less than 20 percent of the purchase price. The requirement usually applies on a refinance too, when your equity is under 20 percent of the home's value. Your lender arranges it, and a private insurance company provides it.

The Consumer Financial Protection Bureau (CFPB) is clear about who benefits. PMI protects the lender if you stop making payments. If you fall behind, PMI does not protect you, and you can still lose your home to foreclosure.

It does have an upside. PMI can help you qualify for a loan you might not otherwise get. The trade-off is that it can increase the cost of your loan.

How do you pay for PMI?

There are three common setups:

• Monthly. This is the most common. The premium is added to your mortgage payment.
• Up front. You pay a one-time premium at closing.
• Both. Some buyers pay an up-front premium and a monthly one.

You can find it on your paperwork. A monthly premium shows on page 1 of your Loan Estimate and Closing Disclosure, under Projected Payments. An up-front premium shows on page 2, in section B.

Be careful with the up-front option if you expect to move. The CFPB says that if you pay up front and then move or refinance, you might not get that premium back. For a family that gets orders every few years, that is a real question to ask before you choose.

When does PMI go away?

Federal law, the Homeowners Protection Act, gives you three ways out. These rules cover single-family primary homes with mortgages that closed on or after July 29, 1999:

1. You ask at 80 percent. You can ask your servicer to cancel PMI when your balance is scheduled to reach 80 percent of the home's original value. You can ask sooner if extra payments get you there early.
2. It ends automatically at 78 percent. Your servicer generally must end PMI on the date your balance is scheduled to reach 78 percent, as long as you are current on your payments.
3. It ends at the midpoint. If it has not ended already, PMI must stop the month after you reach the halfway point of your loan schedule. On a 30-year loan, that is after 15 years. You have to be current.

"Original value" generally means the lower of your contract price or the appraised value when you bought. So a jump in home prices does not change this particular math. Some lenders and investors may allow earlier cancellation under their own standards, so ask yours.

Once PMI is canceled or ends, no premiums can be required more than 30 days later. Any unearned premiums must come back to you within 45 days.

What do you need to cancel PMI at 80 percent?

Your servicer must grant the request if you meet these requirements:

• You ask in writing.
• You have a good payment history and are current. Good payment history has a legal definition. No payment 30 or more days late in the last 12 months, and no payment 60 or more days late in the 12 months before that.
• You have no junior liens. You certify there is no second mortgage or similar lien on the home.
• The value has held. You provide evidence, such as an appraisal, that the home's value has not fallen below its original value. If it has, you may not be able to cancel on schedule.

Your PMI disclosure form should list the first date you can ask. Put that date on your calendar.

Does a VA loan have PMI?

No. VA says its purchase loan has no need for private mortgage insurance or the mortgage insurance premiums that FHA loans use. VA's Buyer's Guide explains why: the VA guaranty is a promise that the federal government will pay lenders a portion of the loan if it goes into default and foreclosure, so borrowers do not pay for mortgage insurance over the life of the loan.

A VA loan does have its own cost to know about. It is called the funding fee, a one-time charge rather than a monthly premium. VA says the fee helps lower the cost of the program for taxpayers, since the program does not require down payments or monthly mortgage insurance.

For a purchase loan with less than 5 percent down, the current fee is 2.15 percent of the loan on first use and 3.3 percent after first use. It drops with a larger down payment. You can pay it at closing or finance it into the loan. Some buyers do not pay it at all, including veterans receiving VA compensation for a service-connected disability.

How should you compare PMI with a VA funding fee?

Good news, you have options, and there's no one-size-fits-all answer. They work differently, so compare them over the time you expect to keep the loan:

• PMI is usually an ongoing monthly cost until it is canceled or ends.
• The funding fee is a one-time cost, and if you finance it, you pay interest on it over the loan.
• The rate and the monthly payment matter too. Ask each lender for a Loan Estimate on the same day so you are comparing like with like.

The CFPB also notes that a conventional loan with a smaller down payment and no PMI usually carries a higher interest rate. So "no PMI" on a conventional offer is worth a second look at the rate.

You earned the benefit. My job is to help you use it wisely, and sometimes the right answer takes running both sets of numbers with your lender.

Common PMI mistakes

• Thinking PMI protects you. It protects the lender. You can still lose your home to foreclosure.
• Waiting for 78 percent when you could ask at 80. Automatic termination comes later than the date you can request cancellation. Asking can save you some months of premiums.
• Counting on a higher home value alone. The federal 80 and 78 percent dates use the original value, not today's price.
• Assuming a VA loan has no upfront cost because it has no PMI. Check whether the funding fee applies to you and how much it is.
• Applying these rules to every loan. The CFPB says FHA and VA mortgages have different requirements, so ask your servicer about those loans.

More on what a loan costs

• VA funding fee 2026: rates and exemptions
• What are the drawbacks of a VA loan with no down payment?
• What is an escrow account, and what is an escrow shortage?

Sources

• CFPB, What is private mortgage insurance? (reviewed August 28, 2023)
• CFPB, When can I remove PMI from my loan? (reviewed August 28, 2026)
• 12 U.S.C. 4902, Termination of private mortgage insurance
• 12 U.S.C. 4901, Definitions
• VA.gov, VA-backed purchase loan (updated January 7, 2026)
• VA.gov, VA funding fee and loan closing costs (updated October 5, 2026)
• VA Home Loan Buyer's Guide, PMI note and definition of guaranty

Frequently asked questions

What is PMI insurance?

PMI is private mortgage insurance. A lender may require it on a conventional loan when your down payment is less than 20 percent. It protects the lender if you stop making payments, not you.

When can I stop paying PMI?

You can ask your servicer to cancel it when your balance is scheduled to reach 80 percent of the original value. It generally ends automatically at 78 percent if you are current, and it must end the month after the midpoint of your loan schedule if you are current.

Does a VA loan have PMI?

No. VA says its purchase loan has no need for private mortgage insurance. You may pay a one-time funding fee, though some buyers are exempt.

How can I avoid PMI when buying a house?

On a conventional loan, a 20 percent down payment means PMI is not required. A conventional loan with a smaller down payment and no PMI usually has a higher interest rate. If you are eligible, a VA purchase loan does not require PMI.

Do I get PMI money back when it ends?

Federal law requires unearned premiums to be returned within 45 days after PMI is canceled or ends. If you paid an up-front premium and then move or refinance, you might not get it back.

Not sure which loan math fits your family? Send me a message and I will help you list what to ask your lender. You can find me at homesbyjrod.com.

The information in this article comes from the CFPB, federal law, and VA, checked on November 5, 2026. Rules and lender requirements can change, so confirm details with your lender. This is general education, not legal or financial advice.