No Down Payment and No Private Mortgage Insurance (PMI)

Updated 2026-05-17

VA loans offer two significant financial advantages that make homeownership more accessible and affordable for eligible Borrower (Consumer), Borrower (Consumer), and Borrower (Consumer): the option for no down payment and the absence of Private Mortgage Insurance (PMI).

No Down Payment

A "No Down Payment" option is a key benefit of VA loans, allowing eligible borrowers to purchase a home without an initial cash payment. This feature is particularly beneficial for first-time homebuyers who may not have substantial savings, making homeownership more attainable.

While a VA loan typically requires no down payment, borrowers should be aware of the VA Funding Fee and Payment System (FFPS), which is a separate, one-time fee. This funding fee can be paid upfront at closing or rolled into the loan amount and is distinct from a down payment.

No Private Mortgage Insurance (PMI)

Another crucial advantage of VA loans is that borrowers are not required to pay for Private Mortgage Insurance (PMI). This holds true even when making no down payment or a down payment of less than 20%. This is a significant distinction from conventional loans, where PMI is typically mandatory for loan-to-value (LTV) ratios above 80% to protect the lender against borrower default.

The absence of PMI can save borrowers hundreds of dollars each month, making homeownership more affordable over the life of the loan. This benefit is a direct result of the VA's guarantee on a portion of the loan, which mitigates risk for the Creditor (Lender).