VA Loans in Washington State Have No Monthly Mortgage Insurance

Eligible VA borrowers in Washington State can buy a home with no down payment and no monthly mortgage insurance. That’s a major advantage compared to many other low-down-payment loan options, but it does not necessarily mean a VA loan comes with no added costs.

This guide explains how the no-monthly-mortgage-insurance benefit works, how VA loans differ from other loan types, and what VA-related fees borrowers should understand before moving forward.

Mortgage Insurance Explained

Many home buyers in Washington have to pay for private mortgage insurance (PMI) when they take out a loan. This type of insurance is usually required when an individual home loan accounts for more than 80% of the property value.

For example, if you were to put down 5% on a home purchase and borrowed the remaining 95%, you would likely have to pay mortgage insurance. This is just an industry-wide requirement that has been in place for many years.

The advantage of mortgage insurance is that it allows home buyers to purchase a house with less money down. The downside is that it could increase your monthly payments by several hundred dollars per month, depending on the size of the loan.

This is why some home buyers across Washington State choose to put down 20% or more on a home purchase. They do it to avoid the extra cost brought on by mortgage insurance, which reduces the size of the monthly payments.

How VA Compares With Conventional and FHA Loans

VA loans stand out because eligible borrowers do not pay monthly mortgage insurance, even with little or no down payment. By comparison, conventional loans often require monthly PMI when the down payment is below 20%, with costs that can vary based on factors like down payment size and credit score. FHA loans use a different structure called mortgage insurance premiums (MIP), which can include both an upfront charge and an ongoing monthly cost.

For borrowers comparing monthly housing costs, that difference can make VA financing worth a closer look if you qualify.

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VA Loans Do Not Require It

But the rules are different when it comes to the VA home loan program. Borrowers who use a VA loan to purchase a house in Washington can put little or no money down without having to pay mortgage insurance. This is true even if you finance up to 100% of the purchase price.

The key takeaway is simple: with a VA loan, eligible borrowers can avoid the monthly PMI charges that often apply to some low-down-payment conventional loans.

By sidestepping PMI, home buyers who use a VA loan could end up with lower monthly mortgage payments. If you buy a more expensive property (and use a bigger loan), the cost difference could be even more noticeable.

With the cost of living going up all the time, home buyers often seek ways to minimize their monthly mortgage payments. The VA program could help you achieve that goal by taking PMI out of the picture.

VA Funding Fee vs. Monthly Mortgage Insurance

One point that often causes confusion is the difference between mortgage insurance and the VA funding fee. VA loans do not require monthly mortgage insurance, but some borrowers do pay a one-time VA funding fee.

This fee helps support the VA home loan program and is one reason eligible borrowers can access features like no down payment and no monthly private mortgage insurance. Some borrowers are exempt from the funding fee, so it’s important not to assume every VA loan will include it.

In other words, no monthly mortgage insurance is a real cost advantage, but borrowers should still review the full loan estimate to understand any funding fee and other closing costs that may apply.

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Other Benefits of the Program

We’ve covered two of the biggest benefits offered by VA loans. Washington home buyers who use this program can finance up to 100% of the purchase price without having to pay for mortgage insurance. That’s a combination not commonly available with other major loan programs.

There are other advantages as well, but qualification is not automatic. To get a VA-backed home loan, borrowers must meet eligibility requirements for the program and also satisfy their lender’s credit, income, and occupancy requirements. In practice, lender standards can vary, so some borrowers may find that qualification is easier with one lender than another.

The VA home loan guaranty gives lenders a level of protection if a loan results in a loss, which is part of what makes this program different from conventional financing. Even so, borrowers should expect a full underwriting review rather than assuming approval based on VA eligibility alone.

Additionally, borrowers can often use this benefit more than once. If you use a VA loan to buy a house, and later sell the home and pay off the debt, you could restore your program eligibility and use it on a future purchase.

In future articles, we will explore some of the other benefits offered by the VA home loan program. Today, we wanted to focus on the mortgage insurance subject in particular. The bottom line is that VA loans give eligible borrowers a way to buy with little or no money down without monthly mortgage insurance being added on.

Have Questions About Mortgages?

Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.