Is it typical for a lender to charge a PMI on a VA loan?

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I live in Las Vegas, NV and am purchasing a home. I want to go VA, because I don’t want to put anything down. However, my current lender-to-be is including mortgage insurance. I was told that VA loans don’t typically need PMI. I am wondering if I am getting screwed…

My fiance and I are interested in buying a home. On the VA website, it says he must have served 181 days of active duty. I’m assuming that going to boot camp counts as active duty, meaning that the day he shipped out to basic training counts as Day 1. Please correct me if I’m wrong, and please tell me how the 181 days is actually calculated.

Also, when he went into the credit union (Navy Federal) to ask about a VA loan and just get more information they told him he needs at least 5 years of good credit. Is this true? While researching all I saw was that the VA usually likes to see good credit for the last 12 months. He has not even had credit for 5 years, so if this is true it would make it impossible to get a VA loan.

Would it be easier to get a VA loan or FHA loan for us? There is no way we could get a conventional loan because we can’t afford the 20% down payment. We could scrape together enough cash for an FHA loan down payment, but it would probably drain our savings accounts and we would have to pay PMI. The reason we are looking into a VA loan is because of the 0% down payment and no PMI.

Getting the loan seems to be the hardest part right now. Once we are married and we receive BAH, the BAH alone will be almost 2x as much as the mortgage, so I’m not too worried about not being able to make the payment.

If it means anything, he has decent credit ( I don’t know his score) and I have good credit (between 720-740)

15 Comments
  1. Reply
    beachlover
    January 23, 2011 at 12:17 pm

    there is no PMI required! brokers love va loans they get paid more!!!
    you pay 2 % to the va to get the loan plus the lenders fees buy the time your done your paying 5% in fees
    there is a cheaper way to go and still get a great rate!

    If you qualify for a normal fixed rate it will save you check out the VA rates and points you have to pay!
    the same rate you want with va can be achieved without paying all the points

    there are other options avalible to you look here and see if they beat it!
    Ill bet they beat what you have in hand by alot!

    try here for options they can give you a clear picture

    http://www.directlendingplanet.com

  2. Reply
    Gregg
    January 23, 2011 at 12:34 pm

    Not only does the VA not require PMI, it also prohibits lenders from requiring it.

    Your lender is a dimwit and you need to run like the wind and report them! Anyone that tells you otherwise is also a dimwit!

  3. Reply
    Mike
    January 23, 2011 at 12:54 pm

    I always thought there was no PMI on VA loans.

    I would find another mortgage broker. Go to a credit union.

  4. Reply
    bdancer222
    January 23, 2011 at 1:08 pm

    Doesn’t PMI stand for Private Mortgage Insurance? A VA loan isn’t a private mortgage.

    Ask questions. Read everything carefully.

  5. Reply
    debbie p
    January 23, 2011 at 1:36 pm

    there is no PMI but you will pay 2% of the loan amount to the VA
    you also pay the lender fees brokers love VA loans they tend to pay more to the broker
    although many think the Va offers better rates the same rate can be achieved without paying All the fees invloved with a va loan.
    if your credit is high enough consider going with a fixed product.

  6. Reply
    fren c
    January 23, 2011 at 2:13 pm

    no PMI but there is a 2% fee
    if you can get a conventional loan you’ll make out better
    after paying 2% to va and broker fee you could have gotten a conventional loan and paid less in the long run!

  7. Reply
    oompa
    January 23, 2011 at 2:42 pm

    All of these answers are slightly incorrect. VA does have mortgage insurance, but it is financed through the VA funding fee the is collected through the loan, resulting in no monthly payments. Size of fee, depends on if you’ve used your VA benefits before, or in other words on your entitlement.

    Still though, you should not see a MI or PMI payment present on your good faith estimate. It could simply be a mistake, most loan systems are automated now and these things happen. If still in doubt, ask for a copy of a Rate Lock. it will among other things indicate the type and interest rate of the loan that has been secured.

    If you are still in doubt, contact the department of Veteran’s Affairs. They are very protective of our veterans and will quickly get right to the heart of the matter. If nothing else they can place you with an alternative, local lender that can help you.

    Ignore the wolves in sheep’s clothing trying to solicit your business. If you can get seller credits to pay your closing costs, VA is the best thing going right now. Ability to do a appraisal-less, 14 day streamline refinance, permission to let another veteran assume your loan, slightly below market interest rates….yes, take it. It beats the snot out of any conventional loan even if you have excellent credit.

  8. Reply
    ted f
    January 23, 2011 at 3:34 pm

    there is no PMI on va
    the VA does not finance loans they insure them and other lenders fund them

    the same lenders that would finance you VA would also finance you on a conventional loan & you will pay less in fees
    the va only insures the loan and charges you 2%
    you can get teh same rate thru the conventional financing and not pay additional fees
    with va you can finance you fees in but you are paying interest on those fees. i think banks and brokers get paid more on VA loans from the lenders

  9. Reply
    pearl m
    January 23, 2011 at 4:01 pm

    No PMI with VA but several other fees added

  10. Reply
    frankie b
    January 23, 2011 at 4:26 pm

    I thought the point of a a is that hey are insuring the loan. Why would you need pmi? Makes no sense.

  11. Reply
    Sandra M
    January 23, 2011 at 5:18 pm

    There are some details that you have left out:

    1. Is he active duty or reserve?
    2. Is he currently in the reserve or on active duty or has he been discharged?

    If he is currently in, is it really wise for you to purchase a house at this time? You have to sit down and go through a couple of things:

    1. how long will you be in the house?
    2. what can you reasonably afford per month? – I know that the VA loan goes up to 250,000 but you have to be honest about what you can afford?
    3. are you purchasing a home in an area that is in a good real estate market? You do not want to purchase in an area where it is hard to sell a home.

    Honestly, I would not go with a va loan if you cannot afford the 20% down payment. If you cannot afford the 20% down payment, you should not purchase a house at this time. Too many people purchased homes that they could not afford and that is why we had the economic melt down. You are far better waiting to purchase. Price homes that you are interested in and begin to save money for them. Do you realize that if you purchase a 120,000 dollar home and put down 20,000 you would pay about 599 a month at today’s rates. If you do not put the 20,000 dollars down, the payment goes to 799. In addition, you build home equity by putting a dent in the principal. For this reason, I never used the VA loan because I waited and saved for my house and was able to take out a 15 year mortgage instead of 30 years. Take your time and crunch numbers.

    Be aware that the last post is a scam. You probably have figured that out for yourself but just in case…..

    Also be very careful with knowledgeable real-estate agents. I actually went through three agents because the first two tried to get me to purchase a house solely on my gross pay and not my net pay. You always want to take a look at your net pay when seeing if you can afford to purchase a home. I would never exceed 15%-20% of my take home pay for a monthly mortgage payment. This is why the VA loan is not a good idea. If your husband is only making 1600 a month he will only bring in about 1100 after deductions. You would get bah (if living off post) which is nontaxable and that would give you another 1300 dollars. Both add to 2400 dollars a month. This means that your monthly mortgage payment should not exceed 480 dollars a month. This does not count taxes or insurance or the cost of anything that you would have to repair on your own and trust me, things break irregardless of whether you have the money to fix them. What you should do is to apply for on post housing and try to save 500 dollars a month. In a year, you will have 6000 dollars and after 4 you will have $ 24,000 plus interest. This would allow you to put down 20% on a home that costs $ 100,000 and cover most closing costs. Even if the rates go up to 6% your monthly payment would be around 480 dollars a month not counting taxes and insurance. By that time, his rank will go up and his salary will increase and $ 480 will not be a huge chunk of his monthly salary.

  12. Reply
    Houd1n1
    January 23, 2011 at 5:52 pm

    Loans are very difficult to get right now because so many people have defaulted on them in the last few years. If you are just starting a military career, I wouldn’t recommend buying a house just yet unless I was guaranteed to be able to stay at that location for at least four years. I’d also wait until you get married so that you can demonstrate a stable joint financial history.

    I went with the VA loan because of the zero down payment. If you qualify for FHA you should qualify for VA. http://www.benefits.va.gov/homeloans/ should have a lot of info for you. A knowledgeable realtor can also get you pointed in the right direction.

  13. Reply
    Jer.L
    January 23, 2011 at 6:06 pm

    You should go with the VA loan just because of the down payment requirements. Most lenders will want to see 6 months of expenses in a savings account also. Even with a VA certificate.

    Another road to try is the NACA program that helps first time home buyers.

  14. Reply
    Pete T
    January 23, 2011 at 6:17 pm

    ACTIVE DUTY PERSONNEL : Until the Gulf War Era is ended , persons on active duty are eligible after serving 90 continuous days.
    That 181 days and 5 years credit is their policy. You must remember , there is no such thing as an actual VA loan. The VA only guarantees a loan made by a private lender. Here’s an idea you may want to look into. go to http://www.jimwalterhomes.com and http://www.ubh.com ( united built homes ) and check them out. If you can buy a lot , they will use that for a down payment to build a house on, and there is no closing cost, no points , no pmi , and the last I read, ubh’s first payment was 6 months after closing the deal, of course that could have changed.

  15. Reply
    Marine5
    January 23, 2011 at 7:16 pm

    Whoa…put the brakes on…you have the Cart before the Horse…

    As one poster said…WAIT !!!!
    Neither of you understand anything about the Military…nothing…
    Any idea of what BAH is ???
    It is only a change in Book Keeping Columns…
    It is the Per Diem that the Marine Corps receives
    for a Marine living in the Barracks & Eating in the Messhall…

    He/She gets Married that is what they receive…
    Now he/she have to provide all of their own/families Food/Shelter/
    and has to Pay to eat in the Messhall…
    Out of that he/she has to pay for his Wife/Kids, Tricare payments…etc
    Car Insurance/Life Insurance/Clothes for everyone/school supplies/on and on…
    Plus he has to Maintain & Purchase all of his Uniforms etc…

    So you have purchased a House some way…
    You now have to Pay for the Mortgage…
    Home Owners Insurance/Flood Insurance…
    Property Taxes/School Taxes…Local Sales Taxes…
    Tel/Cable/Water/Sewer/Gas/Elect/Garbage removal…
    Oh yeah, you have to furnish it…
    Gas to and from Duty plus maintain a Locker in the Barracks…
    must be able to Mount Out with in 12-24 hours…

    Then we get to the reality of Marriage to a First Time Enlistee in the Corps…
    The Divorce Rate is now at 95%+…per DOD Stats…
    All other Services is at 65%+…

    A Junior enlisted does NOT make that kind of Money…ever

    All of the above is true and factual…
    Sorry if I missed anything…

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