A PMI quote rarely shows up on the first loan estimate. It appears a week later, usually as a monthly number that quietly adds $150 to $250 to a payment you’d already talked yourself into. That’s why searches for mortgage types with no PMI spike every spring. Buyers aren’t looking to dodge risk. They want to know whether the premium is avoidable, and what avoiding it actually costs.
Five or six loan programs genuinely skip private mortgage insurance. A few others reach the same place through workarounds that charge you in a different currency. Here’s the honest breakdown.
“No PMI” is a fee question, not a loophole
Private mortgage insurance protects the lender if you default. It gets charged whenever a conventional down payment falls under 20%, because the lender is carrying more exposure. The cost scales with your credit score and loan-to-value ratio. A borrower with a 760 score and 15% down might pay 0.3% of the loan annually. A borrower with a 680 score and 5% down can pay 1.1% or more.
Put a number on it. A 0.55% annual rate on a $400,000 loan is $2,200 a year, or about $183 a month. If it takes three years to reach 20% equity, you’ve handed over roughly $6,600 for coverage that insures the bank, not you.
On a conventional loan, PMI terminates automatically at 78% loan-to-value based on the original value, and you can usually request removal at 80%. That cancellation date is the single most important detail in the whole comparison, and it’s tucked into a row most people skim past on a mortgage loan types comparison chart.
VA loans: the cleanest no-PMI path
VA-backed loans carry zero monthly mortgage insurance, and that applies even at 100% financing. No down payment, no PMI. For eligible borrowers, nothing else in the market matches that combination.
What replaces the premium
A funding fee. First-time use with nothing down runs 2.15% of the loan amount, dropping to 1.5% with 5% down and 1.25% with 10%. On a $400,000 loan that’s $8,600, and most buyers roll it into the balance rather than paying cash. Veterans receiving VA disability compensation at 10% or higher are exempt entirely, as are surviving spouses in many cases.
Do the arithmetic anyway. $8,600 financed over 30 years at 6.5% adds roughly $54 a month. Compare that to $183 a month in PMI that eventually disappears. The funding fee is a one-time hit that’s often cheaper over the full term.
Who actually qualifies
Ninety consecutive days of active duty during wartime, 181 days during peacetime, or six years in the National Guard or Reserve. The property has to be your primary residence. The VA itself doesn’t set a minimum credit score, but lenders overlay their own, typically 580 to 620. If you’re weighing zero-down options more broadly, this breakdown of mortgage types with no down payment covers where VA sits against the alternatives.
USDA loans: no PMI, but a fee that never leaves
USDA guaranteed loans also skip monthly mortgage insurance. Instead there’s a 1% upfront guarantee fee and an annual fee of 0.35% of the outstanding balance. On a $300,000 loan, that’s $3,000 upfront and about $87 a month.
Here’s the catch nobody mentions at the closing table: the 0.35% never falls off. Not at 20% equity, not at 50%. FHA’s 0.55% annual premium behaves the same way when you put less than 10% down. USDA is cheaper than FHA on the monthly line, but it isn’t a premium that disappears, and that matters over 30 years.
Eligibility is geographic and income-based. The property generally needs to sit in an area with a population under 35,000, and household income typically can’t exceed 115% of the area median. In exchange you get 100% financing, which is rare outside government programs. Our guide to low down payment mortgages below 20% runs through the income and property tests in more detail.
Conventional loans where PMI never appears
The 20% down route
Twenty percent down on a $400,000 purchase means $80,000. No PMI, better pricing, and no cancellation conversation to track. It’s also out of reach for most first-time buyers, which is precisely why the other routes exist.
Piggyback loans (80/10/10)
You take a first mortgage for 80% of the price and a second for 10%, then put 10% down. No PMI, because the first loan sits at 80% LTV. The second mortgage usually runs one to two percentage points above the first, sometimes more for a HELOC. In 2005 this was a no-brainer. Today, with second-mortgage rates elevated, a 10% second at 8.5% can cost more per month than a 0.55% PMI policy, and the second doesn’t cancel itself. Run both scenarios before a loan officer talks you into it.
Lender-paid mortgage insurance
LPMI isn’t free insurance. The lender absorbs the premium and charges you a higher interest rate, typically 0.2% to 0.5% higher. On a $400,000 loan, a 0.3% rate bump costs about $75 a month and never goes away unless you refinance. Borrower-paid PMI at 0.55% costs $183 a month but ends at 80% LTV. Stay in the house seven years or longer and borrower-paid usually wins. Move in three and LPMI can come out ahead.
Niche programs that skip PMI entirely
Physician loans, offered by a handful of specialty lenders, give doctors 0% down with no PMI, often up to $750,000 or $1 million. You need an MD, DO, DDS, or DVM, a signed employment contract or residency placement, and solid credit. Some lenders allow 95% LTV for residents still in training.
Certain credit unions write portfolio loans with no PMI at 5% or 10% down, absorbing the risk themselves and pricing it into the rate. Membership requirements apply. State housing finance agencies sometimes pair a first mortgage with a down payment assistance second that carries no mortgage insurance. The seven types of government-backed mortgages are worth scanning if you fall into a specific eligibility bucket like rural, veteran, or Native American lending.
The real cost of each no-PMI route
- VA: $0 monthly MI, 2.15% funding fee on first use with zero down, fee exempt for disabled veterans.
- USDA: $0 monthly PMI, 1% upfront guarantee fee, 0.35% annual fee for the life of the loan.
- Conventional 20% down: no MI, no fee, but $80,000 cash on a $400,000 home.
- 80/10/10 piggyback: no MI, second mortgage at a higher rate, no automatic cancellation.
- LPMI: no monthly MI line item, rate roughly 0.2% to 0.5% higher, permanent until refinanced.
- Physician and credit union loans: no MI, tighter credit and income requirements, limited lender list.
Questions to ask before you pick one
Ask for the loan estimate with mortgage insurance spelled out in three places: the monthly premium, any upfront premium, and the termination terms. Then ask what LTV triggers removal and whether it happens automatically or requires a new appraisal. If a lender says there’s no PMI, ask whether the rate already includes lender-paid coverage, because that changes your refinance math later.
Finally, ask for a seven-year total cost comparison, not a monthly payment comparison. Government-backed loans frequently win on rate and monthly payment in year one and lose by year seven once fees and insurance accumulate. That gap is the whole argument in conventional versus government-backed mortgages, and it’s the number that should drive your decision.
How to decide in about ten minutes
Start with eligibility, not rate. If you have VA entitlement, take the VA loan and stop shopping. If the property is rural and your income fits, USDA beats FHA on the monthly premium and matches it on down payment. If you have 20% down, use it and skip the whole conversation.
For everyone in between, compare two things side by side: a conventional loan with borrower-paid PMI that cancels at 80% LTV, and the same loan with lender-paid PMI. Ask how long you expect to keep the home. Under five years, the higher-rate LPMI version often wins. Over seven, the cancellable premium usually does.
One last thing worth internalizing. A no-PMI loan isn’t automatically the cheapest loan. A VA loan at 6.25% with a funding fee can beat a conventional loan at 6.5% with no PMI, and it can also lose to a credit union portfolio product at 6.1% that charges a small premium. The cheapest mortgage is a match between your profile and a program, not a product you can rank in the abstract. Get two loan estimates, put them on one page, and add up every line for the first seven years. The right answer usually becomes obvious once the numbers sit next to each other.