Here is a fantastic article about what some military home buyers don't realize when selecting what type of loan they'd like to use to finance their home from one of my favorite websites!
No PMI with VA Loans
No private mortgage insurance is just one of the many benefits of the VA Home Loan Program. The U.S. Department of Veterans Affairs sets guidelines so that VA-approved lenders can offer attractive loan features to qualified VA borrowers. 
...VA borrowers are not required to pay a monthly Private Mortgage Insurance (PMI) premium...
One of the unique features of VA loans is that they don't require private mortgage insurance (PMI). PMI is insurance on a conventional mortgage with more than an 80% loan-to-value (LTV) ratio. (FHA also has a mortgage insurance premium ("MIP") on most of its loans regardless of LTV.) The insurance helps cover lender losses in case a borrower defaults on the loan and the property goes into foreclosure. Because 25% of each VA loan mortgage amount is guaranteed by the federal government, VA-approved lenders consider the guaranty in lieu of PMI. Therefore, VA borrowers are not required to pay a monthly PMI premium.
Not having a monthly PMI payment can translate into big savings for the VA borrower. Typical PMI premiums on a conventional loan of $200,000 can run about $120 per month or $1,400 per year. Some borrowers end up paying PMI on non-VA loans even after their principal amounts dip below 80% LTV.
In some cases, an appraisal is necessary before PMI is canceled. Most appraisals cost between $300 and $400. Not having to pay for another appraisal is just another savings VA borrowers may experience by not having PMI associated with their loans.
People in the market for a mortgage may find that some conventional loans may be marketed as no-PMI loans. It's important to be aware that some loans advertised as "no PMI required" may be lender-paid PMI loans with higher interest rates. With some such loans, the borrower may end up paying for the PMI indirectly through higher monthly mortgage payments.
Understanding PMI is just one step in realizing the savings for VA borrowers with a no-PMI loan. In addition to no PMI, there are many advantages in using your VA home loan benefits. Other VA loan advantages include:
- No down payment
- Relaxed qualifying standards
- Competitive interest rates
- No penalties for mortgage pre-payment
- Cash-out and debt consolidation
- Streamline rate reduction
For more information about military home services check out this great resource: http://www.military.com/finance/homebuying/no-pmi-with-va-loans.html
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