Whether you pay mortgage insurance on a Short Pump purchase depends on the loan type and, for conventional loans, the down payment. Conventional loans require it with less than 20% down. Every FHA loan requires it. Most USDA loans carry an equivalent guarantee fee. VA loans never carry monthly mortgage insurance, because the VA charges a one-time funding fee instead.
The second fact matters more than most buyers expect: mortgage insurance protects the lien holder, not you, and on some loans it can be cancelled while on others it stays for years. Duane Buziak explains below which type applies to your loan, what it costs on a typical $520,000 Short Pump purchase, and how to shorten or skip it. The first step is a NoTouch Credit Pull pre-approval, so you can compare loan types without a hard inquiry.
Written by Duane Buziak, NMLS #1110647 | Coast2Coast Mortgage LLC NMLS #376205
When Mortgage Insurance Is Required, Loan Type by Loan Type
A few terms first. LTV (loan-to-value) is the loan amount divided by the lesser of the purchase price or appraised value. PMI is private mortgage insurance, used on conventional loans. MIP is the mortgage insurance premium on FHA loans. The VA funding fee and the USDA guarantee fee are program charges that play the same role for those loans.
Conventional
PMI is required when the down payment is under 20%, meaning an LTV above 80%. The broker arranges it because the investor requires it, and the borrower pays it, usually as a monthly add-on to the payment. Some borrowers pay it upfront or build it into the rate instead.
FHA
MIP applies to every FHA loan, whatever the down payment. It has two parts: an upfront premium, which can be financed into the loan, and an annual premium collected monthly. As of 2026, the upfront premium has been 1.75% of the base loan amount. Annual rates depend on loan amount, term, and LTV, so confirm them in HUD Handbook 4000.1 before you budget.
USDA
USDA loans replace mortgage insurance with an upfront guarantee fee plus an annual fee. Current percentages are published on the USDA Rural Development guaranteed loan page. Eligibility is by property address and household income, and much of Short Pump may fall outside the eligible map, so check the specific address.
VA
VA loans have no monthly mortgage insurance at any down payment, including zero. A funding fee applies instead, and veterans who receive VA disability compensation, along with certain other borrowers, are exempt. The current fee table is on the VA funding fee page.
PMI, MIP, and Funding Fees Compared Side by Side
All figures in the table are as of 2026 and are general guidelines. Program rules change, and individual lender overlays vary.
| Loan type | Down payment minimum | Insurance or fee type | Cost structure | Can it be removed? | Credit minimum (typical) | Soft pull with Duane Buziak |
|---|---|---|---|---|---|---|
| Conventional | 3% to 5% for most buyers | PMI | Monthly, priced by credit score and LTV | Yes, at 80% LTV on request, automatically at 78% | About 620 on most programs | Yes, NoTouch Credit Pull |
| FHA | 3.5% with 580+ score | Upfront MIP plus annual MIP | 1.75% upfront, annual rate largely flat by loan size and LTV | Only by refinance if under 10% down (see below) | 580 for 3.5% down; 500 to 579 with 10% down | Yes, NoTouch Credit Pull |
| USDA | 0% | Upfront guarantee fee plus annual fee | Small percentages on the loan balance | Generally no, refinance to exit | Often about 640 for automated approval | Yes, NoTouch Credit Pull |
| VA | 0% | Funding fee, no monthly MI | One-time percentage, can be financed | Not applicable, no monthly MI | No VA minimum; Duane Buziak’s network goes to 500 FICO | Yes, NoTouch Credit Pull |
Conventional PMI pricing swings with your credit score and LTV. A borrower at 760 with 10% down can pay a fraction of what a borrower at 640 with 5% down pays. FHA annual MIP, by contrast, is largely flat across scores, which is why FHA can win for lower scores and lose for higher ones.
As a rule of thumb, buyers with 680+ FICO and 5% to 10% down often do better with conventional PMI, while buyers with lower scores often do better with FHA. It is a starting point, not a verdict. Rate, PMI company, and loan size can flip the result, so run both side by side before choosing.
Worked Example: Mortgage Insurance on a $520,000 Short Pump Home
Suppose you buy at $520,000, close to the Short Pump median, and assume an illustrative 6.25% rate on a 30-year fixed. These are illustrations, not quotes. PMI percentages below are assumptions for demonstration, not published rates, and your actual pricing depends on credit score and the PMI company. Payments show principal, interest, and mortgage insurance only, without taxes or homeowners insurance.
- FHA, 3.5% down ($18,200): base loan $501,800. The 1.75% upfront premium is $8,782 (rounded). Financed, the loan becomes about $510,582, and principal and interest is roughly $3,144. If annual MIP were 0.55%, that is $2,760 a year, about $230 a month. Total: roughly $3,374.
- Conventional, 5% down ($26,000): loan $494,000, principal and interest about $3,042. If PMI ran 0.5% to 1.2% a year, that is $206 to $494 a month. Total: roughly $3,248 to $3,536.
- Conventional, 10% down ($52,000): loan $468,000, principal and interest about $2,882. If PMI ran 0.3% to 0.8%, that is $117 to $312 a month. Total: roughly $2,999 to $3,194.
- VA, 0% down: if the first-use funding fee were 2.15%, it would be $11,180. Financed, the loan is about $531,180, principal and interest about $3,271, and no monthly mortgage insurance. A fee-exempt veteran skips the $11,180 entirely.
- USDA, 0% down, if the address is eligible: if the upfront fee were 1.00% ($5,200, financed) and the annual fee 0.35%, the loan is about $525,200, principal and interest about $3,234, and the annual fee about $153 a month.
Down payment assistance changes the cash you need, not the insurance math. Suppose a Dynamo DPA or Turbo DPA program supplied the $18,200 on the FHA purchase. The loan amount and MIP stay the same, but your cash to close drops. Program terms, eligibility, and repayment rules change, so verify them before relying on any DPA scenario.
How and When Mortgage Insurance Ends
On conventional loans, you can request PMI cancellation when your balance reaches 80% of the home’s original value, provided you are current and have no subordinate liens that violate lender rules. Under the Homeowners Protection Act, it terminates automatically at 78% on the original amortization schedule. The CFPB’s PMI removal page lays out the rules.
FHA works differently. As of 2026, an FHA loan with less than 10% down generally carries MIP for the life of the loan, while 10% or more down generally ends it after 11 years. Confirm the current schedule in HUD’s handbook. The usual exit for a low-down-payment FHA borrower is refinancing into a conventional loan once equity allows.
Removal through appreciation
If values rise, a new appraisal can show you have reached 80% LTV sooner than the amortization schedule says. Whether it counts depends on the servicer and the loan owner. Fannie Mae servicing guidance has generally tied appreciation-based removal to how long the loan has been in place, with stricter LTV thresholds in the early years, and servicers may add their own rules. Ask your servicer for its written process before ordering an appraisal.
Local values matter here. Census QuickFacts for Henrico County reports countywide owner-occupied home values, which run below the roughly $520,000 to $527,000 Short Pump median Duane Buziak tracks, so a buyer in the western end may gain equity faster than a countywide figure suggests.
Lender-paid mortgage insurance
With lender-paid MI, you accept a higher interest rate and pay no monthly PMI. It cannot be cancelled, because the cost is baked into the rate. It tends to make sense if you expect to sell or refinance within a few years or if borrower-paid PMI quotes are steep. It tends to be a poor fit if you plan to stay a decade, since you keep paying the higher rate after you would have reached 80% LTV.
Ways to Avoid or Reduce Mortgage Insurance
None of these is a guarantee for every buyer, but each can lower the cost.
- Put 20% down. On a $520,000 home that is $104,000. A piggyback structure, such as a first mortgage at 80% with a second lien covering part of the rest, can also avoid PMI where available. The trade-off is a second payment, often at a higher rate, plus extra underwriting.
- Raise your score before you apply. PMI pricing improves sharply at higher score tiers. Duane Buziak uses NoTouch Credit Pull for a soft credit pull mortgage pre-approval, so you can see your options without a hard inquiry while you work on your score.
- Choose VA if you are eligible. There is no monthly mortgage insurance, and Duane Buziak’s lender network reaches down to 500 FICO, though individual lender overlays vary. A VA cash-out refinance can go to 100% LTV.
- Compare lender-paid and borrower-paid quotes. Get both from several lenders in the same session, using the same rate assumptions, and compare total cost over the years you expect to keep the loan.
- Know your loan size. The 2026 FHFA conforming loan limit announcement sets a baseline of $806,500 and a high-cost ceiling of $1,249,125. A $520,000 Short Pump purchase sits well inside the baseline, so conforming pricing and PMI options apply.
Why a Broker Can Price Mortgage Insurance Better Than a Single-Lender Shop
Mortgage insurance pricing and overlays differ by lender and by MI company. Retail lenders and single-lender banks quote from one pricing grid. Duane Buziak, NMLS #1110647, works as a broker and compares more than 500 wholesale lenders, so the PMI company, the rate, and the overlays can be matched to your profile rather than the other way around.
The comparison starts with a mortgage pre approval without hard pull. NoTouch Credit Pull is a no hard inquiry mortgage pre approval, so you can see FHA, conventional, and VA scenarios side by side. It works as a no credit hit mortgage application, which matters when you are shopping across loan types and do not want repeated inquiries. Working with a soft pull mortgage broker means the comparison costs your score nothing.
FHA is Duane Buziak’s number one loan type, and by his own account he has never lost a rate war on an FHA loan. That is his stated claim, not an independent statistic. His track record includes 1,400+ five-star reviews, Scotsman Guide Top Originator 2025 and 2026, and UWM PRO ELITE 2025.
Mortgage Insurance FAQ for Short Pump and Henrico Buyers
Do I need mortgage insurance with 5% down on a Short Pump home?
Yes, on a conventional loan, PMI is required with less than 20% down. On a $520,000 home, 5% is $26,000, and the monthly cost depends mostly on your credit score.
Is mortgage insurance required on FHA loans in Henrico County?
Yes, every FHA loan carries an upfront and an annual premium, as of 2026, regardless of the down payment or the county.
Do VA loans in Virginia require mortgage insurance?
No, VA loans have no monthly mortgage insurance. A funding fee applies unless you are exempt, for example because you receive VA disability compensation.
When can I cancel PMI on a Henrico home?
You can request cancellation at 80% of the original value, and PMI ends automatically at 78% on the original schedule if you are current. Your servicer may have extra requirements.
Does USDA mortgage insurance apply in parts of Short Pump or Henrico?
USDA applies only where the property is in an eligible rural area, and much of Short Pump may not be. Eligibility is checked by address, so confirm before planning around it.
Is mortgage insurance tax deductible?
Possibly, but the deduction has depended on Congress extending it and on your income, so check current IRS rules or ask a tax professional before counting on it.
Can I get pre-approved for a mortgage without a hard pull?
Yes, Duane Buziak offers NoTouch Credit Pull, a soft pull pre-approval with no hard inquiry, so shopping does not lower your score.
Can down payment assistance cover mortgage insurance costs?
Generally it funds the down payment or closing costs rather than ongoing premiums, though terms vary by program as of 2026. An upfront premium may sometimes be financed into the loan, so ask which costs a given program can cover.
Match Your Loan Type to Your Insurance Rule Before You Shop
Mortgage insurance follows the loan type and the down payment. Conventional PMI can be cancelled, FHA MIP often cannot without a refinance, USDA charges its own fees, and VA charges none monthly. The right choice comes from running real numbers on your credit score, down payment, and plans for how long you will stay.
Call (804) 212-8663 or request a NoTouch Credit Pull pre-approval with Duane Buziak at Short Pump Mortgage by Duane Buziak, and you will see FHA, conventional, and VA side by side without a hard inquiry.
Ready to find the right mortgage solution for your Short Pump area home? Connect with our local mortgage experts today for personalized guidance and access to multiple lenders who compete for your best rate.