- VA lenders require homeowners insurance before closing, and requirements are set by individual lenders, not the VA.
- Your first year's premium is due at or before closing and can be covered by the seller as part of the 4% concession cap.
- VA loans have no mortgage insurance requirement, but premiums for homeowners insurance can fluctuate year to year and may affect your monthly payment.
Wondering about VA loan homeowners insurance requirements?
At a minimum, VA lenders require sufficient insurance coverage to be in place before closing, but what counts as "sufficient" depends on the location, the home itself and the lender's specific guidelines.
Borrowers may hear this type of Veteran home insurance referred to as “hazard insurance.”
Hazard Insurance vs. Homeowners Insurance
Hazard insurance is a part of homeowners insurance that refers to severe structural damage to the home caused by natural disasters. Homeowners insurance, as a whole, provides financial protection against theft and damage to your home. These terms are often used interchangeably.
What Does Homeowners Insurance Cover?
Most homeowners insurance policies provide:
- Dwelling coverage for damage to the home: This covers damage or loss to the physical structure of your home, such as the walls, roof, foundation and built-in appliances. It also covers perils like fire, windstorms, hail, lightning and vandalism.
- Coverage for separate structures on the property: This extends coverage to structures on your property that are not part of your main dwelling, such as detached garages, sheds or fences.
- Personal property coverage: This covers your personal belongings, including furniture, clothing, electronics and other items. Some policies also provide "off-premises" coverage for lost or stolen items outside your home.
- Liability coverage: Liability coverage protects you financially if you're found responsible for injuring someone or damaging their property, either on your property or elsewhere. It can also cover legal expenses in case of a lawsuit.
That's by no means an exhaustive list. But notice that a standard homeowners insurance policy does not typically cover major damage sources like floods and earthquakes. These types of natural disasters will usually require additional insurance.
VA buyers interested in purchasing a home in areas at high risk for flooding must obtain a separate flood insurance policy before closing on their loan. Earthquake insurance is not required for a mortgage, but may be recommended depending on your location.
How is Homeowners Insurance Paid?
Borrowers must pay their first year's insurance premium at or before closing. Often, this upfront payment is included in the projected closing costs you'll see from your lender. If that’s the case, the title company will pay the insurance company directly on your behalf, and you generally won't need to write a check or pay the insurer yourself. After the first year's payment, homeowners insurance is typically paid each month as part of the regular mortgage payment. As a service to homeowners, the lender or servicer will escrow these portions and pay the annual bill for you.
Homeowners insurance is a permissible cost that sellers can cover as part of your VA loan closing costs and concessions. Just keep in mind that it will count against the 4% seller concession cap.
Homeowners Insurance Costs May Fluctuate
Homeowners insurance premiums can increase or decrease yearly, even if you don't file a claim. Homeowners often see premium increases due to things outside of their control, such as inflation, natural disasters, aging homes and more.
Keep an eye on this cost every year, as a premium increase will likely impact your monthly mortgage payment. In 2025, the average monthly premium for homeowners insurance was estimated at just over $268, according to Federal Reserve Bank of St. Louis data.
Premium fluctuations are worth monitoring, but one positive is that VA loan buyers have one less cost to worry about. Unlike most other loan types, VA loans don't require mortgage insurance.
Homeowners Insurance vs. Mortgage Insurance
Homeowners insurance and mortgage insurance are two separate costs that serve entirely different purposes, and only one of them applies to VA loans.
Homeowners insurance is intended to protect homeowners against property damage and potential liabilities, while mortgage insurance lowers the risk for mortgage lenders if a borrower defaults.
While other mortgage loan types require borrowers to pay mortgage insurance if they make a down payment of less than 20%, a benefit of VA loans is that they do not require private mortgage insurance (PMI) or any other type of mortgage insurance.
Homeowners Insurance vs. Home Warranty
Homeowners insurance and home warranties are often confused, but they serve distinct purposes. Homeowners insurance protects against sudden damage and liability. A home warranty covers normal wear and tear on home systems and appliances.
Let's see how they compare, side by side:
| Homeowners Insurance | Home Warranty |
| Protects against property damage and liability | Covers repair or replacement of home systems and appliances due to normal wear and tear |
| Required by most lenders | Coverage is optional |
| Sudden and accidental events (fire, theft, storms, liability) | Normal wear and tear, mechanical failures and breakdowns of covered items |
| Claims require deductibles | Claims come with service fees |
| Higher premiums based on home value, location and coverage limits | Annual premiums or service fees, plus a service fee or deductible for each repair request |
The biggest takeaway is that for VA loans, homeowners insurance is a closing requirement for most individual lenders, not the VA itself. A home warranty is simply an optional layer of protection you can add after move-in.
Veterans United Homeowners Insurance Requirements & Guidelines
At Veterans United, we require proof of 12 months (minimum) worth of coverage. The effective date of the homeowners insurance policy must begin before the loan's funding date.
The policy's coverage should be based on the cost to rebuild the home in today's real estate and building environment, known as replacement cost, rather than its market value.
Proof of Insurance
Before closing, we will need a full 12-month "binder" or a declaration page as proof of insurance. An insurance binder is temporary proof of your insurance policy. A declaration page includes coverage limits, deductibles, premiums and policy endorsements, and it serves as an ongoing reference for policyholders during the term of the policy.
Whichever document you provide must outline your coverage and list our company as a payee (along with the borrower) in the event the home is damaged or destroyed.
The insurance binder can't include any language indicating that your coverage is contingent on the payment of your premium. If this kind of wording appears, borrowers will need to ask the company to remove it, pay their premium upfront and seek reimbursement at closing or get a new binder from another company.
In addition, the binder must list the deductible, which can't exceed 5 percent of the dwelling coverage.
Wind and Hail Coverage
Veterans United requires wind and hail coverage to be included in the homeowners insurance policy. That's worth keeping in mind when shopping for coverage. Wind and hail are among the most common homeowners insurance claims, and insurers may factor in the age and condition of your roof and siding when setting your premium.
Working With Your Lender on Insurance Requirements
Every VA loan purchase is a little different, and insurance requirements can vary based on your location, the home and your specific lender's guidelines. Working with a Veterans United VA Loan Expert ensures you have the right coverage in place well before closing day.
How We Maintain Content Accuracy
Our mortgage experts continuously track industry trends, regulatory changes, and market conditions to keep our information accurate and relevant. We update our articles whenever new insights or updates become available to help you make informed homebuying and selling decisions.
Current Version
Oct 1, 2026
Written ByChris Birk
Reviewed ByDon Wilson
Added updated statistics on average monthly premium costs for homeowners insurance. Article reviewed and fact checked by underwriter Don Wilson.
Veterans United often cites authoritative third-party sources to provide context, verify claims, and ensure accuracy in our content. Our commitment to delivering clear, factual, and unbiased information guides every piece we publish. Learn more about our editorial standards and how we work to serve Veterans and military families with trust and transparency.
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