"My grandpa doesn't have hair."
I believe when saying "my [family member]" you don't have to use the possesive 的。 In fact I think you usually leave it out.
Both are ok, the 的 can be dropped if it is understood by the context that it is a possessive. Report if it doesn't accept 我的
Since there are somewhat "close relationship" between 我 and 爷爷, people usually don't use "的" between them. Likewise, they just say 我妈妈. If you use 的, it becomes highlighting, like "MY" grandpa.
When talking about relatives, its not necessary to use the possesive 的. You can, but its adding an extra particle that you dont really need. For example, could say 我的妹妹 but its really easier to say 我妹妹
When you talk about your family, it doesn't need "de". For example, Wo de mama and wo mama, they are the same
Because they are very close (emotionally) to the speaker. Dropping the "de" like that is usually reserved for family relationships.