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Lender-Paid vs. Borrower-Paid Mortgage Insurance

Private mortgage insurance (PMI) helps buyers get a conventional mortgage without a large down payment. PMI protects a lender against loss, and is usually required with a down payment less than 20% of the home value.

Lender-paid mortgage insurance (LPMI)

  • LPMI usually results in lower monthly payments than borrower-paid mortgage insurance, but also carries a higher interest rate.
  • Because the cost of the insurance is included in the interest rate, it remains for the life of the loan, so it can't be canceled unless the loan is refinanced or paid off.
  • Over time, you may end up paying more with LPMI.

Borrower-paid mortgage insurance (BPMI)

  • BPMI results in higher monthly payments at first, but will be canceled at a certain point.
  • Once BPMI is removed from the loan, your monthly payments will be lower than a comparable loan with LPMI.

Please talk to a home mortgage consultant for complete details so you can choose the right PMI option for you.


You can pay additional principal to get rid of BPMI even faster.
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