Compare our 4 most popular premiums plans to determine which best suits your borrower.
Borrower-Paid Mortgage Insurance (BPMI) Monthly Premiums
Borrower-paid Monthly Premiums make up the most widely accepted premium plan in the industry because of their simplicity and ease of use. Other advantages include:
- No money due at closing
- No upfront cost – Borrowers avoid the decision whether to pay premium upfront or finance it, adding to their debt
- Cancellable – Borrowers can request cancellation based on investor requirements or under the Homeowners Protection Act of 1998 (HPA); lenders must automatically cancel under HPA terms. Learn more
- Lower monthly payment upon cancellation – If MI is cancelled, the borrower’s monthly mortgage payment is reduced by the monthly premium amount
- Build equity faster – With no premium financed into the loan amount and no increase to their interest rate, borrowers are able to build equity more quickly than with other premium plans
Who should consider borrower-paid Monthly Premiums?
Borrowers who want to:
- Minimize closing costs
- Qualify for MI cancellation sooner by making extra payments that reduce the mortgage balance ahead of the original amortization schedule or home improvements that result in an increase in the appraised value
- Lock in the lowest interest rate now and a lower monthly payment without refinancing
- Refinance, but whose appraised value was lower than expected and LTV is slightly above 80%
Borrower-Paid Mortgage Insurance Single Premiums
Borrower-paid Single Premiums are available in both refundable and nonrefundable options. Advantages include:
- Lower monthly payment – The absence of a monthly MI payment often provides a lower monthly payment than Monthly or Split Premiums afford
- Flexibility – The borrowers, seller, builder or other third party can pay the premium at closing. Lenders may offer a lender credit to cover the cost of the premium. The borrowers can opt to finance the premium into the loan amount. (While base LTV is used to determine MI coverage requirements, financing the premium into the loan amount may increase the total LTV/CLTV. Check investor guidelines.)
- Cancellable – Borrowers can request cancellation based on investor requirements or under the Homeowners Protection Act of 1998 (HPA); lenders must automatically cancel under HPA terms. Learn more
- Refundable – Borrowers who select refundable single premiums may receive a refund if they cancel MI within the first 5 years of coverage. Even those who select the nonrefundable option may be eligible for a refund if they or their lender cancel MI under the HPA
Who should consider borrower-paid Single Premiums?
Borrowers who want to:
- Minimize their monthly payment, even if it means paying more at closing or increasing their debt by financing the premium into the loan amount
- Get the seller or builder to pay the premium – especially in a buyer’s market
- Qualify for MI cancellation sooner by making extra payments that reduce the mortgage balance ahead of the original amortization schedule or home improvements that result in an increase in the appraised value
Borrower-Paid Mortgage Insurance Split Premiums
Borrower-paid Split Premiums give your borrowers the option of paying part of the MI premium up front, in order to reduce the monthly MI premium paid along with their mortgage payment, similar to FHA loans. Advantages include:
- Multiple upfront options – We offer 6 different upfront options to allow you to custom-fit the right option for your borrower – unlike FHA’s upfront premium, where one size fits all
- Flexibility – The borrowers, seller, builder or other third party can pay the premium at closing. Lenders may offer a lender credit to cover the cost of the premium. The borrowers can opt to finance the premium into the loan amount. (While base LTV is used to determine MI coverage requirements, financing the premium into the loan amount may increase the total LTV/CLTV. Check investor guidelines.)
- Monthly portion is cancellable – Borrowers can request cancellation on the monthly portion of the split premium based on investor requirements or under the Homeowners Protection Act of 1998 (HPA); lenders must automatically cancel under HPA terms. Learn more
Who should consider borrower-paid Split Premiums?
Borrowers who want to:
- Reduced their monthly mortgage payment
- Get the seller or builder to pay the upfront portion – especially in a seller’s market
- Qualify for MI cancellation sooner by making extra payments that reduce the mortgage balance ahead of the original amortization schedule or home improvements that result in an increase in the appraised value
Lender-Paid Mortgage Insurance (LPMI) Single Premiums
The lender pays the LPMI Single Premium at the time of insurance activation. Lenders often either increase the interest rate or charge borrowers an origination fee to cover the cost. Coverage remains in place for the life of the loan and can’t be cancelled by the borrower. Advantages include:
- Lower monthly payment – The absence of a monthly MI payment often provides a lower monthly payment than Monthly or Split Premiums afford
- Ease of use – Because the borrower pays no upfront premium and no monthly payment, it’s easy to explain to the homebuyer
- Marketing opportunity – Many lenders market LPMI Singles as a “No MI” program or promote they’re willing to pay the MI for borrowers
Who should consider lender-paid Single Premiums?
Borrowers who want to:
- Minimize their monthly payment in the short term, even if it means forfeiting MI cancellation and the chance to reduce their monthly payment in the future
- Get the seller or builder to pay origination fees – especially in a buyer’s market
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