Private mortgage insurance (PMI) lets 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.
- 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 with LPMI.
Please talk to a home mortgage consultant for complete details so you can choose the right PMI option for you.