What is lender-paid mortgage insurance (LPMI)?
LPMI is a conventional pricing structure where the lender 'pays' the PMI by raising the borrower's interest rate. The borrower has no monthly PMI line item, but the rate is permanently higher and LPMI cannot be canceled later — even when the loan reaches 80% LTV.
Plain-English explanation
LPMI math: instead of paying monthly PMI, the borrower accepts a rate roughly 0.25-0.5% higher for the life of the loan. The lender uses the increased rate to fund a single-premium PMI policy at closing. LPMI can win on short holds (4-7 years) where the higher rate costs less than the monthly PMI would have. It loses on long holds where regular PMI would have been canceled around year 5-7. The decision is hold-period-driven. Cannot be canceled — that's the key tradeoff.
What can change the answer?
Credit score, LTV, coverage percentage, occupancy, and PMI provider can change cost. PMI removal is governed by HPA and servicer policy.
Want the real answer for your conventional file?
Conventional guidelines are the rule. Your credit, income, DTI, PMI, LLPAs, and Florida payment math are what decide the actual answer.
More conventional questions on PMI
Educational only. Conventional loan guidelines, lender overlays, rates, fees, PMI, LLPAs, and underwriting requirements can change. Final eligibility depends on full underwriting review.