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.
What this actually means.
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.
Where this can move.
Credit score, LTV, coverage percentage, occupancy, and PMI provider can change cost. PMI removal is governed by HPA and servicer policy.
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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. Mortgage Expert, Inc. is not affiliated with Fannie Mae, Freddie Mac, FHFA, or any government agency.