Conventional PMI for which the borrower pays a separately identified premium, often monthly but sometimes through another premium plan.
Borrower-paid mortgage insurance, or BPMI, is private mortgage insurance for which the borrower pays a separately identified premium. The premium is often monthly, but borrower-paid PMI can also use upfront, annual, or split-payment plans.
BPMI tells the borrower who is directly charged for the policy; it does not by itself describe when the premium is paid. That distinction matters because a monthly plan affects recurring payment, while an upfront plan affects cash to close or the amount financed.
BPMI also matters after closing. Covered borrower-paid PMI may qualify for borrower-requested cancellation or automatic termination. By contrast, a borrower with lender-paid mortgage insurance usually has no separate monthly PMI charge that can simply be removed from the payment.
Borrowers encounter BPMI while comparing conventional loan quotes with smaller down payments. The Loan Estimate may show the cost in Projected Payments, in closing costs, or in both places, depending on the premium plan.
After closing, a recurring BPMI charge appears on the mortgage statement. The borrower can use the original value, scheduled balance, payment history, and servicer guidance to understand possible PMI Cancellation.
| Premium plan | Typical borrower impact |
|---|---|
| Monthly Mortgage Insurance | No large initial premium; recurring payment is higher |
| Annual plan | Initial annual premium and later renewal premiums, often funded through escrow |
| Single-Premium Mortgage Insurance | Lump-sum cost at closing, sometimes financed or offset through the transaction structure |
| Split-Premium Mortgage Insurance | Smaller upfront premium plus a lower recurring premium |
The lowest monthly payment is not automatically the lowest-cost plan. Expected holding period, cash available at closing, loan balance, interest on any financed amount, and possible cancellation timing all affect the comparison.
A borrower receives two conventional quotes for the same loan amount:
| Option | Upfront MI | Monthly MI |
|---|---|---|
| Monthly BPMI | $0 | $92 |
| Split-premium BPMI | $1,800 | $43 |
If the borrower expects to refinance or sell soon, the upfront amount may be difficult to recover through the $49 monthly savings. If the borrower keeps the loan longer, the tradeoff may look different. The example is illustrative; actual premiums and refund terms depend on the quote and policy.
BPMI differs from Private Mortgage Insurance (PMI) because PMI names the insurance category, while BPMI specifies that the borrower pays a separately charged premium.
It differs from Monthly Mortgage Insurance because BPMI identifies who pays, while monthly mortgage insurance identifies when a premium is collected.
It differs from Lender-Paid Mortgage Insurance (LPMI) because LPMI is paid to the insurer by the lender and usually recovered from the borrower through interest rate or pricing.