When borrowers learn they’ll need to pay mortgage insurance, their minds almost immediately go to monthly MI. What many don’t realize is that there are multiple ways to structure this cost, and in some cases, alternative options can provide meaningful short- and long-term savings.
In this article, David Showalter, Sales Account Manager at Enact, will explore one of those alternatives: borrower-paid single premium mortgage insurance (BPMI), often referred to as “upfront” MI. If borrowers are only presented with monthly MI, they may never realize there are alternative structures that could reduce their costs and improve affordability.
What is borrower-paid single premium mortgage insurance (BPMI)?
BPMI involves a one-time, lump sum premium that can be paid at closing. In some cases, depending on loan-to-value (LTV) and investor guidelines, it may also be financed into the loan. Additionally, the cost can be covered through seller or builder concessions, or a combination of borrower and concession funds.
Using BPMI to help expand the MI conversation
As mortgage professionals, your role goes beyond structuring loans. It’s about guiding borrowers through informed decisions that can impact their financial future. If borrowers aren’t presented with all available MI options, they may miss meaningful savings, and you may miss an opportunity to demonstrate advisory value.
Monthly MI may be the most familiar option, but it may not be the most optimal choice for every borrower’s unique experience. So, what are the key benefits of choosing a BPMI single premium over monthly MI?
Top reasons Single MI can be introduced as a strategic borrower option
Single MI gives you a practical way to improve borrower outcomes while strengthening your consultative role and enhancing your strategy.
Key Borrower Benefits:
Lower Monthly Payment
By paying MI upfront, borrowers eliminate the need for a monthly MI payment altogether. This results in a lower overall mortgage payment from day one. Depending on factors such as loan size, FICO score, debt-to-income ratio, and other loan characteristics, this could reduce the monthly payment by $50, $75, or even $100 or more.
Long-Term Savings
One of the most compelling advantages of a single premium is the potential for significant long-term savings. While every loan is unique, borrowers with strong credit profiles often benefit the most.
Consider a simplified example: at a 6% interest rate, it could take close to 10 years, or longer, for a borrower to reach the 78% loan-to-value threshold where monthly MI automatically cancels. If monthly MI costs $75, that totals $9,000 over 120 months. By comparison, a single premium on that same loan might be closer to $4,000.
While actual figures will vary, the takeaway is clear: for borrowers who expect to remain in their home, or keep their mortgage for an extended period, a single premium can offer substantial cost savings.
Key Lender Benefits:
A More Effective Sales Approach
Presenting BPMI as an option positions you as a more knowledgeable and consultative advisor. Not only are you offering a solution that could save borrowers thousands, but you’re also differentiating yourself in a competitive market.
According to USMI data, BPMI singles accounted for approximately 9.3% of the MI market in 2020, declining to 4.1% by 2025*. While economic factors, particularly rising interest rates, played a role in this shift, the decline also means many borrowers have never been introduced to this option.
That creates an opportunity. Lenders who consistently present BPMI as part of a broader strategy can have more comprehensive, trust-building conversations. And better conversations tend to lead to stronger client relationships, and higher closing rates.
*Figures calculated using publicly available information from USMI.
Qualified Mortgage (QM) Considerations
When structuring BPMI singles, it’s important to remember that the upfront premium is included in the Qualified Mortgage (QM) 3% points-and-fees cap.
In practice, this is manageable. Most loan origination systems (LOS) include compliance tools that will flag any issues. As a general rule of thumb, higher LTV loans require stronger credit profiles to make the numbers work. If LTV and FICO don’t align, the MI factor may consume too much of the QM threshold.
When in doubt, consult your Enact MI representative or run the scenario through your LOS compliance system to confirm eligibility.
Single MI in today's mortgage environment
For lenders and mortgage professionals, consistently presenting this option can:
Enhance borrower education and transparency
- Strengthen consultative selling approaches
- Differentiate your offerings in a competitive market
- Build trust through more comprehensive financial guidance
More effective conversations drive better results for both borrowers and your business.
The Enact advantage: empowering better MI decisions
At Enact, we believe MI should be a strategic tool, not a default assumption. Single MI may not be the right solution for every borrower, but not presenting it means they may never know it was an option. By integrating Single MI into your standard conversation, you provide borrowers with clarity, choice, and confidence in their financing decisions.
We also offer a suite of tools: including Rate Express®, Underwriting Resources, and other training resources to further help you along the mortgage origination journey. Plus, you can always reach out to your Enact Sales Representative if you need an extra helping hand.
Source: David Showalter is an Account Manager at Enact Mortgage Insurance who works closely with lenders and loan officer to support effective MI strategies and borrower education.
The statements in this article are solely the opinions of David Showalter and do not necessarily reflect the views of Enact or its management. Opinions expressed are for educational purposes only. Always review current, applicable agency guidelines and consult your compliance and legal advisors when exploring MI options.
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