Down Payment & Assistance
What is the difference between borrower-paid and lender-paid PMI?
Updated Jul 1, 2026
The short answer
Borrower-paid PMI is added to your monthly payment and can be cancelled once you reach enough equity under the Homeowners Protection Act. Lender-paid PMI is built into a higher interest rate instead, so it is not a separate line item and generally cannot be cancelled — you would have to refinance to remove it. Each shifts when and how you pay for the same coverage.
Key points
- Borrower-paid PMI is a cancellable monthly charge.
- Lender-paid PMI is baked into a higher rate and is not cancellable.
- Both protect the lender, not you.
- The cheaper option depends on how long you keep the loan.
The long-run trade-off
Lender-paid PMI can look cheaper monthly but lasts the life of the loan through the higher rate. Borrower-paid PMI costs more now but ends once you hit 78–80% loan-to-value, which can be the better deal if you stay long enough.
Sources
Every claim above traces to a public government source.
- ViewT1Homeowners Protection Act (PMI cancellation)
U.S. Code / CFPB summary · Government / primary · 2024