Split premium mortgage insurance (MI) options may be good for a borrower who wants to reduce the monthly MI premium in order to qualify for a larger loan amount.

It offers ultimate flexibility because the cost of MI can be divided into a single, upfront premium payment and a lower monthly payment. The upfront portion can be paid several ways, including by a third party (e.g., seller, builder, lender) or financed into a borrower’s mortgage loan with the remainder of the premium folded into the homebuyer’s monthly mortgage.

This MI option is available as refundable or non-refundable. For homebuyers who chose refundable split premium MI, a partial refund may occur depending on the amount of time the coverage was in place. For homebuyers with non-refundable split premium MI, a partial refund is also possible if it is canceled under the Homeowners Protection Act of 1998 (HPA). Read Removing PMI to learn more.