Single-Premium Mortgage Insurance: Pay Once and Save
Single-premium mortgage insurance (SPMI) is an alternative PMI payment method where you pay the entire insurance premium upfront as a lump sum at closing, rather than in monthly installments.
How Single-Premium PMI Works
At closing, you pay a one-time premium — typically 1%–2% of the loan amount. In exchange, you have no monthly PMI payment for the entire loan term (or until you refinance).
Cost Comparison: Monthly PMI vs Single Premium
Example: $250,000 loan, 10% down, credit score 720.
Monthly PMI: 0.70% = $1,750/year = $145.83/month
Single Premium: 1.50% = $3,750 upfront
Break-even: $3,750 ÷ $145.83 = 25.7 months (about 2 years)
If you stay in the home more than 2 years, the single premium saves money.
Who Should Consider Single-Premium PMI?
- Buyers who plan to stay in the home long-term
- Buyers who want to maximize cash flow (no monthly PMI)
- Buyers receiving gift funds or seller concessions that can cover the upfront cost
Who Should Avoid It?
- Buyers who plan to move or refinance within 2–3 years
- Buyers who are tight on closing costs
- Those who expect rapid home appreciation (which would let them cancel PMI quickly anyway)
Can the Seller Pay the Premium?
Yes! In some transactions, buyers negotiate for sellers to cover the single-premium PMI as part of closing cost concessions. This gives the buyer zero PMI cost at all.
Conclusion
Single-premium PMI is a strategic option for the right buyer. Calculate your break-even point and factor in your plans to determine if it’s the best choice for you.
