PMI vs LPMI vs 20% down: the break-even logic for Las Vegas buyers

Put less than 20% down on a conventional loan and you'll pay for mortgage insurance one way or another — the real question is which structure: a monthly borrower-paid premium (PMI/BPMI), a lender-paid version baked into your rate (LPMI), a one-time single premium, or skipping MI entirely with 20% down. Our PMI basics guide covers what PMI is and what it costs; this article is about the decision between the four structures — the break-even logic Las Vegas buyers should run before locking anything. All dollar figures below are illustrative examples — not a quote, offer, or commitment to lend.

What are the four ways to handle mortgage insurance?

There are four structures: monthly borrower-paid PMI, lender-paid MI (LPMI), single-premium PMI, and 20% down with no MI at all. On a conventional loan with less than 20% down, lenders require private mortgage insurance to protect the investor. But "PMI" isn't one product — it's a menu:

Each row is the same loan wearing a different cost structure. The decision comes down to two variables you control: how long you'll realistically keep this loan, and what your spare cash could otherwise do. The CFPB's explainer on lender-paid mortgage insurance is the neutral reference for how these structures differ.

Why is borrower-paid PMI the flexible default?

Because it's temporary and cancellable, unlike LPMI. The single most important fact about monthly borrower-paid PMI is that it dies. Under the federal Homeowners Protection Act, your servicer must automatically terminate BPMI when your loan balance is first scheduled to reach 78% of the home's original value (if the loan is current), and you can request cancellation in writing at 80%, subject to conditions such as a good payment history. The CFPB lays out the cancellation rules in plain English.

There's a third exit many servicers allow that buyers underuse: if your home has appreciated and a new appraisal supports 80% LTV or better against current value, you can often request early cancellation years ahead of the amortization schedule. Servicer policies vary — ask yours in writing.

What does BPMI cost? It varies with credit score, down payment, and loan type; Freddie Mac's consumer guidance puts typical monthly PMI in the range of roughly $30 to $70 per month for every $100,000 borrowed. That's a planning range, not a quote — your priced premium can land outside it.

When can LPMI win — and what's its one-way door?

LPMI tends to win with strong credit and a long expected hold, but it can never be cancelled once you take it. With lender-paid mortgage insurance, the lender covers the insurance and recovers the cost through a higher interest rate (or occasionally an upfront charge). Your monthly statement shows no separate MI line, and the all-in payment can be lower than the same loan with monthly PMI — which is exactly why it's marketed hard.

The catch is structural: LPMI never cancels. The Homeowners Protection Act's 78%/80% cancellation rights apply to borrower-paid PMI, not to LPMI. Once you're at 22% equity, a BPMI borrower's premium is gone while the LPMI borrower keeps paying the higher rate until refinance or payoff. Escaping it means a refinance — with a fresh round of closing costs, at whatever rates prevail then.

So when does LPMI genuinely win? Generally when three things line up: strong credit (the rate add shrinks as credit improves), a long expected hold (the cancellation option you're giving up is worth less if you'd carry PMI for years anyway), and no near-term refinance plan. If any of those is shaky, the flexibility of monthly BPMI usually pulls ahead.

Single-premium PMI: the middle path

Single-premium (upfront) PMI pays the entire insurance cost as one lump sum at closing. After that, your payment looks like a no-MI loan. Two things make it interesting and one thing makes it risky:

• Seller credits can cover it. In purchases where the seller is contributing to closing costs, folding the single premium into those credits can deliver LPMI-style cash flow without the permanent rate add.
• No monthly drag. Your DTI and monthly budget see the loan without an MI line.
• The risk: it's generally not refundable. Sell or refinance in the first few years and the unused insurance value is typically gone. If your hold period is uncertain, that's a real cost.

Split-premium variants (part upfront, part monthly) exist too. The principle is the same across all of them: the shorter and less certain your hold, the more you should favor structures you can exit for free.

What's the real cost of 20% down?

The real cost isn't the mortgage insurance you avoid — it's the opportunity cost of the cash tied up in equity. Twenty percent down eliminates mortgage insurance entirely and usually earns cleaner pricing. On the monthly statement it always looks like the winner. The other side of the ledger is opportunity cost: the extra cash — often tens of thousands of dollars on a Las Vegas purchase — becomes home equity you can't easily spend, invest, or hold as an emergency reserve.

Because borrower-paid PMI is temporary and cancellable, the honest comparison isn't "PMI forever vs. no PMI." It's a few years of premiums vs. what the extra down payment could have done elsewhere — reserves, paying down higher-rate debt, or staying invested. For some buyers, the bigger down payment genuinely wins: it lowers the payment, simplifies the loan, and matches their risk comfort. For others, draining reserves to dodge a temporary premium is the more expensive choice. There is no universal answer — which is why the four-way comparison is worth pricing on your real numbers, not deciding by rule of thumb. Our 2026 conventional down payment guide covers the down-payment side in depth, and the affordability guide shows how each structure lands in your monthly budget.

An illustrative Las Vegas example

To make the structures concrete, take a $600,000 Las Vegas purchase with 10% down — a $540,000 loan, comfortably under the conforming limit. Using Freddie Mac's typical PMI range of $30-$70 per month per $100,000 borrowed, the monthly-PMI version of that loan would carry an illustrative premium of roughly $160 to $380 per month until cancellation.

Notice what the table can't tell you: whether LPMI's rate add beats the monthly premium for your credit tier, or whether the extra $60,000 of down payment is worth more to you as equity or as reserves. Those two answers come from pricing your actual file — the structure of the decision is universal, the numbers are personal. Run your own scenarios in our conventional mortgage calculator, then compare against today's rates.

Where the $832,750 conforming limit fits

Everything above assumes a conforming conventional loan. FHFA's 2026 baseline conforming limit is $832,750 for a one-unit home, and Clark County uses the baseline — the official county values are published at fhfa.gov. Below that line you get the full PMI/LPMI/single-premium/20%-down menu on a Fannie Mae or Freddie Mac loan. Above it you're in jumbo territory, where private mortgage insurance generally isn't used and both pricing and underwriting follow different rules — our Las Vegas jumbo loan guide covers that side of the line, and the 2026 Nevada conforming limit guide covers the limit itself in detail.

For buyers landing near the line, the loan amount itself becomes part of the MI decision: a somewhat larger down payment that keeps the loan at or under $832,750 preserves the conforming MI menu, while crossing it changes the entire product conversation.

How to run your own break-even

You don't need a spreadsheet PhD — you need four honest inputs and one side-by-side quote:

• Hold period. How long will you realistically keep this loan — not the house, the loan? Job moves, growing families, and refinance plans all shorten it.
• Cancellation date. For monthly PMI, ask for the scheduled 78% auto-termination month and the 80% request date in writing — that's when the premium stops.
• The LPMI rate add. Get the same loan quoted with and without LPMI and compare total monthly cost over your hold period, remembering the add never expires.
• Opportunity cost. For the 20%-down scenario, decide what the extra cash would actually be doing if you didn't bury it in equity.

Then compare total cost over your hold period — not over 30 years, and not over one month. The structure with the lowest cost across the years you'll actually keep the loan is the winner, and it's different for different buyers. First home? Start with the first-time home buyer guide for Las Vegas before drilling into MI structures.

Frequently asked questions

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