Home Insurance Comparator (MIP and DFI)

Estimate the cost of mandatory MIP (Death and Permanent Disability) and DFI (Physical Damage to Property) insurance embedded in your mortgage payment. See how the borrower's age directly impacts the amount of MIP and project the total cost of insurance over the entire loan term.

Quick Profiles:
Young (28 years) Middle-Aged (45 years) Senior (60 years)
Fill in the data and click on Calculate Insurance to see the projection.
Current Monthly MIP Cost
$ 0.00
Monthly DFI Cost (fixed)
$ 0.00
Total Monthly Insurance (MIP + DFI)
$ 0.00
Total Insurance Cost over the Loan Term
$ 0.00
Insurance as a Percentage of Current Payment
0.00%
Total Payment with Insurance (1st installment)
$ 0.00

Evolution of Insurance Costs per Year

Composition of Total Payment

Annual Evolution of Home Insurance

Year Age Outstanding Balance MIP Rate Monthly MIP Monthly DFI Total Monthly Insurance Accumulated Insurance per Year

What are MIP and DFI Insurance in Mortgage Financing?

In the US, every mortgage financing granted by financial institutions requires the contracting of two mandatory insurance policies: MIP and DFI. They are charged monthly along with the payment and represent a significant portion of the total cost of financing.

MIP - Death and Permanent Disability

MIP insurance guarantees the full or partial payment of the outstanding balance in the event of the borrower's death or permanent disability. In the event of a claim, the insurer pays the bank the remaining amount of the debt, releasing the property in favor of the heirs or the disabled borrower.

The main characteristic of MIP is that its rate varies according to the borrower's age: the older the borrower, the higher the actuarial risk and, therefore, the higher the rate charged. Additionally, since it is based on the outstanding balance, its cost decreases as the balance is amortized, but the percentage rate increases with the borrower's aging.

DFI - Physical Damage to Property

DFI insurance covers physical damage to the financed property caused by events such as fires, explosions, landslides, floods, roof damage, and collapse. In the event of a claim, the insurer indemnifies the bank for the amount necessary to rebuild or repair the property given as collateral.

Unlike MIP, the DFI rate is fixed throughout the contract and is based on the property's appraisal value (not the outstanding balance). This means that the monthly cost of DFI remains constant throughout the loan term, regardless of the borrower's age or the remaining outstanding balance.

Impact on the Total Cost of Financing

Many homebuyers underestimate the impact of home insurance on the total cost of financing. In long-term financings (20 to 35 years), the accumulated cost of MIP and DFI can represent 5% to 15% of the total amount paid, depending on the borrower's age. For older borrowers (over 55 years), MIP can become the most expensive installment of the payment, even surpassing interest in proportional terms.

Free Choice of Insurer

Since 2009, the borrower has the right to choose the insurer for MIP and DFI, and is not required to accept the insurer indicated by the financing bank. This possibility, guaranteed by the CNSP Resolution No. 205/2009, allows for more competitive offers in the market and potentially reduces the cost of insurance.

Frequently Asked Questions

No. MIP and DFI insurance are mandatory by law in all mortgage financings in the US, as established by the relevant regulations. They cannot be canceled while the financing is active. The only way to eliminate these costs is to fully pay off the financing.

MIP is a life insurance policy linked to the financing. Life insurance policies are priced based on actuarial tables, which reflect the statistical probability of death or disability by age group. As the risk of a claim increases with age, the MIP rate accompanies this increase. Therefore, borrowers who contract financings at a younger age pay significantly lower rates throughout most of the contract.

Yes. The CNSP Resolution No. 205/2009 guarantees the borrower the right to contract home insurance with any insurer authorized by the SUSEP, as long as the minimum coverage required by the financing bank is met. This practice, known as "free choice of insurer," can generate savings of 20% to 50% compared to the insurance offered directly by the bank, which often has embedded margins.

No. DFI is based on the property's appraisal value, and its rate is fixed throughout the contract. Therefore, the monthly cost of DFI remains constant from the first to the last month of the financing, regardless of the amortization of the outstanding balance or the borrower's aging.

When there are two borrowers (e.g., a couple), MIP is calculated proportionally to each borrower's participation in the combined income. The applied rate considers each borrower's age proportionally. In the event of a claim, MIP pays off only the proportional share of the deceased borrower's participation in the income, leaving the remaining borrower to pay the remaining balance of the financing.