MIP and DFI: mandatory mortgage insurance in Brazil

What the law says

Article 79 says SFH financial agents may grant housing loans only with insurance covering at least the risks of the borrower’s death and permanent disability and of physical damage to the property. Paragraph 1 adds, respecting the borrower’s free choice, that the agent must:

1. make available, as policyholder and beneficiary, a minimum number of policies issued by different insurers that meet this requirement; and
2. accept individual policies presented by loan applicants, provided the coverage meets the minimum and the insurer meets the conditions set by the CNSP, the national council for private insurance.

Paragraph 3 allows the lender to waive the insurance in operations using money from two public housing funds when the risks are covered by those funds.

An older provision, article 2 of Medida Provisória 2.197-43/2001, was repealed in 2011 (by the provisional measure converted into Lei 12.424), so sources that cite it are out of date.

How the central bank frames it

Resolução CMN 3.811 of 2009 puts the rule into practice. It states that SFH institutions grant loans only with MIP and DFI cover (article 1) and must sign at least two collective policies with different insurers, with at least one insurer not controlled by, affiliated with or belonging to the same financial group as the lender (article 2). Where the applicant presents an individual policy, the lender must accept it if it meets the conditions; the 2009 text caps the fee for analysing such a policy at R$ 100, and article 14 of Resolução 4.676 lists that analysis fee among the fees allowed in SFH loans. The borrower can also change policy during the loan (article 6), provided the new policy covers the remaining term, the premium does not impair the ability to pay the other instalments, it carries the required cover, and the lender stays the direct beneficiary.

Resolução 4.676 also lists the borrower’s duty to take out the insurance required by law and regulation, “quando houver”, among the general conditions (article 5). For a loan secured by a home but not used to buy it (home equity), the same resolution makes MIP and DFI optional at the lender’s choice, not mandatory.

How coverage is set

SUSEP, the insurance regulator, states on its official page that housing insurance is mandatory. It refers to CNSP Resolution 447 of 10 October 2022 and says the maximum coverage for the MIP risk each month is the outstanding balance, and the DFI coverage is the initial appraisal value of the property, duly updated. Payotte could not open the text of that resolution, so these two statements rest on the SUSEP page.

The texts read do not list what the policies exclude or how a claim is paid, so read the policy conditions for both before you sign.

Foreign borrowers

Payotte found no text that treats a non-resident borrower differently for MIP and DFI. Lenders decide whether an applicant living abroad is acceptable to the insurer, and the rules read do not say how age or health are assessed for MIP. Ask in writing before relying on an offer.

Which professional to consult

A mortgage lender explains the lender’s policies and the individual-policy route (mortgage lender). A lawyer registered with the OAB can read the policy and the loan contract together (property lawyer). The insurer or broker is licensed by SUSEP, which you check yourself on its register.