Does the lender need a paid receipt for homeowners insurance before closing?
By the Slatehound team · Last updated
No on a conventional first mortgage. Fannie Mae Selling Guide B7-3-07 (08/05/2026) wants evidence of a valid policy. Evidence of premium payments is a second-mortgage servicing requirement. An invoice or paid receipt is shop overlay for the Closing Disclosure.
This is for the processor or processing manager at an independent mortgage bank on Encompass whose HOI row is still open prior to docs because the condition list says paid receipt or proof of premium. The counterparty is the insurance agency. Pull the conditions list, the binder or declarations page in the eFolder, the Closing Disclosure prepaid line, the loan number, and the lender’s legal name.
Fannie wants a valid policy on a first mortgage, not a paid receipt
The underwriter clears HOI from evidence of a valid policy. Fannie Mae Selling Guide B7-3-07 (08/05/2026) says verify a valid insurance policy. A certificate is acceptable if it has the information the lender needs and is signed by the insurer. If the lender cannot tell whether the policy meets the Guide, the loan is not eligible for Fannie Mae purchase. That section does not name a paid receipt on a first mortgage. What a mortgage lender needs from the homeowners insurance agent before closing is the rest of the packet.
| Document | What it proves | Clears HOI on a Fannie 1-4 first mortgage? |
|---|---|---|
| Binder, declarations page, or insurer-signed certificate | Coverage is in force | Yes, if the mortgagee clause, dwelling, deductible, and dates are on it |
| Invoice | Amount due | No. Overlay so the CD can collect the premium |
| Paid receipt | Premium already paid | No. Overlay so the CD does not collect it twice |
| Quote or proposal | Nothing bound | No |
A declarations page is not the same as a binder. Take either if the fields are filled. Do not bounce a complete dec page only because the condition still says paid receipt.
Evidence of premium payments is a second-mortgage servicing file
B7-3-07 draws a line the condition list often erases. For a first mortgage, retain acceptable evidence of insurance. For a second mortgage, the servicer must retain a copy of the insurance policy, any endorsements to it, and evidence of premium payments.
That second-mortgage row is a servicing file after the subordinate lien exists, not the origination packet on a conventional first-lien purchase. Do not copy it onto every HOI condition.
B7-3-07 also lets the lender keep an electronic data file in lieu of a hard-copy policy if the file can confirm coverage, deductibles, that premiums have been paid, and loss drafts. Hard copies and proof of premium payments are due if Fannie Mae requests them. That is a delivery backup, not a prior-to-docs receipt on every purchase.
Fannie Mae B7-3-08 (12/14/2022) tells the insurer to send bills to the servicer. The bill is how the servicer pays the next term from escrow, not the document that clears HOI today.
The invoice is for the Closing Disclosure
The first-year premium usually hits cash to close. 12 CFR 1026.37(g)(2) (read 2026-10-12) puts homeowner’s insurance premiums on the Loan Estimate Prepaids line, with the months and the dollar amount paid at consummation. The Closing Disclosure itemizes the same prepaid under 12 CFR 1026.38(g)(2). Property insurance premiums have no TRID tolerance under 12 CFR 1026.19(e)(3)(iii)(B), so the amount can change from the Loan Estimate if the estimate was made in good faith.
That is why the desk asks the agency for an invoice. Disclosure needs the current premium. Underwriting needs the policy. On r/FirstTimeHomeBuyer in October 2025, desks treated the first-year premium as a closing-table line, with title paying the carrier from closing funds.
Fannie Mae B2-1.5-04 (04/01/2020) generally wants an escrow account on a first mortgage to pay property-insurance premiums as they come due. That is monthly escrow after closing, plus the prepaid at consummation. It is not a paid-receipt condition.
VA is the same split with a fee-file overlay. VA Lender’s Handbook, Chapter 9, Topic 11 (change date 07/30/2019, read 2026-10-12) wants hazard insurance obtained prior to closing. VA Circular 26-24-19 (09/13/2024, read 2026-10-12) tells lenders to support prepaid hazard insurance the veteran pays with an invoice or other document that identifies the transaction. Keep that invoice in the loan file. It supports the charge. It does not replace the binder.
A paid receipt is the document when the premium is already paid
Take a paid receipt when the premium has already left the borrower’s account, a no-escrow overlay wants proof the policy will not cancel for non-pay, or the binder says coverage is contingent on payment.
On r/FirstTimeHomeBuyer in June 2022, a file asked for the policy and a paid receipt for the first year’s premium. An MLO said pay at closing or at clear to close. Another desk, with no insurance escrow, wanted proof. The workable purchase path was still the binder, with title paying the carrier at closing.
On r/FirstTimeHomeBuyer in January 2021, an agent said that when a mortgage company asks for a “receipt,” it often means the evidence of insurance form, which already prints the annual premium and whether it is paid. Read the header. If the binder or declarations page already shows the premium paid, do not hold the lock for a second PDF with the word receipt on it.
Washington WAC 284-30-560 (read 2026-10-12) tells producers a written binder must acknowledge receipt of any premium money received. That acknowledgment lives on the binder. Other states differ. Check counsel. This is not legal advice.
Some shops bounce a binder that says coverage is contingent on premium payment. Ask the agency for a bound document, or for a paid receipt plus a binder that is not contingent. That bounce is overlay. What an insurance binder should include for a mortgage is the field list.
If the policy renews inside the shop’s remaining-term window, chase the next-term invoice, not a receipt for the expiring term. What the lender needs when homeowners insurance renews within 60 days of closing is that packet.
A flood paid receipt is a different job. Freddie Mac Guide 4703.3 (read 2026-10-12) names a premium check or agent’s paid receipt only as interim NFIP evidence during a lapse in the program’s authority. Do not copy that flood row onto the HOI condition.
Fannie, Freddie, FHA, VA, and USDA do not ask for the same proof
| Agency | HOI evidence at origination | Paid receipt or invoice |
|---|---|---|
| Fannie Mae first mortgage | Valid policy or insurer-signed certificate (B7-3-07, 08/05/2026) | Not a Guide document. Overlay for the CD |
| Fannie Mae second mortgage | Policy copy, endorsements, and evidence of premium payments (B7-3-07) | Yes, in the servicing file |
| Freddie Mac | Original policy, copy, or certificate, evidence, or declarations meeting 8202.4 (read 2026-10-12) | Not named. Seller obtains evidence under 4703.1 (09/16/2026) |
| FHA | Evidence of Hazard Insurance in the case binder (HUD Handbook 4000.1, read 2026-10-12) | Not named as the evidence document |
| VA | Hazard insurance obtained prior to closing (Lender’s Handbook, Chapter 9, Topic 11). VA does not require escrow | Invoice supports the prepaid charge (Circular 26-24-19). Overlay, not the coverage document |
| USDA | Hazard policy in force at closing (HB-1-3555 Chapter 16.12(C), read 2026-10-12) | Not named |
What to take and what to bounce
| What landed in the eFolder | Take it? | Why |
|---|---|---|
| Bound binder or issued dec, this lender as mortgagee, dates on or before closing | Yes | B7-3-07 evidence of a valid policy |
| Invoice matching the CD prepaid line, title to pay at closing | Yes, for disclosure | Overlay. Does not replace the binder |
| Paid receipt, premium already paid outside closing | Yes, so the CD does not collect twice | Overlay. Match the prepaid line to paid-outside-closing |
| Binder that already acknowledges premium received | Yes, if the shop will take it as the receipt | WAC 284-30-560 shape. Confirm overlay |
| Quote, proposal, or unpaid invoice with no bound coverage | No | Not a policy |
| Paid receipt with no binder or dec behind it | No | Payment is not coverage |
| Prior-term receipt on a policy that renews inside the shop’s window | No | Chase the next-term invoice |
| Flood premium check labeled as HOI | No | Freddie 4703.3 is a flood-lapse document |
Open the conditions list next to the binder or declarations page and the Closing Disclosure prepaid line. If the CD will collect the first-year premium, email the agency for the invoice and keep the bound evidence in the eFolder. If the premium is already paid, email the agency for the paid receipt so the CD does not collect it again. Log the sent date that afternoon.
Frequently asked questions
Is an invoice the same as a paid receipt for homeowners insurance?
No. An invoice is the amount due, so the Closing Disclosure can collect the first-year premium at closing. A paid receipt is proof the premium already left the borrower's account. Take the invoice when title will cut the check. Take the paid receipt when the premium is paid outside closing, so the CD does not collect it twice.
Can the underwriter clear HOI without a paid receipt on a conventional purchase?
Yes on a Fannie Mae first mortgage, if the binder, declarations page, or insurer-signed certificate shows a valid policy, a standard mortgagee clause, replacement-cost settlement except roofs, and an effective date on or before closing. Selling Guide B7-3-07 (08/05/2026) wants that evidence. A shop overlay can still ask for the invoice so the CD can be drawn.
What if the binder says coverage is contingent on premium payment?
Some shops bounce that language and ask the agency to remove it, or to send a paid receipt and a clean binder. That bounce is overlay, not a Fannie first-mortgage rule. Washington WAC 284-30-560, read 2026-10-12, tells producers to acknowledge any premium money received on the binder itself. Other states differ. Check counsel.
Does Fannie Mae require evidence of premium payments on a second mortgage?
Yes for the servicer. B7-3-07 (08/05/2026) says the servicer of a second mortgage must retain a copy of the insurance policy, any endorsements, and evidence of premium payments. That is a servicing file, not the first-mortgage origination packet. Do not copy that row onto a conventional first-lien purchase.
Should the Closing Disclosure collect the premium if the borrower already paid?
No. If a paid receipt is already in the eFolder, mark the first-year premium paid outside closing and do not collect it again on the CD. On r/FirstTimeHomeBuyer in January 2021, a paid receipt at closing led the carrier to skip the escrow check, then deny it had been paid. Match the CD to the receipt.