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raditionally, saving up for
a 20% down payment has
been the largest obstacle
for aspiring homeowners and
this challenge is even more acute
when interest rates drive monthly
mortgage payments higher. Despite
higher rates cooling home sales
last year, hundreds of thousands of
first-time homebuyers leveraged
private mortgage insurance (MI) to
put as little as 3% down to access
homeownership.
According to a report released
by U.S. Mortgage Insurers (USMI),
64% of homebuyers who used
private MI last year did so to
purchase their first homes and to
begin building equity, a 6% increase
in first-time buyers’ share of the
market from 2020. Considering
a 20% down payment on the
national median home price of
approximately $425,000 is $85,000,
many aspiring homeowners without

the resources to make large cash
down payments understandably
choose private MI. After all, putting
5% down on that same home
requires saving only $21,000 in
comparison. USMI reports that 35%
of homebuyers using private MI
in 2023 had annual incomes lower
than $75,000.
“Private MI remains one of the
most helpful tools available to first-
time and low- to moderate-income
buyers in the market. Private MI
helps borrowers overcome the large
down payment barrier to affordably
and sustainably qualify for financing
and start reaping the benefits of
homeownership years earlier,” said
USMI Board Chairman and Enact
President and CEO Rohit Gupta.
In 2023, private MI helped
800,000 buyers purchase homes
using low down payment mortgages,
and 39 million homebuyers have
achieved this cornerstone of the

American dream with private
MI since it was first introduced.
If a 20% down payment were
required, it would take the average
homebuyer 27 years to save for the
down payment and closing costs,
three times longer than the time
it would take to save for the 5%
down payment that is often used
with private MI. Fortunately, you
don’t need a 20% down payment to
become a homeowner.
USMI President Seth Appleton
described the role that private MI
plays for housing affordability and
access as “opening the homebuying
experience up to working families,
including first-time buyers. People
do not need to save for 20, 30
and even 40 years to meet the
mythical — but not required —
20% down payment threshold to
be able to afford their first house;
instead, millions of homebuyers
have achieved the American dream

of homeownership and started
building their wealth and equity by
using private MI.”
Another advantage for
homebuyers, according to USMI,
is that private MI is a temporary
cost; monthly borrower-paid MI
can cancel after the homeowner
establishes sufficient equity either
through regular payments or home
price appreciation. When mortgage
insurance is canceled, the borrower’s
monthly overall payment goes
down.
There are many financing options
for homebuyers to consider. Learn
how you might be able to use
private MI to start your homebuying
process at lowdownpaymentfacts.
com, a resource launched by USMI
to offer homebuyers low down
payment mortgage information and
dispel the myth that a 20% down
payment is required to become a
homeowner.

Options to help first-time buyers
access the American dream

Low Down
Payment
Mortgages

(BPT)

WELCOME HOME

38 | NOVEMBER 28 • 2024
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