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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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