Blog: Private Mortgage Insurance Is Helping First-Time Homebuyers Become Homeowners

By Lindsey Johnson

A myth about homeownership that discourages many prospective homeowners is that they need a 20 percent down payment to obtain a home loan. Not true! What many borrowers do not realize is that they can qualify for a mortgage with significantly less than 20 percent down. This is particularly true when it comes to first-time homebuyers.

A recent survey from the National Association of REALTORS® found that among first-time homebuyers who obtained a mortgage, more than 70 percent made a down payment of less than 20 percent. What’s more, according to Genworth Mortgage Insurance’s August 2018 “First-Time Homebuyer Market Report,” 66 percent of all homebuyers using low down payment mortgages were first-time buyers, and 79 percent of all first-time homebuyers used some form of low down payment mortgages.

As first-time homebuyers consider taking the exciting leap into homeownership, it’s important for them to fully understand all the home loan options available in the market. Of the variety of home loans available, conventional loans with private mortgage insurance (MI) stand out as one of the most competitive and affordable paths to homeownership.

U.S. Mortgage Insurers (USMI) recently released a report highlighting how MI helps bridge the down payment gap in the United States and promotes homeownership. Importantly, the report confirmed what has long been known: MI makes it easier for creditworthy borrowers with limited down payments to access conventional mortgage credit. Specifically, the report found:

  • MI has helped nearly 30 million families nationally purchase or refinance a home over the last 60 years
  • In 2017 alone, MI helped more than one million borrowers purchase or refinance a home
  • Of the total 2017 number, 56 percent of purchase loans went to first-time homebuyers and more than 40 percent of those borrowers had annual incomes below $75,000, which further demonstrates that MI serves middle-income households
  • At the state level, Texas ranks first in terms of the number of homeowners (79,030) who were able to purchase or refinance a home with MI in 2017. This was followed by California (72,938), Florida (69,827), Illinois (47,866), and Michigan (41,810)

Data show that today many Americans are spending more of their income on rent than they are on mortgage payments. From 1985 to 2000, the share of income spent on mortgage payments was 21 percent; in Q2 2018 it was 18 percent. Conversely, from 1985 to 2000 the share of income spent on rent was slightly higher at 26 percent and has risen to 28 percent as of Q2 2018. As many individuals and families look to make the step from renting to owning their own home to create greater stability and build long-term equity, it’s essential that these individuals have prudent low down payment options – such as private MI – available for their future homeownership needs.

In addition to the wealth creation that homeownership fosters, today’s historically low mortgage interest rates are a good reason to buy a home now. Over the course of nearly 35 years, the housing market has experienced an extraordinary decline in mortgage interest rates. In 1981, the average rate for a 30-year fixed-rate mortgage stood at over 18 percent; it stood at approximately 4.72 percent at the end of September 2018. Borrowers should take advantage of these historically low mortgage interest rates because housing finance experts forecast that this interest rate decline is over, and primary mortgage rates are on the rise.

Homebuyers shouldn’t sit on the sidelines and put off buying the home of their dreams simply because they aren’t in the position to put 20 percent down. Since 1957, MI has helped millions of Americans – particularly first-time homebuyers – become successful homeowners, and it will continue to be a foundation of the housing market and a resource for borrowers in the years to come.

Statement: FHA’s Annual Report to Congress

Report Underscores the Importance of Private Mortgage Insurance for Low Down Payment Lending While Government-Backed FHA Financial Health Not Yet Out of the Woods


WASHINGTON— Lindsey Johnson, President of USMI, released the following statement on the Federal Housing Administration’s (FHA) “Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund (MMIF) Fiscal Year 2018”:

“Today, the FHA released its 2018 Annual Report to Congress on the financial status of its Mutual Mortgage Insurance Fund (MMIF). According to the report, the MMIF’s capital ratio stands at 2.76 percent, up from 2.18 percent last year and slightly above the statutory requirement of 2 percent. The FHA, which insures roughly $1.3 trillion in mortgage credit risk, is an integral piece of the housing finance system. In addition to risks in the reverse program that still exist, the report also highlights that cash-out refinances continue to grow exponentially at FHA, comprising 63 percent of all FHA refinance transactions—as well as an increase in the number of mortgages with very high debt-to-income ratios. This year’s report underscores the need to further put FHA on more stable financial footing, so it can continue to serve low- and moderate-income borrowers who need it most.

“This report is the first under the leadership of FHA Commissioner Brian Montgomery, a seasoned mortgage finance expert who previously served as FHA Commissioner under President George W. Bush during the last housing crisis – a time of unprecedented market stress. Commissioner Montgomery appreciates the importance of properly managing the FHA and returning it to its core mission and intended role in the housing market, which is to focus on borrowers who truly need its 100 percent taxpayer-backed home loans. We agree with Commissioner Montgomery’s statement in the Actuarial Report that one of FHA’s guiding principles should be appropriately managing risks on behalf of borrowers, lender participants, and the U.S. taxpayer. As of September 30, 2018, the MMIF Capital Ratio was 2.76 percent, slightly above the 2.00 percent required by Congress. While an increase from Fiscal Year 2017, this is a thin margin, and taxpayers should never be put at risk again.”

“The FHA has been and will continue to be a critical participant in the housing finance system, but its current oversized role and weak financial health remain a cause for concern. The FHA must continue to refocus on its core mission and scale back its expanded footprint that grew significantly during the great recession.

USMI also agrees with Commissioner Montgomery’s previously expressed views that private capital should play a leading role in guaranteeing low down payment mortgage credit risk to protect U.S. taxpayers and the federal government. Fortunately, there is a robust and available private market today through private mortgage insurance (MI) that is ready to help low-down payment borrowers become homeowners. Private MI  has successfully worked to ensure that creditworthy borrowers have access to safe, sustainable and affordable mortgage options for more than 60 years, and USMI will continue to work with FHA, Congress and the Administration to foster a more robust housing finance system that relies on a coordinated and consistent housing policy so private capital takes more of the credit risk in the housing markets.”


U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at