Press Release: New Report Shows Home Loans Backed by Private Mortgage Insurance Increased 53 Percent in 2020, Allowing More Borrowers to Access Homeownership Three Times Sooner

Texas, California, Florida, Illinois, and Michigan among top states for mortgage financing with private MI

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released its annual report on mortgage financing supported by private MI at the national and state levels. The report finds that home loans backed by private MI increased 53 percent in 2020, a record-setting year for the nearly 65-year-old industry, with more than 2 million borrowers securing mortgage financing. Meanwhile, the report finds that saving for a 20 percent down payment could take potential homebuyers 21 years — three times the length of time it could take to save a 5 percent down payment. Texas, California, Florida, Illinois, and Michigan were the top five states for mortgage financing with private MI.

“Access to low down payment loans was more important than ever this past year as many homebuyers weighed other economic concerns during the pandemic. Mortgage insurance levels the playing field and provides lower- and middle-income households with access to mortgage credit, and the more than 2 million borrowers served this past year reached a new milestone for our industry,” said Lindsey Johnson, President of USMI.

Private MI has enabled over 35 million people access to affordable, low down payment mortgages, serving as a bridge for homebuyers to qualify for home financing despite putting less than 20 percent down. The latest USMI report examines the number of borrowers served, the percentage of borrowers who were first-time homebuyers, average loan amounts, and average FICO credit scores. USMI also calculates the number of years to save 20 percent versus 5 percent down payments for each state plus the District of Columbia.

Key findings from the report include:

  • It could take 21 years on average for a household earning the national median income of $68,703 to save for a 20 percent down payment (plus closing costs), for a $299,900 single-family home, the national median sales price.
  • The wait time decreases to seven years with a 5 percent down payment insured mortgage — a nearly 67 percent shorter wait time at the national level.
  • In 2020, the number of homeowners who qualified for a mortgage because of private MI reached over 2 million.
  • Nearly 60 percent of purchase mortgages went to first-time homebuyers, and more than 40 percent had annual incomes below $75,000. The average loan amount purchased or refinanced with private MI was $289,482.
  • The private MI industry supported $600 billion in mortgage originations in 2020. Approximately 65 percent was for new purchases while 35 percent was for refinanced loans, resulting in approximately $1.3 trillion in outstanding mortgages with active private MI coverage at year’s end.

The below table shows the top five states in which private MI was used by borrowers to purchase or refinance homes in 2020.

State Number of Borrowers Helped with Private MI First-Time Homebuyers
Texas 164,737 58 percent
California 160,103 70 percent
Florida 130,800 55 percent
Illinois 93,976 64 percent
Michigan 72,646 59 percent

Throughout 2020, the private MI industry worked closely with federal policymakers, industry groups, and consumer organizations to support homeowners experiencing financial hardships due to the COVID-19 pandemic. The industry updated its guides and processes to align with the policies of the Federal Housing Finance Agency (FHFA) and government-sponsored enterprises’ (GSEs), Fannie Mae and Freddie Mac, to implement nationwide forbearance programs.

Loans backed by private MI provide protection against mortgage credit risk and are structured to protect the GSEs in the conventional mortgage market. Private MI has proven to be a reliable method for shielding the GSEs, having paid nearly $60 billion in claims since the 2008 financial crisis and housing market downturn.

The complete report is available here, along with fact sheets for all 50 states and the District of Columbia.


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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 www.usmi.org

Press Release: New Report Finds Low Down Payment Mortgage Lending Increased in 2019, Meanwhile Saving for a 20 Percent Down Payment Could Take 21 Years

WASHINGTON — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released its annual state-by-state report on low down payment mortgage lending. The report finds the number of low down payment loans backed by private MI increased 22.9 percent in 2019; meanwhile saving for a 20 percent down payment may take potential homebuyers 21 years to save — three times the length of time it could take to save a 5 percent down payment. USMI also found that the top five states for low down payment home financing with private MI were Texas, California, Florida, Illinois, and Ohio.

“Last year, over 1.3 million homeowners purchased a home or refinanced an existing mortgage with less than a 20 percent down payment using private mortgage insurance,” said Lindsey Johnson, president of USMI. “Given the current economic environment and the desire of many people to keep more cash on-hand, low down payment loans are more important than ever. Loans backed by private MI are a great option as a time-tested means for accessing homeownership sooner while still providing credit risk protection and stability to the U.S. housing system.”

The report examines the number of borrowers helped, the percentage of borrowers who were first-time homebuyers, average loan amounts, and average FICO credit scores. USMI also calculates the number of years to save a 20 percent versus a 5 percent down payment for each state plus the District of Columbia.

Key findings from the report:

  • It could take 21 years on average for a household earning the national median income of $63,179 to save for a 20 percent down payment (plus closing costs), for a $274,600 single-family home, the national median sales price.
  • The wait time decreases to 7 years with a 5 percent down payment insured mortgage — a nearly 67 percent shorter wait time at the national level.
  • In 2019, the number of homeowners who qualified for a mortgage because of private MI reached over 1.3 million, nearly 60 percent of purchase mortgages went to first-time homebuyers, and more than 40 percent had annual incomes below $75,000. The average loan amount purchased or refinanced with MI was $269,072.
  • Over the last five years, the role of private MI in the low down payment sector increased from 34.8 percent of the insured market in 2015 to 44.7 percent in 2019.

The below table shows the top five states in which MI was used by borrowers to purchase or refinance homes in 2019.

State Number of Borrowers Helped with Private MI First-Time Homebuyers
Texas 105,158 56 percent
California 103,120 68 percent
Florida 88,360 55 percent
Illinois 58,654 64 percent
Ohio 51,167 59 percent

Private MI serves as a bridge for creditworthy homebuyers to qualify for home financing despite a low down payment. It provides protection against mortgage default credit risk and is structured to protect the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, in the conventional mortgage market.

The complete report is available here, along with fact sheets for all 50 states and the District of Columbia.

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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 www.usmi.org.

Article: Data confirms buyers don’t need to wait decades to save up to buy a home

By Brad Shuster

June is National Homeownership Month, and this year we celebrate amidst a national conversation about how best to reform the U.S. housing finance system to sustain and grow homeownership in a safe and affordable way. This should excite all Americans who are currently seeking to become homeowners and all those who will in the future, because maintaining access to low down payment mortgages continues to be critically important for millions of Americans to realize the dream of homeownership.

Last year alone, more than one million Americans purchased or refinanced a home using mortgages with private mortgage insurance (MI). They were able to overcome the widely held misconception that buyers need a 20 percent down payment, an amount that would take the average American family more than 20 years to save. Of the more than one million families that used private MI in 2018, nearly 60 percent were first-time homeowners who on average saved only 5 percent of the home purchase price as a down payment. Private MI allowed these borrowers to access the conventional mortgage market with sustainable, affordable mortgage options. In Washington, policymakers are currently exploring ways to help even more households realize homeownership the same way.

A new report showcases how private MI helps hard-working, home-ready families who access the conventional mortgage market, even when they don’t have a large down payment. The report highlights that in 2018, more than 40 percent of buyers with private MI had annual incomes below $75,000, and that there were significant wait times for prospective homebuyers attempting to save for a full 20 percent down payment. The report also underscores the significant mortgage credit risk protection that private MI provides to American taxpayers and the federal government.

The report, released by the U.S. Mortgage Insurers (USMI), finds it could take on average 20 years for a family earning the national median income of $61,372 to save 20 percent (plus closing costs) for a $262,250 single-family home, the national median sales price. However, this drops to seven years if the borrower uses a low down payment mortgage with five percent down. This represents a 65 percent decrease in wait time at the national level, and USMI found the same percentage decrease at the state level.

Unfortunately, today millions of Americans nationwide believe homeownership is out of reach. While there are many reasons for prospective homeowners to perceive homeownership as unachievable, including student debt or low wage growth, the most pervasive misconception is that they need to have a 20 percent down payment, according to the National Association of REALTORS. That is simply untrue. There are a variety of mortgage options available that can help prospective borrowers buy homes with as little as 3 percent down – such as conventional loans with private MI and government-backed loans like those insured by the Federal Housing Administration (FHA). Each option offers something different and has advantages and disadvantages, but as the new USMI report shows, private MI provides a safe and affordable way to buy a home for millions of families.

It is important for policymakers to understand the long, time-tested role MI has played as they seek to create a more robust housing finance system. Private MI serves as protection against mortgage credit risk if a borrower defaults on their mortgage. This means that every dollar a mortgage insurer covers when a borrower defaults is a dollar that Fannie Mae and Freddie Mac (the “GSEs”) and American taxpayers do not have to pay. In fact, since the 2008 financial crisis the MI industry has paid over $50 billion in claims – losses the government and taxpayers did not have to bear.

As the conversation continues over how to best increase American homeownership – a cornerstone of the U.S. economy – and protect taxpayers and the federal government along the way, this report provides valuable facts for the policymakers and regulators engaged in these discussions. The private MI industry’s long history of success in helping Americans qualify for low down payment mortgages highlights its critical role in the housing finance system, and we stand ready to do more to create a stronger and more sustainable housing market.

This column was published in The Hill on June 13, 2019.

Blog: New Report Shows Saving 20 Percent to Buy a Home Takes 20 Years on Average; Over 1 Million Avoided the Wait in 2018 by Using Private Mortgage Insurance

Texas, Florida, California, Illinois, and Ohio Round Out the Top Five States for Low Down Payment Mortgage Lending

WASHINGTON, June 5, 2019 — U.S. Mortgage Insurers (USMI), the association representing the nation’s leading private mortgage insurance (MI) companies, today released its annual report detailing low down payment insured mortgage lending in all 50 states and the District of Columbia. The report breaks down on a state-by-state basis low down payment mortgage lending with private MI, including the number of borrowers helped, the percentage of borrowers who were first-time homebuyers, average loan amounts, average FICO credit scores, and provides an analysis of how long it would take those borrowers to save for a 20 percent versus a five percent down payment.

“No, you do not need a 20 percent down payment to gain mortgage approval,” said Lindsey Johnson, President of USMI. “Our report underscores the critical role private MI plays in helping millions of first-time and middle-income homebuyers bridge the down payment gap across the United States. For over 60 years, private MI has helped provide Americans with affordable access to mortgage credit while also protecting taxpayers and the federal government from undue mortgage credit risk. Millions of borrowers have relied on private MI to responsibly purchase homes and MI will continue to facilitate the dream of homeownership going forward,” continued Johnson.

USMI finds that it could take 20 years for a household earning the national median income of $61,372 to save 20 percent (plus closing costs) for a $262,250 single-family home, the national median sales price. However, that wait time drops to seven years if the household purchases a home with a 5 percent down, where the loan is sustainably backed by private MI. This represents a 65 percent decrease in wait time at the national level, and USMI found the same percentage decrease at the state level.  

Since 1957, MI has helped more than 30 million families qualify for a mortgage. In 2018 alone, MI helped more than one million borrowers purchase or refinance a mortgage, nearly 60 percent of which were first-time homebuyers, and more than 40 percent had annual incomes below $75,000. The average loan amount purchased or refinanced with MI was $244,715 and the average FICO score for these borrowers was 741, compared to a 733 score for all home loan borrowers. The below table shows the top five states in which MI was used by borrowers to purchase or refinance homes in 2018.

 

State Number of Borrowers 
Helped with Private MI
First-Time 
Homebuyers
Texas 89,738 57 percent
Florida 77,565 56 percent
California 71,996 69 percent
Illinois 48,200 65 percent
Ohio 43,761 59 percent

 

In addition to the findings on how MI helps borrowers qualify for low down payment mortgages, the report also highlights the role MI plays in reducing the federal government’s, and therefore U.S. taxpayers’, exposure to mortgage credit risk. Private MI serves as credit protection against mortgage credit risk in the event a borrower defaults on his or her mortgage, meaning every dollar that an MI company covers when a borrower defaults on his or her mortgage is a dollar that the GSEs and taxpayers do not have to pay. In fact, since the 2008 financial crisis the MI industry has paid over $50 billion in claims – losses the government and taxpayers did not have to bear.

“The fact that private mortgage insurance has been helping Americans qualify for low down payment mortgages for more than six decades is a testament to the important access, stability, and credit protection the MI industry brings to the housing finance system,” added Johnson. “In recent years, the private MI industry has become even stronger with more robust underwriting standards, stronger capital requirements, and improved risk management. The industry is well-positioned to continue its important work, and we look forward to further helping grow American homeownership.”

The complete report on MI in the U.S. is available here, along with all 50 state fact sheets and data for the District of Columbia.

Article: More evidence of why trying to save 20 percent on a home down payment isn’t realistic

By Michael Lerner, Washington Post

“One of the biggest misconceptions associated with buying a home is that you need a down payment of 20 percent of the home price. The median down payment for buyers under age 37, a group that typically includes a majority of first-time buyers, was just 7 percent last year, according to the National Association of Realtors…”

Read More on Washington Post

Report: Texas Ranks First in U.S. for Number of Homebuyers Who Secured Home Financing Thanks to Private Mortgage Insurance

Findings Demonstrate Important Contributions by Private Mortgage Insurance to Texas Homeownership

WASHINGTON U.S. Mortgage Insurers (USMI), the association representing five of the six top private mortgage insurance (MI) companies in the United States, today released a report on the role of private MI in Texas. The report found that 79,030 homeowners in Texas secured a home loan with private MI in 2017, which ranks first in the nation in terms of the number of homeowners helped with MI, and breaks down low down payment mortgage lending in Texas.

“Private mortgage insurance has helped millions of first-time and middle-income homebuyers across the United States for more than 60 years and has had a tremendous impact in supporting homeownership in Texas. This report confirms what we have long known: MI is a critical piece of the U.S. housing finance system, helping Texans realize the dream of homeownership while providing important protections to Texas taxpayers,” said Lindsey Johnson, President of USMI. “For decades, low down payment borrowers in Texas have relied on MI to help them affordably and responsibly buy a home, and MI will continue to serve countless more prospective Texas homebuyers in the years to come.”

For many Texans, the biggest hurdle in buying a home is the 20 percent down payment they think is required for mortgage approval. It would take the average Texas homebuyer 18 years to save the full 20 percent down payment for a home. MI helps bridge the down payment gap so borrowers can obtain the financing needed to purchase a home, and in doing so allows Texas homeowners to build the kind of long-term wealth that comes with having equity in a home.

According to the report’s findings, 79,030 Texas borrowers became homeowners with the help of MI in 2017. Of these homeowners:

  • 55 percent were first-time buyers
  • 737 was the average FICO score
  • $233,650 was the average loan amount with MI

The report also highlights the number of minority homebuyers, including African-Americans, Hispanics, and Asian-Americans, who have successfully purchase a home in Texas. In 2017, 613,325 total loans were made in Texas, and of that total 200,279– or nearly 33 percent – were purchased or refinanced by minority borrowers.

“Since 1957, private mortgage insurance has played a critical role in helping first-time buyers and low- to moderate-income earners in Texas achieve affordable home financing. Through this successful homeownership, families can build home equity and are able to enhance their financial stability—both of which greatly benefit Texas communities,” Johnson added. “The MI industry has been a time-tested partner for millions of Americans nationwide as they become homeowners, and we will continue to offer this important and competitive product to countless more Texans in the years to come.”

The complete report can be found here and a data fact sheet on MI in Texas is available here.

Press Release: New Report Shows Importance of Private Mortgage Insurance in Helping Low Down Payment Borrowers Qualify for Mortgages in All 50 States

TX, CA, FL, IL and MI are Top Five States in 2017

WASHINGTONJune 7, 2018 /PRNewswire-USNewswire/ — U.S. Mortgage Insurers (USMI), the association representing five of the top six private mortgage insurance (MI) companies in the United States, today released a report on the role of MI in all 50 states and the District of Columbia. The report finds that nearly 30 million homeowners have been served by MI for more than 60 years, and breaks down on a state-by-state basis low down payment mortgage lending. The report underscores the historic importance of MI, how MI has helped promote homebuying in the U.S., and the significant protection against undue mortgage credit risk that MI provides to American taxpayers and the federal government.

“Private mortgage insurance has helped millions of first-time and middle-income homebuyers across the United Statesfor more than 60 years. This report confirms what we have long known: MI is a critical piece of the U.S. housing finance system, helping Americans realize the dream of homeownership while providing important protections to taxpayers and the federal government,” said Lindsey Johnson, President of USMI. “For decades, low down payment borrowers have relied on MI to help them affordably and responsibly buy a home, and MI will continue to serve countless more prospective homebuyers in the years to come.”

The report looks at how MI helps bridge the down payment gap that affects many borrowers and analyzes at a state level who specifically benefits from MI. The report presents data that highlights:

  • The number of years it takes to save a 20 percent down payment in all 50 states plus the District of Columbia
  • The total number of homeowners helped by MI in 2017 broken down by state—and key lending characteristics including average home price and credit scores of borrowers with MI
  • The number of minority borrowers who have obtained or refinanced mortgages broken down by state

Since 1957, MI has helped more than 30 million families qualify for a mortgage by bridging the gap between the down payment and home financing. In 2017 alone, MI helped more than one million borrowers purchase or refinance a mortgage; of that total number of borrowers, 56 percent were first-time homebuyers and more than 40 percent had annual incomes below $75,000. The top five states in which MI was used by borrowers to purchase homes in 2017 are:

  1. Texas: 79,030 borrowers (55 percent first-time homebuyers)
  2. California: 72,938 borrowers (66 percent first-time homebuyers)
  3. Florida: 69,827 borrowers (58 percent first-time homebuyers)
  4. Illinois: 47,866 borrowers (63 percent first-time homebuyers)
  5. Michigan: 41,810 borrowers (57 percent first-time homebuyers)

 

The report also focuses on how MI reduces taxpayers’ exposure to mortgage credit risk and protects the federal government from that risk. MI serves as credit protection against mortgage credit risk in the event of a borrower defaulting on his or her mortgage, meaning every dollar that an MI company covers when a borrower defaults on his or her mortgage is a dollar that the GSEs and taxpayers do not have to pay. In fact, since the 2008 financial crisis the MI industry has paid over $50 billion in claims – losses the government and taxpayers did not have to bear.

“Coming out of the financial crisis, the MI industry is even stronger with more robust underwriting standards, stronger capital positions, and improved risk management. The MI industry follows a strict set of requirements to insure mortgages acquired by the GSEs, which are known as Private Mortgage Insurer Eligibility Requirements, and has implemented Master Policy Agreements to bring more efficiency and greater transparency to payment of claims,” added Johnson. “MI has played a critical role in protecting taxpayers and the federal government from undue mortgage credit risk for six decades, and will continue to provide this important function in the housing finance system moving forward.”

The complete report on MI in the U.S. is available here. All 50 states fact sheets, plus data for the District of Columbia, are available here.

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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 www.usmi.org.

SOURCE U.S. Mortgage Insurers

This release originally appeared on PR Newswire. Click here to view the original release.