In 2023, nearly 800,000 homebuyers utilized private mortgage insurance (PMI) to facilitate low down payment purchases, with first-time buyers representing 64% of these transactions, according to a recent report by U.S. Mortgage Insurers (USMI).
USMI President Seth Appleton emphasized the vital role of PMI, stating, “Private mortgage insurance continues to assist buyers in securing financing with down payments as low as 3%. It remains a crucial tool for first-time and low- to moderate-income buyers across various market conditions.”
Appleton added, “Without PMI, many prospective buyers would be unable to enter the housing market, thereby missing the opportunity to build long-term wealth and achieve the American Dream of homeownership.”
The report highlights that the top states for PMI utilization include Texas with 70,446 loans, Florida with 54,190, California with 42,920, Illinois with 36,589, and Ohio with 33,649.
Additionally, the share of first-time homebuyers using PMI increased by 7% from 2020 to 2023. The average loan amount for PMI-supported home purchases was recorded at $346,817.
The report underscores the importance of addressing the misconception that a substantial down payment is necessary to buy a home. It notes that saving for a 20% down payment can take approximately 27 years—three times longer than the 5% down payment typically required with PMI.
In 2023, PMI supported $283 billion in mortgage originations. The industry currently insures about $1.6 trillion in mortgages, with $1.4 trillion of this amount associated with loans backed by government-sponsored enterprises Fannie Mae and Freddie Mac.
