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Over 54,000 Floridians relied on private mortgage insurance to achieve homeownership

WASHINGTON, DC — Florida ranked second in the nation for private mortgage insurance use in 2023 according to a new report released today from U.S. Mortgage Insurers (USMI). Over 54,000 homebuyers across Florida used private mortgage insurance to purchase a home with a low down payment in 2023, with first-time buyers representing 58% of those borrowers. This new USMI data on low down payment and first-time borrowers provides some silver lining insights within the current residential real estate market.

“Private mortgage insurance is helping more Floridians become homeowners with down payments as low as 3%,” said Seth Appleton, USMI president. “Without mortgage insurance, far too many buyers would remain on the sidelines as home prices and rates remain high. Floridians are putting down roots and starting to build equity sooner without a 20% down payment.”

Florida Trends
2023 data showed that in Florida:

• It could take a Florida household earning the state median income ($65,370) 34 years to save for a 20% down payment (plus closing costs) for a $428,550 single-family home, the median sales price in Florida. With a 5% down payment, the wait time decreases nearly 65%.
• $377,593 was the average loan amount for a home purchased with private mortgage insurance in Florida.
• Florida saw a 3.7% increase in first-time homebuyers’ share of the private mortgage insurance market.
• For many Floridians, the biggest hurdle in buying a home is the 20% down payment they mistakenly believe is required for mortgage approval.

“Private mortgage insurance is helping to expand access to home ownership for prospective homebuyers,” continued Appleton. “Buyers face many obstacles in purchasing a home; private mortgage insurance helps solve one of the biggest challenges – the need for a large cash down payment – by helping buyers to put down as little as 3%.”

National Trends
Moreover, the new USMI report on low down payment lending found:

• Approximately 800,000 people in 2023 became homeowners using low down payment mortgages backed by private mortgage insurance.
• 64% of purchasers with private mortgage insurance in 2023 were first-time homebuyers. Nearly 35% had annual incomes below $75,000.
• First-time buyers’ share of the private mortgage insurance market increased 7% from 2020 through 2023.
• $346,817 was the average loan amount for a home purchase backed by private mortgage insurance in 2023.
• The 3% down payment segment’s share of the private mortgage insurance market also grew 7% from 2020 through 2023, reaching pre-pandemic levels (18.14%).
• Saving for a 20% down payment could take the average potential homebuyer 27 years — three times longer than the time to save for a 5% down payment that’s often used with private mortgage insurance.
• The total value of mortgage originations supported by private mortgage insurance in 2023 was approximately $283 billion.
• As of the end of 2023, the industry insured nearly $1.6 trillion of mortgages, including $1.4 trillion of mortgages backed by Fannie Mae and Freddie Mac, protecting the housing finance system and taxpayers from credit risk.
• Nearly 39 million borrowers have benefited from private mortgage insurance since 1957.

Why Use Private Mortgage Insurance?
Private mortgage insurance helps low down payment borrowers access affordable mortgage financing while protecting the government, taxpayers and lenders against risk. Private mortgage insurance enables a borrower to qualify for mortgage financing with a down payment as low as 3%.

Private mortgage insurance allows borrowers – who are not able to put down 20% – to qualify for a conventional loan by insuring the lender against potential losses in the event a borrower is not able to repay the loan and there is not sufficient equity in the home to cover the amount owed. Amassing a large down payment can be one of the biggest hurdles to homeownership, particularly for first-time buyers.

Private mortgage insurance has proven to be a reliable method for protecting Fannie Mae, Freddie Mac, lenders, investors, and taxpayers from losses, having paid $60 billion in claims since the 2008 financial crisis and housing market downturn.

The complete 2024 USMI report is available here, along with fact sheets for all 50 states and the District of Columbia.

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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.