Blog: USMI Celebrates Hispanic Heritage Month with New Data on Hispanic Homeownership
During this Hispanic Heritage Month, U.S. Mortgage Insurers (USMI) continues to highlight how the Hispanic community contributes to the U.S. housing market. New data from the soon to be released USMI National Homeownership Market Survey provides important insights on how and why Hispanics access homeownership, along with ways the industry can work to make affordable and sustainable homeownership a reality for this important and growing segment of households. Hispanics are expressing strong interest in homeownership, with 75% of Hispanic survey respondents answering that owning a home is important to them – up 8% from 2021.
According to a recent report from the National Association of Hispanic Real Estate Professionals (NAHREP), the Hispanic homeownership rate reached 49.5% in 2023, with a net gain of 377,000 Hispanic owner-households from the prior year.
Nearly 125,000 Hispanics purchased homes with low down payment conventional mortgages backed by private mortgage insurance (MI) in 2023, accounting for $41.3 billion in mortgage volume and demonstrating the critical role private MI plays in enabling access to homeownership for Hispanic homebuyers while protecting taxpayers and the government from credit risk. USMI’s forthcoming survey found that the top reasons Hispanics are choosing to purchase homes are the stability homeownership provides (36%) and the investment opportunity it presents (36%). Other top reasons that Hispanics cite for purchasing homes are the safety homeownership provides for their families and the sense of accomplishment that comes from purchasing one’s home.
The survey shows that that the inability to afford a down payment is a barrier to homeownership, but private MI can help eliminate that barrier and allows borrowers to qualify for a mortgage with as little as three percent down. 35% of Hispanic survey respondents answered that they plan to purchase a home in the next 3 years and half (49%) of Hispanic respondents answered that private MI makes it easier for low- and moderate-income individuals to purchase a home by decreasing initial down payment costs.
Importantly, Hispanics led the survey in awareness of low down payment mortgage options, with 45% answering that it’s possible to put 5% or less down when buying a home. USMI’s recent report on national and state level data on low down payment borrowing enabled by private MI aligned with these sentiments. The report showed that the three percent down payment share of the private MI market grew consistently year-over-year, from 11.41% in 2020 to 18.12% in 2023. Some states such as Michigan, Indiana, North Dakota, Missouri, and Ohio saw single year increases of over 7% from 2022 to 2023. Hispanic respondents also led the poll as the demographic most aware of the availability of down payment assistance (DPA) options during the homebuying process at 34% – seven percentage points higher than the next closest group.
The recent news around interest rate cuts could inject some optimism into the housing market, allowing additional first-time and low- and moderate-income borrowers the opportunity to enter into homeownership. 55% of Hispanics answered that the ability to access homeownership faster was an important reason to support private MI. For first-time homebuyers, saving for a 20% down payment can be especially difficult when compared to repeat buyers who often have funds from prior home sales or existing equity.
Despite the 20% down payment requirement myth, some 40% of Hispanic survey respondents either mistakenly believe down payments of 20% or more are needed or are not aware of existing down payment requirements. The average down payment among first-time buyers in 2023 was 8%, according to the National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers. Additionally, NAR’s Snapshot of Race and Home Buying in America showed that among all Hispanic homebuyers in 2023, 51% were first-time buyers. The trend of more Hispanics becoming first-time homebuyers should continue to grow in the years to come, as significant numbers of new Hispanic households continue to form.
Starting in 2007, homeowners were able to deduct premiums for private MI and government insurance and guaranty programs on their taxes. The deduction expired following tax year 2021, but data shows that on average, 3.4 million homeowners claimed the deduction annually while it was available, with average household savings of $1,454. A majority of Hispanic respondents (51%) believe that the MI tax deduction is beneficial. 44.5 million homeowners claimed the deduction over the 15-year period between 2007 and 2021.
Private MI has helped 39 million home-ready borrowers across the U.S. access affordable low down payment home financing over the past 67 years. Through education and community outreach, USMI will continue to work on breaking down the inaccurate perception that a large down payment is needed to purchase a home. While USMI cannot solve for interest rates, constrained housing supply, or high home prices, we can answer the call to further raise awareness of the availability of low down payment solutions backed by private capital. Among a growing community that, per NAHREP, now has over 9.5 million households that own their own homes and represents 25.5% of overall U.S. household formation growth, private MI remains a key tool to unlocking the dream of homeownership. We look forward to continuing to advocate for affordable, accessible, and sustainable homeownership opportunities for more Hispanic borrowers in the future.
