Lately, headlines around homeownership – both in the industry and wider media landscape – have focused on the rising costs that make it difficult for renters to afford to become homeowners. Given the challenges that borrowers face, products that create more financing options for borrowers, like mortgage insurance (MI), are more valuable than ever.

According to the U.S. Mortgage Insurers' (USMI^®) 2025 State-by-State Report, private mortgage insurers helped more than 800,000 borrowers become homeowners in 2024. 65% of purchase loans with private MI went to first-time homebuyers, and nearly 35% of homebuyers with private MI had incomes below $75,000. MI increases the accessibility of homeownership for many. And it’s one of the few products in the homebuying process that has actually decreased in cost.

The down payment challenge

The down payment continues to be a major barrier for Americans who want to buy homes. Higher home prices and higher interest rates have put more pressure on affordability. According to USMI:

• Nearly 30% of respondents to its 2024 National Homeownership Market Survey said the inability to afford a down payment was the biggest challenge when buying a home
• It could take 26 years for a household earning the national median income to save a 20% down payment on a median-price single-family home

MGIC founded the modern private mortgage insurance industry in 1957 to provide a solution to the down payment challenge – and the power of private MI has only grown in relevance. Since then, private MI has helped nearly 40 million U.S. households buy or refinance a home.

The costs of buying and owning a home 

We find that many buyers and even other players in the homebuying process have misperceptions about some costs that impact decisions along the way, including MI.

While the initial costs of buying a home can feel like a huge hurdle to a buyer, the ongoing costs ultimately become a source of the largest expenses. In 2023, Fannie Mae conducted a detailed study of homeownership costs, using a 7-year average for how long an owner stays in a home before selling. Fannie Mae found that the largest components of overall costs for the average borrower are property taxes (16.0%), interest (15.9%), capital improvement expenditures (14.5%), the home sale-related broker fees (13.3%), and ongoing utility costs (12.8%).

As a percentage of the home purchase, private MI is one of the few products in the mortgage process that is less expensive today. In its study, Fannie Mae found that MI averaged 0.5% to 2.5% of the 7-year cost of owning a home.

Clarifying when costs incur in the process of buying and owning a home can be eye-opening for buyers and potentially help them evaluate some options they might not have known they had.

• One-time costs can include fees that occur during the buying process, such as the down payment and closing costs
• Temporary costs are things like private mortgage insurance
• Ongoing costs include mortgage payments, property taxes, HOA fees, homeowners insurance, utilities and maintenance

Mortgage insurance adds value

We know how many homebuyers and homeowners perceive MI: as a required, added cost on their monthly mortgage statement that they seemingly have no control over.

But by allowing buyers to put less than 20% down, what MI really offers is options. The option to buy sooner and start building equity. The option to reserve funds for renovations and maintenance, which may even increase the home’s value. The option to expand their buying power to find the home that truly meets their needs – whether that’s a growing family, a house in a specific school district, or the extra outdoor space they need for a pet or a thriving garden.

And many people don’t realize that private MI is usually a temporary cost. In fact, by law, lenders are required to cancel it on the date the mortgage loan balance is first scheduled to reach 78 percent of the original value for loans that are current.

Adding to the benefits of MI for homeowners, policymakers recently reaffirmed its value by restoring and making permanent the mortgage insurance tax deduction. Beginning in tax year 2026, MI premiums are tax deductible for qualified taxpayers.

As a private mortgage insurer, it’s not surprising that we believe in the power of private MI to create financial options for homebuyers. But don’t take it from us: Ask the 14 million homeowners MGIC has helped since 1957. We think they’d agree that the benefits of MI far outweigh the costs.