With mortgage insurance permanently tax-deductible, low down payment loans could be more affordable
The belief that a 20% down payment is needed for a purchase mortgage loan is holding back potential homebuyers, especially first-time buyers. In some cases, it may take years, if not decades, for people with full-time employment to save enough for a 20% down payment.
Peter Hurst (pictured top), senior vice president of regional accounts at Enact Mortgage Insurance, broke down exactly what the ongoing myth of 20% down is doing to potential buyers. He discussed the topic at the National Association of Minority Mortgage Bankers of America (NAMMBA) Connect event on Thursday in Orlando.
“The median income in the state of Florida is just over $77,000,” Hurst said. “The median home price for a single-family home in Florida last year was $433,000. So if you make the median income in the state of Florida, and you want to buy a single-family home at the median sales price, and you have to save up 20%, it would take you 31 years to buy a house.”
While there are loan programs that require as little as 0% down, many hold on to the 20% number needed in many conventional loans.
It’s a myth that many brokers and industry professionals have been working to combat, because the thought of taking more than three decades to save up to buy a home is leaving many as lifelong renters.
Hurting minority buyers
Hurst showed a chart with four different professions listed with their median income. For a firefighter, with a median income of $57,120, it would take 37 years to be able to afford a 20% down payment on the median single-family home in Florida.
Even a veterinarian, with a median income of $140,270, would still need 15 years to save for the down payment.
Yury Shraybman, founder of Innovative Mortgage Brokers, says buyers are still active despite the seasonal slowdown, and refinances are making a comeback. https://t.co/X32NyLpY4H
— Mortgage Professional America Magazine (@MPAMagazineUS) August 21, 2025
Black and Hispanic homebuyers also suffer due to lower median income. For Black homebuyers making a median income of $56,880 in Florida, it would take 37 years to save a down payment. For Hispanic homebuyers making $65,540, they would need 32 years.
“That myth around a 20% down payment is the number one myth or falsehood that is out there in people’s minds, preventing them from becoming a homeowner,” Hurst said.
Mortgage insurance tax deductible again
While the full effects of President Trump’s Big Beautiful Bill are still to be seen, one major change that would benefit those not putting 20% down on a mortgage is the ability to deduct mortgage insurance from taxes again.
“Between 2007 and 2021, mortgage insurance was, in fact, tax deductible,” Hurst said. “Many people took advantage of it. However, because Congress couldn’t get together, that law was temporary, and it fell off the books in 2021. The good news is, as of last month, as part of the Big Beautiful Bill, mortgage insurance tax deductibility became permanent.”
According to the US Mortgage Insurers (USMI), during the previous period where deductions were allowed, it was claimed 44 million times, with 4 million homeowners using it each year. The average deduction was $1,454 per qualified taxpayer.Hurst told brokers to remind potential homebuyers that mortgage insurance on a loan is not permanent. It must be removed automatically when the loan reaches 78% of the loan-to-value (LTV) of the original value.
Borrowers can also request it to be removed once the LTV has reached 80% of the original amount. Certain lenders and loan investors, including Fannie Mae and Freddie Mac, have their own mortgage insurance cancellation rules.
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