It never did. It was only to avoid PMI and is spread by big real estate companies to discourage home ownership among the uninformed, keeping you out of the market and giving them less competition. The amount of equity you'll miss out on while saving 20% (or getting discouraged and giving up entirely, which they hope you'll do), compared to buying with the long standard of 3% minimum for first time home buyers, will always make PMI worth the price vs saving up for that 20%. First time home buyers should never put down 20% of that's their only barrier of entry. If they need to put down 20% to make the monthly payment affordable, they shouldn't be buying that particular house.