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  • Rocket Mortgage, United Wholesale Mortgage, and Zillow now offer mortgages that only require borrowers to put 1% down.
  • The loans combine your 1% down payment with a lender-provided grant to achieve a total down payment of 3%.
  • While these loans make homeownership more affordable, there are risks to having so little equity in your home.

Down payments have long been the major hurdle separating cash-strapped renters from the world of homeownership. But as buying a home has only gotten less affordable in recent years, mortgage lenders have had to get creative to widen their pool of prospective borrowers. 

This has led to a boom in affordable mortgage programs, offering things like low down payments with no mortgage insurance, lender-provided grants, and flexible credit requirements. 

The latest trend in the affordable mortgage wave is the 1% down mortgage, which lets borrowers get into a home with just 1% of the purchase price in cash. 

These 1% down programs can be a great deal and make homeownership more accessible to lower-income households. But it’s important to understand exactly how these mortgages work and whether they make sense for your needs and future plans.

What is a 1% down mortgage?

Typically, the lowest down payment you can make on a conventional mortgage is 3%. Some government-backed mortgages allow no down payment, but these loans are only available to borrowers who meet specific eligibility criteria.

And technically, you’re not actually only putting 1% down with these mortgages. While the borrower is only required to bring 1% of the purchase price in cash to the transaction, the lender provides a 2% grant to achieve a 3% total down payment.

Because of how much home prices have increased in recent years, these mortgages could be a game changer.

Traditionally, to buy a $250,000 home, a borrower would need at least $7,500 to make the minimum down payment of 3%. But with a 1% down mortgage, they’d only need $2,500 of their own funds — the lender would provide the other $5,000 in the form of a grant, in addition to a $242,500 loan to cover the rest of the purchase.

Lenders that offer 1% down mortgages

Right now, the only two major mortgage lenders offering a 1% down mortgage nationwide are Rocket Mortgage and United Wholesale Mortgage. Rocket and UWM are respectively the No. 1 and No. 2 largest mortgage lenders in the US, according to Home Mortgage Disclosure Act data. Zillow Home Loans also recently rolled out a 1% down program, but it’s much more limited.

Rocket Mortgage 1% down payment program

The Rocket Mortgage 1% down mortgage program is called ONE+. This mortgage is available to borrowers who make 80% or less of the area median income. The minimum credit score to qualify is 620.

In addition to allowing a minimum down payment of just 1%, the ONE+ mortgage also doesn’t require borrowers to pay for private mortgage insurance. PMI is generally required on conforming loans with down payments below 20%, and it’s added to the borrower’s monthly mortgage payment. So by avoiding PMI, ONE+ borrowers can lower their monthly payment.

You can also make a larger down payment and still get the 2% grant from Rocket Mortgage. The program allows a combined down payment of up to 5%.

UWM 1% down payment program

The United Wholesale Mortgage 1% down mortgage is referred to simply as the Conventional 1% Down mortgage. This mortgage is also limited to those whose incomes are 80% or less than the area median income. You’ll also need a 620 credit score to qualify for UWM’s 1% down mortgage.

This mortgage differs from Rocket’s in that it does require PMI, and the grant provided by UWM is limited to a maximum of $4,000. So depending on the price of the home, borrowers may end up needing to bring more than 1% to the table to achieve a total down payment of 3% down with UWM’s grant. 

UWM is a wholesale mortgage lender, meaning you’ll only have access to its mortgages through a mortgage broker.

Zillow Home Loans 1% down payment program

Zillow Home Loans’ mortgage is called the 1% Down Payment program. It’s currently only available in Arizona, though the lender plans to expand it. Like Rocket’s and UWM’s programs, Zillow’s allows the borrower to put 1% down and provides an additional 2% down payment, for a total of 3% down.

Zillow doesn’t provide any additional details about this program, including income limits or whether it requires PMI.

Pros and cons of a 1% down mortgage

Pros

  • Spend less to get into a home
  • Lender-provided grant gives you additional equity
  • Use your savings toward other financial goals

A 1% down mortgage lowers the bar for becoming a homeowner by thousands of dollars. 

“Saving for a down payment is still a major obstacle for many homebuyers in today’s market,” says Bill Banfield, executive vice president of capital markets at Rocket Mortgage, which offers the ONE+ mortgage. “A smaller down payment can help people achieve homeownership sooner, as it requires less of an upfront cost. It can enable consumers to put extra money they would have saved for a down payment toward other important expenses like new furniture or an emergency fund.”

Cons

The drawbacks to these loans are the same as any 3% down mortgage program:

  • Larger monthly payment
  • You could end up underwater
  • You may have trouble refinancing

“Some of the potential dangers associated with high loan-to-value financing include higher risk of default, higher monthly payments, and underwater mortgages,” says Jeff Levinsohn, CEO of House Numbers, a home wealth management company.

It can be risky starting out with just 3% equity in your home. A small drop in home values could put you underwater on your mortgage, meaning you owe more on your home than what it’s worth. 

Being underwater isn’t the worst thing in the world if you plan on staying in your home for a while, since your home’s value should rise over time. But it can prevent you from refinancing, meaning you won’t be able to take advantage of lower rates once mortgage rates fall.

Other low down payment options

If you don’t qualify for one of these 1% down mortgages or aren’t sure they’re the right fit for you, there are plenty of other affordable options that come with low or no down payments.

  • FHA loans: Mortgages backed by the Federal Housing Administration require a down payment of just 3.5% and come with less stringent credit requirements, including a minimum credit score of just 580.
  • VA loans: These mortgages are backed by the Department of Veterans Affairs and are available to current servicemembers and veterans who meet minimum service requirements. They require no down payment and no mortgage insurance.
  • USDA loans: Mortgages guaranteed by the Department of Agriculture enable low-to-middle income borrowers in eligible rural or suburban areas to buy a home with no money down. You can use the USDA’s eligibility map to see if you’re in a designated “rural” area.

Many individual lenders also have their own unique mortgage programs that offer low down payments with other perks, like closing cost grants or flexible credit requirements. Chase Mortgage, for example, offers its DreaMaker mortgage, which allows 3% down payments with PMI at a reduced cost. The DreaMaker mortgage can be combined with Chase’s Homebuyer Grant, which offers up to $5,000 in down payment and closing cost assistance.

1% down mortgage FAQs

Some lenders are now offering 1% down mortgages — though you’re technically not only putting down 1%, because you’ll also get a 2% grant from the lender, for a total of 3% down. There are no major mortgage programs that have a minimum total down payment of just 1%, though you could technically put 1% down on a mortgage that doesn’t require a down payment, such as a VA or USDA loan.

With a 1% down mortgage, you’ll make a 1% down payment on a house and the lender will give you a 2% grant, so your total combined down payment ends up being 3%.

Rocket Mortgage and United Wholesale Mortgage both offer 1% mortgages nationwide. You’ll need at least a 620 credit score to qualify for one of these mortgages, and you’ll need to earn 80% or less than the area median income. Zillow also has a similar program for borrowers in Arizona.

Rocket Mortgage is one of the top mortgage lenders in the US, and it recently rolled out a 1% down mortgage program called ONE+. Rocket Mortgage’s 1% down mortgage is a legitimate home loan, and it enables borrowers to put just 1% down and supplement their down payment with a 2% grant from the lender.