Zillow Home Loans announced a 1% Down Payment program to allow eligible home buyers to pay as little as 1% down on their next home purchase. This program is initially being offered on properties located in Arizona, with plans to expand to additional markets. With the 1% Down Payment program, borrowers who qualify can now save just 1% to cover their portion of the down payment and Zillow Home Loans will contribute an additional 2% at closing. The 1% Down Payment program can reduce the time eligible home buyers need to save and open homeownership to those who are otherwise ready to take on a mortgage.
Most markets are in the midst of an affordability crisis, and saving for a down payment remains one of the biggest barriers for many potential home buyers. This is especially true for first-time buyers, who are often paying high rents. Typical asking rent nationwide is $2,062, or 3.6% higher than one year ago and up 31% since the start of the pandemic. The combination of record-breaking home price appreciation and rising interest rates means a majority of first-time buyers (64%) are putting down less than 20%, and one-quarter of first-time buyers are putting down 5% or less.
“For those who can afford higher rent payments but have been held back by the upfront costs associated with homeownership, down payment assistance can help to lower the barrier to entry and make the dream of owning a home a reality,” said Zillow Home Loans’ senior macroeconomist Orphe Divounguy. “The rapid rise in rents and home values means many renters who are already paying high monthly housing costs may not have enough saved up for a large down payment, and these types of programs are welcome innovations in lowering the potential barriers to homeownership for those who qualify.”
