Major lenders like Wells Fargo and Bank of America were making headlines earlier this year when they announced a 3% down payment mortgage, but another lender remained quiet about its even lower offer. Late last year Quicken Loans made a 1% down mortgage available to some of its customers.
Ben Lane, a senior financial reporter for HousingWire, secured an exclusive interview with Quicken Loans' vice president of capital markets Bill Banfield to find out how the 1% down loan program works and why it's important.
According to Banfield, the program is structured as part of Freddie Mac's Home Possible Advantage program that allows buyers to put 1% down and receive a 2% grant so they have a 3% equity to meet the 3% down loans.
First, Quicken’s 1% down loans are only available for purchase mortgages. No refinances are permitted. Second, the program can only be used on a single-family home or condo, not a second home, investment property or co-op.
Additionally, borrowers must have a FICO score of 680 or above, must earn less than the median income for their county, and must carry a debt-to-income ratio of 45% or less.
Also, as part of the program, Quicken Loans makes a free online course on home ownership available to all eligible borrowers. First-time buyers are required to take the online course to be eligible for the program.