This program can reduce the time needed to
save for a down payment and provide another option for those who
are otherwise ready to take on a mortgage payment
SEATTLE, Aug. 24,
2023 /PRNewswire/ -- Zillow Home Loans announced its
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
typical rent in the U.S. in February
2020 was $1,597.) 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.
Zillow Home Loans' 1% Down Payment program lowers the down
payment barrier and increases access to the housing market for
eligible borrowers. An analysis by Zillow Home Loans' shows that by
reducing the down payment burden to 1% of the purchase price, a
home buyer looking to purchase a $275,000 home in Phoenix, Arizona, who makes 80% of their
area's median income and saves 5% of their income would need only
11 months to save for the down payment. By comparison, the
same buyer who needed to save 3% of the purchase price would
require two and half years (31 months) to save that amount.
"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."
Home buyers looking to purchase in the next year should take
steps to research and prepare for getting a mortgage as they
start on their home-financing journey. Among those steps:
- Understand your credit profile: Credit scores are key to
getting approved for a mortgage, but for many home buyers,
understanding credit is complex.
- Improve your credit score: Once buyers familiarize
themselves with what's in their credit report, they can take steps
to pay down existing debts, pay bills on time, and review their
credit report and dispute possible errors.
- Avoid closing accounts: Don't close an account to remove
it from your report. Those accounts aren't automatically removed
and will continue to show up on your report.
- Hold off on financing large new purchases: Wait to make
purchases that need to be financed, such as a car, until after you
close on a home. This type of purchase will impact your
debt-to-income ratio, which will negatively affect the amount of
home loan you qualify for.
- Determine what affordability looks like: Once
buyers have a good understanding of their credit report and their
credit score is at least 620 (generally the lowest score accepted
by mortgage lenders) it's time to understand how much home they can
afford. Use Zillow's mortgage affordability calculator to
customize payment details.
Zillow Home Loans' 1% Down Payment program is currently
available to eligible borrowers in Arizona, with plans to expand. Through the 1%
Down Payment program, Zillow Home Loans will pay 2% of the down
payment for eligible borrowers. The 2% is paid through closing and
not as a payment to the borrower. Interested applicants should call
1-833-372-1449 to speak with a Zillow Home Loans representative to
learn more about the program and determine if it's the right fit
for their circumstances.
About Zillow Group
Zillow Group,
Inc. (NASDAQ: Z and ZG)
is reimagining real estate to make it easier to unlock
life's next chapter. As the most visited real estate website in
the United States,
Zillow® and its affiliates offer customers an on-demand
experience for selling, buying, renting, or financing with
transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®;
Zillow Premier Agent®; Zillow Home Loans™; Trulia®; Out East®;
StreetEasy®; HotPads®; and ShowingTime+™, which houses
ShowingTime®, Bridge Interactive®, and dotloop®. Zillow Home Loans,
LLC is an Equal Housing Lender, NMLS #10287
(www.nmlsconsumeraccess.org).
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SOURCE Zillow Home Loans