Lender will cover 2% of the down payment
Zillow Home Loans has launched a down payment loan program that enables potential home buyers to put as little as 1% down on their home purchase.
With the new program, Zillow Home Loans will cover 2% of the down payment at closing to reduce the borrower’s down payment burden to just 1% of the purchase price. The 1% down payment program is currently available to qualified borrowers located in Arizona, with plans to expand to additional markets.
According to Zillow, a buyer (with an 80% area median income and saving 5% of their income) looking to purchase a $275,000 property in Phoenix would need only 11 months to save for the down payment through the program.
By comparison, the same borrower who needed to save 3% of the purchase price would require two and a half years (31 months) to save that amount.
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“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,” Orphe Divounguy, senior macroeconomist at Zillow Home Loans, said in a press release. “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.”
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