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Unlocking Homeownership with ONE+: A Low Down Payment Mortgage Option

Sal Ciubancan  December 21, 2023


 Unlocking Homeownership with ONE+: A Low Down Payment Mortgage Option You've done your homework.

You know you can afford the mortgage payment and handle the maintenance. The down payment is the last obstacle, but it's a big one. After all, homes aren't getting any cheaper.

With ONE+, you can get into a home with as little as 1% down.1 You'll also receive a 2% grant from the lender.

**In this article, we'll get into how the program works and who qualifies for this option.**

 ONE+ Benefits This loan option has several benefits. Chief among them is the ability to put down as little as 1% and get into a home. The lender is providing a grant of 2% of the loan amount.

Under this scenario, you would enter your home with 3% equity. Clients who qualify may contribute up to 3% toward a down payment while still receiving the 2% grant. This is available for both first-time and repeat home buyers. There are no restrictions on where you can live or where you move from.

The program is available nationwide. In addition to the benefits of the upfront savings, clients won't pay for mortgage insurance on this product. That means a lower monthly payment, which adds to affordability.

But before we go too much further, let's break down the math. We'll use a $250,000 assumed purchase price. This is a 30-year fixed loan with an interest rate of 6%.

- You bring $2,500 for a down payment (.01 × $250,000 = $2,500).

- The lender covers 2% of the loan amount (.02 × $250,000 = $5,000).

- Your monthly principal and interest payment is $1,453.91. - You could save up to $245 per month by not having to pay for mortgage insurance.

- The $6,000 we cover means lower out-of-pocket costs at closing for you. And who wouldn't like $245 per month back in the budget?

In fact, ordinarily, when you do have to pay mortgage insurance, you can't request it comes off until you reach 20% equity. It takes an average of 7 years before mortgage insurance is removed from a loan. Based on this, clients would be saving an average of $20,500 over the same period.

 Qualifying For ONE+ Because this is a conventional loan product tied to affordable housing goals, there are several requirements you should know about. Here's a brief rundown:

- You can't qualify if you make higher than 80% of the median income in the area in which you're looking to buy. For example, if you live in Macomb County, Michigan the area median income is $90,800. You can't use more than $72,640 to qualify for this ($90,800 ×.8 = $72,640). You can look up your area's median income with Fannie Mae's lookup tool.

- You need a qualifying FICO® Score of 620 or better. - This is for single-unit primary residences only. - When combined with our 2% grant, your initial down payment can be no more than 5%.

- Although there are income limits, there's one other important note to make. This is qualifying income. If you can meet debt-to-income ratio (DTI) requirements without using bonus income or putting another borrower on the loan, it doesn't need to be included in your qualifying income. This could give you some breathing room.

Frequently Asked Questions About ONE+ Now that you have the basics, let's take some time to answer a few questions you may have about this option.

Is this really a 1% down option?

Yes, but you get the benefit of going into your loan with 3% equity. In addition to the 1% you bring to the closing table, the lender is providing a 2% grant. Are temporary buydowns available for this product?

Temporary buydowns allow for the creation of a fund to effectively lower the interest rate for a year or more at the beginning of your loan term. These are allowed if they come from an eligible source including the builder, seller or a real estate agent.

Are there other low down payment options if I don't qualify for this program? 

There are several other low down payment options that may be available to you depending on your situation. For example, if you need to qualify with a higher income, you can still put as little as 3% down on a conventional loan as a first-time home buyer.

If your credit score is 580 or better, you can put 3.5% down for an FHA loan. The Bottom Line We know that the down payment is one of the biggest obstacles home buyers face when they can otherwise afford a mortgage payment. ONE+ allows you to get a mortgage by putting as little as 1% down. Combined with a 2% grant from the lender, you start with 3% equity. Mortgage insurance is not charged to you.

This is available to those qualifying with less than 80% of the area median income level who have qualifying credit scores of 620 or better. You can buy a single-unit primary residence nationwide.

Does ONE+ sound good to you?

You can apply online or give one of our Home Loan Experts a call at 510-938-1378. 

Disclaimers: Client will be required to pay a 1% down payment, with the ability to pay a maximum of 3%, and the lender will cover an additional 2% of the client’s purchase price as a down payment. This offer is only available on conventional purchase loans. Primary residence only. Cost of mortgage insurance premium not passed through to client. Offer valid only for home buyers when qualifying income is less than or equal to 80% area median income based on county where property is located. Not available with any other discounts or promotions. Offer cannot be retroactively applied to previously closed loans or loans that have a locked rate. This is not a commitment to lend. We reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change. Additional restrictions/conditions may apply.

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