If you’ve diligently crunched the numbers, feel confident in your ability to manage mortgage payments and property upkeep, but find the down payment hurdle a substantial one, you’re not alone. That initial deposit can seem insurmountable with the continuous rise in housing costs. However, ONE+ powered by our lender is here to change the game, allowing you to step into a new home with as little as a 1% down payment. Plus, there’s a generous 2% grant from the lender to sweeten the deal and make your homeownership dream a reality.

In this article, we’ll delve into the mechanics of this program and provide insights into who qualifies for this enticing option.

The Benefits of ONE+

ONE+ offers a host of advantages. Foremost among them is the ability to secure your home with just a 1% down payment, boosted by the lender’s generous 2% grant, effectively providing you with 3% equity upfront. For eligible clients, there’s also the flexibility to contribute up to 3% towards the down payment while still benefiting from the 2% grant.

This opportunity is open to first-time and repeat homebuyers with no geographical restrictions – it’s accessible nationwide. Additionally, clients will appreciate the absence of mortgage insurance, which translates to lower monthly payments, making homeownership more affordable. But before we dive further into the details, let’s break down the math using a hypothetical $250,000 purchase price and a 30-year fixed loan with a 6% interest rate:

  • You bring $2,500 for a down payment (1% of $250,000).
  • The lender covers 2% of the loan amount ($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 $5,000 the lender covers means lower out-of-pocket costs at closing for you, and who wouldn’t appreciate an extra $245 per month in their budget?

Typically, when mortgage insurance is required, you can’t remove it until you reach 20% equity, a process that takes an average of 7 years. Based on this estimate, ONE+ clients stand to save an estimated $20,500 over the same period.

Qualifying for ONE+

As a conventional loan product aimed at affordable housing goals, ONE+ does come with specific eligibility requirements. Here’s a quick rundown:

Your income cannot exceed 80% of the median income in your target area. For instance, if you’re looking to buy in Maricopa County, Mesa, where the area median income is $99,000, your qualifying income cannot exceed $79,200 ($99,000 × 0.8). You can find your area’s median income using Fannie Mae’s lookup tool.

  • You must have a qualifying FICO® Score of 620 or higher.
  • This option is available for single-unit primary residences only.
  • When combined with the lender’s 2% grant, your initial down payment cannot exceed 5%.

It’s worth noting that while there are income limits, this pertains to qualifying income. If you meet the debt-to-income ratio (DTI) requirements without relying on bonus income or adding another borrower to the loan, you can exclude those sources from your qualifying income, providing some breathing room.

Frequently Asked Questions About ONE+

Now that you have the basics let’s address some common questions you may have about this option:

Is this really a 1% down option?

Yes, it is. With ONE+, you’ll have the advantage of entering your loan with 3% equity – 1% from your contribution and 2% from the lender’s grant.

Are temporary buydowns available for this product?

Temporary buydowns, which can lower your interest rate for an extended period at the start of your loan term, are allowed if they originate from eligible sources such as the builder, seller, or a real estate agent. Learn more about temporary buydowns.

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

Indeed, several other low down payment options are available based on your unique circumstances. For instance, if you have a higher income, you can still put down as little as 3% on a conventional loan as a first-time homebuyer. If your credit score is 580 or higher, you can put 3.5% down for an FHA loan.

The Bottom Line

We understand that the down payment can be a significant obstacle for homebuyers who are otherwise financially capable of handling a mortgage. ONE+ offers you the chance to secure a mortgage with just a 1% down payment, enhanced by a 2% grant from the lender, giving you a solid 3% equity foundation. Best of all, there are no mortgage insurance charges.

This program is open to individuals qualifying with less than 80% of the area median income and boasting credit scores of 620 or higher. It’s your chance to buy a single-unit primary residence anywhere in the nation.

Starwest Mortgage gives you unique access to the ONE+ program through the lender’s wholesale channel, which allows you to receive the most competitive interest rate pricing through the broker channel rather than dealing with what retail banks can offer you directly.

So, don’t miss this incredible opportunity to realize your homeownership dreams. Act now, and take that first step towards your new home.

(Note: This offer is subject to specific terms and conditions, and eligibility criteria may apply.)