Lender's 1% Down Payment program is designed to make homeownership more accessible for eligible first-time buyers by lowering the upfront costs typically required for a mortgage. Here's a breakdown of how the program generally works:
How It Works
1% Down from the Borrower: The borrower contributes just 1% of the home purchase price as a down payment.
2% Contribution from Lender: Lender covers an additional 2% of the down payment, allowing the borrower to start with a total of 3% equity in the home.
Eligibility: Borrowers must meet certain income and credit score requirements. The program often targets lower-income buyers or those who qualify for special financial assistance.
Key Features and Benefits
Low Entry Barrier: The reduced down payment can make homeownership achievable sooner for first-time buyers or those with limited savings.
Conventional Loan: The loan is structured as a conventional mortgage, which may help borrowers avoid some of the restrictions associated with government-backed loans like FHA loans.
Potential Mortgage Insurance: Depending on the loan details, borrowers may need to pay private mortgage insurance (PMI) until they reach 20% equity.
Other Considerations
Interest Rates: Rates and terms are subject to typical mortgage rate changes, so it's advisable to check the current rate before applying.
Credit Requirements: There may be a minimum credit score requirement, though this is typically more flexible than for standard conventional loans.
The 1% Down program can be an excellent option for buyers looking to make homeownership more affordable.
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