Quicken Loans 1 Percent Down Payment: A Game Changer for Affordable Homeownership

Buying a home is an exciting milestone in life. However, the high costs associated with homeownership can make it feel out of reach for many potential buyers. The biggest obstacle is often coming up with enough money for a down payment. Traditionally, lenders have required 10-20% down to qualify for the best mortgage rates. But for most people saving that much takes years.

That’s why the introduction of 1% down payment mortgages by Quicken Loans in 2023 was a real game-changer. With only 1% down, a $300,000 home requires just $3,000 upfront. This lower requirement opens the door to homeownership years sooner for buyers who previously didn’t have enough savings.

In this comprehensive guide, we’ll explain everything you need to know about Quicken Loans 1% down mortgages. You’ll learn

• How Quicken Loans 1% down payment mortgages work
• Who qualifies for a 1% down mortgage
• The pros and cons of 1% down loans
• Other low down payment mortgage options
• Frequently asked questions

How Quicken Loans 1% Down Payment Mortgages Work

Quicken Loans, one of the largest mortgage lenders in America, launched its 1% down mortgage product called Rocket Mortgage ONE+ in April 2023.

Here’s how it works

• Borrowers only need to provide 1% of the purchase price as a down payment. On a $300,000 home, that’s just $3,000.

• Quicken Loans provides the borrower with a 2% grant applied to the down payment. This grant does not need to be repaid.

• Together, the 1% down payment and 2% grant from Quicken Loans covers the 3% minimum down payment required for conventional loans backed by Fannie Mae and Freddie Mac.

• The maximum down payment allowed is 5% when combining the borrower’s funds and Quicken’s 2% grant.

• There is a $350,000 cap on the maximum loan amount.

The benefit of this type of loan is that borrowers can get into a home with minimal cash out of pocket. The 2% grant from Quicken Loans gives buyers instant equity on day one.

Who Qualifies for a 1% Down Mortgage

Quicken Loans ONE+ mortgages have eligibility requirements borrowers must meet:

Income Limits

• Your income must be at or below 80% of the area median income where you want to buy. Median income levels vary by location.

Credit Score

• A minimum credit score of 620 is required. Many lenders have higher credit standards, so a score of 620 provides more options.

Property Type

• The 1% down mortgage can only be used on a single-family primary residence. Investment properties or vacation homes don’t qualify.

Meeting these criteria is essential for getting approved. Quicken Loans also looks at your full financial profile, including your income, assets, debts, and overall ability to repay the mortgage.

Pros and Cons of 1% Down Mortgages

Quicken Loans’ 1% down mortgage product opens doors for buyers, but also has some drawbacks to consider.

Pros

• Requires very little cash for a down payment, making homeownership more attainable

• Quicken Loans provides a 2% grant, so your equity position starts at 3%

• Interest rates are competitive with 3% down conventional loans

• No mortgage insurance requirement saves money each month

Cons

• Limited to borrowers at or below 80% of area median income

• Lower down payment means less equity at the start

• May be more difficult to refinance or sell if home values decline

• First-time home buyers have a higher risk of foreclosure with less equity

While 1% down loans offer an affordable path to homeownership, they do come with more risk. Make sure you feel comfortable with the pros and cons before committing.

Other Low Down Payment Mortgage Options

If you don’t qualify for Quicken Loans’ 1% down mortgage, there are other low down payment options:

• FHA loans – Require just 3.5% down and are available to anyone with a 580 credit score.

• VA loans – Offer 0% down for veterans and qualifying military members. No mortgage insurance.

• USDA loans – Also 0% down for low-income borrowers in designated rural areas.

• Home Possible® – 3% down conventional loans for low- to moderate-income buyers.

• HomeReady® 3% down conventional loans with flexible credit and income options.

Don’t rule out homeownership if you can’t get a 1% down mortgage. Talk to a lender about alternative low down payment programs that may work for your situation.

Frequently Asked Questions

Can I really put just 1% down on a home?

Yes, Quicken Loans’ ONE+ mortgage program allows a minimum 1% down payment. Your down payment can be up to 3%, with Quicken contributing an additional 2% grant.

What are the income limits for a 1% down loan?

Your income must be at or below 80% of the median income for the area where you’re looking to purchase. Income maximums vary by location.

How good does my credit need to be?

You’ll need a minimum credit score of 620 to qualify. The better your credit, the lower interest rate lenders can offer.

Can I use a 1% down loan for any property?

No, these loans are limited to single-family primary residences. You cannot use 1% down for a vacation home or investment property.

Should I put down more than 1% if I can?

Putting down more upfront provides immediate equity and can help you get a lower interest rate. But it’s not required to put more than 1% down.

Quicken Loans Made Homeownership More Accessible

The introduction of 1% down mortgages by Quicken Loans in 2023 was revolutionary. For the first time, buyers can purchase a home with minimal cash out of pocket. While these mortgages aren’t for everyone, they create new opportunities for those who previously didn’t have the savings for a larger down payment.

If you meet the income limit and credit score requirements, a 1% down mortgage from Quicken Loans can help you achieve your dream of homeownership years sooner. Be sure to weigh the pros and cons carefully and compare mortgage rates across multiple lenders. With the right loan program, you could soon be calling yourself a homeowner.