Quicken Loans has been fairly hush about its latest offering of a super low down payment mortgage, even as rival bank giants like Bank of America, Wells Fargo, and JPMorgan Chase all tout their new 3 percent down mortgage products. But late last year, Quicken Loans quietly began offering 1 percent down payment mortgages.
The program emerged from a partnership between Quicken and Freddie Mac in October 2015 and was structured to be part of Freddie Mac’s Home Possible Advantage program, which requires a 3 percent down payment.
However, Quicken Loans offers its customers a 1 percent down because it grants the extra money to the borrower, Bill Banfield, Quicken Loans’ vice president of capital markets, told HousingWire in an exclusive interview.
“We require 1 percent from consumer and we give the consumer a 2 percent grant, so the client has 3 percent equity immediately,” Banfield told HousingWire.
The 1 percent down-payment loans are available only for those purchasing a home and can only be used on a single-family home or condo (second home and investment properties or co-ops are not included). Borrowers also must have a FICO score of 680 or above and must earn less than the median income for their county. Their debt-to-income ratio must be 45 percent or less.
“We want to try to help people and do it in a smart way,” Banfield told HousingWire. “For us, it was really a question of if you want to provide access to credit, how do you do it responsibly? How can you help people? If first-time buyers are struggling, are there smart ways to help them while still balancing access to credit? … We wanted to have a conventional option to get people into more homes.”