Have you heard the good news? Quicken Loans offers a 1% down option for home buyers. With that small investment, you can gain 3% equity in your new home.*
That seems like a pretty good deal for just about anyone. Read on to learn about how the program details and requirements, and see how only putting 1% down could make a huge difference for you.
1% Down Payment Program Details
This program could be a great option for you if you’re looking to buy a home. When you put 1% down, you can gain an additional 2% equity through a grant from Quicken Loans that you don’t have to pay back.
Let’s go over a few additional details on the requirements.
In order to qualify for this program, there are three key qualifying factors you need to keep in mind.
You need a minimum FICO score of 680.
In most cases, you can’t make more than 100% of the area median income. In order to figure out what the qualifying income is in your area, you can use this search engine from Freddie Mac . If you happen to live in an area that’s considered underserved, these limits may not apply.
Finally, you’ll most likely qualify if you have a debt-to-income (DTI) ratio of 45% or less. You’re less likely to be approved if your ratio is higher than 45%.
You must be purchasing a single-unit primary residence, condo, planned unit development (PUD) or townhouse in order to be eligible for this program. You can’t be buying a multiunit residence or co-op.
Also note that you can’t use this loan to get a second home or investment property.
Now that we’ve covered the program details and requirements, let’s take a look at situations that are ideal for options like this 1% down program.
Ditch the Rental
If you’ve been thinking about buying a house for a while but are still stuck paying rent, it might be time to put your cash flow toward mortgage payments. This way, you save money every month and can invest it in your own home. You can even eventually take equity out of your home and convert it into cash to make home improvements, contribute to a college fund or whatever other investment you desire. This can be especially ideal if you live in an area with high rental payments.
Let’s take Dallas as an example. According to Zillow Data’s single-family rental prices for March 2017, the average rental price for a single-family residence is just under $1,600.
According to the most recent data, the median home price in the Dallas area is $205,300. If you break that into a 30-year mortgage at a 5.25% rate, your monthly payment will be $1,133.67, not including taxes and insurance.
If you want to do the math for your own area, you can check out our amortization calculator and try your own payment scenario.
Contributing a lower down payment can be especially helpful in higher cost areas of the country. If you live in an area where houses are going for $300,000, the ability to make a $3,000 down payment while gaining additional 2% equity could suddenly make ownership a great possibility.
Spending on Other Necessities
Buying a house is just the start of the fun. Once you’ve purchased the home, you can really make it your own. Of course, some of that could mean opening up your pocketbook.
Housing is a major economic driver. According to the National Association of Home Builders, the average homeowner who moves into a new home spends over $12,600 in the first two years after investing in things like appliances, furniture and alterations. The data, gathered in 2013, showed that the average buyer spends about $10,900 on those items.
If you only have to put 1% down, you can free up that money for other items in your home, bills or other personal investments.
If this sounds good to you, you can get a preapproval online through Rocket Mortgage® by Quicken Loans® . If you prefer to speak with one of our Home Loan Experts, we would be happy to take your call at (888) 980-6716. If you have any questions, go ahead and leave them for us in the comments.
*The payment on a $200,000 30-year fixed-rate loan at 4.75% (5.289% APR) with an LTV of 97% is $1043.30, which includes a mortgage insurance payment of $95. Taxes and homeowners insurance are not included. Rates shown valid on publication date of 4/24/2017. Restrictions may apply.
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