Rocket Mortgage, the retail home lender division of Rocket Cos. (NYSE: RKT), has introduced ONE+, a 1% down home loan program designed to expand access homeownership for low- and moderate-income households.
According to the Detroit-headquartered company, the new program enables a borrower to make a down payment of 1% of the purchase price while Rocket Mortgage covers the remaining 2% needed to reach the required threshold for conventional loans. The company added that the program eliminates the need for the mortgage insurance fee which is traditionally required if a borrower puts less than 20% down on their purchase.
ONE+ is available to homebuyers purchasing single-family homes – including manufactured homes – whose income is equal to or less than 80% of their area median income. The company estimated that more than 90 million people could be eligible for the program.
“Rocket Mortgage prides itself on finding innovative solutions and lending programs that help clients achieve their goals in any market cycle. No other lender has a mortgage option that makes affordable homeownership possible for as many Americans as ONE+,” said Bob Walters, CEO of Rocket Mortgage. “We talk with people from all walks of life every single day – many of whom are ready to own a home, and could easily make the monthly mortgage payments, but are having trouble saving for a down payment. ONE+ is a response to that feedback and the latest example of Rocket’s commitment to creating programs that help make homeownership more attainable.”
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Rocket Mortgage is not going to give anything away, that 2% they just funded you probably comes with a high interest rate payable to Rocket Mortgage in whatever terms they agree to. Also, how is mortgage insurance eliminated when you only have a combined 3% down?
Why comment with speculation? See for yourself what interest rates they are offering. When I refinanced my home one lender said I would need to bring money to the table and pay for an appraisal, with Rocket I got back over $6k (not a cash out) and did not have to pay for an appraisal because they knew there was sufficient equity to cover the re-fi. Speak in facts not speculation. Some things are actually as good as they seem.
Zillow just announced a similar program starting in the Arizona market.
If this is going to be allowed, then why not let family members or anyone else step up with a loan to help the buyer. I bet the interest rate cost difference in comparison to Rocket and Zillow’s rate would be far less and benefit the buyer even more!
And, how does this negate the need for mortgage insurance?