Zillow Home Loans is rolling out its 1% Down Payment program that will enable home buyers to pay as little as 1% down on their next home purchase, with the company contributing an additional 2% at closing.
The program is initially being offered on properties located in Arizona, with plans to expand to additional markets. To highlight the impact of the new program, Zillow Home Loans noted a buyer looking to purchase a $275,000 home in Phoenix who makes 80% of their area’s median income and saves 5% of their income would need 11 months to save for the down payment through the program but would need to wait over 31 months without the 3% savings.
“For those who can afford higher rent payments but have been held back by the upfront costs associated with homeownership, down payment assistance can help to lower the barrier to entry and make the dream of owning a home a reality,” said Zillow Home Loans’ senior macroeconomist Orphe Divounguy. “The rapid rise in rents and home values means many renters who are already paying high monthly housing costs may not have enough saved up for a large down payment, and these types of programs are welcome innovations in lowering the potential barriers to homeownership for those who qualify.”
Zillow Home Loans is a subsidiary of Zillow Group (NASDAQ: Z, ZG).