Add Guaranteed Rate to the list of lenders offering down payment assistance programs to target first-time homebuyers facing historic affordability challenges.
The Chicago-headquartered lender released OneDown — a mortgage loan that allows customers to buy a home with a minimum down payment of 1% of the purchase price. G-Rate will provide 2% of the required 3% minimum down payment for a conventional loan or up to $2,000 — whichever is lower, the firm said on Wednesday.
OneDown loan program is only eligible for buyers looking for purchase transactions of primary residences.
To qualify for the program, borrowers’ income must be less than 80% of the area median income and have a credit score of at least 620. Buyers must contribute a minimum of 1% down payment from their own funds. Any additional down payment or funds required to close must be from an eligible source.
“OneDown is Guaranteed Rate’s response to the ongoing effect of stubborn inflation and higher interest rates,” Kate Amor, SVP and head of enterprise products for Guaranteed Rate, said in a statement. “We want to not only make homeownership less intimidating but make it possible for more families by offering down payment options as low as 1%.”
G-Rate also noted that seller-paid temporary buydown options may be available for borrowers.
Sellers — including homebuilders — are able to gain a competitive edge by offering temporary rate buydowns, an attractive option that gives borrowers a reprieve to combat the housing affordability challenge.
Home prices are on the rise again, mortgage rates are near 7% and the lack of existing homes for sale continues to put pressure on first-time homebuyers.
Lenders — already struggling with the mortgage industry rightsizing — have rolled out 1% down payment assistance programs in recent months.
United Wholesale Mortgage (UWM) Rocket Mortgage and Guild Mortgage rolled out conventional 1% down mortgage loan programs in the second quarter of 2023.
G-Rate ranked as the sixth largest mortgage lender in America in the first quarter of 2023 with 2.4% market share, according to data from Inside Mortgage Finance (IMF).
In Q1, the lender originated $7 billion in production volume, down 14.6% from $8.2 billion in Q4 2022. Its origination declined 58.8% from $11.9 billion from the same period in 2022.
