{"id":157657,"date":"2023-09-05T12:17:43","date_gmt":"2023-09-05T18:17:43","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=157657"},"modified":"2024-02-28T08:44:39","modified_gmt":"2024-02-28T15:44:39","slug":"zillow-one-percent-down-program","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/zillow-one-percent-down-program","title":{"rendered":"Zillow Launches 1% Down Program\u2014Could It Help Investors?"},"content":{"rendered":"\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-20-year-high\" target=\"_blank\" rel=\"noreferrer noopener\">Mortgage rates<\/a> soared to their highest point in over two decades last month. Just days later, Zillow launched a product that fights back against those higher costs.<\/p>\n\n\n\n<p>The company\u2019s 1% Down Payment program, which went live Aug. 24, allows eligible borrowers to make just a 1% down payment when buying a house. According to a <a href=\"https:\/\/zillow.mediaroom.com\/2023-08-24-Zillow-Home-Loans-offers-a-1-down-payment-option,-opening-homeownership-to-more-borrowers\" target=\"_blank\" rel=\"noreferrer noopener\">press release by Zillow<\/a>, the program \u201clowers the down payment barrier and increases access to the housing market.\u201d It can also \u201creduce the time homebuyers need to save\u201d for their home purchase.<\/p>\n\n\n\n<p>It all sounds nice, but can the program really make a difference in housing affordability? And what could it mean for investors who qualify for it?&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How It Works<\/h2>\n\n\n\n<p>Zillow hasn\u2019t released much detail about how to actually use the 1% Down Payment program, but according to the press release, eligible buyers will need to put 1% of their home\u2019s price down, and then Zillow Home Loans will throw in another 2%. That 2% is paid at closing\u2014not directly to the buyer.<\/p>\n\n\n\n<p>Other than that, the company hasn\u2019t said much else\u2014including what requirements borrowers will need to meet in order to be eligible. There will likely be some sort of income requirement, especially considering Rocket Mortgage\u2019s and UWM\u2019s comparable programs both have them. (With UWM\u2019s, buyers have to make 50% of the area\u2019s median income or less.)<\/p>\n\n\n\n<p>For now, Zillow\u2019s program is only available in Arizona, though the company plans to expand beyond that down the line.\u00a0<\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_64f77168515a2: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_64f77168515a2\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/zillow-one-percent-down-program', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/zillow-one-percent-down-program',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/zillow-one-percent-down-program', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Will It Make a Difference?<\/h2>\n\n\n\n<p>While it\u2019s true that having Zillow kick in part of your down payment can help you buy a home sooner and with less time spent saving, that\u2019s not always a good thing.&nbsp;<\/p>\n\n\n\n<p>For one, it could encourage cash-strapped consumers to take unnecessary risks\u2014buying a home before they have the financial health to really support it.&nbsp;<\/p>\n\n\n\n<p><strong><em>Related: <\/em><\/strong><a href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><em>How Much Is a Down Payment on a House?<\/em><\/strong><\/a><\/p>\n\n\n\n<p>If the median home price in this country is $410,000, on a $400,000 mortgage, principal and interest alone will be about $2,700 per month, according to BiggerPockets CEO Scott Trench. He adds: \u201cThe difference between a 1% and a 3% down payment on a median home is $8,000. If an aspiring homeowner is qualified for a principal-and-interest payment alone of $32,000 per year\u2014not to mention insurance, taxes, maintenance, utilities, and the other costs of homeownership\u2014and can&#8217;t come up with $8,000, something is wrong. I&#8217;d personally encourage that borrower not to purchase until they have a bigger cash cushion.\u201d<\/p>\n\n\n\n<p>Some even argue that if the program catches on, there could be a glut of homeowners who\u2019ve overextended themselves and are just one unexpected medical bill or home repair away from defaulting. That could lead to foreclosures and falling home values, a la 2008.&nbsp;<\/p>\n\n\n\n<p>That\u2019s getting ahead of ourselves, though. With a rollout currently in just one state, widespread adoption of Zillow\u2019s program isn\u2019t in the cards for a while.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Bright Side<\/h2>\n\n\n\n<p>For buyers who are prepared financially\u2014with a flush <a href=\"https:\/\/www.biggerpockets.com\/blog\/saving-money-ultimate-guide\" target=\"_blank\" rel=\"noreferrer noopener\">savings account<\/a> and the ability to afford their mortgage payments for the long haul\u2014the program could be a boon, helping them get into a home slightly more affordably.&nbsp;<\/p>\n\n\n\n<p>It could also be good for investors looking to keep extra cash free for renovations and repairs.&nbsp;<\/p>\n\n\n\n<p>As Trench puts it: \u201cKeeping another $8,000 in the bank might be smart for many investors. That&#8217;s the difference between being able to fund a water heater replacement or get started on a roof replacement if something goes wrong in the early part of homeownership.\u201d<\/p>\n\n\n\n<p>Still, at the end of the day, Trench says, \u201cThe product is interesting and will get adoption\u2026but it won&#8217;t fundamentally change the game for many buyers.\u201d<\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_c81a4af1af009ed724cd8120a36eb579\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_5d2dd13828ed4a860b65f1e6848d16ff\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_6a7910f66cbae4340595c23fd83721f7 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/zillow-one-percent-down-program&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/zillow-one-percent-down-program&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The new program is designed to lower the down payment barrier for homebuyers. We explore the potential impact on real estate investing.<\/p>\n","protected":false},"author":613679,"featured_media":157659,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-157657","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/157657","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=157657"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/157657\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/157659"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=157657"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=157657"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=157657"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}