Guild Mortgage announced a new, nationwide 1% down mortgage product to cater to the upcoming surge in Millennial homebuyers.

To make the down payment so low, Guild Mortgage stated the borrower’s 1% down will be combined with a 2% grant from the lenders, creating 3% equity and a loan with a 97% loan-to-value ratio.

And most importantly for the borrower, the grant does not need to be repaid.

“We were able to create this breakthrough national program because we are a direct lender with many decades of strong investor relationships and first-time homebuyer expertise,” said Mary Ann McGarry, president and CEO of Guild Mortgage. “We wanted to make homebuying more attainable for more people, including millennials who are entering the housing market in increasing numbers.”

Guild Mortgage isn’t the first lender to come out with a 1% down, but it is still one of the few lenders that offer it.

As one of the first and unbeknownst to many in the market, Quicken Loans began offering a 1% down mortgage in late 2015. Both United Wholesale Mortgage and Guaranteed Rate launched a 1% down product in the summer of 2016.

There are two key factors that make Guild’s 1% product different.

While the other lenders also either offer a 2% grant or a 2% lender-paid down payment, Guild’s mortgage adheres to HomeReady guidelines, which is Fannie Mae’s affordable lending product.

Guaranteed Rate and Quicken Loans worked with Freddie Mac.

Secondly, Guild Mortgage allows a debt to income ratio up to 50%. Both Quicken Loans and United Wholesale Mortgage require a maximum or 45% and 43%, respectively.

Other key components of the Guild 1% down loan program include:

  • Non-borrower household income can be used to qualify
  • Boarder income can be used to qualify

“With the gift of a 2% grant, Guild is helping solve financing challenges for first-time and move-up buyers with low-to-moderate income,” said David Battany, executive vice president, Capital Markets, at Guild. “Because this is a down payment assistance program, there are income limits, required homebuyer classes and additional parameters. Income limits do not apply for properties in low-income census tracts.”

“Guild’s 1% down loan program provides a unique option to low-and-moderate-income homebuyers who are having a difficult time coming up with the down payment,” continued Battany. “We developed this program because of our history of working with first-time homebuyers for more than 50 years and what we saw as a need to fill a void in the market. Now, many homebuyers will be in a stronger position to afford a first home, or even upgrade to another home.”

And this is only the second big initiative as of late to come out of Guild Mortgage. Back in March, Guild announced it launched its own digital mortgage, called MyMortgage, through a partnership with Roostify, a cloud-based technology platform, to develop its digital mortgage.

 

 

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