loanDepot’s new FHA down payment assistance program lets borrowers put zero down

The down payment assistance is up to 5% of the home's purchase price or appraised value and comes in the form of a repayable second mortgage

loanDepot has rolled out a new down payment assistance program for Federal Housing Administration (FHA) loan borrowers that enables them to put zero money down upfront.

In loanDepot’s program, dubbed AccessZERO, the down payment assistance is structured as a 10-year fully amortized repayable second mortgage.

Borrowers must have a minimum credit score of 600 to qualify for the down payment assistance, which can be as much as 5% of the home purchase price or appraised value, whichever is less. 

The program is available nationwide through the retail channel for first-time and repeat homebuyers applying for FHA 30-year, fixed-rate purchase loans.

The lender is also considering offering a rate buy-down option soon, according to a spokesperson for the company.

In a recent interview with HousingWire, loanDepot CEO Frank Martell said the company is not chasing business that doesn’t make sense but trying “to make sure our focus is on the strategic growth areas that we think will contribute to the first-time homebuyer, diverse lending and affordable” lending.  

Several lenders have rolled out down payment assistance programs recently, including Rocket MortgageUnited Wholesale MortgageGuild Mortgage and Guaranteed Rate

In most cases, the product is essentially a conventional 3% down mortgage in which the lender pays 2% and the borrower puts just 1% down. Some lenders limit their share of the down payment to $4,000 or $5,000. Usually, the programs come from the lenders’ funds instead of working with a local nonprofit or a government-sponsored enterprise.

These programs function like a modification to Fannie Mae‘s HomeReady and Freddie Mac‘s HomePossible programs, which allow a 3% down payment — or what lenders refer to as 97% loan-to-value (LTV) — on conventional loans. 

UWM launched Conventional 1% Down in April, Rocket rolled out the ONE+ program in May, and Guild started to offer its program in June. Guaranteed Rate joined the list in July with OneDown.  

loanDepot said its down payment assistance program is offered by the Tule River Finance Authority and the companies are not affiliated.

The California-based lender noted that borrowers who make a smaller down payment will typically receive a higher mortgage rate. FHA loans also come with mandatory upfront and annual mortgage insurance premiums — usually for the life of the loan.

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