Zillow Home Loans Launches 1% Down Payment Program in Arizona
Zillow Home Loans announced last week the launch of its 1% Down Payment program, which will allow eligible home buyers in Arizona to put down as little as 1% on their next home purchase. The program will initially be offered on properties located in Arizona, with plans to expand to additional markets in the future.
The 1% Down Payment program comes in response to the growing affordability crisis in most markets, where saving for a down payment remains a formidable obstacle for many aspiring homeowners. This challenge is particularly pronounced for first-time buyers who often grapple with high rents. The current national average asking rent of $2,062 marks a 3.6% increase from the previous year and a staggering 31% surge since the beginning of the pandemic.
By aligning with Zillow Home Loans’ 1% Down Payment program, many first-time buyers will find it more feasible to transition from renters to homeowners. The initiative could also have a notable impact on homebuyers’ financial timelines. According to Zillow Home Loans’ analysis, a potential homebuyer seeking a $275,000 home in Phoenix, Arizona, and earning 80% of the local median income could reduce their down payment savings duration from 31 months to just 11 months by leveraging the 1% Down Payment program.
Orphe Divounguy, Zillow Home Loans’ senior macroeconomist, emphasizes the significance of such programs in making homeownership achievable for those who are ready to take the plunge.
Divounguy notes, “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.”
While Zillow’s new program is targeted to people who are able to afford higher rents (and presumably a mortgage), it also comes at a time when the average American can barely afford their cars and credit card bills.
A recent report from the New York Fed found that US household debt has soared beyond pre-pandemic levels, and with the current economic conditions, this is expected to get worse with the lifting of the student loan holiday in the near horizon.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
