How a 1% down program actually works
The structure behind the headline: you contribute 1%, and the lender grants a credit (commonly 2%, sometimes capped in dollars) to bring your total to a 3% down conventional loan, typically riding on HomeReady or Home Possible rails, income limits included. The credit is real money you do not repay. The trade-offs are also real: pricing may be modestly higher than a plain 3% loan, caps limit purchase price fit in coastal markets, and availability comes and goes with market cycles.
Availability disclaimer, in plain language
Lender-credit programs rotate. Whether a true 1% down structure is open today, this quarter, for your income and county, is a phone call, not a webpage promise. Jackie will tell you what is genuinely available the day you ask, and what beats it.
The full low-down-payment menu
- VA: 0% down, no monthly mortgage insurance. If you served, start here.
- 1% down lender-credit programs: when open, powerful for moderate-income buyers under the caps.
- Conventional 3% down: the dependable workhorse, PMI cancels at 20% equity.
- FHA 3.5% down: friendliest to thinner credit and higher ratios.
- Gift funds on any of the above: family help can supply the entire down payment.
The winner is a total-cost calculation across rate, insurance, and credits, not a headline percentage. See the whole comparison for first-time buyer loans.
Frequently asked questions
Is 1% down too good to be true?
It is true with an asterisk: real credit, real ownership, and real fine print on income limits, price caps, and pricing. For buyers who fit the box, it is excellent. For buyers outside the box, plain 3% conventional or FHA usually wins, and the honest comparison takes one call.
Do I repay the lender credit if I sell or refinance?
Program terms vary, and most current structures do not require repayment, but this is precisely the fine print to confirm on the specific program open when you apply. Get it in writing; Jackie will.
What if I earn above the income limits?
Then the credit programs are out, but standard 97% conventional has no income cap for eligible first-time buyers, and the difference between 1% and 3% down on a starter-priced home is smaller than the fear suggests. Run both numbers before deciding it is out of reach.