No it’s not déjà vu, or Groundhog Day. Guaranteed Rate has launched yet another 1% down payment mortgage in the span of about a month.
However, their new “Double Match” loan program is quite a bit different than their previously announced 1% down mortgage that relied on a grant from the City of Chicago and Chicago Infrastructure Trust (CIT).
Double Match Mortgage Available Nationwide
For one, the Double Match program is available to home buyers nationwide, not just in the city of Chicago.
One thing that is the same is the down payment requirement, which is set at a low, low 1%. That’s right, you just need 1% of the purchase price to get into the home.
It’s a 97% LTV mortgage, meaning it qualifies for backing from Fannie Mae and Freddie Mac, but you only have to come up with 1% of the total 3% down payment.
The other 2% is a “completely forgivable” grant that doesn’t need to be paid back, even if the buyer moves or refinances their mortgage. They claim this is unlike other down payment assistance programs.
I asked Guaranteed Rate for specifics regarding the grant and was told the following via their communications department:
- Guaranteed Rate is providing the grant
- There is no waiting period
- No penalty if borrowers sell or refinance
This seems to mirror a similar loan program recently launched by United Wholesale Mortgage via the broker channel that gifts 2% of the home purchase price.
It also seems to be a trend in the mortgage world – despite max LTVs capping out at 97%, many lenders are getting creative to stretch it to an effective 99% LTV, which clearly isn’t far from the days of zero down financing.
Double Match Mortgage Guidelines
As mentioned, the loan program appears to run on the back of the Fannie or Freddie loan programs, such as the Home Possible Advantage.
However, there are some lender overlays specific to Guaranteed Rate, such as a minimum FICO score requirement of 680, which is significantly higher than the 620 required by Fannie/Freddie.
Of course, 99% LTV presents more risk to lenders, so requiring a good credit score (not great or excellent by any means) is probably a prudent measure.
The maximum loan amount is also set at the conforming limit of $417,000, and there are income limits depending on where the subject property is located.
Allowable property types include single-family homes, condos, and townhomes, and all must be owner-occupied. I’m assuming they all must be one-unit as well.
The Double Match program can also work in conjunction with a Mortgage Credit Certificate if you want to save even more money on mortgage interest.
Speaking of mortgage interest, I have no idea what the mortgage rates are like on this program, or if mortgage insurance is paid separately or built into the rate. My assumption is that rates will be higher than 97% LTV mortgages to account for risk.
If you’re interested, reach out to Guaranteed Rate to get more details. They originate mortgages in all 50 states and have local offices all over the place.
For the record, Guaranteed Rate is now the eight largest retail mortgage lender in the country.