Yep, it’s another post about a 1% down home loan, which seems to be the next big thing in the mortgage realm. That and zero down mortgages I suppose. I guess it’s a sign of the times, or more appropriately, sky-high home prices.
But this new loan program from United Wholesale Mortgage is a tad different. It’s unique because it’s being offered by one of the largest wholesale lenders, meaning mortgage brokers now have a 1% down mortgage option to extend to their borrowers.
It’s a game changer for brokers because up until now they’ve had to compete with loan officers at retail banks who had access to more low and no-down payment loan programs. It levels the playing field to some degree.
United Wholesale Mortgage Equity Boost with Just 1% Down
- Borrowers only need to put down 1% of the home purchase price
- United Wholesale Mortgage contributes another 2%
- Which when combined results in a 3% down payment
- Enough to get a conventional mortgage loan backed by Fannie Mae or Freddie Mac
Like some of the other recent 1% down offerings, such as the program offered by Guaranteed Rate, the lender covers a portion of the down payment so the borrower can come into the home purchase with very little down but still walk away with some built-in equity.
It’s good to have some skin in the game, especially if home prices flatten out, and this program seems to accomplish that.
Specifically, the borrower must come up with a 1% down payment and United Wholesale Mortgage will chip in (gift) 2% of the home purchase price, pushing the loan-to-value ratio down to 97%, making it eligible for Fannie Mae or Freddie Mac backing.
It’s unclear if they’re working with Fannie Mae or Freddie Mac here, but it appears to be a conforming loan, which generally equates to lower mortgage interest rates.
United Wholesale Mortgage calls the loan program “Conventional 1% Down with Equity Boost,” an exclusive only offered by the Troy, Michigan based mortgage lender.
They’ve reportedly grown to become the top wholesale mortgage lender in the nation so it makes sense they’d be the first to come up with such an offering.
There Are Some Rules Here…
- United Wholesale Mortgage requires a 700 FICO score for the program
- Meaning only the most creditworthy borrowers need apply
- The max DTI ratio is also set at 43% like most other mortgages
- And it’s likely only available on an owner-occupied one-unit property with a conforming loan amount
There are some guidelines borrowers must adhere to if they want to get away with a 1% down payment on a new home.
First the foremost, you must have a minimum 700 FICO score. Additionally, the max DTI ratio is set at 43%, which is the standard for all Qualified Mortgages.
Other than that, it should follow the guidelines set forth by Fannie and Freddie. Take a look at the Home Possible Advantage for more on that.
Essentially, you can only finance an owner-occupied one-unit property, so basically a single-family home, condo, or townhouse.
The loan amount also has to be at or below the conforming loan limit, which is currently set at $453,100. I don’t believe you have to be a first-time home buyer, but you are limited in the type of mortgage you can get if it adheres to Fannie/Freddie. Just fixed mortgages, no ARMs.
I’m not sure about the rates, but United Wholesale Mortgage says on their website that they’re “great low rates.”
Lastly, homeowners may be able to forego monthly private mortgage insurance, though in that case it will be paid upfront or built into the interest rate. In other words, a higher mortgage rate but no MI paid out of pocket directly if that’s your desire.
Perhaps most exciting, UWM says they can close the loans in 30 days or less, which is a great selling point for someone attempting to purchase a home in today’s competitive real estate market.
They lend in all 50 states so the new loan program is presumably open to would-be homeowners nationwide. If you’re working with a mortgage broker, you may want to inquire about this option assuming they have a relationship with UWM.
If you’re a broker, reach out to UWM to get paired with one the company’s Account Executives to learn more about this program.
Can I combine with the 3/2/1 buydown using this 1% program with a 2% lender credit?