Empowering Homeownership With as Little as 1% Down

At Progressive Lending Group, we specialize in innovative mortgage solutions.

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A 1% conventional loan allows eligible borrowers to buy a home with a low upfront cost by only contributing 1% of the purchase price, while the lender or a grant covers the remaining 2%. This program makes homeownership more accessible, especially for moderate- and low-income buyers. 

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Key benefits of a 1% conventional loan:

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Financial flexibility

• Minimal upfront cash: With a 1% conventional loan, you can keep more of your savings for closing costs, moving expenses, or an emergency fund, rather than tying it all up in a large down payment.

• Quicker path to ownership: The low down payment requirement can help you buy a home faster, especially in competitive and fast-moving housing markets.

• Immediate equity: Because a grant from the lender covers the remaining portion of the down payment, you start your mortgage with a total of 3% equity, giving you a head start on building wealth. 

Loan advantages

• Cancellable private mortgage insurance (PMI): Unlike with FHA loans, which may require you to pay mortgage insurance for the life of the loan, you can request to cancel your PMI once you have built up 20% equity in your home.

• Competitive advantage: In a tight housing market, sellers often prefer conventional offers over government-backed options like FHA loans, as they are seen as less likely to fall through due to strict property inspection requirements.

• Flexible property types: Conventional loans can be used to finance primary residences, second homes, and investment properties. However, most 1% down programs are restricted to purchasing a primary residence. 

Eligibility for a 1% conventional loan

To qualify for a 1% conventional loan, you must meet certain requirements set by the lender and the underlying program, such as Fannie Mae's HomeReady or Freddie Mac's Home Possible. 

• Income limits: Your household income must typically be at or below 80% of the area median income (AMI).

• Minimum credit score: You will generally need a credit score of at least 620 to qualify.

• Primary residence: The home you are purchasing must be a single-family primary residence. It cannot be an investment property.

• Homebuyer education: If you are a first-time homebuyer, you may be required to complete an online homeownership education course. 

Potential drawbacks

While a 1% conventional loan can be an excellent option for many buyers, it's important to consider some potential downsides:

• Higher interest rate: Your interest rate may be higher compared to a buyer who puts 20% down, as you are borrowing a larger amount relative to the home's value.

• Private mortgage insurance (PMI): You will be required to pay for PMI until your loan-to-value ratio drops to 80%.

• Higher monthly payment: With a smaller down payment, your total loan amount will be larger, which typically results in higher monthly mortgage payments. 

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