1% Down Mortgages: How They Work and Where to Get One

A 1% down mortgage lets you buy a home with just one percent of the purchase price upfront. A grant or assistance from the lender typically covers the remaining portion of the down payment.

These 1% mortgage programs are now available from a growing number of lenders, and some don’t require you to pay mortgage insurance. This guide explains how they work, who qualifies, and what to consider before applying

In this article (Skip to ...)

• What is a 1% down mortgage?
• How do these mortgages work?
• Pros and cons of a 1% down mortgage
• Lenders that offer a 1% down mortgage
• Other low down payment mortgage options
• 1 percent down mortgage FAQ

What is a 1 percent down mortgage?

A 1% down mortgage is a type of home loan that lets eligible borrowers put down just 1% of the purchase price. The remaining 2%—enough to meet the minimum down payment requirement for a conventional loan—is covered by the lender through a grant or down payment assistance program.

This type of low-down-payment mortgage loan is available through select mortgage lenders and often comes with specific requirements, including limits on income, loan amount, debt-to-income ratio (DTI), and loan-to-value ratio (LTV), as well as minimum credit score requirements.

How does a 1% mortgage work?

With a 1% down payment mortgage, you contribute just 1% of the home’s purchase price at closing. The lender provides the remaining 2% to reach the standard 3% down payment required for most conventional loans.

In most cases, the lender’s 2% contribution comes in the form of a non-repayable grant or down payment assistance. You still need to qualify for the loan based on your credit score, debt-to-income ratio, and other standard guidelines. You’ll also need to cover closing costs, and in some cases, private mortgage insurance (PMI) will apply.

How to qualify for a 1% down payment mortgage

To qualify for a 1% down mortgage, you’ll need to meet specific criteria set by the lender. These vary by program, but many follow or closely resemble the eligibility guidelines used for Fannie Mae’s HomeReady and Freddie Mac’s Home Possible loans.

• A credit score of at least 620
• Income at or below 80% of the area median income (AMI)
• Purchasing a primary residence, not an investment property
• A single-family home, condo, or new construction
• A loan amount within conforming limits

Some 1% mortgage loan products are open only to first-time home buyers, while others allow repeat buyers. It’s also common for lenders to cap the 2% assistance amount.

Where can you get a 1% down mortgage?

Several lenders now offer 1% down mortgage programs that use either down payment assistance programs or lender-paid grants to cover the remaining 2% of the loan amount. Here’s a quick look at where you’ll find a 1% mortgage and what you’ll need to qualify.

ONE+ by Rocket Mortgage

With the ONE+ mortgage, you only need to put down 1%, while a down payment assistance program funded by Rocket Mortgage covers the remaining 2%.

• Buy a single-family home to live in as your primary residence.
• Need a credit score of 620 or higher and a DTI ratio below 50%.
• You’ll still need to pay closing costs and mortgage insurance.

Guild Mortgage: 1% Down Home Loan

Guild’s 1% down mortgage comes with a 2% grant, meaning you start with 3% equity from day one. This home loan is paired with their Payment Protection Program, which waives lender fees if you refinance later.

• Open to first-time or repeat home buyers
• Requires a credit score of at least 620
• Designed for low to moderate-income buyers
• For primary residences only
• Grant capped at $5,000 and doesn’t need to be repaid

UWM: Conventional 1% Down

United Wholesale Mortgage offers its 1% down conventional loan program through mortgage broker partners. The additional 2% comes in the form of down payment assistance. This program is exclusively for home purchases, not refinancing. Additionally, purchasing a condo or planned unit development (PUD) is not allowed.

• Available for borrowers at or below 80% AMI
• 620+ credit score required
• Loan-to-value must be 97%
• Grant capped at $7,000

JVM Lending: 1% Down Payment Loan Program

This 1% down mortgage from JVM Lending is available to all buyers, not just first-time home buyers. You put down 1%, and they add 2% as a forgivable grant.

• Requires a 620 credit score
• Income must be ≤ 80% of area median income
• Offers reduced private mortgage insurance (PMI)
• Fast 21-day closing
• Max loan amount of $350,000

Union Home Mortgage: 1% Down Payment Mortgage Program

Union Home Mortgage offers a 1% down payment mortgage where eligible borrowers contribute just 1%, and the remaining 2% is provided through a down payment assistance program, capped at $2,500.

• Must meet HomeReady or Home Possible requirements
• Income must be ≤ 80% of AMI
• Must be a primary residence
• At least one buyer must be a first-time home buyer

American Pacific Mortgage: 1% Down Program

American Pacific Mortgage offers a 1% down mortgage that includes a 2% grant, giving you 3% equity in your home at closing. Qualified borrowers can contribute up to 3% toward their down payment and still receive the grant, which is capped at $4,500. This loan option is open to both first-time and repeat home buyers with no geographic restrictions.

• Credit score must be 620 or higher
• Max loan amount is $375,000
• Income must be ≤ 80% of the area median income
• Must be a primary residence and a single-family property
• New construction homes are eligible

Mutual of Omaha: ONE+

The ONE+ mortgage from Mutual of Omaha is a 1% down home loan program available to both first-time buyers and repeat buyers with just 1% down. The remaining minimum down payment is covered with a 2% lender-paid grant.

• Income must be ≤ 80% of the local area median income
• Property must be a primary residence

Pros and cons of a 1 percent down mortgage

A 1 percent down payment mortgage can make homeownership more accessible, but it’s important to weigh the trade-offs.

Pros

• The lender covers 2% of the down payment.
• Helps buyers purchase sooner in fast-moving housing markets before real estate prices climb further.
• Buyers begin building home equity earlier.
• Keep more of your savings for closing costs, moving expenses, or other financial goals.

Cons

• There’s a greater risk of going underwater if home values fall.d to move during that underwater time, you can feel trapped. One escape route may be to rent out the home.
• You’re borrowing more, which means your monthly payment will be higher than if you put more down.
• You may pay a higher interest rate, which increases your total interest costs over the life of the loan.

Other low down payment mortgage options

Some borrowers may qualify for a 0% down payment mortgage, which means you pay nothing upfront, aside from closing costs.

• VA loans: Available to veterans, active-duty service members, and some surviving spouses. You’ll need a Certificate of Eligibility (COE) and typically a credit score of at least 580.
• USDA loans: Designed for rural areas, these require that your income is within local income limits and the property is located in a USDA-eligible zone.

If you’re not eligible for either of those, you still have low-down-payment options.

• Fannie Mae’s HomeReady and Freddie Mac’s Home Possible: Both require just 3% down, but you’ll need a credit score of 620 or higher. You’ll pay private mortgage insurance (PMI) until you reach 20% home equity.
• FHA loans: These loans require 3.5% down and accept credit scores as low as 580. However, you’ll pay mortgage insurance premiums (MIP) until you pay off the loan or refinance into another loan type.

Use a mortgage calculator or connect with a mortgage lender to compare these loan programs and see what works best for your situation.

FAQs about 1% down mortgages

The bottom line

A 1 percent down mortgage can help more people become homeowners, especially those with modest incomes. The lender covers 2%, giving you a total down payment of 3%. Some lenders, like Rocket Mortgage, may even waive PMI, which could save you thousands of dollars in interest over time.

Ready to explore your options? Click the links below to compare mortgage offers from multiple lenders with no commitment.