1% Down Mortgages
ATL Mortgage is proud to be one of the few brokers in the city offering conventional 1% down loans.
What is it?
Probably they first thing you should know is that our 1% down loan is actually a 3% down loan. Don’t worry it’s not as confusing as I just made it sound.
With this program, you bring 1% of the purchase price to the closing table (plus net closing costs) and our lender contributes the remaining 2% of the down payment up to $5,000. If the purchase price is above $250,000, then you may still qualify for the program, but the lender’s contribution caps out at 2% of $250,000 (i.e. $5,000).
What’s the catch?
Well, there’s not really a catch, but you’re right to question the motivation behind “giving away” money.
First of all, you’re the beneficiary of a unique and pretty dang cool marketing ploy on behalf of our lender towards us as brokers. There are about a hundred “wholesale” lenders that we as brokers can work with. They usually call us and tell us how great their rates are, how quickly they do things, etc. Quite boring. However, UWM has started to lure brokers in by giving them a totally unique product that opens up an entirely new set of potential clients for us. And it works! They’re one of our new favorite lenders for all types of loans, but we’ll always rep their 1% down option because it’s a great solution for those who need it.
Second of all, it’s not entirely free lunch. You’ll notice that the rates on our actual 3% down loans are about an eighth (.125%) of a point lower than the 1% down program, so the lender is earning back some of their up-front cash. (They earn it back after about 10 or 11 years, which is almost twice the average length a person holds a home loan.)
So are they a good idea?
You go into the home having 3% equity in the house, so the conversation actually becomes about whether a 3% down loan is a good idea.
The risks are obvious. If the housing market tanks, you’ve only got a little bit of wiggle room until you’re “underwater.” That’s not good, but it’s only bad if you’ve purchased a house where the mortgage payments become untenable in a down market. So if you’re debt-to-income ratio is tight, if you don’t have any cash reserves, if you don’t have job security, or if you don’t have family or friends in your life to whom you could turn for help, then you likely will want to save more for a down payment.
Anybody with a 700+ credit score, who lives in Dekalb, Gwinnett, or select areas of other Georgia counties. For the rest of the state, you merely need to meet the credit score requirement and to have an income *lower* than the max income listed for your area on this map. Also, you’ll have to meet all other eligibility requirements for standard conventional loans.