Helping More Buyers Get Into Homes: Conventional 1% Down Program

Buying a home is one of the biggest financial steps most people will ever take, but for many, saving up a large down payment is a real hurdle. If that sounds familiar, you’re not alone. That’s why we’re excited to introduce a new option that’s helping more people become homeowners with just 1% down.

The Conventional 1% Down Program is a flexible, affordable mortgage option designed to make homeownership more attainable, especially for buyers with moderate income who may need a little help up front.

Let’s explore how it works and who it’s best for.

What Is the Conventional 1% Down Program?

This program allows qualified homebuyers to put just 1% down, while the lender contributes the remaining 2% toward the down payment, up to a cap of $7,000. That brings the total down payment to 3%, which meets the standard requirement for certain conventional loans.

This 2% contribution is not a loan, it’s a lender-paid down payment assistance grant, meaning buyers don’t have to repay it.

Who Qualifies?

To qualify, buyers must meet certain eligibility criteria:

• Income must be at or below 80% of the Area Median Income (AMI) for the property location
  → Use the Fannie Mae AMI Lookup Tool or Freddie Mac Home Possible Tool to check
• Minimum credit score of 620
• Must be purchasing a 1-unit primary residence
• First-time and repeat buyers welcome (with special education requirements for first-time buyers)
• Loan must fall within conforming loan limits (no high-balance loans)
• Borrowers must meet HomeReady or Home Possible guidelines with DU or LPA Accept/Eligible findings
• Non-occupant co-borrowers are not allowed
• No manufactured or 2–4 unit homes

What Are the Benefits?

This program was created to help more people, especially those in underserved or moderate-income areas, become homeowners with fewer barriers. Key benefits include:

• Low out-of-pocket costs: Just 1% down from the borrower
• Lender pays 2% toward your down payment (up to $7,000)
• No repayment required for the lender grant
• Standard 30-year fixed conventional loan with competitive rates and terms
• Access to temporary rate buydowns (seller-paid or lender-paid)
• Borrowers may also benefit from Loan Level Price Adjustment (LLPA) caps under HomeReady/Home Possible guidelines, which can help reduce rates and fees
• Eligible for Ultimate Submission and Safe Check Complete features for faster underwriting

Additional Notes on Mortgage Insurance

• Mortgage insurance (MI) is required, with 25% coverage for loans at 97% LTV
• Only Borrower-Paid Monthly MI or Lender-Paid MI options are allowed
• MI requirements vary based on FICO score

What About First-Time Homebuyers?

If all occupying borrowers are first-time homebuyers (defined as no ownership interest in any property within the last 3 years), then a homebuyer education course is required. This can be completed through:

• Online programs by mortgage insurance providers
• HUD-approved counseling agencies
• Freddie Mac’s CreditSmart curriculum (select modules)
• Fannie Mae-approved agencies

Note: If underwriting systems are flipped (e.g., DU to LPA), a new course may be needed.

Not Eligible For:

• High-balance loans
• 2–4 unit or manufactured homes

Why This Program Matters

With rising home prices and inflation continuing to impact buyers, this program helps level the playing field, especially for those earning moderate incomes and living in competitive housing markets. It’s also a fantastic tool for real estate agents to offer more options to their buyers.

If you’re a borrower, this could be the solution that gets you into a home faster. If you’re an agent, this gives you a valuable product to attract and serve more clients.

Let’s Explore Your Options

If you’re wondering whether you or your client may qualify for this new 1% down program in Pennsylvania or Florida, let’s connect. We’ll review your income, credit, and property details, and if it’s a fit, we’ll guide you through every step with clarity and confidence.

Reach out today to schedule a free consultation. Homeownership might be closer than you think.