Guild Mortgage has launched a new conventional loan program that requires only a 1% down payment from the borrower.
The new program combines a borrower’s 1% down payment with a 2% grant from Guild, thus resulting in a loan with a 97% loan-to-value ratio. The grant does not need to be repaid.
In addition, non-borrower household income can be used to qualify for the loan. What’s more, boarder income can be used to qualify. The program allows for a debt-to-income ratio up to 50%.
Guild developed this program to make it easier for first-time and low- and moderate-income home buyers to come up with a down payment, which is a serious barrier to entry in this current economy.
“We were able to create this breakthrough national program because we are a direct lender with many decades of strong investor relationships and first-time home buyer expertise,” says Mary Ann McGarry, president and CEO of Guild Mortgage, in a release. “We wanted to make home buying more attainable for more people, including millennials, who are entering the housing market in increasing numbers.”
A recent study from the National Association of Realtors (NAR) estimates that millennials – people born between 1977 and 2000 – represent 32% of all home buyers and 68% of first-time home buyers. However, millennials can have trouble saving for a down payment because of student loans, credit card debt and high rent costs, according to NAR.
“With the gift of a two percent grant, Guild is helping solve financing challenges for first-time and move-up buyers with low to moderate income,” says David Battany, executive vice president for capital markets at Guild. “Because this is a down payment assistance program, there are income limits, required home buyer classes and additional parameters. Income limits do not apply for properties in low-income census tracts.”