Soldier to Soldier Hawaii

The 1% Down Payment Loans

The 1% Down Payment Loans: A Step Forward by Zillow and Rocket Mortgage?

In the ever-evolving landscape of real estate and mortgage lending, Zillow and Rocket Mortgage have recently made headlines by offering 1% down payment loans. This initiative seems like a dream come true for many potential homeowners struggling to save up for the traditional 20% down payment. But is this offer as good as it sounds? And why have these industry giants decided to implement such a program?

Breaking Down the 1% Down Payment

Traditionally, buying a home requires a down payment of 20% of the home’s purchase price. However, Zillow and Rocket Mortgage have recently partnered to offer a 1% down payment loan. This means that for a $200,000 home, you would only need to pay $2,000 upfront instead of the traditional $40,000.

This initiative is particularly appealing to first-time homebuyers, millennials, and those with low to moderate income. It provides an opportunity to enter the housing market without the daunting financial burden that a significant down payment can entail.

The Reasons Behind the Initiative

1. Increasing Homeownership Rates

Homeownership is a cornerstone of the American Dream, yet it has become increasingly difficult for many to achieve. With home prices on the rise and wages remaining stagnant, the gap between income and homeownership is widening. By offering 1% down payment loans, Zillow and Rocket Mortgage aim to bridge this gap and make homeownership accessible to a broader demographic.

2. Competitive Advantage

The real estate and mortgage lending markets are incredibly competitive. By offering a 1% down payment, Zillow and Rocket Mortgage differentiate themselves from other lenders and attract a larger customer base.

3. Economic Stimulus

Homeownership has a trickle-down effect on the economy. It stimulates demand for goods and services, creates jobs, and generates tax revenue. By making homeownership more accessible, Zillow and Rocket Mortgage are indirectly contributing to economic growth.

Is It a Good Thing?

While the 1% down payment loan undoubtedly has its advantages, it also comes with its fair share of drawbacks.


  1. Affordability: For many, this initiative makes homeownership attainable.
  2. Flexibility: It allows potential homeowners to invest their money in other areas, such as home improvements or paying off debt.


  1. Higher Monthly Payments: A lower down payment means a larger loan amount, which translates into higher monthly mortgage payments.
  2. Private Mortgage Insurance (PMI): Typically, loans with less than 20% down payment require PMI, an additional cost included in your monthly mortgage payment.
  3. Higher Interest Rates: Lenders often charge higher interest rates for lower down payments, as it represents a higher risk for them.
  4. Home Value Risk: With only 1% equity in the home, there is a risk that if home values decrease, you may owe more than your home is worth.


The 1% down payment loans offered by Zillow and Rocket Mortgage are a double-edged sword. On one hand, they make homeownership accessible to a broader audience, stimulating the economy and providing a competitive advantage to these companies. On the other hand, they come with higher monthly payments, PMI, higher interest rates, and potential home value risk.

Ultimately, whether this initiative is a good thing depends on your financial situation and long-term goals. It is always advisable to consult with a financial advisor or mortgage professional before making any significant financial decisions

Celester Thomas

Company Blog – Soldier to Soldier Hawaii Realty

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