Zillow, in an attempt to stimulate the real estate market, has come up with an innovative solution for homebuyers. With interest rates currently at their highest in over two decades, Zillow is offering a 1% down payment deal. Furthermore, Zillow is willing to contribute an additional 2% to the down payment at closing, as reported by CBS News. This program will initially be launched in Arizona before expanding to other states. Rents are also on the rise, making it increasingly difficult for potential homebuyers to save up for a down payment. Orphe Divounguy, a senior macroeconomist for Zillow Home Loans, believes that initiatives such as this will help lower the barriers to homeownership for qualified individuals.
According to Bloomberg, Zillow’s 1% down payment deal surpasses the best offer from Freddie Mac, which stands at 3%. The Mortgage Bankers Association has noted that the surge in mortgage interest rates has made the market unaffordable for many, leading to a significant decrease in mortgage applications—reaching a 28-year low. Zillow provided an example of a buyer in Phoenix who, under specific conditions, could save a down payment for a $275,000 home in just 11 months, compared to the usual 31 months required for a 3% down payment. In an effort to expand beyond their role as a real estate listing site, Zillow has started underwriting loans, according to Insider.
(Read more Zillow stories.)
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