Rocket Mortgage is one of the biggest non-bank mortgage lenders in the U.S. Rocket’s 1% down program, launched on Monday, will be available to qualifying homebuyers in all 50 states. Plus, the home loan is only available to those who work in San Francisco or San Mateo County. That means that the interest rate and monthly payments are only fixed for the first five years of the loan, and will reset thereafter. The San Francisco Federal Credit Union also offers mortgages with zero down payment requirement, but it’s an adjustable-rate mortgage. There was no minimum credit score nor mortgage insurance involved. 0.95% introduced zero down payment mortgages with no closing costs for first-time buyers in certain Black and Hispanic neighborhoods such as in Charlotte, Dallas, Detroit, Los Angeles, and Miami. Some private lenders have also begun offering very low to no down payment programs. For instance, veterans who take out a Veterans Affairs mortgage don’t need to put any money down and also don’t need to pay mortgage-insurance fees.

The ability to put even less down has been available for certain groups. He added that the performance of these types of loans has historically been “very, very high.” “We are not reducing the qualifications and putting people into loans they can’t afford,” Walters said. Poor underwriting practices were a big part of why the subprime mortgage crisis began in the U.S., the International Monetary Fund wrote in 2008. Unlike low or no down payment plans that flourished and resulted in the subprime loan crisis - where lenders made loans to people who were eventually unable to repay them - requiring borrowers to meet specific and stringent credit standards will prevent the same scenario from repeating again, Walters stressed. “I’m very, very excited that we’re rolling this out - this is going to be a big deal for a lot of people,” Bob Walters, CEO of Rocket Mortgage, told MarketWatch in an exclusive interview. Their mortgage premium, which is typically required if a home buyer puts down less than 20% on a home, will also be slashed. Government agencies that buy home loans and supply funds to banks and mortgage lenders and support the housing sector, Rocket will pay 2% of the borrower’s loans, the company said. To ensure the mortgages that originated by Rocket are sold and guaranteed by Fannie Mae

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