Author Michael Wilson (NMLS #2536121) is a Florida licensed Mortgage Loan Originator with the Loan Factory (NMLS #398247).
In today’s housing market, rising property prices and the challenge of saving for a down payment can make homeownership seem out of reach for many prospective buyers, especially those with low-to-moderate incomes. To address these concerns and expand access to affordable homeownership, Rocket Mortgage has introduced the ONE+ mortgage program. This innovative program is designed to lower the barriers to entry for homebuyers by reducing upfront costs and eliminating private mortgage insurance (PMI), making it an attractive option for those looking to purchase their first home or transition from renting to owning.
In this article, we will explore the key features of the ONE+ mortgage program, its benefits, eligibility criteria, and how it compares to other mortgage options available in the market.
Understanding the ONE+ Mortgage Program
The ONE+ mortgage program is a unique offering from Rocket Mortgage that allows homebuyers to purchase a home with just a 1% down payment. This is made possible through a combination of the buyer’s contribution and a 2% grant provided by Rocket Mortgage, which effectively gives the buyer 3% equity in the home at the time of purchase.
Here’s how it works in practice: Suppose you’re looking to buy a home for $300,000. Under the ONE+ program, you would only need to bring $3,000 as a down payment (1% of the purchase price). Rocket Mortgage then contributes an additional $6,000 (2% of the purchase price) in the form of a grant, which means you close on the home with 3% equity, as if you had made a $9,000 down payment. This lower upfront cost can make homeownership more accessible, particularly for buyers who have stable incomes but struggle to save for a larger down payment.
Key Benefits of the ONE+ Program
One of the standout features of the ONE+ program is the elimination of private mortgage insurance (PMI). Typically, PMI is required for conventional loans when the buyer puts down less than 20%. PMI can add a significant amount to your monthly mortgage payment—often several hundred dollars per month, depending on the loan amount and down payment. By removing the requirement for PMI, the ONE+ program offers substantial savings over the life of the loan, making it easier for buyers to manage their monthly housing costs.
Additionally, the ONE+ program is available to a wide range of buyers, including both first-time and repeat homebuyers, as long as they meet certain income and property requirements. Specifically, the buyer’s income must be at or below 80% of the area median income (AMI) for the county in which the home is located. This income threshold is designed to ensure that the program benefits those who need it most—buyers who may have the financial stability to manage a mortgage but lack the savings for a substantial down payment.
Another significant advantage of the ONE+ program is its flexibility. The program is available for the purchase of single-family homes, including manufactured homes, as long as the property will serve as the buyer's primary residence. This opens up opportunities for a broader audience, including those interested in more affordable housing options like manufactured homes.
Eligibility and Qualifications
To qualify for the ONE+ program, buyers must meet the following criteria:
Income Limits: The buyer’s income must not exceed 80% of the area median income (AMI) for the county where the home is located. This ensures the program targets those who are most likely to benefit from the reduced down payment and the elimination of PMI.
Credit Score: A minimum FICO score of 620 is required to qualify for the ONE+ program. This is in line with the requirements for most conventional loans, making it accessible to a wide range of buyers.
Property Type: The program is limited to single-unit primary residences, which includes single-family homes and manufactured homes. Multi-unit properties and second homes are not eligible under this program.
Loan Amount: The maximum loan amount for the ONE+ program is capped at $350,000. This ensures that the program remains focused on affordable housing and benefits buyers looking for homes within a moderate price range.
How ONE+ Compares to Other Mortgage Options
When considering the ONE+ program, it’s essential to compare it with other mortgage options to determine if it’s the best fit for your financial situation and homebuying goals. Here’s how ONE+ stacks up against some common alternatives:
FHA Loans: Federal Housing Administration (FHA) loans are a popular choice for first-time homebuyers due to their low down payment requirements (as low as 3.5%) and more lenient credit score requirements (as low as 580). However, FHA loans require both an upfront mortgage insurance premium (MIP) and ongoing monthly MIP payments, which can add significantly to the cost of the loan. In contrast, the ONE+ program eliminates PMI altogether, potentially offering greater savings over time.
Conventional 3% Down Loans: Some conventional loans allow buyers to put down as little as 3%, similar to the ONE+ program. However, these loans typically require PMI if the down payment is less than 20%. The ONE+ program’s elimination of PMI can make it a more cost-effective option, especially for buyers who want to minimize their monthly payments.
VA Loans: Veterans Affairs (VA) loans offer 0% down payment options for eligible veterans and active-duty service members. VA loans also do not require PMI, making them an attractive option for those who qualify. However, VA loans are only available to a specific group of buyers, whereas the ONE+ program is open to a broader audience, including civilians.
USDA Loans: The U.S. Department of Agriculture (USDA) offers 0% down payment loans for buyers in rural and suburban areas who meet income eligibility requirements. Like VA loans, USDA loans do not require PMI. However, they are limited to specific geographic areas, whereas the ONE+ program is available nationwide.
Is the ONE+ Program Right for You?
The ONE+ mortgage program can be an excellent option for buyers who meet the income and credit requirements and are looking for an affordable pathway to homeownership. The combination of a low down payment, no PMI, and the potential for significant monthly savings makes it an attractive choice for those who want to maximize their purchasing power while minimizing upfront costs.
However, it’s important to consider all aspects of the mortgage, including the interest rate, loan term, and overall cost of the loan. While the ONE+ program offers many advantages, you’ll want to compare it with other mortgage options to ensure it aligns with your long-term financial goals.
If you’re considering the ONE+ program, it’s a good idea to speak with a mortgage professional who can help you evaluate your options and determine if this program is the best fit for your needs. They can also assist you in navigating the application process and understanding the specific requirements for your area.
Conclusion
The ONE+ mortgage program by Rocket Mortgage represents a significant step forward in making homeownership more accessible to a broader audience. By reducing the down payment requirement to just 1%, providing a 2% grant, and eliminating the need for private mortgage insurance, this program can help many buyers achieve their dream of owning a home without the burden of large upfront costs or high monthly payments.
If you’re considering purchasing a home and want to explore how the ONE+ program can benefit you, now is the time to take action. Understanding your options and choosing the right mortgage program is crucial to securing a stable and affordable future in your new home.
If you have any questions, comments, or suggestions for future articles, feel free to reach out to me via email Michael.Wilson@Loanfactory.com. If you live in Florida and are looking for a mortgage program, feel free to go to my website: www.mikwilson.com Powered by the Loan Factory.
