Some people will be able to buy a new home with a 1% down payment. Zillow Home Loans launched a new program that allows customers to put down 1% while the company contributes another 2%.
There is a catch, however. The program is currently only offered in Arizona, but Zillow said it plans to add additional markets in the future.
Zillow reports that the average home price in Arizona is currently about $420,000. Rental prices vary by city, but in and around the Phoenix area, people are paying, on average, $2,000 a month.
"The rapid rise in rents and home values means many renters who are already paying high monthly housing costs may not have enough saved up for a large down payment, and these types of programs are welcome innovations in lowering the potential barriers to homeownership for those who qualify," said Zillow Home Loans' senior macroeconomist Orphe Divounguy.
SEE MORE: Mortgage rates in US have reached their highest level since 2001
The down payment is not the only challenge home buyers are facing right now. This week, mortgage rates reached their highest level since 2021. They currently sit at 7.23%.
Zillow's new program also comes at a time when home sales are falling. The National Association of Realtors reports home sales fell 2.2% from June to July. Year-over-year, sales are reportedly down 16.6%.
“Two factors are driving current sales activity: Inventory availability and mortgage rates,” said NAR Chief Economist Lawrence Yun. “Unfortunately, both have been unfavorable to buyers.”
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