Rocket Mortgage, one of the largest non-bank mortgage lenders in the United States, has announced the launch of its innovative ONE+ program. This groundbreaking initiative aims to revolutionize the home buying experience by allowing low- to moderate-income individuals to put down as little as 1% on their dream homes. By reducing the upfront payment requirement and eliminating the need for mortgage insurance, Rocket Mortgage aims to make homeownership more accessible for aspiring buyers.
The ONE+ program is designed to ensure that mortgages originated by Rocket Mortgage are sold and guaranteed by government agencies such as Fannie Mae and Freddie Mac, which provide vital support to the housing sector by purchasing home loans and supplying funds to banks and mortgage lenders. To facilitate this, Rocket Mortgage will contribute 2% of the borrower's loans. Furthermore, the mortgage premium, typically mandatory for buyers who put down less than 20% on a home, will be significantly reduced.
Bob Walters, CEO of Rocket Mortgage, expressed his enthusiasm for the program, stating, "I'm very, very excited that we're rolling this out—this is going to be a big deal for a lot of people." Walters emphasized that the program is built on a foundation of responsible lending practices, distinguishing it from the low or no down payment plans that contributed to the subprime loan crisis. By implementing specific and stringent credit standards, Rocket Mortgage aims to prevent a recurrence of the past mistakes that led to the housing market collapse.
The International Monetary Fund noted in 2008 that poor underwriting practices were a significant factor in the subprime mortgage crisis. Walters reassured potential home buyers, saying, "We are not reducing the qualifications and putting people into loans they can't afford." He further emphasized that loans of this nature have historically performed exceptionally well, instilling confidence in the program's viability.
Rocket Mortgage estimates that approximately 90 million individuals in the United States meet the program's guidelines. The ONE+ program enables home buyers who are purchasing single-family and manufactured homes, and whose income is equal to or less than 80% of the median income in their area, to make a down payment of just 1% on their desired properties. This represents a significant departure from the typical down payments made by first-time homebuyers, which generally range from 6% to 7%, according to the National Association of Realtors. In the first quarter of 2023, the typical home buyer put down approximately $24,000, as reported by Realtor.com.
While government-backed Federal Housing Administration loans already allow for down payments as low as 3%, they often require borrowers to pay mortgage insurance. Similarly, certain groups, such as veterans who take out a Veterans Affairs mortgage, are not required to make a down payment or pay mortgage insurance fees. Some private lenders have also introduced low to no down payment programs, such as Bank of America, which offers zero down payment mortgages with no closing costs for first-time buyers in select neighborhoods.
Rocket Mortgage's ONE+ program, launched on Monday, is available to qualifying homebuyers in all 50 states. As one of the largest non-bank mortgage lenders in the U.S., Rocket Mortgage is committed to expanding access to homeownership for individuals who face financial barriers. The company recently reported a net loss of $411 million in the first quarter of 2023 but remains dedicated to its mission of empowering aspiring homeowners.
In addition to the challenges posed by rising mortgage rates, the housing market currently faces a significant shortage of available homes for sale. Approximately 14 million homeowners who refinanced their
mortgages to take advantage of ultra-low rates during the pandemic are now hesitant to sell their homes, exacerbating the supply issue. While Rocket Mortgage's ONE+ program may not single-handedly solve the supply problem in America, it represents a significant step forward in leveling the playing field for those who have been struggling to enter a competitive market with soaring prices.
The launch of the ONE+ program comes at a critical time when homeownership has become increasingly challenging for many Americans. By reducing the barrier of a hefty down payment, Rocket Mortgage aims to empower individuals and families who have long dreamed of owning a home but have been held back by financial constraints. This initiative aligns with the company's commitment to creating innovative solutions that make the home buying process more accessible and affordable.
The impact of the ONE+ program extends far beyond the financial benefits it offers to home buyers. It represents a renewed focus on responsible lending practices and a commitment to preventing the mistakes of the past. With stringent credit standards and a focus on borrower qualifications, Rocket Mortgage aims to ensure that individuals are placed into loans that they can comfortably afford in the long run.
While Rocket Mortgage is leading the way with its ONE+ program, it is important to acknowledge that other lenders and institutions have also taken steps to address the affordability challenge. Zero down payment programs in select neighborhoods and specialized mortgage offerings for specific groups have emerged as alternative options. These initiatives collectively contribute to a more inclusive and equitable housing market.
As the housing market continues to evolve, it is essential for prospective homebuyers to explore all available options and carefully assess their individual circumstances. While the ONE+ program offers an attractive opportunity to enter the housing market with a minimal down payment, it is crucial for buyers to fully understand the terms and implications of their mortgage agreements. Seeking guidance from mortgage professionals and real estate experts can provide valuable insights and ensure informed decision-making.
The launch of Rocket Mortgage's ONE+ program marks a significant milestone in the ongoing pursuit of making homeownership more attainable for all. By offering the flexibility of a 1% down payment and eliminating mortgage insurance, Rocket Mortgage empowers low- to moderate-income individuals to embark on their homeownership journey with confidence. This innovative approach has the potential to unlock countless opportunities and bring the dream of owning a home within reach for a broader segment of the population.
