1% Down Conforming Loan - HomeReady and HomePossible

[Jeff Dulla]

This post is two-fold. First to introduce a product that has been out for a little bit but is gaining some ground/attention. The second is to question not IF it is a bad idea for the industry but just how bad could it potentially be.

The program revolves around HomeReady and HomePossible loan products which allow buyers to finance a home using just 3% down. This program in particular gives a 2% grant to the buyer to help cover some of the down payment. Taking a 3% down loan to a 1% down loan. Very minimal strings attached, interest rates are pretty damn low.

Obviously the goal is to put more people into homes. And given the right person, maybe it isn't a terrible idea if you are going to prepay the heck out of your mortgage. But I am certain that is not what the vast majority of people will do.

Thoughts/debate welcome.