Zillow offering a 1% down payment loan product

[Scott E.]

Zillow is now offering a loan program which allows home buyers to buy a house with as little as 1% down.

Looks like this product is a regular conventional loan where the buyer will bring 1% of the down payment, and Zillow will contribute the remaining 2% of the down payment (handled through closing, not as a direct payment to buyer).

As far as I can tell this down payment assistance will not ever need to be repaid. The only catch is that the borrower needs to be a first time home buyer, they need a minimum 620 FICO, and they need to complete an online education course. Also, at this time this is only offered to buyers in Arizona, but they plan to expand to other states soon.

Seems like a great option for first time buyers. What do you guys think?

Link to Press Release