Rocket Mortgage's ONE+ and Reality

A brilliant program, but I wonder who could actually take advantage of it

A friend of mine sent me a link to the announcement from Rocket Mortgage rolling out its 1% down, no-PMI program called ONE+:

This loan option has several benefits. Chief among them is the ability to put down as little as 1% and get into a home. Rocket Mortgage is providing a grant of 2% of the loan amount. Under this scenario, you would enter your home with 3% equity. Clients who qualify may contribute up to 2.99% toward a down payment while still receiving the 2% grant.

This is available for both first-time and repeat home buyers. There are no restrictions on where you can live or where you move from. The program is available nationwide.

In addition to the benefits of the upfront savings, clients won’t pay for mortgage insurance on this product. That means a lower monthly payment, which adds to affordability. But before we go too much further, let’s breakdown the math. We'll use a $250,000 assumed purchase price. This is a 30-year fixed loan with an interest rate of 6%

• You bring $2,500 for a down payment (.01 × $250,000 = $2,500).

• Rocket Mortgage covers 2% of the loan amount (.02 × $250,000 = $5,000).

• Your monthly principal and interest payment is $1,453.91.

• You could save up to $245 per month by not having to pay for mortgage insurance.

The $6,000 we cover means lower out-of-pocket costs at closing for you. And who wouldn’t like $245 per month back in the budget?

I love everything about this program, and I understand that UWM is creating something very similar. I believe both are using Fannie Mae’s HomeReady program to create these low-downpayment mortgages for low-income buyers. This is a true push to make homeownership more affordable and more achievable for more people.

It makes sense for the buyer of course, but it also makes sense for the lender as they will make back the 2% grant in fairly short order.

Having said that… once I’ve done a bit of digging, I’m left wondering who exactly could take advantage of it. Let me explain.