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The Pros and Cons of Zillow’s 1 percent down payment program

Zillow’s 1% down payment program may speed up homeownership for qualified buyers.
Arizona new construction by Toll Brothers

Every day it seems more first-time homebuyers are shut out of the U.S. housing market. Homeowners who have enjoyed low mortgage rates before the Federal Reserve’s rate hikes are not selling.

It makes sense because who wants to go from a mortgage rate below 5 percent to current rates that a re above 7 percent. Home sales are sluggish while home prices remain elevated. 

Enter Zillow to save the day…well kinda?

What is Zillow’s 1% Down Payment Program

Zillow's mortgage loans department introduced a 1% down payment option for qualified homebuyers, with an additional 2% contribution from Zillow upon closing.

Considering the standard recommendation for a down payment is 20%, potential buyers should carefully examine Zillow’s program that has already been implemented in Arizona.

What Zillow analysts found

In an Aug. 2023 press release, Zillow’s home loan department showed that reducing the down payment requirement would speed up the time it may take a borrower to save for a down payment: “…A home buyer looking to purchase a $275,000 home in Phoenix, Arizona, who makes 80% of their area's median income and saves 5% of their income would need only 11 months  to save for the down payment. By comparison, the same buyer who needed to save 3% of the purchase price would require two and half years (31 months) to save that amount.”

Pros and Cons of Zillow’s 1% Down Payment Program


  • Homebuyers who can’t save enough for a 20% down payment but can afford higher monthly payments have a new option.
  • The time it takes to save for a down payment can be reduced with only 1 percent required.
  • Expands homeownership opportunities for qualified buyers who are ready right now to take on a mortgage.


  • With only 3% down you’ll be borrowing more money.
  • Borrowers will pay substantially more in interest over the term of the loan.
  • Higher monthly payments will be required to pay off the loan.
  • With only 1% down payment, there’s a possibility that borrowers will be underwater on their mortgage if home values drop after the home is purchased.

Final Takeaway

Prior to enrolling Zillow’s 1% down payment program, you may want to explore alternative avenues to homeownership. There are both government-backed and private initiatives available for down payment and closing costs assistance.

Programs like NACA that offer lower than standard mortgage rates along with $0 down payment requirements as well as nine of the best mortgage options to consider as alternatives to Zillow’s 1% down payment program for first-time homebuyers.

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