Lower has launched a conventional mortgage program that pairs a borrower contribution of as little as 1% with a lender-funded grant intended to cover another 2% of the purchase price.
But the math changes once the home price exceeds $225,000.
Lower caps its grant under the new ONE by Lower program at $4,500. That amount covers the full 2% contribution on a $225,000 purchase, but not on a more expensive home.
“On homes above $225,000, Lower still caps its contribution at $4,500, so the borrower’s down payment will increase over the 1%,” the company told NMP.
Gift funds, down payment assistance, and other permitted sources can cover the difference, according to Lower. That gives Loan Originators some flexibility when structuring a loan, but it also means the product should not be presented as a flat 1%-down option for every eligible borrower.
A buyer purchasing a $300,000 home, for instance, would need $9,000 to reach a 3% down payment. After Lower’s $4,500 grant, another $4,500 would have to come from the borrower or another eligible source.
The grant does not have to be repaid, does not create a second lien, and carries no recapture provision or resale restriction.
Lower also told NMP that the program does not change the borrower’s interest rate or affect the pricing an originator can offer.
“The ONE by Lower program has no impact on the borrower’s interest rate and no impact on the pricing originators offer clients,” the company said.
The purchase-only program is available for single-unit primary residences financed with a conventional mortgage. Borrowers must have a minimum credit score of 620, and household income cannot exceed 80% of the area median income. The maximum loan amount is $375,000.
Private mortgage insurance is required and paid by the borrower. Seller concessions may be used toward eligible closing costs.
Both first-time and repeat buyers can qualify, an important distinction for originators working with borrowers who previously owned a home but still lack the cash needed for a larger down payment.
ONE by Lower is available in every state except New York, Vermont, and Hawaii. Eligibility remains subject to underwriting guidelines and other program requirements.
