UWM announces 0% down purchase product

Mat Ishbia and United Wholesale Mortgage unveiled a 0% down purchase product Thursday, building on the wholesale giant's aggressive offerings in the lending space. 

The product will grant home buyers a 3% second lien, down payment assistance loan up to $15,000, the firm's president and CEO said at his company's conference. The broker tool allows borrowers to pay off the downpayment lien by the end of their mortgage loan, or by the time the first lien is paid off. It also doesn't accrue interest nor require monthly payments. 

"Brokers have something that nobody in America has," Ishbia said Thursday afternoon. 

"Not only is it a true 0% down (product), but it's also one consistent way to get it done for brokers and borrowers without jumping through all those down payment assistance hoops that are out there," said Melinda Wilner, chief operating officer at UWM.

A first-time homebuyer has no Area Median Income restriction, and must have a minimum FICO score of 700. They also must meet FreddieMac's HomeOne guidelines. Non-first-time homebuyers can use the product if they have an AMI of 80% or lower and must meet Freddie's HomePossible guidelines. 

 The requirements are similar to UWM's 1% down product, which allowed buyers to put 1% down while the lender paid another 2%, or up to $4,000 of the down payment. That product will be discontinued, Ishbia said. 

The product was heavily requested, Wilner said, and the firm expects more volume for the 0% down product versus the 1% down loan, given current affordability concerns. 

Ultra-low downpayment programs were a staple of the housing finance industry before the Great Financial Crisis, but have made a comeback since, with similar loan promotions offered by major players. 

Wilner was not overly concerned with the product's debt load onto consumers, emphasizing the no interest accrued aspect and the fact that a borrower could theoretically pay the loan at the end of a 30-year conventional loan lifespan.

"It is a debt, but it's a debt without a payment," she said. 

Buyers today face lofty home prices and rates continuing to cling near 7%. Recently, lenders have touted buydowns and discount points as ways to mitigate high costs, although a Freddie Mac study found those benefits to be marginal.