Quicken now offering a 1% Down Mortgage Loan but don't call it Subprime!

The U.S. housing market is once again teetering. To keep buyers in the game, home prices inflated, and investors satisfied (for now), loan originators are being encouraged to dust off the old playbook: subprime-style mortgages.

These programs are predatory by design. They target borrowers without the resources to maintain a property long term, cover cost-of-living increases, or sustain mortgage payments if their job situation worsens. By enticing families into overvalued homes with unsustainable loans, lenders set the stage for a familiar cycle: borrowers fall behind, properties are abandoned, taxpayers eat the losses, and investors scoop up homes for pennies on the dollar.

We’ve seen this movie before — and we know how it ends.

Quicken’s 1% Down Program

While Bank of America, Wells Fargo, and JPMorgan Chase made headlines by rolling out mortgages with just 3% down, Quicken Loans quietly went even further.

In late 2015, Quicken launched a 1% down mortgage, structured in partnership with Freddie Mac. The program was marketed as a way to help Millennials, first-time buyers, and middle-class borrowers — but the mechanics reveal how thin the margin of safety really is.

Here’s how it works:

• The borrower contributes just 1% down.

• Quicken covers the other 2% by issuing a grant.

• On paper, the buyer now meets Freddie Mac’s 3% down requirement under its Home Possible Advantage program.

Bill Banfield, Quicken’s VP of Capital Markets, described it this way:

“We require 1% from the consumer, and we give the consumer a 2% grant, so the client has 3% equity immediately.”

Why It’s Problematic

At first glance, this looks like generosity — Quicken “helping” borrowers into homes. But in reality, this structure shifts risk downstream:

• Artificial Equity: Borrowers don’t build genuine equity with their own resources. Their financial cushion is paper-thin.

• Inflated Pricing: Easy financing keeps housing demand high and prices elevated, pushing families into overvalued homes.

• Systemic Risk: When markets adjust, many of these borrowers will find themselves upside down, unable to refinance or sell.

Who Really Wins?

• Quicken and Freddie Mac win by originating more loans.

• Investors win when defaults trigger taxpayer-backed bailouts or when foreclosed homes are sold off cheaply.

• Borrowers lose when they can’t keep up and are left with wrecked credit, no equity, and the trauma of foreclosure.

• Taxpayers lose when government agencies backstop the losses.

This isn’t about creating sustainable homeownership. It’s about keeping the machine running, no matter the cost.

Déjà Vu All Over Again

Subprime-style lending fueled the 2008 collapse. Despite warnings from regulators, appraisers, and economists, lenders are back with creative packaging of risky products — this time dressed up with government partnerships and marketing spin.

The game is rigged, and unless something changes, taxpayers will once again foot the bill when the bubble bursts.

📌 For the original HousingWire report on Quicken’s 1% down mortgage, see here.

⚖️ Disclaimer: This article is for educational and informational purposes only. It is not financial or legal advice. Consult a licensed professional before making decisions related to mortgages or real estate.

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Tags: predatory lending, quicken 1% down
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