Zillow's Real Estate Buyer Rebate Program - Guide and Alternatives
Zillow, a leading digital real estate company, offers a real estate buyer rebate, a mechanism that returns a portion of the commission to the property buyer.
This practice, though beneficial for some, might raise questions regarding its application, advantages, and potential alternatives.
This article aims to provide a comprehensive guide on Zillow's real estate buyer rebate, detailing how it functions, its associated benefits, and presenting other alternatives available in the market.
By the end, readers should have a clearer understanding of the rebate and its comparative position in the broader real estate landscape.
Does Zillow Still Have a Real Estate Rebate?
As of September 2023, Zillow no longer offers a real estate buyer rebate.
Prior to this decision, the rebate was a part of Zillow's strategy to provide added value to homebuyers by returning a fraction of the commission.
The removal of this rebate may have implications for those who had considered using Zillow for their property purchases with the anticipation of this financial incentive.
However, it is essential for potential homebuyers to be aware that while Zillow has discontinued its buyer rebate, there are other viable rebate and Down Payment Assistance (DPA) program alternatives available in the real estate market.
These alternatives can be equally beneficial, offering financial relief to buyers.
Further details on these alternatives, their advantages, and how they compare to what Zillow previously offered will be explored later in the article.
MakeFloridaYourHome Real Estate Buyer Rebate
Traditionally, the combination of the FHA's minimum down payment and closing costs means that buyers need to have a minimum of 6.5% of the home's purchase price available upfront.
With the Down Payment Assistance (DPA) program, which will be discussed in more detail later in the article, buyers can cover 5% of that amount, thus leaving them with a 1.5% gap.
This is where the MakeFloridaYourHome Buyer Rebate comes into play. It offers an additional 1% rebate, which effectively reduces the out-of-pocket down payment requirement for the buyer to just 0.5% of the home's price.
Furthermore, for those aiming to eliminate the down payment completely, MakeFloridaYourHome has provisions to assist buyers in obtaining a seller rebate, which can bridge the remaining 0.5%, enabling them to achieve a total down payment of 0%.
Step By Step Guide To Using the MakeFloridaYourHome Real Estate Buyer Rebate
Navigating the real estate market can be complex, especially when trying to leverage financial incentives like buyer rebates.
The following is a detailed step-by-step guide to utilizing the MakeFloridaYourHome Real Estate Buyer Rebate, simplifying the process and ensuring buyers make the most of this opportunity.
Research and Understanding - Begin by familiarizing yourself with the concept of real estate buyer rebates and the specifics of the MakeFloridaYourHome offer. This will help you have an informed conversation when you reach out to them.
Contact MakeFloridaYourHome - To kickstart the process, reach out to MakeFloridaYourHome. You can do this via their official website, phone, or email. This step is crucial as it will help you understand the eligibility criteria and other specifics.
Attend the Initial Consultation - After your initial contact, set up a detailed consultation with a representative. Here, you can ask questions, clarify doubts, and understand the nuances of the rebate program.
Determine Eligibility - Work with the representative to determine if you're eligible for the rebate. This might involve discussing the property type, your financial situation, and any other specific conditions set by MakeFloridaYourHome.
Explore Down Payment Assistance (DPA) Options - Since the rebate covers 1% and DPA covers 5%, familiarize yourself with the DPA programs MakeFloridaYourHome supports. Understand the terms, conditions, and benefits of each.
Property Selection - Search for properties that fit your requirements and budget. It's beneficial to work with an agent from MakeFloridaYourHome, as they will be well-versed with the rebate program's specifics.
Make an Offer - Once you've settled on a property, make an offer. Ensure you're following all standard real estate procedures and protocols.
Secure the Rebate - Upon acceptance of your offer and as you approach the closing process, confirm with MakeFloridaYourHome that the 1% rebate will be applied. It's crucial to get this in writing.
Explore Seller Rebate Options (Optional) - If you're aiming to reduce the down payment to 0%, discuss the possibility of obtaining a seller rebate with your representative. They can guide you on how to negotiate this with the property seller.
- Finalize the Purchase - Proceed with the final steps of the home buying process, including inspections, finalizing your mortgage, and closing. Ensure the agreed-upon rebates (both buyer and potential seller rebates) are correctly applied during the closing.
The Best Down Payment Assistance Programs in 2023
This section provides a comprehensive overview of the most notable programs available this year, detailing their benefits and eligibility criteria.
The Chenoa Fund
The Chenoa Fund Program is a national initiative focused on facilitating homeownership for individuals facing challenges with down payments.
Administered by the Chenoa Fund, this program provides secondary financing options to aid prospective buyers. A distinctive feature of the program is its range of products, tailored to various borrower circumstances.
The offerings include forgivable and repayable down payment assistance loans, as well as specific zero-interest options. The program is designed to be compatible with FHA loans.
To qualify for assistance, applicants must meet certain criteria. A credit score of at least 620 is typically required, and the applicant's debt-to-income (DTI) ratio should not exceed 50%.
As part of the program's stipulations, applicants are also required to participate in homeownership counseling sessions. These sessions aim to educate potential homeowners about the responsibilities and nuances of homeownership.
Another criterion is the income limitation; a prospective buyer's income must not be more than 115% of the median income for their respective area. Furthermore, the property being purchased should be intended for use as the buyer's primary residence.
Although the Chenoa Fund Program is primarily oriented towards first-time homebuyers, some of its products are available to individuals who have owned homes previously.
Due to the varied nature of these products, potential beneficiaries should thoroughly examine the specific requirements and terms associated with each option.
Florida Hometown Heroes
The Florida Hometown Heroes Program is an initiative supported by the state of Florida with the primary objective of aiding working individuals across the state in their homeownership aspirations.
While the program's title may suggest a target audience of frontline workers, it extends its benefits to all employed residents of Florida.
The initiative's central offering is financial assistance for down payments, and in recognition of its growing demand, the state has raised the cap for this assistance to $35,000 for the fiscal year 2023-2024.
One distinguishing feature of the program is its drive to strengthen local community ties. It encourages participants to acquire residences close to their workplaces, aiming to both deepen community engagement and minimize daily commute durations.
Eligibility for the program includes certain specific conditions - participants must be first-time homebuyers, which the program defines as those who haven't held homeownership in the preceding three years, and they need to have a credit score of at least 640.
An additional financial criterion stipulates that an applicant's income should not exceed 150% of the median income for their respective county, as determined by the U.S. Department of Housing and Urban Development (HUD).
A pivotal requirement is that applicants be employed by a Florida-based entity, and they should aim to purchase a home located in the same community as their employment institution.
It's important to note that even if all requirements are met, participation is not guaranteed due to the heightened demand for the program's benefits.
The FHA loan program was established by the Federal Housing Administration in 1934 to offer an alternative route to obtaining home financing compared to conventional loans.
This program is particularly notable for its relatively minimal down payment requisites, making it a popular choice amongst a wide range of individuals, including those venturing into homeownership for the first time or those lacking substantial savings for a down payment.
This type of loan is guaranteed by the government, thereby decreasing the associated risks for lenders. This government backing translates to more relaxed qualification standards for borrowers.
Below is a detailed analysis of the specific qualifications associated with FHA loans:
Down Payment - Individuals boasting a credit score of 580 or above are eligible to make a down payment constituting 3.5% of the property's value. In contrast, those with credit scores ranging between 500 and 579 are mandated to make a 10% down payment.
Credit Scores - The program exhibits a lenient stance towards credit scores. While a score of 580 or above is preferred, facilitating a lower down payment, those with scores in the 500-579 bracket are not excluded, albeit with a higher down payment requirement.
Debt-to-Income Ratio (DTI) - It is generally expected that a borrower's monthly debt obligations do not exceed 43% of their monthly income. However, this rule is not stringent and exceptions can be considered.
Residency - The property purchased through this loan must serve as the borrower's primary residence, excluding the possibilities of investment or second homes.
- Mortgage Insurance - The loans entail two categories of insurance premiums - an upfront charge, typically amounting to 1.75% of the loan value, and an annual charge, generally falling within the range of 0.45% to 1.05%.
Rocket Mortgage ONE+
Rocket Mortgage's ONE+ program is an initiative aimed at easing the significant financial obstacle of down payments for aspiring homeowners.
Under the structure of this program, potential buyers are obligated to provide just 1% of the property's purchase price as a down payment.
In conjunction, Rocket Mortgage contributes a 2% grant. As a result, this arrangement facilitates the buyer in immediately securing a 3% equity stake in the property.
Distinctively, the ONE+ program is not limited solely to first-time homeowners; even those with prior homeownership experience can avail of its benefits. The program is operational on a nationwide scale.
Another prominent advantage of the ONE+ initiative is the elimination of mortgage insurance premiums, a component that, in many conventional loan structures, remains until the homeowner accumulates 20% equity in the property.
There are specific criteria to be eligible for the ONE+ program.
A prospective participant's income should not surpass 80% of the median income of the area where the property acquisition is intended.
To provide a tangible example, if a region's median income stands at $90,800, then the upper income limit for a prospective applicant would be $72,640.
Additionally, a minimum FICO® Score threshold of 620 is set.
Properties eligible for purchase under this program are restricted to single-unit dwellings that will function as the primary place of residence for the buyer.
It's also essential that the cumulative value, consisting of the buyer's initial down payment and the grant from Rocket Mortgage, does not exceed 5% of the property's total value.
Finally, it's important to note the distinction between total income and qualifying income, which can play a pivotal role during the application procedure.
The VA loan program was initiated in 1944 by the U.S. Department of Veterans Affairs. It was established to cater specifically to the financial needs of U.S. veterans, individuals in active military service, and certain qualifying military spouses.
The program is a testament to the nation's gratitude for their service, facilitating a more straightforward avenue towards homeownership.
Being guaranteed by the federal government, VA loans are accompanied by multiple advantages that set them apart from traditional mortgage alternatives.
Here is a comprehensive breakdown of the qualifications and features of VA loans:
No Down Payment - One of the most distinguishing features of VA loans is the absence of any down payment requirement. This provision allows eligible participants to finance the entire purchase price of the home.
No PMI - In contrast to many other mortgage products, VA loans do not necessitate Private Mortgage Insurance (PMI). This omission results in potential monthly financial savings for borrowers.
Certificate of Eligibility (COE) - An essential step for potential borrowers is acquiring a COE. This document verifies that the applicant meets the service prerequisites stipulated by the VA.
Credit Requirements - While the VA hasn't instituted a definitive credit score requirement, many lending institutions gravitate towards a minimum score of 620. Nonetheless, some lenders might accommodate applicants with lower scores, contingent upon their discretion and assessment.
- Debt-to-Income Ratio (DTI) - There isn't a universally fixed DTI limit. However, a ratio of 41% often serves as a general benchmark. This figure is malleable, and adjustments can be made if the borrower showcases other compensating financial factors.
The discontinuation of Zillow's Real Estate Buyer Rebate Program in September 2023 prompted potential homebuyers to seek alternative solutions.
While Zillow's initiative was once a notable option, the current real estate landscape offers a range of viable alternatives, from state-specific programs like Florida Hometown Heroes to broader initiatives like Rocket Mortgage's ONE+ and established loan programs like FHA and VA loans.
For those looking to navigate the complexities of home buying in 2023, understanding these alternatives and their unique offerings is crucial to making informed decisions.
With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.
About Author - Phil Ganz
Phil Ganz has over 20+ years of experience in the residential financing space. With over a billion dollars of funded loans, Phil helps homebuyers configure the perfect mortgage plan. Whether it's your first home, a complex multiple-property purchase, or anything in between, Phil has the experience to help you achieve your goals.