Down Payment and Closing Costs Overview
Freddie Mac's HomeOne® mortgage allows first-time home buyers to make a 3% downpayment on a home. In addition to their down payment, buyers should plan for closing costs, which averaged 1.54% of the loan amount on conventional purchases in 2024.
📊 Key Statistic
Minimum Down Payment Requirement
The minimum down payment on a HomeOne® mortgage is 3% of the purchase price.
Examples:
- $300,000 purchase = $9,000 down
- $400,000 purchase = $12,000 down
- $500,000 purchase = $15,000 down
A unique feature of the HomeOne® 97% mortgage is that buyers don't have to contribute their own funds to their transaction. A buyer's entire cash-to-close can come from gifts and approved assistance programs.
Typical Closing Costs
The HomeOne® mortgage is a conventional mortgage so buyers should expect to see the closing costs associated with the loan type. Some common closing costs include:
- Lender origination or underwriting fees
- Appraisal fee
- Title and settlement charges
- Recording fees
- Prepaid property taxes
- Prepaid homeowners insurance
Closing costs vary by state and lender, and can range up to 5 percent of the loan amount. Typically, though, conventional mortgage closing costs are much less. In 2024, conventional mortgage applicants paid just 1.54%, on average.
Conventional Mortgage Closing Costs by Year
| Year | Average Closing Costs (% of Loan Amount) |
|---|---|
| 2018 | 1.38% |
| 2019 | 0.81% |
| 2020 | 1.27% |
| 2021 | 1.20% |
| 2022 | 1.51% |
| 2023 | 1.66% |
| 2024 | 1.54% |
Using Gift Funds
Freddie Mac allows gift funds to cover the entire 3% down payment on a HomeOne® mortgage as well as 100% of closing costs due. Gift funds can come from any eligible donor which includes family members, fiancé(e)s or domestic partners, employers, or approved nonprofits.
To use gift funds with a purchase, buyers must present:
- A signed gift letter from the donor
- Documentation showing the transfer of funds
For more on gift funds and how to receive them, see our HomeOne® Guide to Gift Funds.
Seller Credits
With a HomeOne® mortgage, buyers can accept cash contributions toward closing costs from home sellers directly. Seller credits are capped at 3% of the home's purchase price, and can applied to any eligible fee.
Seller credits can be applied to:
- Loan origination and underwriting fees
- Title and escrow charges
- Prepaid expenses like property taxes or homeowners insurance
- Prepaid mortgage interest
Seller credits cannot provide cash back to the buyer. The credit must be used to reduce actual closing costs and prepaids. For example, if your total closing costs are $7,000 and the seller agrees to cover $9,000, only $7,000 can be applied. The extra $2,000 is unused and will not come back to you in cash.
Seller Credit Examples
| Closing Costs | Seller Credit | Costs Remaining for Buyer | Unused Seller Credit |
|---|---|---|---|
| $7,000 | ($3,000) | $4,000 | $0 |
| $7,000 | ($5,000) | $2,000 | $0 |
| $7,000 | ($7,000) | $0 | $0 |
| $7,000 | ($9,000) | $0 | $2,000 |
Many first-time buyers combine seller credits with cash gifts for downpayment, using the gift for their 3% then applying their seller credits to cover allclosing costs.
Down Payment Assistance
HomeOne® mortgages can be combined with down payment assistance (DPA) programs to make buying a home even more affordable. DPA programs are often run by state or local housing agencies, nonprofits, or employers, and can provide grants or forgivable loans to help buyers cover their upfront costs.
Since the HomeOne® program doesn't impose limitations on income or location, the only rules buyers need to meet are those of the DPA programs themselves. For example:
- If your state offers a $7,500 first-time buyer grant, you can use it toward your 3% down payment.
- If your employer provides a forgivable loan for closing costs, it may be layered with your HomeOne® mortgage.
- If your city program covers both down payment and closing costs, you may be able to buy with little or no personal funds at closing.
How Downpayment Assistance Works with HomeOne®
- Apply for a HomeOne® mortgage through your lender.
- Apply separately for down payment assistance with a qualifying agency or program.
- Get approval for both — your lender will verify the assistance meets Freddie Mac's guidelines.
- The lender combines the two into one transaction at closing, reducing the cash you need upfront.
This flexibility is one of the key differences between HomeOne® and Home Possible®, which has income limits that can restrict who qualifies.
Key Takeaway
HomeOne® requires just 3% down, plus typical closing costs. But none of the funds need to come from your own savings. With gifts, seller credits, and assistance programs, it's possible to buy a home with little or no personal cash contribution.
Frequently Asked Questions About HomeOne® Down Payment and Closing Costs
Get answers about how much cash is required for a HomeOne® mortgage and what sources can be used.
What is the minimum down payment for a HomeOne® mortgage?
3% of the purchase price.
Can my down payment come entirely from a gift?
Yes. Freddie Mac allows the full 3% to come from gift funds or down payment assistance.
What are typical closing costs?
Closing costs usually run between 2% and 5% of the purchase price and include lender, title, and prepaid expenses.
Can the seller pay my closing costs?
Yes, up to 3% of the purchase price with HomeOne®.
Do I need to contribute any of my own money?
No. All funds can come from eligible sources such as gifts, seller credits, or assistance programs.
Can I combine HomeOne® with down payment assistance?
Yes. Local and state assistance programs can be layered with HomeOne® as long as they meet Freddie Mac rules.
