PROSPECTIVE homeowners may be eligible for free money to help them get on the property ladder.

As rents and mortgages increase and budgets are being squeezed, saving up for a downpayment on a home is becoming even more challenging.

However, online real-estate platform Zillow is hoping to help new home buyers by giving eligible candidates grants worth 2% of the purchase price.

Zillow Home Lones announced the 1% Down Payment program in late August which will be trialed in Arizona with hopes to expand.

“The 1% Down Payment program can reduce the time eligible home buyers need to save and open homeownership to those who are otherwise ready to take on a mortgage,” the Zillow press release said.

It is hoped that the program will help tackle one of the biggest barriers in what Zillow calls the “affordability crisis” in the housing market.

According to the real-estate platform, “typical asking rent nationwide is $2,062, or 3.6% higher than one year ago and up 31 percent since the start of the pandemic.”

Using the example of a $275,000 home in Phoenix, Zillow demonstrated that a buyer who makes 80% of their area’s median income and saves 5% would only need 11 months to save for a downpayment under the 1% Down Payment program.

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With this price, the grant given to the homebuyer would be $5,500.

In compassion, without the program, it would take them two and a half years to save 3% of the purchase price.

Zillow Home Loans’ senior macroeconomist Orhe Divounguy said that “down payment assistance can help to lower the barrier to entry and make the dream of owning a home a reality.”

“These types of programs are welcome innovations in lowering the potential barriers to homeownership for those who qualify,” Divounguy added.

The senior macroeconomist simplified the program by equating it to the role of a parent who may help their child in the house-buying process.

The Zillow economist said: “In an environment where lending is tight, you have renters that are paying essentially as much, if not more, in rent that they would pay to own.

“This is kind of the perfect timing to step in here and help those who have been sidelined by the fact that they don’t have access to parental home equity.”

Those entering the program should consult a home-buying counselor to make sure it is the right plan for them.