Zillow Homes Loans announced the launch of a pilot program in Arizona that will allow some to buy a house with only a 1% down payment. Typically, lenders require a minimum of a 3% down payment. If you were aiming to buy a $300,000 house, you'd pay at least $9,000 in that scenario.

It's tough right now because homes are incredibly unaffordable, and rental prices are, too. If someone's renting and paying the soaring costs that come with it, it isn't easy to save enough for a down payment.

The Zillow Home Loans program requires that a buyer pay 1% upfront. Zillow Home Loans then contributes 2% to their down payment at closing.

To be eligible, borrowers have to be first-time buyers making no more than 80% of the area median income. If you were a family of four living in Phoenix, that would mean no more than $70,000.

While the pilot program is in Arizona, according to a press release from the company, the plan is to expand to other markets.

The 1% down payment program might sound amazing on its face, but there are caveats that buyers must be aware of and some downsides.

First, if you're making such a small down payment, you're ultimately borrowing more money and paying a lot more in interest through your loan. You'll have larger monthly payments to pay it off.

The program from Zillow is aimed at buyers who can afford the higher monthly payments but don't have the opportunity to save a substantial down payment.

Another risk of having a very low down payment is the potential for negative equity. With negative equity, the outstanding mortgage balance is more than a home's current value. If you buy a home and the value drops and only put down 1%, you're underwater. Considering the record-high home prices now, that's a very distinct possibility.

Before signing up for a program advertising low down payments, ensure you've explored all other avenues. Private and government programs can help with down payments and closing costs, for example.

Most government programs have strict definitions of who's eligible for down payment assistance, and it's usually reserved for first-time buyers. The definition first-time buyers can vary, but often, it means you haven't owned a home in the last three years. You might still be considered a first-timer even if you owned a home before that.

Down payment assistance can come as loans, grants, and other programs. Eligibility is usually based on your household income and your credit history. You'll probably have to submit a formal application, and you might have to attend a home buyer education class.

A grant is the most sought-after type of down payment assistance because you don't have to repay it. Another option is a forgivable loan with 0% interest. In these programs, you have a second mortgage and aren't expected to pay it back as long as you remain in the home for a certain number of years. Lenders will then forgive them after a certain number of years. It's usually five, but may be as long as 15 or 20 years. If you participate and move before the end of your forgiveness period, you'd have to repay the loan.

A deferred-payment loan has 0% interest as well, and it's a second mortgage, usually for a loan amount big enough to cover your down payment. You don't repay these loans until you move or sell your home, refinance your first mortgage, or repay the first loan. These loans aren't forgiven, so if you leave your home at any point, you have to repay it. You're expected to repay it through the proceeds you get from the sale of your home.

Finally, matched savings programs are an option for some buyers. These are also called individual development accounts; you deposit money into an account, and the institution matches your deposit. Then, you can use the funds to cover your down payment. The institution may be a bank, a community organization, or a government agency.