Learn 7 Programs to Consider If You Have a Small Down Payment

We’ve all heard the common wisdom: When buying a home, put down a 20% down payment. But are you truly needed to save the entire 20% before you may buy?


There’s good news if you’re trying to save for a large down payment. A little down payment can be used to purchase a home. However, if you’re looking for a mortgage with a low down payment, look no further.

FHA financing

An FHA loan is one of the easiest loans to qualify for with a minimal down payment. Although the government does not pay the mortgage, the Federal Housing Administration does guarantee the loan. This permits lenders to take a chance on you.

You can put down as low as 3.5 percent for a down payment on an FHA loan. If you’re buying a $200,000 home, that’s the difference between saving $40,000 for the usual 20% down payment and saving $7,000.

Furthermore, credit criteria are less stringent with this minimal down payment mortgage. If you’re trying to rebuild your credit, an FHA loan may be suitable.


USDA financing

Another government-backed program that offers low down payment mortgages, this one administered by the USDA, can assist you in purchasing a home with no money down at all.

If you want home loans with no down payment through this program, you must purchase in an approved rural area. You can get 100% financing to help you buy a home if you meet the income, credit, and location requirements.

a VA loan

Do you have any military experience? With the assistance of a VA loan, you may be able to obtain 100 percent financing.

This is another scheme meant to assist you in obtaining house loans with no down payment. Depending on your military status and other variables, you may be able to obtain a mortgage with no money down.

Mortgage for HomeReady

Looking for a house loan with a low down payment? You can take advantage of the Fannie Mae-backed HomeReady financing. This mortgage requires only a 3% down payment.

The HomeReady mortgage is designed for first-time homebuyers with low and middle-incomes. However, the credit standards are more strict than with an FHA loan.

With HomeReady, income criteria take into consideration everyone in the household. Therefore, it is feasible to include your parent’s income in the calculations if you wish to buy a home and have them live with you. You can also include the earnings of children who contribute to your household.

Traditional 97

Fannie Mae also offers the Conventional 97, another fascinating low-down-payment mortgage option. This is yet another initiative meant to assist folks who can only afford a 3% down payment. To qualify, you must meet certain credit requirements.

Programs for sweat equity

Investigate sweat equity programs that can assist you with a down payment on a home. You “earn” your down payment through these schemes by assisting in constructing your home or contributing to the development of other homes.

Many of these initiatives are operated by non-profit organizations or municipal housing authorities. Look for information about sweat equity in your area and how it might assist you in minimizing your down payment.

Loans that piggyback

For a time after the housing market meltdown, piggyback loans were almost non-existent. But they’re finally making a comeback. You may buy a property with a 10% down payment if you use this form of financing.