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Home Loans That Require a Low Down Payment

Updated: Aug 9, 2021

For many homebuyers, putting a down payment on a home can be one of the greatest obstacles of the buying process. For this reason, finding a lender offering little to no-down-payment mortgages could be the solution to this problem.

For some, a low- down-payment could be the difference between buying a home in a month versus several years. For this reason, it is important to research which low- to no-down-payment loans you may qualify for. For example, the Department of Veterans Affairs and USDA loans require zero down payment to qualified home buyers. In addition, loans through the Federal Housing Administration require down payments as low as 3.5%.

However, lower down payments do have their disadvantages, such as higher monthly mortgage payments. Although a lower down payment may mean acquiring your dream home a little sooner, you need to be prepared to meet your financial obligations. This is why it is very important to research all of the options available based on your specific needs and background, especially as a new home buyer.


The Veterans' Affairs home loan program is aimed at rewarding and assisting individuals and families of those who have fought for or are currently protecting our Country. Oftentimes, VA loans require zero money down, have flexible qualifying guidelines, and have low closing costs. VA loans are provided by private lenders, such as Northpoint Mortgage. This means that the VA guarantees a portion of the loan allowing the lender to provide you with the most favorable terms. If you qualify as a service member, veteran, or eligible spouse or family member, this is definitely a program you should consider.


The FHA loan is considered to be one of the most popular government-backed home loans in the Country. FHA loans require a 3.5% down payment for those with a credit score of 580 or higher. With more relaxed credit score requirements than many other loan programs, the FHA offers benefits to those with less than perfect credit. In addition, FHA loans allow sellers to pay up to 6% of the loan amount, covering the buyers’ closing costs.


This common mortgage type is offered by almost all lenders. Conventional loans are ideal for both new and experienced homebuyers with strong credit, offering a down payment of as little as three percent, or quite a bit more, meaning that the down payment depends on the credit score of the homebuyer. Differing from other mortgage programs, conventional loans are not backed by a government agency like the ones listed below. Ideally, applicants will want to place a down payment greater than 3% in order to lower monthly payments.


Loans through the US Department of Agriculture offer benefits to some looking to buy a home in rural and suburban areas, particularly favoring those in rural, low-income areas. USDA loans are one of the only offering zero money down on mortgages with 100%˙ financing, resulting in low out-of-pocket costs to home buyers. In addition, the USDA claims to offer one of the most competitive mortgage programs for those who have not served in the military.

Pros & Cons of Low Down Payment Options

As previously mentioned, lower down payments come with disadvantages such as higher monthly payments. However, not taking advantage of these mortgage programs can mean it will take longer to become a homebuyer and delay your ability to build equity in your home. In addition, Conventional loans, along with FHA and USDA loans, require that homebuyers purchase mortgage insurance.

With so many options to consider, Northpoint Mortgage is here to guide you through the home buying process and find you the program which best suits your specific needs.

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