Member FDIC NMLS #772685
Vice President - Mortgage Division
Buying a home with less than 20% down might be easier than you think
One of the most common assumptions we hear is that “you need 20% cash down payment in order to buy a home”. This couldn’t be further from the truth – there are many different lenders and loan programs that require little to no down payment, regardless of your income level!
If you'd like to be a homeowner in 2017 and the only thing keeping you renting is a lack of a 20% cash down payment, there is a loan solution for you!
Not only are there multiple loan programs available today that require less than 20% down; many of these loan programs have competitive terms for borrowers with less than perfect credit. No matter what your income level, credit history or cash on hand as down payment, there is likely a mortgage loan product out there for you.
Loan programs that require less than 3.5% down
Federal Housing Administration (FHA) loans
FHA loans are mortgage loans backed by the federal government’s Federal Housing Administration. These loans have a down payment requirement of just 3.5% of the estimated purchase price of the home as long as you have a credit score of at least approximately 580 or higher. Scores lower than 580 are still eligible for mortgage loans through the FHA loan program but may require a higher down payment.
Fannie Mae Home Ready Program loans
If you are either a lower-income household or looking to buy into a lower-income neighborhood, Fannie Mae’s Home Ready may be an ideal mortgage loan product for you. This program only requires a 3% down payment. A unique feature of the Home Ready mortgage program is that the annual income of household members who will not be a party to the mortgage loan may still be considered to meet income eligibility guidelines for the mortgage. This means that others living with you, even if they will not be listed on your mortgage, may utilize their income information in order to qualify for a mortgage.
Loan programs that require no down payment
USDA Rural Development Guaranteed Housing loan program (USDA loans)
The United States Department of Agriculture offers a zero-down mortgage loan program aimed at increasing home ownership rates in rural and some suburban areas. You’ll need a credit score of at least 640 to automatically qualify for USDA loan approval; however, there are many USDA lenders who can manually underwrite loans for individuals with lower credit scores. USDA loans are a great option for homebuyers who are looking to purchase a home outside of the city.
US Department of Veterans Affairs (VA) loans
The United States Department of Veterans Affairs’ offers a mortgage loan product to eligible service members, veterans, reservists, members of the National Guard and the spouses of military members who died in the line of duty. Service members are generally able to qualify for a VA loan after just six months of service, and these loans offer many advantages over conventional mortgage loans, including no down payment requirement. Additionally, VA loans can be used to purchase an investment property.