Best Low- and No-Down-Payment Mortgages of July 2026
Rates data is based on a borrower with good credit, a conforming loan amount
(at least $200,000 but less than the national conforming loan amount), and a loan-to-value
ratio of less than 80% (For purchase loans, this corresponds to a down payment of 20% or more).
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Expert Forecast
“We expect rates to average 6.3% this year, though the short-term outlook remains volatile. Mortgage rates ticked higher over the past couple of weeks as tensions in Iran flared once again, and near-term movement will likely hinge on developments in the Middle East.
“Rates could keep drifting higher if a resolution seems out of reach. (July 14’s) cooler-than-expected CPI data is encouraging for rates over the longer term, but for now, rising oil prices tied to the Iran conflict are outweighing that inflation optimism and could continue to push rates upward.”
-Hannah Jones, senior economist, Realtor.com
Compare mortgage rates from top lenders to find the best home loan for you.
Although a 20% down payment is the rule of thumb, it’s not a requirement. The typical down payment among first-time homebuyers in 2024 was 9%, according to the National Association of Realtors. While it’s true that the best terms are generally reserved for well-qualified applicants who can make a bigger down payment, you can take advantage of various mortgage programs that demand far less.
Loan options with flexible down payment requirements can help borrowers who lack the savings to put toward a home but who otherwise qualify for a loan. You’ll generally need to put down at least 3% to 5% for any type of home loan, unless you can qualify for a zero-down-payment mortgage through certain programs with stricter eligibility requirements.
Conventional Loans: 3% Down
Borrowers seeking conforming conventional loans – meaning the loans aren’t government-insured and meet Fannie Mae and Freddie Mac requirements – have a few 3% down options:
- Conventional 97. This is also known as a 97% LTV Standard loan, as the maximum loan-to-value ratio is 97%. In other words, you can put as little as 3% down. There are no maximum income limits for this program, but you’ll need a credit score of 620 or higher to qualify, and at least one borrower must be a first-time homebuyer. The maximum loan amount is limited to the conforming loan limit for your area.
- Fannie Mae HomeReady. This program offers a 3%-down-payment loan for low-income homebuyers. That’s slightly lower than 3.5% for the FHA loan, but the credit guidelines are tougher. A Fannie Mae HomeReady loan requires at least a 620 credit score, and a score of 680 or higher could get better pricing. You don’t need to be a first-time homebuyer to qualify for a HomeReady loan.
- Freddie Mac Home Possible. This fixed-rate loan has a down payment as low as 3%, and borrowers can reduce their mortgage insurance once they reach 10% equity. Freddie Mac’s Home Possible program is available for first-time or repeat buyers with credit scores of 620 or higher.
FHA Loans: 3.5% Down
Federal Housing Administration-backed loans allow you to put as little as 3.5% down on a home purchase. Credit score requirements for an FHA loan may be more flexible than for conventional low-down-payment loans. Your FICO score must be at least 580 to make a 3.5% down payment. For scores between 500 and 579, you’ll need a 10% down payment.
Keep in mind that you’ll have to pay an up-front mortgage insurance premium, as well as an annual MIP that’s divided by 12 and added to your monthly payment. FHA also sets maximum loan limits that depend on where you’re purchasing a home.
VA Loans: 0% Down
The Department of Veterans Affairs offers a zero-down-payment loan program and does not set a maximum loan amount, though there are caps on the amount of loan the VA will guarantee. Veterans and surviving spouses who want to apply must furnish a Certificate of Eligibility, a document that verifies the borrower’s eligibility.
The VA loan program has no minimum credit score, but most VA-approved lenders have credit score requirements.
Borrowers need to pay an up-front funding fee, which can be financed or paid in full at closing. The VA funding fee ranges based on your down payment amount and whether you’ve already used a VA home loan benefit in the past. If your down payment is less than 5%, the VA funding fee is 2.15% for the first use or 3.3% after your first use. VA home loans do not require mortgage insurance.
USDA Loans: 0% Down
No-down-payment loans are available from the U.S. Department of Agriculture. The property must be in an eligible rural area and household income must meet guidelines for a buyer to use a USDA loan.
The USDA does not set a credit score requirement for USDA home loan guarantees, but applicants must show an ability to manage debt and pay bills. You’ll have an easier time getting a direct home loan from the USDA if you have a credit score of at least 640, but it’s possible to qualify with a lower score.
USDA direct loans don’t have mortgage insurance, while loans guaranteed by the USDA have an annual guarantee fee.
Good Neighbor Next Door: $100 Down
The Department of Housing and Urban Development’s Good Neighbor Next Door program is for teachers, law enforcement officers, firefighters and medical personnel. Eligible borrowers can purchase a HUD-owned single-family home for 50% off its list price. The required down payment is as low as $100, and the buyer must live in the home as a primary residence for at least three years. Additionally, some professionals may qualify for grants and closing costs credits that can effectively reduce the down payment to zero.
Other Mortgage Programs: Varies
Lenders may offer their own low-down-payment mortgages and down payment assistance programs that help homebuyers get into a loan without a 20% down payment. State, county and city programs may also be available to help you afford a mortgage down payment. Check with your state’s housing department to find out if you qualify for programs to bring homeownership within reach.
Pros
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You will bring less cash to closing.
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You can access homeownership more quickly.
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You can keep more savings for emergencies.
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You can get into a home faster instead of waiting to save for a large down payment.
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You have the ability to establish wealth by owning a home and paying down that debt.
Cons
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You will likely pay private mortgage insurance.
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You will have little to no equity in the home.
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You will likely pay higher interest rates.
You’ll want to consider a number of factors when comparing the best mortgage lenders for low- or no-down-payment loans.
- What programs do they offer? Because program offerings vary by lender, be sure the lender you choose offers several options for which you think you will qualify.
- Do you need to be a first-time homebuyer? Be sure to clarify the lender’s restrictions. You don’t want to waste your time if you won’t qualify.
- What is the minimum credit score required? Although many no-down-payment government programs don’t set a minimum credit score, often lenders have their own stipulations.
- Is down payment assistance available? Some banks and financial institutions offer their own down payment assistance, while other lenders will work with state programs. Either way, make sure your lender is knowledgeable about your options.
- How is the lender’s customer service? Check online lender reviews, such as with the Better Business Bureau, Trustpilot or the Consumer Financial Protection Bureau. If the lender is a local financial institution, you might reach out to family and friends.
What credit score you need to get a no- or low-down-payment mortgage varies by program. For example, neither the VA nor the USDA sets a minimum credit score requirement for its home loans. With FHA home loans, you can get a mortgage with a credit score as low as 500, but you can reduce your required down payment if your score is 580 or higher.
The important thing to remember is with a higher credit score, you’ll be able to qualify for lower interest rates on your loan.
You do not have to be a first-time homebuyer to qualify for all types low-down-payment mortgages, but certain programs (like 97% LTV Standard conventional loans through Fannie Mae) do require that at least one person on the loan is a first-time buyer. Eligible active and retired military personnel may qualify for a zero-down VA loan, regardless of whether they’re a first-time homebuyer. Additionally, USDA loans and other types of conventional loans do not require buyers to be first-timers to qualify for a low down payment.
Some low-down-payment mortgage programs have income limits. For instance, your qualifying income can be at most 80% of the area median income to get a Fannie Mae HomeReady Mortgage or a Freddie Mac Home Possible Mortgage.
