On a $350,000 house, a 20% down payment is $70,000. That’s more than the typical American household has in savings, and it doesn’t even include closing costs, moving expenses, or the furniture you’ll need. For many people, waiting to save that much feels like a fantasy. But you do not need 20% down to buy a home. The best low down payment mortgage programs can help you get in with 3% or even 0% down, if you know the true cost and which loan fits your situation.
What Counts as a Low Down Payment Mortgage?
Any mortgage with less than 20% down is a low down payment mortgage. Usually, lenders offer these programs with 0%, 3%, or 3.5% down, but a few conventional products go up to 5%. The catch is that most require some mortgage insurance, which pushes up your monthly payment. Still, these loans can be an excellent way to buy in a market where home prices are high.
The old standard of a 20% down payment isn’t necessarily the right target for everyone. The 20% down payment rule has been reexamined by finance professionals with current interest rates and appreciation in mind. Your down payment decision should also reflect how much you can realistically contribute without wiping out your emergency fund. This piece of the puzzle is often best understood by comparing not just the down payment numbers but overall housing costs.
The Best Low Down Payment Mortgage Programs in 2025
Here are the standout programs for borrowers who don’t have a large down payment saved. Some come from the federal government; others are backed by Fannie Mae and Freddie Mac. Each has specific criteria, so pay attention to their details.
FHA Loans: 3.5% Down
FHA loans are one of the most widely used low down payment mortgages. You can qualify with a credit score of just 580 if you’re putting down 3.5%. Scores between 500 and 579 usually require a 10% down payment. Because the Department of Housing and Urban Development insures the loan, private lenders are willing to take on more risk, which means a larger debt-to-income ratio is often accepted.
Just remember, the FHA mortgage insurance premium comes in two parts: a 1.75% upfront premium plus an annual premium around 0.55%. If you put down less than 10%, your annual premium stays with the loan for its entire life until you refinance or sell. That can be costly if you stay in the home for a long period, but for many first-time buyers, it’s the only realistic way in.
Fannie Mae HomeReady and Conventional 97: 3% Down
If you have a FICO score of 620 or more, a conventional 97 loan may be a better deal than an FHA mortgage. HomeReady, which is Fannie Mae’s low down payment option, allows a 3% down payment. You’ll pay private mortgage insurance (PMI) initially, but it drops off once you reach 20% equity. That’s a huge advantage over FHA’s permanent monthly premium.
This program also lets you include income from a roommate or other household member who isn’t on the mortgage to help you qualify. Gift funds and down payment assistance can be used toward the down payment and closing costs. The main requirement, aside from your credit, is that you complete a homeownership education course, which actually helps you understand the process.
VA Loans: 0% Down
If you’re an active-duty service member, veteran, or a qualifying surviving spouse, consider a VA loan first. It provides a true 0% down payment with no monthly mortgage insurance. That makes it one of the most powerful low down payment mortgage programs still available. The Department of Veterans Affairs has no minimum credit score, but private lenders usually look for around 620.
The VA charges a funding fee that can be rolled into the loan. For first-time use with a zero-down mortgage, the fee is 2.15% of the loan amount, and it goes up to 3.3% for subsequent uses. Borrowers with a service-connected disability are exempt. After considering that fee, you still come out ahead because you avoid PMI for the life of the loan.
USDA Loans: 0% Down
The USDA Rural Development loan is for homes in eligible rural and suburban areas. It lets you finance 100% of the purchase price, with the ongoing annual fee set at a low 0.35% of the average loan balance—much lower than FHA’s premium. You’ll pay a 1% upfront guarantee fee too.
The tradeoff is that USDA loans are subject to county income limits, and only certain properties qualify. Most buyers need a credit score above 640. If you’re looking in a rural area and can stay under the income cap, this can be the most affordable way to get a house with no down payment.
Down Payment Assistance Programs
Many states, counties, and local housing agencies offer grants or second-lien loans to cover your down payment and closing costs. These down payment assistance programs can be paired with FHA, conventional, or sometimes VA loans. Depending on where you live, you could receive $5,000 to $20,000 that you don’t have to repay if you stay in the home for several years.
Still, assistance programs have strict rules. They may be limited to first-time buyers, households at a certain income level, or professions like teachers or nurses. For a careful breakdown of what’s available, check out the down payment assistance programs you should actually qualify for. And don’t skip the details—some first-time home buyer programs come with repayment clauses that agents don’t advertise.
How to Choose the Best Program for Your Situation
No single program is universally the best. Instead, you need to weigh factors like your credit score, monthly budget, and the property’s location.
- If your credit is 620 or above: conventional 97 or HomeReady will usually produce a lower long-term cost than an FHA loan due to cancelable PMI.
- If your credit score is below 620: FHA is likely the most accessible path, but plan out the cost of the annual premium.
- If you qualify for VA or USDA: those zero down options can be a game-changer, especially if you want to keep your cash for renovations and emergencies.
- If you think you might move in a few years: compare the upfront closing and insurance costs carefully. A conventional loan with PMI may be better because it can be canceled without refinancing once your equity is high enough.
For a more detailed breakdown of loan products, read this straightforward comparison of mortgage options and decide whether fixed, ARM, FHA, or another structure works with your expected time in the house.
Let’s Look at the Real Math
Numbers make these programs less abstract. Say you’re buying a $350,000 home:
20% down payment: you’d need $70,000. A $280,000 loan at 6% would cost about $1,679 per month for principal and interest.
3% down payment: you only need $10,500. The loan balance is $339,500. At the same rate, the monthly principal and interest are around $2,035, plus roughly $75 for PMI. That’s $2,110 per month—$431 more.
That extra $431 matters, obviously. But over the first year, the home may appreciate by 3% to 5%, adding $10,500 to $17,500 to your net worth. Renting while you save the other $59,500 for a 20% down payment will not build any equity. As long as you can comfortably handle the monthly payment, a low down payment isn’t automatically a bad decision.
Before you pick a number, read more about how much you should put down on a house; seeing the full cost model can help you avoid overstretching.
How to Keep Costs Under Control
Shop around for the best combination of rate and closing costs. One lender might charge a higher interest rate but offer a credit that covers most of the closing costs, which is useful when you’re short on cash. Consider buying out your mortgage insurance upfront if you plan to hold the home for a while. Ask your loan officer to show you the PMI schedule, so you know exactly when it can be removed. A low down payment will still include some insurance cost, but being smart about it can reduce the amount you pay by thousands over the years.