4 Types of Mortgage Loans That Require 5% or Less Down

February 1, 2022


4 Types of Mortgage Loans That Require 5% or Less Down

People talk a lot about the 20% down payment, but you’d be surprised at how few buyers actually pay that much.

It’s true: Most mortgage loans require a far cry from 20%. In some cases, they don’t even have down payments at all.

Are you looking for an affordable way to get your foot in the door of homeownership? Here are four low-down mortgage programs you might want to consider:

FHA loans

FHA loans — or mortgages guaranteed by the Federal Housing Administration, require only 3.5% down as long as you have a 580 credit score or higher. On a $200,000 house, that’s a down payment of just $7,000. (If you have a slightly lower credit score — between 500 and 579, you’ll need to make at least a 10% down payment — or $2,000 on a $200,000 loan.)

Conventional loans

Conventional mortgages require even less than FHA loans. On these mortgages, you’ll pay just 3% down (or $6,000 on that same $200,000 loan).

Keep in mind, though, they do have slightly higher credit score standards. While exact thresholds vary by lender, you can typically expect to need a score in the low- to mid-600s at the very least. You’ll also need a 43% or lower debt-to-income ratio — meaning your monthly debts (including expected housing payment) take up no more than 43% of your monthly take-home pay.

USDA loans

If you’re willing to buy a house in a rural or, often, suburban area, you might be able to use a USDA loan — a mortgage backed by the U.S. Department of Agriculture. These mortgages require zero down payment whatsoever but are only available in certain parts of the country. You can use this USDA eligibility map to find qualifying communities in your area.

VA loans

Veterans, military members, and their spouses have another zero-down-payment option at their disposal: The VA loan (Veterans Administration). Like USDA loans, they also require no down payment. On top of this huge perk, they also require no mortgage insurance, come with low rates, and have limited closing costs. If you’re considering using a VA loan, make sure you meet these military service requirements first.

Learn more about low-down mortgage loans

There are plenty of loans that don’t cost an arm and a leg up front. Want to avoid a sky-high down payment on your home purchase? Get in touch with Premier Nationwide Lending today. We’ll help you determine the best low-down mortgage program for your budget and goals.

Premier Nationwide Lending is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 6201 West Plano Parkway, Suite 100, Plano, TX 75093 | NTFN NMLS 75333.

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