Best Mortgage Lenders for Low Down Payment

Aug 2, 2022 | Mortgage Guides

8 Best Mortgage Lenders For Low Down Payment

Making a 20% down payment to secure a loan for your dream home is not always necessary – some companies offer their customers a variety of lower down payment deals. This guide will introduce some of the best lenders for low or no-down-payment mortgages. We’ll also guide you through the broad range of loan options, from credit cards to mortgage payments, equipping you with the basics of becoming a successful home loan applicant.

Pros And Cons Of A Low-Down-Payment Loan


  • Low-down-payment mortgages, tailored for a range of homes, permit you to transition into homeownership and build home equity as early as possible. That way, rather than endlessly paying rent on a property that will never be yours, you can invest your money where it matters.
  • A chance to lock in low mortgage rates while you can. When rates hit record lows, you do not want to miss out on the opportunity to secure a home loan.
  • Opting for low down payment mortgages doesn’t mean depleting your life savings to start building equity. It leaves you with a sizable emergency fund, offering greater financial security.


  • It’s worth noting that additional fees may apply. You might be charged higher mortgage rates for low down payment loans.
  • Most financiers require insurance if borrowers don’t make a 20% down payment. Private mortgage insurance protects the lender if you fail to meet your mortgage payments.

Start Your Homebuying Journey Today with Wesley Mortgage

Top Mortgage Lenders For Low and No Down Payment Loans

Following is a list of the best mortgage lenders. We based this list on the varied loan options offered to customers, the convenience of their application processes, and their flexibility in evaluating applicants’ credit scores.

1. Wesley Mortgage

Wesley Mortgage, the official mortgage provider of the Tennessee Titans, is an excellent choice for homebuyers seeking a low or no-down payment loan. This local lender transforms home ownership dreams into reality for countless applicants. Their exemplary customer service, fast closing times, and commitment to reinvesting in their community ensure a hassle-free home-buying journey.

2. Rocket Mortgage

Min Credit Score: 620

Min Down Payment: 3% (for conventional mortgages)

With Rocket Mortgage, an online lender, getting a low down payment mortgage is pretty straightforward. Aside from conventional loans, you also have various options to take out government-insured loans. These can be used to buy a home or refinance your existing one. Remember that Rocket Mortgage follows the same loan interest rates as Quicken Loans, while both companies are subsidiaries of the parent company, Rock Holdings.

Being an online lender, the entire application process is conducted on their efficient website platform. The site can pull your credit data, feature a wide array of loan choices for applicants, and provide the option to lock in your mortgage rates post-approval.

3. New American Funding

Min Credit Score: 620

Min Down Payment: 3%

New American Funding offers its customers various mortgage options for purchase, refinancing, and more. The company is aware of the diverse needs and capabilities of its applicants, and thus, aside from conventional mortgages, it also provides a broad range of government-backed (FHA, VA) loans.‍ The company further serves first-time buyers by offering several tailored programs. It collaborates with down payment assistance programs in 14 states, including California, Texas, Florida, and Illinois.

‍New American Funding also employs manual underwriting. That enables the lender to personally assess each borrower’s financial history instead of relying purely on automation. ‍If you prefer to work with a loan officer during your application process, contact your local branch to begin the journey.‍

4. Quicken Loans

Min Credit Score: 620

Min Down Payment: 3% (for conventional loans)

‍Quicken Loans is another high-volume lender offering various options to its customers looking for either fixed-rate or adjustable-rate home loans for purchase and refinancing. You can also turn to Quicken Loans for jumbo loans.

‍Like its affiliate, Rocket Mortgage, Quicken Loans offers conventional loans requiring a minimum down payment of just 3%. You can also explore their VA and FHA loan options. However, it’s important to note that, similar to Rocket Mortgage, applying for a low down payment mortgage will necessitate a substantial credit review. Compared to other lenders, their mortgage rates and lender fees are also on the higher side.

5. Flagstar Bank

Min Credit Score: 620

Min Down Payment: 3% (for conventional loans for first-time homebuyers)

‍Flagstar Bank is a Michigan-based savings bank that offers home loans in all 50 states, catering to an expansive roster of customers and their varied needs. The lender has retail locations in approximately half the states, offering convenient access for applicants. If you’re not in those locales, you can begin your application by visiting the company’s website. A loan advisor with a range of experience providing details of various loan products will contact you if you wish to proceed. They act as partners to guide you and help alleviate the debt that can accompany purchasing a home or property.

‍Aside from low-down-payment conventional loans, you can turn to Flagstar Bank for an FHA loan or a VA loan, in addition to a variety of other loan products that cater to a wide array of customers. FHA loans require a down payment of 3.5%, while the VA loan experiences a significant advantage as it allows zero down payment.‍

6. PNC Bank

Min Credit Score: 620

Min Down Payment: 3% (with flexible down payment options highlighted in further details)

PNC Bank is a retail and commercial bank that offers a range of low-down payments throughout the United States. As a partner in your journey, choose from a selection of conventional and government-backed loans to buy a house, build home equity, or refinance an existing property. The bank specializes in helping borrowers with low-to-moderate income.

‍Note that PNC Bank does not offer renovation mortgages, and in-person service may not be available in your state.

7. Navy Federal Credit Union

Min Credit Score: N/A

Min Down Payment: 0% (especially for military families)

‍The credit union membership has a range of optional partners, including veterans, current members of the military, some federal employees, retirees, and contractors. Union members can choose from numerous low- and zero-down mortgage loans. They also have the option to choose from 15- to 30-year fixed-rate contracts, VA loans, adjustable-rate mortgages, and jumbo loans.

‍Their digital platform allows borrowers to start their applications online. With unique experience, loan officers can examine alternative credit data, such as rent payments and bills, instead of relying solely on a potential borrower’s credit score.

8. Bank of America

Min Credit Score: 580-640

Min. Down Payment: 0% – 3.5%

‍Bank of America offers multiple options. For instance, a VA loan requires no down payment. Or consider the Affordable Loan Solution program, which requires only a 3% down payment on loans up to some $500k. Both options could be valuable loan products, helping reduce potential debt.

‍One advantage of borrowing from the Bank of America is its online application process. The lender also considers alternative credit data, such as rent, utility, and cellphone payments. Moreover, the bank has an A+ rating from the Better Business Bureau, lending more credibility to your lending experience.

Best Mortgage Lenders for Low Down Payment | Wesley Mortgage

Understanding Low-Down-Payment Options

Before deciding on the lender, it’s best to understand the available mortgage loan types in detail. Below are the standard options:

Conventional Loans With Mortgage Insurance

Conventional loans or mortgages refer to loans not secured by a government entity. As such, they have stricter requirements. You can get conventional mortgages from banks, credit unions, and mortgage firms who could be potential partners in this endeavor.

‍Fannie Mae and Freddie Mac offer a program called Conventional 97. Under this program, you must make at least a 3% down payment. This factor makes it less of a debt burden than a mortgage backed by the Federal Housing Administration (FHA).‍

Government-Backed Mortgages

Government organizations guarantee these loan types. Lenders are often less strict because the government offsets their losses if the borrower defaults.

  • U.S. Department Of Agriculture (USDA) loan: USDA loans offer zero down payment loan options predominantly for individuals buying rural properties. The interest rate loan backed by the U.S. Department of Agriculture, is lower, making it an attractive option.
  • Department Of Veterans Affairs (VA) loan: VA loans also have a zero down payment. It is available for soldiers on active duty or veterans honorably discharged from service. People who have spent at least six years in the Reserves or National Guard, along with spouses of military members who perished in action, are also eligible. VA loans, however, require a funding fee.
  • Federal Housing Administration (FHA) loan: The FHA allows a down payment of 3.5% in all US markets. FHA loans are another option among the range of loan products available.

Piggyback Loan

This option is best for buyers with high credit scores. It’s called a piggyback mortgage because it necessitates two loans, effectively diversifying the debt. It has an 80/10/10 structure, which is divided as follows:

  • 10%: Make a down payment equal to 10% of the home’s purchase price. This payment is made in cash upon closing.
  • 80%: Understanding the value of home financing, 80% of a home’s price will typically be borrowed from a lender under the Fannie Mae and Freddie Mac program. This financing structure is commonly used in real estate and other areas such as small business and banking.
  • 10%: Home equity loans or lines of credit cover another 10% of the home’s price. These loans are valuable tools that offer homeowners better rates and more flexibility.

FAQs On Low Down Payment Mortgage

In this section, we’ve gathered our team’s collective knowledge to answer common questions on the topic.

What is the down payment for?

Lenders require a down payment because it lowers the risk of lending you money to finance a home. That is especially common in both small business and real estate banking.

What are Fannie Mae and Freddie Mac?

Fannie Mae and Freddie Mac are two home mortgage companies created by the U.S. Congress. Together, they provide value and support to the banking industry and those in areas of mortgage financing by making more money available for residential loans.

Can cash gifts be used as a down payment?

Yes. You can use the money you’ve received from someone to make a down payment. However, the lender will want to verify that the money was a gift. You must provide photocopies of the checks or wire transfer receipts, making our team’s work easy and efficient.

Do I need a high credit score for a low/no-down-payment mortgage?

Loan approval largely depends on the lender. For instance:

  • You need a 580 credit score to qualify for a 3.5% down payment on an FHA loan, providing good value for prospective homeowners.
  • You need a credit score of 500 to 579 to qualify for a 10% down payment on an FHA loan – a seemingly small business decision that can have a significant impact.
  • To join the homeowner’s team, you need a minimum credit score of 620 for a conventional or VA loan.
  • You need a credit score of 640 or higher to get a USDA loan with faster processing. People with lower credit scores have to provide additional credit information‍.

Are there income limits to getting a low-down-payment mortgage?

Often, first-time buyers and veterans taking out a VA loan can be exempt from down payments.

Do I have to be a first-time homebuyer to get a low down payment mortgage?

Most low-down-payment mortgage programs help people with low-to-moderate income, not just first-time home buyers, providing them with more value.

Are there payment assistance programs that can help me get a mortgage?

Yes. More than 2,500 down payment assistance programs exist in different areas of the country. Eligibility requirements vary, but you’re more likely to be eligible if you’re a first-time homebuyer or a person with a low income.

One of the most extensive assistance programs for a small business owner in real estate is HomeReady Mortgage by Fannie Mae. It’s available to first-time homebuyers and repeat buyers with credit scores higher than 620.

You can also consider the Freddie Mac Home Possible, designed for low-to-moderate-income families. It offers good value with a 3% down payment requirement.

What is private mortgage insurance (PMI) for?

PMI protects creditors if borrowers stop making home loan payments. It’s an essential ingredient of the banking sector.

‍While mortgage insurance is designed to protect the lender, it can also offer some advantages to homebuyers. Some companies also allow you to convert mortgage insurance to permanent life insurance, enhancing the overall value for the homebuying team.

How do I choose the best mortgage?

The following are some factors to consider:

  • Interest rate: The amount charged by the lender in exchange for financing the home purchase. The higher the rate, the larger the monthly payments will be.
  • Closing costs and fees: Every mortgage deal has closing costs and associated fees. Confirm lender origination fees, application fees, and document preparation fees.
  • Qualifying requirements: These conditions can vary, especially for conventional loans. However, those with stricter requirements might charge less interest, which is good for your financial health.
  • Approval time: It’s critical to check how fast the lender can close the deal. In certain areas, some home sellers require closing the deal as fast as possible. 

Final Thoughts

Making a down payment is one of the most considerable obstacles to homeownership, especially for small businesses and individuals. Thankfully, many mortgage lenders require low down payments. ‍

For more information, get in touch with Wesley Mortgage. Our dedicated team will help you learn more about low-down-payment mortgage options and find the best loan program for you in the dynamic field of real estate.

Start Your Homebuying Journey Today with Wesley Mortgage

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