FHA loans are best known as first-time homebuyer loans. However, these loans, which only require a 3.5% down payment, offer excellent terms for anyone struggling to save up a large down payment. They are also a great option for borrowers who have less than perfect credit, as the FHA loan allows a 3.5% down payment for borrowers with credit scores as low as 580.
A VA mortgage is a benefit for military service members in the United States, including members of the National Guard and reservists. It allows borrowers to take out a mortgage with a 0% down payment. The loan’s upfront funding fee adds up to 3.3% to the cost of the principal balance of the mortgage, but the funding fee and other closing costs can be added to the mortgage. In general, interest rates on VA mortgages are competitive with rates on conventional mortgages. That makes the VA loan an appealing option for service members and veterans who may not have enough money for a large down payment.
USDA loans are zero down home loans for people living in rural areas. To qualify, you must earn less than 115% of your area’s median income, and be the primary occupant of the house. These mortgages come with a modest 1% upfront fee, and a 0.35% annual fee.
3% down mortgage programs
Home Possible® and HomeReady® mortgages are conventional mortgages that are designed for low income homebuyers who cannot afford a bigger down payment, as each program allows borrowers to buy a house with as little as 3% down. These mortgages can also be combined with down payment assistance programs.