How to buy a home with little or no down payment
Buying a home with no down payment may sound too good to be true, but it is possible, depending on the loan you qualify for and where you choose to live. Down payment requirements vary by mortgage program and can start as low as zero percent, which can also be referred to as “100% financing.” For many homebuyers, using a low or no down payment mortgage helps speed up their timeline to homeownership.
Homebuyers rank saving for a down payment as one of the hardest parts of homebuying. Younger homebuyers, ages 25 to 33, find down payment savings to present the biggest challenge. Exploring options like low and no down payment mortgages, grants/down payment assistance and gift funds could help ease some of these upfront costs.
How to buy a home with little or no down payment
Several loan programs may help reduce or eliminate a down payment for homebuyers who qualify:
| Program | Eligibility | Down payment | Government-backed | Features |
|---|---|---|---|---|
| USDA loans | Low- to moderate- income buyers in rural/some suburban areas | 0% | Yes |
|
| VA loans | Veterans, activeduty, reservists, surviving spouses | 0% | Yes |
|
| Arrive HomeTM | All homebuyers who meet income requirements | 0% | No |
|
| Zero down | All homebuyers | 0% | No |
|
| State housing loans | Low- to moderate- income buyers | Low down payment/assistance | May be government-backed |
|
| HomeReady® and Home Possible® | Low- to moderate- income buyers | As low as 3% | Yes |
|
| Conventional loans | All homebuyers | As low as 3% | No |
|
| FHA loans | All homebuyers | As low as 3.5% | Yes |
|
Except for VA loans, which don’t require mortgage insurance, you’ll typically have to pay mortgage insurance when putting down less than 20 percent. Mortgage insurance helps protect a lender against a loan defaulting or entering foreclosure. The monthly cost you pay will depend on your lender, loan type, credit score and down payment amount
Looking for no down payment lenders? Find a Guild loan officer near you.
A closer look at funding your down payment
Even with a low-down payment mortgage, you'll still need to cover some upfront costs. But the good news is, you don't have to come up with the entire amount yourself.
There are multiple ways to fund a down payment on a house:
| Funding source | How it works | Considerations |
|---|---|---|
| Personal savings | Money saved over time | Requires long-term planning and discipline. |
| Grants | Financial assistance from nonprofits or public institutions | Eligibility criteria can vary. |
| State down payment assistance | Programs offered by state governments | Income and credit score requirements may apply |
| Employer assistance | Benefits provided by your employer | Availability depends on your employer's policies. |
| Gifts | Money given by family or friends | Gift rules may apply for tax purposes, and amounts may be limited. |
| Home equity | Selling your current home to provide funds for a down payment | May require selling your home before purchasing a new one, potentially impacting your current mortgage. |
| Bridge loan | Utilize your current equity to buy your next home | Allows you to buy a new primary residence without having to sell before you buy. |
Before you accept a financial gift, make sure you talk to your loan officer about it. They can walk you through your loan program’s requirements and explain the guidelines for receiving gifted funds. Nearly 25 percent of recent younger Millennials used gifted funds or a loan from a loved one for a down payment.
Are you eligible for down payment assistance?
If you don’t qualify for a no down payment mortgage, you may be able to reduce your down payment with the help of DPA, or down payment assistance:
- DPA may be available to both first-time and repeat buyers, depending on the program.
- In fact, close to 40 percent of all DPA programs are open to repeat homebuyers.
- If you previously owned a home longer than three years ago, you may still be considered a first-time homebuyer.
Over 2,000 DPA programs exist nationwide. Many supply thousands of dollars in aid to homebuyers who qualify. DPA typically comes in the form of a loan or grant that doesn’t have to be paid back. DPA loans may be forgivable (won’t need to be paid back after a certain number of years), deferred or taken on as a second mortgage. These programs are often compatible with low down payment mortgages.
You can search for down payment assistance in your city, county and state or ask your loan officer which programs you may qualify for.
Want to reduce your down payment?
We may be able to help. To learn more, just reach out.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.