Best Low Down Payment Mortgage Programs 2026: Buy a Home with 0%-3.5% Down
Can't afford 20% down? You're not alone! 78% of first-time buyers put down less than 20%. This complete 2026 guide reveals the 7 best low down payment programs: 0% VA/USDA loans, 3% conventional, 3.5% FHA, and state/local programs offering $5K-$150K in down payment assistance. Compare VA loans (0% for veterans), USDA loans (0% for rural), and FHA loans (3.5%). Stack with DPA programs and tax credits. Save $60,000+ on your down payment with the right program!
🏠 Quick Comparison: Low Down Payment Programs
| Program | Down Payment | Credit Score | Best For |
|---|---|---|---|
| VA Loan | 0% | 620+ | Veterans/Military |
| USDA Loan | 0% | 640+ | Rural areas |
| Conventional 97 | 3% | 620+ | First-time buyers |
| FHA Loan | 3.5% | 580+ | Lower credit |
| HomeReady | 3% | 620+ | Low-moderate income |
| Home Possible | 3% | 660+ | Low-moderate income |
| State DPA | 0-3% | Varies | First-time buyers |
💰 Down Payment Savings ($400K Home)
7 Best Low Down Payment Programs (Ranked)
VA Loans (0% Down) - Best Overall
For veterans and active military only. The absolute best mortgage benefit - 0% down, no PMI, lower rates, and $0 funding fee for disabled veterans.
✅ Requirements:
- • Down Payment: 0%
- • Credit Score: 620+ (no official minimum)
- • DTI: Up to 60% with residual income
- • Eligibility: 90+ days wartime or 181+ days peacetime service
- • Funding Fee: 2.15% (can be financed) or $0 for disabled vets
💰 Savings ($400K Home):
- • Down payment saved: $80,000
- • No PMI saved: $250/month ($90K over 30 years)
- • Total savings: $170,000+
USDA Loans (0% Down) - Best for Rural Areas
For rural and suburban areas. Covers 97% of US land! 0% down, no PMI, lower rates than FHA. Income limits apply.
✅ Requirements:
- • Down Payment: 0%
- • Credit Score: 640+ (automated), 580+ (manual)
- • DTI: 29% housing / 41% total
- • Income Limits: $110,650 (1-4 people) or $146,050 (5+ people)
- • Location: Rural/suburban areas (check USDA map)
- • Guarantee Fee: 1% upfront + 0.35% annual
💰 Savings ($400K Home):
- • Down payment saved: $80,000
- • Lower rate vs FHA: $50/month ($18K over 30 years)
- • Total savings: $98,000+
Conventional 97 (3% Down) - Best for First-Time Buyers
For first-time buyers. Only 3% down, PMI drops off at 20% equity, and better rates than FHA.
✅ Requirements:
- • Down Payment: 3%
- • Credit Score: 620+ (680+ for best rates)
- • DTI: 43-50%
- • Eligibility: First-time buyer (no home in last 3 years)
- • PMI: 0.5-1.5% annually (drops off at 20% equity)
- • Loan Limits: $806,500 (2026)
💰 Savings ($400K Home):
- • Down payment saved: $68,000 (vs 20% down)
- • PMI drops off at 20% equity (year 8): Save $50K+ vs FHA
- • Total savings: $118,000+
FHA Loans (3.5% Down) - Best for Lower Credit
For borrowers with lower credit. Only 3.5% down with 580+ credit. Easier approval but PMI for life of loan.
✅ Requirements:
- • Down Payment: 3.5% (580+ credit) or 10% (500-579 credit)
- • Credit Score: 580+ (3.5% down) or 500+ (10% down)
- • DTI: 43-50%
- • MIP: 1.75% upfront + 0.55% annual (for life if <10% down)
- • Loan Limits: $498,257-$1,149,825 (varies by county)
⚠️ Cost ($400K Home):
- • Down payment: $14,000
- • Upfront MIP: $7,000 (financed)
- • Annual MIP: $183/month ($66K over 30 years)
- • Total cost: $87,000 (but still saves $66K vs 20% down!)
HomeReady (3% Down) - Best for Low-Moderate Income
Fannie Mae program for low-moderate income. 3% down, lower PMI, and can use boarder income to qualify.
✅ Requirements:
- • Down Payment: 3%
- • Credit Score: 620+
- • DTI: 43-50%
- • Income Limits: 80% of Area Median Income (AMI)
- • PMI: 20-40% lower than standard conventional
- • Unique: Can count boarder/rental income without 2-year history
💰 Savings ($400K Home):
- • Down payment saved: $68,000 (vs 20% down)
- • Lower PMI: $50-100/month saved vs standard
- • Total savings: $86,000+
Home Possible (3% Down) - Best for Freddie Mac Borrowers
Freddie Mac version of HomeReady. 3% down, income limits, lower PMI, and homebuyer education credit.
✅ Requirements:
- • Down Payment: 3%
- • Credit Score: 660+
- • DTI: 43-50%
- • Income Limits: 80% of AMI (100% AMI in high-cost areas)
- • PMI: Lower than standard conventional
- • Bonus: Complete homebuyer education for PMI discount
State/Local Down Payment Assistance (0-3% Down)
For first-time buyers. Get $5,000-$150,000 in down payment assistance through state/local programs. Often forgivable!
✅ Top Programs by State:
💡 How to Find Programs:
- 1. Visit your state housing finance agency website
- 2. Check HUD.gov local office list
- 3. Ask your lender about available programs
- 4. Search "[Your State] down payment assistance"
🏠 Compare Low Down Payment Lenders Now!
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Frequently Asked Questions (FAQs)
What is the lowest down payment for a house in 2026?
0% down with VA loans (veterans/military) or USDA loans (rural areas). For everyone else, 3% down with Conventional 97, HomeReady, or Home Possible programs.
Is it better to put 3% or 3.5% down?
3% conventional is better if you have 620+ credit because PMI drops off at 20% equity. 3.5% FHA is better if you have 580-619 credit or need easier approval, but PMI lasts for life of loan.
Can I buy a house with no money down?
Yes! VA loans (0% down for veterans) and USDA loans (0% down for rural areas) require no down payment. You'll still need cash for closing costs ($8K-$12K), but seller can pay up to 4-6% of these.
What credit score do I need for 3% down?
620+ for Conventional 97 or HomeReady, 660+ for Home Possible, and 580+ for FHA 3.5% down. VA and USDA have no official minimums but lenders typically want 620+.
Do I have to pay PMI with low down payment?
Yes for conventional (<20% down) and FHA loans. No for VA loans (no PMI ever) and USDA loans (guarantee fee instead, which is cheaper). Conventional PMI drops off at 20% equity, FHA PMI lasts for life.
Can I combine down payment assistance with FHA or conventional loans?
Yes! Most state/local down payment assistance programs can be combined with FHA, conventional, VA, or USDA loans. This lets you buy with 0-3.5% down PLUS get $5K-$150K in assistance!
Should I wait to save 20% down or buy now with 3%?
Buy now with 3% if: (1) home prices are rising faster than you can save, (2) you're paying high rent, (3) you can afford the payment + PMI. Wait for 20% if: (1) you can save it quickly, (2) you want to avoid PMI, (3) market is declining.
What's the difference between HomeReady and Home Possible?
Both are 3% down programs for low-moderate income borrowers. HomeReady (Fannie Mae) requires 620+ credit and allows boarder income. Home Possible (Freddie Mac) requires 660+ credit and offers homebuyer education discount. Choose based on your lender's preference.