Low Down Payment Programs

Low down payment programs come with many options and features that make them even more attractive for borrowers with limited funds. Some of these loans will allow you to purchase a home with less than a $500 down payment or even no down payment at all!

A variety of low down payment conventional loan programs is available, and FHA has always been a good source for affordable loans. Some of these products even have special relaxed guidelines for targeted borrowers, such as police, fire, and hospital workers.

Alert: Loan Products You'll definitely want to check out the Loan Product Matrix located at the back of this section to get a sense of the types of loan programs that may be available to you.

Alert: Brake Hard Here! If the lists of loan program features and descriptions contain terms that you don't understand, don't worry help is available. You can contact a housing counselor or attend a homebuyer education workshop to learn about the mortgage terms. This will help you be in the driver's seat when it comes to walking the walk and talking the talk. Access to a whole network of housing counselors is right at your fingertips ”it's located along Route 4 in the New Jersey and New York Resource Guides.

Alert: Don't Forget to Tap into Your State Housing Finance Agency You should also check with your state Housing Finance Agency to see if local programs to help disaster survivors have been introduced. Locate your state's housing finance agency at the National Council of State Housing Agencies (NCSHA) website, www.ncsha.org.

Fannie Mae's My Community MortgageSM Product Suite The My Community Mortgages (MCM) help lenders serve America's increasingly diverse population of low- and moderate-income borrowers. This menu of products is offered with several options and with flexible terms. A few of the key features of these products include: Minimum down payment of 0 to 3% , depending on the borrower and the number of units in the property. For a single unit property the minimum down payment is zero dollars from the borrower with a maximum 97% LTV, 3% can come from another acceptable source. For a 2-4 unit property the maximum LTV 95%, the borrower must contribute 3% the remaining 2% can come from another acceptable source. Financing up to 100% of the value of the property Flexibility related to credit history; nontraditional credit history accepted Special options for teachers, police officers, firefighters, and health-care workers Special options for the disabled

Freddie Mac Home PossibleSM Mortgage Product Suite

Freddie Mac's Home PossibleSM Mortgage is designed for first-time homebuyers, and minority, new immigrant and low- to moderate-income borrowers. It provides you with a low down payment and flexible credit terms to make it easier for you to qualify. A few of the key features of these products include:

  • Minimum down payment of 5%
  • Available in fixed-rate and adjustable-rate mortgages
  • Flexibility related to credit history
  • Second mortgages allowed under certain circumstances.
  • Flexible income limits for underserved communities (hurricane-affected areas apply)
  • No cash reserves required
  • Homebuyer education is required (some exceptions apply)

HA 203(b) Mortgage Insurance Program

Section 203(b) is the centerpiece of FHA's single-family mortgage insurance programs and is the most commonly used program. It is available in all areas of the country. It may be used to purchase or refinance a new or existing one- to four-family home in either urban or rural areas, including manufactured homes on permanent foundations.

FHA-insured mortgages offer many benefits and protections that only come with FHA:

  • Easier to qualify ” Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.
  • Less-than-perfect credit ” You don't have to have a perfect credit score to get an FHA mortgage. In fact, if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan.
  • Low down payment ” FHA loans require a low down payment, and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don't allow this.
  • Costs less ” FHA loans have competitive interest rates because the federal government insures the loans. Always compare an FHA loan with other loan types.
  • Helps you keep your home ” Should you encounter hard times after buying your home, FHA has many options to help you keep your home and avoid foreclosure.

FHA does not provide direct financing, and it doesn’t set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. In order to start the loan application process, please contact an FHA-approved lender.