Best Lenders for Low and No-Down Payment Mortgages

It’s commonly believed that you must be able to come up with a 20% down payment to buy a house. This perception stops many people from even looking for a house. They don’t have the money for a large down payment, so they don’t even bother to look. That’s a mistake. The truth is, you can buy a house with a very low or even no down payment if you meet certain qualifications.

The lack of having a sufficient down payment shouldn’t stop anyone from buying their first home. Many lenders have programs for low- or no-down-payment buyers to take advantage of to make homeownership a possibility, even if you don’t have a ton of expendable cash to make it happen.

In this article

    Current mortgage rates

    According to Bankrate’s latest survey of the nation’s largest mortgage lenders, these are the current refinance average rates for a 30-year, 15-year fixed and 5/1 adjustable-rate mortgage (ARM) refinance rates among others.

    Product Interest Rate APR
    30-Year Fixed Rate3.030%3.370%
    30-Year FHA Rate3.200%3.700%
    30-Year VA Rate2.960%3.120%
    30-Year Jumbo Rate3.090%3.210%
    20-Year Fixed Rate2.980%3.270%
    15-Year Fixed Rate2.570%2.890%
    15-Year Fixed Jumbo Rate2.590%2.650%
    5/1 ARM Rate3.060%4.060%
    7/1 ARM Rate2.950%3.960%
    7/1 ARM Jumbo Rate2.910%3.930%
    10/1 ARM Rate3.040%3.910%

    Rates data as of 10/22/2020

    The best low or no-down payment mortgage lenders in 2020

    Lender30-Year Fixed APRMinimum Down PaymentKey Feature
    Suntrust Bank3.490%3%Online application and loan tracking
    Flagstar BankMust receive a personalized quote3%Personal quotes for several mortgages
    Rocket MortgageMust receive a personalized quote3%Nation’s largest mortgage lender
    Navy Credit Union2.750%N/AAccepts nontraditional credit history
    Bank of America3.500%3%Works with state down payment assistance programs
    CitiBank3.625%3%Discounts for Citibank customers
    Chase Bank3.500%3%Offers reduced PMI rates

    *Based on the as-low-as advertised rate as of 2/6/2020

    Best for a variety of loans for first-time buyers – Truist

    SunTrust (now Truist) is one of the nation’s largest banks with branches and is located in 10 states across the East Coast. In addition to conventional mortgages, SunTrust offers low-down-payment mortgages with 3% down through Fannie Mae and Freddie Mac and 3.5% down through the Federal Housing Authority with an FHA loan.

    J.D. Power Rating
    4/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    4 / 5.0
    close
    SimpleScore Truist 4
    Perks 4
    Credit Impact 3
    Customer Satisfaction 4
    Product Variety 5
    Fees 4

    These offers are great for first-time homebuyers who may not have a substantial credit history or a large amount saved for a 20% down payment.

    The minimum acceptable credit score is 620 with a debt-to-income ratio that doesn’t exceed 43%, though higher debt-to-income ratios might be acceptable in some cases for applicants with higher credit scores. Per its website, SunTrust also states it charges a 0% origination fee, which can be appealing for those who have limited funds for fees. Applications can be made online, by phone, through the bank’s mobile app or in person at a local branch office.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    Best for focusing on low and no-down payment loans – Flagstar

    Flagstar Bank is based in Michigan and is licensed to originate home mortgages in 50 states. The bank has retail operations in more than half of these states and accepts applications from a network of more than 2,000 mortgage brokers across the country.

    J.D. Power Rating
    N/A
    Min. Credit
    N/A
    Min. Down Payment
    N/A
    SimpleScore
    3.6 / 5.0
    close
    SimpleScore Flagstar 3.6
    Perks 3
    Credit Impact 3
    Customer Satisfaction 3
    Product Variety 4
    Fees 5

    This lender offers the full range of government-insured mortgages such as FHA, VA, USDA and government-backed mortgages from Fannie Mae and Freddie Mac. Down payments can be as low as 0% for VA loans and USDA loans, 3% for Fannie Mae’s HomeReady program and 3.5% for FHA loans. You can fill out an application online or in person at one of the bank’s branches in Michigan, Ohio, Wisconsin, Indiana or California.

    A disadvantage of Flagstar is that it charges underwriting and processing fees that add up to $1,295 for each application. Also, it does not disclose rates online and you have to request a personalized quote.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    Best for applying over the phone or online – Rocket Mortgage

    Since its inception in 1985, Quicken loans (now Rocket Mortgage) has become one of the nation’s largest mortgage lenders. It is licensed to originate mortgages in all 50 states. In addition to traditional fixed-rate and adjustable-rate mortgages, Quicken Loans offers no- and low-down-payment mortgages backed by FHA, VA, USDA, Fannie Mae and Freddie Mac.

    J.D. Power Rating
    5/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore Rocket Mortgage 3.4
    Perks 4
    Credit Impact 4
    Customer Satisfaction 5
    Product Variety 3
    Fees 1

    Quicken Loans is an especially large producer of FHA loans, working with FICO scores as low as 580 and debt-to-income ratios up to 60%. While Quicken Loans does not have face-to-face service, it does have a top-notch website and highly-rated customer service. The website is very high-tech and has an on-demand service for applicants who want to talk with live representatives.

    If you’re satisfied with not having any personal contact at all, then Quicken Loans Rocket Mortgage is the way to go. Applications through Rocket Mortgage are done completely online with data verified over the internet.

    Quicken Loans also has a unique 1% down option for qualifying buyers. For this program, applicants must have a FICO of 680 or higher, a debt-to-income ratio less than 45% and earn less than the median income for the county of the residence.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    Best for $0-down military personnel – Navy Federal Credit Union

    The Navy Federal Credit Union is designed to meet the needs of military members and their families. Its loan officers are trained to deal with first-time homebuyers, especially during times of deployment and relocations.

    J.D. Power Rating
    5/5
    Min. Credit
    Not Specified
    Min. Down Payment
    0%
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore Navy Federal Credit Union 3.4
    Perks 4
    Credit Impact 4
    Customer Satisfaction 5
    Product Variety 3
    Fees 1

    This credit union offers 100% financing to members of the military, has an upfront funding fee of 1.75% and does not require mortgage insurance.
    This lender is also willing to consider non-traditional credit data, such as rent and utilities, for applicants with incomplete credit histories.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    Best for buyers who prefer bank mortgages – Bank of America

    For borrowers who may prefer a traditional bank, Bank of America offers the Affordable Home Solution program. This program only requires a 3% down payment through Freddie Mac or its Affordable Loan Solution mortgage, and it will accept alternative credit data.

    J.D. Power Rating
    3/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore Bank of America 3.8
    Perks 5
    Credit Impact 3
    Customer Satisfaction 3
    Product Variety 4
    Fees 4

    The program does have an application fee that can exceed $1,000, along with several other closing costs that can range from 2% to 5% of the loan.

    You’ll need a FICO score above 600 to qualify and a debt-to-income ratio of less than 43%. The good news is that private mortgage insurance is not required. Also, Bank of America offers affordable housing programs where borrowers can receive grants for funds to put toward their down payment or closing costs.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    Best for low- to moderate-income buyers – Citibank

    The CitiBank HomeRun Mortgage is designed for low to moderate-income buyers. Down payments can be as low as 3%, but at least 1% must come from the buyer’s funds.

    J.D. Power Rating
    3/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.2 / 5.0
    close
    SimpleScore Citibank 3.2
    Perks 4
    Credit Impact 4
    Customer Satisfaction 3
    Product Variety 4
    Fees 1

    The balance can come from relatives and gifts. Unlike FHA, a HomeRun mortgage does not have an upfront payment for mortgage insurance or ongoing monthly premiums. The goal is to keep monthly mortgage payments low with competitive rates so more people can buy houses.

    Although the stated minimum credit score is 640, Citi may finance borrowers with lower scores at higher interest rates. One drawback of the HomeRun mortgage is that to qualify the borrower’s income cannot exceed 80% of the area’s median income. Many other lenders do not have income restrictions.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    Best for buyers with low credit scores – Chase

    The Chase DreaMaker mortgage program may provide qualifying borrowers with as much as $3,000 to put toward their down payment or closing costs on a new home.

    J.D. Power Rating
    3/5
    Min. Credit
    620
    Min. Down Payment
    3%
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore Chase 3.8
    Perks 4
    Credit Impact 4
    Customer Satisfaction 3
    Product Variety 5
    Fees 3

    The program has a low 3% down payment requirement to make homeownership dreams a reality. There is no upfront mortgage insurance charge and monthly PMI fees can be lower compared to other loans.

    This program accepts credit scores as low as 620 and debt-to-income ratios up to 45%. However, it does restrict the borrower’s income to no more than the median income for the area where the property is located.

    Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional purchase loan. For more information on low and no down-payment mortgages, please visit the lender site.

    What is a low or no-down payment mortgage?

    The common perception is that you must make a down payment of 10% to 20% of the price of the house to obtain a mortgage. Fortunately, that perception is not true. Many lenders have programs that offer lower down payments and even zero down payments on loans. FHA loans only require 3.5% down payments, and numerous banks have programs for eligible buyers that only require 3% down and the VA will finance up to 100% for military personnel.

    How should I choose the right low or no-down payment mortgage?

    Start by finding your credit score and matching it with lenders who will accept your credit history. Be aware that while government-backed loans from Fannie Mae, Freddie Mac and FHA set individual minimum requirements, private-sector mortgage lenders may impose stricter underwriting standards. For example, FHA requires a minimum credit score of 580, but some lenders may bump this requirement up to 620 or higher. You’ll need to find lenders who will work with your particular situation and down payment availability.

    Lenders will have different debt-to-income ratio requirements. You have to work with a lender that will accept your particular financial situation.

    Most importantly, compare the costs from several lenders: interest rate, PMI fees, upfront costs and application fees. Each mortgage program is different and has its unique quirks.

    Methodology

    SimpleScore

    We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore

    We break down each of these five factors and their rating criteria for our review of the best mortgage companies.

    Why do some brands have different SimpleScores on different pages?

    Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores because they offer more than one financial solution — like home loans, auto loans, personal loans and more.

    For instance, in our Bank of America Mortgage Review, we give the company a 3.8 out 5 based on our five rating factors for mortgages. In our Bank of America Auto Loans Review, we give the company a 4.4 out of 5 based on our rating factors for auto loans. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of a brand’s services and how it compares to competitors’ services.

    Perks

    Mortgage lending companies that provide more perks receive a higher score from us.

    Hard/Soft credit checks

    We know that credit checks affect your score –– that’s why we favor companies that offer soft credit checks or hard credit checks when you want to see your pre-approval rates.

    Customer satisfaction

    We use the J.D. Power 2019 Mortgage Origination Satisfaction Study℠ to find out how customers rate their experience with each company. (If a company is not included in J.D. Power’s study, we skip this rating factor and average the remaining factor scores.)

    Product variety

    Mortgage lenders that offer more products for their home loans are given higher scores.

    Fees

    Fees can add up fast. Companies that don’t require as many fees for your home loan receive a higher score with us.

    James Woodruff

    Contributing Writer

    James is a freelance writer based in Connecticut. He writes finance- and business-related articles that are easy to understand and put into action. His work has been published on such sites as National Funding, FastCapital360, Bizfluent, Kapitus, SmallBusiness.Chron and Work.Chron. When not writing, he’s either on the golf course or relaxing on the smooth, white beaches of the Gulf of Mexico.