Your Mortgage Blog

Posted on
August 1, 2025
by
Neena Vlamis

Zero-Down & Low-Down Payment Programs: The Real Truth for Today’s Homebuyers

If you're dreaming of homeownership but feeling held back by the idea of a hefty down payment, you're not alone. Many buyers believe you need 20% down to buy a home — but that’s simply not true.

In reality, there are zero-down and low-down payment mortgage programs designed to help qualified buyers get into a home with far less cash upfront.

But what’s the real truth about these programs? Let’s break it all down.

Do You Really Need 20% Down?

Nope. While a 20% down payment may help avoid private mortgage insurance (PMI), it’s not required to qualify for most home loans. In fact:

  • The average first-time homebuyer puts down just 6–7%
  • Several programs require 3% or even 0% down
  • Waiting to save 20% could mean missing out on today’s prices or interest rates

What Are Zero-Down Mortgage Programs?

Zero-down mortgage programs allow eligible buyers to finance 100% of the home’s purchase price — no down payment required.

Popular Zero-Down Options:

1. VA Loans (Backed by the Department of Veterans Affairs)

  • 0% down
  • No PMI
  • Competitive interest rates
  • Available to eligible veterans, active-duty military, and some spouses

2. USDA Loans (Backed by the U.S. Department of Agriculture)

  • 0% down
  • For homes in eligible rural/suburban areas
  • Income limits apply
  • Great option for moderate-income buyers

3. Down Payment Assistance Programs (DPA)

Some state and local agencies offer forgivable grants or silent second mortgages to help cover the down payment — effectively making it a zero-down situation for the buyer.

The Real Truth About Zero-Down Loans

While these programs are real and powerful, it’s important to know:

  • You still need to cover closing costs (though some assistance may be available)
  • Credit score requirements vary, and stronger credit often means better terms
  • You’ll need to meet income and location eligibility (especially for USDA)
  • A zero-down loan doesn’t mean zero responsibility — always budget for maintenance, taxes, and insurance

Low-Down Payment Options: Buy with 3% to 5% Down

If you don’t qualify for zero-down but still want to minimize upfront costs, there are fantastic low-down payment options available.

Common Low-Down Payment Programs:

1. Conventional Loans (Fannie Mae & Freddie Mac)

  • 3% down for first-time buyers (1- units)
  • 5% down for repeat buyers  
  • PMI required, but can be removed later

2. FHA Loans (Backed by the Federal Housing Administration)

  • 3.5% down with a credit score of 580+
  • More flexible credit requirements
  • Mortgage insurance required for the life of the loan when putting less than 10% down

Should You Wait or Buy Now?

It’s tempting to wait and save for a bigger down payment, but that strategy can backfire if:

  • Home prices continue to rise
  • Interest rates increase, raising your monthly payment
  • You miss out on equity growth while renting

Many buyers are surprised to find they’re eligible to buy now — even with minimal upfront cash. If you are still considering waiting or buying now, keep in mind date the rate, marry the home. You always have the ability to refinance in the future if rates drop, but you may not find the home of dreams if you wait.  

Final Thoughts: Know Your Options, Make Informed Moves

Whether you’re working with 0% down, 3.5% down, or somewhere in between, the most important thing is to understand your options and work with a lender who can guide you through the process.

At A and N Mortgage, we are experts in helping buyers navigate many different payment programs with confidence. From low down payments to jumbo, we are here for everyone.

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