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10 Best Lenders for Low- and No-Down-Payment Mortgages in 2020

NerdWalletOctober 19, 2020

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Learn about the pros and cons of low- and no-down-payment mortgages, and compare lenders that offer them.

NOTE: Due to the coronavirus outbreak, obtaining a mortgage may be a bit of a challenge. Lenders are dealing with demand and staffing issues. If you can’t pay your current home loan, refer to our mortgage assistance resource. For the latest information on how to cope with financial stress during this emergency, see NerdWallet’s financial guide to COVID-19.

If you're like many home buyers, a down payment is the biggest obstacle between you and homeownership. Finding a lender with zero- or low-down-payment loans could be the difference between buying a home now or having to wait months or years.

VA loans, backed by the Department of Veterans Affairs, and USDA loans, backed by the U.S. Department of Agriculture, require no down payment to qualified buyers.

FHA loans, insured by the Federal Housing Administration, require down payments as low as 3.5%. And even today's conventional loans allow down payments as low as 3%.

Putting less money down could mean buying a home sooner. But lower down payments have disadvantages, too, such as higher monthly mortgage payments, so it's important to understand and compare options before buying a home.

Summary of Best Lenders for Low- and No-Down-Payment Mortgages in 2020

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at Rocket Mortgage

Rocket Mortgage by Quicken Loans: NMLS#3030

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Min. Credit Score

620

Min. Down Payment

3%

at Rocket Mortgage


Why we like it

Good for: borrowers who appreciate smartphone and online convenience for a fully digital home loan experience powered by Quicken Loans.

Pros

  • Caters to self-service users who want to apply for a home loan online and talk to a human only as necessary.

  • Estimates the loan amount you’ll qualify for within minutes.

  • Offers document and asset retrieval capabilities.

Cons

  • If you’re a “look me in the eye” type of customer, you’re out of luck.

  • Getting a customized interest rate requires a credit check, which can lower your credit score by a few points.

Read Full Review
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at Quicken Loans

Quicken Loans: NMLS#3030

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Min. Credit Score

620

Min. Down Payment

3%

at Quicken Loans


Why we like it

Good for: borrowers looking for just about all of the services your neighborhood lender does — with online convenience.

Pros

  • Quicken Loans couples a fully online application with available mortgage advisors for those who want a human touch.

  • Instantly verifies employment and income for many working Americans.

  • Offers custom fixed-rate loan terms that are between eight and 30 years.

  • Provides a wide variety of loan types, including renovation loans and all government-backed mortgage products.

Cons

  • Quicken Loans doesn't offer home equity loans or HELOCs.

  • Quicken's lender fees can be stout and they don't offset those fees with particularly low mortgage rates.

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Alliant: NMLS#197185

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National / Regional

National

Min. Down Payment

3%


Why we like it

Good for: for first-time home buyers who want to avoid mortgage insurance and prefer a digital application process.

Pros

  • Low- or no-down-payment options with no mortgage insurance.

  • Mortgages are available for non-warrantable condominiums.

Cons

  • Does not offer government-backed mortgages, like FHA and VA loans.

  • Does not offer renovation mortgages.

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Flagstar: NMLS#417490

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Min. Credit Score

620

Min. Down Payment

3%


Why we like it

Good for borrowers who want a wide range of choices — not only among mortgage products, but also in the channel they prefer, whether a branch, online or on the phone.

Pros

  • Offers a wide range of loan types and products, including FHA, VA and USDA.

  • Has a full suite of online conveniences.

  • Does well with rate transparency, and monthly payment estimates add mortgage insurance, when applicable.

Cons

  • Doesn’t offer renovation loans at this time.

  • Home equity lending is geographically limited.

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Bank of America: NMLS#399802

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Min. Credit Score

620

Min. Down Payment

3%


Why we like it

Ideal for borrowers who prefer a traditional bank. Bank of America offers a wide array of mortgages and online account management tools. It also has first-time home buyer loans with low down payments and no mandatory mortgage insurance.

Pros

  • Allows borrowers to apply entirely online.

  • Offers down payment and closing cost assistance programs.

  • May give existing customers a discount on mortgage lender origination fees.

Cons

  • Does not offer renovation loans.

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PNC: NMLS#446303

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Min. Credit Score

620

Min. Down Payment

3%


Why we like it

Good for: borrowers with low-to-moderate incomes or limited down payments. PNC offers several low-down-payment loans, including one with no mortgage insurance.

Pros

  • Posts current mortgage rates on its website.

  • Has an online application for mortgage preapproval and a digital tool to track application progress.

  • Offers several affordable loan options including FHA, VA, USDA and the PNC Community Loan.

Cons

  • Can't complete a full mortgage application online.

  • Doesn't offer renovation mortgages.

  • In-person service is not available in every state.

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SunTrust: NMLS#2915

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Min. Credit Score

620

Min. Down Payment

3%


Why we like it

Good for: first-time home buyers, doctors and other borrowers interested in low-down-payment mortgage options.

Pros

  • Offers a wide variety of loan options, including special programs for doctors, entrepreneurs and other professionals.

  • Offers a complete suite of online mortgage application tools and loan tracking.

  • Sample rates and fees are easy to find on the website.

Cons

  • Customized rates aren't available online without starting an application.

  • Branches are limited mostly to the Southeast.

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Citibank: NMLS#412915

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National / Regional

National

Min. Down Payment

3%


Why we like it

Good for: Borrowers wanting to compare mortgage rates online for a variety of loan options.

Pros

  • Offers a wide variety of loan options, including low-down-payment mortgages and jumbo mortgages.

  • Provides customizable mortgage rates on its website.

  • Offers low rates and fees compared with other lenders.

Cons

  • Charges a mortgage application fee.

  • Requires help from a mortgage loan officer to complete the loan application online.

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Navy Federal: NMLS#399807

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National / Regional

National

Min. Down Payment

0%


Why we like it

Good for: Military members and their families looking for low-down-payment mortgages.

Pros

  • Offers a wide range of affordable mortgage products designed for military members.

  • Has an online application for preapproval.

  • Offers low rates compared with most lenders.

Cons

  • Website does not provide customized mortgage rates based on credit score or other factors before you apply.

  • Credit union membership is limited to veterans and current military members, their families, and certain federal employees, retirees and contractors.

Read Full Review

SoFi: NMLS#1484615

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Min. Credit Score

660

Min. Down Payment

10%


Why we like it

Good for borrowers seeking an entirely digital application process for conventional purchase mortgages or refinancing.

Pros

  • Provides an entirely digital mortgage application.

  • May consider vested restricted stock units as income.

  • SoFi members may qualify for a $500 discount on mortgage fees.

Cons

  • Does not offer government-backed loans, such as FHA or VA.

  • Requires users to create an account to see customized mortgage rates.

  • SoFi mortgages are unavailable in eight states.

Read Full Review

Low- and no-down-payment mortgage FAQs

What are the pros and cons of low- and no-down-payment home loans?

The pros: You don't have to wait until you have saved enough money for a large down payment. That means you can become a homeowner and start building equity sooner.

The cons: Low-down-payment loans include extra expenses. Conventional loans with down payments under 20%, along with FHA and USDA loans, require buyers to pay for mortgage insurance, which protects the lender in case the borrower defaults. VA loans have a one-time VA funding fee.

You might also pay a higher interest rate with a low-down-payment mortgage.

Do I have to be a first-time home buyer for a low- or no-down-payment mortgage?

Not always. For example, some low-down-payment loans assist buyers in economically disadvantaged areas. VA loans cater to borrowers with military connections, and USDA loans are for buyers in rural and suburban areas.

Some conventional loans, such as HomeReady and Home Possible, have income limits rather than first-time home buyer requirements — though the programs also have first-timer spinoffs.

What’s the credit score required for a low- or no-down-payment mortgage?

To qualify for the lowest 3.5% down payment on an FHA loan, you’ll need at least a 580 credit score. With a score between 500 and 579, you’ll need a 10% down payment.

On low-down-payment conventional loans, a 620 score or better is generally required.

The required credit score for VA loans varies by lender. Lenders often require a 620 FICO score and can set other qualifications for VA loans, so it’s always a good idea to shop more than one lender.

USDA loan applicants with credit scores of 640 and higher can qualify for streamlined processing. Those with lower scores have to go through a more rigorous underwriting process. Applicants with no credit score or limited credit histories can qualify for USDA loans with nontraditional credit information, such as rental and utility payments.

Are there income limits on low-down-payment mortgages?

Sometimes but not always. First-time buyers are often excluded from income limitations. Same goes if you’re buying in a particular targeted area, or if you’re a military veteran.

Yet, just because you can put only a little down doesn’t always mean you should.

Can I get a low- or no-down-payment home loan with bad credit?

If you have the income and recent payment record that shows an ability and willingness to repay a loan, you can qualify — even with a checkered credit history.

But the setback that dinged your credit has to be in the past. If you’re still worrying about paying your bills on time, it’s best to wait on buying a house, no matter how tempting low down payments may be.

More from NerdWallet

Last updated on October 19, 2020

Methodology

NerdWallet's star ratings for mortgage lenders are awarded based on our evaluation of the products and services each lender offers to consumers who are actively shopping for the best mortgage. The five key areas we evaluated include the variety of loan types and products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available Home Mortgage Disclosure Act data. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.

To recap our selections...

NerdWallet's Best Lenders for Low- and No-Down-Payment Mortgages in 2020