10 Best Lenders for Low- and No-Down-Payment Mortgages in 2021
Compare lenders that offer low- and no-down-payment mortgages, and learn about their pros and cons.
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If you're like many home buyers, a down payment is the biggest obstacle between you and homeownership. Finding a lender with low- or no-down-payment mortgages 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, guaranteed 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.
If you're like many home buyers, a down payment is the biggest obstacle between you and homeownership. Finding a lender with low- or no-down-payment mortgages 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, guaranteed 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 2021
| Lender | NerdWallet Rating | Min. Credit Score | Min. Down Payment | Learn More |
|---|---|---|---|---|
 Quicken Loans: NMLS#3030 Learn more at Quicken Loans | Best for overall zero- and low-down-payment lender | 620 | 3% | Learn more at Quicken Loans |
 New American Funding: NMLS#6606 Learn more at New American Funding | Best for traditional lending experience | 620 | 3% | Learn more at New American Funding |
 Rocket Mortgage by Quicken Loans: NMLS#3030 Learn more at Rocket Mortgage by Quicken Loans | Best for online experience | 620 | 3% | Learn more at Rocket Mortgage by Quicken Loans |
 SoFi: NMLS#1484615 Learn more at SoFi | Best for online experience | 620 | 10% | Learn more at SoFi |
 Alliant: NMLS#197185 | Best for zero-down-payment option | N/A | 3% | Read review |
 Flagstar: NMLS#417490 | Best for overall zero- and low-down-payment lender | 620 | 3% | Read review |
 PNC: NMLS#446303 | Best for traditional lending experience | 620 | 3% | Read review |
 SunTrust (Truist): NMLS#2915 | Best for first-time home buyers | 620 | 3% | Read review |
 Citibank: NMLS#412915 | Best for first-time home buyers | N/A | 3% | Read review |
 Navy Federal: NMLS#399807 | Best for low credit score or nontraditional credit history | N/A | 0% | Read review |
at Quicken Loans
Quicken Loans: NMLS#3030
Min. Credit Score
Min. Down Payment
at Quicken Loans
at New American Funding
New American Funding: NMLS#6606
Min. Credit Score
Min. Down Payment
at New American Funding
at Rocket Mortgage by Quicken Loans
Rocket Mortgage by Quicken Loans: NMLS#3030
Min. Credit Score
Min. Down Payment
at Rocket Mortgage by Quicken Loans
Alliant: NMLS#197185
National / Regional
Min. Down Payment
Flagstar: NMLS#417490
Min. Credit Score
Min. Down Payment
SunTrust (Truist): NMLS#2915
Min. Credit Score
Min. Down Payment
Citibank: NMLS#412915
National / Regional
Min. Down Payment
Navy Federal: NMLS#399807
National / Regional
Min. Down Payment
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- and no-down-payment mortgages 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.
A low- or zero-down-payment mortgage means you will start your homeownership journey with little to no equity in the home. If your home declines in value, you can end up owing more than the property is worth. Your interest rate and monthly mortgage payment could also be higher with a low-down-payment mortgage.
Credit score requirements for low- or no-down-payment mortgages
FHA loans: To qualify for a 3.5% 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.
Conventional loans: On low-down-payment conventional loans, a 620 score or better is generally required. Some conventional loans, such as HomeReady and Home Possible are geared to low-income borrowers.
VA loans: VA loans cater to borrowers with military connections. 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 with more than one lender.
USDA loans: USDA loans are for buyers in rural and some suburban areas. 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.
More from NerdWallet
Last updated on August 13, 2021
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 2021
- Quicken Loans: Best for overall zero- and low-down-payment lender
- New American Funding: Best for traditional lending experience
- Rocket Mortgage by Quicken Loans: Best for online experience
- SoFi: Best for online experience
- Alliant: Best for zero-down-payment option
- Flagstar: Best for overall zero- and low-down-payment lender
- PNC: Best for traditional lending experience
- SunTrust (Truist): Best for first-time home buyers
- Citibank: Best for first-time home buyers
- Navy Federal: Best for low credit score or nontraditional credit history
Frequently asked questions
You may be able to get a conventional loan with a down payment as low as 3%. An FHA loan, which is insured by the Federal Housing Administration, requires a minimum down payment of 3.5%.
Sometimes, but not always. Some mortgages have income limitations depending on where the property is located, like USDA loans, which are guaranteed by the United States Department of Agriculture. VA loans, backed by the Department of Veterans Affairs, have no income restrictions.
VA and USDA loans may allow you to purchase a home with no down payment or mortgage insurance. Both of these loans have fees that cover the cost of foreclosure in the event you default on the mortgage loan, however.
No, low-down-payment mortgages aren't limited to first-time home buyers. FHA loans are popular with first-time home buyers because of the minimum 3.5% down payment requirement and relaxed credit score requirements. With some 3% down conventional loans, such as HomeReady and Home Possible, a homeowner education course is required if all borrowers are first-time home buyers.
