5 Low Down Payment Mortgages                                                                     

Home prices are skyrocketing nationwide, & it has made the house buying process very difficult for most buyers in today’s market. Thankfully lenders have caught on to the fact that there is an immense amount of buyers who just need a little wiggle room when it comes to bringing forth the hard cash for a down payment. Say hello to the low payment mortgage option & its many variations!

The most common type of low down payment mortgage is the government-backed Federal Housing Authority or FHA loan. Even though they usually only require a minimum of 3.5% down, that comes with a requiring mortgage insurance for the life of the loan for anyone who puts down less than 20%. That means if you get to the point of having paid off enough of the mortgage to reach 20% equity you are still required to pay the mortgage insurance. For FHA loans the standard rate for mortgage insurance is 0.8% annually (usually divided into 12 payments). Though with private lenders it can vary from 0.5% to 1.5% (sometimes even higher). I’ve listed 5 programs below that either, don’t come with the insurance requirement, have reduced rates, or some other benefit that will make it worthwhile.

NACA: The Neighborhood Assistance Corporation of America works to provide people & communities with affordable homeownership on low to moderate income. There is no eligibility limitation based on one’s income, credit score or other criteria as long as the Member meets the following eligibility criteria; Member must not own another property when they close on the NACA Mortgage, Member must occupy the home as long as they have a mortgage obtained through NACA & Members need to participate in whatever way they feel comfortable and to adhere to NACA’s policies.  They also have several options for people with very low credit scores.

  • Min. Credit score: 580
  • As low as 0 down for qualified buyers
  • Can underwrite a loan before you decide on a home
  • Options with no pre-payment penalty

Carrington Mortgage Services: Carrington is a smaller lender but they do provide mortgages in all 50 states. They also permit certain Down Payment Assistance programs that assist borrowers who meet specific criteria, such as first-time homebuyers, borrowers with lower incomes, and those attending homeowner counseling, among others. They provide FHA loans but have lower minimum credit scores than most of the larger lenders. They also don’t charge an application fee.

  • Min. a credit score of 550 for 10% down
  • Min. a credit score of 580 for 3.5% down
  • Min. credit score of 540 for 5% down w/ a conventional loan

New America Funding: One lender that can write loans for low credit scores is New America Funding, they can also adjust the payment amounts according to the length of time you want the mortgage to last. This could work out better if you want something outside of your standard 15-30 year loans.

  • Minimum credit score: 580
  • As low as 3% down
  • Can qualify for a reduced mortgage insurance rate
  • No prepayment penalty
  • Not tied to 15, 20, or 30-year time frame

Rocket Mortgage: Rocket Mortgage promises not only a smooth mortgage process but being efficient for both approving your loan and getting the actual money into your account. They have a couple different options for people with low credit scores. They also offer a quick & easy online loan process, the ability to manage your mortgage from your phone as well as underwrite a loan!    

  • Min. Credit score of 580
  • As low as 0 down if you qualify
  • An underwrite a loan
  • Options with no pre-payment penalty

Costco: Even though they are not known for mortgages & they’re not lender’s themselves, Costco does facilitate loans with approved lenders. They have funded over 100,000 loans & something pretty unique about their program is the low origination fees that cant go any higher than $350 for executive level members or $650 for gold star members.

  • Minimum credit score of 620
  • As low as 5% down for a conventional loan
  • Low orgination fees for costco members.