If the down payment is your biggest obstacle to buying a house, we've got good news. Yahoo Finance has hand-picked the best home loan lenders specializing in low- and no-down-payment mortgages. While having a 20% down payment is an amazing goal, the truth is that many buyers can’t afford such a hefty expense up front. You can still buy a house with as little as 3% — or sometimes even no down payment at all.

As you'll see, you have some excellent choices. Each mortgage lender has a specialty, and one of them (or more) may be a perfect fit for your home-buying needs.

We use government data and exhaustive research to rate each lender against some of the highest personal finance reporting industry standards. We don't give out five stars like candy. In fact, no lender we've reviewed to date has met that standard yet. But these come close.

In this article:

• Best overall

• Best low-down-payment conventional loans

• Best FHA low-down-payment loans

• Best VA no-down-payment loans

• Best USDA no-down payment loans

• Best 1%-down conventional loans

• Lenders that did not make our list

• More about down payments

• FAQs

Best low- and no-down-payment mortgage lender overall

The Yahoo Finance View: Bank of America has extensive loan offerings, including options with low- and no-down payments. It also has a record of providing lower-than-average interest rates.

Read our full Bank of America mortgage review

Key benefits

• Low- or no-down-payment programs include conventional and government loans.

• An analysis of 2024 government mortgage data reveals BofA offered lower-than-median interest rates on home loans.

• BofA ranks near the top for customer satisfaction, as measured by the J.D. Power Mortgage Origination Satisfaction Study.

Need to know

• Loan costs are merely average. If BofA could pair lower loan costs with its below-average interest rates, it would be an even more appealing choice.

The Yahoo Finance view: Conventional loans can have low down payments too. Chase is a top-10 lender in conventional loan volume and offers grants that can be applied to borrowers' down payments or closing costs.

Read our full Chase mortgage review

Key benefits

• The Chase DreaMaker loan allows a down payment as low as 3% with relaxed credit qualifications.

• Eligible borrowers can receive up to $5,000 in grants, which they can use toward a down payment or to reduce closing costs. Available in select areas.

• Chase guarantees a closing within three weeks, or qualified borrowers receive $5,000.

Need to know

• The Chase 3% down DreaMaker conventional loan has income limits.

• Chase ranks above average in the 2024 J. D. Power mortgage lender satisfaction survey.

Best low- and no-down-payment lender for FHA loans

The Yahoo Finance view: Pennymac is the leading FHA lender in the nation, offering down payments as low as 3.5%.

Read our full Pennymac mortgage review

Key benefits

• Pennymac offers FHA loans with fixed- or adjustable-rate options.

• It features a 1% discount off your mortgage rate for one year as a promotional buydown.

• You can receive a $1,000 credit at closing if you apply for free preapproval before getting a mortgage (this does not apply to jumbo loans or refinances).

Need to know

• According to Yahoo Finance's analysis of HMDA data, Pennymac offered lower mortgage rates but much higher loan costs than the industry average in 2024.

• FHA loans are well-suited for borrowers with a few glitches on their credit reports.

The Yahoo Finance view: NFCU specializes in VA loans — the most valuable no-down-payment mortgage on the market.

Read our full Navy Federal Credit Union mortgage review

Key benefits

• Navy Federal is a top-tier lender in loans backed by the Department of Veterans Affairs, offering no down payments to borrowers with a military link.

• A Navy Federal program, Military Choice, offers VA loan benefits to borrowers with no remaining entitlements.

• According to Yahoo Finance's analysis of HMDA data, Navy Federal offered below-median loan costs and interest rates in 2024. That's a valuable combination.

Need to know

• Mortgage rate information published on the website is of limited use because of vague disclosures.

• NFCU is above average in J.D. Power's customer satisfaction rankings.

Read more: The best VA loan lenders right now

Best low- and no-down-payment lender for USDA loans

The Yahoo Finance view: U.S. Bank is a full-service bank that makes USDA loans accessible to borrowers nationwide and prioritizes lending to underserved households.

Read our full U.S. Bank mortgage review

Key benefits

• You do not have to be a first-time homebuyer to qualify for a no-down-payment USDA loan.

• U.S. Bank has a rent vs. buy calculator that can help you decide whether buying a home right now is a good idea.

• The bank has committed $100 million over five years to provide up to $12,500 in down payment assistance and up to an additional $5,000 as a lender fee credit to help underserved families become homeowners.

Need to know

• USDA loans are made in eligible rural and suburban areas with populations generally under 35,000.

• USDA loans do not usually require a down payment; however, $1,000 is due at closing.

• U.S. Bank has a below-average score in the 2024 J.D. Power customer satisfaction study.

The Yahoo Finance view: BMO gets as low as you can go before zero, with an innovative 1%-down conventional mortgage.

Read our full BMO mortgage review

Key benefits

• BMO allows as little as 1% down, and kicks in a healthy $16,000 or more in closing costs assistance with its Neighborhood Home Loan.

• A new offer includes a $500 discount on closing costs.

• BMO promises an "on-time" closing or you get $5,000 back on your loan closing costs.

Need to know

• A Yahoo Finance analysis of HMDA data revealed that BMO, on average, offered average interest rates but higher loan costs in 2024.

Learn more: 6 tips for picking a mortgage lender

We carefully considered the following mortgage lenders for our best-of list, but they weren’t quite as strong as our top picks:

• American Pacific Mortgage

• AmeriHome Mortgage

• AmeriSave Mortgage

• Better Mortgage

• Cardinal Financial mortgage

• Carrington Mortgage Services

• Citi Mortgage

• Citizens Bank mortgage

• CMG Financial mortgage

• CrossCountry Mortgage

• Embrace Home Loans

• Fairway Independent Mortgage

• Fifth Third Bank mortgage

• Flagstar Bank mortgage

• Freedom Mortgage

• Rate (Guaranteed Rate) mortgage

• Guild Mortgage

• Huntington mortgage

• loanDepot

• Movement Mortgage

• New American Funding

• Newrez mortgage

• PenFed Credit Union mortgage

• PHH Mortgage

• Planet Home Lending

• PNC Bank mortgage

• Prosperity Home Mortgage

• Regions Bank mortgage

• Rocket Mortgage

• SoFi mortgage

• TD Bank mortgage

• Third Federal Savings & Loan mortgage

• Truist mortgage

• USAA mortgage

• Veterans United

• Wells Fargo mortgage

• Zillow Home Loans

What is a down payment, and how does it work?

So, what exactly is a down payment in the first place? A down payment is the money you pay at loan closing to reduce the principal of your mortgage. Some loans call for a certain amount of cash upfront; others have no down payment requirement. However, the more money you put down, the lower your mortgage interest rate and monthly mortgage payment will likely be.

The minimum down payment needed depends on the type of mortgage you’re getting. A 20% down payment has been the traditional standard, and it's the minimum required to avoid paying private mortgage insurance (PMI) — an up-front and ongoing fee on conventional loans that protects the lender. However, loan programs have been launched in recent years that allow much lower down payments, from 0% to around 3%.

According to Realtor.com, in Q4 2024, the average down payment was 14.4%. This is lower than earlier in in the year but up from Q4 2023. The median down payment amount was $30,250. Keep in mind that these are national averages and medians, so the data may be different if you live in a lower- or high-cost-of-living area.

The holy grail of home loans: mortgages with 0% down payment. Yes, they do exist, and as you might imagine, they're quite popular. Two government loans are the primary 100% financing options: VA loans and USDA-backed mortgages.

It's the military benefit that has allowed generations of service members to buy a home. Backed by the Department of Veterans Affairs, VA loans usually require no down payment and put a cap on closing costs. There is a funding fee but no upfront or ongoing mortgage insurance. And while the VA has no minimum credit score, lenders do — and it varies from lender to lender.

Mortgages backed or issued by the U.S. Department of Agriculture, or USDA loans, are another 100% financing option. You don't have to be in a farming or ranching business, but the property has to be located in a rural or suburban area approved by the USDA. The loans are specifically designed to meet the housing needs of low- and moderate-income households.

Coming up with 20% down is a financial leap many first-time buyers just can't make. But something around 3% — now that's a hurdle worth taking a run at. Three low-down-payment programs are worth considering.

The venerable FHA loan has been around for nearly a century. An initiative of the U.S. Department of Housing and Urban Development, the FHA mortgage offers a down payment option as low as 3.5%. Your credit score can be as low as 580, though some lenders will set a higher limit.

A relative newcomer in the low down payment arena, the conventional loan requiring only 3% down is offered by two government-sponsored companies that provide financial backing to lenders. Known as Fannie Mae HomeReady and Freddie Mac Home Possible loans, the programs open the door for more mortgage makers to offer a low-down-payment option.

A creative solution offered by just a few lenders, this loan wraps a 2% lender grant into a 3% down mortgage. The result: You pay 1% down. There may be loan limits or household income caps for these mortgages, but each lender offering such a loan will have its own eligibility requirements.

No matter how much down payment you plan to make on buying a home, saving for a house is no easy feat. Besides the cash down, there are closing costs, perhaps an earnest money deposit — and even things as mundane as moving expenses. First, set a goal for how much you want to save, then automate money transfers to get it done.

You may have heard of down payment assistance and wondered: Who is it for, and how does it work? The programs usually offer grants or forgivable loans and can be sponsored by local and state agencies. Eligibility may be determined by where you live, your income, and whether you are a first-time home buyer.

In 2023, more than one-third of borrowers used gifts to help come up with the down payment. How does that work? Well, first, you have to hunt down a benevolent relative, friend, or charity. Different types of loans — such as conventional, FHA, and VA loans — have separate restrictions on who can donate the money to you and how it can be used.

The minimum credit score required to qualify for low- or no-money-down financing will depend on the type of loan you are getting and the lender. Generally, an FHA loan will require a 580 credit score for 3.5% down. USDA loans with 100% financing also may look for a 580 score or higher. VA loans have no minimum credit score requirements, but lenders often call for a 620 FICO or better. And 3% down conventional loans will likely require a 620 score or better.

If you want 100% financing, a VA loan is often the best option for qualified buyers. However, you'll need to be an active-duty servicemember or a veteran. You could also consider a USDA loan, which usually has no down payment requirement. To qualify, you must meet income restrictions and buy a house in a USDA-approved rural area.

The lowest down payment on a mortgage is 0%. For that, you must be eligible for a VA or USDA loan, which requires having a military affiliation — or a modest income and a property to buy in a rural and USDA-approved area.

No — buying a house with no down payment can help you get your foot in the door as a homeowner, start building equity, and maybe even land a lower interest rate if you get a VA or USDA loan. However, you should be aware of the cons. No down payment means your mortgage payments will be higher, and you’ll start out with 0% equity in your home.

Methodology:

Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2024 Home Mortgage Disclosure Act data from almost 5,000 mortgage companies, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

This article was edited by Laura Grace Tarpley.