5 Mortgage Lenders To Consider If You’re Making A Small Down Payment

The homebuying process can seem confusing and overwhelming, especially since there are so many moving parts to consider.

Making a down payment is just one part of the process. While it has long been a notion that you needed to put at least 20% down in order to buy a home, findings from a recent report by the National Association of Realtors indicate that the average down payment on a home or condo in 2021 was actually 12% — for homebuyers under the age of 30, the average down payment was just 6%.

It’s important to note that if you make a down payment of less than 20%, you’ll typically be charged Private Mortgage Insurance, or PMI, until you build 20% equity in the home.

That said, making a lower down payment can present some advantages. For one, doing so allows you to reserve more of your savings for closing costs, lender fees, renovations that may need to be done in the home and other moving expenses.

Select rounded up five mortgage lenders that do not require a large down payment, evaluating lenders based on the types of loans offered, customer support and minimum down payment amount, among other factors (see our methodology below.)

As always, do your homework ahead of time so you can be sure you’re choosing the lender that best suits your needs, whether you’re a first-time homebuyer or purchasing an investment property.

Who’s this for? Chase Bank offers down payment options as low as 3% if you apply for the DreaMaker home loan — for comparison, an FHA loan requires borrowers to make a 3.5% down payment.

While the DreaMaker loan is designed especially for those who can only afford to make a small down payment, it also comes with stricter income requirements compared to some of the other available loans. According to Chase, the annual income used to qualify customers must not exceed 80% of the Area Median Income, or AMI, for instance.

In addition to the DreaMaker loan, Chase also offers a conventional loan, FHA loan, VA loan and jumbo loan — USDA loans and home equity lines of credit, or HELOCs, are not offered by this lender. The VA loan requires a down payment minimum of 0%, which tends to be the standard rate for these types of loans. Much like other lenders, Chase has a minimum credit score requirement of 620 for its mortgage options.

Chase offers mortgage terms that range from 10 years to 30 years, as well as fixed rate and adjustable-rate mortgages, or ARM. Discounts are also offered for existing customers, although the requirements are rather high: To receive $500 off your mortgage processing fee, you’ll need to have $150,000 to $499,999 between Chase deposit accounts and Chase investment accounts, while having $500,000 or more in these accounts can result in up to $1,150 being taken off the processing fee.

Who’s this for? Navy Federal Credit Union provides the most benefits to current or retired members of the Armed Forces who have signed up for a Navy Federal Credit Union membership (immediate family members are also eligible).

This lender offers VA loans with the option to pay 0% down and contribute up to 4% of the home’s value toward closing costs. Another option, the Military Choice mortgage, has similar guidelines to the VA loan, such as no PMI and a 0% minimum down payment, but allows sellers to contribute up to 6% of the home’s value toward closing costs.

Homebuyers can also use the RealtyPlus program to buy a home and receive up to $9,000 in cash back. Private mortgage insurance, or PMI, is also not a requirement for a low down payment on a mortgage through this particular lender.

While this lender doesn’t disclose its required minimum credit score, it does work with members to analyze their circumstances and find the right mortgage fit for them, making Navy Federal Credit Union a potentially more flexible lender if your credit score is on the lower side.

Who’s this for? Ally Bank offers a HomeReady mortgage program that is geared toward low- to mid-income homebuyers regardless of whether it’s their first time or if they’re a repeat buyer, allowing you to put down as little as 3% for a down payment. Applicants must have a debt-to-income ratio of no more than 50%, their income must be equal to or less than 80% of the area’s median income and at least one borrower must take a homeowner education course.

It’s common for lenders to charge several fees during the mortgage application process, including an application fee, an origination fee, a processing fee and an underwriting fee, which can end up costing a significant amount during the homebuying process. While Ally doesn’t charge any of those fees, you may still have to deal with appraisal fees and recording fees, or pay for title searches and insurance.

It’s possible to get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes, as long as you have all the necessary documents handy.

While Ally also offers a jumbo loan option, note that FHA loans, VA and USDA loans are not available through this lender. Customers can also choose between fixed rate and adjustable rate mortgages, and 15-year, 20-year and 30-year loan terms.

One important drawback, though, is that Ally mortgage loans are not available in every state — residents of Hawaii, Nevada, New Hampshire and New York are not able to apply.

Who’s this for? USDA loans allow homebuyers to make a 0% down payment to purchase their home. It’s sometimes tough to find lenders that offer these types of loans in addition to other standard mortgage options, but PNC Bank does include USDA loans in its lineup.

To apply for a USDA loan with PNC Bank, you must be purchasing a home in a qualifying rural area. If you’re not interested in a USDA loan, this particular lender also offers conventional loans, FHA loans, VA loans, jumbo loans and a PNC Bank Community Loan, a special program that allows homebuyers to put down as little as 3% (without paying private mortgage insurance) and choose between fixed-rate and adjustable-rate mortgage terms.

This lender also offers a special loan option geared toward medical professionals who are looking to buy a primary residence only. With this loan, medical professionals can apply for as much as $1 million and won’t have to pay private mortgage insurance regardless of their down payment amount. They can also choose between fixed-rate and adjustable-rate terms.

It’s possible to get online pre-approval in as little as 30 minutes as long as you have all the documentation available on hand.