The Best Low and No Down Payment Mortgage Lenders

You’ve had enough of paying rent and the dream of having the keys to your own home gets stronger every day. But how do you get moving in the right direction when you don’t have the funds to put together a down payment? You’re by no means alone in this conundrum, and low or no down payment mortgages are tailor-made for people having trouble getting together that first investment.

Before you decide to sign up for a no or low down payment mortgage, it’s best to look at what these entail, and if they’re the right fit for you.

Comparing Interest Rates & APR of the Top Low and No Down Payment Lenders:

 

J.G. Wentworth Home Lending

Quicken Loans

First Internet Bank

Rocket Loans

Interest rate 15-year fixed3.875%3.99%3.875%By custom estimate only
Interest rate 30-year fixed4.5%4.5%4.500%By custom estimate only
APR 30-year fixed4.520%4.762%4.563%By custom estimate only
APR 15-year fixed3.910%4.439%3.983%By custom estimate only
Get an Offer Visit J.G WentworthVisit Quicken LoansVisit First Internet BankVisit Rocket Mortgage

*Specific estimate on J.G. Wentworth given for a borrower with good credit buying a $350,000 house after putting 5% down.

What Is a Down Payment, and How Does It Work?

Take your standard 10% down payment, for a $300,000 house. This requires paying $30,000 up front and financing the rest. Over the term of a 30-year fixed mortgage with 4% interest, you would have a monthly mortgage payment of $1,788.

One thing to keep in mind is that the higher the down payment, the lower the monthly payment over the term of the loan. You may also qualify for a lower interest rate with a higher down payment.

For instance, if you put down 20% on that same $300,000 house, your monthly payment would be $1,558. Conversely, if you put down zero, your payment would be higher -  $2,145 per month.     

What Is a No Down Payment Mortgage

Many enter adulthood assuming that if they want a house, they’re going to need a hefty down payment. But while paying a 20% down payment is a great way to secure affordable monthly payments, it’s by no means a requirement. In fact, only 45% of home buyers pay 20% or more down, and 60% of first-time home buyers only put down 6% or less before they get in the door and start arranging the furniture.

Low or zero down payment mortgages require a down payment of 0-5%, but often require     you to have good credit and the income to make the monthly payments. You may also be required to pay for private mortgage insurance.

Calculate the costs of a no down payment mortgage

The Best No and Low Down Payment Lenders

J.G. Wentworth Home Lending

For more than two decades J.G. Wentworth Home Lending has helped customers obtain financing for a variety of fixed and adjustable rate mortgages. The company can help facilitate zero or low down payment loans by underwriting VA loans, FHA loans, and USDA loans, and does so through a simple online application backed by stellar customer service.  

Pros

  • Underwrites VA, FHA, and USDA loans
  • Simple online application
  • Variety of fixed and adjustable rate mortgages (fixed rate for 15-, 20-, or 30-year terms, and adjustable mortgages for 5, 7, and 10 years)

Cons

  • No live chat support
  • Not available in all states
  • Information on the company website is sparse

The J.G. Wentworth website does not include a chart showing specific rates, but it does have a calculator that you can use to figure out what type of loan they can supply. For instance, the following breakdown shows the various terms someone with good credit (680-699) can expect for a $350,000 house after putting 5% down, over a 30- or 15-year fixed mortgage, or a 5/1 adjustable rate mortgage.  

 0-year fixed15-year fixed5/1 ARM
Interest rate4.5%3.875%4.375%
APR4.520%3.910%4.697%
Monthly payment$1,685$2,439$1,660
Lender costs$795$795$795

Visit J.G. Wentworth


Rocket Mortgage

Rocket Mortgage is an all online platform meant for making mortgages easy to understand and navigate, even from your phone. The company can underwrite VA and FHA loans, and can also secure 5- or 7-year ARM and 15- or 30-year mortgages. The company can handle a variety of mortgage plans and credit histories.

Rocket Mortgage also has a handy live chat customer service option, as well as phone support if you need any assistance.

Pros

  • Live chat and other extensive customer service options
  • Down payments as low as 1% can be accomodated
  • Loan offers can be given within minutes
  • All online platform that’s simple to use

Cons

  • You need to submit extensive financial information to get quotes

*Rocket Mortgage only supplies information on rates once you have uploaded your financial information to the company site.

Visit Rocket Mortgage


Quicken Loans

Quicken Loans provides a large variety of loans from fixed and ARM mortgages to reverse mortgages and more. The company can accommodate VA and USDA mortgages, as well as home refinancing.

Quicken can provide home mortgages for up to $3 million, so chances are that you can find a mortgage that can cover your dream house.

Quicken can provide you with a 3% down payment loan, and the application process is all online and all easy. What’s perhaps most appealing is the sheer volume of loan options, though this could also be confusing to a first time home owner.

Pros

  • Wide variety of loan options
  • Fast application process
  • Many options for people who want to make a low down payment

Cons

  • No 24/7 live chat
  • No FAQ section
 30-year fixed15-year fixedVA 30-year fixedVA 5/1 ARM10-year ARM5-year ARM
Interest Rate4.5%3.99%4.375%3.99%3.99%3.75%
APR4.762%4.439%4.64%4.254%4.596%4.739%

Visit Quicken Loans


First Internet Bank

This all-online lender offers a number of services above and beyond just mortgages. For mortgages, the company can work with FHA and VA loans and the application process is fast and simple.

You can also use First Internet Bank to get pre-approved for a mortgage before you go house-hunting, and the company typically doesn’t require as extensive an amount of documentation as other lenders. There is also no minimum credit score required, and the company can approve mortgages for second homes or vacation homes as well.

Pros

  • No minimum credit score
  • Quick, easy loan approval
  • Fixed rate mortgages for 10, 15, 20, 25, and 30 years

Cons

  • Not as much flexibility on adjustable rate mortgages
 30-year fixed15-year fixedFHA 30-year fixedVA 30-year fixed
Interest Rate4.500%3.875%4.250%4.500%
APR4.563%3.983%5.269%4.807%

Visit First Internet Bank


How Can I Buy a House with No Down Payment?

There are a number of US government programs that can assist new home buyers, and it's worth taking a look to see if they can work for you.

  • Federal Housing Administration (FHA) loan

    These loans are insured by the FHA and allow first time homebuyers to take mortgages with down payments of 3.5% if you have a credit score of 580 or higher. Because of the perceived higher risk, you will be required to pay mortgage insurance with an FHA loan. This is typically 1.75% of the loan amount upfront plus .85 percent annually (paid monthly). For a $300,000 mortgage this would be $5,250 up front plus monthly payments of $212.50.

  • Veterans Affairs Home Loan

    VA home loans, for current or former military personnel, allow you to finance 100% of the cost of the house with zero down payment. There is also no monthly mortgage insurance, but most VA loan recipients will be required to pay a funding fee of 2.15% if you put zero down. And while VA home loans tend to be more lenient about credit, your credit score can affect your interest rate.

  • USDA loan

    The United States Department of Agriculture (USDA) offers low-interest, fixed-rate loans for single family housing in rural areas. These loans do not require a down payment, interest can be as low as 1%, and you can sign up for a payback period as long as 38 years. That said, you do have to meet a number of criteria, including that you are currently without “decent, safe and sanitary housing,” and that you’re looking to buy in a rural area with 35,000 residents or less.

Why Sign up for a No or Low Down Payment Mortgage?

The answer to this may be familiar - it allows you to get a mortgage without having to first save up the money necessary for a large down payment. The down payment is often the biggest unfinanced, out of pocket expense people make in their lives, and if your expenses are high, it can be difficult to put enough away every month to save up for a 20% or even 10% mortgage.

If you don't have to save up for a down payment it means you can sign a mortgage that much sooner, allowing you to take advantage of friendly interest rates and a hot real estate market with prices that will only increase by the time you manage to save up for a down payment. In addition, people get creative to get a down payment together. This can mean borrowing money from family or friends, or cashing out a retirement fund or a stock portfolio - none of which are ideal. In addition, it’s wise to have money stored away in a rainy day fund, and if you put all that money down on a house, you won’t have those liquid funds to count on if the need arises.

Why Shouldn’t I Get a No Down Payment Mortgage?

If you’re not putting money down, a lender may see you as a high-risk borrower and require that you secure mortgage insurance, which can be a significant monthly expense. In addition, with a low or zero down payment, your mortgage will probably come with a higher interest rate that can add up over the lifetime of the loan.

Origination fees and closing costs can also be higher, and all of these factors can be affected by your credit score.

If you don't put any money down, the amount you finance will be higher. This will translate to a higher monthly mortgage payment. In addition, since you didn’t put any money down, you will have zero equity at the beginning of the loan, and it will take you longer to accrue it and make you more susceptible to downturns in the housing market.

So, Should You Take a No Down Payment Mortgage?

A zero or low down payment mortgage can be a great option for borrowers who are looking to finally get into a house of their own, but are having trouble putting together the funds needed to make it happen. These loans can come with higher interest, fees, and require the purchase of mortgage insurance, but for those of us who are having trouble jumping that first (and very big) hurdle to home ownership, a low down payment loan can make it all come together.

Take a look at the rates and terms the industry leaders can offer you, and when you’re ready to buy a house, know that your days of waiting and saving may just be over.

 

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