Buying your first home can feel overwhelming, especially when you’re staring at a hefty down payment. The good news? There are plenty of first-time home buyer programs with low down payment options designed to make homeownership more accessible. Whether you’re short on savings, have average credit, or live in a rural area, these programs can significantly reduce upfront costs. Below are the top 10 low down payment mortgage programs first-time buyers should consider in 2026.
1. FHA Loan (Federal Housing Administration)
Backed by the Federal Housing Administration, FHA loans are one of the most popular first-time home buyer programs. They require as little as 3.5% down with a credit score of 580 or higher, making them ideal for buyers with moderate credit. FHA loans are flexible on debt-to-income ratios and allow gift funds for the down payment. Mortgage insurance is required, but for many first-time buyers, the lower upfront barrier outweighs the extra cost. If your savings are limited, this government-backed option is often the easiest path to homeownership.
2. Conventional 97 Loan
The Conventional 97 loan is backed by Fannie Mae and Freddie Mac and requires just 3% down. Unlike FHA loans, private mortgage insurance (PMI) can eventually be removed once you reach 20% equity. This program works well for buyers with stronger credit scores (typically 620+). It’s a great option if you want lower long-term mortgage insurance costs while still keeping your initial down payment small. Many lenders offer this loan, making it widely accessible for qualified first-time buyers.
3. VA Loan
If you’re an eligible veteran, active-duty service member, or surviving spouse, a VA loan backed by the U.S. Department of Veterans Affairs may be your best option. VA loans require zero down payment and no private mortgage insurance. Interest rates are often competitive, and credit requirements are flexible. While there is a funding fee, it can often be rolled into the loan. For military families, this remains one of the most powerful first-time home buyer programs available today.
4. USDA Loan
The United States Department of Agriculture offers USDA loans for buyers in eligible rural and suburban areas. Like VA loans, USDA mortgages require no down payment. Income limits apply, and properties must meet location guidelines. These loans are perfect for buyers willing to live outside major metropolitan areas. Mortgage insurance costs are generally lower than FHA loans, making this a budget-friendly option for qualifying borrowers seeking affordable housing solutions.
5. HomeReady® Mortgage
Offered by Fannie Mae, HomeReady allows down payments as low as 3% and considers income from household members who aren’t on the loan. This flexibility helps more buyers qualify. It’s designed specifically for low- to moderate-income borrowers and offers reduced mortgage insurance coverage requirements. Completing a homeownership education course is required, but it can help you better prepare for the responsibilities of owning a home. If your income is limited but steady, HomeReady can be a smart, affordable option.
6. Home Possible® Mortgage
Backed by Freddie Mac, Home Possible requires just 3% down and targets low- and moderate-income buyers. Flexible funding sources, including family gifts and employer assistance, can be used for the down payment. Mortgage insurance costs are often lower than FHA loans, especially for borrowers with decent credit. Income limits apply based on location, so check eligibility before applying. This program is ideal if you want the benefits of a conventional loan while keeping upfront costs low.
7. Good Neighbor Next Door
The U.S. Department of Housing and Urban Development (HUD) offers the Good Neighbor Next Door program for teachers, firefighters, EMTs, and law enforcement officers. It provides up to 50% off the home’s list price in revitalization areas. While buyers still need a mortgage, the massive discount significantly reduces the required down payment. Participants must commit to living in the property for at least three years. For public service professionals, this program offers unmatched savings opportunities.
8. State Housing Finance Agency (HFA) Programs
Every state has its own Housing Finance Agency offering down payment assistance, grants, and low-interest loans. These programs often pair with FHA or conventional loans and may provide forgivable second mortgages to cover upfront costs. Eligibility typically depends on income limits and first-time buyer status. Because benefits vary by state, researching your local HFA can uncover valuable savings. Combining state assistance with federal programs can dramatically reduce the cash you need at closing.
9. FHA 203(k) Loan
Also insured by the Federal Housing Administration, the FHA 203(k) loan allows buyers to finance both the home purchase and renovation costs with as little as 3.5% down. This is perfect if you’re considering a fixer-upper but don’t have extra cash for repairs. Funds for renovations are rolled into the mortgage, simplifying the process. While paperwork is more involved, it’s a powerful way to buy affordable homes that need improvements.
10. Local Down Payment Assistance Grants
Many cities, counties, and nonprofits offer grants specifically for first-time home buyers. These grants often do not require repayment if you stay in the home for a certain period. Programs vary widely by location but can cover part or all of your down payment and closing costs. Pairing a local grant with a low down payment mortgage can significantly reduce your upfront expenses. Checking with local housing authorities or nonprofit housing groups is a smart first step.
Conclusion
Finding the right first-time home buyer program with a low down payment can make homeownership achievable sooner than you think. Whether you qualify for zero-down options like VA or USDA loans, or flexible 3% programs like HomeReady or Conventional 97, there’s likely a solution that fits your financial situation. Start by reviewing your credit, income, and location eligibility, then compare programs to maximize savings. With the right strategy, your first home may be closer than you imagined.