For many home buyers, the daunting task of saving the ideal 20% for a down payment can seem like an impossible feat. With home prices rising and homeownership declining, lenders are offering more options than ever for no money down mortgages or low minimum down payments. If you’re in the market for a new home, it’s important to know the best lenders who offer low or zero down mortgage options so you can think less about saving a huge chunk of change and more about finding your new home.
The 6 Best Lenders for Low Down Payment Mortgage
- Bank of America — Best down payment assistance
- Quicken Loans — Best for customer satisfaction
- CitiBank — Best for no PMI insurance
- Rocket Mortgage by Quicken Loans — Best 100% online experience
- Chase Bank — Best for gift of grant down payments
- Navy Federal Credit Union — Best for military families and veterans
|Lender||Best For||Minimum Percentage Down||Key Feature|
|Bank of America||Down payment assistance||3%||Grant programs and closing cost assistance|
|Quicken Loans||Customer satisfaction||0-3%||Low rates and high customer satisfaction|
|CitiBank||No PMI insurance||3%||Discounts for current CitiBank customers|
|Rocket Mortgage by Quicken Loans||100% online experience||0-3%||Same low rates and products as Quicken Loans|
|Chase Bank||Gift or grant down payments||3%||Money back for completing home education courses|
|Navy Federal Credit Union||Military families and veterans||0%||Low down payment with no PMI insurance requirement|
What is a Low Down Payment Mortgage?
The idea of saving 20% for a down payment can be intimidating for home buyers, especially first-time buyers. What many people may not know, though, is that they don’t need 20% down. That is simply an ideal amount. Most lenders offer low or no down payment solutions for those in the market for a new home. This gives even more borrowers the opportunity to make their home buying dreams a reality.
Solutions can range from private lending programs and grants to government loans. Typically, if a borrower puts less than 20% down, they will be required to pay private mortgage insurance (PMI) tacked onto their monthly payment until they pay their mortgage down to about 80% of the purchase price. However, some borrowers are lucky enough to get their hands on a no money down and no PMI option.
Navy Federal Credit Union vs CitiBank
Navy Federal Credit Union is largely known as one of the best credit unions in the United States, offering low rates and convenient products to military personnel and their families. Its mortgage options consist of low down payments, low rates and even no money down with no PMI requirement. Unfortunately, individuals can’t become a member of the credit union if they are not related to or have been a member of the military. Luckily, CitiBank offers a similar solution. With its HomeRun program, there is a low down payment option and discounts for current CitiBank customers. This lender will even waive the PMI requirement for those who qualify.
Quicken Loans vs Rocket Mortgage
We know what you may be thinking: “Why compare two lenders owned by the same company?” But it turns out that the difference between these two may make all the difference in someone’s home buying experience. While Rocket Mortgage by Quicken Loans is under the Quicken Loans family, there is a reason it is a separate entity: it is 100% online. The same exact rates and products are offered under both; however, borrowers can apply and have a mortgage funded under Rocket Mortgage without needing to speak to anyone over the phone or in person. The option to speak with someone is still there if needed, but for those individuals who would prefer to complete the process without making a phone call on their own time, that may be the perfect solution.
Bank of America vs Chase Bank
Both of these big-time banks offer alternative solutions for obtaining down payment funds. Bank of America offers up to $10,000 in down payment and closing cost assistance funds based on eligibility. In contrast, Chase Bank offers borrowers the option to pay 100% of the down payment from either grants or gifts, meaning that they do not have to pay anything out of pocket as long as they are obtaining the funds from somewhere else. This is unique because typically lenders require borrowers to pay at least a portion of their down payment out of pocket.
The Best Lenders
Bank of America — Best for down payment assistance
Bank of America is one of the world’s largest financial institutions with branches all over the globe. In addition to its convenient locations, Bank of America also offers convenient solutions for individuals looking to buy a home. With its Affordable Loan Solution mortgage available in all 50 states, eligible borrowers can pay as little as 3% down. However, Bank of America makes the deal even sweeter with its down payment assistance programs. Those who qualify can receive 3% of the home purchase price for a down payment, up to $10,000 and up to $7,500 for closing costs through America’s Home Grant program. Buyers who borrow with Bank of America need to keep in mind that rates with the Affordable Loan Solution mortgage will be higher than their standard mortgage rates due to built-in PMI.
Quicken Loans — Best for customer satisfaction
When buyers are searching for a mortgage lender, they may also be looking for a lender that makes them feel like more than a borrower. Quicken Loans is known for its attentive customer service and has been named #1 in customer satisfaction by J.D. Power nine years in a row, thanks in part to its low rates and zero-down mortgage solutions.
CitiBank — Best for no PMI insurance
CitiBank is a very large financial institution with an array of mortgage options for consumers that go beyond standard mortgage and government loan options. Most notable among these is CitiBank’s HomeRun mortgage, which allows borrowers to put as little as 3% down for their new home and has no PMI requirement. Along with those perks, CitiBank also has flexible guidelines for credit, so this is also an ideal option for those with a unique credit history.
Rocket Mortgage by Quicken Loans — Best 100% online experience
Rocket Mortgage by Quicken Loans is a completely online experience. With the backing power of Quicken Loans’ acclaimed customer service and great rates, Rocket Mortgage adds an extra perk for those who may require a more flexible application and funding experience. Rocket Mortgage can also tell borrowers their approved loan amount within minutes of applying. This quick and convenient online process offers borrowers a mortgage option that fits into their schedule.
Chase — Best for gift or grant down payments
While most lenders require a portion of the home down payment to be paid by the borrower, Chase’s DreaMaker program allows borrowers to put 3% down on a home, and those funds can come entirely from gifts or grants. This means that qualified borrowers may not have to put any money down on their new home. On top of that, buyers can also earn up to $2,500 for closing costs with Chase and $500 back for completing a home education course. All in all, Chase has many options for borrowers who don’t necessarily have down payment funds for themselves.
Navy Federal — Best for military families and veterans
Navy Federal Credit Union has been exclusively serving military personnel and their families since 1933. It has a wide range of mortgage options, from private loans to government loans. Its loans are catered to fit the needs of military families so it offers loans with no PMI insurance requirement and low rates. Navy Federal will even look at nontraditional credit data in order to help someone qualify for a loan. This could be a great option for someone in the military versus a traditional bank due to the exclusivity and personalized loan products. Having a financial institution that understands the situation of those it serves can indeed make for a more desirable experience.
The Final Word
Homeownership may not be as out of reach as some individuals may think. The days of the 20% down seem to be fading fast and are being replaced by low or no money down mortgage options instead. Being able to put as little as 3% down on a home can give more potential buyers the ability to make their homeownership dreams come true. It is important for buyers to remember that with a lower down payment comes different eligibility standards, so you should consult with a financial institution to help determine what you as a borrower are qualified for. It’s an exciting time for those who dream of buying a home because with these low down payment options, owning a home is now within reach.