Low-down-payment first-time homebuyer loans

Which brands AI mentions

2. Conventional 97% LTV loans

(3% down)

Best for: Buyers with good credit who want to minimize upfront costs.

• Eligible borrowers can finance up to 97% of the home's value.
• Private mortgage insurance (PMI) is generally required with less than 20% down, but it can usually be canceled when eligibility requirements are met.
• Often worth comparing against FHA for long-term savings.

Look at options such as Fannie Mae HomeReady and Freddie Mac Home Possible, which have additional eligibility rules.

3. VA home loan

(0% down)

Best for: Eligible veterans, service members, and certain surviving spouses.

• Often allows no down payment.
• No monthly mortgage insurance.
• A VA funding fee may apply unless you qualify for an exemption.

If you're eligible, this is often one of the strongest options to investigate first.

4. USDA guaranteed loan

(0% down)

Best for: Eligible buyers purchasing in qualifying rural and some suburban areas.

• No down payment for eligible borrowers.
• Household income limits apply.
• Location, occupancy, and property requirements must be met.
• USDA guarantee fees apply.

Don't assume you need to live on a farm; many eligible areas are outside major urban centers.

5. HomeReady and Home Possible

(3% down)

Best for: Low-to-moderate-income buyers who qualify under program guidelines.

• Designed to make conventional homeownership more accessible.
• May offer reduced mortgage insurance costs relative to some alternatives.
• Income limits and homebuyer education requirements may apply.

These are especially worth comparing if your credit is solid and your household income fits the program.

6. State and local down payment assistance

(Potentially thousands in assistance)

Best for: Buyers who can afford monthly mortgage payments but need help with cash upfront.

Depending on the program, assistance may be a grant, a forgivable loan, a deferred-payment loan, or a repayable second mortgage. It may help with the down payment, closing costs, or both.

You can sometimes combine assistance with an FHA or conventional loan, subject to program rules.

If you're buying in Michigan

If you're purchasing in Michigan, I'd put the Michigan State Housing Development Authority (MSHDA) MI Home Loan near the top of your list.

MSHDA MI Home Loan + MI 10K DPA

Up to $10,000

Down payment and closing cost assistance

This program offers eligible buyers up to $10,000 through an interest-free, deferred-payment assistance loan that can cover down payment, closing costs, and prepaid expenses. It must be paired with an MSHDA MI Home Loan.www.michigan.gov+1

Key eligibility requirements:

• Generally a first-time buyer who hasn't owned a home in the past three years, with exceptions for targeted areas.
• Minimum credit score of 640.
• Household income and home purchase price limits apply.
• Homebuyer education is required.

Official details: MSHDA MI Home Loan ·MI 10K assistance

How much cash might you need?

For a $200,000 home, here's how the down payment alone compares:

These figures exclude closing costs, prepaid taxes and insurance, and any applicable mortgage insurance or loan fees. Assistance may reduce the cash you need to bring to closing.www.consumerfinance.gov+2

Let's narrow it down to the best program for you

I can help identify which programs are most realistic for your situation. What state are you buying in, and approximately what is your credit score?

If you'd like to narrow this down, please share:

• Your approximate credit score range
• The purchase price and target location (state/county)
• Whether you have military eligibility

I can give you a more tailored recommendation on which specific program or lender structure will yield the lowest overall out-of-pocket cost for you.