You don't need tens of thousands of dollars or to tap into your 401(k) savings to buy a home. First-time buyers can qualify for low-down payment mortgages with as little as 3 percent down and even find no-down payment options with $0 down.

While the typical first-time buyer makes a 7 percent for a down payment on a home, you may not have to.

In this article, we explore four low- and no-downpayment mortgage options with information about:

1. Interest rates and minimum credit score requirements
2. Mortgage insurance costs and requirements
3. Eligible home types and geographic restrictions
4. Down payment assistance program compatibility
5. Cash gift requirements and restrictions

These are popular mortgage loans, too. According to our mortgage statistics from the FFEIC, these four low downpayment loans account for 96% of purchase mortgages made each year.

Conventional Mortgages

Minimum Downpayment Required: 3% Minimum Credit Score Required: 620

Conventional loans are the most frequently selected loan type for home buyers, offering financing with as little as 3 percent down. Conventional mortgages have higher FICO score requirements than other government-backed loans.

With conventional loans, buyers get relatively few restrictions on the types of house styles they can purchase. Buyers can manage their property taxes and insurance independently and choose to open an escrow account to group these costs with monthly mortgage payments as they prefer.

What's needed?

• Credit score: 620or higher
• Down payment: 3 percent
• Eligible for down payment assistance programs

Is mortgage insurance required?

Conventional mortgages require mortgage insurance for buyers who make a down payment of less than 20 percent. Mortgage insurance typically costs $30-$70 monthly for every $100,000 borrowed. Mortgage insurance payment can stop once your home reaches 20 percent equity.

Can I use cash gifts for the down payment?

Yes, with conventional loans, you can use cash gifts from family, including immediate family, partners, and legal guardians.

Read more about conventional mortgages.

FHA Mortgages

Minimum Downpayment Required: 3.5% Minimum Credit Score Required: 580

FHA loans are designed to make homeownership more accessible for buyers, especially those with lower credit scores or limited savings for a down payment. While the down payment requirement is slightly higher than some conventional loans, it still remains low at just 3.5 percent of the purchase price.

Lenders generally prefer a credit score of 580or higher for FHA loans, though buyers with scores as low as 500 may qualify by making a 10 percent down payment. Additionally, buyers can take advantage of down payment assistance programs to help cover their costs and move forward with making an offer on a home.

FHA loans are popular among first-time home buyers because of their flexible qualification requirements and ability to offer competitive interest rates, even for those with less-than-perfect credit.

Learn more about FHA Loans.

What's needed?

• Credit score: 580or higher
• Down payment: 3.5 percent
• Eligible for down payment assistance programs

Is mortgage insurance required?

Yes, FHA loans require mortgage insurance, regardless of the down payment amount. This includes both an up-front premium and an annual premium that's divided into monthly payments. The up-front premium can be added to the loan amount, making it easier for buyers to manage their initial costs.

Can I use cash gifts for the down payment?

Yes, FHA loans allow cash gifts from various sources that can be used for a down payment, including family members, friends, employers, or even charitable organizations. This flexibility can help buyers overcome the challenge of saving for a down payment.

USDA Loans

Minimum Downpayment Required: $0 Minimum Credit Score Required: 640

USDA loans offer the opportunity to buy a home with no down payment, making them a popular option for buyers looking to minimize upfront costs. With $0 down required, they provide 100% financing for qualified buyers. The credit score requirement for USDA loans is a minimum of 640FICO, though lenders may have their own specific guidelines.

Although USDA loans require the home to be located in an eligible area, they are not limited to rural or agricultural land. Buyers can use USDA loans to purchase homes in smaller towns, suburban areas, and any location that isn't part of a densely populated city.

To determine if a property is eligible, buyers can use a USDA eligibility map.

USDA loans are particularly appealing to buyers and who may not have saved for a large down payment. With no required down payment, buyers can focus their funds on other home-buying costs, such as closing fees or move-in expenses.

What's needed?

• A home in an eligible location as determined by the USDA
• Credit score: 640or higher
• Down payment: $0

Is mortgage insurance required?

No traditional mortgage insurance is required for USDA loans. Instead, buyers pay a USDA guarantee fee, which serves a similar purpose. This fee is paid both up-front and annually, with the recurring fee included in monthly mortgage payments.

Can I use cash gifts for the down payment?

Yes, while no down payment is required for USDA loans, buyers can use cash gifts to cover any closing costs or additional expenses related to the purchase. These gifts can come from family members, friends, or other non-interested parties in the home-buying transaction.

Learn more about USDA loans.

VA Loans

Minimum Downpayment Required: $0 Minimum Credit Score Required: 620

VA loans provide eligible active-duty U.S. military service members, veterans, and their spouses with the opportunity to buy a home with no down payment. VA loans are backed by the Department of Veterans Affairs and are designed to offer flexible terms and affordable financing for those who have served our country.

VA loans typically have more lenient credit score requirements than USDA loans, making homeownership more accessible for qualifying buyers.

Unlike USDA loans, VA loans do not have geographic restrictions, meaning eligible borrowers can purchase a home in any location, whether it's a city, suburb, or rural area. Most lenders require a score of 620or higher to qualify.

VA loans also provide competitive interest rates and do not require private mortgage insurance (PMI), reducing the cost of homeownership for veterans and their families.

What's needed?

• Credit score: 620or higher (depending on lender)
• Down payment: $0
• Certificate of Eligibility (COE) from the VA
• Meet service requirements for veterans, active-duty, or surviving spouses

Is mortgage insurance required?

No, VA loans do not require traditional mortgage insurance. However, borrowers must pay a one-time VA funding fee, or "guaranty fee," which helps keep the loan program sustainable. This fee can be financed into the loan or paid in full at closing. Veterans with service-connected disabilities may be exempt from the funding fee.

Can I use cash gifts for the down payment?

Yes, cash gifts from family members or friends who aren't involved in the transaction can be used toward closing costs or the down payment, though no down payment is required for a VA loan. Lenders typically require a down payment gift letter to verify the source of the funds and ensure there are no repayment obligations.

Learn more about VA loans.