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There’s a misconception out there that you need to put 20% down in order to get a mortgage. That may have been the case in previous generations, but it isn’t anymore. While there are some benefits to a higher down payment, you can now get into a home with as little as 3% down.

This could help you buy a home if you have some savings and a steady income but haven’t been saving for years. It can also help you upgrade your home if you need more space. Let’s go over a couple of great low down payment options we offer at Quicken Loans for conventional loans.

Fannie Mae

Fannie Mae has a couple of low down payment programs for first-time home buyers that could be very attractive options. They’re both 3% down payment options, but there are a couple of differences that could push you toward one program or another.

HomePath Ready Buyer Program

Fannie Mae is more than a mortgage investor – it owns some properties after foreclosures. Fannie Mae isn’t in the business of owning homes, so they’ve introduced an incentive for well-qualified buyers to take the property off their hands. It’s the HomePath Ready Buyer program.

First-time home buyers who buy a property through Fannie Mae’s HomePath site have the opportunity to purchase a home with as little as 3% down. The buyer can also get up to 3% in seller concessions from Fannie Mae in order to save on closing costs.

In order to qualify for this program, there are a few special requirements.

First, at least one of the clients on the loan must be a first-time home buyer. This is defined as not having had any ownership interest in a residential property in the last three years prior to application.

The client also must take and pass a HomePath Ready buyer education course. The course takes anywhere between four and six hours for most people and is available in English and Spanish. At completion, you’ll get a certificate for your real estate agent to submit with your offer and any request for closing cost assistance. The course costs $75, but this can be reimbursed as part of your closing cost assistance.

This program can be a great deal for first-time home buyers.

Alternative 3% Down Option

If you’re not buying a HomePath property, there’s still a 3% down payment option available to you – it just doesn’t have a fancy name. The main difference between these programs is that you can’t ask for closing cost assistance.

Though, there are some commonalities between the two programs: The lowest median FICO credit score of all clients on the loan must be 620 or higher, and the property has to be a one-unit primary property.

Also, the maximum debt-to-income (DTI) ratio you can have is 50%. DTI is a comparison of your existing debts including car and house payments, student and personal loans and credit card payments against your monthly income. For the best chance of approval, your DTI should be no higher than 45%.

Freddie Mac

Freddie Mac has its own 3% down payment option, known as Home Possible.

Home Possible

This loan option is available to everyone; you don’t have to be a first-time home buyer. The only restriction here is that you can only own one other residential property. If both clients are first-time buyers, you’ll also need to take a homeownership education course. The home must serve as your primary property.

With a slightly higher down payment of 5%, you can also get a two-unit property with this loan option.

In terms of other restrictions, the income of all clients on the loan generally has to be no more than 80% of the area median where you’re looking to buy. If it’s in an area Freddie Mac considers to be low income, these limits don’t apply.

Finally, this program requires a median FICO score no lower than 620.

If any of these options sound right for you, you can get a preapproval online through Rocket Mortgage. If you would rather talk to one of our Home Loan Experts, you can give us a call at (800) 785-4788. If you have any questions, leave them for us in the comments below.

This Post Has 20 Comments

  1. You say that for the Freddie Mac Home Possible loan, the income of the person on the loan generally can’t be more than 80% of the area median income. I make $350 per year more than 80% of the area median income where I’m search for a home. Is it possible to still get a Home Possible loan being just so slightly over the 80% limit? Or would asking for a pay decrease from my job solve the problem?
    Thanks for your help!

    1. Hey Jordan,

      Thanks for your question. I recommend giving us a call at (800) 251-9080. We’ll get you in touch with a Home Loan Expert who will work with you and give you the correct answer.

      Thank you!

    1. Good afternoon:

      I’m going to give you a resource with more details, but things like paying down debt and making payments on time are going to make a big difference. I also recommend speaking with one of our Home Loan Experts at (888) 980-6716 to go over potential options.

  2. I owe 64,000 on a home that valued min 175,000 or more with current FHA mortgage payments including taxes, home insurance and mortgage insurance is $780 monthly. I have 24 years left to pay off can I refinance for 15years at a lower payment and still get money out with a credit score of 740 and DR less than 20%

  3. Do you make bridge loans? We are looking to buy a new house appraised at approximately $235. Our current house has roughly the same appraised value. It is ours completely with no outstanding mortgage debt. We would require the bridge loan to buy the new house. We would tghe new mortgage as soon as the current house sells.

    1. Hi Kelly:

      What matters generally isn’t the date you filed for bankruptcy. Rather, it’s the date it was discharged or dismissed. With that being said, if it’s been more than a year since the discharge or dismissal, we may have an option for you. You can give one of our Home Loan Experts a call at (888) 980-6716. Thanks for reaching out!

  4. Does Quicken Loans offer Home Possible loans for two-unit houses with 5% down?

    I read somewhere that Quicken Loans only offers Home Possible loans for single-unit houses but I’m unable to find the link.

    1. Hey Alice:

      The requirement you read about is in this article. However, I’m going to update this as we speak. Since then, there have been updates which you can read about here. We do offer two-unit properties backed by Freddie Mac with 5% down. I’m going to recommend you get started by talking to one of our Home Loan Experts at (888) 980-6716 to go over your situation. I hope this helps! Thanks!

  5. Currently dealing with the bank which gives us 5.75% for conventional with 5% downpayment (640) credit. Can you give us a better rate?

    1. Hi Tim:

      It’s not possible for me to tell you something like that on the blog because there are other factors that go into your rate and determining relative risk like your income and assets. If you want to look into your options, you can choose to get a preapproval to purchase or a full refinance approval online through Rocket Mortgage. Otherwise, one of our Home Loan Experts would be happy to take a deep dive into your situation if you give us a call at (888) 980-6716. Hope this helps and have a good day!

    1. Hi Marissa:

      That depends on what your goals are and the stats on your current loan. It may make sense to refinance if you want to take cash out or if you can get a lower rate than you would have on your current mortgage so you could save money on your monthly payment. You may also want to change your term to pay off the loan faster. If any of this aligns with your goals, it may make sense. You can definitely check in your options online with Rocket Mortgage or feel free to call one of our Home Loan Experts at (888) 980-6716.

  6. loan number
    Balanced of loan is 92623.67 and payments of $607.30 and can we lower out payments?
    Ph# and Cel: This is a loan we have with you

    1. Hi Joseph:

      I’m going to remove all personal information before approving this post. Are you looking to refinance the loan? If so, you can get a complete refinance approval online through Rocket Mortgage or give one of our Home Loan Experts a call at (888) 980-6716. If you’re having trouble making your payment, I recommend talking to members of our client relations team in servicing by calling (800) 863-4332. Hope this helps!

  7. Under the Home Possible program , can you put down more than 3%, is there a limit on the amount of down payment you can make?

    1. Hi Kathy:

      There’s no limit on the amount of the down payment you can make. If you want to get preapproved, you can do so through Rocket Mortgage or call one of our Home Loan Experts at (888) 980-6716.

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