You do not need 20% down to buy your first home in the USA. In 2026, first-time buyers can get a mortgage with 3.5% down through an FHA loan, 3% down through a conventional loan, and 0% down through VA and USDA loans if they qualify. The real challenge is knowing which program fits your credit score, income and immigration status — and budgeting for the closing costs that catch many buyers off guard.
This guide compares the four main low down payment mortgages, breaks down closing costs, and explains how green card, work visa and ITIN borrowers can qualify.
This article is general information, not financial advice. Loan rules and rates change, so confirm the details with a licensed loan officer or a HUD-approved housing counselor.
How much do you really need to buy your first home?
Think of your cash needs in four buckets: the down payment, closing costs, prepaid items and reserves. On a $350,000 home with an FHA loan, for example, the minimum down payment is $12,250, and closing costs at 2–5% of the loan add roughly $7,000–$17,000. Lenders also like to see a month or two of mortgage payments left in your account after closing.
You do not always have to cover all of it yourself. Sellers can contribute toward closing costs within program limits, relatives can give gift funds with a signed gift letter, and state and local assistance can cover part of the down payment. We cover those programs in detail in our guide to first-time buyer programs and down payment assistance.
Which low down payment mortgage is right for you?
| Loan type | Minimum down payment | Typical minimum credit score | Mortgage insurance or fee | Best for |
|---|---|---|---|---|
| FHA | 3.5% (10% with a 500–579 score) | 580 for 3.5% down | Upfront premium of 1.75% plus an annual premium, usually for the life of the loan | Lower credit scores, higher debt-to-income ratios |
| VA | 0% | No official minimum; lenders often want about 620 | One-time funding fee (waived for some disabled veterans); no monthly mortgage insurance | Eligible service members, veterans and surviving spouses |
| USDA | 0% | About 640 for streamlined approval | Upfront guarantee fee plus a small annual fee | Moderate-income buyers in eligible rural and suburban areas |
| Conventional 97 (HomeReady, Home Possible, standard) | 3% | 620 | Private mortgage insurance that can be removed | Good credit, plans to stay long enough to reach 20% equity |
FHA loans: 3.5% down with a 580 score
FHA loans are insured by the Federal Housing Administration, part of HUD, which lets lenders accept lower scores and higher debt-to-income ratios than conventional loans. With a score of 580 or higher you can put down 3.5%; with 500–579 you need 10%, and few lenders go that low. The trade-off is mortgage insurance: an upfront premium of 1.75% of the loan, normally rolled into the balance, plus an annual premium — around 0.55% for most borrowers at the time of writing — paid monthly. With less than 10% down, that annual premium lasts for the life of the loan unless you refinance.
FHA loans have county-based limits. For 2026 the floor for a single-family home in lower-cost areas is a little over $540,000, rising to more than $1.2 million in the most expensive counties. The home must be your primary residence and pass an FHA appraisal. Look up your county’s limit on hud.gov.
VA loans: 0% down for those who served
If you are an eligible active-duty service member, veteran, National Guard or Reserve member, or a surviving spouse, a VA loan is usually the best mortgage available: no down payment, no monthly mortgage insurance and competitive rates. You will need a Certificate of Eligibility, which your lender can normally pull for you, and you will pay a one-time funding fee — a little over 2% for first use with no down payment — that can be financed. Veterans receiving VA disability compensation are exempt. Eligibility rules are at va.gov.
USDA loans: 0% down outside the big cities
USDA Rural Development guarantees loans for buyers in eligible areas, which include many small towns and outer suburbs, not just farmland. Household income generally cannot exceed 115% of the area median. Fees are lower than FHA’s.
Conventional loans: 3% down
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow 3% down for borrowers earning up to 80% of area median income, with reduced mortgage insurance. Standard 97% loans have no income cap but require at least one borrower to be a first-time buyer. The big advantage is that private mortgage insurance (PMI) is not permanent: you can ask to cancel it once you reach 20% equity, and it ends automatically at 22%. The 2026 baseline conforming loan limit is $832,750, higher in high-cost areas. Conventional pricing rewards higher scores, so below about 680, compare carefully against FHA.
What are closing costs, and how much will you pay?
Closing costs typically run 2–5% of the loan amount. They vary widely by state because of differences in transfer taxes, title practices and attorney requirements.
- Lender fees: origination or underwriting fees, and optional discount points to buy down the rate.
- Third-party fees: appraisal (commonly $500–$800), credit report, flood certification.
- Title and settlement: title search, lender’s title insurance, optional owner’s title insurance, settlement or attorney fee.
- Government charges: recording fees and, in some states, transfer or mortgage taxes.
- Prepaids and escrow: the first year of homeowners insurance, prepaid interest, and several months of property tax and insurance to fund your escrow account.
Outside the closing statement, budget $300–$600 for a home inspection and 1–3% of the price as an earnest money deposit, which is credited back to you at closing. Since 2024, buyers also sign a written agreement with their agent that spells out the agent’s compensation; it is negotiable, and you can still ask the seller to cover it.
By law you receive a Loan Estimate within three business days of applying and a Closing Disclosure at least three business days before closing. Compare Loan Estimates from at least three lenders line by line — the Consumer Financial Protection Bureau explains each line at consumerfinance.gov. Lower your costs by shopping for title services, asking for seller concessions, and comparing quotes on homeowners insurance before closing.
Can immigrants and visa holders buy a home in the USA?
Yes. There is no citizenship requirement to own property, and mortgage eligibility depends on lawful status, documentation and credit rather than nationality.
Green card holders
Lawful permanent residents qualify for FHA, VA (if they served), USDA and conventional loans on the same terms as citizens. Expect to show your green card and Social Security number.
Work visa holders (H-1B, L-1, O-1, TN and others)
Non-permanent residents with a valid work authorization and Social Security number can generally get conventional loans under Fannie Mae and Freddie Mac guidelines, including the 3% down options. Lenders will want proof that your employment is likely to continue, and some add their own rules about remaining visa validity. One important change: since May 2025, HUD no longer insures new FHA loans for non-permanent residents, so FHA is now limited to US citizens, permanent residents and a few other categories. If older articles tell you H-1B holders can use FHA, they are out of date.
ITIN borrowers
If you file taxes with an Individual Taxpayer Identification Number instead of a Social Security number, mainstream agency loans are not available, but some banks, credit unions and community development lenders offer ITIN mortgages. They usually require a larger down payment — often 10–20% — two years of tax returns, and carry higher interest rates. Have a real estate attorney review any seller-financing or “rent-to-own” contract offered as a shortcut.
No US credit history?
New arrivals often have good incomes but thin credit files. Some lenders can use nontraditional credit — 12 months of on-time rent, utilities and phone payments — and rent-reporting is now built into Fannie Mae’s underwriting. Building a score for six to twelve months first usually gets you a better rate; see how to build your credit score with a loan, and if your score is already damaged, our guide to getting a home loan with bad credit.
How to buy your first home, step by step
- Check your credit reports for free at annualcreditreport.com and dispute errors.
- Set your budget. Many lenders cap total debt payments at around 43% of gross income, sometimes up to 50% with strong compensating factors. A payment you are comfortable with matters more than the maximum you are approved for.
- Talk to a HUD-approved housing counselor. They are free or low cost and know the local assistance programs.
- Get preapproved with two or three lenders, including a local credit union. Multiple mortgage inquiries within a short window count as one for scoring purposes.
- Hire a buyer’s agent and agree their fee in writing.
- Make an offer with inspection and financing contingencies, and pay earnest money.
- Get the inspection and appraisal, and renegotiate if problems appear.
- Lock your rate, provide documents promptly, and avoid new debt or job changes before closing.
- Review the Closing Disclosure, wire funds only after verifying instructions by phone, and close.
What about mortgage rates in 2026?
Thirty-year fixed rates have spent much of the past two years in roughly the 6–7% range, well above the lows of 2020–2021, and they move daily. Your own rate depends on your credit score, down payment, loan type and points. Rather than timing the market, compare same-day quotes from several lenders. We explain rate shopping in more depth in how to get a mortgage with a low interest rate.
Scams and traps to avoid
- Wire fraud: criminals send fake “updated” wiring instructions by email. Always confirm by calling a number you already know to be genuine.
- Upfront-fee “guaranteed approval” offers: no legitimate lender guarantees approval before reviewing your file.
- Pressure to misstate income or occupancy: that is mortgage fraud, and it can also endanger immigration status.
Frequently Asked Questions
Who counts as a first-time home buyer?
For most programs, anyone who has not owned a principal residence in the past three years. That means you may qualify again after a period of renting, and owning property abroad is treated differently by different programs — ask your lender.
Is FHA or conventional cheaper with 3–3.5% down?
With a score in the 700s, conventional usually wins because PMI is cheaper and removable. With a score in the low 600s, FHA’s rate and insurance are often lower. Ask your loan officer to price both side by side.
Can I use money from family abroad for the down payment?
Yes, as a gift with a signed gift letter, and the lender will want a paper trail of the transfer into your US account. Move the funds early, and keep the bank statements from both ends.
Can I buy a duplex with a low down payment?
Yes. FHA and VA loans allow two- to four-unit properties if you live in one unit, and rental income from the others may help you qualify.
Bottom line
To buy your first home in the USA in 2026, match the loan to your profile: VA if you served, USDA if the address qualifies, FHA for lower scores, and a 3% conventional loan for good credit or for work visa holders who can no longer use FHA. Budget 2–5% for closing costs on top of the down payment, compare at least three Loan Estimates, and use a HUD-approved counselor to find assistance you might otherwise miss.