Are there specific mortgage programs for first-time buyers with a smaller down payment?

Jen, the twenty percent rule is a myth that keeps good buyers renting longer than they need to, and with steady jobs you have real options. FHA, which you already named, is built for your situation with a low down payment and forgiving credit. There are conventional first-time-buyer loans that go well under twenty percent too, and if either of you served, a VA loan can mean nothing down. One honest catch: a smaller down payment usually adds mortgage insurance, so compare the full monthly payment between programs, not just the cash to get in. Down payment assistance and seller credits can also shrink what you bring to closing. For the lender, ask a local first-time-buyer agent who they've watched actually close these, and check your state housing finance agency's approved lender list. Talk to two before choosing. Since I'm licensed in California, lean on a local lender to confirm which programs fit you. Alla Novytska, Realtor®, JohnHart Real Estate, DRE #02254775

Absolutely. You do not need 20% down to buy a home, especially as a first-time buyer. There are several loan programs that may allow qualified buyers to purchase with a much smaller down payment. For example, FHA financing can allow as little as 3.5% down for borrowers who meet the program's requirements. Some conventional programs can also offer 3% down options for eligible buyers. Depending on where you live and your circumstances, there may also be state or local down-payment assistance programs that can help with the down payment and/or closing costs. The important thing is not to focus only on the minimum down payment. A lower down payment can mean a higher monthly payment, mortgage insurance, and potentially higher overall borrowing costs. You also want to budget for closing costs, property taxes, homeowners insurance, and maintenance. I'd recommend speaking with multiple lenders, including at least one who regularly works with first-time buyers and down-payment assistance programs. Ask them to compare FHA, conventional, and any applicable assistance programs side-by-side rather than simply giving you one loan option. Your credit score, debt-to-income ratio, income, available savings, and the property's location and price will all affect which programs you qualify for. A good lender should be able to tell you not only "How much can I borrow?" but also "How much cash will I actually need to close, and what will my monthly payment be?" And don't assume that waiting until you have 20% saved is automatically the best strategy. Depending on your market and financial situation, buying with a smaller down payment may make sense—but the numbers need to work comfortably for you. Juan Picos Real Estate Agent JohnHart Real Estate

Yes. You generally do **not** need 20% down to buy a home, especially if you're a first-time buyer. FHA loans can allow a down payment as low as 3.5% for qualified borrowers, and conventional programs such as certain first-time-buyer options may allow as little as 3% down. Depending on where you live and your qualifications, there may also be state or local down-payment assistance programs that can help with the upfront costs. The important thing is to look at the **whole monthly payment**, not just the down payment. With a smaller down payment, you may have mortgage insurance and potentially a higher monthly payment, so you'll want to compare the total cost between loan programs. I'd recommend speaking with at least two or three lenders and specifically asking about FHA, low-down-payment conventional loans, and local first-time-buyer/down-payment assistance programs. A lender who regularly works with first-time buyers should be able to explain which programs you actually qualify for. Also ask about closing costs and whether there are legitimate assistance programs or seller concessions that could reduce the amount of cash you need at closing. You don't need to wait until you have 20% saved before exploring your options. Getting pre-approved early can help you understand what price range and monthly payment are realistically comfortable for you. Juan Picos Real Estate Agent JohnHart Real Estate

Jen, there are but this is region, credit, and income specific. You should speak with a mortgage professional to determine your eligibility. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Jen, twenty percent has not been the standard for a long time, and the two programs most likely to fit a couple with steady jobs and limited savings are Fannie Mae's HomeReady and Freddie Mac's Home Possible, both of which go to three percent down. Jonathan already covered FHA, which is the right program for a lot of buyers and takes 3.5 percent down with a credit score of 580 or above. Here is the comparison that actually matters between them, and it is the one buyers almost never get told. FHA charges mortgage insurance called MIP, and on loans originated since 2013 with less than ten percent down, that MIP does not cancel. It runs for the life of the loan unless you refinance out of it. Conventional loans, including HomeReady and Home Possible, carry private mortgage insurance that does cancel as you build equity. So on a long hold, conventional at three percent down can cost meaningfully less over time than FHA at 3.5 percent down, even if the monthly payments look similar on day one. HomeReady and Home Possible also carry reduced mortgage insurance pricing compared to standard conventional at that loan to value. The tradeoff: HomeReady and Home Possible generally require income at or below eighty percent of the area median income for your area, and typically a credit score around 620. HomeReady also requires a homeownership education course, which is a few hours online. FHA is more forgiving on credit and on debt to income, which is exactly why it exists. So the real first step is to find out where you land on income against the area median for the specific area you want to buy in. That one number determines whether the cheapest option is even open to you. Any loan officer can look it up in a minute. A few others worth asking about. If either of you has military service, VA is zero down with no monthly mortgage insurance and it beats everything else on this list. If you are open to areas outside the urban core, USDA is zero down in eligible areas with income limits, and the eligible map is broader than most people assume. And Home Possible allows a non-occupying co-borrower, such as a parent, which can help if your income is the constraint rather than your savings. On down payment assistance. Nearly every state has a housing finance agency running assistance programs, and many cities and counties run their own. I am deliberately not going to quote you an amount, because these change frequently and they vary enormously by location. Go to your state housing finance agency's website directly, look at their programs, and then use their own list of participating lenders. That solves your other question too. Which is the real answer to "how do we find a lender who specializes in this." Three ways, in order of usefulness: use the participating lender list on your state housing finance agency's site, because those lenders are already approved for the assistance programs and know how to stack them; ask a local agent who works with first-time buyers, since they know which lenders actually close these and which ones say yes and then stall; and interview at least two, not one. Ask each of them to give you a written comparison of FHA versus HomeReady or Home Possible with your actual numbers, showing total monthly payment and total cost over ten years including mortgage insurance. A loan officer who will not produce that is not the one you want. One thing I would gently push on. Get fully underwritten preapproval rather than a quick prequalification before you shop seriously. It takes longer up front and it makes your offer far stronger, and in a competitive situation it is often the difference between winning and coming second. I am a real estate professional, not a lender, so the specific eligibility and pricing questions need a loan officer who can look at your actual income, credit and location. You did not say where you are buying. Tell me the city and I will connect you with a strong local agent and, if you want, point you to the right housing finance agency. I work the Palos Verdes Peninsula and the South Bay in Los Angeles, so I would not claim to be local to you unless you happen to be here. Reply on this thread if you want help reading the comparison once you have it, Zoltan Peresztegi. Zoltan

Yes, there are several options that can reduce the amount you need upfront. FHA loans can allow down payments as low as 3.5%, while some conventional programs can require as little as 3% depending on the borrower and property. If you’re in California, it’s also worth looking at CalHFA, which offers first-time buyer programs and down-payment/closing-cost assistance; for example, the MyHome program can provide up to 3.5% with an FHA loan or 3% with a conventional CalHFA loan, subject to eligibility requirements.