You don't need 20% down to buy a home. In fact, most of my borrowers put down far less — and some put down nothing at all. Here's every path available to you.
I've had this conversation thousands of times over 23 years: a borrower calls and says they can't buy because they don't have 20% saved. That might have been true decades ago, but it hasn't been the reality for a long time. Today, multiple loan programs exist specifically for buyers with limited down payment savings — and in Arizona, down payment assistance programs can reduce your out-of-pocket cost even further.
The real question isn't whether you can buy with a low down payment. It's which low-down-payment program gives you the best overall cost. Because each one handles mortgage insurance differently, has different credit requirements, and comes with different tradeoffs. That's what I help borrowers sort through every day. Let's look at your options.
Sorted from lowest down payment to highest — with the honest tradeoffs of each.
The gold standard. Zero down, no monthly MI, competitive rates. Available to eligible veterans, active duty, and surviving spouses. Full VA details.
Fannie Mae and Freddie Mac program. 620+ credit, PMI cancels at 80% LTV. At least one borrower must be a first-time buyer. Full conventional details.
Income-limited programs from Fannie Mae and Freddie Mac. Reduced MI pricing. Boarder income allowed (HomeReady). No first-time buyer requirement.
580+ credit, entire down payment can be gifted, higher DTI tolerance. MI stays for life of loan. Best for credit scores below 700. Full FHA details.
The down payment is only one piece of the cost equation. Mortgage insurance, upfront fees, and long-term cost vary dramatically between programs. Here's how they compare on a $375,000 home purchase:
| Factor | VA ($0 down) | Conv. 97 (3%) | HomeReady (3%) | FHA (3.5%) |
|---|---|---|---|---|
| Down payment | $0 | $11,250 | $11,250 | $13,125 |
| Upfront fee | $8,063 (2.15%) | None | None | $6,333 (1.75%) |
| Monthly MI (est.) | $0 | ~$180–$280 | ~$120–$200 | ~$166 |
| MI cancels? | N/A (none) | Yes, at 80% LTV | Yes, at 80% LTV | No (life of loan) |
| Min. credit score | No VA min. (lenders: 580–620) | 620+ | 620+ | 580+ |
| Gift funds | N/A | Allowed (restrictions) | 100% allowed | 100% allowed |
| DPA compatible | N/A | Yes | Yes | Yes |
| Income limits | None | None | Area median | None |
How I decide: If you're VA-eligible, start there — zero down and no MI is unbeatable. If you're not VA-eligible and your credit is 700+, conventional (3% or 5% down) often produces the lowest long-term cost because PMI cancels. If your credit is below 680, FHA's more flexible guidelines and lower MI rate (0.55%) may be the better path despite the life-of-loan MI. And if you're at or below area median income, HomeReady's reduced MI pricing can split the difference. I run all these scenarios for every borrower.
Even with programs requiring just 3% to 3.5% down, that upfront cost can still be a hurdle. That's where Arizona's DPA programs come in. I layer these on top of your first mortgage to cover part or all of the down payment and closing costs.
Up to 5% of the loan amount as a forgivable second mortgage. No interest, no payments, forgiven over five years. Income limit: $112,785. Available on FHA, VA, and conventional first mortgages. No first-time buyer requirement for most options. Military borrowers get an additional 1%. Administered by the Arizona Industrial Development Authority.
3% to 6% DPA as a forgivable second mortgage, forgiven after 84 months (7 years). No first-time buyer requirement. Additional 1% for veterans, teachers, and first responders. Compatible with FHA, VA, and select conventional products. This is one of the most generous DPA programs in the country.
Purchase price: $380,000. FHA requires 3.5% down = $13,300. Home in Five provides 5% DPA = $19,000. The DPA covers the entire down payment ($13,300) plus $5,700 toward closing costs. Buyer's true out-of-pocket cost: potentially under $2,000 for prepaid items. That's a $380,000 home for less than a month's rent in some cases. The DPA is forgiven completely after 7 years — stay in the home, and it costs you nothing. This is a real scenario I execute regularly for buyers in Gilbert, Mesa, Chandler, and Phoenix.
DPA for buyers at or below 120% area median income. Requires first-time buyer status (no homeownership in past 3 years). Silent second mortgage due upon sale. Available through the Arizona Department of Housing.
I stay current on all active DPA programs and check eligibility as part of every pre-approval for first-time buyers and repeat buyers alike. Some of these programs have limited funding cycles, so timing matters. Start your pre-approval to see what's available right now.
I'm a firm believer in low down payment programs — they make homeownership accessible. But I also believe in being honest about the tradeoffs so you can make an informed decision.
When you put less than 20% down, you pay mortgage insurance in some form. On FHA, it's 0.55% annually for the life of the loan. On conventional, PMI varies by credit score and LTV but cancels at 80% equity. VA has no monthly MI at all (just the upfront funding fee). The cost of MI is real, but it's also the cost of getting into a home sooner — and building equity — rather than spending years saving a larger down payment while rents climb.
Less money down means a larger loan balance, which means a higher monthly payment. On a $375,000 home, the difference between 3.5% down and 20% down is about $61,875 in loan amount. That translates to roughly $350 to $400 more per month (including MI). Use our mortgage calculator to see exactly how down payment affects your payment.
With 3.5% down, a small dip in home values could temporarily put you underwater. This only matters if you need to sell in the first year or two. If you plan to stay in the home for 3+ years, normal appreciation and principal paydown typically build a healthy equity cushion.
I've helped hundreds of borrowers buy with low down payments, and I've seen the long-term results. The borrowers who build wealth through real estate are the ones who got in — period. Waiting until you have 20% saved sounds prudent, but it often means paying rising rents for years while home prices continue to climb. Low down payment programs exist for a reason, and when used thoughtfully, they're one of the most powerful wealth-building tools available to working families. That's a conviction I've built over 23 years of doing this work.
While there's no zero-down program for non-veterans equivalent to VA, the combination of a low-down-payment loan with a DPA program can get very close. In Maricopa County, the Home in Five Advantage provides up to 6% DPA. On a 3.5% FHA loan, 5% DPA covers the entire down payment plus a significant portion of closing costs. Some of my borrowers close with under $1,000 out of pocket.
The main tradeoff is mortgage insurance. FHA charges 0.55% annually for the life of the loan. Conventional PMI cancels at 80% LTV. VA has none. The other tradeoff is a higher loan balance (higher monthly payment). I show every borrower the total cost at each down payment level so you can make an informed decision about the right tradeoff for your budget.
Not for most Arizona programs. HOME Plus and Home in Five Advantage are available to anyone meeting income and purchase price limits — no first-time buyer requirement. Arizona Is Home does require you haven't owned in the past 3 years. I check eligibility for every DPA program as part of the pre-approval process. See our first-time buyer guide for more detail.
Yes. FHA allows 100% of the down payment from gift funds. Conventional also allows gifts (some programs require a small borrower contribution). VA requires no down payment at all. Proper documentation is critical — gift letter plus paper trail. I walk every borrower through this process to ensure clean underwriting.
I'll show you every low-down-payment option and DPA program you qualify for, run the numbers side by side, and help you find the path that makes the most financial sense.