How to Qualify for Low Down Payment Home Mortgage
As local Santa Clarita realtors and brokers, we understand the challenges prospective homebuyers face, particularly when it comes to securing a down payment. The good news is that as of 2025, there are several programs and options available to help you achieve homeownership with a minimal down payment. Before going further, if you are a planning to buy a first home, we’ve published an extensive post, filled with helpful advice for first time homebuyers.
UPDATE 2025: We verified and updated the basic information shown below to better reflect conditions here in 2025.
Challenges for First-Time Homebuyers
Traditionally, obtaining a home mortgage required meeting stringent lender qualifications and providing a substantial down payment. This financial hurdle often deters qualified buyers from entering the housing market. Fortunately, various low down payment mortgage options are now available, especially for first-time homebuyers. It’s crucial to obtain a mortgage pre-approval letter before making a purchase offer, as it demonstrates your qualification to sellers.
Low Down Payment Mortgage Options
Conventional Loans with 3% Down: Both Fannie Mae and Freddie Mac offer conventional loans that require as little as a 3% down payment for qualified buyers. These programs are no longer limited to first-time buyers and can be an excellent option for those with good credit. Additionally, gift funds or down payment assistance programs are permissible sources for the down payment. As of March 1, 2025, Fannie Mae has extended a $2,500 credit toward down payment or closing costs for very low-income first-time homebuyers.
If you have good credit and can afford the low down payment, you can absolutely buy a home! Additionally, there are some great condos available in Santa Clarita priced below $500K.
Look at the Numbers for a Low Down Mortgage
As an example, set’s say we searched for FHA appoved condos and identified one we decided to buy! If the amount of the home is $540,000 and we only needed a 3% down payment, the low down payment for the home would be less than $17,000. Yes, there are often other costs, so let’s say the down payment amount ends up being $20,000. Now, what if we only had $15,000 available? Well, with the Fannie Mae changes we can now accept a gift from a family member to make up the difference!
Contact Us for an Introduction to Our Preferred Lender
If you’d like a personal introduction to a terrific lender, contact us for a referral to Keith Renno. He is truly one of the very best in Santa Clarita and beyond. One thing for sure, all lenders are NOT created equal and having the right lender in your court can make or break your transaction.
FHA Loans
The Federal Housing Administration (FHA) continues to offer loans with down payments as low as 3.5% for borrowers with credit scores of 580 or higher. These loans are popular among first-time buyers due to their more lenient credit requirements.
VA and USDA Loans
For eligible veterans, active-duty service members, and certain rural area residents, VA and USDA loans offer zero down payment options. These programs have specific eligibility criteria but provide excellent benefits for those who qualify.
Down Payment Assistance Programs in California
California offers several programs to assist homebuyers with down payments and closing costs:
CalHFA MyHome Assistance Program
The California Housing Finance Agency (CalHFA) provides the MyHome Assistance Program, offering deferred-payment loans of up to 3.5% of the purchase price or appraised value to help with down payment and closing costs. This program is available to first-time homebuyers who meet specific income and credit requirements.
CalHFA Forgivable Equity Builder Loan
Introduced to assist low- to moderate-income buyers, this program offers a loan of up to 10% of the home’s purchase price. The loan is forgivable after five years, provided the buyer occupies the home as their primary residence for the duration.
California Dream For All Shared Appreciation Loan
Launched in 2024, this program provides up to 20% of a home’s value for down payment and closing cost assistance. In exchange, the state shares in the home’s appreciation upon sale or refinancing. This initiative aims to assist first-generation homebuyers in overcoming financial barriers to homeownership. Check out the Dream For All Program.
Local Assistance in Santa Clarita and Los Angeles County
In addition to state programs, local assistance is available:
Los Angeles County Development Authority (LACDA) Home Ownership Program
This program offers down payment assistance to low-income first-time homebuyers in the form of a deferred-payment loan of up to $85,000 or 20% of the purchase price, whichever is lesser. The loan is due upon sale, transfer, or refinancing of the property.
Santa Clarita First-Time Homebuyer Program
While specific programs may vary, the city of Santa Clarita periodically offers assistance to first-time homebuyers, including deferred loans and grants. Prospective buyers should consult the city’s official housing website or contact local housing authorities for the most current information.
Steps to Get Started
We understand that obtaining financing may seem overwhelming, but it’s really just a series of manageable steps. Take it one step at a time, and before you know it, you’ll be on your way to purchasing your home. If you find out that you don’t qualify, don’t worry! Your lender will guide you with the necessary information to help you work toward your goal of homeownership. After all, you won’t know unless you try!
- Assess Your Financial Situation: Review your credit score, savings, and income to determine your readiness for homeownership.
- Explore Mortgage Options: Research various loan programs to find the one that best suits your needs.
- Seek Professional Guidance: Contact a reputable lender or mortgage broker to discuss your options and obtain a loan pre-approval or pre-qualification.
- Investigate Assistance Programs: Look into state and local down payment assistance programs for additional support.
- Partner with Real Estate Professionals: Work with experienced realtors familiar with the Santa Clarita and Los Angeles County markets to find your ideal home.
Embarking on the journey to homeownership is exciting, and with the right resources and support, achieving it with a low down payment is more attainable than ever. Stay informed about the latest programs and consult with professionals to make well-informed decisions.
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