4 Programs for Buyers Without a Big Down Payment

As buying a home is the biggest purchase most people will ever make, buyers will look to you, their agent, to help them navigate the complicated world of financing their home. For many buyers, finding the required down payment money is the most difficult part of the process. For others, it may be more helpful to find a program that allows them to borrow without putting a lot of money down. Fortunately, there are a number of assistance programs for homebuyers that can help to lower the substantial upfront costs of purchasing a home. 

Let’s take a closer look at some financing programs you can recommend to buyers who might not have a large amount saved for a down payment:

1. Federal Housing Authority Loans

FHA loans offer the opportunity to borrow money with a low down payment (as little as 3.5 percent) and still access competitive interest rates. Also the federal program won’t penalize your buyer for having a low credit score. In order to qualify for this type of loan, your buyer must: 

  • Have verifiable income
  • Be able to afford the housing payment and any existing debt
  • Save at least a 3.5 percent down payment
  • Have an established credit history
  • Have a FICO score of at least 580 to 640
  • Purchase a home that does not exceed FHA loan limits

2. Veterans Administration Loans

VA home loans help service members, veterans, and eligible surviving spouses become homeowners. These loans are provided by private lenders, such as banks or other mortgage companies. The VA guarantees a portion of the loan, thus enabling the lender to provide your buyers with more favorable loan terms. In order to be eligible for a VA loan, one of the following criteria must be met:

  • Served 181 days of service during peacetime
  • Served 90 days of service during wartime
  • Served 6 years of service in the Reserves or National Guard

3. Rural Development Housing and Community Facilities Program

Lesser known than its counterparts, this program is administered by the United States Department of Agriculture and is designed specifically for lower-income individuals who either live in a rural community or plan to move to one. This program helps buyers by providing a cash subsidy to borrowers or by guaranteeing a no down payment loan, known as a Section 502 loan. 

In order to qualify for this type of loan, however, there are a few stipulations that must be met: the home must be 1,800 square feet or smaller, it must be the buyer’s main residence, and the borrower must meet certain income eligibility requirements.  

4. State, County and Local Programs 

There are also other down payment assistance programs that can be obtained at the state, county, or even local level. These assistance programs most often come in the form of either a grant or a loan that is known as “silent seconds.” A silent second is a no-interest loan that also doesn’t require a monthly payment to be made. 

To help your client find and secure these types of programs in your area, you can turn to State Housing Financing Agencies. These entities are chartered by the individual states and were established to help local residents secure affordable housing. AgentEDU can point you in the right direction for finding market data in your area.

To learn more about how you can better manage the sales process for your clients, sign up for our course Preparing Homebuyers to Buy today. 


AgentEDU® is a platform where agents at every level can come to watch 10-minute video courses for the many situations that successful agents must master. From essential to advanced level and everything in between, AgentEDU® courses help agents become top producers with increased earnings and a plan for continued growth.AgentEDU® is an Agent Publishing brand. For 18 years, Agent Publishing has been committed to providing residential real estate professionals with the information and training required to build successful and meaningful careers in their local markets. Agent Publishing’s influence extends to every career stage and reaches agents across print, digital, events and online learning.

Getting Your Buyers Pre-Qualified for a Mortgage

As any real estate professional knows, the lending landscape is always changing. While there were a number of years when it was very easy for homebuyers to secure a mortgage loan, mortgages are now under more scrutiny than ever, with tight regulations in place to help keep banks sound. Because most of your home buyers will need to take out a mortgage loan, it’s important that you have a working understanding of the process. 

The Difference Between Pre-qualified and Pre-approved

There are differences between getting pre-qualified and getting pre-approved for a mortgage. It is important for you to be aware of these.

Getting pre-qualified for a mortgage is an initial check-in to get a preliminary estimate from a lender of the mortgage your client will probably qualify for. It helps guide the home search process by narrowing down to the range that they will likely be able to borrow. It’s the first hurdle a borrower must clear.

Getting pre-approved for a mortgage happens further down the road in the lending process. It requires an even closer look at your client’s income, debts, assets, and credit. While still not an assurance of obtaining the mortgage—pre-approval is the second hurdle in the process, and brings the client one step closer to a successfully closed transaction.

Why It’s Good to Have Pre-qualified Clients

While getting your buyers pre-qualified for a mortgage does not carry the same weight as getting them pre-approved, it does serve as the initial guide post for making sure that you are selecting homes that are realistically in your client’s price range. You may of course have to narrow home selections even further once the financial options and constraints become clearer, but it’s a great place to start.

One of the most frustrating things for agents is working with buyers who have not yet been pre-qualified for a mortgage. You take buyers to see a number of homes, only to find out that they are not likely to get approved for the mortgage that is required to purchase those homes. This is why it’s helpful to be working with pre-qualified clients from the get-go, or for you to urge your buyers to get pre-qualified early in your business relationship.

Advice You Can Offer At This Stage

So then, as an agent, what advice can you give at this stage? How can you help raise your clients’ chances of success at the pre-qualification stage? Let’s look at three effective pieces of advice for your clients at this point in the process. 

#1. Recommend a Credit Review

One of the first steps toward getting pre-qualified, as well as knowing the types of houses your buyers should be looking at, is for them to know where their credit rating stands. If not already done so, recommend that your buyers review their credit report and check their FICO scores to uncover any potential issues or mistakes, and determine if they need to build their score before searching for a home. 

#2. Urge Them to Fix Credit Errors Quickly

If mistakes are found in their credit history or on their credit reports, your buyers will want to resolve them before moving forward with getting pre-qualified for a mortgage. Have them contact the credit reporting agencies immediately if any errors are found. Mortgage companies that want loans to close on time may offer to pay credit agencies to update your buyer’s credit report quickly with a rapid rescoring service

#3. Remind Them to Be Realistic

It’s not uncommon for lenders to pre-qualify or pre-approve applicants for a mortgage that’s more than they can afford. Make sure that your buyers aren’t letting lenders dictate how much they spend on a home. Lenders determine pre-qualifying amounts based solely on income and credit report information, and don’t factor in day-to-day expenses such as daycare, car payments, groceries, insurance, and more. Rather than purchasing a home for the maximum amount allowed by the lender, make sure your buyers are making a smart investment by purchasing a house that is within their means

As an agent, although you are not a loan officer, you still play an important role in the mortgage process. To learn more about what you need to do to help keep the sale on track, check out our course Guiding Your Homebuyer Through the Mortgage Process today. 


AgentEDU® is a platform where agents at every level can come to watch 10-minute video courses for the many situations that successful agents must master. From essential to advanced level and everything in between, AgentEDU® courses help agents become top producers with increased earnings and a plan for continued growth. For a 7-day free trial sign up here.

AgentEDU® is an Agent Publishing brand. For nearly two decades, Agent Publishing has been committed to providing residential real estate professionals with the information and training required to build successful and meaningful careers in their local markets. Agent Publishing’s influence extends to every career stage and reaches agents across print, digital, events and online learning.