The idea that you need tens of thousands of dollars saved up before you can buy a home is simply outdated. After years of working with buyers in Spicer, Minnesota, I've seen firsthand how misconceptions about down payments keep people from pursuing homeownership when they could actually qualify for programs that make it possible with little to no money down.

If you've been thinking your dreams of owning a home are out of reach because of the down payment hurdle, I have good news. There are legitimate, proven loan programs and assistance options available right now that can help you purchase a home with minimal upfront cash. Let me walk you through the options that could work for your situation.

VA Loans: The Gold Standard for Veterans

VA and USDA loans offer true no-down-payment mortgages. If you're a veteran, active-duty service member, or eligible surviving spouse, a VA loan is often your best path to homeownership. VA loans enable zero-down financing without monthly mortgage insurance for qualified military members, veterans, and surviving spouses.

The benefits are substantial. You won't pay private mortgage insurance (PMI), which saves thousands over the life of your loan. Instead, you'll pay a one-time VA funding fee, which can typically be rolled into your loan amount. VA loans don't require monthly mortgage insurance. Instead, they include a one-time VA funding fee, which helps keep the program running for future Veterans. The funding fee typically ranges from about 1.25% to 3.3% of the loan amount.

One question I hear often is about credit requirements. The VA doesn't set a minimum credit score, though most lenders prefer to work with borrowers who have a score around 620 or higher. If you served in the military and haven't explored VA loans yet, this should be your first stop. It's one of the most powerful tools available for eligible buyers.

USDA Loans for Rural and Suburban Areas

A USDA home loan offers a 0% down payment for eligible properties and home buyers. To qualify for this loan, you must purchase a home located in an eligible rural area, as defined by the USDA.

Here's something many people don't realize: If you're buying in a qualifying rural or suburban area — aka 97% of the landmass of the U.S. — you may be able to skip the down payment altogether with a USDA loan. In Spicer and many surrounding areas of Minnesota, USDA loans are absolutely worth exploring.

The USDA won't approve loans if your adjusted household income is more than 115% of the median in your area. This is important to note, as USDA loans are specifically designed for low- to moderate-income buyers. If your income fits within the limits for your area, you can finance 100% of the home's purchase price. Lower credit score requirement: 600 minimum.

FHA Loans: Flexible Terms for First-Time Buyers

FHA loans aren't zero-down, but they're incredibly valuable if you don't qualify for VA or USDA programs. Backed by the Federal Housing Authority, FHA loans offer down payments as low as 3.5% if your credit score is at least 580.

FHA loans are popular because they're flexible. For most first-time buyers in 2026, FHA loans require a minimum down payment of 3.5% of the home's purchase price if your credit score is 580 or above. If your score is lower (500-579), you'll need a 10% down payment.

You will pay mortgage insurance with an FHA loan, but combined with down payment assistance programs (which we'll cover next), an FHA loan can still be an affordable path to homeownership.

Conventional Loans with Low Down Payments

Conventional loans only need 3% down for first-time home buyers. If you're a first-time buyer with decent credit, conventional loans like HomeReady or Home Possible offer flexibility that traditional mortgages don't.

HomeReady and HomePossible loans require a down payment of at least 3% to those who make no more than 80% of the area median income. They also offer a $2,500 credit that low-income, first-time buyers can put toward that down payment or closing costs if their income is less than 50% of the area median. These credits can significantly reduce your out-of-pocket costs.

State and Local Down Payment Assistance Programs

Minnesota, like every state, offers down payment assistance programs. Down payment assistance programs exist in virtually every state. Offered by state housing finance agencies, local governments, and nonprofit organizations. According to the National Council of State Housing Agencies, DPA programs helped over 180,000 home buyers in 2023.

Grants provide free money that doesn't need to be repaid. Typically $3,000 to $15,000. Some programs also offer forgivable second mortgages, meaning you don't have to pay them back if you stay in the home for a certain period.

State housing agencies, city governments, nonprofit organizations, and major lenders all offer programs that hand buyers $5,000 to $25,000+ toward their purchase — often as outright grants that never need to be repaid. To find programs available in your area around Spicer, contact your local housing authority or search the HUD database.

Gift Funds from Family Members

Don't overlook the power of gift funds. Many loan programs allow 100% of your down payment to come from family gifts. Family members can gift money for closing costs. FHA, VA, and USDA all allow 100% gift funds. Need a gift letter — no repayment expected.

The key is documentation. The gift must be documented with a gift letter stating the funds are a gift with no repayment expectation. The donor must also show the source of funds through bank statements proving they had the money to give. If family members want to help you achieve homeownership, most mortgage programs will accept their assistance.

Lender-Specific Programs and Grants

Major banks and mortgage lenders have started offering their own down payment assistance programs. Our Down Payment Grant program offers a grant of up to 3% of the home purchase price, up to $10,000, to be used for a down payment in select markets. Many national lenders offer similar programs, and it's worth asking your lender if they participate in any special down payment grant initiatives.

Important Considerations Before You Apply

While the prospect of buying with little to no money down is exciting, it's important to understand that zero down doesn't mean zero costs. In 2026, a planning range of roughly 2%–6% of the purchase price may be reasonable for closing costs. The actual amount depends on the state, lender, taxes, insurance, and loan structure. On a $300,000 house, that broad range equals $6,000–$18,000 before credits. You'll need cash available for closing costs, even with a zero-down mortgage.

Also remember that some loan programs require mortgage insurance. FHA loans with a lower down payment require mortgage insurance premiums (MIP). Factor these ongoing costs into your monthly payment when evaluating different loan options.

Where to Start: Getting Pre-Approved and Exploring HOUSEJET

The first step is getting pre-approved. This process only takes a few days and will tell you exactly which loan programs you qualify for. A good lender will review your income, credit, and situation to recommend the best path forward.

Once you know which programs work for you, use HOUSEJET to search for homes in your price range across Spicer and the surrounding areas. HOUSEJET makes it easy to filter properties and get a clear picture of what's available in your budget.

After years of helping buyers in Spicer, I've learned that the down payment shouldn't be the reason someone doesn't pursue homeownership. The programs exist. You may qualify. And if you're ready to explore your options, I'm here to guide you through the process.

The path to homeownership might look different than you expected, but it's absolutely within reach. Let's talk about which programs make sense for your situation.