4 mortgages that require little money down

The USDA has maps on its website that highlight eligible areas. In addition to geographical limits, the USDA program has restrictions on household income, and it's intended for first-time buyers, although there are exceptions.

The USDA mortgage comes from a bank, and there is no mortgage insurance. Instead, the USDA levies a 2 percent guarantee fee, which can be rolled into the loan amount.

Low down payment: Federal Housing Administration

The zero-down options listed above are restricted to limited groups of buyers. With a minimum down payment of 3.5 percent, the Federal Housing Administration is the low-down option that's available to the most people.

Today, about 15 percent of all home loan borrowers get FHA-insured loans, up from 3 percent during the housing boom. The FHA gained market share after many other low-down-payment options (such as piggyback loans) evaporated in the housing bust.

Losses to the insurance fund compelled the FHA to hike rates. The FHA charges an upfront premium of 1.75 percent of the mortgage amount. On a loan with the minimum down payment, there's an annual premium of 1.25 percent of the mortgage amount, or $1,250 a year for each $100,000 borrowed -- a little over $100 a month.

Another low-down-payment option

There is one more option for borrowers in the "low-down-payment" camp: A standard home loan with private mortgage insurance.

A number of companies offer private mortgage insurance for home loans with down payments of less than 20 percent. PMI is not the same thing as FHA insurance, a form of public mortgage insurance.

Typically, loans with private mortgage insurance require higher down payments than the FHA requires. But for homebuyers who can afford down payments of at least 5 percent, mortgages with PMI often have lower monthly payments than equivalent loans insured by the FHA.

Private mortgage insurance has another edge over FHA: Under certain conditions, you can cancel PMI earlier -- as soon as two years after you get the loan, compared to a wait of at least five years to cancel FHA insurance.

In the first few years of the housing bust, private mortgage insurers slapped a "declining market" label on the worst-hit housing markets and required minimum down payments of 10 percent or more, instead of the traditional minimum of 5 percent.

Now, at least some of the insurers have relaxed the requirements, even in hard-hit states such as Arizona, California, Florida, Nevada and Michigan.

"We'll do 5 percent down across the country," says Chris Antonello, senior vice president of marketing for Genworth, a mortgage insurer based in Raleigh, N.C.


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