Buying a house without making a down payment is possible, but only certain mortgage programs offer true 100% financing.
For most borrowers, the two major options are VA loans for eligible military borrowers and USDA loans for eligible households purchasing qualifying properties. Buyers who do not qualify for either program can still find mortgages requiring as little as 3% to 3.5% down, and down payment assistance may reduce the amount they need to provide themselves.
Key Takeaways
- VA and USDA loans can provide 100% financing to eligible borrowers.
- A zero down payment does not necessarily mean zero cash needed at closing.
- Conventional and FHA loans can offer low down payments when VA or USDA financing is not available.
Which mortgages allow no down payment?
VA and USDA loans are the two major nationwide mortgage programs that can finance 100% of an eligible home purchase.
| Loan type | Minimum down payment | Who may qualify | Main limitation |
|---|---|---|---|
| VA | 0% for eligible transactions | Eligible Veterans, service members and certain surviving spouses | VA eligibility, lender approval and property requirements apply |
| USDA | 0% | Eligible low- and moderate-income households | Property and household-income eligibility apply |
| Conventional | As little as 3% on certain programs | Borrowers meeting the applicable conventional requirements | Mortgage insurance is generally required at higher LTVs |
| FHA | As little as 3.5% | Borrowers meeting FHA and lender requirements | FHA mortgage insurance applies |
The best option depends on your eligibility, income, credit profile, location and the property you’re purchasing.
How does a zero-down VA loan work?
VA-backed purchase loans can allow eligible borrowers to finance a home without a down payment.
According to the Department of Veterans Affairs, a VA-backed purchase loan can generally require no down payment as long as the sales price does not exceed the property’s appraised value.
You must qualify for a VA Certificate of Eligibility and meet the lender’s credit, income and other underwriting requirements. The home generally must also be your primary residence.
Borrowers considering this option can also look more closely at how VA loans work, including eligibility, funding fees and the lack of monthly private mortgage insurance.
Borrowers with full VA entitlement are not subject to a VA loan limit for purposes of determining how much VA can guarantee without a down payment. The lender still decides how much you can afford, and the property’s appraised value can limit financing.
If you have already used part of your VA entitlement and have not restored it, remaining entitlement and the applicable county loan limit can affect whether a down payment is required.
Does a VA loan have mortgage insurance?
VA-backed loans do not require monthly private mortgage insurance.
However, many borrowers pay a one-time VA funding fee. For purchase loans with less than 5% down, the current fee is generally 2.15% of the loan amount for first use and 3.3% for subsequent use.
The fee can usually be financed into the mortgage rather than paid entirely in cash at closing.
Some borrowers are exempt from the funding fee, including certain Veterans receiving compensation for a service-connected disability and qualifying surviving spouses.
That distinction matters when comparing VA financing with a conventional mortgage requiring PMI or an FHA mortgage requiring mortgage insurance premiums.
How does a zero-down USDA loan work?
The USDA Single Family Housing Guaranteed Loan Program can also provide 100% financing.
The program is intended for eligible low- and moderate-income households purchasing a primary residence in an eligible rural area.
USDA says qualifying borrowers can receive 100% financing, meaning the program itself does not require a down payment.
Eligibility depends on both the borrower and the property. Household income generally cannot exceed 115% of the median household income for the area, and the property must be located in an area USDA considers eligible.
Buyers weighing this option can dig further into USDA down payment requirements, including when 100% financing is available and which other upfront costs can still apply.
You can check a property’s eligibility through the USDA property eligibility system.
Do you need a 640 credit score for a USDA loan?
No USDA-wide minimum credit score applies to the guaranteed program.
USDA states that the program itself has no credit-score requirement. Borrowers instead must demonstrate their willingness and ability to manage debt.
Individual lenders can still establish their own credit requirements, and underwriting results can affect how an application is evaluated.
That means a commonly cited score such as 640 can be a lender or underwriting benchmark without being a universal USDA eligibility rule.
Does zero down mean zero cash at closing?
No. A zero-down mortgage eliminates the required down payment, but buyers can still face other upfront expenses.
Those may include:
- Closing costs
- Prepaid property taxes
- Homeowners insurance premiums
- Initial escrow deposits
- Home inspection costs
- Appraisal costs, depending on the transaction
- Earnest money paid earlier in the purchase process
Some of these costs may be offset through seller credits, lender credits, grants or other assistance, depending on the loan program and transaction.
VA, for example, allows sellers and builders to pay certain buyer closing costs, although separate limits apply to seller concessions.
USDA financing can also permit certain eligible closing expenses to be included in the transaction when program requirements are met.
So it is possible for some buyers to reach closing with very little cash, but a zero-down mortgage should not automatically be interpreted as a zero-cash home purchase.
Can you get a conventional loan with a low down payment?
Yes. Buyers who do not qualify for VA or USDA financing may still be able to purchase with as little as 3% down through certain conventional programs.
Fannie Mae offers 97% loan-to-value purchase options. Its standard 97% LTV option generally requires at least one borrower to be a first-time homebuyer, while HomeReady can also reach 97% LTV and limits qualifying income to 80% of area median income.
Freddie Mac’s Home Possible program also permits up to 97% LTV on qualifying one-unit properties and generally limits qualifying income to 80% of area median income.
Both HomeReady and Home Possible allow flexible sources for the down payment, such as eligible gifts, grants and assistance programs.
For a broader comparison, down payment requirements by loan type vary substantially between conventional, FHA, VA and USDA financing.
Can down payment assistance make a conventional loan effectively zero down?
Potentially, although the mortgage itself is still a low-down-payment loan rather than a true zero-down loan.
State housing finance agencies, local governments, nonprofits and other organizations offer down payment assistance programs. Assistance can take the form of a grant, forgivable loan, deferred-payment loan or repayable second mortgage.
If a qualifying program covers the minimum required down payment, your personal contribution may be reduced significantly.
Requirements vary widely. Programs can impose income limits, purchase-price limits, location restrictions, homebuyer-education requirements or rules for first-time buyers.
Before choosing a program, understand whether the assistance must eventually be repaid and whether accepting it changes your mortgage rate, monthly payment or future sale and refinance options.
How much do you need down with an FHA loan?
FHA financing is another alternative for buyers who cannot qualify for a zero-down program.
Under FHA guidelines, borrowers with a minimum decision credit score of at least 580 can be eligible for the maximum 96.5% loan-to-value ratio on a standard purchase, which corresponds to a minimum 3.5% down payment.
Borrowers with scores between 500 and 579 are generally limited to 90% LTV, meaning at least 10% down.
Lenders can impose requirements beyond FHA’s minimum standards.
FHA loans also require mortgage insurance, so buyers should compare the entire payment and upfront cost rather than focusing only on the minimum down payment.
Is 20% down required for a conventional mortgage?
No. The idea that every conventional mortgage requires 20% down is a persistent misconception.
Some conventional purchase loans allow as little as 3% down, while many others permit 5%, 10% or 15%.
The significance of 20% is primarily mortgage insurance. On many conventional mortgages, putting less than 20% down means you will initially need private mortgage insurance.
Whether putting more money down is worthwhile depends on the effect on your payment, savings and other financial goals.
Comparing different down payment amounts can help you determine whether preserving cash or lowering the loan balance makes more sense for you.
Should you choose a zero-down mortgage if you qualify?
A zero-down mortgage can remove one of the largest barriers to buying a home, but zero down is not automatically the best financial choice.
Putting money down reduces the amount you have to borrow. A smaller loan can lower the monthly principal-and-interest payment and reduce the amount of interest charged over time.
On the other hand, using all of your savings for a down payment can leave you without much cash for closing costs, repairs, moving expenses or emergencies after you buy.
If you qualify for VA or USDA financing, compare a zero-down scenario with one where you voluntarily make a down payment. The better choice depends on how much cash you have available and what keeping that cash allows you to do.
What do you need to qualify for a no-down-payment mortgage?
The exact requirements depend on the program.
VA borrowers need the required military eligibility and Certificate of Eligibility, must satisfy the lender’s underwriting standards and generally must occupy the property as a primary residence.
USDA borrowers must meet household-income limits, purchase an eligible property for use as a primary residence and meet credit and repayment requirements.
In either case, lenders will still evaluate factors such as income, monthly debts and your ability to repay the mortgage.
A complete look at what you need to buy a house can help you prepare the income, credit, assets and documents involved before you apply.
How much home can you afford with zero down?
Eliminating the down payment does not eliminate the monthly payment.
In fact, borrowing 100% of the purchase price produces a larger mortgage balance than putting money down on the same property.
Your mortgage rate, taxes, insurance, loan fees and existing debts can all affect how much home fits within your budget.
Before choosing a price range simply because you do not need a down payment, use a broader home affordability calculation to estimate the monthly payment your income and debts can support.
Bottom Line
VA and USDA loans are the primary nationwide mortgage programs that can allow qualified homebuyers to purchase with no down payment.
If you are not eligible for either, a low-down-payment conventional or FHA mortgage can still reduce the upfront hurdle. Down payment assistance may further reduce the amount you need to provide yourself.
But no down payment does not mean no cost. Compare the monthly payment, mortgage insurance or funding fees, closing costs and cash reserves you would have left after buying before deciding how much to put down.
FAQ
Can you really buy a house with no money down?
Some eligible buyers can obtain a VA or USDA mortgage with no required down payment. You may still need money for closing costs, prepaid expenses and other transaction costs unless those expenses are covered through credits, assistance or other permitted sources.
What loans require no down payment?
VA-backed purchase loans and USDA Single Family Housing Guaranteed Loans are the two major nationwide mortgage programs offering 100% financing to qualifying borrowers and properties.
Does USDA require a 640 credit score?
No. USDA says its guaranteed loan program does not impose an agency minimum credit score. Individual lenders can have their own requirements, and credit history remains part of underwriting.
Do VA loans require a down payment?
Eligible VA borrowers can generally purchase without a down payment when the sales price does not exceed the VA-appraised value and the borrower has sufficient entitlement. Some borrowers with remaining rather than full entitlement may need a down payment depending on the transaction.
Can first-time buyers get a mortgage with 3% down?
Yes. Certain conventional programs allow qualifying borrowers to purchase with 3% down. Fannie Mae and Freddie Mac both offer 97% LTV options, although eligibility requirements vary by program.
Can down payment assistance cover the entire down payment?
Some programs can provide enough assistance to cover a mortgage’s minimum down payment, but program rules differ. Assistance may be a grant, forgivable loan, deferred loan or repayable second mortgage rather than free money.
