Buying a Home With No Down Payment: What Programs Actually Exist
Yes, you can buy a home with no down payment, but the path depends on who you are and where you live
No-down-payment mortgages exist, but they are not the default option most lenders advertise. The main routes are VA loans (for military members and veterans), USDA loans (for rural properties), and conventional loans with down payment assistance programs attached to them. Each has different rules about income, location, property type, and credit score. The catch: without a down payment, you will pay higher interest rates, higher monthly payments, and mortgage insurance. You also need to may have access to for the full loan amount on your income alone—lenders do not lower the bar just because you are putting nothing down.
Key Takeaways
- VA loans and USDA loans both allow zero down payment, but VA loans are only for military-connected borrowers and USDA loans only for rural properties.
- Conventional loans with down payment assistance programs exist in many states and cities, but they usually require you to meet income limits and often tie you to a specific lender or program.
- With no down payment, you will pay mortgage insurance (PMI on conventional loans, funding fees on VA loans) and higher interest rates than borrowers who put money down.
- Your debt-to-income ratio and credit score matter more when you have no down payment, because the lender is taking on more risk.
- Down payment assistance is not the same as a grant—many programs are loans you repay, sometimes forgiven after you stay in the home for a set number of years.
VA loans: zero down if you have military service
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs. It requires no down payment and no mortgage insurance (PMI), which saves money every month. You must have served on active duty, be a surviving spouse of a service member, or meet other military-connected criteria. You will need a Certificate of may be able to access from the VA, which you can request online through VA.gov or through your lender.
The trade-off: VA loans charge a funding fee (usually 1.4 to 3.6 percent of the loan amount, depending on your service history and down payment), which gets rolled into the loan. You also cannot use a VA loan for investment properties or vacation homes—only your primary residence. Interest rates on VA loans are often lower than conventional rates, which can offset the funding fee over time. Your lender must be VA-approved, but most major banks and mortgage companies are.
USDA loans: zero down for rural and some suburban properties
A USDA loan is a mortgage backed by the U.S. Department of Agriculture, designed to help people buy homes in rural areas. It requires no down payment and no mortgage insurance. You must meet income limits (which vary by county and family size) and the property must be in an may be able to access rural area—the USDA has a map on its website where you can check your address.
Like VA loans, USDA loans charge a funding fee (usually 1 to 3.5 percent of the loan amount), rolled into the loan. The application process is longer than conventional mortgages because the USDA must verify the property location and your income. You also cannot have a recent bankruptcy or foreclosure. If you live outside a city or large suburb, this is often the cheapest no-down-payment option because there is no monthly mortgage insurance.
Down payment assistance programs paired with conventional loans
Many states, cities, and nonprofits offer down payment assistance programs that work alongside a conventional mortgage. You borrow the down payment (and sometimes closing costs) from the program, then take out a conventional mortgage for the rest. The assistance is usually a second loan or a grant, depending on the program.
These programs vary widely by location. Some are run by state housing finance agencies, some by city governments, and some by nonprofits. Common names include first-time homebuyer programs, down payment assistance loans, and shared equity programs. Income limits are typical—many cap household income at 80 to 120 percent of the area median income. You will still need to may have access to for the conventional mortgage on your own income and credit, and you will pay mortgage insurance because you are putting down less than 20 percent.
The key difference from a grant: most down payment assistance is a loan you repay. Some forgive the loan after you live in the home for 5 to 10 years. Others require repayment if you sell or refinance. A few are true grants with no repayment, but these are rare and usually only for very low-income buyers. Ask the program directly whether the assistance is a loan or a grant, and what happens if you move or refinance.
What lenders look at when you have no down payment
Without a down payment, lenders scrutinize your credit score and debt-to-income ratio more carefully. Most require a credit score of at least 620 for conventional loans, though 640 to 680 is more common. Your debt-to-income ratio—the total of all your monthly debt payments divided by your gross monthly income—usually cannot exceed 43 to 50 percent, depending on the lender and loan type.
Lenders also want to see stable income and employment history. A job change in the last two years may raise questions. Self-employed borrowers often need two years of tax returns and may face stricter income verification. Some lenders will not approve a no-down-payment loan if you have recent late payments, collections, or a bankruptcy within the last few years—the exact timeline depends on the program.
The real cost of no down payment: interest, insurance, and monthly payments
Putting down nothing means you borrow the full purchase price. If you buy a $300,000 home with no down payment, you borrow $300,000 instead of $240,000 (with a 20 percent down payment). Over a 30-year mortgage, that extra $60,000 costs thousands in interest.
You also pay mortgage insurance every month. On a conventional loan, PMI (private mortgage insurance) typically runs 0.5 to 1.5 percent of the loan amount per year, paid monthly. On a $300,000 loan, that is $125 to $375 per month. PMI drops off once you reach 20 percent equity (through payments or home appreciation), but that takes years. VA loans skip PMI but charge the funding fee upfront. USDA loans also skip monthly PMI but charge the funding fee.
Interest rates are also higher for no-down-payment loans. A borrower with 20 percent down might get 6.5 percent; a borrower with no down payment might get 7.0 or 7.5 percent. Over 30 years, that 0.5 to 1 percent difference adds tens of thousands to the total cost. Shop rates across multiple lenders—the difference between lenders can be as large as the difference between down payment levels.
How to find down payment assistance in your area
Start with your state housing finance agency. Every state has one, and most maintain a list of down payment assistance programs. Search "[your state] housing finance agency" or "[your state] down payment assistance." Many state programs are administered through local nonprofits or mortgage lenders, so the agency can tell you which programs are currently open in your county.
Your city or county housing authority may also run programs. Call your local housing authority directly or search "[your city] down payment assistance." Some programs are seasonal or run out of funding, so the authority can tell you whether money is available right now.
A mortgage lender can also point you toward programs. Some lenders partner with specific down payment assistance programs and can roll the application into your mortgage process. Ask whether the lender has preferred partners and whether using their partner program affects your interest rate or terms.
Frequently Asked Questions
Do I need a credit score to get a no-down-payment loan?
Yes. Most lenders require a credit score of at least 620 for conventional loans with down payment assistance, though 640 to 680 is more typical. VA loans and USDA loans have no official minimum, but most lenders still want 580 or higher. A lower score may mean a higher interest rate or stricter income requirements.
What if I do not may have access to for VA or USDA loans and there is no down payment assistance program in my area?
You have a few options: save for a smaller down payment (even 3 to 5 percent reduces your monthly insurance and interest rate), look into first-time homebuyer programs in neighboring counties or states if you are willing to relocate, or work with a mortgage broker who specializes in low-down-payment loans. Some lenders offer 3 percent down conventional loans without a separate assistance program.
If I use down payment assistance, can I refinance later?
It depends on the program. Some down payment assistance loans must be paid off before you refinance; others forgive automatically after a set time in the home. Read the promissory note or program agreement carefully, or ask the program administrator before you sign. Refinancing without paying off the assistance loan can trigger a repayment clause.
Will a no-down-payment mortgage hurt my chances of getting approved?
It makes approval harder, not impossible. Lenders see no down payment as higher risk, so they compensate by requiring a higher credit score, lower debt-to-income ratio, and more stable income history. If your credit or income is borderline, a small down payment (even 3 to 5 percent) can make the difference between approval and denial.
How long does it take to get approved for a no-down-payment loan?
Conventional loans with down payment assistance usually take 30 to 45 days from application to closing. VA loans take 30 to 60 days. USDA loans often take 45 to 90 days because the USDA must verify the property and your income. If you are using a down payment assistance program, add time for that program's underwriting—some programs have their own approval step separate from the mortgage lender.