Buying a House With No Down Payment: What Programs Actually Exist
Yes, but only through specific loan types and military or government programs
You can buy a house with no down payment, but you cannot do it through a conventional mortgage—those require at least 3 to 5 percent down. Instead, you will need to use one of four paths: a VA loan (if you served in the military), a USDA loan (if you buy in a rural area and meet income limits), an FHA loan (which requires 3.5 percent down, not zero, but is the lowest conventional option), or a state or local down payment assistance program that pairs with a regular mortgage.
Each path has different rules about where you can buy, what you can earn, what the house must cost, and what paperwork you need. None of them are faster or easier than a conventional mortgage—they often take longer because the lender has to verify more details. But if you do not have savings for a down payment, one of these four is likely your only route to homeownership right now.
Key Takeaways
- VA loans and USDA loans require zero down payment, but VA loans are only for military service members and USDA loans only for rural properties with household income below certain limits.
- FHA loans require 3.5 percent down, not zero, but are easier to get than conventional mortgages if your credit is lower or your debt is higher.
- Down payment assistance programs exist in most states and cities, but they pair with a mortgage you still have to may have access to for—they do not replace the need to prove income and credit.
- All zero-down loans come with higher monthly costs than a conventional mortgage because the lender takes on more risk: higher interest rates, mortgage insurance, or both.
- The house itself must meet the lender's standards—older homes, rural properties, or homes needing repair may not may have access to, depending on the loan type.
VA loans: zero down if you served in the military
A VA loan is backed by the U.S. Department of Veterans Affairs and requires no down payment, no monthly mortgage insurance, and no prepayment penalty. You may have access to if you served on active duty (usually 90 days or more), are a surviving spouse of a service member who died in service, or are in the National Guard or Reserves with enough service time. You will need a Certificate of may be able to access from the VA, which you can request online at VA.gov or through your lender.
The interest rate on a VA loan is typically lower than on other loan types because the VA guarantees part of the loan to the lender. You still have to may have access to based on income and credit, and the lender will verify your employment and debt. The house must be your primary residence—you cannot use a VA loan to buy an investment property or a vacation home.
VA loans do have a funding fee (usually 2 to 3.3 percent of the loan amount), but you can roll it into the mortgage instead of paying it upfront. If you are receiving VA disability compensation, you may be exempt from the funding fee entirely.
USDA loans: zero down in rural areas with income limits
A USDA loan is backed by the U.S. Department of Agriculture and requires no down payment if you buy in a designated rural area and your household income is at or below 115 percent of the area median income. The USDA defines "rural" broadly—it includes small towns and suburbs, not just farmland. You can check whether a specific address qualifies on the USDA website.
Like a VA loan, a USDA loan comes with a may provide fee (usually 1 to 2 percent of the loan amount) that you can roll into the mortgage. You also pay an annual mortgage insurance premium, which is lower than FHA insurance but still adds to your monthly payment. You must be a U.S. citizen or permanent resident and cannot have a recent history of late payments or foreclosure.
The house must be a single-family home and your primary residence. Condos, townhouses, and multi-unit properties do not may have access to. The property must also meet USDA standards for safety and livability, which means very old homes or homes needing major repair often fail inspection.
FHA loans: 3.5 percent down, the lowest conventional option
An FHA loan is not zero down—it requires 3.5 percent of the purchase price as a down payment. But it is the lowest down payment option available through a conventional lender if you do not may have access to for VA or USDA. FHA loans are easier to get than conventional mortgages: you can have a credit score as low as 580 (conventional loans usually want 620 or higher), and you can carry more debt relative to your income.
The tradeoff is that you pay mortgage insurance for the life of the loan (or until you refinance into a conventional mortgage later). This insurance protects the lender if you stop paying, and it adds roughly 0.5 to 1 percent to your monthly payment. You also pay an upfront insurance premium, usually 1.75 percent of the loan amount, which the lender rolls into the mortgage.
FHA loans work for single-family homes, townhouses, and condos in FHA-approved buildings. The property must meet FHA standards, which are less strict than USDA standards but still exclude homes with major structural or safety issues. You must be a U.S. citizen or permanent resident and have a valid Social Security number.
Down payment assistance programs: grants or loans to cover the gap
Many states, cities, and nonprofits offer down payment assistance programs that give you a grant or a second loan to cover part or all of your down payment. These programs pair with a regular mortgage—you still have to may have access to for the underlying loan, but the assistance covers the down payment you cannot afford. Some programs are free grants; others are forgivable loans (you do not have to repay them if you stay in the house for a set number of years); and some are regular loans you repay alongside your mortgage.
may be able to access varies widely by program. Most require that you are a first-time homebuyer, that your household income is below a certain threshold (often 80 to 120 percent of area median income), and that the house price is within a set limit. Some programs are limited to specific neighborhoods or cities. You will need to search for programs in your area—start with your city or county housing authority, your state housing finance agency, or a nonprofit like NeighborWorks or the National Council of State Housing Agencies.
Down payment assistance programs often move slowly because they require extra paperwork and approval steps beyond the mortgage lender's process. Some programs have limited funding and close when the money runs out. It is worth starting your search early, even before you find a house, so you know what you may have access to for and what the timeline looks like.
What zero-down loans cost you each month
When you put zero down, your monthly payment is higher than it would be with a down payment, even if the interest rate is the same. Here is why: you are borrowing the full purchase price instead of a smaller amount, so the loan itself is bigger. On a $300,000 house, zero down means a $300,000 loan; 10 percent down means a $270,000 loan. The difference in monthly payment is real and permanent.
On top of that, zero-down loans often come with higher interest rates because the lender sees you as higher risk. VA loans are an exception—they typically have competitive rates. FHA and USDA loans usually have rates 0.25 to 0.75 percent higher than conventional mortgages. And most zero-down loans require mortgage insurance, which adds another $100 to $300 per month depending on the loan type and the house price.
Before you commit to a zero-down loan, ask your lender to show you the full monthly payment (principal, interest, insurance, taxes, and homeowners insurance) and compare it to what you would pay with a 5 or 10 percent down payment. Sometimes saving for a down payment, even a small one, saves you thousands over the life of the loan.
What lenders look for beyond the down payment
Even with a zero-down loan, you still have to prove you can afford the house. Lenders will check your credit score, your income (usually verified through tax returns and recent pay stubs), your employment history, and your existing debt. They will also order an appraisal to make sure the house is worth what you are paying for it.
The house itself has to meet the lender's standards. All zero-down loans require an inspection, and the property must pass. Very old homes, homes with foundation problems, homes with outdated electrical or plumbing, or homes in flood zones often fail inspection. If the house does not pass, you either have to negotiate repairs with the seller or walk away—you cannot close the loan until the property meets standards.
You will also need to show proof of homeowners insurance before closing. Some lenders require you to have cash reserves after closing (usually equal to one or two months of mortgage payments) to show you can handle an emergency. The exact requirements depend on the lender and the loan type.
Frequently Asked Questions
Can I use a down payment assistance program with an FHA loan?
Yes. Many programs allow you to stack assistance with FHA loans. You would use the assistance to cover the 3.5 percent down payment, and the FHA loan would cover the rest. Some programs have limits on how much they will give you or which loan types they work with, so ask the program directly before you apply for the mortgage.
What if I have bad credit but want a zero-down loan?
VA and USDA loans have no minimum credit score requirement, though lenders often set their own minimums (usually 580 to 620). FHA loans officially allow scores as low as 580. If your score is lower, you may need to wait and rebuild credit, or work with a lender that specializes in lower-credit borrowers. Down payment assistance programs usually require a minimum score of 620 to 640.
Can I use a zero-down loan to buy a second home or investment property?
No. VA, USDA, and FHA loans all require that the house be your primary residence—the place you live most of the year. You cannot use them for vacation homes, rental properties, or houses you plan to flip. If you want to buy an investment property, you will need a conventional mortgage and a down payment.
How long does it take to close a zero-down loan?
Most zero-down loans take 30 to 45 days from offer to closing, similar to conventional mortgages. Down payment assistance programs can add 1 to 4 weeks because of extra approval steps. If you are using both a zero-down loan and assistance, budget 45 to 60 days and ask both the lender and the assistance program for a timeline upfront.
What happens if I cannot afford the monthly payment after I buy?
Contact your lender immediately if you fall behind. Most lenders offer loan modification programs that can lower your payment by extending the loan term or reducing the interest rate. Do not wait until you are several months behind—the sooner you reach out, the more options you have. Your lender is required to discuss options with you before starting foreclosure.