How to Buy a House With No Down Payment

What "no down payment" actually means

A house purchase with no down payment means you borrow 100% of the purchase price instead of putting your own money down upfront. You still pay closing costs (usually 2% to 5% of the price), and you still need a mortgage. The lender covers the full home price, and you begin repaying immediately after closing.

This is not the same as a gift or a grant that erases the cost. You are borrowing money you will repay over 15, 20, or 30 years, plus interest. The monthly payment will be higher than it would be with a down payment, because you are financing a larger amount.

No-down-payment mortgages exist, but they are not common and come with trade-offs: higher interest rates, required mortgage insurance, stricter income and credit requirements, and a smaller pool of lenders willing to offer them.

Key Takeaways

• VA loans and USDA loans are the most straightforward no-down-payment options, but VA loans require military service and USDA loans require a rural property and income limits.
• Conventional mortgages with no down payment exist but typically require a credit score of 700 or higher, stable employment history, and mortgage insurance that adds to your monthly cost.
• Down payment assistance programs run by cities, nonprofits, and some lenders can cover part or all of your down payment, but they have income caps and may require a first-time homebuyer course.
• Closing costs still come out of your pocket or must be borrowed separately, even when the down payment is covered.
• Your monthly payment will be significantly higher with no down payment because you are financing the full purchase price plus mortgage insurance.

VA loans: no down payment if you served

A VA loan is backed by the U.S. Department of Veterans Affairs and requires no down payment if you are a current or former service member, surviving spouse, or dependent of a deceased veteran. The VA guarantees a portion of the loan, which means the lender takes less risk and can offer terms no conventional lender will match.

To use a VA loan, you 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 process takes a few days to a few weeks. You will also need a valid ID, proof of income, and a credit score of 580 or higher (though most lenders prefer 620+).

VA loans cover the full purchase price with no down payment, no mortgage insurance requirement, and no prepayment penalty. The trade-off is a one-time funding fee (usually 1.25% to 3.3% of the loan amount) that you can roll into the mortgage. If you are a surviving spouse or have a service-connected disability rated at 0%, you may be exempt from the funding fee.

You still pay closing costs, which typically run 2% to 5% of the purchase price. Some sellers will cover part or all of these costs as part of the negotiation, but that is not may provide.

USDA loans: no down payment for rural properties

A USDA loan is backed by the U.S. Department of Agriculture and requires no down payment if the property is in a rural area and you meet income limits. The USDA defines "rural" broadly—it includes many towns and suburbs, not just farms. You can check whether a specific address qualifies on the USDA website.

Income limits vary by county and family size. A family of four in a rural area might have a limit of $90,000 to $110,000 annually, but this changes yearly and by location. You will need to verify the current limit for your county before you start the process.

Like VA loans, USDA loans require no down payment and no mortgage insurance. You do pay a may provide fee (usually 1% to 2% of the loan amount), which can be rolled into the mortgage. You still pay closing costs out of pocket or negotiate with the seller to cover them.

You need a credit score of 580 or higher, proof of income, and a valid ID. The application process is similar to a conventional mortgage and typically takes 30 to 45 days.

Conventional mortgages with zero down

Some conventional lenders offer mortgages with no down payment, but the requirements are strict. You typically need a credit score of 700 or higher, a debt-to-income ratio below 43%, and a stable employment history (usually two years with the same employer or in the same field).

The interest rate on a zero-down conventional mortgage is higher than it would be with a 10% or 20% down payment—often 0.5% to 1% higher. You will also pay mortgage insurance (PMI), which protects the lender if you default. PMI typically costs 0.5% to 1.5% of the loan amount annually, added to your monthly payment.

For example, on a $300,000 loan with no down payment, PMI might add $150 to $375 per month. You can remove PMI once you have paid down the loan to 80% of the home's value, but that takes years.

Closing costs still apply and are not covered by the lender. You will need to bring 2% to 5% of the purchase price to closing, or negotiate with the seller to cover some or all of it.

Down payment assistance programs

Many cities, counties, and nonprofits run programs that cover part or all of your down payment. These are not loans—the money does not have to be repaid. However, they have strict rules about income, first-time homebuyer status, and the type of property you can buy.

Common sources include your city or county housing authority, nonprofit organizations like NeighborWorks or the Local Initiatives Support Corporation (LISC), and some mortgage lenders who offer in-house assistance programs. You can search for programs in your area through the National Foundation for Credit Counseling or by calling 211 (a free referral service).

Most programs require you to complete a homebuyer education course, which teaches budgeting, credit, and the mortgage process. Some courses are free; others cost $50 to $200. The course usually takes one to two days and can be done online or in person.

Income limits are common. A program might serve households earning up to 80% of the area median income. In an expensive city, that might be $60,000 for a single person; in a less expensive area, it might be $45,000. You will need to verify the limit for your specific program and location.

Processing time varies. Some programs fund within two to four weeks; others take two to three months. If you find a program that covers your down payment, ask the lender how it affects the mortgage timeline.

What you still have to pay

Even with no down payment, you will pay closing costs. These typically include appraisal fees ($400 to $600), title search and insurance ($500 to $1,500), loan origination fees ($500 to $1,500), and property taxes and homeowners insurance prorated to your closing date. Total closing costs usually run 2% to 5% of the purchase price.

You can sometimes negotiate with the seller to cover closing costs as part of the purchase agreement. This is called a "seller concession." Lenders allow seller concessions up to a certain percentage of the purchase price—usually 3% to 6%, depending on the loan type and your down payment amount. If you have no down payment, the lender may limit seller concessions to 2% or 3%.

If you cannot cover closing costs and the seller will not concede, some lenders will roll closing costs into the mortgage. This increases your loan amount and your monthly payment, but it means you do not need cash at closing.

How your monthly payment changes with no down payment

Your monthly mortgage payment is calculated based on the loan amount, interest rate, and loan term. With no down payment, you are financing the full purchase price, so your payment is higher than it would be with a down payment.

Here is a simplified example: a $300,000 home with a 7% interest rate and a 30-year loan. With 20% down ($60,000), your loan is $240,000 and your monthly payment (principal and interest only) is roughly $1,595. With no down payment, your loan is $300,000 and your payment is roughly $1,994—about $400 more per month. Add mortgage insurance (if required), and the difference grows to $500 to $600 per month.

Over 30 years, that extra $500 per month adds up to $180,000 in additional cost. This is why lenders and financial advisors prefer borrowers to put down at least 10% to 20% if they can.

Your interest rate itself may also be higher with no down payment. Lenders see zero-down borrowers as higher risk, so they charge more. The difference is often 0.25% to 0.75%, which adds hundreds of dollars per year to your payment.

Frequently Asked Questions

Can I use a down payment assistance program with a VA or USDA loan?

Some programs allow it, but many do not. VA and USDA loans already offer no-down-payment terms, so assistance programs sometimes prioritize conventional borrowers. Ask the program directly before you apply. If you are may be able to access for both a VA or USDA loan and a down payment program, the VA or USDA loan is usually the better deal because it has no mortgage insurance.

What credit score do I need for a no-down-payment mortgage?

VA loans typically require 580 or higher, though most lenders prefer 620+. USDA loans also start at 580. Conventional zero-down mortgages usually require 700 or higher. Down payment assistance programs vary widely—some work with credit scores as low as 600, while others require 650 or higher. Check with the specific program or lender.

If I get a no-down-payment mortgage, can I remove mortgage insurance later?

Only if you have a conventional mortgage. Once you have paid down the loan to 80% of the home's original value, you can request PMI removal. With a VA loan, there is no mortgage insurance to remove. With a USDA loan, mortgage insurance is permanent for loans with no down payment.

What happens if I cannot afford closing costs even with no down payment?

Ask your lender whether they will roll closing costs into the mortgage. This increases your loan amount and monthly payment, but it means you do not need cash at closing. You can also negotiate with the seller to cover closing costs as part of the purchase agreement, though this is not always possible in a competitive market.

Is a no-down-payment mortgage a good idea?

It depends on your situation. If you are a veteran or buying a rural property and meet income limits, VA and USDA loans are excellent options with low interest rates and no mortgage insurance. If you are a conventional borrower, the higher interest rate and mortgage insurance make the monthly cost significantly higher. It may be worth saving for a 5% to 10% down payment if you can do so within a year or two.