How to Buy a Home With No Down Payment
Mortgages that require no down payment do exist, but they come with real costs and strict requirements
You can buy a home without saving a down payment, but the lender will charge you more in interest, require mortgage insurance, and demand a higher credit score and steady income history. The most common no-down-payment mortgages are VA loans (for military members and veterans), USDA loans (for rural properties), and conventional loans with private mortgage insurance (PMI). Each has different rules about who qualifies, what property types work, and how much you actually pay over the life of the loan.
No down payment does not mean no upfront costs. You will still owe closing costs—typically 2 to 5 percent of the purchase price—unless the seller agrees to cover them or the lender rolls them into the loan. You will also pay for a home inspection, appraisal, and title search before closing. The real expense comes later: a mortgage with no down payment means you borrow the full purchase price, so your monthly payment is higher, and you pay interest on a larger balance for 30 years.
Key Takeaways
- VA loans and USDA loans require no down payment and no mortgage insurance, but VA loans are only for military-connected borrowers and USDA loans only for rural properties.
- Conventional mortgages with no down payment require private mortgage insurance (PMI), which adds $100 to $300+ per month to your payment and does not build home equity.
- No down payment requires a credit score of at least 620, usually higher, and proof of stable income and employment for the past two years.
- Closing costs (2 to 5 percent of the purchase price) are still your responsibility unless negotiated with the seller or lender.
- You can remove PMI once you reach 20 percent equity, but that takes years of payments on a full-price mortgage.
VA loans: no down payment, no PMI, military-only
A VA loan is backed by the U.S. Department of Veterans Affairs and requires zero down payment and zero mortgage insurance. You must be an active-duty service member, veteran, or surviving spouse of a service member who died in service or from a service-connected disability. The VA does not lend the money itself—a bank or mortgage lender does—but the VA guarantees a portion of the loan, which means the lender takes less risk and passes that savings to you.
VA loans have no property type restrictions (unlike USDA loans), no PMI, and no prepayment penalty if you pay off the mortgage early. You do pay a one-time VA funding fee, usually 1.4 to 3.6 percent of the loan amount, which can be rolled into the mortgage. If you are disabled from a service-connected injury, you may not owe the funding fee at all. To use a VA loan, you 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 main limit is the property itself: it must be your primary residence, not a rental or investment property. The lender will still require a credit score (usually 620 or higher), proof of income, and a debt-to-income ratio below a certain threshold (often 41 percent). VA loans are available nationwide and through most major lenders.
USDA loans: no down payment for rural and suburban properties
A USDA loan is backed by the U.S. Department of Agriculture and requires no down payment and no mortgage insurance. You must buy a property in a rural or may be able to access suburban area—the USDA has a map on its website showing which zip codes may have access to. Income limits apply: you cannot earn more than 115 percent of the median income for your county, though this varies widely by location.
Like VA loans, USDA loans have no PMI, but you do pay an upfront may provide fee (typically 1 percent of the loan amount) and an annual annual fee (0.35 percent of the loan balance each year). Both can be rolled into the mortgage. You need a credit score of at least 580, though 640 or higher is more common, and you must show stable income for the past two years.
USDA loans are slower to close than conventional mortgages—often 45 to 60 days—because the USDA reviews the application after the lender approves it. The property must be a single-family home (not a condo or multi-unit building in most cases) and your primary residence. If you live in or near a city, you may not may have access to based on location alone.
Conventional mortgages with PMI: the trade-off for no down payment
A conventional mortgage with no down payment requires private mortgage insurance (PMI), which protects the lender if you stop paying. PMI typically costs 0.5 to 1.5 percent of the loan amount per year, split into monthly payments. On a $300,000 mortgage, that is $125 to $375 per month added to your payment—money that does not build equity in your home.
You can remove PMI once you reach 20 percent equity in the home, either by paying down the principal or by the home's value rising. On a $300,000 purchase with no down payment, you need $60,000 in equity to hit that mark. If you pay $1,500 per month and $500 goes to principal (the rest to interest), you reach 20 percent equity in about 10 years. PMI removal is not automatic—you must request it in writing once you hit the threshold, and the lender may require a new appraisal to confirm the home's value.
Conventional mortgages with no down payment require a credit score of at least 620, but 680 or higher is more common. You need proof of income for the past two years, a debt-to-income ratio below 43 percent (sometimes 50 percent), and stable employment. The property can be a single-family home, condo, or townhouse, and it must be your primary residence.
What lenders actually check before approving a no-down-payment mortgage
Lenders use your credit score, debt-to-income ratio, and employment history to decide whether to approve a no-down-payment mortgage. A credit score of 620 is the legal minimum for most loans, but lenders often require 640 or 680 because no down payment means they are taking more risk. Your score reflects whether you have paid bills on time, how much debt you carry, and how long you have had credit accounts open.
Your debt-to-income ratio is the total of all your monthly debt payments (car loans, credit cards, student loans, child support) divided by your gross monthly income. Most lenders want this below 43 percent; some allow up to 50 percent. On a $5,000 monthly income, a 43 percent ratio means you can carry $2,150 in total debt payments, including the new mortgage. If you already have $1,500 in car and credit card payments, the mortgage payment can only be $650—which limits how much house you can afford.
Lenders also verify employment by contacting your employer directly and reviewing your last two years of tax returns or pay stubs. They want to see that you have been in the same job or field for at least two years. Gaps in employment, frequent job changes, or recent career switches can slow approval or result in denial, even with a good credit score.
Closing costs and other upfront expenses you still owe
No down payment does not mean no upfront money. You will owe closing costs, which typically run 2 to 5 percent of the purchase price. On a $300,000 home, that is $6,000 to $15,000. Closing costs include the lender's origination fee, appraisal, title search, title insurance, homeowners insurance, property taxes, and recording fees. Some lenders allow you to roll closing costs into the mortgage, but that means you pay interest on them for 30 years.
Before closing, you also pay for a home inspection ($300 to $500), which is separate from the appraisal. The inspection tells you whether the house has structural problems, plumbing issues, or electrical hazards. You can negotiate with the seller to cover inspection costs or repair problems, but the inspection itself is your responsibility.
You can ask the seller to cover closing costs as part of the purchase agreement. This is called a seller concession. Sellers often agree to cover 2 to 6 percent of the purchase price, which can offset most or all of your closing costs. However, if you ask for a large concession, the seller may lower their asking price or walk away from the deal. The negotiation depends on the local market and how many other buyers are competing for the home.
How to compare the real cost of a no-down-payment mortgage
A mortgage with no down payment costs more over time because you borrow more money and pay interest on a larger balance. Compare the total interest paid, not just the monthly payment. On a $300,000 mortgage at 7 percent interest over 30 years, the monthly payment is about $1,995 and the total interest is roughly $418,000. If you had put 20 percent down ($60,000), the mortgage would be $240,000, the monthly payment would be about $1,596, and the total interest would be about $334,000—a difference of $84,000 in interest alone.
If you choose a conventional mortgage with PMI, add the PMI cost to the comparison. On a $300,000 mortgage with 1 percent annual PMI, you pay $3,000 per year ($250 per month) until you reach 20 percent equity. Over 10 years, that is $30,000 in PMI that does not build equity. A VA or USDA loan avoids PMI entirely, which is why they are cheaper over time if you may have access to.
Use a mortgage calculator to compare scenarios: no down payment with PMI, 5 percent down, 10 percent down, and 20 percent down. Enter the interest rate your lender quoted, the loan term (usually 30 years), and the PMI cost. The calculator will show you the monthly payment and total interest for each scenario. This helps you decide whether saving for a down payment first makes sense, or whether buying now with no down payment is worth the extra cost.
Frequently Asked Questions
Can I use a no-down-payment mortgage to buy an investment property or rental?
No. VA loans, USDA loans, and conventional mortgages with PMI all require the property to be your primary residence—the home where you live most of the year. Investment properties and rentals require a down payment, usually 20 to 25 percent, and have higher interest rates because lenders see them as riskier.
What happens if my home's value drops after I buy it with no down payment?
You are underwater on the mortgage, meaning you owe more than the home is worth. This does not force you to sell, but it makes refinancing difficult and limits your options if you need to move. PMI protects the lender, not you, so it does not go away when the value drops. VA and USDA loans have no PMI, so this risk is lower.
Can I remove PMI before reaching 20 percent equity?
Some lenders allow PMI removal at 15 percent equity if you have made on-time payments for at least five years, but this is rare and depends on the lender's rules. Most require you to reach 20 percent equity. You can also refinance into a new mortgage without PMI once you have enough equity, but refinancing costs money and resets your loan term.
Do I need a co-signer for a no-down-payment mortgage?
Not usually. If your credit score or debt-to-income ratio is borderline, a lender may ask for a co-signer, but most no-down-payment mortgages do not require one. A co-signer is responsible for the loan if you do not pay, so they take on real risk. Ask your lender whether a co-signer would improve your chances before offering one.
How long does it take to close on a no-down-payment mortgage?
Conventional mortgages typically close in 30 to 45 days. VA loans close in 30 to 45 days. USDA loans are slower—45 to 60 days—because the USDA reviews the application after the lender approves it. The timeline depends on how quickly you provide documents, how fast the appraisal is completed, and whether the title search uncovers any issues.