How to Buy a Home Without Saving a Down Payment
What "no down payment" actually means
A no down payment mortgage means you borrow 100% of the home's purchase price instead of putting money down upfront. The lender covers the full cost, and you begin repaying immediately through monthly mortgage payments. This is different from a low down payment loan (3% to 5% down) — with no down payment, you owe nothing at closing except closing costs, which typically run 2% to 5% of the purchase price and can sometimes be rolled into the loan.
No down payment loans exist, but they are uncommon and come with real trade-offs. Most lenders require at least some down payment because it reduces their risk. When you put nothing down, the lender is betting entirely on your income and credit history. That bet costs you: higher interest rates, mandatory mortgage insurance, and stricter income requirements than conventional loans.
Key Takeaways
- VA loans and USDA loans offer true no down payment mortgages, but VA loans are only for military members and USDA loans require the home to be in a rural area and your income to be below a set limit.
- Conventional lenders rarely offer 100% financing; most require at least 3% down, and loans with less than 20% down require mortgage insurance that adds $100 to $300+ per month to your payment.
- Closing costs (2% to 5% of the purchase price) still come due at closing even with no down payment, unless you negotiate the seller to cover them or roll them into the loan.
- Your credit score, debt-to-income ratio, and employment history matter more with no down payment loans because the lender has no equity cushion if you stop paying.
- Down payment assistance programs in your state or city may cover part or all of a down payment, which can be faster and cheaper than a no down payment loan.
VA loans: no down payment for military members and veterans
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs and requires zero down payment. You must be an active-duty service member, veteran, or surviving spouse of a veteran who died in service or from a service-related injury. The VA does not lend the money directly — a bank or mortgage company does — but the VA guarantees a portion of the loan, which means the lender takes less risk and can offer better terms.
VA loans have no mortgage insurance requirement, which saves you hundreds of dollars per month compared to conventional loans with less than 20% down. The interest rate is typically lower than conventional mortgages. You still pay closing costs, though the VA limits what lenders can charge you, and sellers often cover some or all of them in a VA sale.
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 process takes a few days to a few weeks. Your lender will verify your military service and run a standard mortgage approval process based on income, credit, and debt.
USDA loans: no down payment for rural homebuyers
A USDA loan is a mortgage backed by the U.S. Department of Agriculture and requires zero down payment. You must buy a home in a USDA-designated rural area (not a city or suburb, though some towns may have access to) and your household income must be at or below 115% of the median income for your county. The income limit varies by location — a rural area in a high-cost state may have a higher limit than one in a lower-cost state.
Like VA loans, USDA loans do not require a down payment and have no mortgage insurance. Instead, you pay a one-time may provide fee (about 1% of the loan amount) and an annual fee (about 0.35% of the loan balance per year). These fees are typically rolled into the loan, so you do not pay them upfront.
To learn about your home is in a USDA-may be able to access area, use the USDA's property may be able to access map on rd.usda.gov. Your lender can also check for you. The approval process is the same as a conventional mortgage: you provide income verification, tax returns, and employment history, and the lender reviews your credit and debt-to-income ratio.
Conventional loans with 3% down as a practical alternative
Most conventional lenders will not offer 100% financing to non-military, non-rural buyers. Instead, they offer loans with 3% down, which is the lowest down payment on a conventional mortgage. If you can save even a small amount, this route is often simpler and cheaper than waiting for a no down payment program.
With 3% down, you pay mortgage insurance (called PMI, or private mortgage insurance), which typically costs 0.5% to 1% of the loan amount per year. On a $300,000 loan, that is $1,500 to $3,000 per year, or $125 to $250 per month. You can remove PMI once you reach 20% equity in the home, either by making extra payments or waiting for the home to appreciate. Conventional loans also have lower interest rates than loans with no down payment, which can offset the insurance cost.
Some first-time homebuyer programs offer down payment assistance that covers part or all of a 3% down payment, which means you could end up with zero out-of-pocket down payment and a conventional loan. This is often cheaper than a true no down payment loan because conventional rates and terms are better.
Down payment assistance programs in your state or city
Many states and cities run down payment assistance programs that give money or low-interest loans to homebuyers who meet income and credit requirements. These programs typically cover 3% to 10% of the purchase price, which can be enough to eliminate your down payment entirely. Some programs are limited to first-time homebuyers; others are open to anyone buying in a specific neighborhood or income range.
Assistance comes in three forms: a grant (money you do not repay), a forgivable loan (you repay it only if you sell the home within a set number of years), or a low-interest loan (you repay it like a second mortgage). The terms vary widely by program and location.
To find programs in your area, start with your state housing finance agency (search "[your state] housing finance agency") or your city or county housing department. You can also call 211 (a free referral line) and ask for down payment assistance programs near you. Many programs have income limits and require you to take a homebuyer education course, which usually costs $50 to $200 and can be taken online.
Why closing costs matter even with no down payment
Closing costs are fees paid at the time you close on the home. They include the lender's origination fee, appraisal, title search, title insurance, property survey, homeowners insurance, property taxes, and attorney fees. Closing costs typically run 2% to 5% of the purchase price — on a $300,000 home, that is $6,000 to $15,000.
With a no down payment loan, you still owe closing costs unless you negotiate the seller to pay them or roll them into the loan. Many sellers will cover closing costs in a no down payment sale because they know the buyer has limited cash. If the seller will not cover them, ask your lender whether you can roll them into the loan amount. Some lenders allow this; others do not. Rolling closing costs into the loan means you pay interest on them over 30 years, which increases the total cost, but it means you do not need cash at closing.
Credit score and debt requirements for no down payment loans
With no down payment, lenders scrutinize your credit and income more closely because they have no equity cushion. Most lenders require a credit score of at least 620 for a conventional no down payment loan, though 640 to 660 is more common. VA loans typically require a score of 580 or higher, and USDA loans usually require 580 to 640, depending on the lender.
Your debt-to-income ratio (the percentage of your monthly income that goes to debt payments) also matters more. Most lenders want your ratio to be 43% or lower, meaning if you earn $5,000 per month, your total debt payments (car loans, credit cards, student loans, and the new mortgage) should not exceed $2,150. With no down payment, some lenders will go up to 50%, but your interest rate may be higher.
Lenders also verify your employment and may require a letter from your employer confirming your job is stable. If you recently changed jobs, some lenders will not approve you; others require a two-year history in the same field. Self-employed borrowers face stricter requirements and must provide two years of tax returns and profit-and-loss statements.
Comparing no down payment to saving for a small down payment
Saving even 5% to 10% for a down payment often results in a better loan than a true no down payment mortgage. Here is why: conventional loans with 5% to 10% down have lower interest rates than no down payment loans, and the mortgage insurance is lower. Over 30 years, the difference in interest rate can save you tens of thousands of dollars.
If you can save $15,000 to $20,000 in six months to a year, that may be a better path than taking a no down payment loan today. Use a mortgage calculator to compare: a no down payment loan at a higher rate versus a 5% down payment loan at a lower rate. The math often favors waiting and saving, especially if you are not may be able to access for a VA or USDA loan.
However, if home prices are rising in your area faster than you can save, or if you are paying high rent and could build equity instead, a no down payment loan may make sense despite the higher cost. The decision depends on your local market, your savings rate, and your timeline.
Frequently Asked Questions
Can I get a no down payment loan if my credit score is below 620?
Most conventional lenders will not approve you. VA loans may work with scores as low as 580, and USDA loans have similar minimums. If your score is lower, focus on raising it before applying — paying down credit card balances and correcting errors on your credit report can raise your score 20 to 50 points in a few months.
What happens if I cannot afford closing costs even with a no down payment loan?
Ask the seller to cover them as part of the sale negotiation. In a buyer's market, sellers often agree. If the seller will not pay, ask your lender whether closing costs can be rolled into the loan. Not all lenders allow this, so confirm before you make an offer.
Is a no down payment loan a good idea if I have student loans?
It depends on your debt-to-income ratio. Student loans count toward your total debt, so if you already have high monthly payments, a no down payment loan may push you over the lender's debt limit. Calculate your ratio before applying: add up all monthly debt payments and divide by your gross monthly income. If it is above 43%, focus on paying down debt or increasing income before applying.
Can I use a down payment assistance program and a VA or USDA loan together?
Yes. Some down payment assistance programs are designed to work with VA and USDA loans. Since these loans already require no down payment, the assistance can cover closing costs instead. Ask your lender and your local housing agency whether combined programs are available in your area.
How long does approval take for a no down payment loan?
Typically 30 to 45 days from application to closing. VA loans sometimes take longer because the VA must issue a Certificate of may be able to access. USDA loans can take 45 to 60 days because the USDA reviews the property and the borrower. Conventional no down payment loans usually move at standard speed, though some lenders prioritize them lower because they are riskier.