You can buy a house with no down payment, but only through specific loan programs—and they come with real tradeoffs in cost and may be able to access.

A zero down payment mortgage exists. It is not common, it is not the cheapest option, and it requires you to meet stricter income and credit standards than a conventional loan with 3 or 5 percent down. The programs that offer it are VA loans (for military veterans and active-duty service members), USDA loans (for rural properties and moderate-income borrowers), and some FHA loans (Federal Housing Administration, for first-time and repeat buyers). Each has different rules about what property you can buy, who qualifies, and what you pay in fees and insurance.

The reason zero down is rare is straightforward: a lender has more risk when you have no equity in the house. If you stop paying, they foreclose and sell the property. If the market drops, they lose money. To offset that risk, lenders charge higher interest rates, require mortgage insurance, or both. You end up paying more per month than someone who put 10 or 20 percent down, even if the base loan amount is the same.

Key Takeaways

  • VA loans and USDA loans are the most common zero down programs; FHA loans can go to zero down but usually require at least 3.5 percent.
  • You will pay mortgage insurance (PMI, VA funding fee, or USDA may provide fee) on a zero down loan, which raises your monthly payment.
  • VA loans have no income limit and no mortgage insurance; USDA loans require moderate income and a rural property; FHA loans are available to most borrowers but charge the highest insurance costs.
  • Your credit score, debt-to-income ratio, and employment history matter more on zero down loans because the lender has no down payment cushion.
  • The interest rate on a zero down loan is typically 0.25 to 0.5 percent higher than on a loan with 10 percent down, which compounds over 30 years.

VA Loans: Zero Down for Military Service Members and Veterans

A VA loan is backed by the Department of Veterans Affairs and requires no down payment, no monthly mortgage insurance, and no maximum loan amount (though lenders set their own limits). You must be on active duty, a veteran, or a surviving spouse of a service member who died in service or from a service-connected disability. The VA does not lend the money—a bank or mortgage company does—but the VA guarantees a portion of the loan, which means the lender takes less risk.

Instead of mortgage insurance, you pay a VA funding fee at closing, usually 2.3 percent of the loan amount for a first-time user with no down payment. That fee can be rolled into the loan, so you do not pay it upfront in cash, but you pay interest on it for 30 years. If you are a veteran with a service-connected disability rated at 0 percent or higher by the VA, or a surviving spouse, you are exempt from the funding fee entirely.

The main advantage is cost: no monthly mortgage insurance, no income ceiling, and a competitive interest rate. The main constraint is that you must have a valid Certificate of may be able to access from the VA, which you request through the VA website or your lender can request on your behalf. Processing takes a few days to a few weeks.

USDA Loans: Zero Down for Rural and Moderate-Income Buyers

A USDA loan is issued through the U.S. Department of Agriculture and covers properties in rural areas and some suburbs, defined by USDA maps (not by your sense of what is rural). There is no down payment required. You must have a household income at or below 115 percent of the area median income, though some lenders offer loans up to 150 percent in high-cost areas. Credit score requirements are typically 580 or higher, though some lenders go lower.

You pay a USDA may provide fee at closing, usually 1 percent of the loan amount, plus an annual mortgage insurance premium of 0.35 percent of the loan balance each year. Both can be rolled into the loan. Over a 30-year mortgage, the annual insurance adds up significantly—on a $250,000 loan, that is roughly $875 per year in insurance alone.

The property must be a single-family home and meet USDA standards for safety and condition. You cannot use a USDA loan to buy a condo, a multi-unit property, or a house in an area the USDA classifies as urban. Check the USDA property may be able to access map before you fall in love with a house; if it is outside the may be able to access area, the loan will not work.

FHA Loans: Minimum 3.5 Percent Down, Not Zero

An FHA loan (Federal Housing Administration) is often mentioned alongside zero down programs, but it actually requires a minimum 3.5 percent down payment. You can borrow that 3.5 percent from a family member or a grant program, but you cannot avoid putting something down with an FHA loan.

FHA loans are available to most borrowers with a credit score of 580 or higher (some lenders go to 500 with a larger down payment). There is no income limit and no property type restriction—you can buy a condo, a house, or a multi-unit property. You pay mortgage insurance upfront (1.75 percent of the loan amount at closing) and annually (0.55 to 0.85 percent of the loan balance per year, depending on your down payment and loan term). The annual insurance stays on your loan for the full 30 years if you put down less than 10 percent.

Because FHA insurance is mandatory and long-lasting, the total cost of an FHA loan is usually higher than a VA or USDA loan. It is a reasonable option if you do not may have access to for VA or USDA programs and have saved at least 3.5 percent, but it is not a true zero down path.

What Lenders Actually Check on a Zero Down Loan

With no down payment, a lender has no equity cushion. They scrutinize your credit score, your debt-to-income ratio, your employment history, and your savings more carefully than they would on a conventional loan with 10 percent down. A credit score of 620 might get you approved for a conventional loan; on a zero down loan, many lenders want 640 or higher. A debt-to-income ratio of 50 percent might be acceptable on a conventional loan; on zero down, lenders often cap it at 43 percent.

You will also need to show cash reserves—usually two to three months of mortgage payments in a bank account after closing. This is not a down payment; it is proof that you can cover the mortgage if you have a temporary income disruption. Some lenders require more for zero down loans than for loans with a down payment.

Employment history matters too. A lender wants to see at least two years of stable income in the same field. If you changed jobs in the last 90 days, some lenders will not approve you, even if the new job is similar and pays more. Self-employed borrowers face extra scrutiny and usually need two years of tax returns.

The Real Cost: Interest Rate and Insurance Over 30 Years

A zero down loan costs more per month than a loan with a down payment, and that difference compounds. Assume a $300,000 home and a 7 percent interest rate. A borrower with 20 percent down ($60,000) borrows $240,000 and pays roughly $1,596 per month in principal and interest, with no mortgage insurance. A borrower with zero down borrows $300,000 and pays roughly $1,995 per month in principal and interest, plus mortgage insurance of $200 to $300 per month (depending on the program). That is $400 to $500 more per month, or $4,800 to $6,000 per year.

Over 30 years, that difference is substantial. The zero down borrower pays roughly $144,000 to $216,000 more in insurance alone, plus a higher interest rate on a larger loan balance. The trade-off is that you do not need to save $60,000 upfront; you can buy sooner. Whether that trade-off makes sense depends on your timeline, your income, and whether you expect your income to rise.

When Zero Down Makes Sense and When It Does Not

Zero down is most useful if you are a veteran with a VA loan (no mortgage insurance, competitive rates) or if you are in a rural area with moderate income and a USDA loan (lower insurance than FHA). It is less useful if you are an FHA borrower, because the insurance costs are high and you could save 3.5 percent in a few months and reduce your total cost.

Zero down also makes sense if you expect your income to rise significantly in the next few years, or if you plan to stay in the house for fewer than seven years. If you are staying longer, the cost of mortgage insurance over time usually outweighs the benefit of buying sooner. It also makes sense if you are in a market where prices are rising faster than you can save—buying now with zero down and refinancing later when you have equity might be cheaper than waiting to save a down payment.

Zero down does not make sense if you have unstable income, a credit score below 620, or high existing debt. Lenders will either reject you or charge you a much higher interest rate, which erases the benefit of avoiding a down payment. It also does not make sense if you can save 10 percent in a year or two; the interest and insurance you avoid by putting down 10 percent instead of zero usually exceeds the cost of waiting.

Frequently Asked Questions

Can I use a down payment gift from a family member to avoid zero down?

Yes. Most lenders allow down payment gifts from family members, and some programs (like USDA) allow gifts to cover the entire down payment. You will need a signed gift letter stating the money is a gift, not a loan, and the gift giver may need to show proof of funds. This is different from a zero down loan—you are still putting money down, just not your own savings.

What happens to my interest rate if I get a zero down loan?

Zero down loans typically carry an interest rate 0.25 to 0.5 percent higher than a loan with 10 percent down, depending on the lender and your credit score. On a $300,000 loan, that 0.5 percent difference adds roughly $125 per month to your payment. VA loans are an exception; they often have competitive rates despite zero down.

Can I refinance out of mortgage insurance later?

Yes, but only if you build equity. Once you have 20 percent equity in the home (through payments or appreciation), you can refinance to remove mortgage insurance. On an FHA loan, if you put down less than 10 percent, the insurance stays for the full 30 years unless you refinance. On a USDA loan, the annual insurance is permanent unless you refinance.

Do I need a co-signer for a zero down loan?

Not usually, but a co-signer can help if your credit score or debt-to-income ratio is borderline. The co-signer's income and credit are added to yours, which strengthens your process. The co-signer is legally responsible for the loan if you do not pay, so lenders take this seriously and require a family relationship or documented reason for the co-sign.

What if I have savings but want to keep them for emergencies instead of using them for a down payment?

That is a reasonable choice, and it is why zero down programs exist. However, lenders will ask why you have savings but no down payment, and some will require you to use a portion of those savings toward the down payment or keep them as reserves. Be prepared to explain your reasoning to your lender.