The real routes to zero-down homeownership

You can buy a house without a down payment through four main paths: VA loans (for military service members and veterans), USDA loans (for rural properties), conventional loans with lender-paid mortgage insurance, and state or local down payment information programs. Each has different requirements, different costs over time, and different properties or borrowers they serve. None of them means "information programs"—you are borrowing the down payment or paying it back through higher monthly costs.

The catch is real: without a down payment, lenders see you as higher risk. They protect themselves by charging higher interest rates, requiring mortgage insurance, or both. A zero-down loan costs more per month than a loan where you put 20 percent down. You need to know the actual monthly difference before you decide whether zero-down makes sense for your situation.

Key Takeaways

  • VA loans and USDA loans are the only zero-down options with no mortgage insurance requirement, but VA loans require military service and USDA loans require a property in a designated rural area.
  • Conventional loans with zero down exist but require mortgage insurance, which adds $100 to $300+ per month depending on your credit score and loan size.
  • Down payment information programs exist in most states and some cities, but they have income limits, property price caps, and often require you to take a homebuyer education course first.
  • Your actual monthly payment on a zero-down loan will be 15 to 25 percent higher than on the same house with 20 percent down, because of interest rate differences and insurance costs.

VA loans: zero down for military service members and veterans

If you served on active duty, in the reserves, or in the National Guard, you may be may be able to access for a VA loan through the Department of Veterans Affairs. VA loans require no down payment and no mortgage insurance. The lender charges a funding fee (typically 2.3 percent of the loan amount for first-time users) instead, which you can roll into the loan itself.

To use a VA loan, you need a Certificate of may be able to access from the VA, which you request through the VA website or through your lender. The process takes a few days to a few weeks. You also need a valid purchase contract on a property and a lender willing to offer VA loans—not all lenders do, so you may need to shop around.

VA loans have no income limits and no property price limits. You can buy a $150,000 house or a $750,000 house. The VA guarantees a portion of the loan to the lender, which is why the lender will lend without a down payment. Your credit score matters—most lenders want 620 or higher—but the VA itself does not set a minimum.

USDA loans: zero down for rural property purchases

The USDA Rural Development program offers zero-down loans for properties in designated rural areas. The property must be in an may be able to access area (you check this on the USDA website by address), and you must meet income limits that vary by county and family size. For a family of four, the limit is often around $90,000 to $110,000 annually, though this changes by location.

USDA loans do require mortgage insurance, but it is split into two parts: an upfront fee (1 percent of the loan) and an annual fee (0.35 percent of the remaining balance). The annual fee is lower than conventional mortgage insurance and does not disappear after you reach 20 percent equity—it stays for the life of the loan.

The process process is longer than conventional loans. You need a USDA-approved lender, a property appraisal, and proof of income. The whole process typically takes 30 to 45 days. If the property is outside the may be able to access rural area by even a few blocks, you cannot use a USDA loan, so verify the address early.

Conventional loans with zero down and mortgage insurance

Most major lenders now offer conventional loans with zero down payment. You do not need military service or a rural property. The tradeoff is that you pay 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, depending on your credit score and how much you are borrowing.

On a $300,000 loan, PMI might cost $150 to $450 per month. It stays on your loan until you reach 20 percent equity (either through payments or home appreciation), which usually takes 8 to 12 years. Some lenders let you remove it sooner if you refinance or if your home value rises enough to justify a new appraisal.

Credit score matters more with conventional zero-down loans than with VA or USDA loans. Most lenders want 640 or higher, and your rate will be better if you have 680 or above. You also need to show stable income and low existing debt—lenders typically want your total monthly debt payments (including the new mortgage) to be no more than 43 to 50 percent of your gross monthly income.

Down payment information programs in your state or city

Most states and many cities run down payment information programs that give or lend money specifically for a down payment. These are separate from the loan itself—you still get a mortgage from a bank, but a government or nonprofit program covers part or all of the down payment.

These programs have income limits (usually $50,000 to $120,000 annually, varying by location), property price caps (often $300,000 to $500,000), and first-time homebuyer requirements. Many require you to complete a homebuyer education course, which takes 4 to 8 hours and covers budgeting, credit, and the home-buying process. Some programs offer grants (money you do not repay) and some offer loans (money you do repay, usually with no interest or at a very low rate).

The process process varies widely. Some programs work through lenders (you explore when you get your mortgage), and some work through housing nonprofits or your local housing authority. Start by contacting your city or county housing department or searching your state's housing finance agency website. Response times range from a few weeks to several months, so start early if you are in contract on a property.

What zero-down actually costs you each month

The monthly payment difference between zero-down and 20-percent-down is substantial. On a $300,000 house, putting 20 percent down ($60,000) versus zero down typically means a difference of $200 to $400 per month in mortgage payment and insurance combined.

Here is why: a lender charges a higher interest rate on a zero-down loan because the risk is higher. You also pay mortgage insurance (unless you use VA or USDA). A conventional zero-down loan at 7.0 percent with PMI might cost $2,100 per month on a $300,000 loan. The same house with 20 percent down at 6.5 percent might cost $1,700 per month. That $400 difference compounds over 30 years.

Before you commit to zero-down, calculate the actual monthly payment with your lender. Ask them to show you the payment with and without a down payment, so you can see the real cost. If you have savings but are choosing zero-down to keep cash on hand, make sure the monthly difference does not stretch your budget too thin.

When zero-down makes sense and when it does not

Zero-down makes sense if you are a veteran with a VA loan (no mortgage insurance, no down payment required), if you own rural property and may have access to for USDA (lower insurance costs than conventional), or if you have no savings and no way to save a down payment in the near future. It also makes sense if you expect your income to rise significantly in the next few years and you want to buy now rather than wait.

Zero-down does not make sense if you have savings available and your interest rate would be significantly lower with a down payment. It also does not make sense if your monthly budget is already tight—the extra $200 to $400 per month can make the difference between a comfortable mortgage and one that leaves you vulnerable to job loss or unexpected expenses.

Run the numbers with a lender before you decide. Ask for a Loan Estimate that shows the monthly payment, the total interest you will pay over 30 years, and all insurance costs. Compare that to what the same house would cost with a 10 or 20 percent down payment. The difference in total cost over the life of the loan is often $50,000 to $100,000 or more.

Frequently Asked Questions

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

Some programs allow it, but many do not. VA loans already require no down payment, so information programs often exclude them. USDA loans vary by program. Check with your state or local program before you assume you can combine them.

What credit score do I need for a zero-down loan?

VA loans typically require 620 or higher, though some lenders go lower. USDA loans usually want 640 or higher. Conventional zero-down loans typically want 640 to 660 or higher. The higher your score, the lower your interest rate will be.

If I use zero-down, can I remove the mortgage insurance later?

With conventional loans, yes—once you reach 20 percent equity, you can request PMI removal. With USDA loans, the annual insurance fee stays for the life of the loan. VA loans have no mortgage insurance to remove.

How long does it take to get approved for a zero-down loan?

Conventional and VA loans typically take 30 to 45 days from process to closing. USDA loans often take 45 to 60 days because the appraisal and income verification take longer. Down payment information programs can add 2 to 8 weeks on top of the mortgage process.

What happens if I cannot afford the monthly payment on a zero-down loan?

You should not take the loan. A lender will approve you based on debt-to-income ratio, but that does not mean the payment is comfortable for your actual life. If the zero-down payment stretches your budget, save for a down payment instead or wait until your income rises.