Yes, but only through specific loan programs and with trade-offs

You can borrow 100 percent of a home's purchase price through VA loans, USDA loans, and some conventional loans with lender-paid mortgage insurance. No down payment means you do not hand over cash at closing, but you will pay more in interest, insurance fees, or both over the life of the loan. The programs that allow this have strict rules about who qualifies, what kind of property you can buy, and where that property can be located.

The most common zero-down options are VA loans for military members and veterans, USDA loans for rural properties, and conventional loans where the lender covers the mortgage insurance cost by charging you a higher interest rate. Each has different income limits, property restrictions, and approval timelines. Knowing which one fits your situation saves you from applying to programs you cannot use.

Key Takeaways

  • VA loans require military service or veteran status and allow 100 percent financing with no down payment, no mortgage insurance premium, and a lower interest rate than conventional loans.
  • USDA loans finance rural properties for borrowers with low to moderate income and require no down payment, but the property must meet USDA location and condition standards.
  • Conventional loans with lender-paid mortgage insurance let you borrow 100 percent of the purchase price, but you pay a higher interest rate for the life of the loan to cover the insurance cost.
  • All zero-down programs require a stable income history, acceptable credit score, and debt-to-income ratio below a set threshold—usually 43 to 50 percent depending on the program.
  • Closing costs are not covered by zero-down programs and typically run 2 to 5 percent of the purchase price, so you will need cash for those even if you put nothing down on the home itself.

VA loans: the most forgiving zero-down option

VA loans are issued by private lenders but may provide by the U.S. Department of Veterans Affairs. They allow 100 percent financing with no down payment, no mortgage insurance, and no prepayment penalty. The interest rate is typically lower than conventional loans because the VA may provide protects the lender if you default.

To use a VA loan, you must have served on active duty, be a current member of the National Guard or Reserves, or be a surviving spouse of a service member who died in service or from a service-connected disability. You obtain a Certificate of may be able to access from the VA before you apply to a lender. The lender will verify your military status and run a standard credit and income check.

VA loans do charge a funding fee at closing—typically 2.3 percent of the loan amount for first-time users, lower for subsequent loans, and waived if you receive VA disability compensation. This fee is usually rolled into the loan, so you do not pay it upfront, but it increases the total amount you borrow. You still need cash for closing costs, which the seller can be asked to cover in part or in full through negotiation.

USDA loans for rural and suburban properties

USDA loans are backed by the U.S. Department of Agriculture and allow 100 percent financing for properties in designated rural and suburban areas. The USDA publishes an online map showing which ZIP codes and counties may have access to. Most suburban areas within 30 miles of a city do not may have access to, but many towns and rural counties do.

Income limits vary by county and family size but generally cap out at 115 percent of the area median income. A family of four in a rural county might have a limit of $90,000 to $120,000 depending on location. You must have a credit score of at least 580, though most lenders prefer 620 or higher. Debt-to-income ratio cannot exceed 43 percent, and the lender will count the new mortgage payment against your existing debts.

USDA loans charge a may provide fee—typically 2 percent of the loan amount—rolled into the loan at closing. The property must meet USDA standards for safety and livability, which means the lender will order an appraisal that checks for things like working plumbing, electrical systems, and a safe roof. A home that fails inspection cannot be financed through USDA until repairs are made. Like VA loans, you need cash for closing costs, though the seller can negotiate to cover some or all of them.

Conventional loans with lender-paid mortgage insurance

Conventional loans are not government-backed, but some lenders offer 100 percent financing by charging you a higher interest rate to cover the cost of mortgage insurance. This is called lender-paid mortgage insurance (LPMI). You do not see a separate insurance bill each month; instead, the interest rate is roughly 0.5 to 1 percent higher than it would be for a 20 percent down payment loan.

The trade-off is permanent: you pay the higher rate for the entire 30-year loan, even after you have built equity. If you refinance later, you can potentially move to a lower rate, but you start over with a new loan term. Credit score requirements are stricter than government loans—most lenders want 680 or higher, and some require 700. Debt-to-income ratio is typically capped at 43 percent.

Conventional loans have no funding fee or may provide fee, so the only upfront cost is closing costs. However, the property must appraise at or above the purchase price, and the lender will require a full inspection and title search. If the appraisal comes in low, you either renegotiate the price, cover the difference in cash, or walk away.

What you still have to pay at closing

Zero-down programs cover the down payment itself, but closing costs are separate and required. Closing costs typically include loan origination fees, appraisal, title search, title insurance, homeowners insurance, property taxes, and recording fees. These run 2 to 5 percent of the purchase price—on a $300,000 home, that is $6,000 to $15,000.

Some of these costs can be negotiated. The seller can agree to pay part or all of your closing costs as a condition of the sale, though this is more common in a buyer's market. The lender may offer to waive or reduce the origination fee to compete for your business. Homeowners insurance is required by all lenders and cannot be waived, but you can shop rates among insurers.

If you do not have cash for closing costs, some programs allow you to roll them into the loan, which increases your total debt and monthly payment. Others require you to bring the cash to closing. Ask the lender upfront what costs can be rolled in and what must be paid in cash.

Credit score and debt-to-income requirements

All zero-down programs require a credit check and debt-to-income calculation. Credit score minimums vary: VA loans have no official minimum but most lenders want 620 or higher, USDA loans require 580 minimum with most lenders preferring 620, and conventional LPMI loans typically require 680 to 700. A lower score does not disqualify you, but it may limit which lenders will work with you and may raise your interest rate.

Debt-to-income ratio is the percentage of your gross monthly income that goes to debt payments. Most programs cap this at 43 to 50 percent. If you earn $5,000 per month and have $1,500 in existing debt payments (car loan, credit cards, student loans), your ratio is 30 percent. The new mortgage payment is added to that calculation. A lender will estimate your mortgage payment and add it to your existing debts to see if you stay under the limit.

If your ratio is too high, you can lower it by paying down existing debt, increasing your income, or looking for a less expensive home. Some lenders will stretch the ratio to 50 percent if you have strong compensating factors—a large savings account, a long employment history, or a significant increase in income coming soon.

The approval timeline and what to expect

Zero-down loans typically take 30 to 45 days from application to closing, though this varies by lender and program. VA loans often move faster because the VA may provide reduces lender risk. USDA loans can take longer if the property fails the initial inspection and needs repairs. Conventional LPMI loans move at the speed of the lender's underwriting team.

The process starts with a pre-qualification call where the lender asks about income, debts, and credit. This is not a commitment and does not appear on your credit report. If you pass pre-qualification, you move to a formal application, which triggers a hard credit pull and verification of employment and assets. The lender orders an appraisal and title search. An underwriter reviews everything and either approves you, asks for more documents, or denies you.

Common reasons for delays or denial: income cannot be verified, debts are higher than stated, the appraisal comes in low, the title has a lien or claim, or the property fails inspection. You can speed things up by gathering documents early—recent pay stubs, tax returns, bank statements, and a list of all debts with account numbers and balances.

When zero-down does not work for you

If you do not may have access to for VA or USDA loans and your credit score is below 680, conventional LPMI may not be available. Some lenders specialize in lower credit scores but charge higher interest rates. If your debt-to-income ratio is above 50 percent, you may need to pay down debt or increase income before any lender will approve you.

If the property you want to buy is in an urban area, USDA loans are off the table. If you do not have military service, VA loans are not an option. If you cannot afford closing costs and the seller will not cover them, you will need to save or find a co-signer who can gift you the money (most lenders allow gift funds for closing costs but not for down payments).

In these cases, saving for a down payment—even 3 to 5 percent—may be faster than waiting to improve your credit or income. A smaller down payment means you pay mortgage insurance, but the insurance can be removed once you reach 20 percent equity, whereas a higher interest rate on an LPMI loan is permanent.

Frequently Asked Questions

Do I have to use the zero-down option if I have cash for a down payment?

No. If you have savings, putting down 10 to 20 percent can lower your interest rate and eliminate mortgage insurance, which saves money over time. Zero-down programs are useful when you do not have cash available or want to preserve savings for emergencies. Run the numbers with a lender to compare the total cost of zero-down versus a small down payment.

Can I use a gift from family for closing costs?

Yes. Most lenders allow gift funds for closing costs and require a signed letter from the gift-giver stating the money is a gift, not a loan. The gift-giver does not need to be a co-signer or have any financial stake in the home. Gift funds cannot be used for the down payment in most programs, only for closing costs.

What happens if the appraisal comes in lower than the purchase price?

The lender will not approve a loan for more than the appraised value. You can renegotiate the purchase price with the seller, pay the difference in cash, or walk away. On a zero-down loan, paying the difference means bringing cash to closing, which defeats the purpose. Renegotiating is usually your best option.

Can I refinance out of a higher interest rate LPMI loan later?

Yes, but you start a new loan with a new term. If you refinance a 30-year loan after five years, the new loan is another 30 years, extending your payoff date. You can refinance into a shorter term (15 years) if your income has increased, but your monthly payment will be higher. Refinancing makes sense if rates have dropped significantly or if you want to remove mortgage insurance by building equity.

Do zero-down loans have prepayment penalties?

VA loans have no prepayment penalty. USDA and conventional loans typically do not either, but always ask the lender before signing. Prepayment penalties are rare but can exist on some loans. If you think you might pay off the loan early or refinance, confirm there is no penalty in writing.