What zero-down mortgages actually are and who offers them

A zero-down mortgage lets you borrow the full purchase price of a home without saving a down payment first. The lender covers 100% of the home's cost, and you begin making monthly payments immediately. This is not a new invention—these loans have existed for decades—but they are less common now than they were before 2008, and the terms vary widely by lender and your financial situation.

The main sources are the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA). Each program has different rules about who can borrow and what the home must be like. Some conventional lenders also offer zero-down loans, though these typically require a stronger credit score and income history than government-backed programs.

The trade-off for putting no money down is that your monthly payment will be higher, and you will pay mortgage insurance—an extra fee added to your loan to protect the lender if you stop paying. With FHA loans, this insurance is mandatory and stays on your loan for the life of the mortgage if you put down less than 10%. With VA and USDA loans, the insurance structure is different but still present.

Key Takeaways

  • FHA loans allow zero down and accept credit scores as low as 580, but require mortgage insurance that lasts the life of the loan if you put down less than 10%.
  • VA loans are available only to military members, veterans, and some surviving spouses, and require a Certificate of may be able to access from the VA.
  • USDA loans are for rural properties and borrowers with moderate income; they have no down payment and no mortgage insurance requirement, but the home must meet USDA location and property standards.
  • Your debt-to-income ratio—the percentage of your monthly income that goes to debt payments—must usually stay below 43% to 50%, depending on the program.
  • Lenders will verify your income, employment history, and credit report before approving any zero-down loan, and the process typically takes 30 to 45 days.

FHA loans: the most common zero-down path

FHA loans are backed by the Federal Housing Administration and are the most widely available zero-down option. Most lenders offer them, and they accept borrowers with credit scores as low as 580. You do not need to be a first-time buyer—FHA loans are open to anyone who meets the debt and income requirements.

The catch is mortgage insurance premiums (MIP). You pay an upfront MIP of 1.75% of the loan amount at closing (this can be rolled into your loan), and then an annual MIP that gets added to your monthly payment. The annual rate varies based on your loan amount and how much you put down, but typically ranges from 0.55% to 0.80% per year. If you put down less than 10%, this annual insurance stays on your loan forever—you cannot remove it even after you build equity.

FHA loans have a maximum loan amount that varies by county. You can look up your county's limit on the HUD website. The home must be your primary residence, and it must pass an FHA inspection, which is more detailed than a standard home inspection. The property must meet minimum safety and soundness standards.

VA loans: zero down for military and veterans

VA loans are available to active-duty service members, veterans, and some surviving spouses of military members who died in service or from a service-related injury. You do not need to be a first-time buyer. To use a VA loan, you must obtain a Certificate of may be able to access from the VA, which you can request online through VA.gov or by mail.

VA loans have no down payment requirement and no mortgage insurance. Instead, you pay a funding fee at closing, which is typically 2.3% of the loan amount for first-time users and 3.6% for subsequent uses. This fee can be rolled into the loan. Some borrowers—including those receiving VA disability compensation—are exempt from the funding fee entirely.

VA loans have no maximum loan amount, though lenders set their own limits based on your income and credit. The home must be your primary residence. VA loans are assumable, meaning a future buyer can take over your loan under the same terms, which can be a selling point if you ever put the home on the market.

USDA loans: zero down for rural properties

USDA loans are for borrowers buying homes in rural areas designated by the USDA. There is no down payment, and there is no mortgage insurance requirement—a significant advantage over FHA. However, you must meet income limits (usually 115% of the area median income or less) and the property must be in an may be able to access rural location.

You do pay a may provide fee at closing, typically 2% of the loan amount, which can be rolled into the loan. USDA loans are slower to process than FHA or VA loans because the USDA must verify the property location and your income documentation is more detailed.

To find out whether a property is in a USDA-may be able to access area, use the USDA's property may be able to access map on their website. The home must be your primary residence. USDA loans are available through approved lenders, and you will need to work with a lender who has experience with the program, as not all lenders offer them.

What lenders look for when you have no down payment

Without a down payment, lenders focus heavily on your ability to repay. They will examine your debt-to-income ratio (DTI), which is your total monthly debt payments divided by your gross monthly income. Most programs require your DTI to stay at or below 43%, though some lenders will go to 50% if your credit and income are strong. Your mortgage payment, property taxes, insurance, and HOA fees all count toward this number.

Lenders will pull your credit report and typically want a score of 580 or higher for FHA, 620 or higher for conventional zero-down loans, and no minimum for VA (though most VA lenders prefer 620+). They will also verify your employment for the past two years and may ask for a letter from your employer confirming you are still employed.

Savings matter even without a down payment. Lenders want to see that you have cash reserves—typically two to three months of mortgage payments in a savings account after closing. This shows you can handle an emergency without defaulting. If you have no savings, some programs will still work with you, but it weakens your application.

The application and approval timeline

The process begins with a pre-qualification or pre-approval letter from a lender. Pre-qualification is informal and based on what you tell the lender; pre-approval involves a credit check and income verification and carries more weight with sellers. Getting pre-approved typically takes three to five business days.

Once you find a home and make an offer, the lender orders an appraisal to confirm the home is worth at least the purchase price. The appraisal takes one to two weeks. During this time, the lender also orders a title search to make sure the seller actually owns the home and there are no liens against it.

After the appraisal and title search come back clear, the lender prepares your loan documents for closing. This stage, called underwriting, typically takes one to two weeks. You will receive a Closing Disclosure at least three business days before closing, which lists all the final loan terms, interest rate, and costs. The entire process from offer to closing usually takes 30 to 45 days, though it can be faster or slower depending on the lender and any issues that come up.

Costs and fees you will pay upfront

Even with no down payment, you will pay several costs at closing. These include the upfront mortgage insurance or funding fee (1.75% to 3.6% depending on the program), appraisal fees (typically $400 to $600), title search and insurance (typically $800 to $1,200), and lender fees (typically $500 to $2,000). You may also pay for a home inspection, though this is not required by the lender.

Most of these costs can be rolled into your loan, meaning you do not pay them out of pocket at closing—they get added to the amount you borrow. However, rolling costs into the loan means you will pay interest on them over 30 years, so the total cost is higher. Some lenders will negotiate and cover certain fees, especially if you have a strong application.

Ask the lender for a Loan Estimate within three business days of applying. This document shows all the costs and fees and lets you compare offers from different lenders. Shopping around can save you thousands of dollars over the life of the loan.

Frequently Asked Questions

Can I get a zero-down mortgage if I have bad credit?

FHA loans accept credit scores as low as 580, which is lower than most conventional loans. If your score is below 580, you may still find lenders willing to work with you, but you will pay a higher interest rate and may face stricter income requirements. VA and USDA loans have no official minimum credit score, though most lenders prefer 620 or higher.

What happens if the home appraises for less than the purchase price?

If the appraisal comes in low, you have a few options: renegotiate the price with the seller, put down money to make up the difference, or walk away from the deal. With a zero-down loan, you cannot simply accept a lower loan amount because you have no cushion. This is one reason lenders require a strong appraisal before approving zero-down loans.

Can I remove mortgage insurance from an FHA loan later?

If you put down 10% or more, you can remove the annual mortgage insurance after 11 years of payments. If you put down less than 10% (including zero), the insurance stays for the life of the loan. You can refinance into a conventional loan once you have built enough equity, which would remove the FHA insurance, but refinancing has its own costs and fees.

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

Not necessarily. If your income and credit are strong enough, you can may have access to on your own. However, if your DTI is too high or your credit is weak, a co-signer with stronger finances can help you get approved. The co-signer's income and debts count toward the DTI calculation.

What if I am self-employed or have irregular income?

Self-employed borrowers can get zero-down loans, but lenders require more documentation. You will typically need two years of tax returns, profit-and-loss statements, and bank statements. Lenders average your income over two years, so a recent business launch or a year with very low income can hurt your application. Some lenders specialize in self-employed borrowers and may be more flexible.