No down payment mortgages exist, but they come with real trade-offs

You can buy a house without putting money down upfront, but lenders will charge you more in interest, require mortgage insurance, and limit which properties and loan amounts you can access. The three main routes are VA loans (for military members and veterans), USDA loans (for rural properties), and conventional loans with private mortgage insurance (PMI). Each has different income limits, property requirements, and credit score minimums. The catch: if you put down nothing, the lender takes on all the risk if you stop paying, so they protect themselves by raising your monthly cost.

The trade-off is straightforward: you avoid saving a large sum upfront, but you pay more per month and carry more risk. If the housing market drops, you can end up owing more than the house is worth. If you need to move within a few years, that underwater position can trap you. But if you stay in the home long enough to build equity, and if you may have access to for a VA or USDA loan, zero down can be the only realistic path to homeownership.

Key Takeaways

  • VA loans and USDA loans allow zero down payment for may be able to access borrowers, but VA loans require military service and USDA loans require a property in a designated rural area.
  • Conventional mortgages with no money down exist but require private mortgage insurance (PMI), which adds $100 to $300+ per month to your payment and stays until you build 20% equity.
  • Your credit score, debt-to-income ratio, and income documentation matter more when you have no down payment, because the lender has no cushion if you default.
  • No down payment means you start owing more than the house is worth, so selling quickly or facing a market downturn can leave you underwater.
  • Closing costs (typically 2% to 5% of the purchase price) still come out of your pocket unless the seller agrees to cover them as part of the deal.

VA loans: zero down if you served

A VA loan is backed by the U.S. Department of Veterans Affairs and requires no down payment if you meet service requirements. You must have served on active duty (typically 90 days or more, though this varies by era), be a surviving spouse of a service member, or be in the National Guard or Reserves with sufficient service time. You apply through a VA-approved lender—not the VA itself—and you will need a Certificate of may be able to access, which you can request online through VA.gov or through your lender.

VA loans do not require mortgage insurance, which saves you hundreds per month compared to a conventional no-down loan. The lender charges a one-time funding fee (typically 1.25% to 3.3% of the loan amount, depending on your service branch and whether you have a disability rating) that gets rolled into your mortgage. Your credit score minimum is usually 580 to 620, and your debt-to-income ratio must typically stay below 41%. You can use a VA loan only once at a time, but you can reuse your entitlement after you sell and pay off the previous loan. The VA does not set interest rates—lenders compete for your business, so shop around for the best rate.

USDA loans: zero down for rural and suburban properties

A USDA loan is backed by the U.S. Department of Agriculture and allows zero down payment on properties in designated rural areas. The USDA defines "rural" broadly—it includes many suburbs and small towns, not just farms. You can check whether a specific address qualifies on the USDA Rural Development website by entering the property address. Income limits vary by county and household size, but generally you must earn no more than 115% of the area median income (or up to 150% in some cases if you meet other criteria).

USDA loans require a may provide fee (similar to a funding fee) of about 2% of the loan amount, rolled into your mortgage, plus an annual fee of roughly 0.35% of the remaining balance. Like VA loans, USDA loans do not require mortgage insurance. Your credit score minimum is typically 580 to 640, and your debt-to-income ratio usually cannot exceed 41% to 43%. You must occupy the home as your primary residence—you cannot use a USDA loan for an investment property or vacation home. If you are self-employed or have irregular income, bring two years of tax returns to show consistent earnings.

Conventional mortgages with PMI: the higher-cost path

If you do not may have access to for VA or USDA loans, you can get a conventional mortgage with zero down, but you will pay for it through private mortgage insurance (PMI). PMI protects the lender if you default; it does not protect you. The cost ranges from roughly $100 to $300+ per month depending on your loan amount, credit score, and the lender's risk assessment. PMI stays on your loan until you reach 20% equity (either by paying down the principal or by a significant rise in home value), which typically takes 8 to 15 years.

Your credit score must usually be at least 620, and some lenders require 640 or higher for the best rates. Your debt-to-income ratio typically cannot exceed 43%, though some lenders go up to 50% if you have strong credit and savings. You will also need to document your income through recent tax returns, W-2s, and pay stubs. Lenders are stricter about income verification when you have no down payment, because they want proof you can sustain the payments. The interest rate on a no-down conventional loan is usually 0.25% to 0.5% higher than on a loan with 20% down, so the total cost compounds over time.

What you still have to pay even with zero down

Closing costs—the fees for appraisal, title search, underwriting, and recording—typically run 2% to 5% of the purchase price. On a $300,000 house, that is $6,000 to $15,000. You cannot roll closing costs into the mortgage on most loans, so you need to pay them upfront unless the seller agrees to cover them as a concession. In a competitive market, sellers rarely do; in a buyer's market, you may be able to negotiate.

Property taxes, homeowners insurance, and HOA fees (if applicable) are also your responsibility from day one. Some lenders require you to set aside money in an escrow account to cover these costs, which means you need cash on hand even though you are not putting down a down payment. Ask your lender upfront what closing costs and reserves they require so you know your true out-of-pocket expense. Many borrowers are surprised to learn that "zero down" does not mean "zero cash needed"—you still need several thousand dollars for closing and reserves.

The risk of owing more than the house is worth

When you put down zero, you start with 100% loan-to-value (LTV). If the housing market drops 10% in the next few years, your house is worth less than you owe. This is called being underwater. You cannot sell without taking a loss, and if you need to move for a job or family reasons, you are stuck paying the difference out of pocket or walking away (which destroys your credit).

This risk is real but not inevitable. If you stay in the home for 7 to 10 years and make regular payments, you build equity and the market typically recovers. But if you think you might move within 5 years, or if you live in a volatile market, zero down amplifies your risk. A small down payment—even 3% to 5%—gives you a buffer and lowers your monthly insurance costs. Run the numbers with a lender to see whether saving for even a modest down payment makes sense for your timeline and financial situation.

How to improve your odds of approval

Lenders scrutinize no-down borrowers more carefully because they have no skin in the game. To strengthen your application: keep your credit score as high as possible (aim for 640+), pay down existing debts to lower your debt-to-income ratio, save for closing costs and reserves even if you are not putting down a down payment, and document your income clearly with recent tax returns and pay stubs. If you are self-employed, lenders typically want two years of tax returns and may ask for a CPA letter verifying your income stability.

Shop with multiple lenders. Interest rates and PMI costs vary significantly, and a difference of 0.25% in interest rate saves you thousands over 30 years. Ask each lender for a Loan Estimate, which shows the interest rate, PMI cost, closing costs, and monthly payment side by side. Compare the total cost, not just the rate. Some lenders specialize in no-down loans and may offer better terms than banks that rarely do them.

Frequently Asked Questions

Can I get a no-down mortgage if I have bad credit?

Most lenders require a credit score of at least 620 for conventional no-down loans, and 580 to 620 for VA and USDA loans. If your score is below 620, you may need to wait and build credit, or look for a lender that specializes in lower-score borrowers (though they will charge higher interest rates). Check your credit report for errors and dispute any inaccuracies before applying.

What happens if I cannot afford closing costs?

Ask the seller to cover closing costs as part of the purchase agreement. In a buyer's market, this is negotiable. Some lenders also offer "no-cost" mortgages where they cover closing costs in exchange for a slightly higher interest rate. Compare the long-term cost: paying closing costs upfront is usually cheaper than accepting a higher rate for 30 years.

Can I remove PMI early?

Yes, once you reach 20% equity, you can request PMI removal. Some lenders remove it automatically; others require you to ask. You can build equity faster by making extra principal payments or by a home value increase (though you will need a new appraisal to prove it). Removing PMI can save you $100+ per month.

Is a no-down mortgage a good idea if I have savings?

Not always. If you have $30,000 saved and the house costs $300,000, putting down 10% lowers your monthly payment, eliminates PMI, and gives you a financial cushion for emergencies. Keeping all your savings liquid is safer than stretching yourself thin to afford a no-down purchase. Run the numbers with a lender to compare the total cost of 10% down versus zero down.

Can I use a gift for closing costs if I have no down payment?

Yes. Most lenders allow gift funds for closing costs and reserves, but not for the down payment itself (with some exceptions for family gifts on conventional loans). The gift giver typically must sign a letter stating it is a gift, not a loan. Ask your lender what documentation they need before you accept the gift.