Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure.

Yes, there are mortgage options that let you buy a home with no money down. For many Americans, saving tens of thousands of dollars for a down payment can take years. Fortunately, you don’t need a 20% or even 10% down payment for a mortgage, and you might not need any down payment at all. A zero-down mortgage can help expedite your journey to homeownership, but it is limited to specialty loans like VA and USDA loans.

In this article:

What is a zero-down mortgage?

Types of zero-down mortgage loans

Pros and cons

Alternatives

Are no-down-payment home loans right for you?

FAQs

A zero-down mortgage is exactly what it sounds like: a mortgage loan that requires no down payment. In other words, it allows you to finance 100% of a home’s purchase price. Not everyone qualifies for a zero-down home loan, but for those who do, it’s a great way to become a homeowner without spending years saving just so you can get your foot in the door.

Read more: The best mortgage lenders for low/no down payments

VA loans and USDA loans are two mortgage options that allow you to buy a home without putting any money down.

VA loans are insured by the U.S. Department of Veterans Affairs and are available to eligible active-duty service members, military veterans, past or present members of the National Guard or Reserve, or surviving spouses of deceased veterans. To qualify for a zero-down VA loan, you must have a Certificate of Eligibility from the VA.

While the VA has no minimum credit score requirement, most VA lenders like to see a credit score of at least 620. You’ll also want to keep your debt-to-income ratio (DTI) at or below 41% for the smoothest path to approval, though lenders can make exceptions up to 50% with strong compensating factors.

Learn more: Is now a good time to get a VA loan?

A USDA loan is backed by the United States Department of Agriculture and is specifically designed for borrowers with low-to-moderate incomes who want to buy homes in rural areas. Though these home loans don't require a down payment, they’re pretty strict about your household income. This income limit depends on the location of the property and your household size. Check the income limits for the county where you plan to buy your home to see if you’re eligible.

Besides meeting financial requirements like income limits, your home must be located in a rural or suburban area for you to qualify. Check out the USDA’s map of eligible areas to determine if your home is eligible.

Read more: The best USDA loan lenders

Though zero-down home loans lower the barriers to homeownership, they come with a few downsides that could be deal-breakers. Make sure you’re aware of these pros and cons before making a decision.

Buy a house with $0 down. Since the federal government backs USDA and VA loans, they allow lenders to be more lenient with down payment requirements. This means you get to keep more cash on hand.

No private mortgage insurance. Zero-down mortgages do not come with private mortgage insurance (PMI), which conventional loans require if you put down less than 20%. PMI can be expensive and add to the cost of homeownership.

You can become a homeowner sooner. With the median home price in the U.S. being over $400,000, saving up for a down payment can take years. Zero-down home loans make it possible to buy a home sooner.

Watch out for fees. VA loans include a one-time funding fee (1.25%-3.30%) at closing. USDA loans charge a 1% guarantee fee at closing plus an ongoing annual fee of 0.35% of your remaining balance.

You’ll take on more debt. Financing your home’s entire purchase price means your mortgage balance will be higher. This will lead to higher monthly payments and more interest paid over the life of the loan.

You’ll have little to no equity in the home. Without making a down payment, you’re essentially starting with no equity. This can be risky because if the market plummets shortly after you buy the house, your equity could fall below 0% since you didn't have much in the first place. This puts you in the tricky situation of being underwater on your mortgage.

Zero-down mortgages aren’t your only option when you have little saved for a down payment. Here are some other loan types to consider.

Certain conventional loan programs only require you to come up with a 3% down payment, including the following:

Fannie Mae’s HomeReady program is a great option for lower-income buyers. To qualify for this 3% down conventional loan, your income cannot exceed 80% of the area's median income. There's no set minimum credit score (Fannie Mae evaluates your overall credit profile), though lenders may set their own minimums.

Conventional 97. This 3% down conventional mortgage backed by Fannie Mae has no income limits and requires at least one borrower to be a first-time homebuyer, defined as not having owned a home in the past three years.

Freddie Mac’s Home Possible® program. Freddie Mac’s Home Possible® program is similar to Fannie Mae’s HomeReady program but requires a credit score of at least 660.

FHA loans are insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). Since the FHA backs them, these types of mortgages are less risky for lenders to issue and, as a result, come with more lenient borrower eligibility criteria.

With an FHA loan, you only need to put 3.5% down if your credit score is 580 or higher. And if your score falls between the 500 to 579 range, you’ll need to put 10% down. However, one downside you should be aware of is that FHA loans come with mortgage insurance premiums (MIPs) that last for the life of your loan, unless you put 10% or more down, in which case MIP can be canceled after 11 years.

A few mortgage lenders have started offering mortgage loans that only require 1% down down payments. Remember how many conventional loans only require 3% down payments? Well, in this case, you cover 1% of the down payment, and the lender covers the other 2% by giving you a grant.

Each lender will have its own requirements surrounding income limits and credit scores to qualify for these programs. If you’re interested in a 1% down mortgage, check out Guild Mortgage, Rate (previously Guaranteed Rate), and Rocket Mortgage.

Many states and counties offer homebuyer incentive programs that provide down payment assistance, low-interest-rate home loans, and more. Depending on where you live, you may be able to access grants, forgivable loans, or closing cost assistance — sometimes worth thousands of dollars. Search for programs in your area through the U.S. Department of Housing and Urban Development (HUD) or your state's housing finance agency.

A zero-down loan can be a great way to help you break into the housing market if you are eligible and have little to no money saved for a down payment.

However, you’ll likely face higher monthly payments and pay more interest over the life of the loan since you’re financing the full purchase price. Plus, starting with no equity can be risky if home values fluctuate. Talk to a financial adviser or mortgage broker who can help you weigh your options and find the best fit for your needs.

VA loans and USDA loans typically do not require down payments.

The USDA doesn’t set a minimum credit score requirement, but most lenders require a score of at least 640. VA lenders also have their own minimum requirements for VA loans, and most require a score of at least 620. However, there are lenders out there that will accept lower scores.

Unfortunately, no. Conventional loans require at least 3% down. If you’re looking for a no-down-payment mortgage, consider USDA or VA loans.

USDA and conventional loans differ in many ways, including eligibility requirements, interest rates, and more. Find out which mortgage type is a better fit.

Learn about the differences between USDA and VA loans, including eligibility requirements and fees. Then decide whether a USDA or VA loan is right for you.

You can buy a house with no credit history, but you need to be strategic. Search for the right lender and type of loan. Learn how to buy a house with no credit.

The best mortgage lenders for low and no down payments have programs for low-income borrowers, down payment assistance, and more. Find out which is best for you.

USDA and FHA loans have different income, loan limit, down payment, and credit score requirements. Find out which mortgage is best for you.

Buying a house with a low income can be challenging, but it’s possible with the right mortgage lender and program. Learn how to buy a home with a low income.