Yes, but they come with real tradeoffs and aren't available to everyone
Zero-down mortgages exist, but they are not common and they are not simple. The main programs that allow you to borrow 100 percent of the home price are VA loans (for military members and veterans), USDA loans (for rural properties), and some conventional loans offered by individual lenders. Each has different rules about who qualifies, what property you can buy, and what you pay in return for putting no money down.
The catch is that lenders do not give away down payment money. When you put nothing down, the lender takes on more risk, and you pay for that risk through higher interest rates, mandatory mortgage insurance, or both. You also need stronger credit and income to may have access to. A zero-down mortgage is not cheaper than a mortgage with a down payment—it is a different trade, and whether it makes sense depends on your situation.
Key Takeaways
- VA loans and USDA loans allow zero down payments, but VA loans are only for military members and veterans, and USDA loans only for rural properties that meet specific criteria.
- Conventional zero-down mortgages exist but are rare; most lenders require at least 3 to 5 percent down, and those that do not charge higher interest rates or require mortgage insurance.
- With no down payment, you pay more over the life of the loan through higher interest rates and mortgage insurance premiums, not less.
- Lenders typically require a credit score of 620 or higher for zero-down loans, and some programs require 640 or better; your debt-to-income ratio also matters more when you have no equity cushion.
VA loans: zero down for veterans and active-duty service members
A VA loan is backed by the Department of Veterans Affairs and allows may be able to access borrowers to buy a home with no down payment and no mortgage insurance requirement. This is the most straightforward zero-down option if you may have access to. You do not need to be a first-time buyer, and you can use a VA loan multiple times in your life.
To may have access to, you must have served on active duty for a minimum period (usually 90 days during wartime or 181 days during peacetime), be a current service member, 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, then apply through a lender who offers VA loans. The lender will still check your credit and income, but the VA may provide means they take less risk, so approval is often easier than with conventional loans.
The tradeoff is a funding fee, which is a one-time charge paid at closing (usually 1.4 to 3.6 percent of the loan amount, depending on your military branch and whether you have a disability rating). This fee is often rolled into the loan, so you pay it over time with interest. You also pay a standard mortgage interest rate, which may be lower than conventional rates because of the VA may provide.
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 purchases in rural areas and some suburban areas that meet USDA may be able to access criteria. The property must be in a designated rural area, which includes many small towns and suburbs but excludes most major cities. You can check whether a specific address qualifies on the USDA website.
Income limits apply: your household income must not exceed 115 percent of the area median income for your county (or 150 percent in some cases). You do not need to be a first-time buyer. Like VA loans, USDA loans do not require a down payment, but they do require an upfront may provide fee (about 1 percent of the loan amount) and an annual mortgage insurance premium (about 0.35 to 0.80 percent of the loan balance per year). The insurance premium is built into your monthly payment.
Credit requirements are typically a score of 620 or higher, though some lenders prefer 640. Your debt-to-income ratio (the total of all your monthly debt payments divided by your gross monthly income) usually cannot exceed 41 to 43 percent.
Conventional zero-down mortgages: rare and expensive
Some conventional lenders offer mortgages with no down payment, but these are uncommon and come with significant costs. When you put zero down on a conventional loan, the lender requires private mortgage insurance (PMI), which protects them if you default. PMI typically costs 0.5 to 1.5 percent of the loan amount per year, added to your monthly payment.
You will also pay a higher interest rate than you would with a 10 or 20 percent down payment. The combination of PMI and a higher rate means your monthly payment is substantially higher than it would be if you had saved a down payment. For example, a $300,000 loan with zero down might cost $200 to $400 more per month than the same loan with 10 percent down, depending on your credit score and the lender.
Lenders that offer conventional zero-down mortgages typically require a credit score of 660 or higher (some require 680), a debt-to-income ratio of 43 percent or lower, and proof of stable income. You will also need to show cash reserves—usually two to six months of mortgage payments in savings—to prove you can handle the loan if your income drops.
What lenders look for when you have no down payment
Without a down payment, you have no equity cushion. If the home value drops or you lose your job, you owe more than the house is worth and have no savings to fall back on. Lenders compensate by being stricter about everything else. Your credit score matters more; your income stability matters more; your existing debt matters more.
Most lenders require a minimum credit score of 620 for zero-down loans, but competitive rates usually start at 640 or higher. They will pull your full credit report and look at payment history, the age of your accounts, and how much of your available credit you are using. A recent late payment or high credit card balances can disqualify you or raise your interest rate significantly.
Income verification is thorough. Lenders want to see at least two years of tax returns, recent pay stubs, and a letter from your employer confirming your job. If you are self-employed, the bar is even higher. They also calculate your debt-to-income ratio by adding up all your monthly debt payments—car loans, student loans, credit cards, child support—and dividing by your gross monthly income. Most lenders cap this at 43 to 50 percent for zero-down loans.
The real cost of borrowing 100 percent of the home price
A zero-down mortgage is not cheaper than putting money down. It is a different choice with different costs. When you borrow the full purchase price, you pay interest on a larger loan amount, and you pay mortgage insurance (on conventional and USDA loans). Over 30 years, this adds up.
Consider a $300,000 home. With 20 percent down ($60,000), you borrow $240,000. With zero down, you borrow $300,000. Even if your interest rate were identical, you are paying interest on an extra $60,000 for 30 years. Add in PMI or a USDA insurance premium, and your total cost is thousands of dollars higher. The only scenario where zero down makes sense is if you do not have the down payment saved and cannot wait to buy, or if you expect your income or home value to rise significantly in the near term.
If you do get a zero-down mortgage, you can remove PMI once you have built 20 percent equity through payments or home appreciation. This typically takes 5 to 10 years. USDA insurance cannot be removed, so you pay it for the life of the loan unless you refinance.
Alternatives if zero down is your only option
If you cannot save a down payment and zero-down programs do not fit your situation, consider a down payment assistance program run by your state or local housing authority. These programs provide grants or low-interest loans to help with a down payment, and they often pair with conventional mortgages that have better terms than zero-down loans. You can search for programs through your city or county housing department or through the National Council of State Housing Agencies.
Another option is to delay buying and save aggressively. Even a 3 to 5 percent down payment reduces your interest rate and eliminates or shrinks your mortgage insurance requirement. Six months to a year of saving can save you tens of thousands of dollars over the life of the loan.
Frequently Asked Questions
Can I get a zero-down mortgage if my credit score is below 620?
Most lenders will not offer zero-down mortgages to borrowers with credit scores below 620. If your score is low, focus on paying down existing debt and making all payments on time for six to twelve months before applying. Even a 20 to 40 point increase can open up better loan options.
What happens if my home value drops after I buy with zero down?
You are responsible for the full loan amount regardless of the home's value. If you need to sell and the home is worth less than you owe, you have to pay the difference out of pocket or negotiate a short sale with your lender. This is why zero-down borrowers are at higher risk during market downturns.
Can I use a VA loan or USDA loan to buy a second home or investment property?
VA loans can be used for a primary residence only. USDA loans are also for primary residences, though you can use them multiple times if you move. Neither program covers investment properties or vacation homes.
How long does it take to get approved for a zero-down mortgage?
The timeline is typically 30 to 45 days from application to closing, though it can be faster or slower depending on how quickly you provide documents and how busy the lender is. VA and USDA loans sometimes take longer because the government agency must review the appraisal.
Can I remove PMI from a conventional zero-down mortgage?
Yes, once you have paid down the loan to 80 percent of the original home value (or 20 percent equity), you can request PMI removal. This usually takes 5 to 10 years of payments, though faster if the home appreciates. You must request removal; most lenders do not do it automatically.