The main routes to zero-down mortgages

You can buy a home without a down payment through four real programs: VA loans (for military members and veterans), USDA loans (for rural properties), FHA loans with a 3.5% down payment funded by a gift, and conventional loans with lender credits that cover your down payment in exchange for a higher interest rate. Each has different income limits, property requirements, and credit score thresholds. The path you can actually use depends on your military status, where the home is located, how much you earn, and what your credit report shows.

No program gives you a home for nothing. Every zero-down option costs you somewhere else—through a higher monthly payment, a higher interest rate, mortgage insurance you pay for years, or stricter rules about the property itself. Understanding what you trade away helps you decide whether zero-down makes sense for your situation or whether saving for a down payment first would cost you less over time.

Key Takeaways

  • VA loans require no down payment and no mortgage insurance, but only military members, veterans, and some surviving spouses can use them.
  • USDA loans cover rural properties with no down payment, but your income cannot exceed 115% of the area median, and the property must meet USDA standards.
  • FHA loans require 3.5% down but that money can come from a gift, a grant, or an employer program—not your own savings.
  • Conventional loans can reach 100% financing through lender credits, but you pay a higher interest rate for the life of the loan to offset the lender's risk.
  • Every zero-down option includes costs that a down payment would avoid: mortgage insurance, higher rates, or both.

VA loans: no down payment, no mortgage insurance

A VA loan is a mortgage backed by the Department of Veterans Affairs. It requires zero down payment and zero mortgage insurance, which makes it the cheapest zero-down option if you are may be able to access. You do not need to have served in combat or for any minimum length of time—the VA sets the may be able to access rules, and they include active-duty service members, most veterans, National Guard members with federal active-duty time, and some surviving spouses of service members who died in service or from a service-connected disability.

To use a VA loan, you need a Certificate of may be able to access, which you request from the VA through eBenefits, the VA website, or by mail. The lender will verify your may be able to access directly with the VA, so you do not have to wait for the certificate to arrive before you start shopping. You pay a one-time VA funding fee (usually 2.3% of the loan amount for first-time users, lower for subsequent uses, and zero if you receive VA disability compensation). That fee rolls into your loan, so you do not pay it upfront, but you do pay interest on it for 30 years.

VA loans have no income cap and no property type restrictions beyond the property meeting VA standards. Your credit score matters, but the VA does not set a minimum—individual lenders do, and most accept scores in the 580 to 620 range. The main catch: you can only use a VA loan once at a time. If you buy a home with a VA loan and keep that loan active, you cannot use your VA benefit on a second property until you pay off the first loan or sell the home.

USDA loans for rural properties

A USDA loan is a mortgage for homes in rural areas, backed by the U.S. Department of Agriculture. It requires zero down payment and no mortgage insurance. To use one, the property must be in a USDA-may be able to access area (you can check the USDA website with the address), and your household income cannot exceed 115% of the area median income. For a family of four in a rural county, that might be $80,000 to $120,000 depending on the county—the limit varies by location.

USDA loans have no minimum credit score set by the USDA itself, but lenders typically require 580 to 640. You pay a one-time may provide fee (usually 2% of the loan amount) rolled into the loan, plus an annual annual fee (0.55% of the loan balance per year) that you pay as part of your monthly mortgage payment. Over 30 years, these fees add up to more than the cost of a down payment on a conventional loan, but you pay them gradually rather than upfront.

The property must meet USDA standards: it cannot be in a city or suburb, and it cannot be a second home or investment property. You must occupy it as your primary residence. The USDA also limits the size and value of the home, though the limits are high enough that most rural homes may have access to. If the property fails inspection, you cannot use a USDA loan on it, and you will need to find a different property or use a different loan type.

FHA loans with a gift or grant for the down payment

An FHA loan requires 3.5% down, but that money does not have to come from your savings. It can come from a gift (from a family member, employer, nonprofit, or government program), a grant (money you do not repay), or an employer down-payment assistance program. If you have no savings but can find a source for 3.5%, an FHA loan becomes a zero-down option.

FHA loans have lower credit score requirements than conventional loans—most lenders accept 580 to 620—and they allow higher debt-to-income ratios, meaning you can borrow more relative to your income. You do pay mortgage insurance: an upfront premium (1.75% of the loan amount, rolled into the loan) plus an annual premium (0.55% to 0.80% of the loan balance per year, depending on your loan size and down payment). That insurance stays on your loan for the life of the loan if you put down less than 10%, which means you pay it for 30 years.

To use a gift, the lender requires a signed letter from the gift-giver stating the money is a gift, not a loan, and that they expect no repayment. Some lenders require the gift-giver to be a family member; others accept gifts from employers or nonprofits. Ask your lender what they accept before you ask someone for money. Grants come from nonprofits, government programs, or employers—search your state housing finance agency website or 211.org to find programs in your area.

Conventional loans with lender credits

A conventional loan with a lender credit is a mortgage where the lender covers your down payment in exchange for you paying a higher interest rate. The lender does not give you cash—instead, they reduce the amount you owe at closing by crediting your account, and you pay back that credit through a higher rate over 30 years.

For example, a lender might offer you a 7.2% rate with a credit that covers your 3% down payment, instead of a 6.8% rate with no credit. Over 30 years, the higher rate costs you tens of thousands of dollars more than the lower rate would have. Whether that trade makes sense depends on how long you plan to stay in the home. If you sell or refinance in five years, you may come out ahead. If you stay 30 years, you almost certainly lose money.

Conventional loans with lender credits typically require a credit score of 620 or higher and a debt-to-income ratio under 43%. They do not include mortgage insurance if you reach 20% equity (either through down payment or home appreciation), but you still pay for the higher rate. The main advantage over FHA is that you can eventually stop paying insurance; the main disadvantage is that the rate stays high for as long as you keep the loan.

What zero-down actually costs you

Every zero-down program shifts the cost somewhere. VA loans avoid mortgage insurance but charge a funding fee. USDA loans avoid mortgage insurance but charge a may provide fee plus an annual fee. FHA loans charge mortgage insurance for 30 years. Conventional loans with credits charge a higher interest rate for 30 years. None of these is free.

To compare the real cost, calculate the total amount you will pay over the life of the loan under each option. A mortgage calculator that includes insurance and fees will show you the difference. For example, a $300,000 FHA loan with 3.5% down and mortgage insurance might cost $150,000 more in total interest and insurance than a conventional loan with 20% down, even though you put down $21,000 less upfront. Whether that trade makes sense depends on whether you have the $21,000 available and whether you plan to stay in the home long enough to break even.

If you have any savings at all, even 3% to 5%, putting it down reduces your total cost compared to a zero-down option. The exception is VA loans, which have no mortgage insurance and no rate penalty, making them genuinely cheaper than putting money down if you are may be able to access.

Credit score and debt requirements for zero-down loans

All zero-down programs require a credit check, but the minimum score varies. VA loans have no VA-set minimum, though lenders typically want 580 to 620. USDA loans have no USDA-set minimum, though lenders typically want 580 to 640. FHA loans officially allow scores as low as 500 with 10% down, but for 3.5% down most lenders want 580 to 620. Conventional loans with credits typically require 620 or higher.

Your debt-to-income ratio (your total monthly debt payments divided by your gross monthly income) also matters. VA loans allow up to 60% debt-to-income in some cases. USDA loans typically cap at 41% to 43%. FHA loans allow up to 50% in some cases. Conventional loans typically cap at 43%. If your debt-to-income is high, you may not may have access to for the loan amount you need, or you may need to pay down debt before applying.

Frequently Asked Questions

Can I use a zero-down loan if I have bad credit?

FHA and USDA loans accept credit scores as low as 580, and VA loans have no VA-set minimum. However, individual lenders set their own minimums and may require 620 or higher. If your score is below 580, you may need to wait and build credit before applying, or look for lenders that specialize in lower scores. Check your credit report for errors and dispute any you find.

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

The lender will only lend up to the appraised value, not the purchase price. If you put down zero and the home appraises low, you will need to cover the gap in cash or renegotiate the price with the seller. This is a real risk with zero-down loans—you have no cushion if the home is worth less than you agreed to pay.

Can I use a zero-down loan to buy a second home or investment property?

VA and conventional loans allow second homes and investment properties. USDA loans do not—the property must be your primary residence. FHA loans allow second homes but not investment properties. Check the specific program rules before you commit to a property.

Do I have to pay off the entire down-payment gift before I can refinance?

No. A gift is not a loan, so there is nothing to pay back. Once the mortgage closes, the gift is complete. You can refinance whenever you want without repaying the gift-giver.

What if I cannot find a zero-down program I may have access to for?

Saving even 3% to 5% for a down payment opens up more loan options and lowers your total cost. Many employers, nonprofits, and state housing agencies offer down-payment assistance programs that can help you reach that threshold. Search your state housing finance agency website or contact 211 to find programs in your area.