Yes, but only through specific loan programs that shift the risk differently
You can buy a house without putting money down, but you cannot do it through a conventional mortgage. Banks that offer zero-down loans use different rules, different insurance, and different loan structures than the standard 20-percent-down mortgage. The most common path is a VA loan (if you served in the military), an USDA loan (if you buy in a rural area), or an FHA loan with a 3.5 percent down payment — which is close enough to zero that many people treat it the same way.
The catch is that lenders protect themselves when you put nothing down. They charge higher interest rates, require mortgage insurance, impose stricter income and credit requirements, or limit which properties you can buy. You are not getting a free house; you are shifting where the cost appears on your monthly payment.
Key Takeaways
- VA loans and USDA loans genuinely require zero down payment, but VA loans are only for military service members and USDA loans only for properties in designated rural areas.
- FHA loans require 3.5 percent down, which is the lowest conventional option and often cheaper overall than a zero-down loan when you factor in insurance costs.
- Zero-down loans come with mortgage insurance, higher interest rates, or both — the lender's cost of taking on more risk gets passed to you as a higher monthly payment.
- Your debt-to-income ratio and credit score matter more on a zero-down loan than on a conventional mortgage, because the lender has no equity cushion if you stop paying.
VA loans: zero down if you have military service
A VA loan is backed by the Department of Veterans Affairs and requires no down payment, no mortgage insurance, and no prepaid interest. If you served on active duty (or are a surviving spouse of someone who did), you can borrow the full purchase price with no money down. The VA guarantees a portion of the loan to the lender, which is why the lender accepts the risk.
The trade-off is that you pay a funding fee — a one-time charge rolled into the loan amount, usually 1.5 to 3.6 percent of the purchase price depending on whether it is your first VA loan and how much you put down. You also cannot use a VA loan to buy an investment property; it must be your primary residence. And the property must meet VA minimum standards, which can disqualify older or heavily damaged homes.
To use a VA loan, you need a Certificate of may be able to access from the VA, which you request through the VA website or through your lender. The process takes a few days to a few weeks. Once you have it, most lenders will approve you quickly if your income and credit are solid, because the VA may provide reduces their risk.
USDA loans: zero down in rural and suburban areas
A USDA loan is backed by the U.S. Department of Agriculture and requires zero down payment if you buy in a USDA-designated rural or suburban area. The USDA defines "rural" broadly — it includes many towns and suburbs within commuting distance of cities, not just farms. You can check whether a specific address qualifies on the USDA website by entering the zip code.
Like a VA loan, a USDA loan includes a may provide fee (usually 1 to 2 percent) and an annual mortgage insurance premium (0.55 percent of the loan balance per year). The insurance stays on the loan for the life of the loan, unlike FHA insurance, which drops off after you build equity. Your income also has to fall below a limit set by county — typically 115 percent of the area median income, though some counties allow higher.
USDA loans are slower to process than VA loans because the USDA itself reviews the property and your process. Expect 45 to 60 days from process to closing. The property must meet USDA standards and cannot be in an urban area, so if you are buying in a city, this route is closed.
FHA loans: 3.5 percent down as the practical zero-down option
An FHA loan requires a minimum 3.5 percent down payment, which means on a $300,000 house you need $10,500 in cash. That is not zero, but it is the lowest down payment a conventional lender will accept, and for many buyers it is the real entry point to homeownership.
FHA loans come with mortgage insurance premiums that work differently than VA or USDA insurance. You pay an upfront premium (1.75 percent of the loan amount) at closing, and then an annual premium (0.55 to 0.80 percent depending on your loan-to-value ratio) added to your monthly payment. The annual premium drops off once you reach 20 percent equity, but only if you put down at least 10 percent initially. If you put down 3.5 percent, the insurance stays for the life of the loan.
FHA loans have looser income and credit requirements than VA or USDA loans. You can have a credit score as low as 580 (though 620 is more common) and still be approved. The property standards are less strict than USDA, so you have more options. But your debt-to-income ratio cannot exceed 43 to 50 percent depending on the lender, and the lender will scrutinize your recent credit history for late payments or defaults.
How lenders protect themselves on zero-down loans
When you put nothing down, the lender has no equity cushion. If you stop paying and the house sells in foreclosure, the lender loses money if the sale price drops below what you owe. To offset that risk, lenders use three tools: higher interest rates, mortgage insurance, and stricter borrower requirements.
A zero-down loan typically carries an interest rate 0.25 to 0.75 percent higher than a conventional 20-percent-down loan, depending on the lender and your credit score. Mortgage insurance adds another 0.5 to 1.5 percent to your monthly payment. Together, these can add $150 to $400 per month to your payment on a $300,000 loan. Over 30 years, that is $54,000 to $144,000 in extra cost.
Lenders also tighten the rules on who qualifies. Your debt-to-income ratio — the total of all your monthly debt payments divided by your gross monthly income — usually cannot exceed 43 percent on a zero-down loan, versus 50 percent on a conventional loan. Your credit score needs to be higher. And lenders will dig into your recent payment history; a single 30-day late payment two years ago might disqualify you from a zero-down loan but not from a conventional one.
Comparing the three zero-down and near-zero-down paths
| Loan Type | Down Payment | Who Qualifies | Where You Can Buy | Mortgage Insurance |
|---|---|---|---|---|
| VA Loan | 0% | Military service members and surviving spouses | Anywhere in the U.S. | No, but 1.5–3.6% funding fee |
| USDA Loan | 0% | Income below county limit; U.S. citizen or permanent resident | USDA-designated rural and suburban areas only | Yes, 1–2% upfront plus 0.55% annual |
| FHA Loan | 3.5% | Credit score 580+; debt-to-income under 43–50% | Anywhere in the U.S. | Yes, 1.75% upfront plus 0.55–0.80% annual |
What happens after you close: the real cost of zero down
Once you own the house with no down payment, you have zero equity. If the housing market drops 5 percent in the first year, you are underwater — you owe more than the house is worth. That means you cannot sell without taking a loss, and you cannot refinance into a better loan without bringing cash to closing. You are locked in.
You also start paying mortgage insurance when ready, which does not build equity the way a down payment does. A $10,000 down payment on a $300,000 house gives you when ready ownership of that $10,000. A $10,000 mortgage insurance payment over five years buys you nothing; it is pure cost to the lender's benefit.
The practical path for most people without savings is an FHA loan with 3.5 percent down, because the upfront cost is lowest and the approval process is fastest. If you may have access to for a VA or USDA loan, those are genuinely better deals — no mortgage insurance on VA loans, and USDA loans have income limits that keep them available to people who actually need them. But if you do not may have access to for either, FHA is the realistic entry point.
Frequently Asked Questions
Can I get a zero-down loan with bad credit?
VA and USDA loans have no stated minimum credit score, but most lenders require 620 or higher in practice. FHA loans officially allow 580, but again, most lenders want 620. If your score is below 620, you may need to wait and rebuild credit, or look for a lender that specializes in lower scores — though they will charge a higher interest rate.
What if I have money for a down payment but want to keep it in savings?
You can do this, but the math usually does not work in your favor. A 10 percent down payment on an FHA loan drops your mortgage insurance to 0.55 percent annually instead of the full amount, saving you money over time. On a VA loan, putting down 5 to 10 percent lowers your funding fee. Unless your savings account earns more than your mortgage interest rate — which is rare — you are better off putting the money down.
Do I need a real estate agent to get a zero-down loan?
No. A real estate agent helps you find and negotiate for a house, but the loan itself comes from a lender. You can work with an agent or buy directly from a seller. The lender does not care how you found the property. Some lenders have preferred agents, but that is a convenience, not a requirement.
Can I use a zero-down loan to buy an investment property?
No. VA loans, USDA loans, and FHA loans all require the property to be your primary residence — the place you live most of the time. If you want to buy a rental property, you need a conventional loan with at least 15 to 20 percent down, and the terms are stricter.
What if the house fails the lender's inspection?
Each loan type has different property standards. FHA is most flexible; VA and USDA are stricter. If a house fails inspection, you can negotiate with the seller to make repairs, or you can walk away and look for another property. The inspection happens before closing, so you have time to decide.