Yes, you can borrow for a home with zero down payment, but the trade-offs are real
You can get a mortgage without a down payment through specific loan programs designed for this purpose. The most common are VA loans (for military members and veterans), USDA loans (for rural properties), and FHA loans with 3.5% down — which is close enough to zero that many people treat it the same way. Conventional mortgages (the standard loans most people use) typically require at least 3% down, though some lenders go lower.
The catch is that putting down less money costs you more over time. You'll pay a higher interest rate, you'll owe mortgage insurance (a monthly fee that protects the lender if you stop paying), and you'll pay interest on a larger loan amount. A $300,000 home with no down payment means you're borrowing the full $300,000 plus insurance costs, not $285,000.
Key Takeaways
- VA loans and USDA loans genuinely require zero down payment; FHA loans require 3.5% down, which is the closest alternative for most borrowers.
- No-down-payment loans always include mortgage insurance, which adds $100 to $300+ per month to your payment depending on the loan size and type.
- Your interest rate will be higher on a no-down-payment loan than on one where you put 10% or 20% down, because the lender takes on more risk.
- You must meet income, credit, and property requirements that vary by program — VA loans require military service, USDA loans require a rural property, and FHA loans have credit score minimums.
VA loans: zero down if you have military service
If you're a current or former member of the military, a VA loan is the strongest no-down-payment option. The Department of Veterans Affairs guarantees part of the loan to the lender, which means the lender takes less risk and doesn't require you to put money down. You also don't pay mortgage insurance, which saves you hundreds of dollars per year compared to other zero-down programs.
To use a VA loan, you need a Certificate of may be able to access from the VA, which you can request online through VA.gov or through your lender. The certificate proves your service record meets the program's requirements. Most people who served on active duty for at least 90 days (or 181 days during peacetime) may have access to. Surviving spouses of service members who died in service or from service-related injuries may also may have access to.
VA loans have no maximum loan amount set by the VA itself, though individual lenders set their own limits. Interest rates are typically lower than conventional loans because the VA may provide reduces the lender's risk. You still need a decent credit score (usually 620 or higher) and enough income to cover the monthly payment, property taxes, insurance, and any other debts.
USDA loans: zero down for homes in may be able to access rural areas
The USDA Rural Development program offers mortgages with zero down payment for homes in designated rural areas. The USDA doesn't lend the money itself — banks do — but the USDA guarantees the loan, so lenders are willing to skip the down payment requirement. Like VA loans, this means no mortgage insurance.
The main restriction is location. The property must be in a rural area as defined by the USDA, which includes many small towns and counties but excludes major cities and their when ready suburbs. You can check whether a specific address qualifies on the USDA's website by entering the address or zip code. Some areas you'd expect to be rural don't may have access to, and some areas near cities do, so checking is essential before you fall in love with a house.
Income limits explore: your household income must not exceed 115% of the area median income for your county. For a family of four in a rural county, this might be $80,000 to $120,000 depending on where you live. You also need a credit score of at least 580, though 640 or higher gives you better rates. The USDA doesn't require a minimum down payment, but it does charge a may provide fee (usually 2% of the loan amount), which can be rolled into the loan itself.
FHA loans: 3.5% down as the practical zero-down option
FHA loans require 3.5% down payment, not zero, but they're often grouped with no-down-payment programs because 3.5% is low enough that many first-time buyers treat it as nearly the same thing. On a $300,000 home, 3.5% is $10,500 — real money, but less than the 10% or 20% down that conventional loans often ask for.
FHA loans are backed by the Federal Housing Administration, which means the government guarantees part of the loan. This may provide lets lenders accept borrowers with lower credit scores (as low as 580) and smaller down payments. The trade-off is that you pay mortgage insurance for the life of the loan (or at least 11 years if you put down 10% or more). That insurance typically runs $150 to $250 per month on a $300,000 loan.
FHA loans have loan limits that vary by county — in expensive areas, the limit might be $800,000, while in rural counties it might be $350,000. You can borrow up to 96.5% of the home's value, meaning you only need to cover that 3.5% down payment yourself. Income and credit requirements are less strict than conventional loans, but you still need to show you can afford the monthly payment.
What mortgage insurance costs and how long you pay it
Mortgage insurance is the price you pay for borrowing without a substantial down payment. It protects the lender, not you — if you stop paying, the insurance covers part of the lender's loss. On an FHA loan, you pay an upfront mortgage insurance premium (usually 1.75% of the loan amount) at closing, plus a monthly premium that runs 0.55% to 0.80% of the loan balance per year.
On a $300,000 FHA loan, the upfront premium is about $5,250, which gets added to what you owe. The monthly premium might be $140 to $200. You pay this for the life of the loan unless you refinance later or put down 10% or more upfront (in which case you pay for 11 years, then it stops). VA and USDA loans don't charge mortgage insurance at all, which is one reason they're valuable if you may have access to.
Conventional loans with less than 20% down also require mortgage insurance, called PMI. The cost varies by lender and your credit score, but it's typically 0.5% to 1.5% of the loan amount per year. Once you've paid the loan down to 80% of the home's original value, you can request that PMI be removed — a process that takes a few months but saves you money going forward.
Interest rates are higher when you put nothing down
Lenders charge a higher interest rate for no-down-payment loans because they're taking on more risk. If you default, they have less cushion — they own a home worth $300,000 but are owed $300,000 plus interest and costs. If the home sells for less than that, they lose money. With a 20% down payment, they own a home worth $300,000 but are only owed $240,000, so they have room to absorb a price drop.
The difference in rate might be 0.25% to 0.75% higher than what someone with 20% down would pay. On a $300,000 loan, that 0.5% difference means roughly $125 more per month. Over 30 years, that's $45,000 in extra interest. This is on top of the mortgage insurance you're already paying, so the total monthly cost difference between zero down and 20% down can be $300 to $400 or more.
VA and USDA loans are exceptions: they often have competitive or even lower interest rates than conventional loans, because the government may provide reduces the lender's risk enough that they don't need to charge a premium. This is one reason these programs are valuable — you get zero down without the interest rate penalty.
Credit score and income requirements vary by program
Each program has different minimums. VA loans typically require a credit score of 620 or higher, though some lenders go lower. USDA loans require 580 or higher. FHA loans officially allow scores as low as 580, though many lenders require 640 to get the best rates. Conventional loans with low down payments usually want 660 or higher.
Income requirements are about whether you can afford the payment. Lenders use a debt-to-income ratio: they add up all your monthly debt payments (car loans, credit cards, student loans, the new mortgage) and divide by your gross monthly income. Most programs want this ratio to be 43% or lower, meaning your debts can't exceed 43% of what you earn before taxes. Some lenders go up to 50% if you have a strong credit history and savings.
VA loans have no income limit. USDA loans cap household income at 115% of the area median. FHA loans have no income cap but do require you to show you can afford the payment. All three require a job history showing you've been employed for at least two years, though you don't have to be at the same job the whole time.
The real cost: comparing zero down to putting money down
A concrete example shows why down payment size matters. Say you're buying a $300,000 home and can afford either zero down or 10% down ($30,000).
| Scenario | Loan Amount | Interest Rate | Monthly Payment (P&I) | Mortgage Insurance | Total Monthly | Total Paid Over 30 Years |
|---|---|---|---|---|---|---|
| Zero down (FHA) | $300,000 | 7.0% | $1,996 | $175 | $2,171 | $781,560 |
| 10% down (Conventional) | $270,000 | 6.5% | $1,706 | $135 | $1,841 | $662,760 |
The zero-down scenario costs $330 more per month and $118,800 more over 30 years. That's the price of not having $30,000 to put down today. If you have the money and can afford to wait, putting it down saves you real money. If you don't have it, a no-down-payment loan lets you buy now instead of waiting years to save.
Frequently Asked Questions
Can I get a conventional loan with zero down?
Most conventional lenders require at least 3% down, and some require 5% or more. A few lenders offer zero-down conventional loans, but they're rare and come with higher interest rates and mortgage insurance. VA and USDA loans are easier paths to zero down if you may have access to for either.
What if I don't may have access to for VA or USDA but can't save a down payment?
FHA loans with 3.5% down are your best option. If even 3.5% is out of reach, some nonprofits and state programs offer down payment information grants that don't have to be repaid. Ask your local housing authority or search your state's housing finance agency website for programs in your area.
Can I borrow the down payment from someone else?
Most lenders allow a gift from a family member, but not a loan. If a relative gives you money as a gift, you'll need a signed letter stating it's a gift and doesn't have to be repaid. Borrowed money counts as debt and increases your debt-to-income ratio, which can disqualify you or lower the amount you can borrow.
Will I ever stop paying mortgage insurance on an FHA loan?
If you put down 10% or more, mortgage insurance stops after 11 years of payments. If you put down less than 10%, you pay for the life of the loan unless you refinance into a different loan type later. VA and USDA loans never require mortgage insurance.
What happens if the home value drops after I buy with zero down?
You still owe the full loan amount, even if the home is worth less. This is called being underwater. You can't walk away without damaging your credit, but you can refinance if rates drop or your credit improves. This risk is why putting down more money is safer — you have equity (ownership stake) that protects you if values decline.