Yes, but the programs are narrow and the trade-offs are real
You can get a mortgage without putting money down, but you are not choosing between identical loans at different prices. A zero-down loan costs more in interest, requires a higher credit score, limits which properties you can buy, and often comes with mortgage insurance that adds hundreds to your monthly payment. The lenders offering them are specific: the VA loan (for military), USDA loans (for rural properties), and conventional loans with down payment information programs attached. FHA loans require 3.5 percent down, not zero, though that is the closest mainstream option for lower credit scores.
The reason zero-down mortgages are uncommon is straightforward: a lender with no equity cushion absorbs all the risk if you stop paying or the house drops in value. They price that risk into the interest rate, the fees, or the insurance requirement. Understanding which program fits your situation—and what it will actually cost you—matters more than the headline of "no money down."
Key Takeaways
- VA loans and USDA loans are the only true zero-down mortgages; VA loans require military service and USDA loans require a rural property in an may be able to access county.
- Conventional loans with down payment information programs exist but often come with higher interest rates or require you to repay the information later.
- Mortgage insurance (PMI) on zero-down conventional loans typically adds $150 to $300 per month to your payment and lasts until you build equity.
- Your credit score matters more on a zero-down loan; most lenders want 620 or higher, and better rates go to borrowers at 740 and above.
- The total cost of a zero-down loan over 30 years is often $50,000 to $100,000 higher than a loan with 10 or 20 percent down, depending on the interest rate and insurance.
VA loans: zero down if you have military service
A VA loan is issued by a private lender but backed by the Department of Veterans Affairs. The may provide means the lender takes less risk, so they will lend 100 percent of the purchase price with no down payment and no mortgage insurance. You pay a one-time funding fee (typically 2.3 percent of the loan amount for first-time users, lower if you have a disability rating) instead of monthly insurance.
You must have served on active duty, in the reserves, or in the National Guard for a set length of time—usually 90 consecutive days during wartime or 181 days during peacetime, though some reserve and guard service has different thresholds. You obtain a Certificate of may be able to access from the VA, which takes a few days to a few weeks. The lender will verify it before closing.
Interest rates on VA loans are typically lower than conventional loans because the government may provide reduces the lender's risk. There is no income limit, no property type restriction (though the property must be your primary residence), and no limit on how many times you can use the benefit. If you sold a previous home bought with a VA loan and paid it off, your may be able to access restores.
USDA loans: zero down for rural and small-town properties
A USDA loan is a mortgage for properties in rural areas, backed by the U.S. Department of Agriculture. Like the VA loan, it requires no down payment and no traditional mortgage insurance. Instead, you pay an upfront may provide fee (typically 1 percent of the loan amount) and an annual fee (0.35 percent, paid monthly) for the life of the loan.
The catch is geography: the property must be in a county the USDA designates as rural or small-town. You can check the USDA's property may be able to access map online by address. Most counties outside major metropolitan areas may have access to, but suburbs of large cities do not. The property must be a single-family home, a condo in an approved project, or a manufactured home on owned land—not a townhouse, not a multi-unit building.
Income limits explore: your household income cannot exceed 115 percent of the area median income for your county. A family of four in a rural county might have a limit of $90,000 to $110,000, depending on location. The USDA publishes these limits by county each year. Credit score requirements are typically 580 or higher, though some lenders want 620.
Conventional loans with down payment information: the hidden cost
Some lenders and nonprofits offer down payment information programs paired with conventional mortgages. A nonprofit or local government gives you a grant or a second loan to cover the down payment, and you take out a conventional mortgage for the rest. On paper, you put zero down. In practice, you are taking on two loans and often paying a higher interest rate on the first one.
The structure varies. Some programs give you a grant (money you do not repay); others give you a second mortgage that you repay over 10 or 15 years, usually at a lower rate than the first mortgage. Some require you to repay the information if you sell the house within five years. A few programs forgive the second loan after you make on-time payments for a set period.
The problem: lenders know you received information, and they price the first mortgage accordingly. Your interest rate may be 0.25 to 0.75 percent higher than it would be with a 10 percent down payment. Over 30 years, that adds $20,000 to $50,000 to the total cost. You also still pay mortgage insurance (PMI) because your down payment is below 20 percent, adding another $150 to $300 per month.
Before pursuing a down payment information program, ask the lender directly: will the interest rate be higher because of the information, and if so, by how much? Compare the total cost (interest plus insurance plus any repayment obligation) to saving for a 5 or 10 percent down payment yourself. Sometimes the math favors waiting.
FHA loans: 3.5 percent down, the practical minimum
An FHA loan is not zero down, but it is the closest option for borrowers with lower credit scores or less cash. The Federal Housing Administration insures the loan, which means you can put down as little as 3.5 percent and still get approved. Credit scores as low as 580 may have access to, though 640 and above get better rates.
The trade-off is mortgage insurance: you pay an upfront insurance premium (1.75 percent of the loan amount) and an annual premium (0.55 percent for most borrowers, paid monthly). That annual premium stays for the life of the loan, even after you build equity, unless you refinance into a conventional loan later.
On a $300,000 home with 3.5 percent down, you would borrow $289,500. The upfront insurance is about $5,066, rolled into the loan. The monthly insurance is roughly $133. Over 30 years, you pay more than $47,000 in insurance alone. FHA loans make sense if you have a low credit score and cannot wait to save more, but the cost is real.
What zero-down loans cost you in interest and insurance
A concrete example: a $300,000 home in a market where the current conventional rate is 6.5 percent.
| Loan Type | Down Payment | Loan Amount | Monthly Payment (P&I) | Monthly Insurance | Total Monthly | 30-Year Total Cost |
|---|---|---|---|---|---|---|
| Conventional, 20% down | $60,000 | $240,000 | $1,520 | $0 | $1,520 | $547,200 |
| Conventional, 10% down | $30,000 | $270,000 | $1,711 | $180 | $1,891 | $680,760 |
| Conventional, 0% down | $0 | $300,000 | $1,896 | $250 | $2,146 | $772,560 |
| VA loan, 0% down | $0 | $300,000 | $1,896 | $0 (funding fee built in) | $1,896 | $682,560 |
| FHA loan, 3.5% down | $10,500 | $289,500 | $1,836 | $133 | $1,969 | $709,080 |
The VA loan is the only zero-down option that does not add monthly insurance. A conventional zero-down loan costs $225,360 more over 30 years than a 20 percent down loan. Even the FHA loan at 3.5 percent down costs $161,880 more. These are not small differences.
Credit score requirements for zero-down mortgages
Lenders tighten credit requirements when there is no down payment, because they have no equity cushion. A conventional zero-down loan typically requires a credit score of 660 to 680 minimum; most lenders want 700 or higher for the best rates. VA loans have no official credit score minimum, but most lenders want 620. USDA loans typically want 580 to 620.
The difference between a 620 score and a 740 score on a zero-down conventional loan can be 0.5 to 1 percent in interest rate. On a $300,000 loan, that is $150 to $300 per month, or $54,000 to $108,000 over 30 years. If your score is below 640, spending three to six months paying down debt and disputing errors on your credit report before explore can save you far more than the cost of waiting.
When a zero-down loan makes sense and when it does not
A zero-down mortgage makes sense if you are may be able to access for a VA or USDA loan and the interest rate is competitive. Both programs are genuinely cheaper than conventional loans because the government may provide reduces the lender's risk. If you have military service or a rural property, these are worth pursuing.
A zero-down conventional loan makes sense only if you cannot save a down payment in a reasonable timeframe and your credit score is 700 or higher. If you can save 5 to 10 percent in a year or two, the interest savings usually outweigh the benefit of buying sooner. If your credit score is below 680, an FHA loan at 3.5 percent down is often cheaper than a conventional zero-down loan.
A down payment information program makes sense only if the grant is truly a grant (not a loan you repay) and the lender commits in writing that the interest rate will not be higher than a conventional loan with 10 percent down. Many programs do not meet this standard, and you end up paying more for the convenience of not saving.
Frequently Asked Questions
Can I get a zero-down loan if I have bad credit?
Not easily. Conventional zero-down loans want credit scores of 660 and up. If your score is below 640, an FHA loan at 3.5 percent down is more realistic, though you will still pay mortgage insurance. USDA loans accept scores as low as 580, but only for rural properties. Spending time improving your credit before explore usually saves more money than the cost of waiting.
Do I have to repay down payment information?
It depends on the program. Some grants are gifts and never need repayment. Others are second mortgages that you repay over 10 to 15 years, usually at a lower rate than your first mortgage. Some forgive the loan after you make on-time payments for five to ten years. Always ask the program in writing whether repayment is required and under what conditions.
Is a VA loan really better than a conventional loan?
Yes, if you are may be able to access. VA loans have no mortgage insurance, lower interest rates on average, and no prepayment penalties. The only cost is a one-time funding fee. A conventional zero-down loan costs significantly more over 30 years because of monthly mortgage insurance. If you have military service, a VA loan is almost always the better choice.
What happens to mortgage insurance on a zero-down conventional loan?
You pay it for the life of the loan unless you refinance into a conventional loan later with 20 percent equity. On a zero-down loan, building 20 percent equity takes 10 to 15 years depending on home appreciation and how fast you pay down the principal. Some lenders will remove insurance at 80 percent loan-to-value if you ask, but you have to request it in writing.
Can I use a down payment information program with a VA or USDA loan?
VA loans do not allow down payment information because there is no down payment to information with. USDA loans technically allow it, but most programs do not pair with USDA loans because the USDA already offers zero-down financing. If you find a program that does, verify the terms carefully—some add fees or restrictions that make the combination more expensive than the USDA loan alone.