You can buy a house without putting money down at closing, but only through specific loan programs—and they come with real tradeoffs

Yes, you can purchase a house without putting money down at closing. The most common route is a VA loan (if you served in the military), followed by USDA loans (for rural properties), FHA loans with 3.5% down (which some people finance into the loan), and occasionally conventional loans with lender-specific zero-down programs. But "no down payment" does not mean "no money out of pocket"—you will still pay closing costs, property taxes, homeowners insurance, and possibly mortgage insurance. The real question is whether the loan program lets you roll some of those costs into the mortgage or cover them another way.

Each program has different rules about what you can finance, what you must pay upfront, and who qualifies. Understanding these differences matters because a zero-down loan that costs you 7.5% in interest is not the same as one that costs 6.0%, even though both require zero down at closing.

Key Takeaways

  • VA loans and USDA loans are the only programs that genuinely require zero down payment with no workaround needed.
  • FHA loans require 3.5% down, but some borrowers finance this into the loan amount rather than paying it upfront.
  • Closing costs (typically 2–5% of the purchase price) are separate from the down payment and usually cannot be avoided or financed.
  • Lenders charge higher interest rates and mortgage insurance premiums on zero-down loans to offset their risk.
  • Your debt-to-income ratio and credit score matter more on zero-down loans than on loans with a substantial down payment.

VA loans: the only true zero-down option for military borrowers

If you are a current or former member of the U.S. military, a VA loan is the only program that requires literally zero down payment and zero mortgage insurance. The Department of Veterans Affairs guarantees a portion of the loan to the lender, which removes the lender's need to protect itself with a down payment or insurance premium. You pay a one-time VA funding fee (typically 1.4–3.6% of the loan amount, depending on your service branch and whether you have a disability rating), but this can be rolled into the loan itself.

The catch: you must have a Certificate of may be able to access from the VA, and the property must be your primary residence. The VA also sets a maximum loan amount that varies by county. If you want to borrow more than that limit, you would need to put money down on the difference. VA loans also come with a funding fee that, while rolled into the mortgage, still increases what you owe over time. You can request your Certificate of may be able to access through the VA website or by mail.

USDA loans for rural and suburban properties

USDA loans (backed by the U.S. Department of Agriculture) also require zero down payment and no mortgage insurance. They are designed for borrowers in rural areas and some suburban zones, with income limits that vary by location. Like VA loans, USDA loans charge a may provide fee (typically 1% of the loan amount) that can be financed into the mortgage.

The main limitation is geography: the property must be in a USDA-may be able to access area, which excludes most urban centers and many suburbs. You can check whether a specific address qualifies on the USDA website. USDA loans also have stricter income caps than conventional or FHA loans, so high earners may not may have access to even if they want to. The income limits change yearly and depend on the county where the property is located.

FHA loans and the 3.5% down payment

FHA loans require a minimum 3.5% down payment, which is lower than the typical 5–20% on conventional loans. Some borrowers finance this 3.5% into the loan amount rather than paying it upfront, which makes it feel like zero down—but you are borrowing the down payment and paying interest on it for 30 years. A $300,000 house would mean borrowing an extra $10,500 for the down payment alone.

FHA loans also require mortgage insurance for the life of the loan (if you put down less than 10%), which adds roughly 0.5–1.5% to your annual payment. On a $300,000 loan, that is $1,500–$4,500 per year in insurance costs. The advantage is that FHA loans are easier to obtain with a lower credit score (often 580 or higher) and more forgiving debt-to-income ratios than conventional loans. This makes FHA the most accessible zero-down option for borrowers with credit challenges.

Conventional loans with zero-down programs

Some conventional lenders offer zero-down mortgages, but these are less common than they were before 2008 and typically require a strong credit score (usually 700+) and a low debt-to-income ratio. These loans carry higher interest rates than conventional loans with a down payment, and they require mortgage insurance (called PMI, or private mortgage insurance) until you build equity.

PMI on a zero-down conventional loan typically runs 0.5–1.5% annually, similar to FHA insurance. The real difference is that PMI on a conventional loan can eventually be removed once you reach 20% equity, whereas FHA insurance is permanent. If you plan to stay in the house long enough to build that equity, a conventional zero-down loan might cost less over time than an FHA loan. However, reaching 20% equity takes years of payments and home appreciation, so this advantage only materializes if you stay put.

What you still have to pay even with zero down

Closing costs are the biggest surprise for borrowers who think "zero down" means "zero money." Closing costs typically run 2–5% of the purchase price and cover the lender's appraisal, title search, title insurance, attorney fees, recording fees, and other services. On a $300,000 house, that is $6,000–$15,000 at closing.

Some lenders will roll closing costs into the loan (called a "no-cost" or "lender-paid" mortgage), but this increases your interest rate and the total amount you borrow. You also need to pay for a home inspection (usually $300–$500), property taxes (varies by location), homeowners insurance (required by all lenders), and possibly HOA fees if the property is in a planned community. None of these can be avoided, though some sellers will negotiate to cover part of the closing costs as a concession. The inspection and insurance are separate from the lender's closing costs and typically come out of your pocket.

How lenders price zero-down loans

Lenders charge more for zero-down loans because they have more risk: if you default, they have no equity cushion to recover their money through a sale. This shows up in two ways: a higher interest rate and mortgage insurance.

A borrower with a 20% down payment might get a 6.5% interest rate, while a zero-down borrower with the same credit score might get 7.0–7.5%. Over a 30-year loan, that 0.5–1% difference adds tens of thousands of dollars to the total cost. Mortgage insurance adds another layer: on a $300,000 loan with zero down, PMI or FHA insurance might cost $150–$375 per month. These costs do not build equity—they are pure insurance for the lender. The exact rate you receive depends on your credit score, debt-to-income ratio, and the lender's appetite for risk at that moment.

Debt-to-income ratio and credit requirements

Lenders scrutinize zero-down borrowers more carefully because they have more to lose. Most require a debt-to-income ratio of 43% or lower, meaning your total monthly debt payments (including the new mortgage) cannot exceed 43% of your gross monthly income. Some VA and USDA lenders will go to 50%, but that is the exception.

Credit score requirements also matter more. VA and USDA loans can work with scores in the 580–620 range, though you may get a higher interest rate. Conventional zero-down loans typically require 700+. FHA loans are the most flexible, accepting scores as low as 580, but again, a lower score means a higher rate. If your credit is below 620, VA or USDA loans (if you may have access to geographically or by service) are your best options. Lenders will also look at your payment history on existing accounts—recent late payments or collections will disqualify you from most zero-down programs.

Frequently Asked Questions

Can I buy a house with zero down if I have bad credit?

VA and USDA loans are more forgiving of lower credit scores than conventional loans. FHA loans accept scores as low as 580. However, a lower score will result in a higher interest rate, which increases your monthly payment and total cost. If your score is below 580, you may need to wait and build credit before most lenders will work with you.

What happens if I finance the down payment into the loan?

You will pay interest on that money for the full loan term. If you finance a $10,500 down payment into a 30-year mortgage at 7%, you will pay roughly $24,000 in interest alone on that borrowed down payment. This is why financing the down payment is more expensive than saving it upfront, even though it feels like zero down at closing.

Can I use a gift or loan from family to cover the down payment?

Most lenders allow gift money from family members for the down payment, but you will need a signed gift letter stating it does not have to be repaid. Loans from family are treated differently—lenders count them as debt, which increases your debt-to-income ratio and may disqualify you. Check with your lender before accepting borrowed money.

Is mortgage insurance ever removed on a zero-down loan?

On conventional loans, PMI can be removed once you reach 20% equity (through a combination of payments and home appreciation). On FHA loans, mortgage insurance is permanent if you put down less than 10%, so it stays for the life of the loan. VA and USDA loans have no mortgage insurance at all.

What if I want to put down 5% instead of zero?

Putting down even 5% significantly reduces your interest rate and mortgage insurance costs. On a $300,000 house, a 5% down payment ($15,000) might lower your rate by 0.25–0.5% and reduce or eliminate PMI, saving you $50–$200 per month. If you can save even a small amount, it usually pays for itself within a few years.