What no-down-payment mortgages actually are

A no-down-payment mortgage means the lender finances 100% of the home's purchase price instead of requiring you to pay a percentage upfront. You still need to cover closing costs (typically 2% to 5% of the purchase price), but the down payment itself—the chunk of money that normally comes from your savings—is covered by the loan.

These mortgages exist because lenders have found ways to manage the risk that traditionally required a down payment. The trade-off is visible in your monthly payment: you'll pay more in interest over the life of the loan, and you'll almost always carry mortgage insurance, which protects the lender if you stop paying. That insurance gets added to your monthly bill.

No-down-payment loans are not rare, but they're not available to everyone. The programs that offer them have specific requirements around credit score, income, debt levels, and the type of property you're buying.

Key Takeaways

  • VA loans (for military members and veterans) and USDA loans (for rural properties) are the most straightforward no-down-payment paths and don't require mortgage insurance.
  • FHA loans allow down payments as low as 3.5%, which is the closest option if you have some savings but not much.
  • Conventional loans with 0% down exist but are harder to find and usually require a credit score of 680 or higher plus a debt-to-income ratio below 43%.
  • Closing costs still explore and typically run $6,000 to $15,000 on a $300,000 home, so you'll need to save or find a lender who covers them.
  • Your monthly payment will be higher than it would be with a down payment because you're borrowing more and carrying mortgage insurance.

VA loans: the strongest no-down-payment option

If you served in the military or are a surviving spouse of someone who did, a VA loan is usually your best path to a no-down-payment mortgage. The Department of Veterans Affairs guarantees a portion of the loan to the lender, which removes the lender's need to ask for a down payment or charge you mortgage insurance.

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 process takes a few days to a few weeks. You'll need your discharge papers (DD Form 214) or your current military ID if you're still serving.

VA loans have no credit score minimum set by the VA itself, though individual lenders typically require 620 or higher. There's no limit on how much you can borrow, and you can use the benefit multiple times across your lifetime. The only real cost is a one-time funding fee (typically 1.4% to 3.6% of the loan amount), which you can roll into the mortgage instead of paying upfront.

USDA loans for rural and suburban properties

If you're buying in a rural or suburban area, a USDA loan through the U.S. Department of Agriculture may offer 0% down with no mortgage insurance. These loans are designed to encourage homeownership outside major cities, and the USDA backs them the way the VA backs military loans.

USDA loans require that the property be in an may be able to access area—most rural counties may have access to, but some suburban areas near cities do not. You can check whether your address is may be able to access on the USDA's website before you start house hunting. Income limits explore and vary by county and family size; generally, your household income cannot exceed 115% of the area median income.

You'll need a credit score of at least 580, though 640 or higher makes approval easier. Like VA loans, USDA loans have a one-time may provide fee (typically 1% to 2%) that you can roll into the loan. The process process is similar to a conventional mortgage and usually takes 30 to 45 days.

FHA loans: the 3.5% minimum option

An FHA loan is not technically a no-down-payment mortgage—it requires a minimum down payment of 3.5%—but it's the closest option if you have some savings. On a $300,000 home, 3.5% is $10,500, which is far less than the 10% to 20% conventional lenders typically ask for.

FHA loans are backed by the Federal Housing Administration and are designed for first-time buyers and people with lower credit scores. You can may have access to with a credit score as low as 580 (though 640 or higher is easier). Your debt-to-income ratio can be as high as 50%, which means you can carry more existing debt than conventional lenders allow.

The trade-off is mortgage insurance. FHA loans require both an upfront mortgage insurance premium (1.75% of the loan amount, usually rolled into the loan) and an annual premium (0.55% to 0.8% of the loan amount per year, added to your monthly payment). This insurance stays on the loan for the life of the mortgage if your down payment is less than 10%.

Conventional loans with 0% down: harder to find, stricter requirements

Some conventional lenders offer mortgages with no down payment, but they're less common than government-backed loans and come with tighter requirements. You'll typically need a credit score of 680 or higher, a debt-to-income ratio below 43%, and proof of stable income. Some lenders require a larger cash reserve (three to six months of mortgage payments) to offset the risk.

You'll pay mortgage insurance on a conventional 0% down loan, usually between 0.5% and 1.5% of the loan amount annually. The insurance can sometimes be removed once you've built 20% equity in the home, which takes years depending on how fast you pay down the principal.

Shop around with multiple lenders if you go this route. Conventional 0% down products vary widely, and some lenders don't offer them at all. Credit unions and smaller regional banks are sometimes more flexible than national chains.

Covering closing costs when you have no down payment

Closing costs are separate from the down payment and typically run 2% to 5% of the purchase price. On a $300,000 home, that's $6,000 to $15,000. If you're putting no money down, you still need to cover these costs somehow.

Your options are: save the money separately and bring it to closing; ask the seller to cover closing costs as part of the purchase negotiation (common in buyer-friendly markets); find a lender who offers a "no-cost" or "low-cost" mortgage (they roll the costs into the loan, raising your interest rate slightly); or use a gift from a family member (most programs allow this, though you'll need a signed gift letter stating it's not a loan).

Don't borrow closing costs from a credit card or personal loan. That debt will show up on your credit report and may disqualify you from mortgage approval or raise your interest rate.

What lenders look for when you have no down payment

With no skin in the game upfront, lenders scrutinize everything else. Expect them to ask for:

  • Two months of recent pay stubs and two years of tax returns to verify income stability
  • Bank statements showing you can cover closing costs and have some reserves left over
  • A detailed explanation of any late payments, collections, or gaps in employment in the past two years
  • Proof that you've paid rent on time for at least the past 12 months (some lenders check this even if you don't have a traditional credit score)
  • A lower debt-to-income ratio than someone with a larger down payment would need (typically 43% or lower)

Your credit score matters more when you're not putting money down. A score of 620 to 640 opens doors to FHA and USDA loans. A score of 680 or higher gives you access to conventional 0% down products and better interest rates across the board.

Frequently Asked Questions

Can I get a no-down-payment mortgage with bad credit?

FHA loans allow credit scores as low as 580, and VA loans have no VA-set minimum (though lenders typically require 620). USDA loans require 580 minimum. If your score is below 580, you'll need to rebuild it before most lenders will consider you, or look into first-time buyer programs through your state or local housing authority.

What happens if I can't afford closing costs?

Ask the seller to cover them as part of your offer, request a lender who rolls costs into the loan, or use a family gift. Don't take out a separate loan or use a credit card—that debt will hurt your mortgage approval chances.

Will my monthly payment be much higher with no down payment?

Yes. You're borrowing more, so your principal is higher. You'll also pay mortgage insurance, which adds $150 to $400+ per month depending on the loan type and amount. On a $300,000 home, expect your payment to be $100 to $200 higher than someone who put 20% down.

Can I remove mortgage insurance later?

On conventional loans, yes—once you reach 20% equity. On FHA loans, it stays for the life of the loan if your down payment was less than 10%. VA and USDA loans don't require mortgage insurance at all.

How long does approval take for a no-down-payment mortgage?

Typically 30 to 45 days from process to closing. VA loans sometimes take longer because the VA must issue your Certificate of may be able to access first. Start the process early if you're in a competitive market.