You can buy a house without a down payment through specific loan programs, though they come with tradeoffs you need to understand before you commit.
The most common path is a VA loan if you served in the military, or a USDA loan if you are buying in a rural area and meet income limits. Both let you borrow the full purchase price with no down payment required. FHA loans allow you to put down as little as 3.5 percent, which is close enough that many people count it as "no money down" — though you will still need to bring that 3.5 percent to closing.
The catch is that lenders protect themselves when you put down nothing by charging you higher interest rates and requiring you to pay mortgage insurance — an extra monthly fee that protects the bank if you stop paying. This insurance stays on your loan for years, sometimes the life of the loan, and it costs real money every month. A house you can afford with a down payment might become unaffordable once mortgage insurance is added in.
Before you choose a no-down-payment path, you need to know what the monthly payment will actually be, including insurance. That number determines whether you can truly afford the house, not just whether a lender will approve you.
Key Takeaways
- VA loans and USDA loans require zero down payment; FHA loans require 3.5 percent down, which is the lowest conventional option.
- All no-down-payment loans charge mortgage insurance on top of your regular payment, raising your monthly cost significantly.
- You still need to bring closing costs to the table — usually 2 to 5 percent of the purchase price — unless the seller agrees to cover them.
- Your credit score, debt-to-income ratio, and income verification matter more when you put down nothing, because the lender is taking on more risk.
- The monthly payment with insurance included is what determines affordability, not the down payment amount.
VA loans: zero down if you served in the military
A VA loan is backed by the Department of Veterans Affairs and available to military members, veterans, and some surviving spouses. The defining feature is that you do not need a down payment — you can borrow 100 percent of the purchase price. The VA also does not require a minimum credit score, though most lenders will want a score of 620 or higher.
The tradeoff is that VA loans charge a funding fee — a one-time cost that goes into your loan amount and gets paid back over time. This fee ranges from about 1.4 to 3.6 percent of the loan, depending on whether you served on active duty, in the reserves, or as a National Guard member, and whether you have used a VA loan before. You do not pay this upfront; it rolls into what you borrow.
VA loans also do not require mortgage insurance, which is a real advantage over FHA and USDA loans. Your monthly payment will be lower because of this. You will still pay property taxes, homeowners insurance, and possibly HOA fees, but not an extra insurance premium on top of your mortgage payment.
To use a VA loan, you need a Certificate of may be able to access from the VA. You can request this online through VA.gov or through your lender, and it usually arrives within days. Bring this certificate when you explore for the mortgage.
USDA loans: zero down in rural and some suburban areas
A USDA loan is backed by the U.S. Department of Agriculture and is meant to help people buy homes in rural areas where traditional lending is thin. The USDA defines "rural" broadly — it includes many towns and suburbs, not just farmland. You can check whether your address qualifies on the USDA's website before you start shopping.
USDA loans require zero down payment and no minimum credit score, though most lenders want 640 or above. Like VA loans, they do not require mortgage insurance. Instead, they charge a may provide fee — similar to a VA funding fee — that rolls into your loan amount. This fee is typically 1 to 2 percent of the loan.
The main limitation is income: you cannot earn more than 115 percent of the median income for your county. This limit varies widely by location — in a rural county it might be $70,000 for a family of four, while in a suburban area it could be $120,000. Check your county's limit before you spend time on an process.
You will also need to show that you cannot get a conventional loan elsewhere. This is not a hard barrier — most lenders can document this quickly — but it is a step in the process.
FHA loans: 3.5 percent down as the lowest conventional option
An FHA loan is backed by the Federal Housing Administration and requires a minimum down payment of 3.5 percent. This is the lowest down payment available through a conventional mortgage path, and it is open to anyone with a credit score of 580 or higher (though 640 or above gets you better rates).
The cost of going this route is mortgage insurance, which you pay every month for the life of the loan if you put down less than 10 percent. This insurance protects the lender if you default, but you are the one paying for it. On a $300,000 house with 3.5 percent down, mortgage insurance can add $200 to $400 per month to your payment.
You will also need to bring 3.5 percent of the purchase price to closing — on a $300,000 house, that is $10,500. This money comes from you, not from a loan. If you do not have this saved, an FHA loan is not an option.
FHA loans are easier to get than conventional loans if your credit is not perfect or your income is variable, which is why they are popular with first-time buyers. But the monthly insurance cost is real and permanent, so calculate the full payment before you commit.
Closing costs still come out of your pocket
Even with zero down payment, you will owe closing costs — the fees lenders, title companies, and inspectors charge to process the loan and transfer the house to your name. These typically run 2 to 5 percent of the purchase price. On a $300,000 house, that is $6,000 to $15,000.
You have three options: pay closing costs from your own savings, ask the seller to cover them as part of the sale agreement, or roll them into your loan (which means you borrow the money and pay interest on it for 30 years). Many sellers will cover some or all closing costs if the market is slow, but you cannot count on this — it depends on the local market and the specific house.
Before you make an offer, talk to a lender about what closing costs will be for your situation. This number is not optional, and it is not covered by a down-payment waiver.
Your credit score and debt matter more without a down payment
When you put down nothing, the lender is taking on more risk. To offset that risk, they look harder at your credit score, your debt-to-income ratio, and your income history. A score of 620 might technically may have access to you for a VA or USDA loan, but you will get a much better interest rate with a score of 680 or higher.
Your debt-to-income ratio is the total of all your monthly debt payments divided by your gross monthly income. Most lenders want this to be 43 percent or lower — meaning if you earn $5,000 a month, your car payment, credit card payments, student loans, and new mortgage payment combined should not exceed $2,150. With no down payment, lenders are stricter about this number.
You will also need to show stable income for at least two years. If you are self-employed, you will need two years of tax returns. If you changed jobs recently, you may need a letter from your new employer confirming your salary. The lender wants to know you can keep making payments.
Comparing the three paths side by side
| Loan Type | Down Payment | Mortgage Insurance | Who Can Use It | Main Cost |
|---|---|---|---|---|
| VA Loan | 0% | No | Military members, veterans, some spouses | Funding fee (1.4–3.6% rolled into loan) |
| USDA Loan | 0% | No | Rural/suburban buyers under income limit | may provide fee (1–2% rolled into loan) |
| FHA Loan | 3.5% | Yes, for life of loan | Anyone with credit score 580+ | Monthly insurance ($200–$400+) plus 3.5% down |
The choice between these depends on what you are may be able to access for. If you served in the military, a VA loan is usually the best option because there is no mortgage insurance. If you are buying in a rural area and your income qualifies, a USDA loan offers the same advantage. If neither applies to you, an FHA loan is the most accessible path, but you need to understand that the monthly insurance cost is permanent and substantial.
Each path has different requirements for credit, income, and location. Before you spend time on any of them, confirm that you meet the basic rules. A lender can tell you in one conversation whether you are may be able to access and what your estimated monthly payment would be.
Frequently Asked Questions
Can I get a no-down-payment loan with bad credit?
VA and USDA loans have no minimum credit score requirement, though most lenders want 620 or higher and will offer better rates at 680+. FHA loans require a minimum score of 580. If your score is below 580, you will need to work on improving it before any of these options are available to you.
What if I do not have money for closing costs?
You can ask the seller to cover closing costs as part of the purchase agreement, or you can roll them into your loan and pay interest on them over 30 years. Some lenders also allow gifts from family members to cover closing costs. Talk to your lender about what is allowed before you make an offer.
Will my monthly payment be affordable if I put nothing down?
That depends on the interest rate, the loan amount, and the mortgage insurance (if any). Calculate the full monthly payment including property taxes, homeowners insurance, and mortgage insurance before you commit. A house you can afford with a down payment might be out of reach once insurance is added.
Can I use a no-down-payment loan to buy a second home or investment property?
VA loans are for primary residences only. USDA loans are also for primary residences. FHA loans can be used for investment properties, but the rules are stricter and the down payment requirement may be higher. Talk to a lender about your specific situation.
What happens if I stop paying my mortgage?
The lender can foreclose and take the house. With no down payment, you have no equity cushion — you owe what the house is worth from day one. If the house value drops or you fall behind on payments, you could end up owing more than the house is worth. This is why lenders are careful about who they lend to with zero down.