Zero down mortgage: buying a house with no down payment

A zero down mortgage is a home loan for the whole price of the house, so you pay no down payment from your own money. Two federal loans offer it: a loan backed by the U.S. Department of Veterans Affairs (VA) for eligible veterans and service members, and one backed by the U.S. Department of Agriculture (USDA) for homes in rural areas. Closing costs remain, though a seller may pay them or a USDA loan can include them.

Which loans really allow no down payment?

Only the VA and USDA loans let you borrow the full price. Other low down payment loans ask for a few percent, though a state program may give or lend you that money.

An FHA loan is insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD), the federal housing department. HUD's rulebook for FHA loans asks for 10% down if your credit score is 500 to 579. Home Possible is a loan type whose rules are set by Freddie Mac, a company that buys home loans from lenders. Its income limit, the most a household can earn and still qualify, is 80% of the area median income, the middle income for your area.

Who qualifies for a VA loan?

You need a Certificate of Eligibility, a document from VA that tells a lender your service qualifies you. If you are serving now, you qualify after 90 days in a row on active duty. If you served any time since August 2, 1990, you usually need 24 months in a row. A shorter call to active duty also counts if you served all of it and it was at least 90 days. National Guard and Reserve members have their own rules, such as six years of service.

VA's no down payment rule has one condition: the price can't be higher than the home's appraised value, the value an expert sets after looking at it. The loan can't be more than the lower of the two. VA doesn't set a minimum credit score, but many lenders do, so ask more than one lender. A VA loan also has no monthly mortgage insurance, the extra monthly charge many low down payment loans add to protect the lender.

If you have full entitlement, VA sets no loan limit, and the lender decides how much you can borrow. Full entitlement usually means you have never used your VA loan benefit, or you paid off an earlier VA loan and had the benefit restored.

Who qualifies for a USDA loan?

A USDA loan needs a home in an eligible rural area, which you can check by address on USDA's eligibility site. You must live in the home and be a U.S. citizen, a U.S. non-citizen national or a qualified alien. Check the address before you rule a home out. USDA has two loans:

• Guaranteed loan. You borrow from a lender USDA approves, and USDA promises the lender it will cover most of the loss if you stop paying. Your household income can't be more than USDA's limit for your county. That limit is the highest of three figures based on national, state and local incomes. So it is never lower than 115% of the national median family income, the middle income of all U.S. families. For fiscal year 2026, that floor is $122,800 for 1–4 people and $162,100 for 5–8. The limit is higher where incomes are high. The loan has a 30-year fixed rate, and USDA sets no minimum credit score.
• Direct loan. You borrow from USDA itself. Your income must be at or under the area's low-income limit. USDA can lower your monthly payment with payment assistance, which can bring your interest rate as low as 1%.

These USDA limits for fiscal year 2026 are for a household of up to four people:

USDA counts the income of everyone who lives in the home, even people who won't be on the loan, minus some deductions. The lender or USDA makes the real calculation. A worked example of USDA's income count shows how adult children's pay is added in.

Can a state program cover the down payment?

Yes, for an FHA or other low down payment loan, many state housing agencies give or lend you the down payment through a lender they approve. Two examples:

• Nevada. Nevada Housing Division's Home Is Possible for First-Time Homebuyers gives up to 4% of the loan, with no interest, for the down payment or closing costs. It is never forgiven, so you pay it back. You must not have owned a home in the past three years, need a credit score of at least 640 and must take a homebuyer class. Its other program gives up to 5% for the down payment or closing costs.
• North Carolina. The NC 1st Home Advantage Down Payment gives $15,000 to first-time buyers and veterans as a second loan with no interest. It is forgiven 20% a year in years 11 to 15, so if you stay 15 years you owe nothing.

A loan with down payment help can carry a higher interest rate than one without it. Ask the lender to quote both, so you can compare. Most state programs also set income and price limits and ask you to take a homebuyer education class first; down payment assistance programs differ by state.

What costs remain with no down payment?

Closing costs remain: the fees to make the loan and move the home into your name, paid on the day you sign. Each government loan also adds its own fee. Example: a $300,000 home, a 30-year loan and an appraisal that matches the price.

The FHA one-time fee is 1.75% of the $289,500 loan, and you can add it to the loan. The yearly FHA mortgage insurance is 0.55% because you borrow more than 95% of the home's value, and you pay it for the life of the loan.

The VA funding fee can also be added to the loan, and veterans who receive VA disability compensation don't pay it. On a VA purchase loan, the funding fee is the only cost you can add to the loan. You pay the other closing costs on closing day, unless the seller agrees to pay them.

For loans USDA approves from October 1, 2026 to September 30, 2027, USDA's fees are 1% at closing and 0.35% a year. The lender pays them to USDA and usually passes them to you, and the one-time fee can be added to the loan. The yearly fee shrinks as you pay the loan down.

Every loan also has ordinary closing costs, such as the appraisal and title insurance. Your lender lists them on the Loan Estimate it gives you after you apply, and on the Closing Disclosure, which you must get three business days before closing.

Your monthly payment may also include an escrow payment (money the lender collects for your property taxes and home insurance), which can change each year. On a regular loan with less than 20% down, you usually pay private mortgage insurance, which protects the lender if you stop paying, not you.

What does "no down payment" not mean?

No down payment means only that you don't pay part of the price up front. It doesn't mean:

• no closing costs or fees;
• no credit check or income check;
• that every home qualifies: VA needs an appraisal at or above the price, and USDA needs an eligible rural address;
• free money: down payment help is often a second loan, and some must be repaid when you sell;
• a lower monthly payment. It raises it: you borrow more, so you pay more each month, and you start with no equity, the share of the home you own outright.

Where do you start?

1. Check your credit report and your monthly budget before a lender does.
2. Talk to a housing counselor approved by HUD. Many are free. Call HUD's counselor line at 800-569-4287, or search the Consumer Financial Protection Bureau's counselor list.
3. Get quotes from at least two lenders for the same home, with and without a down payment. Compare their Loan Estimates, the forms that show each loan's rate and costs.
4. Ask which loans fit you: VA if you served, USDA if the home and your income fit, and your state housing agency's first-time buyer programs for down payment help.
5. Look at homes priced below the market. Browse homes for sale, check lower-priced homes by area, and run the qualify check to see which fit your household. Ask the office selling each home which loans it accepts. Veterans can also read our guide to housing help for veterans.