No down payment mortgages exist, but they come with real trade-offs you need to understand before you commit

You can buy a home without saving a down payment. Three main paths exist: VA loans (for military members and veterans), USDA loans (for rural properties), and conventional loans with lender-paid mortgage insurance. Each has different rules about who qualifies, where you can buy, and what you'll pay over the life of the loan. The catch is that zero down doesn't mean zero cost — you're typically paying more in interest and insurance than someone who put money down.

The reason lenders allow this is risk transfer. When you put nothing down, the lender absorbs the loss if you default and the home sells for less than you owe. To protect themselves, they charge you higher interest rates, require mortgage insurance, or both. Understanding which program fits your situation — and what it actually costs — matters more than the headline of "no money down."

Key Takeaways

  • VA loans require no down payment and no mortgage insurance, but only military members, veterans, and some surviving spouses can use them.
  • USDA loans require no down payment for properties in may be able to access rural areas and are open to any buyer, but come with a funding fee and mortgage insurance.
  • Conventional no-down loans exist but charge higher interest rates and require mortgage insurance, making them more expensive over time than putting money down.
  • All no-down loans require you to have decent credit, stable income, and proof you can afford the monthly payment — lenders are stricter on these factors when you have no equity cushion.
  • The monthly payment on a no-down loan includes principal, interest, taxes, insurance, and mortgage insurance, which is significantly higher than a loan with 20 percent down.

VA loans: No down payment, no mortgage insurance

If you served on active duty, are a veteran, or are a surviving spouse of a service member, you may have a VA loan benefit. The Department of Veterans Affairs doesn't lend money itself — instead, it guarantees loans made by private lenders, which means the lender takes less risk and can offer better terms. The benefit includes zero down payment and zero mortgage insurance, which is the strongest no-down option available.

To use a VA loan, you need a Certificate of may be able to access, which you request from the VA. You'll also pay a one-time funding fee (usually 2.3 percent of the loan amount for first-time users), which can be rolled into the loan. The interest rate is typically lower than conventional loans, and there's no monthly mortgage insurance payment. The trade-off is that VA loans have a maximum loan amount that varies by county, and some lenders are slower to process them.

You still need to meet the lender's income and credit requirements, and you'll pay property taxes and homeowners insurance like any buyer. But the combination of no down payment and no mortgage insurance makes VA loans the cheapest no-down option if you're may be able to access.

USDA loans: No down payment for rural properties

The USDA Rural Development loan program offers no down payment mortgages for homes in may be able to access rural areas. The USDA doesn't lend directly; private lenders make the loans and the USDA guarantees them. You don't have to work in agriculture or live on a farm — you just have to buy a property the USDA classifies as rural, which includes many small towns and suburban areas outside major cities.

Like VA loans, USDA loans charge a one-time funding fee (1 percent of the loan amount) and require mortgage insurance (0.55 percent annually). The mortgage insurance is mandatory for the life of the loan, even if you later build equity. The interest rate is typically competitive with conventional loans. You'll need acceptable credit and stable income, and the lender will verify your assets and debts.

The biggest limitation is geography. You can check whether a specific address qualifies on the USDA website. If the property is just outside the may be able to access area, you won't be able to use the program, even if it looks rural. If you're buying in a may have access to area, USDA loans are often cheaper than conventional no-down loans because the interest rate is lower.

Conventional no-down loans: Higher cost, broader availability

Some conventional lenders offer mortgages with zero down payment to borrowers with good credit and stable income. These loans require private mortgage insurance (PMI), which protects the lender if you default. The insurance premium is added to your monthly payment and typically ranges from 0.5 to 1.5 percent of the loan amount annually, depending on your credit score and the lender.

Conventional no-down loans have higher interest rates than loans with 10 or 20 percent down, sometimes by 0.5 to 1 percent. Combined with the mortgage insurance, your monthly payment is noticeably higher than it would be if you'd saved a down payment. You can remove the mortgage insurance once you build 20 percent equity, but that takes years of payments.

The advantage is availability — any lender can offer conventional loans, and you can buy anywhere in the country. The disadvantage is cost. If you have any option to save even 5 or 10 percent down, a conventional loan with a down payment will cost you less over the life of the mortgage.

Credit, income, and debt requirements for no-down loans

Lenders are stricter about credit and income when you're putting nothing down, because they have no equity cushion if you run into trouble. Most no-down programs require a credit score of at least 620, though 640 or higher is more realistic for approval. Some lenders want 680 or above for the best rates.

You'll need to show stable income for at least two years, and your total monthly debt payments (including the new mortgage) can't exceed a certain percentage of your gross income — usually 43 to 50 percent, depending on the program and lender. If you're self-employed, you'll need two years of tax returns. If you've had recent job changes, gaps in employment, or large deposits in your bank account, the lender will ask for explanations.

Lenders also verify your assets and savings. Having some money in the bank — even if you're not using it for a down payment — shows you can handle emergencies. If you have no savings at all, some lenders will deny you or charge a higher rate.

What no-down loans actually cost each month

The monthly payment on a no-down loan includes principal, interest, property taxes, homeowners insurance, and mortgage insurance (or the funding fee rolled into the loan). On a $300,000 home with no down payment, your monthly payment could easily be $2,200 to $2,500 before property taxes and insurance, depending on the interest rate and program.

Compare that to a buyer who put 20 percent down ($60,000): their loan amount is $240,000, they pay no mortgage insurance, and their monthly payment is roughly $1,400 to $1,600 before taxes and insurance. Over 30 years, the difference is tens of thousands of dollars.

The real question isn't whether you can afford the monthly payment — it's whether you can afford to pay more than necessary. If you have the option to save a down payment, even a small one, the math usually favors waiting.

When a no-down loan makes sense

No-down loans are worth considering if you're a veteran with a VA loan benefit, if you're buying in a USDA-may be able to access rural area and have stable income, or if you're in a market where home prices are rising faster than you can save. They also make sense if you have a large amount of cash but prefer to invest it rather than tie it up in a down payment.

They don't make sense if you have the ability to save even 5 or 10 percent down. The interest rate and insurance costs on a no-down loan are steep enough that you'll come out ahead by waiting a year or two and building a down payment. The exception is if you're renting and your rent is higher than a mortgage payment would be — in that case, buying sooner with no down payment might be cheaper than renting while you save.

Frequently Asked Questions

Can I get a no-down loan with bad credit?

Most no-down programs require a credit score of at least 620, and many lenders prefer 640 or higher. If your score is below 620, you'll struggle to find a lender. If it's between 620 and 640, you may find options but will pay a higher interest rate. Improving your credit before applying will save you money.

Do I have to pay mortgage insurance forever on a no-down loan?

On conventional loans, you can remove mortgage insurance once you have 20 percent equity, which typically takes 5 to 10 years of payments. On USDA loans, the mortgage insurance is permanent for the life of the loan. VA loans have no mortgage insurance at all.

What if I'm buying a home that's not in a USDA-may be able to access area?

You can use a conventional no-down loan or, if you're may be able to access, a VA loan. Conventional loans are available anywhere but cost more due to higher interest rates and mortgage insurance. VA loans also have no geographic restrictions.

Can I use a no-down loan to buy an investment property?

No. VA loans, USDA loans, and most conventional no-down programs require the home to be your primary residence. Investment properties require a down payment, usually 20 to 25 percent.

How long does it take to get approved for a no-down loan?

The process typically takes 30 to 45 days from application to closing, but can be longer if the lender needs additional documentation or if you're using a VA loan (which some lenders process more slowly). Starting early and having your documents ready speeds up the timeline.