Zero Down Payment Home Loans: Your Complete 2026 Guide

Zero down payment home loans make homeownership possible even when you have not saved a large sum of money. Two federal programs — USDA and VA loans — offer true 100% financing for eligible buyers. Several other options bring your out-of-pocket costs close to zero. This guide explains all of them, who qualifies, what they cost, and when putting nothing down actually makes sense.

If you have been told you need 20% down to buy a house, that information is outdated. Many first-time buyers close with little to no money from their own savings.

The Two True Zero Down Payment Programs

Only two loan programs backed by the federal government offer guaranteed zero down payment financing with no workarounds required: USDA loans and VA loans. Every other path to zero-down involves layering assistance programs on top of a low-down-payment mortgage — which is effective but not the same thing.

USDA Loans: Zero Down for Rural and Suburban Buyers

The United States Department of Agriculture (USDA) guarantees home loans for buyers in eligible rural and suburban areas through the Single Family Housing Guaranteed Loan Program. These loans require no down payment and carry competitive interest rates — often lower than conventional 30-year rates.

USDA Property Eligibility

The most common misconception about USDA loans is that they are only for farms or remote rural areas. In reality, USDA-eligible areas include most suburbs outside of major metropolitan cores. The USDA defines eligibility based on population density, not agricultural use. Towns with up to 35,000 people — and some suburban fringe areas of larger cities — often qualify.

You can check whether a specific property address is in an eligible area at the USDA’s online eligibility map at eligibility.sc.egov.usda.gov. This is the only authoritative source — do not assume a property is ineligible until you check.

USDA Income Limits

USDA loans are designed for low-to-moderate income buyers. Your household income must generally be at or below 115% of the area median income (AMI). This is a household income limit — meaning all income in the household counts, not just the borrower’s. Income limits vary by county and household size.

For a household of four, the income limit in many markets runs from around $110,000 to $150,000 or higher in higher-cost areas. Many middle-income families qualify. Check current limits at the USDA eligibility website, as limits are updated annually.

USDA Credit Score Requirements

The USDA itself does not set a minimum credit score, but most lenders require at least 640 for automated underwriting. Scores below 640 may be eligible through manual underwriting, but fewer lenders offer this. A score of 660 or higher makes USDA approval straightforward with most lenders.

USDA Guarantee Fee Structure

USDA loans do not require private mortgage insurance (PMI), but they do have two fees that serve a similar purpose:

• Upfront guarantee fee: 1% of the loan amount, due at closing (but can be rolled into the loan, so you do not pay it out of pocket)
• Annual fee: 0.35% of the outstanding loan balance per year, divided into monthly payments as part of your mortgage payment

These fees are significantly lower than FHA mortgage insurance, which is one reason USDA loans often have a lower monthly payment than comparable FHA loans. For full program details, read our USDA loan requirements 2026 guide.

VA Loans: Zero Down for Military Borrowers

VA loans — backed by the U.S. Department of Veterans Affairs — are widely considered the best mortgage product available. They offer 100% financing, no monthly mortgage insurance, and competitive rates, with no income limits and no purchase price cap (though lenders set their own limits).

VA Loan Eligibility

To use a VA loan, you must meet military service requirements. The basic eligibility categories are:

• Active-duty service members: Eligible after 90 consecutive days of active service
• Veterans: Eligibility depends on length of service and when you served — generally 181 days of active service during peacetime or 90 days during wartime
• National Guard and Reserves: Generally eligible after six years of service or 90 days of active service under Title 32
• Surviving spouses: Un-remarried surviving spouses of veterans who died in service or from a service-connected disability may be eligible

You obtain a Certificate of Eligibility (COE) from the VA to document your eligibility. Most VA-approved lenders can help you get your COE directly — you do not have to request it separately.

VA Funding Fee Structure

VA loans have no monthly mortgage insurance, but they do charge a one-time VA funding fee. The fee amount depends on your down payment and whether this is your first VA loan or a subsequent use:

Down Payment	First Use	Subsequent Use
Zero down (0%)	2.15%	3.3%
5% or more	1.5%	1.5%
10% or more	1.25%	1.25%

The funding fee can be rolled into the loan. Veterans with a service-connected disability rating of 10% or higher are exempt from the funding fee entirely — a significant savings.

Even with the funding fee, VA loans are almost always less expensive over time than conventional or FHA loans with mortgage insurance. For a direct comparison, read our VA loan vs FHA loan breakdown.

VA Loan Credit and Income Requirements

The VA does not set a minimum credit score, but most lenders require at least 620 for VA loans, and some go lower. DTI can be up to 41% under VA guidelines, though lenders sometimes approve higher with compensating factors. There are no income limits for VA loans.

Down Payment Assistance That Brings Cost to Near Zero

For buyers who do not qualify for USDA or VA loans, down payment assistance programs (DPA) can effectively reduce the out-of-pocket cost to near zero — even if the base loan requires a 3% or 3.5% down payment.

Here is how the math works:

• You get an FHA loan requiring 3.5% down on a $250,000 home — that is $8,750
• Your state HFA program provides a deferred second loan covering 3.5% of the purchase price
• Result: your down payment is effectively zero out of pocket

This is not technically “zero down” — you have a second loan — but you do not bring cash for the down payment to closing. Many buyers also use DPA to cover closing costs, meaning total out-of-pocket at closing may be only a few hundred dollars.

Our full guide to down payment assistance programs 2026 covers all DPA types in detail. For state-specific grant options, see first-time home buyer grants by state.

Common DPA programs that pair with low-down-payment loans to create near-zero cost:

• State Housing Finance Agency (HFA) second mortgages — forgivable or deferred
• National Homebuyers Fund (NHF) grants — up to 5% of the loan amount, no repayment
• Local city and county grant programs
• Employer-assisted housing programs (some large employers offer down payment grants as a benefit)

Navy Federal Credit Union: 100% Financing for Members

Navy Federal Credit Union offers its own zero-down mortgage product — the Homebuyers Choice mortgage — for members who do not qualify for or want a VA loan. This is a conventional loan (not government-backed) with 100% financing and no PMI required.

Key details on Navy Federal’s Homebuyers Choice:

• No down payment required
• No private mortgage insurance (PMI)
• A one-time funding fee applies (similar concept to the VA funding fee, but smaller — often around 1.75%)
• Available only to Navy Federal members (active duty, veterans, DoD employees, and their families)
• Fixed-rate options available
• Used for primary residences, including condos and townhomes

Navy Federal membership is broader than many people realize. Active duty military, veterans, DoD civilian employees, contractors working on DoD installations, and immediate family members of current members all qualify. If you are eligible, Navy Federal’s products are competitive with VA loans and sometimes easier to use for borrowers who have already used their VA entitlement or prefer the flexibility of a conventional product.

State Programs with Very Low Down Payments (Not Zero, But Close)

If you do not qualify for USDA, VA, or Navy Federal programs, these options get you close to zero down through conventional or FHA structures:

Fannie Mae HomeReady and Freddie Mac Home Possible

Both programs require only 3% down for first-time buyers with income at or below 80% of AMI. Reduced PMI rates apply, and DPA can cover the 3% — making effective out-of-pocket cost near zero. Credit score minimum is generally 620.

FHA Loans with Down Payment Assistance

FHA requires 3.5% down with a 580+ credit score. When paired with DPA, out-of-pocket cost approaches zero. See our FHA loan down payment requirements guide for full details.

Good Neighbor Next Door

HUD’s Good Neighbor Next Door program offers a 50% discount on the list price of HUD homes in revitalization areas for teachers, law enforcement officers, firefighters, and emergency medical technicians. This reduces the purchase price so dramatically that the 3.5% FHA down payment is very small. Buyers must commit to living in the home for three years.

Risks and Trade-Offs of Zero Down Mortgages

Zero down payment loans are a legitimate and valuable tool — but they come with trade-offs you should understand before committing.

You Start with No Equity

When you buy with zero down, your equity on day one is zero (or close to it). If home values drop after you buy — which happens in some markets — you could end up “underwater,” meaning you owe more than the home is worth. Selling in that situation means bringing money to the closing table instead of receiving proceeds.

Higher Monthly Costs

A larger loan means a larger monthly payment. You are also typically paying mortgage insurance (for USDA and FHA loans) or a funding fee that gets rolled into the loan balance, increasing what you owe. Over a 30-year loan, the difference in total interest paid between a zero-down loan and a 10% or 20% down loan is significant.

Less Negotiating Power

In competitive markets, sellers sometimes prefer offers with larger down payments as a sign of financial strength. A VA or USDA offer is still strong because of the government guarantee, but some sellers (and their agents) are unfamiliar with these loan types and may be hesitant. Working with an experienced agent who can explain these loans to sellers helps.

Closing Costs Still Apply

Zero down does not mean zero at closing. You still owe closing costs — typically 2% to 5% of the purchase price. On a $250,000 home, that is $5,000 to $12,500. You can ask the seller to pay closing costs (seller concessions), use DPA for closing costs, or negotiate a lender credit in exchange for a slightly higher interest rate. See our how much closing costs are guide for the full breakdown.

When Zero Down Makes Sense vs. When to Put Money Down

Zero Down Makes Sense When:

• You are a veteran or active military and can use your VA benefit — it is one of the best loan products in existence
• You are buying in a USDA-eligible area, your income qualifies, and you do not have a large down payment saved
• Renting is costing you more per month than a mortgage would — waiting to save 20% down costs you more in rent than you save
• Home prices in your area are rising faster than you can save — getting in now may build more equity than waiting
• You have strong income and job stability but limited savings — your income supports the payment even without equity cushion
• You keep your emergency fund intact rather than draining it for a down payment

When to Put Money Down Instead:

• You have 5% to 20% saved and are buying in a flat or declining market — equity cushion protects you from being underwater
• Putting 20% down eliminates PMI on a conventional loan, which can save $100 to $300 per month
• You have VA entitlement but plan to move in two to three years — a lower loan balance means less risk if you have to sell quickly
• Your income is variable or inconsistent — a lower loan balance means a lower payment, which gives you more buffer during slow months

There is no universal answer. The right choice depends on your market, your income stability, your savings level, and how long you plan to stay in the home. Our how much house can I afford guide can help you model the numbers for your situation.

How to Find Zero Down Payment Lenders

Not every lender offers USDA and VA loans, though most larger mortgage companies do. Here is how to find the right lender:

For VA Loans

Look for VA-approved lenders — most major banks, credit unions, and online lenders qualify. Specialty VA lenders (like Veterans United or Navy Federal) often have the most VA loan experience and may offer better terms than general lenders. See our best mortgage lenders for first-time buyers 2026 roundup for recommendations.

For USDA Loans

USDA loans require lenders approved by the USDA Rural Development program. Most large lenders and many regional lenders qualify. Confirm that the lender offers USDA loans — some smaller banks or credit unions do not. Online mortgage marketplaces let you compare multiple USDA-approved lenders at once.

For DPA-Paired Loans

You need a lender that participates in your state’s DPA program. Your state HFA website has a searchable directory of approved lenders. Start there.

Frequently Asked Questions

Can I really buy a house with zero money down?

Yes, with USDA or VA loans. You will still owe closing costs (typically 2% to 5% of the purchase price) unless you negotiate seller concessions or use additional assistance to cover them. Some buyers close with very little out of pocket by combining zero-down financing with seller-paid closing costs or DPA for closing costs.

Does zero down mean higher monthly payments?

Yes — a larger loan balance means a higher monthly payment compared to putting money down on the same home. USDA and VA loans also have fees (guarantee fee and funding fee) that increase the loan balance when rolled in. However, the absence of PMI on VA loans partly offsets this for VA borrowers.

Can I get a zero down loan with bad credit?

USDA and VA loans have more flexible credit requirements than conventional loans, but most lenders still want to see 620 or higher. Scores below 620 may still work with some lenders through manual underwriting. If your credit needs work, read our guide on how to qualify for an FHA loan with bad credit — many of the same strategies apply to USDA and VA loans.

Is a USDA loan really only for farmers?

No. USDA loans have nothing to do with farming. They are available for standard single-family homes, townhomes, and approved condos in eligible areas — which includes most suburbs outside major city cores. The program is based on geography and income, not occupation.

What is the income limit for a USDA loan?

Generally 115% of the area median income (AMI) for your county. This is a household income limit, meaning all adult income in the home counts. In many areas, households earning up to $110,000 to $150,000 or more qualify. Check current limits at the USDA eligibility site for your specific county.

Can I use a zero down loan to buy a fixer-upper?

USDA and VA loans both require the home to be in good condition and meet appraisal standards. Major fixer-uppers that need structural or habitability repairs typically do not qualify. Minor cosmetic issues are generally acceptable. If you want to buy and renovate, look into the FHA 203(k) renovation loan instead.

Do zero down loans have higher interest rates?

USDA and VA loans generally carry market-competitive interest rates — often on par with or better than conventional rates. They are not “higher risk” products that carry rate premiums. In fact, VA loan rates are frequently among the lowest available because of the government guarantee. Shopping multiple lenders is still important, as rates vary.

Can I use a VA loan more than once?

Yes. You can use your VA benefit multiple times. If you have fully paid off a previous VA loan and sold the property, your full entitlement is restored. If you still have an outstanding VA loan, you may have remaining entitlement depending on your county’s conforming loan limit. This is called “bonus entitlement” and allows you to have two VA loans simultaneously in some cases.

For more on the home buying process, read our first-time home buyer checklist, our steps to buying a house guide, and our article on what credit score you need to buy a house.