Buying a home can feel impossible for a new buyer when the median US home price is $422,921 in 2026. The average down payment is nearly 19%. This is more than $80,000 upfront before closing costs or moving expenses. No wonder buyers are stressed.
The good news? You can still become a homeowner without paying a home down payment. From zero-down mortgages to state-backed programs, there are ways to buy a house with no money down. This guide covers every option, who qualifies, and how to get started.
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Key Takeaways
- Zero-down home loans, such as VA and USDA loans, make homeownership possible without upfront cash.
- Down payment assistance grants and state HFA programs can help if you don’t qualify for either.
- Good credit, steady income, and a low debt-to-income ratio are essential to qualify for no-money-down financing.
- FHA, HomeReady, and Conventional 97 loans require as little as 3%–3.5% down payment as an alternative.
- Be prepared for higher monthly payments or mortgage insurance costs to offset the low upfront expense.
- Closing costs still apply despite qualifying for zero down payment, but seller concessions and lender credits can help cover them.
What Does Buying a House With No Money Down Mean?
To buy a house with no money down doesn’t mean the home is free; it means you are not required to make a down payment, which is 3%-20% of the home’s price. Instead, you finance 100% of the home price through no down payment home loans or assistance options.
Zero-down mortgages are not available to every buyer. They are tied to specific loan programs with eligibility rules based on military service, property location, income limits, and credit requirements. If you don’t qualify for a true zero-down mortgage, low-down-payment loans, and homebuyer assistance programs can reduce how much cash you need upfront.
However, keep in mind that no down payments doesn’t equal no cost. You’ll still need to cover closing costs, appraisal fees, and home insurance; some programs help with those.
What are Zero-Down Mortgage Options in 2026?
Only two federally backed programs offer a true no down payment mortgage: VA loans and USDA loans. These programs are guaranteed by the federal government, reducing lenders’ risk and allowing qualified buyers to finance 100% of the purchase price.
VA Loan: No Down Payment for Veterans
VA loans are available to eligible veterans, active-duty service members, and surviving spouses. They are backed by the U.S. Department of Veterans Affairs.
To use a VA loan, borrowers must obtain a Certificate of Eligibility (COE) confirming their eligibility based on qualifying military service. Borrowers typically pay a VA funding fee, though it can often be rolled into the loan. Veterans with service-related disabilities are typically exempt.
Key features of VA Loans include 0% down payment, no private mortgage insurance (PMI), and competitive interest rates. Meanwhile, you need to remember that the VA does not set a minimum credit score, but most lenders prefer 620 or higher.
Note VA loans can only be used for a primary residence. You cannot avail a VA loan for secondary houses, investment properties, or vacation homes.
USDA Loan: 0 Down Home Loan for Rural Buyers
USDA loans are supported by the U.S. Department of Agriculture. These are designed for buyers purchasing homes in eligible rural and some suburban areas. Plus, just like VA Loans, USDA Loans can be used only for a primary residence.
There are two types: the USDA Guaranteed Loan (through approved private lenders) and the USDA Direct Loan (issued directly by the USDA for very low-income borrowers). Most buyers use the Guaranteed Loan.
Besides 0% down payment requirement, for USDA, your household income must fall within limits for the area. That said, most loans use 30-year fixed-rate terms, and you get lower mortgage insurance costs than with FHA loans.
Government Programs for No Money Down Home Loans
If you don’t qualify for a VA or USDA loan, several government programs can help reduce or eliminate the down payment.
National Down Payment Assistance Programs
Down payment assistance (DPA) programs provide grants or low-interest loans to help home buyers cover upfront costs. Some assistance is forgivable, meaning if you stay in the home for a set number of years, you never have to repay it. That said, the eligibility usually depends on income limits, credit score, and whether the buyer is purchasing their first home.
Well-known national programs include:
- HUD-approved housing counseling agencies that connect buyers with local programs
- Assistance programs offered through lenders using Fannie Mae or Freddie Mac loan products
- National Homebuyers Fund (NHF) provides grants up to about 5% of the loan amount
State and Local Home Buyer Programs
Every U.S. state has a Housing Finance Agency (HFA) that administers home buyer assistance programs. These programs often offer:
- Down payment grants
- Second mortgage loans
- Below-market mortgage rates
- Closing cost assistance
State-Level Down Payment Assistance Programs
| State | Program Name | Best For | Assistance Amount |
|---|---|---|---|
| California | CalHFA MyHome Assistance | First-time buyers meeting income limits | Up to 5% of the loan amount |
| Texas | TSAHC Home Sweet Texas | First-time buyers, credit score 620+ | Up to 5% of loan amount |
| Florida | Florida Assist (FL Assist) | First-time buyers meeting income limits | Up to $7,500, 0% interest deferred loan |
| New York | SONYMA Achieving the Dream | First-time buyers, income, and purchase price limits apply | 1% minimum out of pocket; optional DPAL grant available |
| Georgia | Georgia Dream Program | First-time buyers, credit score 620+ | $7,500 standard; up to $10,000 for targeted areas/borrowers |
Tip Many government programs are designed specifically for first-time homebuyers or buyers with limited savings. To find programs in your state, visit your state’s HFA website or the HUD resource directory at hud.gov.
Good Neighbor Next Door Program
HUD runs the Good Neighbor Next Door (GNND) program and offers a 50% discount on the list price of eligible homes for:
- Teachers (pre-K through 12th grade)
- Law enforcement officers
- Firefighters
- Emergency medical technicians
If you want to buy a home with Good Neighbor Next Door, the property must be located in HUD-designated revitalization areas. Also, remember that the discount is structured as a silent second mortgage that is forgiven after 36 months, as long as the buyer lives in the home as their primary residence.
Gift Funds From Family
Many loan programs allow buyers to use a family member’s gift toward their down payment. VA and USDA loans allow gift funds with proper documentation. Furthermore, FHA also permits gift funds, as do most conventional programs.
The donor typically needs to provide a gift letter confirming that the funds are a gift and that no repayment is expected. Most lenders will also ask for the donor’s bank statement showing the funds, proof of the transfer into your account, and a copy of the check, if applicable.
Alternatives to Zero Down Payment Loan Programs
If you don’t meet the requirements for a VA or USDA loan, several mortgage programs allow you to buy a home with 3% to 3.5% down, much lower than the traditional 20% down.
FHA Loan (3.5% Down)
FHA loans are backed by the Federal Housing Administration. These are commonly used by first-time buyers and borrowers with lower credit scores. That said, key features of FHA are:
- Minimum 3.5% down with a credit score of 580 or higher
- 10% down required for scores between 500–579
- Mortgage insurance premium (MIP) required
- With less than 10% down, MIP usually lasts for the duration of the loan
- Can be combined with DPA programs to further reduce upfront costs
Fannie Mae HomeReady Loan (3% Down)
HomeReady loans are designed for low- to moderate-income buyers and offer flexible qualification requirements such as:
- 3% minimum down payment
- Income limits apply (typically 80% of the area median income)
- In some cases, lenders may consider income from other household members
- Lower mortgage insurance costs compared to many FHA loans
Freddie Mac Home Possible Loan (3% Down)
The Home Possible program is similar to HomeReady but is offered through Freddie Mac. It also requires a minimum 3% down payment and an 80% income limit. The program allows co-borrowers who won’t occupy the home. The Home Possible Loan is beneficial for home buyers in high-cost areas.
Conventional 97 Loan (3% Down)
The Conventional 97 program allows buyers to purchase a home with just 3% down payment using a standard conventional mortgage. No income limits in most cases, but you need Private mortgage insurance (PMI). PMI can be cancelled after reaching 20% equity.
The program is available to first-time buyers and, in some cases, repeat buyers. It also requires a credit score of 620+.
Ways to Cover Your Closing Costs
Despite a no-down-payment mortgage, closing costs can run several thousand dollars. Here are two legitimate ways to reduce or eliminate them.
Seller Concessions
When making an offer, you can negotiate for the seller to cover some or all of your closing costs. This is called a seller concession. Limits depend on your loan type. For VA loans, you get a concession of upto 4% of the loan amount, while 6% is given for FHA and USDA Loans.
Tip In a buyer’s market, sellers may be more willing to cover costs. In a competitive market, asking for concessions could make your offer less attractive. Hence, weigh the trade-off carefully.
Lender Credits
Some lenders offer to cover your closing costs in exchange for a slightly higher interest rate. This is called a lender credit. You can avoid paying anything upfront, but the trade-off is a slightly higher monthly mortgage payment.
Tip Lender Credits can be a smart choice if you’re cash-strapped at closing and plan to refinance later when rates drop.
Pros and Cons of Buying a House With No Deposit
Pros ✅
- Enter the Market Sooner: You don’t have to spend years saving for a large down payment.
- Keeps Cash Liquid: Your savings remain available for emergencies, repairs, moving costs, or early mortgage payments.
- Builds Equity Over Time: If home values rise and you make regular mortgage payments, your equity grows.
- Competitive Interest Rates: VA and USDA loans often offer lower rates than many conventional loans.
- Preserve cash for upfront costs: Skipping the down payment frees money for closing, repairs, and moving.
Cons ❌
- Higher monthly payments: Financing 100% of the purchase price increases the total loan balance.
- Mortgage Insurance Costs: FHA and low-down-payment conventional loans require mortgage insurance.
- Negative Equity Risk: If home values fall, you could owe more than the home is worth.
- Limited Loan Options: True zero-down loans are limited to a few programs.
- Program Eligibility Requirements: Loans like VA and USDA have specific service, income, or location requirements.
How to Buy a Home With No Money Down?
These 6 steps can help ease the process of buying a house with a 0 down home loans or minimal upfront costs:
Step 1: Check Your Loan Eligibility
First, determine which zero-down or low-down-payment programs you qualify for. If you’re a veteran or active-duty service member, start with VA. If you’re buying in a rural or suburban area and meet income limits, check USDA eligibility. If neither applies, look into DPA programs in your state.
Step 2: Get Pre-Qualified
Contact a lender who offers the type of loan you are eligible for. They will review your credit, income, and debt-to-income (DTI) ratio and issue a pre-qualification or pre-approval letter. This tells you how much you can borrow and signals to sellers that you’re a serious buyer.
Note: For VA loans specifically, you need to obtain your Certificate of Eligibility (COE). There is no equivalent certificate for USDA or FHA Loans.
Step 3: Explore and Apply for DPA
If you plan to use a DPA program, Research available programs early before you go under contract. Some have limited funding and operate on a first-come, first-served basis. Apply early and confirm the program is compatible with your loan type.
Lastly, complete any required counseling or documentation, such as a HUD-approved homebuyer education course, proof of income, bank statements, or gift letters.
Step 4: Make an Offer
Once you find a home, work with your real estate agent to submit a competitive offer. Make sure to include requests for seller concessions if needed. However, be realistic about market conditions. Since in a seller’s market, asking for a concession may hurt your chances.
Step 5: Finalize Your Loan and Closing Costs
After your offer is accepted, the lender will order a home appraisal and begin underwriting. We recommend reviewing your loan estimate carefully. Ensure DPA, seller concessions, or lender credits are properly documented on your Closing Disclosure. Finally, verify your cash-to-close figure reflects all credits.
Step 6: Close on Your Home
At closing, you will sign the loan documents (promissory note, deed of trust, closing disclosure, and initial escrow statement), pay any remaining costs, and receive the keys.
With a zero-down mortgage and negotiated seller concessions or lender credits, your out-of-pocket cash at closing could be very low.
Tips to Improve Your Chances of Qualifying
- Boost your credit score: Pay bills on time and lower credit card balances.
- Reduce your DTI ratio: Lenders prefer a debt-to-income ratio under 43%.
- Compare lenders: Not all offer the same loan programs or assistance.
- Get preapproved: Shows sellers you are serious and financially ready.
Should You Buy a House With No Down?
A mortgage with no down payment makes housing more accessible for first-time buyers, veterans, and eligible professionals. If you’re wondering how to buy a house with no money down, these options are a great way to get started.
These loans may come with higher loan amounts and extra fees. If you don’t qualify, consider options like Fannie Mae HomeReady and Freddie Mac HomeOne that require just 3% down. You can simplify the process by connecting with top lenders.
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