Buying a home can feel impossible for a new buyer when the median US home price is $321,408 in 2025. And the average down payment hits nearly 7%. This is more than $28,000 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. Here’s how to make it happen and turn your homebuying dream into reality.
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Key Takeaways
- Zero-down home loans like VA and USDA loans make homeownership possible without upfront cash.
- Down payment assistance programs and grants can cover part or all of your initial costs.
- Good credit and steady income remain essential to qualify for no-money-down financing.
- Be prepared for higher monthly payments or mortgage insurance costs to offset the low upfront expense.
- Compare lenders, programs, and eligibility requirements to find the best zero-down option for your situation.
What Does No Money Down Mean in Real Estate?
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 typically 3%-20% of the home’s price. Instead, you finance 100% of the home price through no down payment home loans or assistance options.
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 even help with those. These loans are designed for first-time buyers, low-income families, veterans, or residents of rural areas.
Can You Buy a House With No Money Down?
Yes, you can buy a house with no down payment, especially if you are a first-time home buyer! Certain programs, like VA loans for veterans and USDA loans for rural homebuyers, allow you to skip the down payment entirely.
Many states also offer homebuyer assistance programs with grants that can cover or reduce your upfront costs. So, while most mortgages require 3% to 20% down, there are other ways to buy a home with little to no money upfront!
How to Buy a Home With No Money Down?
These 5 steps can help ease the process of buying a house with no money down:
1. Get Pre-Qualified for a Mortgage
Find out if you meet the eligibility requirements for zero down payment under conventional, VA, or USDA loans. Know your budget and apply for a zero-down payment mortgage that suits your needs.
2. Explore Down Payment Options
Another way to buy a house with no down payment is to explore alternative funding options. You can seek down payment assistance (DPA) or ask family members for gift funds to cover the down payment.
3. Find Your Dream Home
The next step is to find a home that fits your budget and suits your needs. Work with a real estate agent to explore different neighborhoods and attend showings. Make sure to compare properties to find the best deal.
4. Apply for the Loan You Choose
First, you must confirm the programs you are eligible for. Then, prepare the required documents and submit your application to the loan program and lender you chose.
5. Negotiate Closing Costs
Negotiate your closing costs to reduce upfront expenses. Also, ask if the seller would cover a part or all of these costs in exchange for a slightly higher purchase price. Additionally, search for lenders who allow you to roll closing costs into your mortgage.
Types of Home Loans to Buy a House with No Money Down
If you’re wondering how to buy a house with no money down, here are some low or zero-down payment loan options:
1. VA Loans (For Veterans and Military Personnel)
VA loans are a valuable benefit available to active-duty service members, veterans, and eligible surviving spouses. Backed by the US Department of Veterans Affairs (VA), these loans are issued through private lenders and are designed to make homeownership more accessible to those who have served.
Key Advantages:
- No down payment required.
- No Private Mortgage Insurance (PMI).
- Competitive interest rates and flexible credit guidelines.
Associated Costs:
Borrowers are typically required to pay a VA funding fee ranging from 1.25% to 3.3% of the loan amount. The percentage varies depending on the borrower’s down payment (if any) and whether it is a first-time or subsequent VA loan.
2. USDA Loans (For Rural and Suburban Homebuyers)
The US Department of Agriculture (USDA) offers loans aimed at supporting homeownership in eligible rural and suburban areas. These types of loans are ideal for low- to moderate-income buyers who meet program criteria.
Program Benefits:
- No down payment requirement.
- Favorable interest rates and loan terms.
- Encourages development and stability in rural communities.
Associated Costs:
USDA loans include two standard fees:
- A 1% upfront guarantee fee, generally paid at closing or rolled into the loan.
- A 0.35% annual fee, included in monthly average mortgage payments.
3. Good Neighbor Next Door Program (For Public Service Professionals)
The Good Neighbor Next Door (GNND) initiative, administered by the US Department of Housing and Urban Development (HUD). This provides significant incentives for teachers, law enforcement officers, firefighters, and emergency medical technicians. The program offers HUD-owned properties at a 50% discount in designated revitalization areas.
Program Features:
- Homes available at 50% of the list price.
- Option for FHA-insured financing with a minimum $100 down payment.
- Ability to include repair costs within the mortgage, similar to an FHA 203(k) loan.
- Opportunity to build equity after residing in the home for a minimum of three years.
Associated Costs:
The 50% discount is secured by a silent second mortgage, which requires no repayment provided the homeowner occupies the property for at least 36 months. Standard closing costs and remaining purchase expenses still apply.
4. Piggyback Loans (Two-Loan Financing Strategy)
A piggyback loan, commonly referred to as an 80-10-10 loan, allows buyers to finance their home through two simultaneous loans. This approach can reduce or eliminate the need for Private Mortgage Insurance (PMI) and lower the initial cash requirement.
Structure Overview:
- Primary mortgage: 80% of the home’s purchase price.
- Secondary mortgage: 10–15% of the price.
- Buyer contribution: 5–10% down payment.
Cost Considerations:
While piggyback loans help avoid PMI, they often involve higher interest rates on the second loan, dual closing costs, and two monthly payments. Some lenders may also impose servicing fees for the secondary loan.
Pros and Cons of Buying a House With No Down Payment
| Pros ✅ | Cons ❌ |
|---|---|
| Not spending years of savings for a down payment means more cash in hand for emergencies. | Since you borrow a larger amount, your mortgage payments will be higher than usual. |
| If your home value rises, you get more equity without making any upfront investments. | Almost every zero down payment loan requires you to have PMI, which adds to your cost. |
| Several programs like VA and USDA loans exist that make homeownership more accessible. | If property values drop, you could end up owing more than the home’s value on your mortgage. |
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. And at Houzeo, we simplify the process by connecting you with top lenders and options.
