No and Low Down Payment Mortgage Options
Two mortgage programs offer genuine zero down payment with no conditions: VA loans for eligible veterans and service members, and USDA Rural Housing loans for buyers in eligible areas within income limits. A third path to near-zero out-of-pocket costs is available through down payment assistance programs that pair with FHA, HomeReady, or Home Possible first mortgages and cover the required down payment entirely. Understanding which path fits your situation is what this guide covers.
All Mortgage Programs at a Glance
Two programs offer genuine zero down payment: VA for eligible veterans and USDA for qualifying buyers in eligible areas. A third path reaches effectively zero through down payment assistance paired with FHA, HomeReady, or Home Possible. For buyers who bring some cash to closing, the 3% and 3.5% programs reduce the upfront requirement while still requiring mortgage insurance that affects the monthly payment long-term.
| Program | Down Payment | Who Qualifies | Monthly Mortgage Insurance |
|---|---|---|---|
| VA Loan | 0% | Eligible veterans, active duty, surviving spouses | None |
| USDA Rural Housing | 0% | Buyers in eligible areas within income limits | 0.35%/yr (annual fee) |
| FHA + DPA | 0% effective with assistance | Income-qualifying buyers in participating programs | 0.55%/yr MIP (life of loan) |
| HomeReady + DPA | 0% effective with assistance | Buyers at or below 80% AMI | PMI, cancels at 20% |
| Home Possible + DPA | 0% effective with assistance | Buyers at or below 80% AMI (660+ score) | PMI, cancels at 20% |
| FHA | 3.5% | Any eligible buyer (580+ score) | 0.55%/yr MIP (life of loan) |
| HomeReady | 3% | Income-qualifying buyers (620+ score) | PMI, cancels at 20% |
| Home Possible | 3% | Income-qualifying buyers (660+ score) | PMI, cancels at 20% |
Option 1: VA Loan: True Zero Down for Veterans
The VA home loan is the strongest zero-down mortgage product available. Eligible veterans, active-duty service members, and qualifying surviving spouses can purchase a home at any price their income and credit support, with no down payment, no monthly mortgage insurance, and no loan limit for borrowers with full entitlement.
Instead of a down payment or monthly mortgage insurance, VA charges a one-time funding fee at closing, which can be rolled into the loan:
- First use, 0% down: 2.15% of the loan amount
- Subsequent use, 0% down: 3.30%
- Veterans with service-connected disability: exempt (no funding fee)
On a $300,000 loan at first use, the 2.15% funding fee is $6,450, a one-time cost that finances into the loan, compared to years of monthly mortgage insurance on other programs. For a veteran receiving VA disability compensation, even this one-time cost is waived.
Sellers can contribute up to 4% of the established home value in concessions toward the buyer’s closing costs, making a VA purchase with zero out-of-pocket cash genuinely achievable.
See complete VA loan details → See VA loan pros and cons →
Option 2: USDA Rural Housing: Zero Down Outside Urban Centers
The USDA Guaranteed Rural Housing loan offers zero down payment for buyers in USDA-eligible areas with household income at or below 115% of the area median income. The 2026 standard income limits are $119,850 for 1-4 person households and $158,250 for 5-8 person households in most counties.
USDA-eligible areas include many smaller cities, towns, and outer suburbs, not just remote farmland. Properties in communities adjacent to major metros often qualify depending on population and density thresholds. Check any specific address on the official USDA property eligibility map.
USDA charges two fees in place of mortgage insurance:
- Upfront guarantee fee: 1.0% of the loan amount (financeable into the loan)
- Annual fee: 0.35% of the outstanding balance, paid monthly
On a $250,000 loan, the monthly fee is approximately $73, meaningfully lower than FHA’s $115/month at the same balance. Both fees replace what other programs charge in mortgage insurance.
The practical zero-down path with USDA: If the home appraises above the purchase price, USDA allows closing costs to be financed into the loan up to the appraised value. Combined with a 6% seller concession covering remaining costs, a USDA buyer can sometimes close with literally zero cash at the table.
See complete USDA program details → Check your area’s USDA property eligibility →
Option 3: Down Payment Assistance Programs
Down payment assistance (DPA) is the path most buyers don’t know about, and the one that makes zero-down homeownership possible for buyers who don’t qualify for VA or USDA.
DPA programs are administered by state Housing Finance Agencies, local governments, and nonprofits. They provide grants (true gifts with no repayment), forgivable loans (forgiven over time as long as you stay in the home), and deferred second mortgages (due only when you sell, refinance, or pay off the first mortgage). All of them pair with a first mortgage: FHA, HomeReady, Home Possible, or USDA, to cover the required down payment.
State programs across our service area:
- Wisconsin (WHEDA): Easy Close DPA second mortgage at a below-market rate, paired with a WHEDA Advantage below-market first mortgage
- Minnesota (Minnesota Housing): Monthly Payment Loan or Deferred Payment Loan for down payment and closing costs
- Illinois (IHDA): IHDAccess Forgivable grant up to $6,000 (10-year forgiveness); Deferred up to $7,500; Repayable up to $10,000
- Indiana (IHCDA): Next Home program: grants and forgivable loans for down payment
- Georgia (Georgia Dream): Deferred second mortgages up to $10,000-$20,000
- Michigan (MSHDA): MI Home Loan: up to $10,000 in deferred DPA
- Texas (TDHCA): My First Texas Home: up to 5% of loan amount in DPA
- Virginia (Virginia Housing): Grants up to 2.5% of purchase price, no repayment required
- Florida (Florida Housing Finance Corporation): Down payment assistance for income-qualifying buyers through participating lenders
DPA programs have income limits and purchase price limits that vary by county and household size. They require working with a participating lender. Not all lenders in a given state offer all DPA programs; ask specifically which programs your loan officer works with.
See WHEDA program details → See Mortgage Credit Certificate details →
Option 4: Low Down Payment Programs including FHA Loans and Conventional Mortgages (Down Payments as low as 3 to 3.5% Down)
For buyers who don’t qualify for VA, USDA, or DPA, three programs offer the lowest conventional down payment requirements.
FHA at 3.5% down requires a 580+ credit score and carries no income limit. The entire 3.5% can be a gift. Sellers can contribute up to 6% toward closing costs. The trade-off: FHA MIP with less than 10% down lasts for the life of the loan and never cancels without refinancing.
Fannie Mae HomeReady at 3% down requires a 620 credit score and household income at or below 80% of area median income. PMI is canceled at 20% equity. Boarder income and non-borrower household income provisions make this program more flexible than standard conventional for buyers with household members who contribute but aren’t on the loan.
Freddie Mac Home Possible at 3% down requires a 660 credit score and 80% AMI income limit. PMI cancels at 20% equity. Freddie Mac’s free CreditSmart homebuyer education satisfies the course requirement.
Gift Funds: Using Someone Else’s Money for the Down Payment
Most major loan programs allow the down payment to come entirely from a gift:
- VA: Gift funds allowed for closing costs
- USDA: Gift funds allowed from family and eligible organizations
- FHA: Entire 3.5% can be gifted from family, employer, nonprofit, or government
- HomeReady: Full 3% can be gifted
- Home Possible: Full 3% can be gifted
Gift documentation requirements are consistent across programs: a signed gift letter confirming the amount, the donor relationship, and that no repayment is expected, plus bank statements documenting the transfer. The source must be a person or organization permitted under the program’s guidelines.
See gift fund documentation details → See Gift of Equity guide →
Seller Concessions: Covering Closing Costs at the Table
Down payment and closing costs are separate expenses, and seller concessions are the primary tool for eliminating the second one. A buyer who has the down payment covered by DPA or gifts but still needs $5,000-$12,000 in closing costs can negotiate seller concessions to cover that gap entirely, making the combined strategy of DPA plus seller concessions the most direct path to zero out-of-pocket costs on a qualifying purchase.
Seller concession limits by program:
| Program | Maximum Seller Contribution |
|---|---|
| VA | Up to 4% of established value (plus normal closing costs) |
| USDA | Up to 6% of purchase price |
| FHA | Up to 6% of purchase price |
| Conventional (LTV > 90%) | Up to 3% |
| Conventional (75-90% LTV) | Up to 6% |
| HomeReady / Home Possible | Up to 3-6% depending on LTV |
A buyer using USDA or FHA with a 6% seller concession and DPA covering the down payment can close with zero or near-zero out-of-pocket cash on a qualifying purchase.
What Zero Down Payment Actually Costs
Zero down payment doesn’t mean zero cost. Each program replaces the down payment with a different cost structure worth understanding before you choose.
VA: One-time funding fee of 2.15% (first use, no down). Exempt for veterans with disability compensation. No monthly mortgage insurance. On a $300,000 loan: $6,450 one-time cost, then no ongoing fee.
USDA: 1.0% upfront guarantee fee (financeable) plus 0.35% annual fee monthly. On a $250,000 loan: $2,500 upfront plus approximately $73/month ongoing.
FHA: 1.75% upfront MIP (financeable) plus 0.55% annual MIP monthly, and it never cancels with less than 10% down. On a $250,000 loan: $4,375 upfront plus approximately $115/month, forever until refinancing.
HomeReady/Home Possible with DPA: No upfront fee beyond the DPA second mortgage. PMI at reduced rates, canceling at 20% equity. The second mortgage has its own rate and mortgage payment structure.
The true cost comparison for a buyer eligible for both VA and USDA is almost always VA: no monthly fee vs. USDA’s 0.35%, and the VA funding fee is typically offset within a few years by the monthly savings. For a buyer eligible for both USDA and FHA, USDA’s lower fees and no life-of-loan MIP produce better long-term costs in most scenarios.
Frequently Asked Questions about No and Low Down Payment Loans
For buyers without VA eligibility and outside USDA-eligible areas, FHA at 3.5% down combined with a state DPA grant is the most commonly available path to near-zero out-of-pocket costs. The questions below address that combination and the full range of program, cost, and affordability questions buyers ask before choosing between their options.
Can I really buy a home with no money at all?
Yes, in specific scenarios. A VA-eligible veteran using seller concessions to cover closing costs can close with zero dollars out of pocket. A USDA buyer where the home appraises above the purchase price and the seller covers closing costs can also reach zero. A buyer using FHA with DPA covering the 3.5% and seller concessions covering closing costs can close with near zero. None of these are guaranteed outcomes; they depend on finding a seller willing to contribute and a property that appraises at or above the purchase price.
What is the easiest no-money-down loan to qualify for?
VA is typically the easiest for eligible borrowers because it has no minimum credit score, no income limit, no geographic restriction, and no monthly mortgage insurance. USDA requires property eligibility and income within 115% of AMI. DPA programs have their own income limits, purchase price limits, and first-time homebuyer requirements in some areas.
Do I still need money saved if I use a no-down-payment loan?
Yes , even with zero down payment, having savings matters. You need reserves after closing for maintenance, repairs, and financial emergencies. Lenders also look at post-closing reserves as a qualification factor on some loan programs. Arriving at homeownership with zero financial cushion is a risk regardless of how little you put down.
Can I use a no-down-payment loan on any property?
No. VA requires owner-occupancy and the property must be for primary residence. USDA requires that the property be in a USDA-eligible area and be a single-family residence. FHA requires owner-occupancy. DPA programs typically restrict property type and purchase price.
Is a no-down-payment loan a bad idea?
Not inherently. Starting with zero home equity means you have no cushion if values decline, and you’ll pay fees or private mortgage insurance that a 20%-down buyer avoids. But for buyers who would otherwise spend years saving a down payment while renting, purchasing now with zero down can produce better long-term financial outcomes than waiting, particularly when home prices are appreciating and when low-down-payment programs have competitive rates.
Do no-down-payment loans have higher interest rates?
VA rates are typically at or below conventional loan rates; the VA guaranty allows competitive pricing without the rate premium you might expect. USDA rates are also competitive with an FHA mortgage and conventional for qualifying borrowers. When it exists, the rate premium on zero-down purchases is usually modest.
What are the pros and cons of a low or no down payment mortgage?
The primary benefit is homeownership sooner, often years sooner, than waiting to accumulate a 20% down payment while renting. In markets with appreciating home prices, buying earlier with a low down payment frequently produces better financial outcomes than waiting. State DPA programs can cover the down payment entirely, and the monthly cost of PMI or guarantee fees is often lower than the ongoing rent increase a buyer avoids by purchasing.
The trade-offs are real. Mortgage insurance adds to the monthly payment on FHA and conventional low-down-payment loans, and FHA MIP with less than 10% down never cancels without refinancing.
Starting with minimal equity means no financial cushion if values decline. VA and USDA replace the down payment with a funding fee or guarantee fee, which is lower than PMI over time but not zero. And some low-down-payment programs have income limits that exclude buyers earning above the area median threshold.
None of these trade-offs outweigh the benefits for most buyers who qualify, but understanding them before choosing a program prevents surprises at closing or three years into the loan.
Do I need mortgage insurance with a low down payment?
It depends on the program. VA loans have no mortgage insurance at any down payment level, ever. USDA loans have no PMI but charge a 0.35% annual guarantee fee. Conventional loans below 20% down require PMI, which cancels when equity reaches 20%. FHA loans require MIP regardless of down payment, and with less than 10% down, MIP lasts for the life of the loan without refinancing.
HomeReady and Home Possible (both at 3% down) require PMI at reduced rates compared to standard conventional, and PMI cancels at 20% equity. The mortgage insurance question is one of the most important reasons to compare VA and USDA against FHA before assuming FHA is the default low-down option.
What credit score is needed for a low or no down payment mortgage?
VA has no published minimum and evaluates the full credit picture, with the most recent 12 months weighted most heavily. USDA requires 640 for automated underwriting (manual underwriting available below 640 at some lenders). FHA requires 580 for 3.5% down and accepts 500-579 with 10% down, though most lenders apply overlays requiring 600-640. HomeReady requires 620. Home Possible requires 660.
Standard conventional requires 620, though scores below 680 produce higher pricing through Loan Level Price Adjustments. For buyers with scores below 620, FHA is typically the most accessible conventional mortgage path, and some VA-experienced lenders will work below 580 through manual underwriting for eligible veterans.
How much house can I afford with a $10,000 down payment?
With $10,000 as the down payment, the purchase price depends on which program you use. On a conventional loan at 5% down, $10,000 supports a $200,000 purchase. On FHA at 3.5% down, $10,000 supports roughly a $285,000 purchase. On HomeReady or Home Possible at 3% down, $10,000 supports approximately a $333,000 purchase.
If a DPA program in your state covers the down payment separately, $10,000 in savings can instead go toward closing costs and reserves rather than the down payment, potentially supporting a higher purchase price on the same programs. Keep in mind that the purchase price you can afford is also constrained by your income and existing debt through the DTI calculation, the down payment percentage determines the minimum required, but income determines the maximum loan you qualify for.
Can I buy a house with a $30,000 down payment?
Yes, and $30,000 can cover the full down payment requirement on a wide range of purchase prices depending on the program. On conventional at 5% down, $30,000 supports a $600,000 purchase. On FHA at 3.5% down, it supports roughly an $857,000 purchase, though FHA loan limits cap at $524,225 in most counties, so FHA’s limit becomes the binding constraint before the down payment does at higher prices.
On HomeReady or Home Possible at 3% down, $30,000 supports a $1,000,000 purchase in theory, though income qualification becomes the constraint at those prices. On a $300,000 purchase, $30,000 is a 10% down payment on a conventional loan, which eliminates the higher-LTV LLPA tiers and reduces but doesn’t eliminate PMI.
On an FHA loan at the same price, $30,000 exceeds the 3.5% minimum and reduces the loan amount, but MIP still applies. Running the numbers with a loan officer on both conventional and FHA at your target price shows which produces the better monthly payment and long-term cost.
How much do you need for a down payment on a $300,000 house?
The minimum depends on the program:
- VA: $0 for eligible veterans with full entitlement
- USDA: $0 for buyers in eligible areas within income limits
- HomeReady (620+ score, within 80% AMI): $9,000 (3%)
- Home Possible (660+ score, within 80% AMI): $9,000 (3%)
- FHA (580+ score): $10,500 (3.5%)
- Conventional standard (620+ score): $15,000 (5%)
- Conventional without PMI: $60,000 (20%)
On top of the down payment, closing costs typically run 2-3% of the loan amount, or $6,000-$9,000 on a $300,000 purchase. Seller concessions (up to 6% on FHA and USDA, up to 3-6% on conventional) can cover all or most closing costs. State DPA programs can cover the down payment entirely for income-qualifying buyers. A buyer combining DPA with a seller concession on a $300,000 purchase can sometimes close with under $3,000 total out of pocket.
What type of mortgage has the lowest down payment?
VA and USDA are the only programs with zero down payment as a standard feature. Between them, VA is more broadly accessible (no geographic or income restriction for eligible borrowers) while USDA is available to any qualifying buyer in an eligible area within income limits. After zero-down options, HomeReady and Home Possible at 3% down produce the lowest conventional down payment, slightly lower than FHA’s 3.5%.
Among low-down-payment options, HomeReady and Home Possible also have the long-term cost advantage over FHA because their PMI cancels at 20% equity rather than lasting for the life of the loan. For buyers who don’t qualify for VA or USDA and aren’t within income limits for HomeReady or Home Possible, FHA at 3.5% is typically the lowest accessible down payment option.
Ready to Explore Your Loan Options?
The right no or low down payment program depends on three things in order: whether you have VA eligibility, whether the property is in a USDA-eligible area within the income limit, and what your credit score is. A loan officer who actively originates all of these programs can tell you which ones apply to your specific situation in a single pre-approval conversation.
We are licensed in Arizona, Florida, Georgia, Illinois, Indiana, Iowa, Michigan, Minnesota, New Jersey, North Carolina, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin.
Related Resources
If you’re comparing programs, start with the VA, USDA, and FHA program pages for full requirement details, then the state-specific pages for DPA and MCC eligibility in your area. The comparison guides at the bottom help narrow the choice once you know which programs you qualify for.
- VA Loan Program
- USDA Rural Housing Program
- FHA Loan Program
- HomeReady Mortgage
- Home Possible Mortgage
- WHEDA Program
- Mortgage Credit Certificate
- First Time Home Buyer Programs
- Down Payment Guide
- FHA Cash Gift Down Payment
- Gift of Equity
- How to Buy a Home With No Money Down
- No Down Payment Mistakes to Avoid
- What Is Mortgage Insurance?
- FHA vs. VA vs. USDA Comparison
- Mortgage Pre-Approval vs. Pre-Qualification
This information is provided for educational purposes only. Program guidelines, income limits, fees, and eligibility requirements are subject to change. Down payment assistance program terms vary by state and are updated periodically. MadisonMortgageGuys.com is not acting on behalf of or at the direction of the Department of Veterans Affairs, the United States Department of Agriculture, Fannie Mae, Freddie Mac, the Federal Housing Administration, or any state Housing Finance Agency.
