By Andrew Dehan, Bankrate.com
If you qualify for a no-down-payment mortgage, you could get a loan for the full purchase price of a home. Here’s what you need to know.
A no-down-payment mortgage doesn’t require you to make a down payment at closing. With rising home prices, it’s more and more difficult for many buyers to save up for the upfront costs of homeownership. No-down-payment loans eliminate one of the biggest upfront costs.
One-fifth (20%) of aspiring homeowners believe they won’t ever be able to save enough to buy a home, according to Bankrate’s 2025 Down Payment Survey.
The two most prominent no-down-payment mortgages are VA and USDA loans.
If you’re a military service member, veteran or surviving spouse, you might qualify for a VA loan guaranteed by the U.S. Department of Veterans Affairs (VA). Unlike a conventional loan, VA loans don’t typically require a down payment, and they don’t charge mortgage insurance. However, you will pay a funding fee, either at closing or by financing it into your mortgage. This fee ranges from 1.25% to 3.3% of the loan amount, and it varies depending on the down payment amount and whether you’ve used a VA loan before. Those who don’t make a down payment, as well as repeat VA loan applicants, pay higher funding fees.
The U.S. Department of Agriculture (USDA) guarantees USDA home loans for lower- to moderate-income buyers purchasing homes in eligible rural areas. These loans don’t require a down payment, but there’s an upfront fee — also known as a guarantee fee — of 1% of the principal loan amount which can be financed into the mortgage. On top of that, there’s an annual fee of 0.35% of the loan amount which lasts for the life of the loan. The only way to remove this annual fee is to refinance to a non-USDA loan.
If you aren’t eligible for a true no-money-down home loan, you might still qualify for a low-down-payment mortgage.
Fannie Mae and Freddie Mac — the two government-sponsored enterprises underpinning mortgages in the U.S. — back several 3-percent-down conventional loan programs: Conventional 97, HomeReady, Home Possible and HomeOne.
You will be required to pay for private mortgage insurance (PMI). PMI varies in cost depending on your down payment amount and credit score. Once you reach 80% loan-to-value (LTV) on your home, you can request the lender remove PMI. Otherwise, it will automatically come off once you reach 78% LTV.
Insured by the Federal Housing Administration (FHA), an FHA loan requires only 3.5% down with a credit score as low as 580. If you have a credit score between 500 and 579, you’ll need to put 10% down.
Similar to PMI, you’ll pay FHA mortgage insurance with an FHA loan. However, unlike conventional PMI, you’ll pay both an upfront mortgage insurance premium (MIP) at closing and an annual MIP divvied up between your monthly payments. The upfront MIP equals 1.75% of your loan amount, and the annual MIP varies depending on your down payment and other factors. If you make a down payment of 10% or more, you’ll pay the annual MIP for 11 years. Otherwise, you’ll pay it for the life of the loan.
Some mortgage lenders offer conventional mortgage programs that require only 1% down, including Rocket Mortgage’s ONE+ program. In this case, the lender pays 2% of the required 3% down payment for a HomeReady or Home Possible loan, and you need only provide the remaining 1%.
The Good Neighbor Next Door (GNND) program is for borrowers who work in select public service professions — teachers, firefighters, law enforcement and emergency medical technicians — and plan to buy a home in a qualifying area. Sponsored by the U.S. Department of Housing and Urban Development (HUD), the program provides a discount of up to 50% on the list price of a qualifying home.
The ability to buy a home with no or very little money down can be appealing, but there are drawbacks, too.
The pros of no-down-payment mortgages include:
The cons of no-down-payment mortgages include:
No-down-payment mortgages are geared toward buyers with limited savings who want the security of owning a home. While they’re a great option for those who qualify, they also come with extra fees. You’ll pay less for your loan over time if you can afford to make a down payment.
What credit score do I need to buy a house with no money down?
The Department of Veteran Affairs and the U.S. Department of Agriculture don’t set a minimum credit score requirement for VA and USDA loans, respectively. However, most lenders offering these loans do, and they’d want them to be at least in the “fair” range: 620 for VA loans, 640 for USDA loans.
What are my alternatives if I don’t qualify for a low-money-down loan?
If you don’t qualify for a no- or low-down-payment mortgage, a down payment assistance program might help. These programs typically offer loans or grants to first-time or repeat homebuyers within certain income thresholds based on location. The money can often be applied to both the down payment and closing costs.
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