Can You Buy a House With Zero Down?

While a significant down payment is often perceived as necessary for home purchase, several financing options allow individuals to acquire a home without one. These opportunities have specific eligibility requirements that borrowers must meet. Understanding these criteria is fundamental for those exploring homeownership without substantial initial capital.

Primary Zero-Down Loan Options

Two prominent loan programs directly facilitate home purchases with no down payment: VA loans and USDA loans. These programs cater to specific borrower groups and property types, offering favorable terms that reduce the initial financial burden of homeownership. They represent direct avenues for zero-down financing.

VA loans are a benefit for eligible service members, veterans, and some surviving spouses, provided by private lenders. The U.S. Department of Veterans Affairs guarantees a portion of these loans, allowing lenders to offer no down payment and competitive interest rates. Borrowers typically do not pay private mortgage insurance (PMI), which can result in lower monthly payments.

Eligibility generally requires specific periods of active service or six years in the National Guard or Reserves. While the VA does not impose a minimum credit score, lenders commonly require a score of 620 or higher. A one-time VA funding fee is usually applied and can often be financed into the loan amount.

USDA loans, guaranteed by the U.S. Department of Agriculture, promote homeownership in eligible rural and some suburban areas. They feature no down payment requirement and typically lower mortgage insurance premiums compared to Federal Housing Administration (FHA) loans.

Property eligibility is tied to location, with the USDA defining rural areas based on population and proximity to metropolitan areas. Income limits also apply; for 2025, standard income limits are generally $119,850 for 1-4 person households and $158,250 for 5-8 person households in most areas.

Navigating Down Payment Assistance Programs

Beyond direct zero-down loans, down payment assistance (DPA) programs can reduce or eliminate the out-of-pocket cash needed at closing. These programs provide funds that cover the down payment, closing costs, or both. DPA funds originate from various sources, including state housing finance agencies, local governments, non-profit organizations, and some mortgage lenders.

DPA programs come in several forms, each with distinct repayment structures. Grants generally do not require repayment.

Forgivable loans are structured as a second mortgage but are forgiven over a set period, typically if the homeowner meets conditions such as residing in the home for a specified number of years. Other DPA comes as a second mortgage that must be repaid, sometimes with deferred payments until the primary mortgage is satisfied, or with low-interest rates.

Eligibility for DPA programs varies significantly by program and location. Common requirements include being a first-time homebuyer, although some programs define this as not having owned a home in the past three years. Income limits are imposed, aligning with low-to-moderate income thresholds for the area.

Many DPA programs require applicants to complete homebuyer education courses and may have minimum credit score requirements, often around 620 to 640. These programs are often designed to be used with specific primary mortgage types, such as FHA, conventional, VA, or USDA loans.

Essential Financial Considerations Beyond the Down Payment

While a zero-down mortgage eliminates the initial equity contribution, homeownership involves other financial obligations. Buyers should account for various expenses separate from the down payment itself.

Closing costs are fees and expenses paid at the conclusion of the real estate transaction. These costs compensate various parties involved in the sale, including the lender, title company, and legal professionals. Common closing costs include loan origination fees, appraisal fees, title insurance premiums, attorney fees, recording fees, and prepaid interest.

These expenses typically range from 2% to 5% of the home’s purchase price, though they can vary based on location and loan type. While some DPA programs may assist with closing costs, they generally require payment at closing.

Beyond the initial closing, homeowners incur ongoing expenses to maintain their property. These recurring costs include property taxes, often collected through an escrow account by the mortgage servicer. Homeowner’s insurance protects against property damage and liability, and is also frequently managed through escrow.

If the loan is not a VA loan or a conventional loan has less than 20% equity, mortgage insurance may be an ongoing monthly cost. This includes premiums like PMI or FHA mortgage insurance.

Regardless of the down payment amount, all mortgage applicants must meet general loan qualification criteria. Lenders assess a borrower’s financial capacity through factors like credit score, debt-to-income (DTI) ratio, and income stability. A strong credit score, typically 620 or higher for most conventional and VA loans, indicates responsible financial management.

The DTI ratio, which compares monthly debt payments to gross monthly income, often needs to be below 43% to 50% to qualify, though specific limits vary by loan type and lender. Lenders also verify stable income and employment history, typically requiring documentation of at least two years of consistent earnings.