Can You Buy a House with No Down Payment?

Introduction

Saving for a down payment is one of the biggest hurdles for first-time homebuyers. Many wonder: Can you buy a house with no down payment? The answer is yes—if you qualify for certain government-backed loan programs. VA and USDA loans can allow 0% down for eligible borrowers. That does not mean you need zero cash; you still need funds for closing costs, which typically run 2–5% of the loan amount.

Understanding no-down-payment options helps you know what programs exist, who qualifies, and what to expect. Federal rules—including the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), and TRID (TILA-RESPA Integrated Disclosure)—require lenders to provide a Loan Estimate within 3 business days of application. This form shows your estimated loan amount, interest rate, mortgage payment, and closing costs, so you can see the full picture before you commit.

This guide explains VA and USDA no-down-payment options, how they work, and what first-time homebuyers should know. For a broader look at down payment requirements by loan type, see VA Loan, USDA Loan, and Down Payment Requirements Explained.

What This Means

A no down payment loan means you finance 100% of the purchase price (or appraised value, whichever is lower). Your loan amount equals the full price minus any seller credits or other adjustments. With a traditional loan, a down payment reduces the loan amount and often improves your loan-to-value ratio (LTV). With 0% down, your LTV is 100%—you borrow the entire amount.

VA and USDA programs are designed to help certain borrowers buy with no down payment. The VA guarantees the loan for lenders, and the USDA guarantees rural housing loans. In exchange, VA charges a funding fee (which can be financed) and USDA charges a guarantee fee. These fees help fund the programs and are not the same as closing costs for appraisal, title, and other services—but they add to your total cost.

Even with 0% down, you need cash for closing costs unless you negotiate seller concessions, receive lender credits, or use down payment assistance. Your Loan Estimate will show "Estimated Cash to Close"—the amount you need to bring to closing. That number includes closing costs, prepaid items, and any down payment. With 0% down, it reflects closing costs and prepaids only.

How It Works

When you apply for a VA or USDA loan, the lender will underwrite your application—verifying your income, assets, credit, and the property. VA does not set a minimum credit score; lenders set their own. USDA has income limits and requires the property to be in an eligible rural or suburban area. Both programs have specific eligibility rules that you must meet.

With a VA loan, eligible veterans and active-duty service members can purchase with 0% down. The VA funding fee can be paid at closing or financed into the loan amount. Financing the fee increases your loan amount and thus your mortgage payment, but it reduces the cash you need at closing. Some veterans are exempt from the funding fee (e.g., those with service-connected disabilities).

With a USDA loan, eligible buyers can purchase in designated rural areas with 0% down. The USDA guarantee fee can also be financed. Income limits apply—your household income generally cannot exceed 115% of the area median income. The property must meet USDA eligibility (single-family primary residence in an eligible area).

Your Loan Estimate will show the interest rate, mortgage payment, and total costs. Because you are financing 100% of the purchase price, your loan amount is higher than it would be with a down payment. That means a higher mortgage payment for the same purchase price. The amortization schedule shows how each payment applies to principal and interest over time.

Down payment assistance programs—offered by states, localities, or nonprofits—can help cover the down payment and sometimes closing costs for conventional or FHA loans. These programs often target first-time buyers or those with lower incomes. If you receive assistance, the lender must document the source; grants and forgivable loans may have residency or other requirements.

Realistic Example Scenario

Marcus is an eligible veteran buying a $280,000 home. He uses a VA loan with 0% down. His loan amount is $280,000 (he does not pay discount points). The VA funding fee is 2.3% for a first-time use with no down payment—$6,440. He finances the funding fee, so his total loan amount is $286,440.

His closing costs (appraisal, title, recording, prepaids) total about $8,500—roughly 3% of the base loan. He has $8,500 in savings for closing. His Loan Estimate shows an interest rate of 6.5% and a mortgage payment (principal and interest) of about $1,810 per month. He receives the Loan Estimate within 3 business days of applying, per TRID.

At closing, Marcus brings $8,500 for closing costs. He does not bring a down payment. His loan amount of $286,440 is fully financed. If he had put 10% down ($28,000), his loan would have been $252,000 and his payment would have been lower—but he did not have the savings for a down payment. The VA program allows him to buy now with 0% down.

This example is illustrative. Actual interest rates, fees, and closing costs vary by lender, location, and market. Marcus's scenario shows how 0% down works: no down payment, but closing costs and (in his case) a financed funding fee still apply.

Why This Matters for Homebuyers

For first-time homebuyers who cannot save a large down payment, VA and USDA programs can make homeownership possible. They eliminate the down payment hurdle while still requiring that you qualify based on income, credit, and debt-to-income ratio (DTI). Lenders will underwrite your application to ensure you can afford the mortgage payment.

Even with 0% down, you need to budget for closing costs. For a $250,000 loan, 3% in closing costs is $7,500. That is a significant amount for many buyers. Seller concessions (where the seller pays a portion of your costs), lender credits (which may increase your interest rate), or down payment assistance can help. VA and USDA have rules about seller contributions—your lender can explain what is allowed.

Your Loan Estimate and Closing Disclosure, required under TRID, give you a clear view of the loan amount, interest rate, mortgage payment, and closing costs. Review them carefully. Understanding the full cost of the loan—including any funding or guarantee fees—helps you decide if a no-down-payment loan fits your situation.

Pros and Cons of No-Down-Payment Loans

Common Mistakes

• Assuming 0% down means zero cash: You still need closing costs. Budget for 2–5% of the loan amount unless you have seller concessions or other help.
• Not checking eligibility: VA and USDA have specific rules. Verify your eligibility before you start house hunting.
• Ignoring the funding fee or guarantee fee: These add to your loan amount if financed, increasing your mortgage payment. Factor them into your budget.
• Overlooking down payment assistance: If you do not qualify for VA or USDA, down payment assistance may help with conventional or FHA loans. Research state and local programs.
• Not comparing Loan Estimates: Shop lenders. Different lenders may offer different interest rates and fees. Your Loan Estimate makes it easier to compare.

Frequently Asked Questions

Can I buy a house with no down payment?

Yes. VA loans often allow 0% down for eligible veterans and service members. USDA loans allow 0% down for eligible rural and suburban properties. You still need funds for closing costs, which typically run 2–5% of the loan amount.

What about conventional and FHA loans?

Conventional loans typically require at least 3% down. FHA loans require 3.5% down with a 580+ credit score, or 10% down with 500–579. Down payment assistance programs may help cover some or all of the down payment for eligible buyers.

Do I still need money for closing with 0% down?

Yes. Even with 0% down, you typically need closing costs (2–5% of the loan amount). Seller concessions, lender credits, or down payment assistance may help cover some costs. VA and USDA allow the funding fee or guarantee fee to be financed into the loan.

What is down payment assistance?

Programs—often grants, forgivable loans, or low-interest loans—that help eligible buyers with the down payment or closing costs. Many target first-time homebuyers or those with lower incomes. Availability varies by state and locality.

Does 0% down affect my mortgage payment?

A 0% down loan means you finance 100% of the purchase price (minus any seller credits). Your loan amount is higher, so your monthly mortgage payment is higher than it would be with a down payment. You may also pay mortgage insurance or a VA funding fee.

Who qualifies for VA and USDA no-down-payment loans?

VA: Active-duty service members, veterans, and certain spouses. USDA: Buyers who meet income limits and purchase in eligible rural or suburban areas. Both programs have specific eligibility requirements.

Sources

• U.S. Department of Veterans Affairs (VA) – VA Home Loan Guaranty
• U.S. Department of Agriculture (USDA) – Single Family Housing Guaranteed Loan Program
• Consumer Financial Protection Bureau (CFPB) – Loan Estimate and Closing Disclosure (TRID)
• Consumer Financial Protection Bureau (CFPB) – Truth in Lending Act (TILA) and RESPA