VA $0 Down, USDA $0 Down, DPA + FHA, Navy Federal, State Programs
No Down Payment Mortgage Options: Zero-Down Programs by Loan Type
Two programs offer true zero-down-payment mortgages: VA ($0 down for eligible veterans with no monthly MI) and USDA ($0 down in eligible rural/suburban areas with income limits). For everyone else, down payment assistance programs can cover FHA’s 3.5% minimum — effectively creating a zero-down purchase. No conventional zero-down option exists without DPA.
Next step:
Compare Mortgage Offers
VA — $0 Down
- Eligibility: Veterans, active-duty service members, National Guard, Reserve, and eligible surviving spouses only
- Down payment: $0 — 100% financing with no down payment requirement on any VA purchase with full entitlement
- Monthly MI: $0 — VA has no monthly mortgage insurance under any circumstance, reducing payment significantly vs FHA
- Action: VA is the best zero-down option in existence — if you have eligibility, use it before considering any other program
USDA — $0 Down
- Eligibility: Property must be in USDA-eligible rural/suburban area and household income below 115% of area median income
- Down payment: $0 — 100% financing with 1% upfront guarantee fee (financeable) and 0.35% annual fee
- Credit: 640+ for GUS automated approval; manual underwriting available below 640 at limited lenders
- Action: Check the USDA property eligibility map — many suburban areas qualify that buyers do not expect
FHA + DPA — Effective $0
- How it works: Down payment assistance programs provide grants or forgivable loans covering FHA’s 3.5% minimum down
- Sources: State housing agencies, local municipalities, nonprofits, and employer-assisted housing programs
- Requirements: Most DPA programs have income limits, purchase price caps, credit minimums (often 580–640), and geographic limits
- Action: Search your state housing finance agency website for current DPA programs — availability and terms change frequently
What Does NOT Work
- Conventional: No zero-down conventional option exists — minimum 3% on first-time buyer programs, 5% standard
- Seller concessions: Cannot cover the down payment on any program — only closing costs and prepaids are eligible
- Gift funds alone: Gifts can cover FHA down payment, but the gift must come from family — not the seller, agent, or lender
- Action: If you have no VA/USDA eligibility and no DPA available, the minimum cash required is FHA 3.5% down from own or gift funds
Frequently Asked Questions
Can I buy a house with no money down?
Is there a conventional zero-down-payment mortgage?
Do I still pay closing costs with zero down?
The Bottom Line Up Front
Two mortgage programs offer true zero-down-payment financing: VA ($0 down for eligible veterans with no monthly mortgage insurance) and USDA ($0 down in eligible rural and suburban areas with income limits). For non-veteran, non-rural buyers, down payment assistance programs can cover FHA loans’s 3.5% minimum — effectively creating a zero-down purchase.
No conventional zero-down option exists. Seller concessions cannot cover the down payment on any program. The distinction matters: “zero down payment” means the borrower brings $0 for the down payment specifically — but closing costs, prepaids, and escrow deposits still require cash unless covered by seller concessions, lender credits, or DPA programs. Understanding which zero-down path fits your eligibility and location is the first step in determining how much cash you actually need to buy a home.
How Do VA Zero-Down Loans Work?
VA is the strongest zero-down-payment program available in any mortgage market. Eligible veterans and active-duty service members with full entitlement can finance 100% of any purchase price a lender will approve — with no maximum loan limit, no monthly mortgage insurance, and interest rates typically 0.25–0.50% below FHA.
The VA funding fee (2.15% first use at $0 down, 3.3% subsequent use) is the only additional cost compared to a standard purchase. It can be financed into the loan balance, keeping out-of-pocket costs limited to closing fees and prepaids. Veterans with a service-connected disability rating of 10% or higher are exempt from the funding fee entirely — making VA with disability exemption the least expensive mortgage product available to any borrower in the entire market: $0 down, $0 funding fee, $0 monthly insurance.
Deal Math
VA vs FHA on a $350,000 home: VA requires $0 down plus $7,525 funding fee (financeable) plus ~$8,000 closing costs = $8,000 cash to close. FHA requires $12,250 down (3.5%) plus $5,906 UFMIP (financeable) plus ~$8,000 closing = $20,250 cash to close. VA saves $12,250 in upfront cash AND eliminates the $160/month MIP that FHA charges permanently. Over 7 years, total VA savings exceed $25,000 compared to FHA on the same purchase.
How Do USDA Zero-Down Loans Work?
USDA’s Guaranteed Loan program offers 100% financing — $0 down payment — for homes in eligible rural and suburban areas. The eligibility requirements are geographic (property must be in a USDA-eligible area) and income-based (household income cannot exceed 115% of the area median income for your county).
USDA charges a 1% upfront guarantee fee (financeable into the loan) and 0.35% annual guarantee fee collected monthly through escrow. Both are lower than FHA’s comparable fees (1.75% UFMIP and 0.55% annual MIP). The credit requirement is 640+ for automated GUS approval, with manual underwriting available below 640 at limited lenders willing to originate manual USDA files.
USDA-eligible areas are broader than most buyers expect. The definition includes towns up to 20,000–35,000 population and many suburban communities adjacent to but not within metropolitan statistical areas. The USDA property eligibility map (available on the USDA Rural Development website) shows exactly which addresses qualify — check before house hunting to avoid discovering ineligibility after you have made an offer on a specific property.
Lender Reality Check
USDA income limits count all adult household members’ income — not just the borrowers on the mortgage. If you earn $65,000 but your spouse earns $50,000 and an adult child living at home earns $30,000, total household income is $145,000 — potentially above the limit even though no single person earns that much. Verify household income eligibility through the USDA income calculator before investing time in a USDA application. The income limit is the most common surprise disqualifier for otherwise eligible USDA borrowers.
What Down Payment Assistance Programs Cover the FHA Minimum?
For buyers who are not VA-eligible and not purchasing in a USDA-eligible area, down payment assistance programs are the primary path to a zero-down or near-zero-down purchase. These programs provide grants (free money that does not need to be repaid) or forgivable loans (repaid only if you sell or refinance within a specified period, typically 5–10 years) that cover FHA’s 3.5% minimum down payment.
DPA programs are administered by state housing finance agencies, local municipalities, counties, nonprofit organizations, and some employers. Most have income limits (typically 80–120% of area median income), purchase price caps, credit score minimums (usually 580–640), and geographic restrictions (county or state-specific). Some require homebuyer education courses before closing. The terms vary dramatically between programs — a $10,000 forgivable grant in one county may have completely different requirements than a $15,000 deferred-payment loan in the neighboring county.
The most effective approach: search your state housing finance agency website first (every state has one), then check county and city programs. Many DPA programs can be layered with FHA — the DPA covers the 3.5% down payment while seller concessions cover closing costs, creating a true near-zero cash-to-close purchase. Not all lenders participate in every DPA program, so verify that your chosen lender is an approved DPA participating lender before applying.
Can Bad Credit Block You from Zero-Down Programs?
Credit requirements vary by program. VA has no agency-set minimum — lender overlays start at 580–620 but the program itself does not exclude any score level. USDA’s automated GUS approval requires 640+. DPA programs typically require 580–640 depending on the specific program and the underlying mortgage (usually FHA).
For borrowers below 580: the only true zero-down option is VA (if eligible) because VA has no score floor. Below 640: USDA automatic approval is not available, though manual underwriting may work at limited lenders. Below 580: most DPA programs exclude you from participation. The credit score directly determines which zero-down pathways remain available — and at the lowest score levels, VA eligibility becomes the critical differentiator between zero-down and a required 10% FHA minimum.
| Program | Down Payment | Credit Minimum | Eligibility Requirement | Monthly Insurance |
|---|---|---|---|---|
| VA | $0 | No VA min (overlay 580–620) | Military service | $0 |
| USDA | $0 | 640 (GUS) | Rural area + income limit | 0.35% |
| FHA + DPA | Effective $0 | 580–640 (varies by DPA) | Income/price/area limits | 0.55% permanent |
| Conv 3% + DPA | Effective $0 | 620+ (DPA may require 640+) | First-time buyer + DPA limits | PMI cancels at 78% |
File Guidance
If you are a veteran: use VA. Always. No other zero-down program matches VA’s combination of $0 down, $0 monthly insurance, no loan limit, and the lowest available interest rate. If you are not a veteran: check USDA eligibility first (free, takes 2 minutes on the map tool). If USDA does not work, search your state housing finance agency for DPA programs that pair with FHA. Layer DPA for the down payment and negotiate seller concessions for closing costs. This combination creates the closest possible path to a zero-cash-to-close purchase for non-veteran, non-rural buyers.
The Bottom Line
VA and USDA are the only true zero-down-payment mortgage programs. VA is the clear winner: $0 down, $0 monthly insurance, no loan limit, and the lowest rates. USDA offers $0 down in eligible rural/suburban areas with lower fees than FHA. For everyone else, DPA programs layered with FHA can cover the 3.5% minimum — creating an effective zero-down purchase when combined with seller concessions for closing costs.
No conventional zero-down option exists without DPA. Seller concessions cannot cover the down payment. The minimum cash commitment without VA, USDA, or DPA is FHA’s 3.5% from your own funds or family gift — $10,500 on a $300,000 home. Check your eligibility for VA and USDA first, then explore DPA programs in your state. The order matters because each subsequent option is more restrictive and more expensive than the one before it.
Frequently Asked Questions
Are zero-down mortgages risky?
The risk is starting with zero equity — if home values decline, you could owe more than the home is worth. However, VA and USDA have lower default rates than FHA despite the $0 down because of stricter qualification standards (VA residual income, USDA income limits). The risk is manageable when you buy within your means and plan to stay at least 3–5 years to build equity through payments and appreciation.
Can I use DPA and seller concessions together?
Yes — this is the optimal strategy for minimizing cash-to-close. DPA covers the down payment (3.5% FHA). Seller concessions cover closing costs and prepaids (up to 6% on FHA). Combined, the borrower’s out-of-pocket cash approaches near-zero. Both must be written into the purchase contract and the specific DPA program must be compatible with seller concessions.
Does the VA funding fee make VA more expensive than FHA?
No. The VA funding fee (2.15% first use) is higher upfront than FHA UFMIP (1.75%), but VA has $0 monthly MI while FHA charges 0.55% permanently. VA breaks even at approximately month 9 and saves money every month thereafter. Over 10 years, VA saves $15,000–$25,000 compared to FHA on the same loan amount. Veterans with disability ratings pay $0 funding fee.
Can I get a zero-down investment property?
Not directly. VA and USDA require owner occupancy as a primary residence. However, VA and FHA allow 1–4 unit properties where you live in one unit and rent the others. This is the closest path to a zero-down investment: buy a 2–4 unit with VA at $0 down, live in one unit, and rent the remaining units for income that offsets or exceeds your mortgage payment.
How do I find DPA programs in my area?
Start with your state housing finance agency website — every state has one and most list all available DPA programs with current terms. Then check county and city housing departments for local programs. Your lender may also maintain a list of DPA programs they participate in. Not all lenders offer every DPA program, so verify participation before choosing a lender.
Do I need to be a first-time buyer for zero-down programs?
VA and USDA have no first-time buyer requirement — repeat buyers qualify on the same terms. Most DPA programs do require first-time buyer status (defined as not owning a home in the past 3 years). Conventional 3% programs also typically require first-time buyer status. Only VA and USDA offer true zero-down to repeat buyers without additional restrictions.