On this page
- Low down payment mortgage options at a glance
- Who can buy a house with no money down: VA and USDA loans
- Low down payment mortgages: FHA, Conventional 97, HomeReady and Home Possible
- What each option costs on a $417,500 home
- Other ways to buy a house with no money down: assistance, gifts and credits
- Bad credit: can you buy a house with no money down?
- Should you buy a house with no money down? Pros and cons
- Can you put 10% down and skip PMI?
- Frequently asked questions
- Your next step to buy a house with no money down
Yes, you can buy a house with no money down, but only two federal programs lend 100% of the price. VA loans serve eligible service members, veterans and some surviving spouses, while USDA loans serve moderate-income buyers in eligible rural and suburban areas. Everyone else can buy with 3% to 3.5% down, and down payment assistance can cover that amount.
Closing costs come on top of any down payment, so a no money down mortgage rarely means zero cash at closing. This guide compares each option, prices it on a median-price home and shows ways to cover the cash you need.
Low down payment mortgage options at a glance
These are the program rules as of October 2026. Each lender can add stricter rules of its own, called overlays.
| Program | Minimum down | Who qualifies | Mortgage insurance or fee | Credit score rule |
|---|---|---|---|---|
| VA loan | 0% | Eligible service members, veterans, some surviving spouses | No monthly mortgage insurance; funding fee of 2.15% (first use, under 5% down) or 3.3% (later use), with exemptions | No VA minimum; lenders set one |
| USDA loan | 0% | Income up to 115% of the area median; home in an eligible area | 1% upfront and 0.35% annual guarantee fee | No USDA minimum; lenders set one |
| FHA loan | 3.5% (580+ score) or 10% (500–579) | Buyers who meet HUD rules | 1.75% upfront MIP plus 0.55% annual MIP at 3.5% down (base loan up to $726,200) | 580 for 3.5% down; 500 for 10% down |
| Conventional 97 | 3% | At least one first-time buyer; no income limit | Private mortgage insurance (PMI) | No Fannie Mae DU minimum since November 16, 2025 |
| HomeReady or Home Possible | 3% | Income up to 80% of the area median | PMI | No fixed DU or LPA minimum; 660 for a manual Home Possible 1-unit fixed-rate purchase |
| 80-10-10 piggyback | 10% | Buyers who qualify for both loans | No PMI on the first mortgage | Set by each lender |
Because overlays differ, one lender can turn down a file that another approves. So compare lenders before you decide an option is out of reach.
Who can buy a house with no money down: VA and USDA loans
Both programs cover a primary residence only. For more detail, see the 100% financing guide.
VA loans: 0% down and no monthly mortgage insurance
A VA home loan is open to eligible service members, veterans and some surviving spouses, such as the spouse of a veteran who died on active duty. VA charges no monthly mortgage insurance at any down payment.
Instead, most borrowers pay a one-time VA funding fee. As of October 2026, it is 2.15% of the loan on first use with less than 5% down, and 3.3% on later use. Veterans who receive VA compensation for a service-connected disability are exempt, as are some surviving spouses and active-duty Purple Heart recipients (VA funding fee rules).
VA sets no minimum credit score and no fixed debt-to-income cap. Its Lender’s Handbook treats 41% as a guideline and gives more weight to residual income, the money left each month after major expenses.
Caution: Since you can finance the funding fee, a 0% down VA loan ends up larger than the price. Also, VA lets you finance only the funding fee on a purchase, so you pay other closing costs unless the seller or lender covers them.
USDA loans: 0% down in eligible areas
A USDA home loan through the Section 502 Guaranteed Loan Program offers 100% financing. Household income can’t exceed 115% of the area median. USDA also charges a 1% upfront guarantee fee, which you can finance, plus a 0.35% annual fee.
Eligible areas are generally open country and towns of 20,000 people or fewer. Some areas of up to 35,000 also keep rural status under federal law (42 U.S.C. 1490) until 2030 census data arrives. Since some suburban addresses qualify too, check the home on the USDA eligibility map before you make an offer.
USDA sets no minimum credit score. Its automated system, GUS, reviews each application, and each lender can set its own minimum. Standard debt-to-income ratios are 29% for housing and 41% in total, although a waiver can allow 32% and 44% with a 680 or higher score.
Caution: A home just outside an eligible area doesn’t qualify, and neither does a household slightly over the income limit.
Low down payment mortgages: FHA, Conventional 97, HomeReady and Home Possible
Without VA or USDA eligibility, these loans need 3% to 3.5% down. Each lender can set a higher minimum score than the program does.
FHA loans: 3.5% down
An FHA loan, insured by the Federal Housing Administration, lets you put 3.5% down with a credit score of 580 or higher. With a score of 500 to 579, the minimum is 10% down (HUD Handbook 4000.1, section II.A.2).
FHA also charges an upfront mortgage insurance premium (MIP) of 1.75% of the base loan, which can be financed. Annual MIP is 0.55% of the loan at 3.5% down on a base loan of $726,200 or less. The FHA down payment guide covers gift and assistance rules.
Conventional 97: 3% down with no income limit
A Conventional 97 loan finances 97% of the price. At least one borrower must be a first-time home buyer, but there’s no income limit. Because high-balance loans don’t qualify, the loan must stay at or below the 2026 baseline conforming limit of $832,750 for one unit.
Fannie Mae removed its 620 minimum score for loans run through its Desktop Underwriter (DU) system on November 16, 2025. Even so, a lender can still set its own minimum as an overlay.
HomeReady and Home Possible: 3% down for lower incomes
Fannie Mae’s HomeReady mortgage and Freddie Mac’s Home Possible also allow 3% down. Both cap qualifying income at 80% of the area median income (Fannie Mae Selling Guide B5-6-01). Neither is limited to first-time buyers, although HomeReady requires homeownership education when all occupying borrowers are first-time buyers.
HomeReady loans approved through DU have no fixed minimum score. Likewise, Home Possible loans approved through Freddie Mac’s Loan Product Advisor (LPA) have none, while a manually underwritten 1-unit fixed-rate purchase needs 660. Both programs use reduced mortgage insurance coverage, which can lower the PMI cost.
What each option costs on a $417,500 home
Say a buyer purchases a $417,500 home, the National Association of Realtors’ median existing-home price for September 2026. The table shows the cash down and the loan amount under each option, with any upfront fee financed. It leaves out rates, monthly payments, property taxes, homeowners insurance and monthly mortgage insurance.
| Option | Down payment | Upfront fee added to the loan | Total loan |
|---|---|---|---|
| VA, 0% down, first use | $0 | $8,976.25 funding fee (2.15%) | $426,476.25 |
| USDA, 0% down | $0 | $4,175 guarantee fee (1%) | $421,675 |
| FHA, 3.5% down | $14,612.50 | $7,050.53 upfront MIP (1.75% of the $402,887.50 base loan) | $409,938.03 |
| Conventional, 3% down | $12,525 | None | $404,975 |
| 80-10-10 piggyback | $41,750 | None | $334,000 first mortgage plus $41,750 second mortgage |
The VA and USDA loans start above the purchase price because the fee is financed. Also, closing costs come on top of every amount in the table. They typically run a few percent of the price, and the buyer pays them unless a seller credit or lender credit covers them. To weigh a bigger down payment against keeping cash, see how much to put down on a house.
Rates differ by program and lender, so compare quotes on the same home, starting with current mortgage interest rates.
Other ways to buy a house with no money down: assistance, gifts and credits
You can pair a 3% or 3.5% down loan with outside money and bring your own cash close to zero.
Down payment assistance
State and local housing agencies, and some nonprofits, run down payment assistance programs. Grants don’t need repayment, while second loans may be deferred, repayable or forgivable after a set period. On a Fannie Mae loan, the combined loan-to-value can reach 105% when the second loan is a Community Seconds loan, so assistance can cover the full 3% down.
Gift money
FHA accepts gifts from a family member, an employer or labor union, a close friend with a documented interest, a charity, or a government homebuyer program. On a Fannie Mae loan for a principal residence, gifts can pay all or part of the down payment and closing costs, subject to its minimum contribution rules. Our guide to down payment gift money explains the gift letter and paperwork.
Seller and lender credits
A seller can agree to pay part of your closing costs, and a lender can offer a credit in exchange for a higher rate. Each program caps seller contributions, so ask your lender for the limit before you make an offer. Fannie Mae, for example, doesn’t let seller contributions fund the down payment.
Bad credit: can you buy a house with no money down?
A low score makes a zero-down loan harder to get, although it doesn’t rule one out. FHA has the lowest published floor here: 3.5% down at 580 or higher, or 10% down at 500 to 579. On the $417,500 example, 10% down is $41,750.
VA and USDA set no program minimum score, but lenders do. A larger down payment lowers the lender’s risk and can help a weaker file, but no program guarantees approval at any down payment.
Lenders also weigh your debt-to-income ratio, late payments and collections. If your score sits near a cutoff, see what credit score you need to buy a house before you apply.
Should you buy a house with no money down? Pros and cons
Pros:
- You can buy sooner instead of saving for years.
- You keep savings for reserves, repairs and moving costs.
Cons:
- Your loan and monthly payment are larger.
- You pay mortgage insurance, a guarantee fee or a funding fee.
- You start with little equity, so a price drop could leave you owing more than the home is worth.
On a conventional loan, PMI typically costs about 0.46% to 1.50% of the loan amount per year, depending on credit score and down payment (Urban Institute, via Experian, 2026). Under the Homeowners Protection Act, you can ask to cancel PMI when your balance is scheduled to reach 80% of the home’s original value. Then it ends automatically at 78% if you’re current on payments (CFPB on PMI removal).
FHA works differently. Annual MIP lasts 11 years if your loan-to-value starts at 90% or less; otherwise, it lasts for the loan term. Therefore, an FHA buyer with 3.5% down pays MIP until they sell or refinance. For more, see how much PMI costs.
Can you put 10% down and skip PMI?
A single conventional loan with 10% down needs mortgage insurance, because Fannie Mae requires it above 80% loan-to-value. However, two other paths avoid monthly PMI.
The first is an 80-10-10 piggyback loan: 10% down, a first mortgage for 80% and a second mortgage for 10%. Because the first mortgage sits at 80% of the price, it carries no PMI. Still, the second mortgage has its own rate and terms, and both payments count when the lender qualifies you. Unlike PMI, the second loan doesn’t drop off, so you pay it down or pay it off.
The second is a VA loan, which has no monthly mortgage insurance at any down payment. In fact, with 10% down on first use, the funding fee falls to 1.25%.
Frequently asked questions
Can you buy a house with no money down?
Yes, you can buy a house with no money down if you qualify for a VA or USDA loan. VA serves eligible service members, veterans and some surviving spouses, while USDA serves moderate-income households buying in eligible areas.
Can a first-time buyer buy a house with no money down?
Being a first-time buyer doesn’t qualify you for a zero-down loan by itself. However, a first-time buyer can use Conventional 97 with 3% down and cover that amount with assistance or a gift. Our first-time home buyer loan guide compares the options.
Can I buy a house with no money down and bad credit?
Possibly, because VA and USDA set no minimum score, but each lender sets its own. FHA allows a 500 score, although you need 10% down below 580. Approval depends on your full file, so no program can promise it.
What is the lowest down payment for a conventional loan?
The lowest is 3%, through Conventional 97, HomeReady or Home Possible. Conventional 97 needs at least one first-time buyer, while HomeReady and Home Possible cap income at 80% of the area median.
Is a 0% down mortgage a good idea?
It can be when the payment fits your budget and you’d rather keep savings for emergencies. However, you start with no equity and a larger loan, so selling within a few years could cost you money.
Do I still pay closing costs with a zero-down loan?
Yes. Closing costs are separate from the down payment, and VA lets you finance only the funding fee on a purchase. Seller credits, lender credits or assistance programs can cover some or all of them.
Your next step to buy a house with no money down
Start with the two zero-down programs. If you served, get your VA Certificate of Eligibility; otherwise, run the address through the USDA map. If neither fits, compare FHA and 3% down conventional quotes on the same home, and ask each lender which assistance programs it accepts.
