Home loans with no down payment: VA, USDA and zero-down options in 2026

What does “no down payment” actually mean?

A home loan with no down payment finances the purchase without requiring the buyer to contribute a percentage of the purchase price as an equity down payment. That is different from saying the home purchase requires no money at all. A borrower can still face closing costs, prepaid property taxes and homeowners insurance, appraisal charges, title costs, escrow funding and other items shown on the Loan Estimate and Closing Disclosure.

In the U.S., the two mainstream purchase programs most closely associated with true zero-down financing are VA-backed purchase loans for eligible Veterans, service members and certain surviving spouses, and USDA rural housing loans for households and properties that meet program rules. Both programs have eligibility restrictions that do not apply to a standard conventional mortgage.

If you are starting from the broader question of how mortgages work, the Housefinan home loan guide explains the main loan families, qualification process and cost structure before you narrow the search to zero-down options.

Which home loans can offer no down payment?

VA and USDA are the principal nationwide mortgage programs that can support a home purchase without a borrower down payment when all program requirements are satisfied. A VA-backed purchase loan can often finance 100% of the home value for a borrower with sufficient entitlement, while USDA’s Single Family Housing Guaranteed Loan Program can provide 100% financing for eligible low- and moderate-income households purchasing eligible primary residences in eligible rural areas.

Conventional and FHA loans are different. Eligible conventional programs can go as low as 3% down, and FHA can allow 3.5% down for borrowers meeting the applicable credit requirements, but those first mortgages are not inherently zero-down. A buyer may combine a low-down-payment mortgage with gifts, grants or down-payment assistance, yet the structure and source of funds must satisfy the first mortgage and assistance-program rules.

That distinction matters because “zero down” marketing sometimes refers to the borrower bringing no down-payment funds after assistance rather than to a mortgage product that itself finances 100% of the price.

VA home loans: the main zero-down route for eligible borrowers

The Department of Veterans Affairs says a VA-backed purchase loan often allows no down payment as long as the sales price is not higher than the home’s appraised value. Eligibility starts with a valid Certificate of Eligibility, but the borrower must also meet the lender’s standards for income, credit and the requested loan amount, and the property generally must be intended for the borrower’s occupancy.

VA financing is not restricted to first-time homebuyers. Eligible borrowers can use the benefit more than once, subject to entitlement rules. Borrowers with full entitlement generally are not subject to a VA loan limit for purposes of determining how much they can borrow without a down payment, although the lender still decides the maximum loan based on income, credit, appraisal and underwriting. A borrower with remaining rather than full entitlement may face a different down-payment calculation.

For buyers comparing this route with low-down-payment conventional financing, focus on the whole package: rate, APR, funding fee, cash to close, monthly payment and future flexibility.

VA funding fee, closing costs and seller credits

No down payment does not remove VA transaction costs. Many VA borrowers pay a one-time funding fee unless they qualify for an exemption. For purchase loans with less than 5% down, the published VA funding fee is 2.15% for first use and 3.3% after first use. The fee can generally be financed into the loan instead of paid entirely in cash at closing.

VA also states that buyers and sellers can negotiate many closing costs. Seller or builder credits can pay certain buyer closing costs, while seller concessions are subject to separate limits. Importantly, on a VA purchase loan most ordinary closing costs cannot simply be rolled into the loan amount; the funding fee is the major exception.

A borrower therefore needs to distinguish three numbers: down payment, closing costs and total cash to close. A VA loan may bring the first number to zero while the third remains meaningful.

USDA home loans and 100% financing

USDA Rural Development’s Section 502 Guaranteed Loan Program allows approved lenders to provide 100% financing to eligible low- and moderate-income households buying or building an adequate primary residence in an eligible rural area. USDA describes the program as “no money down” for borrowers who qualify, but both household eligibility and property location matter.

The word “rural” is broader than many buyers expect. Some small towns, exurban communities and areas outside major metropolitan cores can qualify, while properties only a short distance away may not. The correct approach is to check the specific address using USDA’s eligibility resources rather than assuming a community is or is not rural.

USDA guaranteed loans are issued by approved private lenders and backed by a federal guarantee. Borrowers still need to satisfy underwriting for income, debts, credit history and the property. The program is intended for a primary residence, not a vacation home or standard investment property.

USDA income, location and property eligibility

USDA eligibility works on several levels at once. The household must fit applicable income limits, the home must be in an eligible area, and the borrower must demonstrate the ability to repay the loan. The exact income ceiling depends on location and household size, so a national income number is not useful for screening eligibility.

The property also has to meet program requirements for a primary residence. Buyers should verify address eligibility early because a loan preapproval does not make an ineligible property eligible. If your search spans several towns, keep the USDA map in the property-screening workflow so you do not spend time negotiating on homes that cannot use the program.

USDA is also not a first-time-buyer-only program. Repeat buyers can potentially qualify if they meet the program’s current rules. For first-time purchasers, the separate first time home buyer loan guide compares USDA with conventional, FHA and VA options.

USDA guarantee fees and monthly cost

USDA guaranteed financing uses a guarantee-fee structure rather than conventional private mortgage insurance. USDA materials list a 1.00% upfront guarantee fee and a 0.35% annual fee for the Single Family Housing Guaranteed Loan Program. The upfront fee can generally be included in the loan amount, while the annual fee is based on the unpaid principal balance and is typically collected through the monthly payment.

That means a 0%-down USDA loan is not cost-free financing. The annual fee, interest rate, property taxes, homeowners insurance and any HOA dues all affect the payment. Because the upfront fee can increase the financed balance, compare total loan amount as well as cash required at closing.

Ask the lender to show the USDA structure next to a realistic FHA or conventional alternative using the same property price and estimated closing date. That makes differences in upfront cash and long-term monthly cost easier to see.

Zero down is not the same as zero cash to close

Cash to close is the amount the borrower actually needs to bring to settlement after accounting for deposits, credits and financed items. Even when the down payment is zero, the closing package can include lender origination charges, appraisal, title and settlement fees, recording charges, prepaid interest, insurance premiums, property-tax adjustments and initial escrow deposits.

Some costs may be offset by seller credits, lender credits, gifts or assistance, depending on the program. Credits are not free in an economic sense: a lender credit can be associated with a higher interest rate, and a seller credit may be reflected in the negotiated purchase price or reduce room for other concessions.

Review the Loan Estimate’s “Estimated Cash to Close” rather than assuming that a zero-down advertisement describes the full amount you need. Keep additional reserves outside the closing account for moving, repairs and the first months of homeownership.

Seller credits, gifts and down-payment assistance

A buyer who qualifies for zero-down financing may still use permitted credits to reduce closing costs. VA allows certain seller credits and concessions under program rules, while USDA permits eligible contributions and gifts subject to lender documentation. State and local housing-finance agencies may also offer grants, forgivable loans or repayable second mortgages for qualifying households.

Assistance rules vary widely. Programs can impose income caps, purchase-price limits, approved-lender requirements, homebuyer education, occupancy periods or repayment if the property is sold or refinanced too soon. A grant is very different from a deferred second mortgage that becomes due later.

Ask for a written explanation of every assistance layer: amount, interest rate, payment, lien position, forgiveness schedule and refinance consequences. The goal is not merely to reduce today’s cash requirement; it is to understand the entire financing stack.

Credit, income and debt-to-income still matter

Zero down does not mean zero underwriting. VA does not publish one universal minimum credit score for every VA-backed loan, but lenders can apply their own credit standards and overlays. USDA lenders also evaluate credit history, stable income, debts and repayment ability under program guidelines.

Debt-to-income ratio is only one part of the analysis. Lenders may review residual income, recent late payments, employment stability, variable income, student loans, child support, alimony obligations and other recurring debts. Self-employed applicants should expect additional documentation of business and personal income; the self-employed mortgage preapproval guide explains that documentation in more detail.

Before applying, avoid opening unnecessary new credit, making large unexplained transfers or financing major purchases. A lender can recheck credit, employment and assets before closing.

Preapproval for a no-down-payment mortgage

A useful preapproval should identify the program you are actually expected to use, not just a generic purchase price. If VA is the target, confirm the lender has reviewed your Certificate of Eligibility and entitlement position. If USDA is the target, discuss household income and likely property areas before assuming the loan will work.

The preapproval amount is not a spending target. Build your own budget from the projected principal and interest, taxes, insurance, USDA annual fee if applicable, HOA dues and maintenance. Then compare that monthly number with your income and other financial goals.

Preapproval is also not final approval. The property must be acceptable, the appraisal must support the transaction, and underwriting can require updated documents. Read mortgage pre approval for the broader distinction between a preapproval letter and final loan approval.

Zero-down and low-down-payment loan comparison

The table below shows the basic structure of the major purchase-loan routes. It is a starting point rather than a substitute for lender underwriting or official eligibility checks.

If you do not qualify for VA or USDA

Most buyers who are not eligible for VA and whose property or income does not fit USDA will need a low-down-payment rather than zero-down first mortgage. Eligible conventional programs can allow 3% down, and FHA can allow 3.5% down when the borrower meets applicable requirements.

Those options may sometimes be paired with gifts or down-payment assistance so the buyer contributes little or none of their own funds to the down payment. The exact structure depends on program rules, acceptable sources of funds and any second-lien terms. That is not the same as a conventional or FHA mortgage being a true 100%-financing product.

Compare the conventional home loan and FHA home loan guides if VA and USDA are not available to you.

Property, appraisal and occupancy requirements

Zero-down programs protect the lender or guarantor against part of the credit risk, but they do not eliminate property standards. VA transactions use a VA appraisal and minimum property requirements. USDA requires an eligible property that will serve as the borrower’s primary residence and must satisfy program and lender standards.

An appraisal is not a home inspection. The appraisal supports value and program requirements; a buyer’s inspection is intended to investigate the physical condition of the home in greater detail. Buyers should not skip independent due diligence merely because a government-backed program is involved.

If the appraisal comes in below the contract price, a true zero-down structure can be disrupted. The lender will not simply finance an unsupported price. Depending on the program and negotiation, the buyer may need a price reduction, a reconsideration process, a different property or additional cash.

Can zero-down loans be used for new construction?

VA benefits can be used to build a home, and USDA guaranteed financing can also support eligible construction structures through participating lenders. In practice, construction financing is more specialized than buying a completed home because the lender must manage builder approval, plans, budget, inspections, draws and conversion to permanent financing.

Availability varies by lender. A borrower can be eligible for VA or USDA while still finding that a particular lender does not offer the relevant construction product. If building is the objective, start with lenders that actively originate construction-to-permanent loans under the program you need.

For the mechanics of draws, single-close and two-close structures, land equity and construction appraisal, see the construction home loan guide.

Monthly payment, reserves and the cost of financing more

Financing 100% of a purchase price preserves upfront cash, but it also means the starting loan balance is larger than if you made a down payment. A larger balance generally produces more interest expense and a higher monthly principal-and-interest payment, all else equal. USDA’s annual fee also affects the payment, while VA borrowers may finance the funding fee into the balance.

Keeping cash can still be valuable. Emergency reserves can absorb repairs, insurance deductibles, job disruption and moving costs. The decision should compare the value of liquidity with the payment and interest impact of borrowing more.

Ask the lender for side-by-side scenarios at 0%, 3%, 5% or another realistic contribution level if the program permits. A small voluntary down payment may change the loan balance, VA funding fee tier or overall cash position, so the best structure is not always the minimum permitted down payment.

Trade-offs and risks of buying with no down payment

The main trade-off is low initial equity. If home values fall or you need to sell soon after closing, transaction costs can exceed the equity you have built. That does not mean zero-down financing is inherently inappropriate; it means the buyer should understand the time horizon and keep a financial buffer.

A zero-down structure can also create a higher payment than the same loan with a meaningful down payment. Do not let a low upfront requirement justify a purchase price that strains the monthly budget. Property taxes and insurance can rise after closing even when the principal-and-interest payment is fixed.

Finally, avoid offers that use “no money down” as a substitute for transparent disclosures. Verify the loan program, lender, APR, points, credits, fees and estimated cash to close in the official Loan Estimate.

Home loans with no down payment: buyer checklist

First, determine whether you have a credible zero-down path. For VA, confirm Certificate of Eligibility and entitlement with a VA-experienced lender. For USDA, verify both household income and the property search area. If neither applies, compare 3%-down conventional and 3.5%-down FHA financing rather than searching indefinitely for a standard zero-down conventional mortgage.

Second, build a cash-to-close estimate that includes closing costs, prepaids and escrow funding. Ask which seller credits, gifts, grants or assistance sources are permitted. Keep emergency reserves separate from the amount needed to close.

Finally, compare at least a few Loan Estimates on the same loan type and assumptions. Review rate, APR, points, funding or guarantee fees, monthly payment and five-year cost—not just the down-payment line. Keep finances stable until the loan funds and verify every material change in writing.

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