No Down Payment Mortgages — VA, USDA, and 0% Down
Two major government-backed programs let you buy a home with absolutely no down payment: VA loans and USDA loans. Here's how they work, who qualifies, and the real costs involved.
The down payment is the biggest barrier to homeownership for most Americans.
Check what you qualify for with the Home Affordability Calculator→VA Loans: The Best Mortgage in America
VA loans are available to veterans, active-duty service members, National Guard/Reserve members, and eligible surviving spouses. They're widely considered the best mortgage product available — by far.
VA Loan Highlights
| Feature | Detail |
|---|---|
| Down payment | 0% |
| PMI | None — ever |
| Interest rate | Typically 0.25–0.5% lower than conventional |
| Credit score | No VA minimum (lenders usually require 620+) |
| DTI limit | 41% guideline, but flexible with residual income |
| Loan limit | No limit for borrowers with full entitlement |
| Funding fee | 1.25–3.3% (can be financed into the loan) |
| Closing costs | Seller can pay all closing costs |
Who Qualifies
You need a Certificate of Eligibility (COE) from the VA. You qualify if you served:
- 90 consecutive days during wartime
- 181 consecutive days during peacetime
- 6 years in the National Guard or Reserves
- Or you're the surviving spouse of a service member who died in service or from a service-connected disability
Get your COE through your lender (fastest) or directly at VA.gov.
The Funding Fee
The VA funding fee replaces PMI. It's a one-time fee based on your service type and down payment:
| Category | First Use | Subsequent Use |
|---|---|---|
| Regular military, 0% down | 2.15% | 3.3% |
| Regular military, 5%+ down | 1.5% | 1.5% |
| Regular military, 10%+ down | 1.25% | 1.25% |
| Reserves/Guard, 0% down | 2.15% | 3.3% |
Exempt from funding fee: Veterans receiving VA disability compensation, Purple Heart recipients, surviving spouses.
On a $350,000 home, the first-use funding fee at 0% down is $7,525. You can finance it into the loan, making your loan $357,525. While this adds to your monthly payment, it's still dramatically cheaper than conventional PMI over time.
Why VA Is the Best
No other mortgage program offers 0% down, no PMI, below-market rates, and flexible DTI — all in one package. A veteran buying a $350,000 home with a VA loan saves approximately $150–$250/month compared to a conventional buyer with 5% down and PMI.
USDA Loans: Zero Down for Rural and Suburban Buyers
USDA loans are backed by the US Department of Agriculture and designed for moderate-income buyers in eligible rural and suburban areas.
USDA Loan Highlights
| Feature | Detail |
|---|---|
| Down payment | 0% |
| Guarantee fee | 1.0% upfront + 0.35% annual |
| Credit score | 640+ (most lenders) |
| DTI limit | 29% front-end / 41% back-end |
| Income limit | 115% of area median income |
| Property location | Must be in USDA-eligible area |
Who Qualifies
Income: Your household income cannot exceed 115% of the area median income (AMI). This is more generous than it sounds — in many areas, a household earning $80,000–$100,000 still qualifies.
Location: The property must be in a USDA-eligible area. Despite the "rural" label, approximately 97% of US land area qualifies, including many suburbs and small towns near major metro areas. Check eligibility at eligibility.sc.egov.usda.gov.
Property type: Single-family primary residence only. No investment properties, no multi-family, no manufactured homes on leased land.
USDA Costs vs. Other 0% Options
| Cost | VA Loan ($350K) | USDA Loan ($350K) |
|---|---|---|
| Upfront fee | $7,525 (2.15%) | $3,500 (1.0%) |
| Annual fee | $0 | $1,225 (0.35%/year) |
| Monthly cost of fee | $0 | ~$102/month |
| Fee duration | One-time | Life of loan |
USDA has a lower upfront fee but adds an ongoing annual fee. Over time, VA's structure is more cost-effective, but USDA is still far cheaper than conventional PMI for eligible buyers.
Other Low or No Down Payment Options
Navy Federal Credit Union 100% Financing
Navy Federal offers a 0% down conventional-like loan to its members (military, DoD, and family members). No PMI required. This is essentially a VA alternative with potentially fewer restrictions.
State Housing Finance Agency Programs
Many state HFAs offer loans with 0–3% down payment, sometimes combined with down payment assistance grants that cover the entire down payment:
- FHA + DPA grant = Effectively 0% out of pocket
- Some states cover 3.5% FHA down payment entirely through forgivable second mortgages
Check your state's programs in our Down Payment Assistance Guide.
Doctor/Professional Loans
Some lenders offer physician loans with 0–5% down, no PMI, for doctors, dentists, veterinarians, and other medical professionals. These account for high student loan balances and future earning potential.
The Real Cost of 0% Down
Putting nothing down means borrowing the full purchase price. On a $350,000 home:
| Down Payment | Loan Amount | Monthly P&I (6.5%) | Total Interest (30yr) |
|---|---|---|---|
| 0% ($0) | $350,000 | $2,212 | $446,300 |
| 3.5% ($12,250) | $337,750 | $2,135 | $430,600 |
| 5% ($17,500) | $332,500 | $2,102 | $423,900 |
| 20% ($70,000) | $280,000 | $1,770 | $357,100 |
Zero down costs roughly $77 more per month compared to 5% down. Over 30 years, the total interest difference is about $22,400. But consider: that $17,500 you didn't need for a down payment can be invested or kept as an emergency fund.
Risks of 0% Down
1. Underwater Risk
With no equity cushion, even a small price decline puts you "underwater" — owing more than the home is worth. If you need to sell within 2–3 years in a flat or declining market, you'd need to bring cash to closing.
2. Higher Monthly Payments
Borrowing more means higher monthly payments. Make sure your budget has room — use the Home Affordability Calculator to check.
3. No Equity Buffer for Emergencies
If you need to sell quickly, having no equity means less flexibility. Building equity through extra payments can offset this over time.
Mitigating Factors
- If you plan to stay 5+ years, appreciation typically builds equity
- VA loans have historically low foreclosure rates (under 1%) despite 0% down
- USDA loans target stable, affordable markets where prices tend to be less volatile
- Extra payments build equity faster than you'd expect — even $100/month extra on a $350K loan builds $7,000+ in equity in the first 2 years
VA vs. USDA: Which Zero-Down Loan?
| Factor | VA | USDA |
|---|---|---|
| Eligibility | Military service required | Income + location requirements |
| Property location | Anywhere | USDA-eligible areas only |
| Income limit | None | 115% of AMI |
| Ongoing fees | None | 0.35%/year |
| DTI flexibility | Very flexible (residual income) | Strict 41% cap |
| Loan limits | None (full entitlement) | Area-dependent |
If you're eligible for both: VA wins due to no ongoing fees and more flexible underwriting.
Bottom Line
You don't need to save $50,000+ for a down payment to buy a home. VA loans offer 0% down with no PMI to veterans and service members — it's the best mortgage deal in America. USDA loans provide 0% down to moderate-income buyers in eligible areas (which covers 97% of US land). Combined with state down payment assistance programs, many first-time buyers can close on a home with minimal or zero cash out of pocket.
Calculate your full picture with the Down Payment Calculator and check your DTI readiness with the DTI Calculator.
Frequently Asked Questions
Who qualifies for a VA loan with no down payment?
Veterans, active-duty service members, National Guard/Reserve members with qualifying service, and eligible surviving spouses can get a VA loan with 0% down. You need a Certificate of Eligibility (COE) from the VA. There's no PMI, no loan limit for full entitlement, and rates typically run 0.25-0.5% below conventional loans. See current rates in the Mortgage Rate Guide.
What is the difference between VA and USDA zero-down loans?
VA loans require military service but have no income limits and no ongoing fees. USDA loans are available to civilians but require the property to be in an eligible rural/suburban area (97% of US land qualifies) and household income under 115% of area median. Both offer 0% down. Check your budget with the Home Affordability Calculator.
Are there risks to buying a home with no down payment?
The main risk is being "underwater" — owing more than the home is worth — if prices drop early in your ownership. With no equity cushion, selling within 2-3 years in a flat market may require bringing cash to closing. That said, VA loans historically have foreclosure rates under 1%. State down payment assistance programs can also help bridge the gap.
This article is for informational purposes only and does not constitute financial advice. Consult a qualified financial advisor for guidance tailored to your personal circumstances.
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