What no-down-payment loans are and who offers them

A no-down-payment home loan lets you borrow the full purchase price of a house without saving money upfront. Instead of putting down 3, 5, 10, or 20 percent, you finance 100 percent of the cost. The lender takes on more risk, so these loans come with higher interest rates, mandatory mortgage insurance, and stricter requirements on your credit score and income than conventional loans do.

Three main sources offer no-down-payment mortgages: the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA). Each has different rules about who can borrow, what properties may have access to, and what you pay. Private lenders also offer no-down-payment loans, but they typically charge higher rates and require stronger credit than government-backed programs.

The loan itself comes from a bank, credit union, or mortgage company — not from the government. The government insures or guarantees the loan, which means the lender is protected if you stop paying. That protection is what allows lenders to lend without a down payment.

Key Takeaways

  • FHA loans require a 580 credit score minimum and charge mortgage insurance for the life of the loan, while VA loans are only for military members and their families and carry no mortgage insurance.
  • USDA loans are for rural properties and borrowers with moderate income, and they also charge no mortgage insurance if you meet income limits.
  • No-down-payment loans cost more per month than conventional mortgages because of insurance premiums and higher interest rates.
  • You still need to show proof of income, employment history, and a clean payment record to be considered, even with no down payment required.
  • Private lenders offer no-down-payment options but usually require a higher credit score and charge rates above what government programs offer.

FHA loans: the most common no-down-payment path

FHA loans are the most widely available no-down-payment option. You need a credit score of at least 580 to may have access to, though some lenders require 620 or higher. The loan covers up to 96.5 percent of the purchase price, which means you still need 3.5 percent down — but many borrowers cover this with a gift from a family member or a grant from a nonprofit, so it still functions as a no-down-payment loan in practice.

FHA loans require mortgage insurance premiums (MIP). You pay an upfront premium of 1.75 percent of the loan amount at closing, and then a monthly premium added to your mortgage payment. The monthly premium stays on your loan for the full 30 years if you put down less than 10 percent. This makes your monthly payment significantly higher than a conventional loan at the same interest rate.

FHA loans have limits on how much you can borrow. The maximum varies by county and ranges from roughly $440,000 to $766,000 for a single-family home as of 2024, though these limits change yearly. You can borrow up to 96.5 percent of the lower of the purchase price or the appraised value, whichever is less.

VA loans: no mortgage insurance for may be able to access veterans and service members

VA loans are available only to military members on active duty, veterans, National Guard members, and surviving spouses of service members who died in service or from service-related injuries. You must obtain a Certificate of may be able to access from the VA before you explore to a lender.

VA loans require no down payment and no mortgage insurance, which makes them the cheapest no-down-payment option if you may have access to. You pay a one-time funding fee instead, which ranges from 1.4 to 3.6 percent of the loan amount depending on your branch, whether this is your first VA loan, and how much you put down. This fee can be rolled into the loan amount, so you do not pay it upfront.

VA loans have no maximum loan amount set by the VA itself, though individual lenders set their own limits. The interest rates are typically lower than FHA or conventional loans. You can use a VA loan to buy a single-family home, a condo, a townhouse, or a multi-unit property (up to four units) if you occupy one unit.

USDA loans: no-down-payment mortgages for rural areas

USDA loans are for borrowers buying property in rural areas designated by the USDA. The USDA defines "rural" broadly — it includes many areas within commuting distance of cities, though it excludes urban centers and some suburbs. You can check whether a specific address qualifies on the USDA website before you start the process.

USDA loans require no down payment and no mortgage insurance. Instead, you pay a may provide fee of 2 percent of the loan amount at closing, plus an annual fee of 0.35 percent added to your monthly payment. Like VA funding fees, the may provide fee can be rolled into the loan.

USDA loans have income limits that vary by county and family size. You must have a household income at or below 115 percent of the area median income for your county. The USDA also looks at your debt-to-income ratio — typically your total monthly debt payments cannot exceed 41 to 43 percent of your gross monthly income, though this varies by lender.

What lenders look for beyond the down payment

Even though you do not need a down payment, lenders still assess your ability to repay. You will need to provide recent pay stubs, W-2s or tax returns for the past two years, bank statements, and a list of your debts. Lenders verify your employment by contacting your employer directly.

Your debt-to-income ratio matters more with no-down-payment loans than with conventional mortgages. This is the percentage of your gross monthly income that goes to debt payments — mortgage, car loans, credit cards, student loans, and child support. Most lenders want this ratio below 43 percent, though some go up to 50 percent. A higher ratio means you have less room in your budget for the new mortgage payment.

Your credit history is examined for recent late payments, collections, charge-offs, or bankruptcy. FHA loans accept credit scores as low as 580, but most lenders require 620 or higher. VA and USDA loans do not set a minimum credit score, but lenders typically require 580 to 620 anyway. Recent negative marks — within the last two years — weigh more heavily than older ones.

How interest rates and total costs compare

No-down-payment loans cost more over time than conventional mortgages with a down payment. The interest rate is typically 0.5 to 1 percent higher, and you pay insurance or may provide fees on top. On a $300,000 loan, the difference in monthly payment between an FHA loan and a conventional loan with 20 percent down can be $200 to $400 per month, depending on current rates.

VA loans are the exception: they often have interest rates as low as or lower than conventional loans, and there is no mortgage insurance. This makes VA loans the cheapest no-down-payment option for those who may have access to. USDA loans fall between FHA and VA in cost — no mortgage insurance, but higher interest rates than VA loans.

Use a mortgage calculator to compare the total cost of each loan type at current rates. Input the loan amount, interest rate, and insurance or may provide fees to see the monthly payment and total interest paid over 30 years. This shows you the real cost difference, not just the interest rate.

Private lenders and portfolio loans

Some banks and mortgage companies offer no-down-payment loans outside the FHA, VA, and USDA programs. These are sometimes called portfolio loans or bank statement loans. They typically require a credit score of 680 or higher, proof of income (which can include bank statements if you are self-employed), and a debt-to-income ratio below 43 percent.

Private no-down-payment loans usually charge 1 to 2 percent higher interest rates than government-backed programs and require mortgage insurance. They are most useful if you do not may have access to for FHA, VA, or USDA loans — for example, if your credit score is between 580 and 620, or if you are self-employed and cannot document income the traditional way.

Shop with multiple lenders before choosing a private loan. Rates and fees vary widely, and a difference of 0.5 percent in interest rate costs tens of thousands of dollars over 30 years.

Frequently Asked Questions

Can I use a gift from family to cover the down payment on an FHA loan?

Yes. FHA allows gifts to cover the entire down payment and closing costs. The gift giver must sign a statement saying it is a gift, not a loan you have to repay. The gift can come from a family member, a nonprofit organization, an employer, or a government agency — but not from the seller or anyone with an interest in the sale.

What happens if the house appraises for less than the purchase price?

You can only borrow up to the appraised value, not the purchase price. If the appraisal comes in low, you either pay the difference out of pocket, renegotiate the price with the seller, or walk away. This is why getting a pre-approval and understanding the property's likely value before you make an offer matters.

Can I remove mortgage insurance from an FHA loan later?

If you put down 10 percent or more, you can remove mortgage insurance after 11 years of payments. If you put down less than 10 percent, the insurance stays for the full 30-year loan term. Refinancing into a conventional loan is the only way to remove it early if you put down less than 10 percent.

Do I need a job to get a no-down-payment loan?

You need to show stable income, but it does not have to be from a traditional job. Self-employment income, rental income, Social Security, disability payments, and pension income all count. Lenders typically want to see two years of history and expect the income to continue.

What is the difference between being pre-approved and pre-may have access to?

Pre-qualification is informal — a lender estimates how much you might borrow based on information you provide. Pre-approval is formal — the lender verifies your income, credit, and employment and commits to lending you a specific amount. Pre-approval is what you need before you make an offer on a house.