Zero Down Home Loans: A Comprehensive Guide

As the name suggests, a no-down mortgage is a mortgage loan that you can get without a down payment. A down payment is the first payment you make toward the house, and is due when you close your mortgage loan. Lenders generally calculate your down payment as a percentage of the total amount you borrow. There are two government-backed 0% down payment loan options.

The VA loan program is specifically for military borrowers, while the USDA loan is aimed at low- to moderate-income borrowers who purchase homes in designated rural areas. Founded in 1976, Bankrate has a long history of helping people make smart financial decisions. We have maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in what steps to take next. Our mortgage reporters and editors focus on the points that matter most to consumers, such as the most recent rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more, so you can feel confident when making decisions as a homebuyer and homeowner.

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So, whether you're reading an article or a review, you can trust that you get credible and trustworthy information. Our experts have helped you master your money for more than four decades. We continually strive to provide consumers with the expert advice and tools necessary to succeed along life's financial journey. Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate.

Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial team is objective, factual and not influenced by our advertisers. The Department of Agriculture (USDA) endorses USDA Mortgage Loans, a Home Guarantee Program for Homebuyers in a Designated Rural Area. USDA loans don't require a down payment, but borrowers must meet credit and income requirements to qualify and, in some cases, be first-time homebuyers.

You can check your eligibility through the USDA website. While there is no down payment with a USDA loan, there is an upfront security fee, which borrowers can include in the cost of the mortgage. While you won't initially pay money if you choose to incorporate it into the loan, keep in mind that this adds to the balance and will accrue interest for the term of the loan, which means you'll pay more overall. If you are a military service member, veteran or surviving spouse, you may be eligible for a U.

S.-backed VA loan from the Department of Veterans Affairs (VA) with no down payment. There is no mortgage insurance with this type of loan, but just like with a USDA loan, you have to pay an upfront financing fee, which can be incorporated into the mortgage. Keep in mind that you can lower the financing fee by making a down payment, but in reality no down payment is required. The ability to buy a home without a down payment or with very little initial money can be attractive, but it also has drawbacks.

As home prices rise, reaching that often-quoted 20 percent down payment is becoming increasingly difficult. Don't let the need for a huge sum of money discourage you from trying to own a home. There are a variety of programs that can help you buy a home with no down payment or with just a fraction of the purchase price. Compare all your loan options and, most importantly, compare multiple lenders.

By comparing mortgages, you'll be able to get the best deal that makes sense with your savings and budget. You can also get a government-backed FHA loan with a 3.5% down payment, which is a great option if you have bad credit. If you're not eligible for VA or USDA no-down loans and don't have the cash for down payment or closing costs, a Down Payment Assistance (DPA) loan is your next best option. In addition, applying for a VA loan doesn't require you to purchase private mortgage insurance (PMI) to protect the lender in the event of default.

Some people take out an FHA loan, wait until they accumulate 20% equity on their property and then refinance with a conventional loan as an alternative solution. The good news about the USDA rural home loan is that it's not just a “rural loan” but it's also available to buyers in suburban neighborhoods.


insured by the Federal Housing Administration (FHA) require a down payment greater than 3.5%, but allow much lower credit scores than other low-down loan programs. VA loans are available to all veterans and can give you a home without needing to deposit a single penny. So if the purchase price exceeds the FHA limit, you may want to save up to 5% and instead try to get a conventional loan.

Alexandria Meekins
Alexandria Meekins

Social media expert. Infuriatingly humble internet trailblazer. Incurable internet aficionado.

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