Yes, You Can Buy a Home with Zero Down
The idea that you need 20% down to buy a house is one of the most persistent myths in real estate. While a larger down payment does offer advantages including lower monthly payments and no private mortgage insurance, it is not a requirement for homeownership. In 2026, multiple loan programs allow you to purchase a home with zero money down, and several more require as little as 3% to 3.5%.
For a $350,000 home, a 20% down payment means $70,000 in cash. A 3.5% FHA down payment requires $12,250. And with a VA or USDA loan, you can purchase with $0 down. The difference is life-changing for many buyers who have the income to afford monthly payments but have not yet accumulated a large cash reserve.
True Zero-Down-Payment Programs
Two government-backed mortgage programs offer genuine 100% financing with no down payment required.
VA Loans: The Best Zero-Down Option
VA loans, guaranteed by the U.S. Department of Veterans Affairs, are widely considered the best mortgage product available in the United States. They offer 100% financing with no down payment, no private mortgage insurance ever, competitive interest rates that are typically 0.25% to 0.50% lower than conventional loans, flexible credit requirements, and limited closing costs.
Who qualifies: Active-duty service members with at least 90 consecutive days of service, veterans who served at least 90 days during wartime or 181 days during peacetime, National Guard and Reserve members with at least 6 years of service or 90 days of active-duty service, and certain surviving spouses of veterans who died in service or from a service-connected disability.
The VA funding fee: VA loans do not require PMI, but they do include a one-time funding fee that ranges from 1.25% to 3.3% of the loan amount depending on your service history, down payment, and whether you have used your VA benefit before. First-time VA borrowers with no down payment pay a 2.15% funding fee. This fee can be rolled into the loan balance so you do not need to pay it in cash at closing. Veterans with service-connected disabilities are exempt from the funding fee entirely.
No geographic restrictions: Unlike USDA loans, VA loans can be used to purchase homes anywhere in the United States, including urban, suburban, and rural areas.
USDA Loans: Zero Down for Rural and Suburban Buyers
USDA loans, backed by the U.S. Department of Agriculture, provide 100% financing for homes in eligible rural and suburban areas. Despite the name, USDA-eligible areas are not limited to farmland. Many suburbs and small to mid-sized towns qualify, and approximately 97% of the U.S. land mass falls within USDA-eligible territory.
Key requirements: Your total household income cannot exceed 115% of the area median income for your county. The property must be located in a USDA-eligible area, which you can verify using the USDA eligibility map on their website. You must occupy the home as your primary residence. USDA loans cannot be used for investment properties, second homes, or income-producing farms.
Costs: USDA loans include a 1.0% upfront guarantee fee (which can be financed into the loan) and an annual fee of 0.35% of the remaining loan balance, paid monthly. These fees are significantly lower than FHA mortgage insurance premiums, making USDA loans one of the most affordable financing options available.
Advantages over FHA: USDA loans offer lower mortgage insurance costs than FHA (0.35% annual vs 0.55% for FHA), no down payment requirement (vs 3.5% for FHA), and competitive interest rates. The primary limitation is geographic eligibility and income caps.
Low-Down-Payment Programs (3% to 3.5%)
If you do not qualify for VA or USDA loans, several programs allow you to purchase with minimal cash out of pocket.
FHA Loans: 3.5% Down
Federal Housing Administration loans are the most widely used low-down-payment option. They require just 3.5% down for borrowers with credit scores of 580 or higher. Borrowers with scores between 500 and 579 can still qualify but must put 10% down.
FHA loans carry mortgage insurance premiums (MIP) including a 1.75% upfront premium (financed into the loan) and an annual premium of 0.55% paid monthly for the life of the loan. For a $350,000 home with 3.5% down, your upfront MIP would be approximately $5,900 (rolled into the loan) and your monthly MIP approximately $155.
The lifetime MIP requirement is the primary drawback of FHA loans. Unlike conventional PMI, which automatically cancels at 20% equity, FHA MIP continues for the entire loan term unless you refinance into a conventional loan once you have sufficient equity.
Conventional 3% Down Programs
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs allow down payments as low as 3% with reduced mortgage insurance costs compared to standard conventional loans.
HomeReady is designed for low-to-moderate-income borrowers and allows income from non-borrower household members to be considered for qualification. The minimum credit score is 620, and income limits are capped at 80% of area median income.
Home Possible has similar features to HomeReady, with a 3% minimum down payment, 620 minimum credit score, and income limits tied to area median income. Both programs offer reduced PMI rates compared to standard conventional loans, and PMI cancels automatically once you reach 20% equity.
Standard conventional loans with as little as 3% down are also available to first-time buyers through the Conventional 97 program, though PMI rates may be slightly higher than HomeReady or Home Possible.
Creative Zero-Down Strategies Using Down Payment Assistance
Even if you do not qualify for VA or USDA loans, you can effectively achieve zero-down-payment homeownership by combining a low-down-payment loan with a down payment assistance (DPA) program.
FHA + DPA Grant
Many state housing finance agencies offer grants of 3% to 5% of the purchase price that can be applied to your FHA down payment. Since FHA requires only 3.5% down, a 4% grant covers the entire down payment with money left over for closing costs. The grant never needs to be repaid.
Conventional + Forgivable Second Mortgage
Some DPA programs provide a forgivable second mortgage that covers the 3% down payment on a conventional loan. If you stay in the home for the required period (typically 5 to 15 years), the second mortgage is forgiven entirely.
Lender-Specific Zero-Down Products
Several lenders have created proprietary zero-down-payment products. Some combine an FHA first mortgage with a forgivable second mortgage from a nonprofit partner. Others offer conventional loans with built-in DPA that eliminates the need for a separate down payment. Others offer programs in eligible counties that provide zero-down, no-PMI options for borrowers meeting certain credit and income criteria. Check with local lenders and credit unions for programs specific to your area.
Employer-Assisted Housing Programs
Many employers, particularly in healthcare, education, government, and large corporations, offer housing assistance as an employee benefit. These programs may provide direct grants, forgivable loans, or matching funds toward your down payment. Check with your HR department to see if your employer offers such a program.
What You Still Need Cash For
While zero-down programs eliminate the down payment, you still need some cash to complete a home purchase. Understanding these costs prevents surprise at the closing table.
Earnest money deposit is typically $1,000 to $5,000 and is due when your offer is accepted. This money is applied toward your down payment or closing costs at settlement, so it is not an additional cost, but you do need the cash upfront.
Home inspection costs $300 to $600 on average and is paid out of pocket before closing. This is not financeable and is one of the most important investments you make during the purchase process.
Appraisal fee runs $400 to $700 and is typically paid upfront or at closing. Some lenders include this in their closing costs.
Closing costs average 2% to 5% of the purchase price and include lender fees, title insurance, attorney fees, prepaid taxes, and insurance. On a $350,000 home, expect $7,000 to $17,500 in closing costs. However, you can negotiate for the seller to cover all or part of your closing costs (seller concessions), and some DPA programs also cover closing costs in addition to the down payment.
Pros and Cons of Buying with No Money Down
Advantages
You become a homeowner years sooner than if you saved for a traditional 20% down payment. You begin building equity through mortgage payments and potential home price appreciation immediately. You preserve your savings for emergencies, home maintenance, and other financial goals. You stop paying rent, which builds zero equity and offers no tax benefits.
Disadvantages
Higher monthly payments since you are financing the full purchase price. Mortgage insurance adds to your monthly cost (except on VA loans). You start with zero or negative equity, meaning you could owe more than the home is worth if prices decline. Higher total interest paid over the life of the loan due to the larger loan balance. Some zero-down loans have geographic or income restrictions.
Tips for Success with a Zero-Down Purchase
Build an emergency fund first. Having three to six months of expenses in savings is more important than the down payment itself. Homeownership comes with unexpected costs, and having a financial cushion prevents small problems from becoming financial crises.
Improve your credit score before applying. A higher credit score unlocks better interest rates, which is especially important when your loan balance is maximized due to zero down. Even a 0.25% rate improvement on a $350,000 loan saves roughly $50,000 over 30 years.
Get pre-approved before house hunting. Pre-approval confirms your eligibility for zero-down programs and shows sellers you are a serious, qualified buyer.
Do not skip the home inspection. When you have no equity cushion, buying a home with hidden defects is especially risky. The inspection protects you from costly surprise repairs.
Plan for PMI removal. If your loan includes mortgage insurance, track your equity growth and request PMI removal as soon as you reach 20% equity through payments and appreciation (for conventional loans). For FHA loans, plan to refinance into a conventional loan once you have 20% equity to eliminate the lifetime MIP.
The Bottom Line
Buying a home with no money down is not only possible in 2026, it is a viable and increasingly common path to homeownership. VA loans offer the best zero-down option for eligible military members. USDA loans provide the same benefit for buyers in eligible rural and suburban areas. And creative combinations of FHA or conventional loans with down payment assistance programs can achieve zero-down-payment homeownership for buyers who do not qualify for government-backed programs.
The key is understanding your options, choosing the right program for your situation, and ensuring you can comfortably afford the monthly payments even with a maximized loan balance. A knowledgeable loan officer who specializes in low- and no-down-payment programs is your most valuable resource in navigating these options.