No-Down-Payment Mortgages: Options Beyond VA and USDA
Last updated: October 2026 · Editorial standards
VA and USDA loans are the best-known zero-down mortgage programs — but they’re not the only options for buyers who can’t afford a traditional down payment. Here’s the complete picture.
VA Loans: Best Zero-Down Option for Those Who Qualify
The VA loan program for eligible veterans, active-duty service members, and surviving spouses remains the gold standard:
- Zero down payment
- No PMI
- Competitive rates
- No loan limit with full entitlement
If you qualify for a VA loan, use it.
USDA Loans: Zero Down for Rural Buyers
USDA loans offer 100% financing for properties in eligible rural and suburban areas with income limits.
- Zero down payment
- Guarantee fee instead of PMI (lower cost)
- Geographic and income restrictions apply
Check eligibility at the USDA’s eligibility map.
Beyond VA and USDA: Other Low/Zero-Down Options
FHA + Down Payment Assistance
While FHA itself requires 3.5% down, combining it with a down payment assistance (DPA) grant or forgivable loan can effectively create a zero-down purchase.
DPA programs are widely available through state housing finance agencies, local governments, and nonprofits. Many cover the full FHA down payment and closing costs.
Effective result: Zero out-of-pocket for buyers who qualify for DPA.
Conventional 97 (3% Down)
Fannie Mae and Freddie Mac offer conventional loans with just 3% down:
- Fannie Mae HomeReady: 3% down, income limits apply, allows gift funds and DPA
- Freddie Mac Home Possible: 3% down, income limits, similar terms
- Conventional 97: 3% down for first-time buyers (no income limits)
These aren’t zero-down, but combining with employer DPA or grant programs can achieve near-zero out-of-pocket.
Down Payment Assistance Grants
Many DPA programs offer grants (free money, no repayment) that cover 3–5% of the purchase price. Combined with a low-down-payment loan:
- 3% DPA grant + 3% Conventional 97 = zero out-of-pocket down payment
- 3.5% DPA grant + FHA = zero out-of-pocket
Programs vary by state, income, and availability. Search DownPaymentResource.com for current programs.
Piggyback Loans for Zero Down (Rare)
An 80-20 piggyback — a first mortgage for 80% and a second mortgage for 20% — technically allows zero down. These became nearly extinct after 2008 but some portfolio lenders and credit unions still offer them in specific situations.
Requirements are strict: excellent credit, strong income, limited availability.
Employer and Professional Assistance Programs
Some large employers, hospital systems, universities, and municipalities offer home purchase assistance — particularly near their campuses.
Examples of sectors with programs:
- Hospital and healthcare systems
- Universities and colleges
- Local governments and police/fire departments
- Large corporations in specific markets
These programs may cover down payment, closing costs, or provide below-market second mortgages.
Shared Equity Programs
Nonprofits and some local governments offer shared equity programs where they provide the down payment in exchange for a share of appreciation when the home is sold. Common in high-cost markets.
The Real Cost of Zero-Down: What to Watch
Zero-down doesn’t mean zero cost. With no down payment:
- You have no equity buffer — if prices drop, you’re immediately underwater
- Monthly payments are higher (larger loan = more interest)
- You’ll pay mortgage insurance (VA funding fee, USDA guarantee fee, PMI/MIP)
- Building equity takes longer
A small down payment can meaningfully improve your financial position even if you qualify for zero-down.
Key Takeaways
Zero-down and low-down-payment options are more available than most buyers realize — especially when combining loan programs with DPA. The best zero-down option depends on your eligibility (VA first, then USDA if the location works, then DPA-backed FHA or conventional). Research what’s available in your area before assuming you need to save for years.
Frequently Asked Questions
Is it a bad idea to buy with zero down? Not necessarily, but it increases risk. You start with no equity and are vulnerable to price declines. If you have stable income, plan to stay long-term, and the alternative is renting indefinitely, zero-down can make sense.
Can I use a zero-down loan for an investment property? No. VA and USDA require primary occupancy. DPA programs are also for primary residences. Zero-down financing is not available for investment properties through standard programs.
Are there income limits for zero-down mortgages? VA has no income limits. USDA and most DPA programs have income limits (usually 80–115% of area median income). HomeReady and Home Possible have moderate income limits.
What credit score do I need for a zero-down mortgage? VA: No official minimum (lenders typically want 580–620). USDA: 640 at most lenders. DPA-backed FHA: 580+. Check specific program requirements.
