Most renters with little or no cash assume they have to save 20% before they can buy. That isn’t how most first-time purchases work. “No savings” rarely means no options, but the options come with trade-offs: mortgage insurance, financing fees, deferred second liens, or a slightly higher rate. I’m Duane Buziak, a licensed mortgage broker in Virginia, Florida, Tennessee, and Georgia, and these are the seven strategies I walk a first time homebuyer with no savings through, in the order I’d test them. Up Lending by Duane Buziak is a mortgage brokerage, not a comparison aggregator, so the goal is to match you to one real program and run the numbers. You can often start with a soft credit pull mortgage review that leaves your score alone. Every dollar figure below is an illustration, and your actual terms depend on your credit, income, property, and the day you lock.
1. Zero-down VA and USDA loans
Suppose an eligible veteran buys a $280,000 home with $0 down. On the VA funding fee table, as of this writing, a first-use borrower putting nothing down pays 2.15%, which is $6,020. Financed into the loan, the balance becomes $286,020. Veterans receiving VA disability compensation are generally exempt from the fee, and the current table is on the VA funding fee and closing costs page. The funding fee is a one-time charge that keeps the program running without monthly mortgage insurance.
USDA works differently. The guaranteed program also allows 0% down, but the property must be in an eligible area and household income must fall under the program limit for your household size. USDA charges an upfront guarantee fee and a small annual fee, both published on the USDA Rural Development guaranteed loan page. Confirm the current percentages there, because they can change.
- Request your Certificate of Eligibility through VA.gov, or check USDA eligibility by address and household size.
- Gather two years of work history and recent pay stubs.
- Have a broker compare the program against your other options.
The common mistake is hearing “zero down” and assuming nothing is owed. Prepaid taxes and insurance, appraisal, title charges, and fees still exist. Measure cash needed at closing against an FHA scenario on the same home.
2. FHA with a gifted down payment
The mistake that stalls the most gift-funded files is timing. A family member wires money three days before closing, or hands over cash, and the underwriter has no way to trace it. The file then sits while you scramble for statements.
FHA allows a minimum 3.5% down payment with a qualifying score, and the gift funds can come from an approved donor such as a relative. Illustration: on a $300,000 purchase, 3.5% is $10,500, and a documented gift can cover all of it. The loan amount before fees is $289,500. FHA also charges an upfront mortgage insurance premium (MIP) of 1.75%, which is $5,066.25 and can be financed, taking the balance to $294,566.25. Annual MIP is billed monthly; at 0.55% of $289,500 it is about $133 a month. Confirm current rates on HUD.gov.
To document a gift properly:
- Get a signed gift letter stating the amount, the donor’s relationship to you, and that no repayment is expected.
- Collect the donor’s bank statement showing the funds.
- Keep the transfer record showing the money moved into your account or to the title company.
- Send it all to your broker early, well before the appraisal.
Avoid cash deposits without a paper trail. Measure the percentage of required funds covered by documented gifts and assistance. If it is under 100%, you know exactly how big the gap is.
3. Down payment assistance stacking
Down payment assistance (DPA) is a program, usually run by a state housing agency or local government, that supplies funds toward your down payment or closing costs. The assistance is typically layered on top of a qualifying first mortgage. Virginia, Florida, Tennessee, and Georgia each have a state housing finance agency with its own offerings, and availability, funding, and terms change often, so verify any program directly before relying on it.
Illustration: a program provides a second lien equal to 3% to 5% of the price. On a $300,000 home, that is $9,000 to $15,000. Some programs forgive the balance over time; others defer it until you sell or refinance.
The misconception is that DPA is free money. Many programs are deferred or forgivable second liens, and the repayment triggers matter. Some carry resale restrictions or recapture rules if you sell or refinance early. Read the note before you commit.
- Confirm income, purchase price, and first-time buyer eligibility.
- Complete any required homebuyer education course; certificates often expire.
- Have your broker confirm which first mortgage products pair with the program, since not every product does.
Measure two things: out-of-pocket cash at closing after assistance, and the monthly payment impact, including any second-lien payment or higher first-mortgage rate that the program requires.
4. Seller credits and rate-for-credit structuring
A seller concession is a negotiated amount the seller agrees to put toward your closing costs. Caps depend on the program and down payment. FHA allows up to 6% of the price, while conventional caps are lower for small down payments; check the Fannie Mae Selling Guide for current limits. Illustration: a 3% concession on a $300,000 price is $9,000, well within FHA limits, applied to closing costs and prepaids.
There is a second form of credit: accepting a slightly higher rate in exchange for a credit from the wholesale source. Suppose a quote offers a $3,000 credit if the rate rises 0.25%, adding about $45 a month. Break-even is $3,000 divided by $45, or roughly 67 months. If you expect to keep the loan longer than that, the credit costs you more than it saves.
- Write the concession into the offer, with the dollar amount or percentage stated.
- Confirm the program cap with your broker before offering.
- Request a no-credit quote and a credit quote side by side.
The common mistake is lowering your offer price to cover credits without checking appraisal impact, or ignoring the higher payment altogether. Measure break-even months on the higher rate against the cash saved at closing.
5. Low-down conventional with HomeReady or Home Possible
Defaulting to FHA is the most common error I see in this category. FHA is forgiving on credit, but if your score is solid, conventional pricing can come out lower. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow 3% down for qualifying buyers. Both have income limits tied to area median income, and HomeReady requires homebuyer education for first-time buyers; check the Fannie Mae HomeReady page for current terms.
The mechanism is how mortgage insurance is priced. Conventional private mortgage insurance varies with your score: stronger credit means a cheaper premium, and it can be removed once your balance reaches 80% of the home’s value. FHA annual MIP, by contrast, typically stays for the life of the loan when you put down less than 10%.
Illustration: 3% down on $300,000 is $9,000, a loan of $291,000. Compare that monthly cost to the FHA example above (about $133 a month in MIP) at your actual score. At 640 the FHA loan may win; at 740 conventional often does.
- Check income limits for the county you’re buying in.
- Schedule the homebuyer education course early.
- Request side-by-side FHA and conventional quotes with identical assumptions.
Measure total monthly payment, including mortgage insurance, across both programs, and note when the insurance can drop off.
6. Strengthen qualifying without cash
Three levers cost little or nothing: your credit profile, your debt-to-income ratio (DTI, your monthly debt payments divided by gross monthly income), and who is on the loan. A co-borrower’s income can lower DTI, though their debts and credit come along with it, so discuss the implications first. If you’ve paid rent on time but have thin credit, alternative credit history, such as documented rent and utility payments, may be usable on some programs.
Illustration: a card has a $5,000 limit and a $4,000 balance, which is 80% utilization. Paying $2,550 brings the balance to $1,450, under 30%. Scores often improve when utilization drops, though the size of the change varies. Re-check the score afterward rather than assuming.
- Pay revolving balances down, starting with the highest utilization.
- Avoid new credit applications and financed purchases.
- Document twelve months or more of rent payments.
- Review your credit reports at CFPB’s homebuying resources and dispute genuine errors.
The pitfall is opening or closing accounts right before applying. Closing an old card shrinks your available credit and can raise utilization, and a new account can shift scores unpredictably. Measure your credit score and DTI before and after each change.
7. Soft-pull pre-approval and broker shopping
A hard inquiry is recorded on your credit report when a company pulls your credit to make a lending decision; a soft inquiry is not. If you apply at several companies without a plan, you can collect multiple hard inquiries. Scoring models often count mortgage inquiries in a short window as one, but don’t count on it, particularly with alternative scoring.
The NoTouch Credit Pull is my soft-pull review. It lets me look at your profile and build FHA, VA, USDA, and conventional scenarios without a hard inquiry, so it works as a mortgage pre approval without hard pull on your score. As a soft pull mortgage broker, I can then shop 500+ wholesale sources instead of one company’s rate sheet. Large retail companies such as Rocket or Movement offer polished apps, but they typically work from a single set of products and start with a full application. Illustration: one soft-pull review yields comparable FHA, VA, and conventional scenarios, versus one company’s single answer.
- Start a NoTouch Credit Pull review with Duane Buziak.
- Compare Loan Estimates for each scenario side by side.
- Authorize a hard pull only when you’ve chosen a program.
Measure the number of hard inquiries (ideally one) and the lowest verified monthly payment and cash to close across quotes. Choosing the quote that meets both is the whole point of shopping.
The same $300,000 home, four ways
This comparison is an illustration using round numbers and published fee schedules as of this writing. Closing costs, prepaids, and rates are not included, and conventional insurance varies with credit.
- VA: $0 down. Funding fee 2.15% for first use ($6,450), financed to $306,450. No monthly mortgage insurance. Requires military eligibility.
- USDA: $0 down. Upfront fee 1% ($3,000), financed to $303,000. Annual fee 0.35% (about $88 a month). Requires an eligible area and income under program limits.
- FHA: $10,500 down (3.5%). Upfront MIP $5,066.25 financed to $294,566.25. Annual MIP about $133 a month. Flexible on credit.
- HomeReady or Home Possible: $9,000 down (3%). No upfront insurance charge. Monthly PMI depends on your score and can be removed later. Subject to income limits.
Eight questions first-time buyers with no savings ask me
Can I buy a home with no savings at all?
Yes, in some cases. VA and USDA loans allow 0% down for eligible borrowers, and gifts, DPA, and seller concessions can cover the rest. You still need steady income and a workable credit profile.
Do I need 20% down?
No. FHA allows 3.5% down, conventional programs allow 3%, and VA and USDA allow 0%. Less than 20% down usually means mortgage insurance or a funding fee.
Is down payment assistance free money?
Not always. Many programs are deferred or forgivable second liens with repayment triggers or resale rules. Read the terms before you commit.
Does a soft-pull pre-approval hurt my credit?
No. A soft inquiry doesn’t affect your score. A hard pull comes later, once you choose a program.
What credit score do I need for FHA?
FHA’s published guidance allows 3.5% down with a 580 score or higher, and 10% down for scores between 500 and 579. Brokers and wholesale sources can set stricter requirements, so check current rules at HUD.gov.
Can a gift cover my entire down payment?
On FHA, yes, with a gift letter and a documented transfer. Conventional rules depend on the program and down payment percentage, so ask before assuming.
Does zero down mean zero cost?
No. Fees, prepaids, and closing costs still apply. Combining seller credits, assistance, and gifts can leave little to nothing out of pocket at closing, but that depends on the deal.
Is Up Lending by Duane Buziak a legitimate mortgage broker?
Yes. Duane Buziak is NMLS #1110647, with Coast2Coast Mortgage LLC NMLS #376205, and is licensed in Virginia, Florida, Tennessee, and Georgia. The business has more than 1,400 five-star reviews.
The order I’d work through, and where to begin
Start by confirming VA or USDA eligibility, since it can eliminate the down payment entirely. If neither fits, move to FHA with documented gifts plus DPA, then add seller credits to cover closing costs. Finish with a soft-pull review with Duane Buziak at Up Lending by Duane Buziak, so you compare real numbers before any hard inquiry. Test conventional alongside FHA if your score is solid.
Ready to experience a fast, simple, and stress-free path to homeownership or refinancing? Connect with our trusted mortgage experts today and discover the right loan solution tailored to your unique financial situation, whether you’re a first-time buyer, seasoned investor, or anywhere in between. You can also call 804-212-8663.