Most buyers assume they need 20% down. The reality is narrower and more useful: only two loan programs, VA and USDA, are truly zero down. Every other route, including FHA, conventional, gifts, and assistance programs, gets you to zero out of pocket by covering the down payment with someone else’s money. The difference matters because each route has its own costs, limits, and paperwork.
The six zero down payment mortgage options below are ordered from true zero down to zero out of pocket. As a mortgage broker with access to 500+ wholesale lenders, I can price several of them side by side. We start with a soft credit pull mortgage pre-approval, which we call the NoTouch Credit Pull: a credit check that shows me your profile without a hard inquiry, so your score isn’t dinged while you explore.
By Duane Buziak, NMLS #1110647
1. VA Loan: the original zero-down mortgage
For eligible veterans, service members, and surviving spouses, the VA loan is the strongest option on this list. The VA guarantees part of the loan, so wholesale lenders accept $0 down, and there is no monthly mortgage insurance. In place of mortgage insurance, there is a one-time funding fee, a percentage of the loan that can be financed into it. The fee is waived for some borrowers, including veterans receiving VA disability compensation and surviving spouses who receive DIC.
Here is an illustration. Suppose you buy a $350,000 home with $0 down. As of 2026, the first-use funding fee at zero down is 2.15% (confirm current tiers on the VA funding fee page). That is $7,525, financed into a $357,525 loan, so you bring little to nothing out of pocket at closing. A comparable FHA purchase with 3.5% down ($12,250) would carry a 1.75% upfront premium, about $5,911, plus annual mortgage insurance of roughly $157 a month at 0.55%. The VA loan has no equivalent monthly charge.
To put it into practice:
- Request your Certificate of Eligibility through VA.gov, or let me pull it for you.
- Run a soft-pull pre-approval so nothing hits your credit.
- Have me shop wholesale lenders for the best fit on credit score and debt-to-income ratio (DTI), since lenders’ overlays vary.
- Make offers with the pre-approval letter in hand.
The common mistake is assuming the funding fee makes VA too costly, then never comparing it to FHA or conventional mortgage insurance over the life of the loan. Often the VA loan wins by a wide margin. Measure the total monthly payment and the cash to close against FHA and conventional quotes for the same price, with the same credit profile.
2. USDA Loan: zero down where the map allows it
USDA loans are zero-down financing for primary residences in eligible areas, for households within income limits (generally up to 115% of area median income, as of 2026). Eligibility is tied to the property’s location, and many suburban areas qualify that buyers assume are too developed. The program charges a guarantee fee: an upfront fee, currently 1%, which can be financed, plus a small annual fee, currently 0.35% (verify current figures on USDA’s guaranteed loan page).
Imagine a family that loves a house in a suburb they assumed was ineligible. They check the address on the USDA eligibility map and find it qualifies. On a $300,000 purchase, the 1% fee is $3,000, financed into a $303,000 loan with $0 down. The annual fee of 0.35% works out to about $1,060 a year, or roughly $88 a month, compared with about $157 a month in FHA mortgage insurance on a similar balance.
Steps in order
- Check the specific address on the eligibility map before you fall for it.
- Confirm total household income against current limits for your county and household size.
- Request a USDA pre-approval, which I can start with a soft pull.
Where buyers go wrong
Two errors cause most USDA surprises. The first is choosing a house and checking property eligibility last. The second is counting only the borrower’s income, when USDA counts income for the whole household. Measure the guarantee fee and monthly cost against FHA on the same price. USDA frequently comes out lower, but only a side-by-side quote confirms it.
3. FHA Loan Plus Down Payment Assistance
FHA is not a zero-down loan. HUD’s FHA program requires a minimum of 3.5% down for borrowers with qualifying credit scores. What changes the picture is down payment assistance (DPA): grants, or forgivable or deferred second mortgages, that cover that 3.5%. State housing finance agencies run many of these, including Virginia Housing, Georgia Dream, the Tennessee Housing Development Agency, and Florida Housing Finance Corporation. Which programs are open changes often, so I confirm availability when you apply.
The math is simple. On a $300,000 home, 3.5% is $10,500. A DPA program covers it, which leaves closing costs as the remaining cash need. Some assistance combines with seller credits or gifts to shrink that further.
To put it into practice:
- Ask me which DPA programs are active in your state.
- Confirm income limits, occupancy rules, and any first-time-buyer or education requirements.
- Pair the DPA with the FHA file from the start, because assistance has its own underwriting steps and deadlines.
- Use a mortgage pre approval without a hard pull to get your numbers before choosing a program.
The classic mistake is choosing a DPA program without reading the repayment or recapture terms. Some forgivable seconds are repaid if you sell or refinance within a set period, and some programs come with a higher interest rate on the first mortgage. Measure the full cost of the assistance (any rate premium plus any repayment) against the cash it saves up front. Sometimes saving $10,500 today costs more than that over seven years.
4. Gift Funds From Family
Gifts are the simplest bridge on FHA and conventional loans, and they are the most paperwork-sensitive. A gift letter is a signed statement from the donor confirming the money is a gift, naming the amount and relationship, and stating that no repayment is expected. Underwriters then trace the money to make sure the letter matches reality.
For example, imagine a parent gifts $14,000 toward a $400,000 FHA purchase. That is exactly 3.5%. The file includes the signed gift letter, the donor’s bank statement showing the funds, and proof of the transfer into the buyer’s account.
The process runs like this:
- Confirm the donor is acceptable under the program’s guidelines. Family members are the standard case, and FHA allows some others with a clearly defined interest in the buyer.
- Collect the gift letter, the donor’s statement, and transfer proof.
- Deposit the gift early, so it is seasoned and documented before underwriting looks at the file.
Two mistakes sink gifts. The first is depositing cash with no paper trail, which underwriters generally treat as an unsourced deposit. The second is a donor who expects repayment, which turns the gift into a loan and can disqualify the funds and change your DTI. Measure the number of days from deposit to underwriting clearance, with no outstanding conditions. If that stretches, the documentation has a gap.
5. Conventional 3% Programs With Assistance
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow as little as 3% down on conventional loans, and the down payment can come from gifts, grants, or approved assistance. HomeReady has an income cap tied to area median income and requires homebuyer education in many cases. Credit tier matters more here than on FHA. A higher score means cheaper mortgage insurance, and that sets this route apart from FHA.
Illustration: a buyer with solid credit uses a 3% program on a $325,000 home. The down payment is $9,750, funded with an approved grant. Because conventional mortgage insurance is cancellable, the buyer can later request removal once the balance reaches 80% of the home’s value, through payments, appreciation, or both. FHA premiums generally stay for the life of the loan at low down payments.
To put it into practice, check income eligibility and your credit tier, then compare quotes against FHA, and confirm the approved sources for the down payment funds. Rules on borrower contribution can vary by program and occupancy, so confirm before you assume the grant covers everything.
The common mistake is comparing only the interest rate. A slightly higher rate with cheaper, cancellable mortgage insurance can beat a lower FHA rate over five to ten years. Measure the monthly payment with insurance included, and estimate the month the insurance can come off.
6. Seller Credits and Rate-for-Credit Tradeoffs
This strategy doesn’t replace a program. It sits on top of one to cut your cash at closing. A seller concession is a negotiated amount the seller pays toward your closing costs. Rate-for-credit works the other way around: you accept a slightly higher interest rate, and the loan is priced to give you a credit that offsets costs. Concession caps differ by program and loan-to-value, so confirm current limits before you write an offer (for example, FHA is commonly 6% and VA has its own cap, as of 2026).
Illustration, with rates that are examples rather than offers: on a $350,000 loan, a 6.25% rate gives a payment of about $2,155, and 6.5% gives about $2,212. Say the higher rate buys a $3,500 credit. The extra $57 a month means the credit takes about 61 months, just over five years, to break even. If you expect to sell or refinance in three years, you come out ahead. If you plan to stay for fifteen, you don’t.
- Ask me to price the same loan at several rate and credit levels.
- Divide the credit by the monthly payment difference to get the break-even month.
- Write the credit request into the offer, within the program’s limits.
Two mistakes are common. Buyers request concessions above the cap, which forces a renegotiation or a reduced credit at the table. Or they take the higher rate without calculating the break-even. Measure the break-even month and the final cash to close.
How a Broker With 500+ Wholesale Lenders Compares to a Single-Shelf Lender
Choosing among these six routes means comparing real quotes. The two big retail names below each offer one company’s rate sheet. A broker shops many. Each has strengths, and the table shows them honestly.
| Factor | Up Lending by Duane Buziak (broker) | Rocket Mortgage | Movement Mortgage |
|---|---|---|---|
| Rate sources | 500+ wholesale lenders, shopped for your profile | One company’s rate sheet | One company’s rate sheet |
| Credit check to start | NoTouch Credit Pull (soft pull, no hard inquiry) | Full application and hard pull | Full application and hard pull |
| VA, USDA, FHA, conventional | All available; compared side by side | Offered within one lender’s guidelines | Offered within one lender’s guidelines |
| Credit or DTI overlays | Can move your file to wholesale lenders whose guidelines fit | One set of overlays applies | One set of overlays applies |
| Credibility | Scotsman Guide Top Originator (#114); VA Broker of the Year 2024 to 2025; 1,400+ five-star reviews | Large national brand recognition | Large national brand recognition |
| Where licensed | Virginia, Florida, Tennessee, Georgia only | Broad multi-state footprint | Broad multi-state footprint |
The NoTouch Credit Pull is a soft credit pull that lets me see your profile and pre-qualify you without a hard inquiry. Broker independence is leverage: when one wholesale lender’s overlays block your file, another may approve it. The tradeoff to know about is geography. I am licensed in Virginia, Florida, Tennessee, and Georgia, while the retail giants cover more states.
Eight Questions Buyers Ask About Zero Down Payment Mortgages
Can I really buy a home with nothing down?
Yes, with a VA loan (eligible veterans, service members, and surviving spouses) or a USDA loan (eligible areas and household incomes). Both finance 100% of the purchase price, subject to qualifying.
Is FHA a zero-down loan?
No. FHA requires 3.5% down. It can be zero out of pocket if gifts or down payment assistance cover that amount.
What is the VA funding fee?
It is a one-time fee in place of monthly mortgage insurance, and it varies by down payment and prior VA use. As of 2026, the first-use fee at zero down is 2.15%, and exemptions exist. Check the VA funding fee page for current rates.
Do I need perfect credit?
No. Each program has different score and DTI guidelines, and wholesale lenders vary on overlays. Because I shop many of them, a file one wholesale lender declines may fit another.
Will exploring options hurt my credit score?
Not with a soft credit pull. The NoTouch Credit Pull lets you get a no credit hit mortgage application started before any hard inquiry is needed.
What counts as acceptable gift funds?
A gift from an approved donor, with a signed gift letter, donor bank statement, and transfer proof. The donor can’t expect repayment. Details vary by program.
Does zero down mean zero closing costs?
No. Closing costs are separate from the down payment. Seller credits, program rules, and rate-for-credit pricing can bring them down to little to nothing out of pocket at closing, but that depends on the deal.
Which option should I try first?
The one you qualify for by service or location: VA first, then USDA. If neither fits, I compare FHA or a conventional 3% program with assistance or gifts. The CFPB’s homebuying guide is a good neutral resource for the process.
Start With Service and Location, Then Stack the Rest
Begin with the programs you already qualify for by service or location: VA first, then USDA. If neither applies, layer DPA or gifts onto an FHA or conventional 3% loan. Seller credits come last, because they depend on a contract and a program’s caps. Stacking is allowed within each program’s rules, which is how some buyers reach little to nothing out of pocket at closing.
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. Call Duane Buziak at Up Lending by Duane Buziak at 804-212-8663 for a no hard inquiry mortgage pre approval.