How to Buy a Home With No Money Down

If saving for a big down payment is the one thing standing between you and homeownership, you have options. Many eager buyers may be surprised to learn that it’s entirely possible to buy a home with no money down or less money down than they thought. 

Whether you’re just starting to look for homes or hoping to move sooner than your savings allows, certain loan programs and some smart strategies can help you make this happen. 

In this post, we’ll share exactly who can buy a home with no money down, low down payment mortgage options, and how to get mortgage-ready so you can move forward in the home buying process with confidence. 

Key takeaways 

• Options like VA and USDA loans can help eligible buyers get into a home sooner with no money down. 
• If you don’t qualify for a loan program that allows for zero money down, low-down-payment loans and assistance options can still make homeownership possible. 
• If your income is low, gift money and down payment assistance can help cover the upfront costs of buying a home. 
• Buying a home with little or no money down has its trade-offs, such as higher monthly payments or fewer loan choices. 

Can you buy a home with no money down? 

You can buy a home with no money down, but only if you are eligible for certain types of home loans.  

While conventional wisdom says you need a 20% down payment to get a home loan, that’s not always the case. For qualified buyers, including veterans and those living in rural areas, zero-down mortgage options like VA and USDA loans are available. 

While not everyone will qualify for a zero-down mortgage, there are plenty of ways to reduce — or even eliminate — the upfront cash typically needed to buy a home. 

Some buyers may opt to use gift money, apply for down payment assistance, or take advantage of loans that require as little as 3% down. These programs may be especially helpful if you’re a first-time home buyer. 

Zero-down mortgage options 

Two major government-backed loans exist that can help you buy a home with no money down: VA loans and USDA loans. Let’s take a deeper look at both options. 

VA loans for military and family 

A VA loan can make it possible for veterans, active-duty service members, and eligible surviving spouses to buy a home with no money down. Because VA loans are backed by the Department of Veteran Affairs, borrowers are not required to purchase private mortgage insurance (PMI) and are often able to secure competitive interest rates. 

The goal of VA loans is to make homeownership more accessible for those who’ve served in the U.S. military. These loans have more flexible credit requirements and little to no down payment requirements. 

USDA loans for rural buyers 

USDA loans help low- to moderate-income buyers purchase homes in certain rural and suburban areas, often with no money down. Backed by the U.S. Department of Agriculture, these loans offer 100% financing, reduced PMI costs, and competitive interest rates. 

To qualify for these loans, you must meet income limits and the home you’re buying must be in a USDA-approved area. If you live outside major cities or population areas, a UDSA loan may provide you with an affordable path toward homeownership. 

Low down payment mortgages 

If you don’t qualify for a mortgage option that allows you to buy a home with no money down, you likely still have some pretty good, low-cost options. Programs like FHA loans and conventional loans that require as little as 3% down can help make homeownership more accessible to you. 

Let’s explore a few of the options you have when it comes to qualifying for a low-down payment mortgage. 

FHA loans 

Backed by the Federal Housing Administration, an FHA loan is a popular choice for both first-time home buyers and those with lower credit scores. Requiring a down payment as low as 3.5%, FHA loans offer more flexible credit requirements (as low as 600), making them a great fit if you’ve had past credit issues or don’t have a large amount of cash in savings. 

One thing to keep in mind, though, is that FHA loans require mortgage insurance. Despite this, they have successfully opened the door to homeownership for many who might otherwise have been shut out.  

Low-income mortgage options 

If your income isn’t at the level that most lenders require, programs like HomeReady® and Home Possible® offer loans to buy a home with just 3% down. These conventional mortgage options for low- and moderate-income buyers offer flexible guidelines, including the ability to use income from people in your household not listed on the loan. HomeReady and Home Possible also come with reduced mortgage insurance costs.  

Other options to buy a home with no money down 

If you don’t qualify for VA, USDA, or low-down-payment mortgages and you’re still wondering how to buy a home with no money down, you haven’t completely run out of options. Strategies and programs still exist that can help make your dream home purchase a reality: 

Using gift money 

Using gift money from a family member or another approved donor is one way to buy a home when you don’t have the money for a down payment. Gift money is cash that has been given to you specifically to help cover your down payment or closing costs — and it doesn’t have to be repaid. 

If you use gift money for a down payment, lenders will typically require a gift letter from the contributor, and they may ask for proof of funds. But otherwise, the process is fairly straightforward. Just make sure you understand the rules around who can give the gift and how it must be documented. 

Down payment assistance programs 

It’s also common for first-time home buyers to use a down payment assistance program to help them buy a home with no money down. Offered through state and local housing agencies, these programs often come in the form of grants, forgivable loans, and deferred-payment loans that cover some or all of your down payment and closing costs. 

Eligibility for these programs often depends on income, location, and whether you’re buying your first home. Some lenders also offer their own assistance programs which, if combined with low-down-payment loans, can reduce upfront costs even further. 

Pros and cons of buying a home with no money down 

While buying a home with no money down can be a game-changer for someone who might otherwise not be able to afford a home, it isn’t the right move for everyone. Consider the following pros and cons before making your final decision: 

Pros: 

• Without the need to save for a large down payment, you can typically get into a home faster. 
• You can keep your savings intact and be better prepared for emergencies, moving costs, home repairs, and other unforeseen expenses. 
• You may be able to access programs created to make homeownership more affordable. 

Cons: 

• Unless they’re rolled into the loan, you’ll still need to cover closing costs. 
• Low (or no) down payments usually result in higher monthly payments. 
• You may end up paying more in interest over the term of the loan. 
• Fewer loan options and stricter eligibility requirements may apply. 

Understanding these potential benefits and drawbacks can help you decide if a zero-down or low-down-payment mortgage is right for you. 

How to get started today 

If you’re ready to take the first step toward buying a home with no money down, the process starts with getting preapproved from a reputable lender like AmeriSave. We’ll help you determine if you’re eligible for a zero-down mortgage or a low-down-payment option with assistance.  

Our Loan Experts are happy to guide you through every step along the path to homeownership, from helping you explore the right loan option to securing the best rate for your situation. If you’re eager to buy but remain unsure where to begin, get started today and, together, let’s explore the possibilities. 

Frequently asked questions 

What is a zero-down mortgage? 

A zero-down mortgage is a home loan that allows you to borrow 100% of a home’s purchase price without a down payment. Zero-down mortgages are typically backed by government programs, like the Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA) and are designed to make homeownership accessible for more people. 

Are there loan programs to buy a home with no money down? 

Yes! VA loans for veterans and active military members as well as USDA loans for eligible rural buyers are two common zero-down mortgage options. If you don’t qualify for those loans, low-down-payment loans — perhaps combined with gift funds or down payment assistance programs — can help reduce or eliminate upfront costs of home buying. 

What are the pros and cons of buying a home with no down payment? 

The ability to get into a home sooner, without taking years to save cash for a down payment, is the greatest advantage of avoiding a down payment. One trade-off to this, however, is you may end up with a higher monthly payment, and you’d likely still have to pay closing costs and other expenses upfront.