How to Buy a House With No Money Down

According to the National Association of REALTORS®, the average down payment for repeat and first-time homebuyers was 16% in 2024. Given that the median price of existing homes in 2024 was over $420,000 according to the U.S. Census Bureau, this would translate to about $67,200. While making a larger down payment can lower your monthly payments and potentially reduce how much you pay in interest, it isn’t always feasible.

Fortunately, it’s possible to buy a house with little to no money upfront. Certain types of government-backed loans, including USDA and VA loans, down payment assistance programs, and alternative financing options make it possible to buy a home without a large down payment.

Learn more about how to buy a house with no down payment, the pros and cons of each method, and the steps needed to secure a home with minimal upfront costs.

Is it possible to buy a house with no money down?

It’s possible to purchase a home with no down payment. However, you may have more options if you’re a first-time homebuyer or haven’t owned property in the last three years.

Many lenders offer down payment or closing cost assistance to eligible first-time buyers. States often have their own homebuyer assistance programs, like government grants or loans. These can pay for or reduce out-of-pocket costs like the down payment or closing fees.

Some lenders also offer zero-down mortgages, such as VA and USDA loans. These loans don’t have a minimum down payment requirement.

If you aren’t paying significant funds upfront, you may be able to roll closing costs into your loan or negotiate with the seller to pay some or all closing costs. Rolling costs into your loan can increase your balance — and likely your monthly payment amount — but it can also reduce the amount you need to pay upfront.

Government-backed loans with no down payment

One way to buy a house with no money down is to get a government-backed loan, like a USDA or VA loan. These loans have their own repayment term, loan amounts, interest rate, fees, and conditions.

Unlike conventional loans, these loans are insured by a government agency — namely the U.S. Department of Veteran Affairs (VA) or the U.S. Department of Agriculture (USDA). This mitigates the risk of default for the lender and may make it easier to qualify for financing.

Requirements vary based on the loan program, however. Each lender will still assess key factors — like credit score, income, and debt-to-income ratio (DTI) — when determining your eligibility.

Here’s how USDA loans compare to VA loans:

Down payment assistance programs and grants

Many lenders offer down payment assistance programs, which can reduce your total upfront costs, sometimes to zero. Down payment assistance usually comes in one of two forms:

• Grants: You don’t need to pay back a grant. However, eligibility criteria can be strict.
• Loans: Sometimes called a second mortgage, this is a type of subsidized loan that must be repaid over time. Some down payment assistance loans come with better rates and terms than other loans. Others don’t incur interest at all.

You can generally combine down payment assistance with a conventional or FHA loan to bring down upfront costs. Check your state, government, and local programs to find out what’s available in your region.

Keep in mind that many down payment and closing cost assistance programs are geared toward low- to moderate-income households and first-time homebuyers. Some are limited to specific neighborhoods or professions — like public service employees or teachers.

Alternatives to no-money-down mortgages

If you don’t qualify for a government-backed mortgage or down payment assistance, or if you’re still weighing your options, there are alternatives. These include:

• Low-down-payment loans: Depending on your credit score, you could qualify for a home loan with a low down payment. The Federal Housing Administration insures FHA loans, which allow a 3.5% down payment if your credit is 580 or higher (if your score is 500 to 579, the down payment requirement is 10%). If you’re shopping for a conventional loan, some lenders may allow a down payment as low as 5% if you also pay for private mortgage insurance (PMI). In addition, Fannie Mae’s HomeReady Mortgage program only requires a down payment of 3%. Some lenders also offer low-down-payment specialty loans, such as those geared toward doctors or other professionals.
• Rent-to-own: This is an agreement made between you and the property owner in which you both sign a legal contract indicating that you’ll make regular monthly payments for a certain period — up until the lease ends and you can buy the property. Some of the money from those payments will go toward the home purchase price. 

• Gifts: Some loan programs let you use gifts from family or friends to cover a down payment, as long as you can provide proof that the funds are a gift, not a loan.
• No-closing-cost mortgage: Some lenders offer loans that don't have any upfront closing costs or lender fees. To compensate, these loans will either come with a higher interest rate or roll these charges into your loan amount — which could mean a higher monthly payment.

What are the risks of buying a house with no money down?

Zero- and low-down-payment options can help you buy a house with fewer upfront costs, but it’s not without its risks. Here’s what to consider:

• Mortgage insurance: You may have to pay PMI if you get a conventional loan and put less than 20% down, which can increase your monthly payment amount.
• Higher monthly payment and interest charges: The less money you put down, the larger your total loan will be. This can lead to a larger monthly payment and higher interest payments over time. 
• Less ideal terms: Without a down payment, a lender might consider you a higher risk. This could result in a higher interest rate or repayment terms that are less than ideal.
• Limited home equity: Home equity is what your property is worth after subtracting the existing mortgage. No down payment means it will take longer to build substantial equity in your property.
• Additional fees: Some financing options, like no-down-payment VA loans, come with additional fees — like a funding fee or mortgage insurance.