Guide to zero down payment mortgages

A zero down payment mortgage is exactly what it sounds like: a mortgage that requires no money down at closing. Buying a home and putting no money down sounds appealing to many, but in reality there are limited loan options that allow a zero down payment. However, that doesn’t mean it's impossible.

Here’s how borrowers can get a zero down payment mortgage — and the pros and cons of getting one.

'Can I buy a house with no money down?'

Not everyone will qualify for a zero down payment loan, but in certain circumstances, you might be able to buy a house with no money down.

VA loans

If you’re a veteran or active military, you might be able to get a VA loan with no down payment. In order to qualify for the loan, you’ll need good credit, enough income, and a Certificate of Eligibility from the VA. VA loans offer a list of great benefits, including no down payment on the home (as long as the loan falls within the VA loan limits and meets other applicable VA guidelines), no private mortgage insurance premium, and limited closing costs.

USDA loans

The second option for a no down payment loan is a USDA loan. The United States Department of Agriculture offers a variety of these loans. Most of the loans are designed to help low- or moderate-income borrowers with decent credit buy a home in an approved rural area.

Pros and cons of a zero down payment loan

The perks of a zero down payment mortgage are simple: You can get a mortgage to buy a home without having to put any money down. This means borrowers without savings could buy a home.

Though that sounds appealing, it does come with downsides. For one, depending on the appraised value, you may not have equity built up in your home at the time of purchase, so you won’t be able to do things such as take out a home equity loan or home equity line of credit if you need to do home repairs or have other expenses you need to take care of.

Plus, you’ll likely be paying off this home loan for longer than someone who had put money down would, which means you’ll likely be paying the bank thousands more in interest payments over the life of the loan.

Bottom line

Most home buyers will need to put down at least 3-5% or more of the cost of the home to get a mortgage. But no matter what kind of loan you get — with a down payment or without — make sure you can truly afford the mortgage payments and the other costs of homeownership (insurance, repairs, etc.) every month.

Use a mortgage calculator to help estimate your monthly mortgage costs or an affordability calculator to help estimate what you can truly afford.