Two federal mortgage programs allow qualified buyers to purchase a home with zero down payment in 2026: VA loans for eligible military borrowers and USDA loans for properties in eligible rural and suburban areas. A handful of state programs also eliminate out-of-pocket down payment costs for income-qualified first-time buyers.
VA Loans: Zero Down for Military Borrowers
VA loans are guaranteed by the U.S. Department of Veterans Affairs and are available to:
- Veterans with sufficient service history
- Active-duty service members (typically 90 continuous days of service)
- National Guard and Reserve members (typically 6 years of service or 90 days activated under Title 10)
- Surviving spouses of veterans who died in service or from a service-connected disability
VA Loan Key Facts (2026)
| Feature | Detail |
|---|---|
| Down payment required | 0% |
| Loan limit | No limit for full entitlement borrowers |
| Private mortgage insurance | None |
| VA funding fee | 1.25–3.3% (can be rolled into loan) |
| Minimum credit score (lender typical) | 580–620 |
| Primary residence requirement | Yes |
| Maximum debt-to-income | Typically 41% (higher with strong compensating factors) |
VA Funding Fee
The VA funding fee is a one-time charge that replaces PMI and helps sustain the program. It varies by:
| Borrower Type | Down Payment | First Use | Subsequent Use |
|---|---|---|---|
| Regular military | 0% | 2.15% | 3.30% |
| Regular military | 5–9.99% | 1.50% | 1.50% |
| Regular military | 10%+ | 1.25% | 1.25% |
| Guard/Reserve | 0% | 2.40% | 3.30% |
Veterans with a service-connected disability rating of 10% or higher are exempt from the funding fee. The fee can be rolled into the loan amount rather than paid upfront.
Worked Example — VA Loan With Zero Down
Home price: $375,000 | Down payment: $0 | Funding fee: 2.15% = $8,063 (rolled in) | Loan amount: $383,063 | Rate: 6.50% 30-year fixed | Monthly payment (P&I): ~$2,421
See VA loan rates for current rate data and VA loan guide for the full eligibility and application process.
USDA Loans: Zero Down for Rural and Suburban Buyers
USDA loans are guaranteed by the U.S. Department of Agriculture and require no down payment for properties in USDA-eligible areas. Contrary to the name, many USDA-eligible areas are suburban — not just rural farmland. About 97% of U.S. land area qualifies, covering roughly 100 million Americans.
USDA Loan Key Facts (2026)
| Feature | Detail |
|---|---|
| Down payment required | 0% |
| Geographic restriction | USDA-eligible areas only |
| Income limit | Up to 115% of area median income |
| Upfront guarantee fee | 1.0% of loan amount |
| Annual fee | 0.35% of loan balance (monthly) |
| Minimum credit score (typical) | 640 for automated approval |
| Property type | Single-family, primary residence only |
USDA vs. VA: Which Is Better?
| VA Loan | USDA Loan | |
|---|---|---|
| Who qualifies | Military/veterans only | Income-eligible, eligible-area buyers |
| Geographic restriction | None | USDA-eligible areas |
| Funding/guarantee fee | 1.25–3.30% upfront | 1% upfront + 0.35%/yr |
| Ongoing mortgage insurance | None | 0.35% annual fee |
| Loan limits | No limit (full entitlement) | Based on area |
| Secondary homes allowed | Yes (with remaining entitlement) | No |
VA loans are generally the better product for eligible borrowers — no ongoing fee, no geographic restriction, and no income limit. USDA fills the gap for non-military buyers who meet the income and location requirements.
No-Down-Payment Options Without VA or USDA Eligibility
If you do not qualify for VA or USDA loans, these alternatives can reduce or eliminate out-of-pocket down payment costs:
Down Payment Assistance Programs (DPA): Most states offer DPA through their Housing Finance Agency. Programs typically provide 2–5% of the purchase price as a grant or forgivable second mortgage. Income limits and first-time buyer requirements apply. Search your state’s HFA for current programs.
FHA Loans (3.5% down): FHA loans are not zero-down, but the 3.5% minimum is the lowest available from a conventional source. With a 580+ credit score, a $300,000 home requires only $10,500 down. See FHA loan guide for details.
Fannie Mae HomeReady / Freddie Mac Home Possible: These conventional programs allow 3% down for income-qualified buyers (typically at or below 80% of area median income). Unlike FHA, PMI can be cancelled once you reach 20% equity.
Employer or Nonprofit Assistance: Some employers, unions, and nonprofits (e.g., NACA) offer below-market or zero-down lending with income-based qualifications.
Pros and Cons of No-Down-Payment Mortgages
| Pros | Cons |
|---|---|
| Purchase sooner without waiting to save | Higher monthly payment (no equity cushion) |
| Preserve cash for closing costs, reserves | Mortgage insurance or funding fees apply |
| Build equity through appreciation immediately | Underwater risk if prices drop |
| VA loan eliminates PMI entirely | USDA has geographic and income limits |
Is Zero Down the Right Choice?
A no-down-payment mortgage makes sense when:
- You have stable income and expect home prices to appreciate
- Your savings would otherwise take several years to accumulate
- You are a VA-eligible borrower (the economics are compelling)
- Your local market offers strong appreciation history
It makes less sense when:
- You have no emergency fund (cash reserves matter post-purchase)
- You are buying in a market with flat or declining prices
- You can reach 20% down within 12–18 months (avoiding PMI entirely)
Related: Average down payment · First-time homebuyer programs · FHA loan guide · USDA loan guide · VA loan guide · PMI guide
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