A 20% down payment isn’t the only way to get a mortgage. Zero-down mortgages can open doors to homeownership for buyers with limited savings and free up cash for expenses such as closing costs or home repairs. Here’s what you can expect when you’re buying a home with no money down.
Homefinity launched in 2018 as the online lending division of Fairway Independent Mortgage. It offers a variety of mortgage products, including conventional mortgages, Federal Housing Administration and Veterans Affairs mortgages, and mortgage refinancing.
Caliber Home Loans of Coppell, Texas, offers mortgage products nationwide. Options include conventional, adjustable-rate, jumbo, refinancing, Federal Housing Administration, U.S. Department of Agriculture and Department of Veterans Affairs loans. Caliber has been in business since 2008, and is solely focused on home lending products.
Carrington Mortgage Services, founded in 2007, offers an array of mortgage and refinancing options to borrowers seeking conventional or government-backed loans. Its California-based parent company, Carrington Holding Co., was established in 2003 and provides a range of real estate services. Carrington Mortgage Services is based in California and also has offices in Arizona, Connecticut, Florida, Indiana and Maryland.
Pentagon Federal Credit Union, widely known as PenFed, offers borrowers access to many types of mortgages: conventional, adjustable rate, jumbo and Department of Veterans Affairs, plus refinancing loans and home equity lines of credit. The financial institution, which serves 2.5 million members, was established in 1935 and is based in McLean, Virginia.
North American Savings Bank, or NASB, is a Missouri-based bank and lender founded in 1927 that offers home mortgages nationally. NASB provides a variety of mortgage options, including conventional, Federal Housing Administration and Department of Veterans Affairs loans, and products for borrowers who might otherwise have trouble getting a mortgage.
Headquartered in Charlotte, North Carolina, Truist Bank was formed in 2019 after SunTrust and BB&T banks merged. Truist Bank offers a variety of mortgage products, including refinancing and home equity lines of credit.
Chase, one of the world’s largest banks, was founded in 1799 in New York and offers fixed-rate, refinance and other mortgage loans.
AmeriSave Mortgage Corp. is an online lender that has been in business since 2002. It was one of the first to offer an offsite digital mortgage experience for customers. The company says it has financed more than 664,000 borrowers since it began operating. With headquarters in Atlanta, AmeriSave services loans in 49 states and Washington, D.C.
Simmons Bank was founded in Arkansas in 1903 and can now be found across six states. It offers mortgage products such as conventional and jumbo loans, federal-government-backed loans and state-approved down payment assistance programs.
You can get a no-down-payment mortgage, although you’re more likely to find a low-down-payment mortgage. Many mortgages require a down payment, even a minimal 3%. Although 20% down is the rule of thumb, many homebuyers put down less than that.
While it’s true that the best terms are generally reserved for well-qualified applicants who can make a bigger down payment, you can take advantage of various mortgage programs that demand far less.
But if you want a no-down-payment home loan, the loan types available to you may be limited. Typically, no-down-payment mortgages come in the form of government loans or special lender programs. Homebuyers with low credit scores might not qualify for some programs.
Zero-down-payment loan options can help borrowers who lack the savings to put toward a home but otherwise qualify for a loan. Keep in mind that you’ll generally need to put at least 3% down for conventional loan. Here are a few zero-down home loan programs to explore with 100% financing for your primary residence.
Department of Veterans Affairs Home Loans
The VA offers a zero-down-payment loan and does not set a maximum loan amount, though there are caps on the amount of loan the VA will guarantee. Veterans and surviving spouses who want to apply must furnish a Certificate of Eligibility, a document that verifies the borrower’s eligibility.
The VA loan program has no minimum credit score, but most VA-approved lenders have credit score requirements. Some borrowers may need to pay an upfront funding fee, which can be financed or paid in full at closing. VA home loans do not require mortgage insurance.
U.S. Department of Agriculture Loans
No-down-payment loans are available from the USDA. The property must be in an eligible area and household income must meet guidelines for a buyer to use a USDA loan.
The USDA does not set a credit score requirement for USDA home loan guarantees, but applicants must show an ability to manage debt and pay bills. You’ll have an easier time getting a direct home loan from the USDA if you have a credit score of at least 640, but it’s possible to qualify with a lower score.
USDA direct loans don’t have mortgage insurance. Loans guaranteed by the USDA have an annual guarantee fee.
Doctor Loan Program
Some lenders offer special loan programs for physicians, dentists, residents and fellows. Programs may have features designed for early career professionals, who frequently have big student loan bills.
Credit Unions
Many credit unions have zero-down mortgages, although they generally require membership to qualify. Promotions can change, so check with your credit union for the latest information.
The 30-year fixed mortgage rate fell to 6.63% this week, down from 6.81% a week ago. Interest rate trends were mixed across fixed- and adjustable-rate home loan products, with some types of mortgage rates rising while others dipped slightly.
Mortgage interest rates are twice as high as they were at the beginning of 2022, which continues to have a tangible impact on mortgage affordability and consumer housing sentiment. However, mortgage rates are widely expected to fall throughout the course of 2023. Here are the current mortgage rates, without discount points unless otherwise noted, as of Jan. 12:
30-year fixed: 6.63% (down from 6.81% a week ago).
20-year fixed: 6.68% (up from 6.44% a week ago).
15-year fixed: 5.95% (down from 5.96% a week ago).
10-year fixed: 6.07% (up from 6.01% a week ago).
5/1 ARM: 5.51% (up from 5.49% a week ago).
7/1 ARM: 5.61% (down from 5.62% a week ago).
10/1 ARM: 5.98% (down from 6.02% a week ago).
30-year jumbo loans: 6.63% (down from 6.85% a week ago).
30-year FHA loans: 5.85% with 0.06 point (down from 5.99% a week ago).
VA purchase loans: 6% with 0.05 point (down from 6.03% a week ago).
You’ll want to consider a number of factors when comparing the best mortgage lenders for no-down-payment loans.
What programs do they offer? Because program offerings vary by lender, be sure the lender you choose offers several options for which you think you most qualify.
Do you need to be a first-time homebuyer? Be sure to clarify their restrictions – you don’t want to waste your time with if you don’t qualify.
What is the minimum credit score required? Although many no-down-payment government programs have minimum credit scores, often lenders may have their own stipulations.
Is down payment assistance available? Some banks and financial institutions offer their own down payment assistance, while other lenders will work with state programs. Either way, make sure your lender is knowledgeable and able to offer options.
How is the lender’s customer service? Check online reviews, such as with the Better Business Bureau, Trustpilot or the Consumer Financial Protection Bureau. If the lender is a local financial institution, you might reach out to family and friends.
A zero-down mortgage can be a great option for a homebuyer who has limited cash on hand but is otherwise well-qualified to purchase a home. But putting money down on a mortgage has benefits, too.
Pros of Zero-Down Mortgages
Reserve savings: You can use the cash you would have used for a down payment to cover other expenses, such as closing costs or home improvements. Or you could leverage cash for investing.
Buy a home faster: You could get into a home faster since you won’t have to save up for a down payment.
Cons of Zero-Down Mortgages
Higher costs: You may see higher interest rates because your lender perceives more risk. Your monthly payment will also be higher, and you could be required to pay private mortgage insurance.
No equity: You won’t immediately have some equity in the home if you don’t make a down payment. The more you pay down your mortgage, the more your equity goes up.
If you can swing a down payment of any size, you will broaden your loan options and save on interest charges. Overall, your mortgage costs will be less if you can foot even a relatively small percentage of the loan value as a down payment.
“There’s no free lunch,” says David Battany, executive president of capital markets at Guild Mortgage. Consider these low-down-payment mortgage options:
Piggyback Loans
A piggyback loan is a second loan taken at the same time as your primary mortgage to cover a portion of your home’s purchase price when you make your down payment. This type of loan can reduce the cash you need to purchase a home and help you avoid private mortgage insurance. A piggyback loan can also ensure that your loan amount stays under conforming loan limits, which can make it easier to qualify for a government-backed loan.
FHA Loans
The FHA allows you to put as little as 3.5% down. Credit score requirements may be more flexible than for conventional low-down-payment loans. Your FICO score must be at least 580 to make a 3.5% down payment. For scores between 500 and 579, you’ll need a 10% down payment.
HomeReady by Fannie Mae
This program offers a 3%-down-payment loan for low-income homebuyers. That’s slightly lower than 3.5% for the FHA loan, but the credit guidelines are tougher. A HomeReady loan requires at least a 620 credit score, and a score of 680 or higher could get better pricing.
Freddie Mac Home Possible Loans
This fixed-rate loan has a down payment as low as 3%, and borrowers can reduce their mortgage insurance once they reach 10% equity. Freddie Mac’s Home Possible program is available for buyers with credit scores of 620 or higher.
Conventional 97
The Conventional 97 Fannie Mae loan requires a 3% down payment and sets no income limits. You’ll need a credit score of 620 or higher for this conventional loan.
Good Neighbor Next Door
The Department of Housing and Urban Development’s Good Neighbor Next Door program is for eligible teachers, law enforcement officers, firefighters and emergency medical technicians. Eligible borrowers can purchase a HUD-owned single-family home for 50% off its list price.
The required down payment is as low as $100, and the buyer must live in the home as a primary residence for at least three years.
If you’re having trouble affording a down payment, consider down payment assistance programs. Down payment and closing cost assistance programs are available nationwide, especially for first-time homebuyers or homebuyers who meet certain income requirements.
“There are various down payment assistance programs available, depending on your state, city and county, and a local lending specialist can provide you with that information,” says Ann Thompson, specialty lending executive at Bank of America. “There are also programs with a higher interest rate where you can get partial bank-paid credit to help with closing costs.”
Some banks have special programs for low- to moderate-income homebuyers, which may include down payment assistance. “The goal is to give people access to credit to help meet down payment requirements,” says Bill Banfield, executive vice president of capital markets at Rocket Mortgage.
Down payment assistance programs include:
Grants: Organizations that provide grants to help cover down payments include the National Homebuyers Fund and state housing finance agencies.
Second mortgage programs: You may be able to take out a second mortgage to cover your down payment and closing costs. In many cases, these loans can be forgiven, according to the Federal Deposit Insurance Corp. This can happen once you meet certain requirements, such as living in your house for a specified time period.
There is no single minimum credit score you need to get a no- or low-down-payment mortgage; it varies by program. For example, neither the VA nor the USDA sets a minimum credit score requirement for its home loans. With FHA home loans, you can get a mortgage with a credit score as low as 500, but you can reduce your down payment if your score is 580 or higher.
The important thing to remember is with a higher credit score, you’ll be able to qualify for lower interest rates on your loan.
You do not have to be a first-time homebuyer to qualify for a no-down-payment mortgage. The requirements to get a zero-down mortgage will depend on the lender and the program.
Find the Mortgage That’s Right for You
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
To recap, here are the picks:
How to Get a Mortgage With No Down Payment in 2023
Best for VA loans
Veterans United Home Loans
Veterans United Home Loans offers mortgages in all 50 states and Washington, D.C., and specializes in Department of Veterans Affairs loans. Since 2016, Veterans United Home Loans has generated the largest number of VA purchase loans per year in the nation. The lender was founded in 2002 and is based in Columbia, Missouri.
PNC Bank is one of the largest banks in the United States, serving more than 9 million customers in all 50 states. A full-service mortgage lender, PNC offers most mortgage loan product types.
PrimeLending is a Dallas-based mortgage lender in operation since 1986. The company offers several mortgage loan options, including conventional loans, jumbo loans, government-backed loans and refinance loans. The lender is a subsidiary of PlainsCapital Bank.
Real Genius is a division of FirstBank, a publicly traded bank based in Nashville, Tennessee. Real Genius, formerly known as ConsumerDirect Mortgage, offers both home purchase and refinance loans.
New American Funding is a mortgage lender offering a variety of home loan options to homebuyers and homeowners nationwide except for Hawaii. The company, founded in 2003 and based in Tustin, California, has originated $61.9 billion in mortgages to date.
Guild Mortgage is a San Diego-based lender established in 1960 and focused on residential home loans. Guild Mortgage offers buyers in 43 states a full suite of mortgage products, including conventional loans, government-backed mortgages and jumbo loans.
CMG Financial, a trade name of CMG Mortgage Inc., is a privately-held mortgage banking firm operating nationwide and based in San Ramon, California. Founded in 1993, the lender offers a range of products, including conventional, government and specialty mortgages, like jumbo loans.
Founded in 1990 and headquartered in Mount Laurel, New Jersey, Freedom Mortgage is a full-service mortgage company. It’s the fifth-largest mortgage provider in the country and is licensed to operate in all 50 states. Freedom Mortgage offers a variety of mortgage options, including conventional loans, refinancing and first-time homebuyer friendly programs such as FHA loans.
LoanDepot is a mortgage lender that operates nationally with more than 200 branches and delivers both a digital experience and face-to-face service. The lender offers fixed- and adjustable-rate conventional mortgages, Federal Housing Administration and Department of Veterans Affairs loans, as well as refinance and renovation loans. The company was founded in 2010 and is based in Foothill Ranch, California.
Alliant Credit Union is a not-for-profit financial cooperative that serves customers in all 50 states. Alliant offers products such as conventional, jumbo, refinancing and home equity line of credit loans, but specific mortgage products may not be available in certain states.
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