Zero Down Payment Mortgage: Your Ultimate Home Guide 2023

Zero Down Payment Mortgage

Unlocking the Dream of Homeownership

What is a Zero Down Payment Mortgage? Embarking on the journey to homeownership can be both exciting and daunting, especially for first-time homebuyers. A significant obstacle for many is the need for a sizeable down payment. But what if you could purchase a home without putting any money down? Enter the zero down payment mortgage – a solution for those who dream of owning a home but have limited savings. In this guide, we’ll dive deep into the world of zero down payment mortgages, from qualifying factors to the potential risks and rewards.

The Basics of Zero Down Payment Mortgages

A zero down payment mortgage is a home loan that doesn’t require the borrower to make a down payment. Instead, 100% of the home’s purchase price is financed, eliminating the need for upfront cash. While this type of mortgage may sound enticing, it’s crucial to understand the qualifications, options, and potential drawbacks before diving in.

Zero Down Payment Mortgage Statistics and Relevant Government Resources

  1. First-Time Homebuyers: According to the National Association of Realtors, 29% of first-time homebuyers in 2020 used a zero down payment mortgage to finance their home purchase. This number highlights the importance of zero down payment mortgage options for those entering the housing market for the first time.
  2. VA Loans: The U.S. Department of Veterans Affairs (VA) backs VA loans, which often require no down payment. In fiscal year 2020, the VA guaranteed over 1.2 million home loans, many of which were zero down payment mortgages for eligible veterans, active-duty service members, and surviving spouses.
  3. USDA Loans: The U.S. Department of Agriculture (USDA) offers USDA loans for eligible rural and suburban homebuyers, which often require no down payment. In fiscal year 2020, the USDA guaranteed 107,612 single-family housing loans, helping many Americans achieve homeownership with zero down payment mortgages.
  4. FHA Loans: While Federal Housing Administration (FHA) loans typically require a low down payment of 3.5%, there are state-specific down payment assistance programs available to eligible borrowers that can help cover this cost, effectively making these loans zero down payment mortgages. In fiscal year 2020, the FHA insured over 1.4 million single-family home loans.
  5. Homeownership Rates: According to the U.S. Census Bureau, the homeownership rate in the United States reached 65.5% in the second quarter of 2021. The availability of zero down payment mortgage options has played a role in making homeownership more accessible to a broader range of individuals and families.

By researching and leveraging government resources and programs, you can gain valuable insights into zero down payment mortgage options and make informed decisions about financing your home.

Can I Get A Zero Down Payment Mortgage

Who Qualifies for a Zero Down Payment Mortgage?

Eligibility for a zero down payment mortgage depends on several factors, including credit score, income, and the specific mortgage program. Some of the most common zero down payment mortgage programs include:

Each program has its own set of requirements, so it’s essential to research and find the one that best suits your needs.

Delving Deeper: Types of Zero Down Payment Mortgages

Let’s explore the primary zero down payment mortgage options in more detail:

USDA Loans

The US Department of Agriculture (USDA) offers zero down payment mortgages through its Rural Development Guaranteed Housing Loan program. These loans are designed to promote homeownership in rural and select suburban areas. To qualify, you must meet specific income requirements and purchase a home in an eligible area.

VA Loans

The US Department of Veterans Affairs (VA) provides VA loans for eligible active-duty service members, veterans, and surviving spouses. These loans require no down payment and often have lower interest rates than conventional mortgages. To be eligible, you must meet the VA’s service requirements and obtain a Certificate of Eligibility (COE).

What Is A Zero Down Payment Mortgage

Weighing the Pros and Cons

Zero down payment mortgages can be a blessing for those who lack the savings to make a traditional down payment. However, they also come with potential drawbacks. Weighing the pros and cons is essential before deciding if a zero down payment mortgage is right for you.


  1. No Down Payment: The most obvious benefit of a zero down payment mortgage is that you don’t need to save up for a down payment, which can be a significant barrier to homeownership for many.
  2. Faster Homeownership: Since you don’t need to save for a down payment, you can achieve homeownership sooner than you might have otherwise been able to.
  3. Flexibility: Without having to allocate a significant portion of your savings towards a down payment, you may have more flexibility to cover other expenses, such as home improvements, emergency funds, or retirement savings.


  1. Higher Monthly Payments: Since you’re financing the entire purchase price, your monthly mortgage payments will likely be higher than if you had made a down payment.
  2. Higher Interest Rates: Zero down payment mortgages may come with higher interest rates, resulting in increased overall borrowing costs.
  3. Private Mortgage Insurance (PMI): Borrowers with zero down payment mortgages often have to pay private mortgage insurance (PMI), which increases your monthly payments and overall loan costs.
  4. Limited Equity: Without a down payment, you start with zero equity in your home. This can make it more challenging to refinance or sell your home in the future.
  5. Potential for Negative Equity: If home values decrease, you may owe more on your mortgage than your home is worth, resulting in negative equity. This can make it difficult to sell or refinance your home.
Zero Down Payment Mortgages

Mortgage Terminology and Learning

As you navigate the world of zero down payment mortgages, it’s essential to familiarize yourself with common mortgage terms and concepts. Visit our Mortgage Terms page for more information and resources to help you build your mortgage knowledge.

Wrapping It Up: Is a Zero Down Payment Mortgage Right for You?

A zero down payment mortgage can be an excellent solution for those who want to achieve homeownership but lack the funds for a traditional down payment. However, it’s crucial to carefully consider the pros and cons, research eligibility requirements, and consult with a mortgage professional to determine if a zero down payment mortgage is the best fit for your financial situation.

If you’re ready to explore your zero down payment mortgage options, apply for a loan with Mortgage Rater today. Our team of experienced mortgage professionals is here to guide you through the process and help you make the best decision for your homeownership journey.

Donavon Warren

Donavon Warren

Donavon Warren is a seasoned finance professional with over 20 years of experience. Before embarking into the mortgage industry Donavon attended UCLA. He is the owner of Mortgage Rater, a leading mortgage finance company that offers a range of informational services to clients across the United States. As a finance and mortgage author, Donavon brings his wealth of knowledge and experience to the platform, writing about various topics related to personal finance, investments, home loans, FHA loans, VA loans, 30 Year Fixed rates, no-interest loans, mortgages and more. With his insights and expertise, he aims to educate and empower readers to make informed financial decisions that can help them achieve their financial and mortgage goals. NMLS#2470202
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