A $320,000 house with nothing down still requires roughly $9,000 in the bank before the keys change hands. That one number is what most no-down-payment articles leave out, and it’s the number that decides whether you’re actually ready to buy this year or next.
So let’s be straight about what’s achievable. A first time home buyer with no down payment has more options in 2024 than at any point in the last decade, but each option comes with a filter: military service, a rural address, an income cap, or a homebuyer class you have to sit through. Knowing which filter you clear is the whole game.
Zero down is real, just narrower than the ads suggest
Strip away the marketing and there are three genuine routes to a 0% down purchase. Government-backed loans for specific groups, state and local assistance programs, and a handful of credit unions running their own portfolio products. If you want the broader sequence of what happens and when, the first time home buyer guide covers the parts nobody mentions before you start touring houses.
VA loans: the only true zero down for most people
If you or your spouse served 90 days of active duty in wartime, 181 days in peacetime, or six years in the Guard or Reserve, the VA will back a purchase with no down payment, no monthly mortgage insurance, and no loan limit since the rule change in January 2020. On a $350,000 home you’d pay a funding fee of 2.15% ($7,525) on first use, and nearly every buyer finances it rather than paying cash. Veterans with a service-connected disability are exempt from the fee entirely.
Rates on VA loans also tend to run about a quarter point under conventional, which on a $350,000 loan is roughly $50 a month, or $18,000 over the life of the loan.
USDA loans: zero down, if the address qualifies
The USDA’s Single Family Housing Guaranteed Loan Program also does 0% down. The catch is where you buy and how much you earn. Roughly 97% of U.S. land area is eligible, but those areas are overwhelmingly rural; towns of about 35,000 people or fewer generally qualify. Your household income also has to land under 115% of the area median, which rules out higher earners even in eligible towns.
Costs are modest: a 1% upfront guarantee fee, financeable, plus an annual fee of 0.35% of the balance. On a $280,000 loan that’s about $82 a month. Properties need to be primary residences and in reasonable condition, so a fixer-upper with a sagging roof won’t fly.
Down payment assistance nobody asks about
Almost every state runs a housing finance agency, and most of them offer second liens covering 3% to 5% of the purchase price. These are frequently 0% interest, fully deferred, and forgiven after five to ten years if you stay put. Some are straight grants. Local city and county programs exist on top of that, and NACA, a nonprofit, has been writing no-down, no-closing-cost mortgages for decades in exchange for attending workshops and doing volunteer advocacy work.
Here’s the frustrating part: many loan officers won’t mention assistance programs unless you ask directly. Say the words: “Do you have down payment assistance that can layer onto an FHA or conventional loan?” Typical requirements are a credit score around 620 to 640, an income cap, and a homebuyer education course that runs six to eight hours and is often free online.
You still need cash at the closing table
Zero down means zero toward the purchase price. It doesn’t mean zero cash. Budget for these:
- Closing costs: typically 2% to 5% of the price, so $6,000 to $15,000 on a $300,000 home. This covers lender fees, title insurance, appraisal, recording, and prepaid interest.
- Earnest money: usually $1,000 to $5,000, due within a few days of your offer going under contract. It gets credited back to you at closing, but you need it available now.
- Escrow setup: lenders often collect three to six months of property taxes and homeowners insurance upfront. Another $1,500 to $3,000 in many markets.
- Cash reserves: some programs want one to two months of payments still sitting in your account after closing.
- Moving and setup: truck rental, utility deposits, a washer, blinds. Realistically $1,000 to $3,000.
Seller concessions can absorb part of this. FHA permits the seller to cover up to 6% of the price in your costs. Conventional loans cap it at 3% once your loan-to-value is above 90%, and with zero down you’re at 100%, so 3% is the ceiling. That’s still $9,000 on a $300,000 house if you negotiate it in.
What borrowing the whole price costs you monthly
On a $300,000 loan at 6.5% over 30 years, principal and interest runs about $1,896. With FHA, add roughly $140 a month in mortgage insurance premium (1.75% upfront plus about 0.55% annually) and you’re near $2,036 before taxes and insurance. Conventional PMI is similar in the early years, landing somewhere between 0.3% and 1.5% of the loan annually depending on your credit score. USDA’s 0.35% annual fee is cheaper; VA has no monthly insurance at all.
One detail worth knowing: FHA mortgage insurance typically lasts the life of the loan unless you put down 10% or more. Conventional PMI drops off automatically at 78% loan-to-value. If you plan to stay 15 years, that difference is real money, and it’s one of the first-time home buyer mistakes that quietly cost you thousands over time.
Your actual rate depends on far more than the headline number you see online, and the factors that set your mortgage rate include credit score tiers, loan-to-value, property type, and how many lenders you actually compare.
Qualifying without a savings cushion
With no down payment, underwriters lean harder on credit and debt-to-income. FHA allows a 580 score at 3.5% down; between 500 and 579 you’d need 10% down, which defeats the purpose. Conventional loans generally start at 620 and price much better above 740. DTI, the percentage of your gross income going to all debt payments, usually needs to land at or under 43%, though automated underwriting sometimes stretches to 50% with compensating factors like a long employment history or significant reserves.
If your credit took a hit, read up on what actually works for a first time home buyer with bad credit before you apply anywhere. Rate shopping within a 14-day window counts as a single inquiry for scoring purposes, so pull quotes from at least three lenders in one week.
Gift funds are fully allowed. FHA and conventional both accept 100% of your down payment and closing costs as a gift from a relative, documented with a signed gift letter and a bank statement showing the transfer. There’s no seasoning requirement on FHA gifts, though the money does need to be traceable.
A realistic 90-day sequence
Get a full pre-approval, not a pre-qualification, from a lender who writes both FHA and conventional loans plus assistance programs. In the same week, take the homebuyer education course, since it’s required for many assistance programs and takes a weekend. Then figure out your true cash-to-close number with the lender in writing, save aggressively toward it, and only start touring homes once you can cover closing costs plus two months of reserves.
The first-time home buyer checklist lays out that order properly, because doing pre-approval before you know your closing cost figure is how people fall in love with a house they can’t actually close on.
Questions to ask before you sign anything
Ask each lender how long the mortgage insurance stays on the loan and what removes it. Ask whether the rate quote assumes a seller concession or an assistance second lien, because both shift the real number. Ask what the total monthly payment is with taxes and insurance included, not just principal and interest. Ask if there’s a prepayment penalty or a recapture tax on the assistance program if you sell in year three. And ask for the Loan Estimate in writing, then compare page one across all three lenders side by side.
Get clear answers to those five things and the no-down-payment path stops being a sales pitch and starts being a plan with a number attached to it.