How to Buy a House With Little or No Down Payment in 2025
You do not need 20% down to buy a home. Multiple legitimate programs let qualified buyers purchase with 0–3% down. Here are your real options — with the true costs of each.
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Your Low Down Payment Options
| Loan Type | Min Down | Min Credit Score | Who Qualifies | PMI/MIP |
|---|---|---|---|---|
| VA Loan | 0% | No minimum (lenders want 620+) | Veterans, active duty, surviving spouses | None |
| USDA Loan | 0% | 640+ | Rural/suburban areas, income limits apply | Annual fee (0.35%) |
| FHA Loan | 3.5% | 580+ (or 10% down with 500–579) | Anyone meeting income/credit requirements | MIP for life of loan |
| Conventional 97 | 3% | 620+ | First-time buyers (Fannie/Freddie) | PMI until 20% equity |
| HomeReady / Home Possible | 3% | 620+ | Low-to-moderate income buyers | Reduced PMI rates |
VA Loan: The Best Option If You Qualify
If you are an eligible veteran, active duty service member, or qualifying surviving spouse, the VA loan is almost always the best mortgage available — period. Zero down payment, no PMI, competitive rates, and no loan limit for buyers with full entitlement.
The VA loan has no PMI but charges a one-time funding fee: 2.15% of the loan for first-time use with 0% down (1.5% with 5–10% down, 1.25% with 10%+ down). Disabled veterans with a service-connected disability rating are exempt from the funding fee entirely. The funding fee can be rolled into the loan.
USDA Loans: Zero Down for Rural and Suburban Buyers
USDA loans are dramatically underused because many buyers assume "rural" means remote farmland. In reality, many suburban areas qualify — use the USDA Property Eligibility map at eligibility.sc.egov.usda.gov to check any specific address. Income limits apply (typically 115% of area median income).
FHA Loans: The Most Flexible Option for Imperfect Credit
FHA loans require only 3.5% down with a 580+ credit score, making them accessible to buyers who cannot qualify for conventional financing. The significant downside: FHA mortgage insurance premium (MIP) is required for the life of the loan if you put less than 10% down — unlike conventional PMI, which cancels at 20% equity.
FHA MIP costs approximately 0.55% of the loan annually and cannot be removed until the loan is paid off or refinanced (for loans with less than 10% down). Conventional PMI at similar loan sizes costs 0.5–1.5% annually but cancels automatically at 22% equity. For buyers who can qualify conventionally, the conventional loan is usually the better long-term choice — even with a slightly higher rate.
Down Payment Assistance Programs
Every US state has a housing finance agency that offers down payment assistance — grants, second mortgages, or matched savings programs — for first-time buyers meeting income requirements. These programs are dramatically underused: