Two government programs allow qualified buyers to purchase a home with absolutely zero down payment — USDA loans for rural and suburban buyers, and VA loans for veterans and active military. For buyers who don't qualify for these programs, down payment assistance grants can cover 3%–5% of the purchase price. This guide covers every zero-down and low-down option available for bad credit buyers.
Down payment required for USDA and VA loans — the only mainstream zero-down mortgage programs
Cost to apply for HUD housing counseling — the best resource for finding DPA programs
Typical minimum credit score for USDA loans — VA has no official minimum
Many DPA programs provide outright grants — free money that doesn't need to be repaid
The USDA Single Family Housing Guaranteed Loan Program provides 100% financing (zero down payment) for eligible properties in USDA-designated rural and suburban areas. More properties qualify than most people realize — approximately 97% of the US land area is USDA-eligible.
Check your specific address at eligibility.sc.egov.usda.gov — many suburban and small-city areas qualify. A town of 20,000–35,000 people can still be USDA-eligible if it's not part of a large metro statistical area. Don't assume you don't qualify without checking.
VA loans are the best mortgage product available — period. Zero down payment, no mortgage insurance, competitive rates, and no prepayment penalty. For eligible veterans, active duty, and surviving spouses, VA should always be the first loan considered.
| Feature | VA Loan | FHA Loan | USDA Loan |
|---|---|---|---|
| Down payment | 0% | 3.5% | 0% |
| Monthly MI | None | Permanent MIP | 0.35%/year |
| Min credit score | None (lender ~580) | 500–580 | 580–640 |
| Income limits | None | None | 115% AMI cap |
| Property restrictions | Any eligible property | FHA standards | USDA-eligible areas only |
| Funding fee | 1.25%–3.3% | 1.75% UFMIP | 1% guarantee fee |
VA funding fee varies by down payment and whether it's a first or subsequent use. Disabled veterans with a service-connected disability rating are exempt from the funding fee entirely. The fee can be rolled into the loan — no cash needed at closing.
Every state has a Housing Finance Agency (HFA) that administers down payment assistance programs. Most combine a first mortgage (often FHA) with a second mortgage or grant covering the down payment. Many programs are first-time buyer specific, but "first-time" often means "haven't owned in the past 3 years." Find your state's HFA at ncsha.org/housing-help.
Many cities and counties offer their own DPA grants — separate from state programs — specifically for buying in their jurisdiction. Some urban revitalization programs provide $10,000–$25,000 in forgivable grants for buying in targeted neighborhoods. Contact your local housing or community development department.
NHF provides grants up to 5% of loan amount that do not need to be repaid. Works with FHA, VA, and USDA loans. Not a second mortgage — a true grant. Income and purchase price limits apply and vary by state. Check nhffunding.com.
Many large employers — hospitals, universities, corporations — offer down payment assistance as a benefit to attract employees to nearby housing markets. Ask your HR department whether your employer has a homebuyer assistance program.
Get your Certificate of Eligibility (COE) at va.gov or through any VA-approved lender. If you qualify for VA, this is your loan — no question.
Go to eligibility.sc.egov.usda.gov and enter any address you're considering. If it's USDA-eligible and your income is under 115% AMI, USDA is a strong option.
Call HUD at 1-800-569-4287 for free housing counseling. They'll identify every DPA program you qualify for in your county — state, local, and employer-based programs.
Not all lenders are approved for USDA loans. Not all participate in state DPA programs. Find a lender specifically approved for your program before starting the application process.
Zero down doesn't mean zero cash needed. Closing costs (2%–5% of loan) still apply unless you negotiate seller contributions or find a program that covers these too. Budget $4,000–$10,000 in closing costs on a $200,000 loan.
USDA loans (rural/suburban eligible areas, income limits apply) and VA loans (veterans, active military, eligible surviving spouses) both provide 100% financing with zero down payment. These are the only mainstream mortgage programs offering zero down.
Yes — VA loans have no official minimum credit score (lenders typically require 580–620) and USDA loans are available at 580–640. Both programs accommodate bad credit better than conventional loans. Down payment assistance programs can also eliminate the down payment requirement for FHA loans.
A USDA loan provides 100% financing for homes in USDA-designated rural and suburban areas. You must live in an eligible area (check at eligibility.sc.egov.usda.gov), meet income limits (115% of area median income), have at least a 580–640 credit score, and use the property as your primary residence.
Yes — zero down payment doesn't eliminate closing costs (2%–5% of the loan amount). Options to cover closing costs: ask the seller to contribute up to 6% of the purchase price, roll them into the loan (some programs allow this), or find a DPA program that covers both down payment and closing costs.
Down payment assistance (DPA) comes in two forms: grants (free money, no repayment) and second mortgages (low or zero interest, often forgivable after 5–10 years in the home). Programs vary by state and locality. HUD housing counselors (free at 1-800-569-4287) can identify every DPA program you qualify for in your area.
Every state has DPA programs — our first-time buyer grants guide covers how to find and apply for free down payment money in your state.
First-Time Buyer Grants Guide →Low credit, low down payment option
Veterans zero-down guide
Rural zero-down mortgage guide
Free money for your down payment
Complete bad credit home buyer guide
Calculate your true monthly payment
⚠ Disclaimer: USDA and VA loan eligibility rules, income limits, and funding fees change periodically. Verify current requirements with a HUD-approved housing counselor (free) or at usda.gov and va.gov. Not financial advice. See our Disclaimer and Privacy Policy.