Government Programs With Zero Down Payment For First Time Home Buyers

Not all that long ago, “zero down” mortgages were widely available. Today, they’re less, but that doesn’t mean that first-time home buyers should give up on the possibility of getting a zero down mortgage. There aren’t many options left, but under certain circumstances, it’s possible to get a zero down mortgage.

A word of caution, though – even if you do qualify for a “zero down” mortgage, you should always make sure that you have at least three months’ worth of mortgage payments saved up, just in case you should encounter some unforeseen expenses, or be temporarily out of work.

Now, let’s talk about some options for zero down payment mortgage loans.

Veterans Administration (VA) Loans

A VA loan is similar to an FHA loan, in that it is an insured loan – the VA insures the lender against loss if the home owner defaults on the mortgage. It differs from an FHA loan in that intermittent occupancy of the home is permitted.

In order to qualify for a VA loan, you’ll need to provide your lender with a certificate of eligibility. Anyone who is on active duty with the US military, or who has been honorably discharged, is eligible. So is anyone who has spent at least six years in the National Guard or the Reserves. Spouses of service members who were killed in the line of duty also qualify. Bankruptcy and poor credit will not immediately disqualify the applicant, and mortgage insurance is not required.

Usda Rural Housing Loans

This type of loan was created by the United States Department of Agriculture, with the goal of stimulating home-buying in rural areas. The great thing about this type of loan is that it’s not actually limited to areas of very low population – people in suburban areas can qualify. It depends on population density (usually a community of fewer than 20,000 people), and is designed specifically for potential buyers who have low to moderate incomes. Buyers in college towns and even the suburbs of some major cities have qualified for USDA loans.

There is a maximum purchase price. Home improvements and repairs can be included in a USDA loan. USDA mortgage rates are often even lower than other comparable “zero down” mortgages. These advantages mean that financing a home using a USDA loan can be an extremely cost-effective means for first time home buyers.

Other Sources

Credit unions and smaller banks are sometimes more flexible than larger lending institutions when it comes to “zero down” mortgage for first-timers. Over the past number of years, though, these zero down payment mortgage programs have become fewer, and some are simply no longer available.

Similarly, in the past, many employers offered their employees a 3.5% down payment as part of their benefits package. Again, this has become far less common in recent years. There are a few such programs left, though, so check with your employer.


It’s less likely today than it was in the past for first-time home buyers to qualify for a zero down mortgage, but there are still a few sources available. Programs like the VA loan and the USDA loan program are subject to limited funds, and employers are cutting back on benefits. However, it may still be possible to get a zero down mortgage in certain circumstances, so investigate your options, and ask your realtor or lender for guidance.