100% financing: No down payment mortgage options

Buying a home with no down payment

The biggest barrier for many home buyers isn't their monthly payment affordability. It's saving up for a down payment. If you're paying rent and other bills, stashing away $20,000-40,000 feels impossible.

The good news: you may not need to. Several loan programs offer 100% financing, meaning no down payment required.

VA Loans: The best zero-down option

If you're a veteran, active-duty service member, or eligible spouse, VA loans offer:

• 0% down payment
• No private mortgage insurance (PMI)
• Competitive interest rates (often lower than conventional)
• Flexible credit requirements
• Limited closing costs

This is genuinely one of the best loan programs available. If you're eligible, there's rarely a reason to choose anything else for your primary residence.

Who qualifies: Generally, you need 90 days of active service during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves. Surviving spouses of veterans who died in service or from service-connected disabilities may also qualify.

FHA with down payment assistance

While FHA loans require 3.5% down, many state and local programs offer grants or forgivable loans to cover that down payment.

How it works:

• You qualify for an FHA loan
• A down payment assistance program provides a grant or forgivable second lien for your 3.5%
• You bring little or nothing to closing

Many DPA programs are structured as forgivable second mortgages. This means the assistance amount is placed as a second lien on your property, but forgives over time (often 5-10 years). If you stay in the home, you never pay it back.

Programs vary by location. Pennsylvania, New Jersey, and other states we serve have multiple options. We track these programs and can match you with ones you might qualify for.

Conventional with down payment assistance

Similar to FHA, conventional loans with 3% down can be combined with down payment assistance programs to create effectively zero-down financing.

Types of assistance available:

• Forgivable grants: Free money that doesn't need to be repaid
• Forgivable second liens: Loan that forgives over time (usually 5-10 years) as long as you stay in the home
• Deferred second liens: Repayable when you sell, refinance, or pay off the first mortgage
• Low-interest second mortgages: Small monthly payment in addition to your primary mortgage

The best programs are forgivable. These cover your down payment with no strings attached after the forgiveness period.

USDA Loans: Zero down in rural areas

The USDA loan program offers 100% financing for homes in eligible rural and suburban areas. Despite the name, you don't need to buy a farm.

Important note: MortgageCS does not currently offer USDA loans. However, we want you to know this option exists if it fits your situation. We can refer you to a lender who specializes in USDA financing.

Key requirements:

• Property must be in a USDA-eligible area (more areas qualify than you'd expect)
• Household income must be below 115% of area median income
• Primary residence only
• Credit score typically 640+

Many suburban towns qualify for USDA loans. If you think a USDA loan might be right for you, let us know and we can point you in the right direction.

The trade-offs of 100% financing

No-down-payment loans make homeownership accessible, but understand the trade-offs:

Mortgage insurance: VA loans don't have it, but FHA and conventional loans do. With 100% financing, you'll pay mortgage insurance until you build equity.

Higher payments: Borrowing more means higher monthly payments compared to putting money down.

Less equity cushion: If home values drop, you could owe more than your home is worth. This limits your ability to sell or refinance.

Slightly higher rates: Some zero-down programs (excluding VA) have slightly higher rates than loans with larger down payments.

For many buyers, these trade-offs are worth it to stop renting and start building equity.

You still need closing costs

Even with 100% financing, you'll have closing costs (typically 2-4% of purchase price). However:

• Sellers can contribute to closing costs in your purchase negotiation
• Some down payment assistance programs cover closing costs too
• Lender credits can offset costs (in exchange for a slightly higher rate)
• Gift funds from family are allowed for closing costs

It's possible to buy a home with very little cash out of pocket if you structure things right.

Which option is best for you?

The answer depends on your eligibility and situation:

Option	Best For	Offered by MortgageCS
VA Loan	Veterans, active military, eligible spouses	Yes
FHA + DPA	Buyers who meet down payment assistance requirements	Yes
Conventional + DPA	Buyers with good credit who meet DPA income limits	Yes
USDA Loan	Moderate-income buyers in suburban/rural areas	No (referral available)

We'll evaluate your situation and identify all the programs you might qualify for.

Don't wait to save 20%

The old advice to save 20% before buying keeps many people renting longer than necessary. While having a down payment is great if you can swing it, waiting years to save means:

• More years of rent payments instead of building equity
• Potential home price increases while you save
• Missing out on tax benefits of homeownership

If you can afford the monthly payment, 100% financing might make sense.

See your zero-down options

Let's figure out which programs you qualify for. Get pre-qualified to see your options, or schedule a call to discuss your situation.