🏡 What Is a Zero-Down Mortgage in Real Estate?

A zero-down mortgage is a home loan that allows a buyer to purchase a property with no down payment. Instead of putting 3%–20% down upfront, the lender finances 100% of the purchase price, making it possible to buy a home with minimal cash on hand.

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How a Zero-Down Mortgage Works

With a zero-down mortgage, the buyer does not make a traditional down payment. Instead, the full purchase price is financed through special loan programs or government-backed products. These programs are designed for buyers who have stable income but may not have the savings for a large upfront payment.

Zero-down mortgages are commonly available through:

  • VA Loans – for eligible veterans, active-duty service members, and some surviving spouses.
  • USDA Loans – for homes in eligible rural and suburban areas with income limits.
  • Lender-specific 100% financing programs – offered by some banks and credit unions.

Key elements of zero-down mortgages:

  • No down payment required.
  • Credit score and income requirements vary by program.
  • May require mortgage insurance (unless it’s a VA loan).
  • Buyer must still pay closing costs unless the program or seller contributes.

Why Zero-Down Mortgages Matter

Benefits for Buyers:

  • Allows buyers to purchase a home sooner without waiting to save for a down payment.
  • Ideal for buyers with strong income but limited savings.
  • Can make homeownership accessible in competitive or rising price markets.

Challenges for Buyers:

  • Higher monthly mortgage payments because the loan amount is larger.
  • Some programs require mortgage insurance, adding to costs.
  • Higher risk of being “underwater” if home values fall shortly after purchase.

Example of a Zero-Down Mortgage

A buyer wants to purchase a $350,000 home but doesn’t have funds for a down payment. They qualify for a USDA loan in an eligible area:

  • Home price: $350,000
  • Down payment: $0
  • Lender finances the full purchase price.
  • Buyer pays closing costs and makes regular monthly payments.

This allows the buyer to purchase a home with minimal upfront cash, as long as they meet the program’s requirements.

Why Zero-Down Mortgages Matter for FSBO Sellers

  • Expands your pool of buyers—especially first-time buyers with limited savings.
  • Can help close deals faster thanks to government-backed programs.
  • Makes your home more accessible in lower-priced or rural markets.
  • Buyers may still request seller concessions for closing costs.