No-Down-Payment Mortgages Rise as Home Prices Hit $410,800 in Q2 2025

Buying a home without making a down payment is possible, but it typically comes with strict eligibility criteria and unique financial implications. According to the Federal Reserve Bank of St. Louis (FRED), the median home sales price in the second quarter of 2025 stood at $410,800, highlighting the financial barrier many potential homebuyers face when considering traditional mortgage options [1]. For a home of this value, a 5% down payment would require $20,540, while a 20% down payment would require $84,160.

Government-backed loans offer one of the primary pathways to homeownership without a down payment. The U.S. Department of Veterans Affairs (VA) provides loans that do not require a down payment, provided the borrower is an eligible service member, veteran, or surviving spouse. These loans may come with lower interest rates and less stringent credit requirements than conventional loans. However, borrowers must pay an upfront VA funding fee, which ranges from approximately 1.25% to 3.30% of the loan amount [1]. Additionally, in some cases, a down payment may still be required if the borrower has existing VA loan debt.

The U.S. Department of Agriculture (USDA) also offers two types of no-down-payment mortgage programs: USDA guaranteed loans and USDA direct loans. Guaranteed loans are available to low- and moderate-income households and require a 1% upfront guarantee fee and a 0.35% annual fee. Direct loans, on the other hand, offer lower interest rates and longer repayment terms but are only available to very-low and low-income households [1]. These loans are restricted to properties in eligible rural areas and require that the home meets certain eligibility criteria.

High-income professionals—particularly those in healthcare—may also qualify for special loan programs that require little or no down payment. These programs recognize the unique financial profiles of medical professionals, including high earning potential and significant student debt [1]. Lenders may offer favorable terms, including high loan limits and higher debt-to-income (DTI) ratios. Some lenders also extend similar terms to other high-income professionals, such as nurses, veterinarians, and lawyers.

Despite the absence of a down payment, buyers must still consider closing costs, which typically range from 2% to 6% of the home’s purchase price. For a $400,000 home, this could translate to $8,000 to $24,000 in additional upfront costs. These expenses may include appraisal fees, title insurance, and transfer taxes [1]. It is also worth noting that unexpected expenses, such as home inspections and renovations, may arise during the purchase process and could further increase the total out-of-pocket cost.

The advantages of buying a home with no down payment include the ability to purchase sooner and greater liquidity by not tying up large amounts of cash. However, these benefits come with trade-offs. No-down-payment mortgages often have strict eligibility requirements and may require higher interest rates or mortgage insurance. Additionally, starting with no equity in the home means that homeownership gains are delayed, which could impact long-term financial planning [1].

Ultimately, a no-down-payment mortgage may be a viable option for some, but not for all. Those who do not qualify may still consider conventional mortgages, which typically require a 5% minimum down payment or as low as 3% for first-time buyers. If eligible for government-backed or profession-specific programs, however, a zero-down approach can make homeownership more accessible—especially for those who need to enter the market quickly [1].

Source: [1] Can you buy a house with no money down? What you should know (https://fortune.com/article/no-down-payment-mortgage/)