Home affordability is at a record low.

According to the Urban Institute, nearly half of Americans can’t afford the true cost of living. 

Average house prices in the U.S. are sitting at an all-time high of $514,600. In states like Florida, Colorado and California, those averages are higher — $477,000, $597,000 and $811,000, respectively.

For most people, saving up nearly $100,000 in cash for a 20% down payment on your average house is a Sisyphean task. And if you qualify for a loan with only 15%, 10% or 5% down on a conventional mortgage, you will have to pay private mortgage insurance (PMI), which can add hundreds of dollars to your monthly payment.

Fortunately, for qualified buyers, there are options. For active duty service members and veterans, the U.S. Department of Veterans Affairs (VA) offers $0 down payment mortgages to offset the crushing cost of housing. And for people with modest incomes looking to buy property in rural or suburban areas, a loan from the United States Department of Agriculture (USDA) can provide a leg up.

What is a VA $0-Down Payment Mortgage?

Anyone who has looked around the internet for homebuying information has seen the bad news. Current mortgage rates are hovering around 6%, and at the end of last year, the average mortgage payment in the U.S. topped $2,000 per month for the first time.

Fortunately for our men and women in uniform, the government created the VA $0-down payment home loan program in 1944 as part of the GI Bill of Rights. The program allows veterans to take out a government-backed loan guaranteed by the U.S. Department of Veterans Affairs.

That also means you don’t have to pay private mortgage insurance (PMI), which is common for mortgages with less than 20% down at closing and can be as much as 2% of your mortgage depending on your down payment and credit score.

According to Chris Birk, VP of Mortgage Insight and Education at Veterans United Home Loans, “The $0-down payment feature gets most of the attention, but it’s only part of what makes the VA loan so powerful. Flexible credit underwriting, no monthly private mortgage insurance and consistently competitive interest rates can save eligible borrowers thousands of dollars over the life of a loan. When you look at the full picture, it’s one of the strongest home financing options on the market.”

What is a USDA loan?

A USDA loan is a government-backed mortgage designed to help low- to moderate-income homebuyers purchase properties in designated rural and suburban areas. 

As the name implies, these loans are backed by the United States Department of Agriculture to incentivize rural development.

But what most people don’t know, according to Ashley Harris, Director of Homebuyer Education at Neighbors Bank, is that “97% of US land mass falls in an eligible area, and most regions cap household income around $119,850 (higher in some high-cost areas), so plenty of service members and veterans qualify, even those who aren’t eligible for a VA loan.”

The primary benefit of this program is the $0 down payment requirement, allowing buyers to finance the entire purchase price of the property. Credit score criteria are also generally more flexible than you find with conventional mortgages, making it easier for first-time buyers to qualify. 

Like VA loans, these loans eliminate the need for expensive private mortgage insurance, though a modest upfront fee applies.

To qualify, both the applicant and the specific property must meet USDA eligibility requirements based on location and household income, and the home must be situated within an eligible rural boundary. But many qualified applicants may not know that this area often includes surprisingly large portions of suburban American towns.

Do I qualify for a $0-down-payment USDA or VA mortgage?

VA mortgages are for eligible service members, veterans and their surviving spouses. If one of those people sounds like you, you are probably eligible for a VA loan.

• Active Duty: You have served at least 90 continuous days on active duty.
• Veterans: You meet minimum service requirements based on when you served (typically 24 continuous months for those who served after 1980, or 90 days during wartime).
• National Guard or Reserve: You have completed at least six years of service, or 90 days of active-duty service under Title 10 or Title 32.
• Surviving Spouses: You are the unremarried spouse of a service member who died in the line of duty or from a service-connected disability.

Qualifying for the $0-down-payment VA mortgage is just the start, however. Like other mortgage loans, your interest rate and, consequently, your monthly payment depend on how large your mortgage is and your credit score.

The VA itself doesn’t set a minimum credit score to qualify for a loan, but most private lenders require a score of at least 620. While 620 is the common industry standard, some lenders may accept credit scores as low as 550–580.

Lenders also calculate your debt-to-income ratio (DTI) when setting your interest rate. That is your total monthly debt (including the new mortgage) relative to your gross monthly income, focusing on your ability to handle payments.

One additional requirement that is unique to the $0-down-payment VA mortgage is the Certificate of Eligibility (COE). You have to get this formal document from the VA to prove to your lender that you qualify for the benefit. You can request this document through your lender.

USDA loans are intended for low- to moderate-income buyers seeking affordable housing. Eligible applicants include citizens and permanent residents who cannot secure conventional financing but demonstrate the ability to repay daily debt obligations reliably.

One key criterion is that the prospective home serves as a primary residence. In addition to that, the property needs to be located within a government-designated rural or suburban area, but as Harris notes, that restriction may not be as strict as it sounds.

• Debt Ratio: Monthly debt obligations generally should not exceed 41% of gross income.
• Geography: The property must be located in a USDA-eligible rural or suburban area.
• Income Limit: Total household income cannot exceed 115% of the local median income.
• Residency: Applicants must be U.S. citizens, non-citizen nationals, or qualified permanent aliens.
• Occupancy: The home must be occupied as the buyer’s primary residence.
• Credit Score: Lenders typically require a minimum credit score of 640 for automated approval.

What to know about a VA loan before you commit

Committing to a VA loan requires looking beyond the “$0 down payment” headline. 

The first thing to understand is the VA Funding Fee, a one-time charge that supports the program. While it replaces the need for monthly Private Mortgage Insurance (PMI), it typically ranges from 1.25% to 3.3% of the loan amount. 

However, veterans with service-connected disabilities are often exempt from this cost. For borrowers who do have to pay the fee, it is usually added to their loan balance.

Because there is no down payment, you face a higher negative equity risk. According to early 2026 data from ATTOM, more than 3% of all U.S. mortgaged homes are “seriously underwater.” 

Starting with zero equity increases the likelihood of experiencing this if local home values dip or you are forced to sell quickly due to a Permanent Change of Station (PCS), which could leave you owing more than the home is currently worth.

Your choice of property is also limited by the VA Appraisal. Homes must meet strict Minimum Property Requirements (MPRs) regarding safety and habitability. Consequently, a “fixer-upper” with peeling paint or structural issues may not qualify without immediate repairs. 

Finally, remember that “no money down” does not mean “no money at closing.” You are still responsible for closing costs, though the VA even prohibits veterans from paying certain “non-allowable” fees that might be tacked onto a conventional mortgage. 

A list of non-allowable fees includes:

• Loan application or processing fees
• Broker or trustee fees
• Interest rate lock-in fees
• Document preparation fees
• Lender appraisals
• Lender inspections (except for VA construction loans)
• Postage costs
• Photographs
• Escrow or notary fees
• Tax service fees
• Loan closing or settlement fees 

You’ll want to negotiate with the seller to cover these costs to truly minimize your out-of-pocket expenses.

Similarly, though USDA loans are “$0-down-payment,” they also come with costs:

• Upfront Fee: A 1% upfront guarantee fee is charged, but you can roll it into the total loan amount.
• Out-of-Pocket Costs: You must pay for the home inspection and the property appraisal upfront.
• Closing Costs: Lender fees, escrow deposits, and insurance are due at closing unless covered by the seller.

Helping to make housing affordable is a benefit that no active-service member or veteran should willingly pass up. It’s part of your reward for protecting our country.

FAQs: $0-down payment mortgages for veterans

Can these loans be used by surviving spouses?

Yes, eligible surviving spouses can use a VA loan with $0 down payment. But there are some caveats. To be eligible, your spouse must have died while on active duty or from a service-connected disability, or your spouse was totally disabled for a required period before they died. You must also be unremarried.

Can these loans be used for second homes?

VA loans are intended for primary residences only, meaning you cannot use them to buy a “second home” in the traditional sense of a vacation home or a seasonal getaway.

Do they qualify for jumbo loans?

Thanks to the 2020 Blue Water Navy Act, you can use a VA loan for jumbo loan amounts with $0 down payment, provided you have your full entitlement available. (You generally have full entitlement if you have never used a VA loan before or if you have fully paid off and sold your previous VA-financed home.)

While traditional jumbo loans often require a 10% to 20% down payment, the VA program allows qualified veterans to bypass this requirement entirely.