First-time home buyer programs with no money down may help qualified buyers purchase a home with little or no traditional down payment. The most common true no money down home loan programs are VA loans for eligible military borrowers and USDA loans for eligible buyers purchasing in approved rural or suburban areas.
Some buyers may also reduce upfront cash by using down payment assistance, forgivable loans, seller credits, gift funds, or first-time buyer programs.
But “no money down” does not always mean “no money needed.”
Even with a no down payment home loan program, buyers may still need funds for closing costs, prepaid taxes, homeowners insurance, escrow reserves, inspections, appraisal, and moving expenses.
Important note: This article is for informational purposes only and is not a commitment to lend. Loan approval, down payment requirements, assistance programs, forgivable loans, loan forgiveness, seller credits, gift funds, rates, APR, fees, and terms depend on credit, income, property eligibility, occupancy, underwriting, investor guidelines, and program availability.
Key Takeaways First-time home buyer programs with no money down may be available through VA loans, USDA loans, or assistance-based structures if the buyer and property qualify. No money down home loan programs are not automatic; buyers still need to meet credit, income, occupancy, property, and underwriting requirements. A forgivable loan first time home buyer program may help cover down payment or closing costs, but forgiveness usually depends on rules such as occupancy period and repayment triggers. First time home buyer loan forgiveness is usually conditional, not automatic debt cancellation. If a buyer does not qualify for a 0 down first time home buyer program, FHA, Conventional 3% down, HomeReady, Home Possible, and down payment assistance may still help reduce upfront cash. What Are First-Time Home Buyer Programs With No Money Down? First-time home buyer programs with no money down are mortgage or assistance options that may help eligible buyers purchase a home without making a traditional down payment. These may include VA loans, USDA loans, forgivable assistance, grants, seller credits, or approved down payment assistance programs.
The phrase “no money down” can mean different things depending on the program.
It may mean:
The mortgage program does not require a traditional down payment Assistance helps cover the required down payment Seller or lender credits help reduce closing costs A forgivable loan helps reduce cash needed at closing A combination of approved sources reduces the buyer’s upfront cash The Consumer Financial Protection Bureau explains that VA loans do not require a down payment for eligible servicemembers or family members, while USDA offers a no-down-payment mortgage program for eligible low- and moderate-income households in eligible rural areas.
The safest way to understand “no money down” is to ask for a full cash-to-close estimate, not just a down payment estimate.
Best No Money Down Home Loan Programs for First-Time Buyers The most common no money down home loan programs for eligible first-time buyers are VA loans and USDA loans. VA is generally for eligible military borrowers, while USDA is generally for eligible buyers purchasing a primary residence in approved rural or suburban areas.
Here is a practical comparison:
Program
Can It Be No Money Down?
Best For
What to Review
VA Loan Often yes, if eligible Veterans, service members, and eligible surviving spouses VA eligibility, COE, funding fee, occupancy USDA Loan May be yes, if eligible Buyers in approved rural/suburban areas Property location, income limits, guarantee fee Forgivable Loan Assistance May reduce upfront cash Eligible first-time buyers by program Forgiveness schedule and repayment triggers Down Payment Assistance May reduce or cover down payment Buyers meeting state/local rules Grant vs. loan, income limits, funding availability Seller Credits May reduce closing costs Negotiated purchase contracts Program limits and underwriting approval FHA Loan Not no money down by itself Buyers needing flexible credit guidelines Down payment and mortgage insurance Conventional 3% Down Not no money down by itself Qualified first-time or eligible buyers PMI and credit requirements
USDA states that qualifying individuals and families may have the opportunity to purchase or build a single-family home with no money down, and that eligibility is based on income and varies by area.
VA also states that nearly 90% of VA-backed loans are made with no down payment, while borrowers still need required credit and income for the loan amount they want to borrow.
VA Loans for 0 Down First-Time Home Buyers A VA loan may allow an eligible 0 down first time home buyer to purchase without a traditional down payment. VA loans are generally available to eligible Veterans, active-duty service members, certain National Guard or Reserve members, and some surviving spouses.
VA loans may help eligible:
Veterans Active-duty service members National Guard members Reserve members Certain surviving spouses VA purchase loans can help eligible borrowers buy, build, or improve a home, especially if they do not want to make a down payment.
VA May Be a Good Fit If You: Have eligible military service Can obtain a Certificate of Eligibility Plan to live in the home as your primary residence Meet lender credit and income requirements Want to preserve upfront cash Want to avoid required monthly private mortgage insurance VA Costs to Review A VA loan may reduce the down payment barrier, but buyers should still review:
VA funding fee, unless exempt Closing costs Seller credit options Appraisal requirements Occupancy rules Estimated monthly payment Cash needed at closing VA can be one of the strongest no money down options for eligible buyers, but it still requires full lender approval.
→ Read more: how to get VA home loan
USDA Loans for First-Time Buyers With No Money Down A USDA loan may allow eligible first-time buyers to purchase a home with no money down in approved rural or suburban areas. USDA eligibility depends on property location, household income, occupancy, credit profile, and lender underwriting.
USDA’s Single Family Housing Guaranteed Loan Program helps approved lenders provide homeownership opportunities for low- and moderate-income households purchasing adequate, modest, decent, safe, and sanitary homes as their primary residence in eligible rural areas.
USDA loans are not only for farms.
Many eligible homes may be located in:
Smaller towns Outer suburbs Rural communities Certain lower-density areas outside major metro centers USDA May Be a Good Fit If You: Want to buy a primary residence Are open to eligible rural or suburban areas Meet USDA household income limits Have acceptable credit and repayment ability Want to reduce or avoid a traditional down payment Can qualify through an approved lender USDA Costs to Review Before choosing USDA, review:
Exact property address eligibility Household income limits USDA guarantee fees Closing costs Appraisal and property condition Monthly payment Timeline and lender requirements USDA can help some first-time buyers purchase with no money down, but both the buyer and the property must qualify.
→ Read more: USDA first-time home buyer loan qualifications
Forgivable Loan First-Time Home Buyer Programs A forgivable loan first time home buyer program may help cover down payment or closing costs, and the balance may be forgiven if the buyer meets program rules. These programs are often offered through state housing agencies, local governments, nonprofits, or community programs.
A forgivable loan may be structured as a second mortgage.
The buyer receives assistance at closing.
Then, the assistance may be forgiven over time if the buyer follows the program rules.
Common rules may include:
Living in the home as a primary residence Staying in the home for a required period Meeting income limits Buying in an eligible area Using an approved first mortgage Completing homebuyer education Not selling or refinancing too soon Meeting property and purchase price limits HUD notes that HOME homebuyer assistance may be structured in several ways, including grants, deferred-payment loans, below-market-rate loans, or loan guarantees.
A forgivable loan can reduce upfront cash, but it is not automatically free money. Buyers should understand when forgiveness applies and what could trigger repayment.
How First Time Home Buyer Loan Forgiveness Works First time home buyer loan forgiveness usually means the assistance may be forgiven if the buyer satisfies specific program requirements. Forgiveness may happen gradually each year or after a required occupancy period.
Common forgiveness structures include:
Forgiveness Type
How It May Work
What to Watch
Fully forgivable after a set period Balance may be forgiven after required occupancy period Selling or refinancing early may trigger repayment Gradual forgiveness A portion may be forgiven each year Remaining balance may be due if rules are broken Deferred-payment second loan Payment delayed until sale, refinance, or payoff Not always forgivable Grant May not require repayment if rules are met Still may have eligibility conditions Repayable second mortgage Must be repaid under loan terms Not loan forgiveness
Buyers should ask what happens if they:
Sell the home Refinance the mortgage Move out Convert the home into a rental Pay off the first mortgage Break program rules HUD’s HOME program guidance discusses resale or recapture provisions that may apply when homebuyer assistance is provided, which means assistance may have conditions tied to affordability or repayment.
The most important question is not “Is it forgivable?” It is “What could make me repay it?”
Can You Combine First-Time Buyer Assistance With No Down Payment Programs? Some buyers may be able to combine first-time buyer assistance with eligible loan programs, but this depends on the mortgage type, assistance provider, lender guidelines, property, and underwriting approval. Not every assistance program can be combined with every loan.
Potential combinations may include:
USDA loan plus closing cost assistance VA loan plus seller credits FHA loan plus forgivable down payment assistance Conventional 3% down plus approved grants HomeReady or Home Possible plus eligible assistance Seller credits plus gift funds, when allowed Fannie Mae’s HomeReady mortgage offers a down payment as low as 3% for eligible borrowers, and Fannie Mae also provides a down payment assistance tool to help buyers search for programs that may help with down payment and closing costs.
Questions to Ask Before Combining Programs Ask your loan advisor:
Can this assistance be used with my first mortgage? Is the assistance a grant, forgivable loan, deferred loan, or repayable second mortgage? Does it affect my debt-to-income ratio? Are there income limits? Are there purchase price limits? Can it be used for closing costs? Can seller credits also be used? What happens if I refinance or sell? Layering programs can reduce upfront cash, but every layer must meet loan and assistance guidelines.
First-Time Buyer Programs With No Money Down vs. Low Down Payment Loans First-time buyer programs with no money down may remove the traditional down payment for eligible borrowers, while low down payment loans usually require a smaller contribution such as 3% or 3.5%. Buyers should compare both because no money down is not always the lowest total-cost option.
Option
Down Payment Feature
Best Fit
VA Loan Often 0% down Eligible military borrowers USDA Loan May allow 0% down Eligible buyers in approved rural/suburban areas FHA Loan As low as 3.5% down Buyers needing flexible credit guidelines Conventional 3% Down As low as 3% down Qualified first-time or eligible buyers HomeReady As low as 3% down Eligible low- to moderate-income borrowers Home Possible As low as 3% down Eligible very low- to moderate-income borrowers Forgivable Assistance Varies Buyers who meet program rules
The CFPB explains that FHA loans may allow down payments as low as 3.5%, while conventional loans backed by Fannie Mae or Freddie Mac can require as little as 3% down.
No money down can help preserve cash, but low down payment options may offer more property flexibility or a better overall fit for some buyers.
What Costs Should First-Time Buyers Expect? Even with first-time home buyer programs with no money down, buyers may still need funds for closing costs, prepaid expenses, escrow reserves, inspections, appraisal, and moving costs. A no down payment program is not the same as zero cash to close.
Common upfront costs may include:
Earnest money deposit Home inspection Appraisal Title and escrow fees Prepaid property taxes Homeowners insurance Escrow reserves HOA setup or transfer fees Moving expenses Emergency savings after closing Some buyers may reduce cash to close using:
Seller credits Lender credits Gift funds Closing cost assistance Forgivable loans Approved grants Down payment assistance But these options depend on loan program rules, seller negotiation, lender guidelines, and assistance availability.
Before making an offer, ask for an estimated cash-to-close breakdown — not just a down payment estimate.
You can use the Loan Factory mortgage calculator to estimate how purchase price, loan amount, taxes, insurance, and loan term may affect your monthly payment.
Case Study: First-Time Buyer With No Money Down Options A first-time buyer may have more than one path to reduce upfront cash. The right strategy depends on eligibility, property location, income, credit, seller credits, assistance availability, and total monthly payment.
Hypothetical Buyer Scenario A first-time buyer wants to purchase a $350,000 primary residence.
Path
Down Payment
What the Buyer Should Review
VA Loan $0 if eligible COE, funding fee, occupancy, appraisal, lender approval USDA Loan $0 if eligible Property location, income limits, guarantee fee, lender approval FHA + Forgivable Loan May reduce upfront cash Forgiveness schedule, mortgage insurance, cash to close Conventional 3% Down + Assistance May reduce upfront cash PMI, credit profile, assistance terms Seller Credits May reduce closing costs Negotiation, program limits, appraisal approval Gift Funds May help cover eligible costs Documentation and source requirements
In this example, a VA-eligible buyer may be able to purchase with no down payment.
A buyer choosing a USDA-eligible property may also have a no money down path.
A buyer who does not qualify for VA or USDA may still reduce upfront cash using FHA, conventional, forgivable assistance, seller credits, or gift funds.
Loan Factory Experience Note: In real first-time buyer reviews, many buyers ask for “no money down” first. But the better question is often: “Which structure leaves me with the safest cash position after closing?” Sometimes a 0 down loan is best. Other times, a low down payment loan combined with assistance creates a smoother approval path.
How to Find First-Time Home Buyer Programs With No Money Down To find first-time home buyer programs with no money down, start with a pre-approval review, then check VA eligibility, USDA property eligibility, state and local assistance programs, forgivable loans, seller credits, and low down payment alternatives.
Step 1: Check VA Eligibility Ask whether you qualify for VA benefits based on military service.
Review:
Certificate of Eligibility Occupancy requirement Funding fee Closing costs Property appraisal Step 2: Check USDA Eligibility Ask whether the property may qualify for USDA.
Review:
Property address Household income Primary residence requirement Guarantee fee Property condition Step 3: Search for Assistance Programs Look for state, county, city, nonprofit, or employer programs.
Review:
Grant vs. loan Forgiveness schedule Income limits Purchase price limits Homebuyer education Funding availability Step 4: Compare Low Down Payment Alternatives Review FHA, conventional, HomeReady, Home Possible, and other options if VA or USDA does not fit.
Step 5: Request a Side-by-Side Loan Comparison Compare:
Down payment Closing costs Cash to close Monthly payment APR Mortgage insurance Guarantee fees Assistance terms Cash left after closing The best program is not always the one with the biggest assistance amount. It is the one that fits your eligibility, monthly payment, and long-term homeownership plan.
Start by checking your options through Loan Factory’s mortgage quote tool or begin your application through Loan Factory’s online application .
Common Mistakes to Avoid The biggest mistake with first-time home buyer programs with no money down is assuming zero down means zero cost. Buyers should also avoid ignoring program rules, repayment triggers, closing costs, property eligibility, and long-term affordability.
Mistake 1: Assuming Every First-Time Buyer Qualifies Not every first-time buyer qualifies for no money down.
Eligibility depends on the program.
Mistake 2: Confusing Forgivable Loans With Grants A forgivable loan may need to be repaid if the buyer breaks program rules.
A grant may work differently.
Mistake 3: Forgetting About Closing Costs No down payment does not automatically remove closing costs.
Buyers should review cash to close early.
Mistake 4: Ignoring USDA Property Rules USDA requires eligible property location and income limits.
A buyer may qualify financially, but the home may not.
Mistake 5: Not Checking Repayment Triggers Forgivable loans may require repayment if the buyer sells, refinances, rents out the home, or moves too soon.
First-time buyers should compare the full loan structure before choosing a program based on the headline alone.
→ Read more: First-Time Buyer Mortgage Checklist: What to Do First
Loan Factory helps homebuyers compare mortgage options from 240+ wholesale lenders using technology designed to make the home loan process clearer, faster, and more transparent.
If you are exploring first time home buyer programs with no money down, no money down home loan programs, or forgivable loan first time home buyer options, Loan Factory can help you review available programs based on your credit, income, location, property type, and homebuying goals.
What Loan Factory Offers Homebuyers Compare options from 240+ wholesale lenders Review FHA, VA, USDA, Conventional, Jumbo, and specialty loan options through lender partners Explore first-time buyer assistance options Compare low down payment and no down payment home loan programs Check estimated payment, APR, fees, and cash-to-close side by side Use TERA technology for faster loan comparison Work with local loan advisors Review whether assistance, seller credits, gift funds, or forgivable loans may fit your situation Ready to explore first-time home buyer programs and low-cash options?
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Author Box Written by: Loan Factory Mortgage Education Team
Loan Factory is a technology-powered mortgage platform helping homebuyers compare mortgage options from 240+ wholesale lenders. Our mortgage education content is designed to help buyers understand loan programs, affordability, qualification factors, assistance options, and the mortgage process before applying.
Compliance Disclaimer This article is for informational and educational purposes only and is not a commitment to lend. Loan programs, down payment options, grants, forgivable loans, down payment assistance, seller credits, lender credits, gift funds, rates, APR, fees, mortgage insurance, guarantee fees, repayment terms, and approval are subject to credit approval, underwriting, investor guidelines, property eligibility, income limits, occupancy requirements, assistance program rules, funding availability, assets, appraisal, and program availability. Not all applicants will qualify. Terms may change without notice.
Loan Factory is not affiliated with or acting on behalf of any government agency. FHA, VA, USDA, Conventional, Jumbo, and other loan programs are offered through participating lender partners, subject to eligibility and underwriting approval.
FAQ: First Time Home Buyer Programs With No Money Down 
