Key Takeaways
- Which loan programs allow $0 down, and who qualifies
- How down payment gifts and assistance programs actually work
- When it makes sense to ask a seller to cover closing costs
- The tradeoffs of a low down payment you should know before you commit
Not having a large down payment saved up is one of the most common reasons people assume homeownership is out of reach. It usually isn’t. Between zero-down loan programs, down payment gifts, assistance funds, and seller-paid closing costs, there are several legitimate paths to closing on a home without draining your savings account first.
Here are six ways to reduce what you need out of pocket, plus what to weigh before choosing one.
See If You Qualify for a VA Loan
Active-duty service members, veterans, and eligible surviving spouses can access one of the strongest homebuying benefits available: a VA loan with no minimum down payment requirement. Because the loan is backed by the Department of Veterans Affairs, lenders can extend financing without requiring a down payment or ongoing private mortgage insurance — instead, most VA loans include a one-time VA Funding Fee, and some borrowers are exempt from that as well.
For eligible buyers, this is typically the lowest out-of-pocket path to homeownership available.
Consider an FHA Loan
FHA loans allow a down payment as low as 3.5%, and that 3.5% doesn’t have to come entirely from your own savings — it can be covered by a financial gift from a family member or contribution from a qualified nonprofit or government program. Sellers can also contribute up to 6% of the sale price toward closing costs.
The tradeoff: FHA loans require mortgage insurance regardless of your down payment size, so it’s worth weighing that ongoing cost against the lower barrier to entry.
Look Into a Homebuyer Assistance Program
Down payment assistance (DPA) programs exist at the state, local, and nonprofit level, and many extend beyond first-time buyers to previous homeowners as well. These typically come as grants, forgivable loans, or deferred second loans — funding structures where you’re not simply taking on more debt to cover your down payment. Availability and eligibility vary significantly by location, so this is worth a direct conversation with your loan officer rather than assuming you don’t qualify. If this is your first purchase, our first-time buyer resources are a good starting point, and it’s also worth reading whether a 20% down payment is actually necessary before ruling anything out.
Don’t Overlook the USDA Loan
USDA loans — sometimes called rural development loans — offer a zero down payment option for eligible properties in designated rural and, in many cases, surprisingly suburban areas. Don’t assume your target area doesn’t qualify without checking; USDA eligibility maps cover more ground than most buyers expect. Mortgage insurance is required, and both loan limits and income restrictions vary by area, so property and income eligibility should be confirmed early in your search rather than after you’ve found a home.
Receive a Down Payment Gift
If a family member is able to gift you funds toward your down payment, most loan programs allow it — but the paperwork matters. Lenders require a documented paper trail showing who gifted the funds, how and when the money was transferred, and written confirmation that repayment isn’t expected. The amount you’re allowed to accept as a gift varies by loan program, so confirm the specifics with your loan officer before the funds move. For more on how gift funds interact with your overall closing costs, see Can You Reduce Your Closing Costs, and Should You?
Have the Seller Pay Closing Costs
Seller-paid closing costs, also called seller concessions, depend heavily on your local market conditions. In a buyer’s market, where inventory exceeds demand, sellers are often willing to negotiate on closing cost contributions to keep a deal moving. In a competitive seller’s market, that same request may not land — but it’s still worth asking, since many sellers value a fast, certain close over squeezing out every dollar. How much a seller can contribute is also capped by your loan program, so this is another detail your loan officer can confirm before you write an offer.
What to Weigh Before Choosing a Low Down Payment Option
Reducing your out-of-pocket cost at closing is genuinely useful, but it comes with tradeoffs worth understanding upfront:
- Mortgage insurance may be required depending on the loan program and down payment size, which adds to your monthly payment.
- Less equity at the start means less “cushion” if you need to sell within the first few years, and potentially a somewhat higher interest rate since the lender is taking on more risk.
- Slower equity build means it may take longer to reach the point where selling nets a meaningful profit — a bigger consideration if you expect to move again soon than if you’re planning to stay long-term.
If putting a full 20% down would leave you without a financial cushion for emergencies, a lower down payment option is often the smarter move — not a compromise. The right call depends on your full financial picture, which is exactly what a conversation with a loan officer is for.
The Bottom Line
A thin savings account doesn’t have to mean a delayed home purchase. Between VA and USDA’s zero-down options, FHA’s gift-fund flexibility, down payment assistance programs, and seller concessions, most buyers have more than one realistic path to closing — the right one just depends on your eligibility, your market, and your long-term plans.
Milend has been helping buyers navigate exactly this decision since 1995. As a family-owned, Atlanta-based lender, we underwrite across FHA, VA, USDA, and Conventional programs, so we’re matching you to the loan built for your actual financial picture — not the one that’s easiest for us to originate.
Questions I get asked?
Can I really buy a home with no money down?
Yes, in certain situations. VA loans and USDA loans are two programs that may allow qualifying borrowers to purchase with no down payment. VA loans are available to eligible active-duty service members, veterans, and qualifying family members. USDA loans are available in designated rural and many suburban areas and carry income eligibility requirements. Whether either program fits your situation is worth a direct conversation with a Milend loan officer.
What is the minimum down payment for a first-time homebuyer?
It depends on the loan program. FHA loans typically require as little as 3.5% down. Conventional loans may be available with as little as 3% down for qualifying borrowers. VA and USDA loans may allow zero down for those who meet eligibility requirements, and down payment assistance programs at the state or local level may reduce what you need to bring to closing further still.
How does a VA loan work with no down payment?
The VA loan program is backed by the Department of Veterans Affairs and is one of the most valuable homebuying benefits available to eligible servicemembers, veterans, and qualifying surviving spouses. Because the VA guarantees a portion of the loan, lenders can extend financing without requiring a down payment. Instead of ongoing mortgage insurance, most VA loans include a one-time VA Funding Fee, though some borrowers are exempt.
Can a family member gift me money for a down payment?
In most cases, yes. Loan programs generally allow gift funds from immediate family members toward a down payment, but documentation requirements vary by loan type — typically including a signed gift letter confirming the amount, the source, and that repayment isn’t expected. Your Milend loan officer can walk you through the exact requirements for your loan program.
What is a homebuyer assistance program and do I qualify?
Homebuyer assistance programs are offered through state housing finance agencies, local governments, and nonprofit organizations to help with down payments and closing costs. Eligibility and available funding vary significantly by location, and while many programs target first-time buyers within certain income limits, some are open to previous homeowners as well.
