How to Buy a House With No (or Almost No) Money Down

Quick answer

True zero-down mortgages exist mainly through VA loans (for eligible veterans and service members) and USDA loans (in rural areas). Everyone else gets close to zero by stacking: an FHA loan at 3.5% down plus down payment assistance covering that 3.5%, gift funds from family, and seller or lender credits toward closing costs. The result can be a few thousand dollars out of pocket instead of tens of thousands.

The Two True Zero-Down Loans

Only two mainstream programs lend 100% of the purchase price:

• VA loans — for eligible veterans, active-duty service members, and some surviving spouses. Zero down, no monthly mortgage insurance, competitive rates. If you're eligible, this is almost always the first option to price out.
• USDA loans — zero down in designated rural areas. Most of urban LA County doesn't qualify, but outlying parts of Riverside, San Bernardino, and Kern County can. Income limits apply.

VA eligibility is broader than many veterans realize — including National Guard and Reserve service. It costs nothing to check your Certificate of Eligibility.

For Everyone Else: The Stack

No military service and not in a USDA area? You get to near-zero by combining pieces, each one legitimate on its own:

1. Start with a low-down-payment first mortgage — FHA at 3.5% down, or a conventional loan at 3% for qualifying buyers.
2. Cover the down payment with assistance — CalHFA's MyHome deferred loan covers up to 3.5%, which on an FHA loan is the entire down payment.
3. Cover closing costs with credits — a seller credit negotiated into your offer, a lender credit in exchange for a slightly higher rate, or both.
4. Fill any remaining gap with gift funds from family.

Stacked right, a buyer's out-of-pocket can come down to earnest money and a few incidentals. Not every deal gets all the pieces — but most buyers get more of them than they expected.

Gift Funds: Simpler Than People Think

Every major loan program allows your down payment to be partly or fully a gift from a family member. The mechanics are simple: the giver signs a short letter confirming it's a gift and not a loan, and the transfer is documented so underwriting can trace it. That's it. What trips people up is undocumented cash — money moving without a paper trail is the one version underwriters can't use. If family plans to help, loop your loan officer in early so the transfer happens the clean way.

Seller Credits and Lender Credits

Closing costs — lender fees, title, escrow, prepaid taxes and insurance — typically run 2% to 3% of the price, and they can be covered by someone other than you:

• Seller credit: the seller agrees to pay part of your closing costs as a term of the offer. In a balanced or slow market this is a normal ask, especially on homes sitting more than a few weeks.
• Lender credit: you accept a modestly higher interest rate and the lender pays costs in exchange. Sensible if cash today is tighter than payment tomorrow — and you can refinance later if rates improve.

The Honest Math of Putting Less Down

Low-down buying is a trade, and you should see both sides of it. Less cash in means a larger loan, a larger monthly payment, and mortgage insurance — FHA's MIP or conventional PMI — until you build equity. It also means less cushion if prices dip in the short term. The counterweight: every year you wait while renting, you're paying 100% of someone else's mortgage instead of part of your own, and in most Southern California cycles, time in the market has mattered more than cash at entry. The right answer depends on your numbers, not a slogan — run your actual payment both ways before deciding.

Gimmicks to Walk Past

A few things dressed up as zero-down help that deserve skepticism:

• “No money down, no credit check” seller-financing ads — often lease-options where you can lose every dollar paid if a technicality trips you.
• Borrowing your down payment from a personal loan or credit card — underwriting will spot it, and it usually kills the file.
• Paying a fee upfront to “unlock” grant money — real programs never charge you to apply for assistance.

Common questions

Can I really buy a house with zero down?

With a VA or USDA loan, yes — genuinely $0 down. Otherwise you get close to zero by stacking an FHA or conventional low-down loan with down payment assistance, gift funds, and seller or lender credits covering closing costs.

How much cash do I actually need to close on a low-down purchase?

It varies by deal, but with assistance covering the down payment and credits covering most closing costs, some buyers close for a few thousand dollars — earnest money, the appraisal, and small prepaid items. Others need more. The pre-approval conversation is where the real number takes shape.

Is it a bad idea to put less money down?

It's a trade-off, not a mistake. You'll carry a bigger payment and mortgage insurance, but you keep savings in reserve and start building equity sooner. For many renters, the comparison that matters is against another year of rent — run both sets of numbers.

Can my whole down payment be a gift?

On FHA loans, yes — 100% of the down payment can be gift funds from a family member with a simple gift letter and a documented transfer. Conventional loans allow full gifts in most owner-occupied scenarios too.

Do zero-down options exist for self-employed buyers?

The same stacking applies — the difference for self-employed buyers is documenting income, usually with two years of tax returns or a bank-statement loan program. The down payment side works the same way.