After years of record-breaking home price appreciation, it's gotten harder and harder to achieve the gold-standard down payment of 20% for a house. So hard, that many potential buyers have decided to wait out the market until home prices and mortgage rates come back down to earth.
But if a down payment is such a steep barrier to entry, can you buy a house with no down payment at all?
The short answer: Yes, you can. Government-backed, no-down-payment-required loans can help uniquely qualified buyers purchase homes in certain areas. However, the buyers and houses that qualify for these programs are limited.
A down payment is the portion of a home's purchase price that homebuyers pay upfront at closing. It's often expressed as a percentage of the home's price, which is where that golden 20% figure comes from.
But while it might be considered ideal, a 20% down payment is not a necessity. The average down payment in Q3 of 2024 was just 14.5%, according to research from Realtor.com®.
This is roughly on track with the decade before, but falls well below the early 2000s peak, when average down payments reached 25%, according to research from the National Association of Realtors®.
Even though you can put less money down upfront, there's good reason to try to hit that 20% mark. Paying more upfront means you'll have lower monthly payments for several reasons:
Yes, it's possible to purchase a house with no money down. Government-backed loans and other down payment assistance programs are the primary mechanism for doing so.
However, these programs often carry strict eligibility requirements, and the average buyer is unlikely to qualify for them. So while it may be possible to buy a home with no down payment, it's not an option for most homebuyers.
Even if you qualify, buying a home with no down payment comes with financial consequences that might make you think twice:
To buy a house with a $0 down payment, you're going to need some help. The first step is identifying which program you want to use to purchase your home. Below are some of the best options for homebuyers:
If you have a generous benefactor in your life, now might be the time to call in a favor. Many lenders allow you to use gifted funds from friends or family to cover your down payment -- as long as the donor is willing to provide documentation.
Lenders typically require a signed gift letter confirming that the funds are a gift, not a loan, and that there's no expectation of repayment. This helps ensure the money won't affect your debt-to-income ratio, increasing your chances of loan approval.