What type of loan requires no down payment?

A VA loan is designed specifically for eligible veterans, active-duty service members, and certain members of the National Guard and Reserves. One of the standout features of a VA loan is that it allows for no down payment, making it an attractive option for those who qualify. This benefit is particularly significant because it allows service members and veterans to purchase homes without the financial burden of saving for a down payment, which can often be a barrier to homeownership. Additionally, VA loans often come with favorable terms such as lower interest rates and no private mortgage insurance (PMI) requirements, further easing the financial constraints of buying a home.

In contrast, conventional loans typically require a down payment unless the borrower has specific financing arrangements or compensating factors. FHA loans generally require a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher. USDA loans are aimed at rural homebuyers and typically require a down payment of 0% in certain eligibility scenarios, but this is still conditional on specific criteria. Therefore, among all these options, the VA loan is unique in providing the opportunity to purchase without any down payment required.