What type of loan allows a borrower to buy a house with no down payment?

A VA loan allows a borrower to purchase a house with no down payment, making it an attractive option for eligible veterans, active duty service members, and certain members of the National Guard and Reserves. This type of loan is backed by the U.S. Department of Veterans Affairs, which means the lender is protected against loss, allowing them to offer more favorable terms, including the possibility of zero down payment and no private mortgage insurance (PMI).

In addition to not requiring a down payment, VA loans often come with competitive interest rates and are designed to help veterans and service members achieve homeownership. Eligibility for VA loans also includes specific service requirements, so those interested need to verify that they qualify based on their military service history.

While FHA loans may offer low down payments, they still typically require a minimum down payment, making them distinct from VA loans which can eliminate this requirement entirely for eligible borrowers. Conventional loans tend to require a down payment, usually around 5% to 20%, and subprime loans are typically associated with higher risk borrowers and can come with even less favorable terms.