{"id":188411,"date":"2026-06-29T11:50:28","date_gmt":"2026-06-29T17:50:28","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=188411"},"modified":"2026-06-29T11:50:32","modified_gmt":"2026-06-29T17:50:32","slug":"zero-down-payment-fha-loans-could-be-a-game-changer-for-renters-and-investors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/zero-down-payment-fha-loans-could-be-a-game-changer-for-renters-and-investors","title":{"rendered":"Zero-Down Payment FHA Loans Could Be a Game Changer For Renters and Investors Alike, According to a New Report"},"content":{"rendered":"<p><span data-preserver-spaces=\"true\">A zero-down FHA loan might sound too good to be true<\/span><span data-preserver-spaces=\"true\">, but a<\/span><span data-preserver-spaces=\"true\"> new analysis from the nonprofit research group<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.urban.org\/research\/publication\/new-evidence-shows-fha-can-make-sustainable-zero-down-payment-mortgages\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Urban Institute<\/span><\/a><span data-preserver-spaces=\"true\"> argues that allowing the Federal Housing Administration (FHA) to offer such loans would put roughly 6.5 million renters in a position to buy their first homes. And for newbie landlords, it would offer an on-ramp to investing without the biggest hurdle to starting their landlording journey: a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">down payment<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Why the Talk of Zero-Down Payment FHA Loans?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">After the 2008 financial crash, zero-down payment loans almost became banished from the homebuyer\u2019s lexicon of acceptable phrases. However, amid rising home prices, they have been<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.washingtonpost.com\/news\/where-we-live\/wp\/2018\/02\/12\/zero-down-home-loans-are-back-be-very-leery\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> creeping back to the periphery<\/span><\/a><span data-preserver-spaces=\"true\"> of home lending\u2014with warning signs attached. However, they have largely <\/span><span data-preserver-spaces=\"true\">been ignored<\/span><span data-preserver-spaces=\"true\"> by governmental bodies for fear of steering buyers toward risky loans.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Despite this, mainstream lenders have gradually warmed to the idea of very <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/money.usnews.com\/loans\/mortgages\/low-or-no-down-payment-mortgages\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">low down payment homebuying<\/span><\/a><span data-preserver-spaces=\"true\">, though they require PMI (private mortgage insurance) and higher monthly payments. Smaller credit unions and community banks have flirted with 0% down payment loans, while Fannie Mae\u2019s<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/singlefamily.fanniemae.com\/originating-underwriting\/mortgage-products\/97-loan-value-options\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Conventional 97<\/span><\/a><span data-preserver-spaces=\"true\"> and<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/singlefamily.fanniemae.com\/originating-underwriting\/mortgage-products\/homeready-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> HomeReady<\/span><\/a><span data-preserver-spaces=\"true\"> loans and<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/sf.freddiemac.com\/working-with-us\/origination-underwriting\/mortgage-products\/home-possible\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Freddie Mac\u2019s Home Possible<\/span><\/a><span data-preserver-spaces=\"true\"> program offer loans with 3% down. The current down payment standard for an FHA loan is 3.5%.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The Urban Institute makes the case that Congress should allow zero-down FHA loans to not only make homebuying easier but also replace the \u201cinconsistent patchwork of down payment assistance programs\u201d and help buyers accrue home <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-home-equity\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">equity<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Urban Institute\u2019s modeling suggests:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Zero-down FHA loans would add only a modest amount of extra default risk (HousingWire reports it\u2019s about<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.housingwire.com\/articles\/fha-zero-down-loans-risk\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> 12 basis points<\/span><\/a><span data-preserver-spaces=\"true\">).<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">This risk could be offset by a small increase in FHA mortgage insurance premiums (such as a 25-to-35-basis-point upfront PMI adjustment) if policymakers demanded it.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Compared with large <\/span><span data-preserver-spaces=\"true\">down payment<\/span><span data-preserver-spaces=\"true\"> grants, a permanent zero-down product could reach more borrowers and exert less upward pressure on home prices because income and savings are no longer <\/span><span data-preserver-spaces=\"true\">factors in buying<\/span><span data-preserver-spaces=\"true\"> a home.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">According to the study, in 2018, 17% of the nation\u2019s 46 million renter households were financially \u201cready\u201d to buy, and turning renters into homeowners will ease pressure in tight rental markets.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The Urban Institute recommends setting a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/why-credit-scores-matter-how-to-improve-them\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">credit score<\/span><\/a><span data-preserver-spaces=\"true\"> threshold of 700 to mitigate the risk of default. <\/span><span data-preserver-spaces=\"true\">A 660 score could be accepted<\/span><span data-preserver-spaces=\"true\"> for borrowers with a two-year history of on-time rent payments or <\/span><span data-preserver-spaces=\"true\">a minimum of six<\/span><span data-preserver-spaces=\"true\"> months of cash reserves.<\/span><\/li>\n<\/ul>\n<h2><span data-preserver-spaces=\"true\">The Advantages of an FHA Loan<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">An <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/fha-loan-pros-cons\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">FHA loan<\/span><\/a><span data-preserver-spaces=\"true\"> is often favored by new investors<\/span><span data-preserver-spaces=\"true\">, as it allows a low down payment and greater credit flexibility (typically 3.5% for borrowers with credit scores of 580 or higher). It allows buyers to purchase one- to four-unit homes, enabling owners to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/real-estate-investing\/house-hacking-strategy\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">house-hack<\/span><\/a><span data-preserver-spaces=\"true\">\u2014renting out additional units to help pay the mortgage while they save for their next investment.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Although a borrower generally cannot have two FHA mortgages at the same time, by <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-refinance-your-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">refinancing<\/span><\/a><span data-preserver-spaces=\"true\"> the first home into a conventional mortgage before buying a second home a year later, in which they again plan to house hack, investors can take advantage of an<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.fha.com\/fha_article?id=3299\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> FHA loan multiple times<\/span><\/a><span data-preserver-spaces=\"true\"> to build their portfolio, as long as they can offer a<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/smartasset.com\/mortgage\/fha-loan-for-investment-property\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> legitimate reason for moving<\/span><\/a><span data-preserver-spaces=\"true\"> when applying for another FHA loan.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The advantage of using an FHA loan to house hack is that lenders will typically allow you to count 75% of the projected rental income from the nonoccupied units toward your qualifying income, thus allowing you to buy more home than just your salary would allow you to qualify for. However, a<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/select\/mortgage-lenders-for-a-small-down-payment\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> conventional 5% loan<\/span><\/a><span data-preserver-spaces=\"true\"> is possible for a second home without refinancing the first FHA loan.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">How Realistic Is a Zero-Down FHA Loan?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Although the government has <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-392\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">proposed several initiatives<\/span><\/a><span data-preserver-spaces=\"true\"> to increase homeownership, zero-down FHA loans appear, on the surface, the least likely to receive a green light due to the risks involved. Even with a higher credit score, such a low barrier to entry sets off alarm bells for government regulators who remember the easy-credit era leading up to the 2008 financial crisis.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u201cIt\u2019s not very popular to make things more stringent, but you want to make sure the borrower <\/span><span data-preserver-spaces=\"true\">is able to<\/span><span data-preserver-spaces=\"true\"> make the payments,\u201d Tobias Peter, senior fellow and co-director of the nonprofit American Enterprise Institute Housing Center, told <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.homes.com\/news\/zero-down-payment-fha-loans-would-be-worth-the-risk-report-finds\/733249617\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Homes.com News<\/span><\/a><span data-preserver-spaces=\"true\"> about the FHA zero-down idea. \u201cYes, we can qualify more people, but there are not enough starter homes for these people to buy, so that will drive up home prices.\u201d<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Current Low- and No-Down Payment Options\u00a0<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Even if zero-down payment FHA loans do not become a reality, there are currently several low- or no-money-down structures that small investors can use under existing rules. According to<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/select\/mortgage-lenders-for-a-small-down-payment\/#best-mortgage-lenders-for-low-and-no-down-payments\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> CNBC<\/span><\/a><span data-preserver-spaces=\"true\">, Guild\u2019s Zero Down mortgage combines a 3.5% FHA loan with a forgivable second mortgage, effectively lowering your down payment to zero. And <\/span><span data-preserver-spaces=\"true\">borrowers can be approved<\/span><span data-preserver-spaces=\"true\"> with credit scores as low as 600.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Guild also offers several low-down-payment options, including a 1% down loan. <\/span><span data-preserver-spaces=\"true\">CNBC Select reports that the creative FHA\u00a0 structure Guild uses to minimize a borrower&#8217;s out-of-pocket expenses is increasingly <\/span><span data-preserver-spaces=\"true\">being<\/span><span data-preserver-spaces=\"true\"> favored by lenders looking to serve borrowers with good credit scores who are <\/span><span data-preserver-spaces=\"true\">low<\/span><span data-preserver-spaces=\"true\"> on cash.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Final Thoughts: There Are Lots of No Down Payment Options That <\/span><span data-preserver-spaces=\"true\">Can Be Utilized by New Investors<\/span><span data-preserver-spaces=\"true\">\u00a0<\/span><\/h2>\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/downpaymentresource.com\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Down payment assistance (DPA) <\/span><span data-preserver-spaces=\"true\">programs<\/span><\/a><span data-preserver-spaces=\"true\"> can be accessed<\/span><span data-preserver-spaces=\"true\"> through state housing finance agencies, local governments, or nonprofits and layered on top of FHA loans to cover all or part of the 3.5% down payment requirement.<\/span><\/p>\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.rocketmortgage.com\/learn\/fha-down-payment-assistance\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Rocket Mortgage<\/span><\/a><span data-preserver-spaces=\"true\"> explains that while FHA itself does not operate an official DPA program, many buyers combine an FHA first mortgage with grants, forgivable loans, or low-interest subordinate loans, structured to meet down payment and closing cost needs.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is <\/span><span data-preserver-spaces=\"true\">amongst<\/span><span data-preserver-spaces=\"true\"> the safest of <\/span><span data-preserver-spaces=\"true\">the<\/span> <a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rookie-180\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">no-money-down investment strategies<\/span><\/a><span data-preserver-spaces=\"true\"> when paired with house hacking a two-to-four-unit home because the interest rate is protected and the rental income is used to qualify buyers for the loan and offset mortgage payments, <\/span><span data-preserver-spaces=\"true\">compared to<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/themortgagereports.com\/59359\/invest-in-real-estate-with-little-or-no-money-down\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> many <\/span><span data-preserver-spaces=\"true\">of the<\/span><span data-preserver-spaces=\"true\"> other techniques<\/span><\/a><span data-preserver-spaces=\"true\"> used by investors.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">While zero-down loans get prospective homeowners into houses, they leave them with almost no equity cushion should they need to access funds in an emergency via a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-heloc\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">HELOC<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Even with stellar credit scores, owning rental property entails risk\u2014from both tenants (such as nonpayment of rent) and essential repairs, which is why not having to put money down is not an excuse to have insufficient money sitting on the sidelines should things go awry. In fact, accruing a sizable nest egg of <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/how-much-should-you-budget-for-reserves-and-capex\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">reserves<\/span><\/a><span data-preserver-spaces=\"true\"> makes sense for this very reason.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A zero-down FHA loan might sound too good to be true, but a new analysis from the nonprofit research group Urban Institute argues that allowing the Federal Housing Administration (FHA) [&hellip;]<\/p>\n","protected":false},"author":613725,"featured_media":187435,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-188411","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/188411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=188411"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/188411\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/187435"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=188411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=188411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=188411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}