How to Buy a Home With No Down Payment and No Closing Costs Using a USDA Loan

Buying a home without a down payment is already a big win—but what if you could also eliminate your closing costs and walk into a home with almost zero out-of-pocket expenses? That’s exactly what’s possible with a USDA loan when you combine it with the smart use of seller concessions—especially when you find a home that’s already had a price reduction. Let’s break it down and show you exactly how it works.

✅ Step 1: Use a USDA Loan—$0 Down Payment

USDA loans are designed for rural and some suburban areas and offer:

No down payment required
Low interest rates
Reduced mortgage insurance costs

You must meet certain income limits and purchase in a USDA-eligible area, but if you qualify, USDA loans are one of the most affordable ways to become a homeowner.

✅ Step 2: Use Seller Concessions to Cover Closing Costs

With a USDA loan, sellers can contribute up to 6% of the purchase price toward your closing costs and prepaid expenses. This includes:

Title and escrow fees
Lender fees
Insurance and property taxes
Even buying down your interest rate

That’s where strategy comes in—especially if the home you’re eyeing has recently had a price drop.

💡 Example Scenario: Making It a True No Money Down Deal

Let’s say you’re looking at a home that was originally listed at $300,000, but it’s been reduced to $285,000 after sitting on the market for a few weeks.

Rather than offering $285,000 and covering closing costs out of pocket, you do this:

🔹 Offer $300,000 (the original asking price)

🔹 Ask the seller for 6% in concessions—which is $18,000

🔹 Those concessions are used to pay all your closing costs and even potentially buy down your interest rate

👉 As long as the home appraises for $300,000, it’s a win-win.

The seller nets close to their reduced price after concessions, and you buy the home with no down payment, no closing costs, and possibly even a lower monthly payment thanks to a rate buy-down.

🚨 Why the Appraisal Matters

It’s critical that the home appraises for the full $300,000 offer price. If it doesn’t, the lender can’t approve the loan for that amount, and you may need to renegotiate.

That’s why this strategy works best when:

The price reduction was made to attract buyers
The original list price wasn’t overpriced
The home is in good condition and supports the appraised value

Work with a knowledgeable real estate agent and loan officer to help ensure you're not overpaying for the property.

🏡 The End Result: A True $0-Out-of-Pocket Home Purchase

With the right home, the right loan, and the right offer strategy, you could:

Buy a home with $0 down
Have all closing costs covered
Start building equity from day one

It’s a smart move—especially for first-time buyers looking to stretch their savings and get into a home without a large upfront investment.

Ready to Make It Happen?

If you’re interested in seeing what homes might qualify and how seller concessions can work in your favor, reach out today. I can show you how to structure a true no down payment purchase that helps you take full advantage of the USDA loan program.