Zero-Down Mortgages in Washington: What They Actually Cost
Putting nothing down does not move the down payment to zero. It moves it into your monthly payment, forever, with interest. In King County County that trade costs about $162K of house at a $150,000 income.
This is not an argument against zero-down loans. They are the right call for a lot of people, and the alternative — renting for five more years while you save $170,682 — has costs of its own. But the trade is real, it is large, and almost nobody puts a number on it before you sign.
Why zero down costs more, twice
First, you borrow more. Obvious, and not the interesting part.
Second, the rate is higher. Zero-down conventional products — credit-union 100% financing and similar — price roughly 0.67 percentage points above a conventional loan with 20% down. On a $517,000 balance that difference alone is real money every month.
Third, there's a funding fee. 1.75% of the loan on credit-union 100% products, 2.15% on a first-use VA loan with nothing down. Nearly everyone finances it rather than paying cash, which means your loan is bigger than the house from the day you close. You start with negative equity by construction.
What that looks like in real Washington counties
Same borrower, $150,000 household income, no other debt, housing held at 33% of gross. Only the loan program changes.
| County | Conventional, 20% down | FHA, 3.5% down | VA, zero down | Credit-union 100% |
|---|---|---|---|---|
| King County | $670,000 | $541,000 | $554,000 | $508,000 |
| Snohomish County | $674,000 | $544,000 | $557,000 | $511,000 |
| Spokane County | $668,000 | $540,000 | $552,000 | $507,000 |
Read across King County: the same income buys $670,000 with 20% down and $508,000 with nothing down. You are not choosing between saving a down payment and not saving one. You are choosing between two quite different houses.
The cash side, which is the actual argument for it
Now the other column, and this is why zero-down exists.
| Program | Purchase price | Cash needed at closing |
|---|---|---|
| Conventional, 20% down | $670,000 | $150,647 |
| FHA, 3.5% down | $541,000 | $32,474 |
| VA, zero down | $554,000 | $13,841 |
| Credit-union 100% | $508,000 | $12,698 |
$150,647 versus $12,698. For most first-time buyers that is not a comparison, it is a verdict. Saving $150,647 in King County while paying King County rent takes most people the better part of a decade, and house prices do not politely wait.
That is the honest case for zero down: it converts a wait you may never finish into a payment you can start now. Just go in knowing the payment is permanently higher.
If you're eligible for VA, this whole discussion changes
The VA loan is the one zero-down product that is not a compromise. It prices below conventional — currently 6.4% against 6.7% — and charges no mortgage insurance at any down payment.
In King County it is worth $46K more house than a credit-union 100% loan at the same income and the same zero down.
And the funding fee is waived entirely for any borrower with a VA disability rating, at any percentage. If that applies to you, you are looking at a below-market rate, no down payment, no mortgage insurance and no fee — which is simply the best mortgage product available to anyone in the United States.
Full comparison: VA loan vs conventional in Washington.
The risk nobody prices: negative equity
You finance the funding fee, so you close owing more than the house is worth. In a rising market that resolves in a year or two. Washington is not currently a rising market — 11 of 39 counties are down year over year.
Being underwater only matters if you need to sell. If you'll be there five-plus years, it's a number on a statement. If your job might move you in two, it's the difference between leaving and writing a cheque to leave. Be honest with yourself about which one you are before you sign, not after.
Who should actually use zero down
Use it if: you're VA-eligible (almost unconditionally — it's the best product on the market); you have stable income but no lump sum; you're confident you'll stay five-plus years; or rent in your area is close to what the mortgage would be.
Think twice if: you could reach 20% within about two years; your job might relocate you; your income is variable or commission-heavy; or you're stretching to the top of what a lender will approve. Zero down plus maximum DTI is how people end up unable to sell and unable to stay.
Compare all four programs on your numbers
Values are Zillow ZHVI as of 2026-07-31. Rates are no-points survey averages and change weekly. Credit-union 100% figures reflect typical pricing for that product type, not any specific institution's offer.