Ask people why they are still renting and you will get one answer more than any other. It is never the payment. It is the pile of cash you supposedly need before anyone will hand you a set of keys.
Here is the part that does not get said often enough in Southern Illinois: there are two loan programs that require no down payment at all, and between them they cover a very large share of the people and the property in this region. One is for veterans and service members. The other is for almost anybody buying in a rural area — which, out here, is most of the map.
This is the second in our Saturday financing series with Jarod Sanders, our in-house lender. Last week we covered what pre-qualification is and why it comes first. This week: the two ways to buy with nothing down.
First, the Math That Surprises People
The assumption is that zero down must cost a fortune every month. It does not. Here is a $200,000 purchase three ways, at an illustrative 6.75% over 30 years:
| Cash at closing | Loan amount | Principal & interest | Monthly mortgage insurance | Monthly total | |
|---|---|---|---|---|---|
| VA — 0% down | $0 | $204,300 | $1,325 | None | $1,325 |
| USDA — 0% down | $0 | $202,000 | $1,310 | ~$59 | $1,369 |
| Conventional — 5% down | $10,000 | $190,000 | $1,232 | ~$79 | $1,312 |
Read the first column and the last column together, because that is the whole argument.
The VA option costs about $14 a month more than putting $10,000 down. Fourteen dollars. For that, you keep the ten thousand dollars. USDA runs about $57 a month more and you keep the same ten thousand.
Now put it in time instead of money. A household setting aside $400 a month needs about two years to save that 5% down payment, and more than eight years to save a 20% down payment. Two more years of rent, at today's prices, in a market where the homes you are watching are not waiting for you. That is what the down payment actually costs — not the dollars, the delay.
USDA: The One Almost Nobody Around Here Knows They Qualify For
The USDA Single Family Housing Guaranteed Loan is designed for rural areas, and Southern Illinois is exactly what the program has in mind. It is not a farm loan. It is a regular 30-year mortgage on a regular house, backed by the federal government.
What it takes:
- No down payment. 100% financing based on the appraised value.
- An income limit, not an income floor. Household income cannot exceed 115% of the area median. For most Illinois counties in fiscal year 2026 that is $122,800 for a household of one to four and $162,100 for five to eight. Note the word household — it counts income the loan application itself may not, so this is a number to have checked rather than assumed.
- No published minimum credit score. USDA does not set one; individual lenders add their own requirements on top. If a past credit problem is why you have not asked, ask anyway.
- You have to live there. Primary residence only — no rentals, no second homes.
- Fees instead of a down payment: a 1% upfront guarantee fee, which can be rolled into the loan, and a 0.35% annual fee spread across your monthly payments. On a $200,000 purchase the annual fee runs about $59 a month at the start and shrinks as the balance does.
⚠️ Eligibility is by address, not by town
This is the part that trips people up, and it is the same trap as school-district lines: the USDA map is drawn address by address, and a boundary can run down the middle of a street. One side qualifies, the other does not. Do not assume your town is in or out based on its name, its ZIP code, or what somebody told you at work. USDA publishes the official map at eligibility.sc.egov.usda.gov and it will answer for a specific address in about a minute. Better still, have Jarod run it before you get attached to a house.
VA: Earned, Underused, and Genuinely the Best Loan in the Country
If you served, this is very likely the strongest financing available to you anywhere — and Southern Illinois has an unusual number of people it applies to. The VA Marion Healthcare System, headquartered right here in Marion, serves 43,722 veterans a year across 27 counties in Southern Illinois plus counties in southwestern Indiana and northwestern Kentucky. A great many of those neighbors have never used the home loan benefit they earned.
What makes it different:
- No down payment, and no loan limit for buyers with full entitlement.
- No monthly mortgage insurance. Ever. This is the single biggest advantage and the one most often overlooked. Every other low-down-payment loan charges you monthly for the privilege. VA does not, which is why the VA column above has the lowest monthly total of the two zero-down options despite the larger balance.
- A one-time funding fee instead: 2.15% of the loan for a first-time use with less than 5% down, 3.3% for a subsequent use. Put 5% or more down and it drops to 1.5%; 10% or more, 1.25%. It can be financed into the loan.
- The funding fee is waived entirely if you are receiving VA compensation for a service-connected disability, if you are eligible for it but taking retirement or active-duty pay instead, if you are a surviving spouse receiving Dependency and Indemnity Compensation, if you have a pre-discharge rating in hand before closing, or if you are active duty with a Purple Heart. If you are exempt, VA financing at zero down costs you nothing extra at all — no down payment, no funding fee, no monthly mortgage insurance. There is no better deal in American housing.
The benefit also does not expire and is not once-in-a-lifetime. If you used it in 1998 and sold that house, your entitlement generally restores.
The Honest Downside
We are not going to pretend there is no trade-off, because there is one and you should hear it from us rather than find it later.
When you finance the fee, you start out owing slightly more than the house is worth. On that $200,000 example, VA leaves you at $204,300 and USDA at $202,000 against a $200,000 appraisal. You are a few thousand dollars underwater on day one, and it takes a couple of years of payments and normal appreciation to work through it. If there is any real chance you will need to sell within two or three years, that matters — selling costs money, and you need equity to cover it.
You also build equity more slowly at the start, because you are amortizing a bigger balance. That is the honest price of not waiting two years to buy. For most people it is a trade worth making. For some it is not, and a good lender will tell you which one you are instead of just closing the loan.
What Else Is Worth Knowing
Zero down does not have to mean zero cash, but it can. Both programs allow seller concessions toward your closing costs, so a genuinely $0-out-of-pocket purchase is possible when the deal is structured for it from the start — which means bringing it up when you write the offer, not at the closing table. That is a conversation between your broker and your lender, and it is a large part of why we keep ours in the same building.
For context on the rate assumption used above: the national 30-year fixed average was 6.76% in the week of September 10, 2026, per the Freddie Mac Primary Mortgage Market Survey. We used 6.75% for the illustration. Your rate is your rate — it depends on your credit, your loan type and the day you lock, and nothing on this page is a quote.
Browse What Is Actually on the Market
Active listings across Williamson, Jackson, Franklin and Union counties — newest first.
What Greg Holthaus Tells People Who Think They Cannot Buy Yet
I have had this conversation a few hundred times and it almost always goes the same way. Somebody tells me they are saving up, they figure they need twenty percent, and they will be ready in a few years. Then we find out they are a veteran, or the house they have been driving past every day sits in a USDA-eligible spot, and the thing they were saving three more years for was never required. Two years of rent is real money to hand a landlord for no reason. I am not telling you zero down is right for everybody — if you might move in two years, it probably is not. But find out what you actually qualify for before you decide you are not ready. That call is free and it takes twenty minutes.
Zero-Down Mortgage FAQ
Can you really buy a house in Southern Illinois with no money down?
What is the income limit for a USDA loan in Illinois?
Does a zero-down loan cost much more every month?
Do I have to pay the VA funding fee?
How do I know if a house qualifies for USDA financing?
🏠 Find Out If You Qualify for Zero Down
It takes one conversation to know whether USDA or VA is on the table for you, and what your actual number is. No cost, no credit damage from asking, no obligation to do anything afterward.
📱 Got a Question About This Market? Text Greg.
Buying? Selling? Not sure where to start? Text Greg Holthaus directly — just tell him you saw his blog. He'll help you think through your decision, match you with the best broker for your situation, and point you in the right direction. He's open to a text any time.
Text Greg · 618.925.8654
Who is Greg Holthaus?
Greg Holthaus is the Owner and Designated Managing Broker of Southern Illinois Realty Experts, with 25+ years in Southern Illinois real estate and more than 10,000 transactions closed. He leads a full-service operation — home sales, mortgage, title, and property management under one roof — with offices in Marion, Herrin, and Carbondale. Meet Greg ›
About these numbers and programs: Program terms are current as of September 12, 2026 and come from official sources: VA funding fee rates and exemptions from the U.S. Department of Veterans Affairs; USDA guarantee fee, annual fee and eligibility requirements from USDA Rural Development’s Single Family Housing Guaranteed Loan Program materials; the fiscal-year 2026 income limits shown are the standard limits applying to counties without their own metropolitan figure, and limits are revised annually — verify yours. The 30-year average cited is the Freddie Mac Primary Mortgage Market Survey for the week of September 10, 2026. All payment figures are illustrative examples computed at an assumed 6.75% over 30 years with estimated mortgage insurance, and exclude property taxes, homeowners insurance, HOA dues and any other costs. Nothing on this page is a loan offer, a rate quote, a commitment to lend, or a guarantee of eligibility. Your rate, fees, qualification and program eligibility depend on your own credit, income, the property, and the date you lock. USDA property eligibility is determined address by address — confirm a specific address before relying on it. Southern Illinois Realty Experts is an Equal Housing Opportunity brokerage. Jarod Sanders · CrossCountry Mortgage · NMLS #2337228.