Zillow Zero Down Payment Assistance: What's the Catch for Texas Buyers?

Zillow just announced a zero down payment program for home buyers. So what's the catch? Who can use it, and is it available in Texas?

Here's the catch: this is a loan. It's not free money. Zillow can cover your FHA down payment with a second loan at zero interest and no monthly payment, and it could be forgiven after five years if you meet the terms. Sell, move out or refinance before then, and the full assistance comes due.

I read Zillow's press release and fine print, and I checked the FHA rules and our Collin and Denton County loan limits. Let's break it down.

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Who can use Zillow's zero down program

This is designed for FHA buyers who can qualify for the full payment under standard underwriting. Here's what Zillow describes:

• At least a 640 credit score.
• A primary residence. You have to be buying an eligible owner-occupied, one-to-two unit property.
• No first-time home buyer requirement.
• No income cap, according to Zillow.

And yes, it's available in Texas.

What Zillow actually announced

Zillow announced the program on October 28 for FHA buyers. The assistance is up to 3.5% of the purchase price or appraised value, whichever is lower. Zillow says you can add your own money to bring your total down payment up to 10%.

Here's what people don't realize: the assistance covers your down payment, not your closing costs. So get your actual cash-to-close numbers in writing, and make sure they include inspection and appraisal. Down payment help does not mean showing up with no money out of your pocket.

Does it work in North Dallas?

I've had people ask me this, and the answer depends on where you shop and what you spend. FHA has county loan limits. For 2026, HUD lists the one-unit limit for both Collin and Denton County at $563,500.

That's the loan amount, not the price. At 3.5% down, dividing that by 96.5% gives a rough purchase price ceiling of about $583,900. Have your lender confirm the financing and how the second loan affects it, because that math is not an approval.

What it does mean is that where you shop, and the price range you shop in, matter just as much as the down payment help.

The five-year catch

The second mortgage is not a grant. Forgiveness takes five years of meeting its terms, including no delinquency of 90 days or more during the first 60 payments. Sell, move out or refinance early, and the assistance comes due.

How FHA mortgage insurance fits in

Selling or paying off your FHA loan ends the mortgage insurance. But what if you keep the home and refinance?

With 3.5% down on a 30-year FHA loan, HUD says the annual mortgage insurance runs for the mortgage term at the starting loan-to-value ratio. So it does not automatically cancel when you reach 20% equity. Refinancing into a conventional loan is the usual way to remove it while keeping the home, if you qualify.

Think about it. If rates fall in two, three or four years and you qualify to refinance conventionally, you bring that assistance money back to the table. You're not necessarily trapped for five years, but if you sell or refinance, you have to pay off that second loan.

To be fair to Zillow, FHA mortgage insurance works this way no matter where the down payment comes from. Zillow didn't create that. This program simply adds an early refinance cost. And less cash down means less of an equity cushion if prices dip.

Compare the loan, not just the assistance

This program requires financing through Zillow Home Loans only. That doesn't prove its rate is worse. It could be competitive. But don't look only at the help. On a $400,000 home, 3.5% is $14,000.

Here's some hypothetical math, not a Zillow quote. A $55 a month difference across all 360 scheduled payments would add up to $19,800. That's why the loan terms matter.

If you're thinking about using this program, here's what I would do:

1. Get same-day written loan estimates from Zillow and at least two other lenders, using the same buyer and the same property.
2. Compare the rate, APR, points, fees, any applicable mortgage insurance, the total payment and your cash to close.

Zillow isn't the only door in Texas

Texas has its own down payment assistance programs, and they're structured differently:

• TSAHC Home Sweet Texas offers up to 5% for down payment and closing costs. Its options include a grant you never repay, or a second lien forgiven after three years if you meet the terms. First-time and repeat buyers may qualify, but income, price and lender requirements apply.
• TDHCA My First Texas Home offers 2% to 5% through a deferred repayable option or a three-year forgivable option. It has first-time home buyer rules with exceptions, required education, and income and price limits.

So compare the assistance, closing cost eligibility, repayment, lender options and your own qualifications. A grant is not the same as a forgivable loan or a deferred loan.

Who is this program for?

Here's my honest take. It fits a narrow group, and if you're in it, it could be a good deal. But ask yourself these questions first:

• Can you comfortably afford the total payment, including taxes, insurance and FHA mortgage insurance, without it being tight?
• If the water heater goes out next month, do you still have reserves after closing?
• Do you reasonably plan to stay for five years?
• If a refinance opportunity shows up early, can you handle repaying all of the assistance money?
• Do you have same-day written estimates from Zillow and two other lenders?

A "no" doesn't mean don't buy. It means slow down and compare your options first.

The bottom line

The program is real, and the help can be helpful. But it's a second loan, it's not free money, and the five-year terms affect refinancing and selling. The payment and your options matter more than the headline.

If someone you know has been renting because they think they need 20% down, please send this to them. It might help them see their options more clearly.

This is educational, not a loan offer or pre-approval. I'm a real estate professional, not your lender, and eligibility, mortgage insurance and assistance rules depend on the lender, the loan, the property and your full file.

Frequently asked questions

Is Zillow's zero down payment assistance free money?

No. It's a second loan at zero interest with no monthly payment. It could be forgiven after five years if you meet the terms, but if you sell, move out or refinance early, the full assistance comes due.

Is Zillow's zero down program available in Texas?

Yes. Zillow's program is available in Texas for FHA buyers who meet its requirements.

Who qualifies for Zillow's zero down program?

It's designed for FHA buyers who can qualify for the full payment under standard underwriting, with at least a 640 credit score, buying an eligible owner-occupied one-to-two unit primary residence. There's no first-time buyer requirement, and Zillow says there's no income cap.

Does Zillow's assistance cover closing costs?

No. The assistance covers up to 3.5% of the purchase price or appraised value, whichever is lower, for the down payment only. Get your actual cash-to-close numbers in writing, including inspection and appraisal.

What is the FHA loan limit in Collin and Denton County for 2026?

HUD lists the 2026 one-unit FHA limit for both Collin and Denton County at $563,500. That's a loan amount, not a price. Divided by 96.5%, it works out to a rough purchase price ceiling of about $583,900, which your lender still has to confirm.

What happens if I refinance before five years?

You'd have to pay back the assistance. With 3.5% down on a 30-year FHA loan, mortgage insurance doesn't automatically cancel at 20% equity, so refinancing into a conventional loan is the usual way to remove it, and that would bring the second loan due.

Are there other down payment assistance programs in Texas?

Yes. TSAHC Home Sweet Texas offers up to 5% for down payment and closing costs, and TDHCA My First Texas Home offers 2% to 5%. Each has its own repayment, eligibility, income and price rules.

Compare your options before you commit

Thinking about buying in North Dallas with little down? Comment your city and price range on the video or reach out, and I'll help you put together the right questions for your lender.

Already have a loan estimate? Send it over and I'll walk through the cash to close and the total payment with you, side by side with your other options.

Call or text 469-829-7713, email troy@troysage.com, or search North Dallas homes.

Watch next: How Much Money Do You REALLY Need to Buy a House in North Dallas?

Source: Program details are as stated by Zillow in its October 28, 2026 announcement; FHA loan limits and mortgage insurance rules are from HUD; TSAHC and TDHCA details are high level, as presented in my video published November 9, 2026. Terms change, so always confirm current rules with a participating lender.

I'm Troy Sage with Centric Realty Group at LPT Realty, and this is Real Estate Differently.