First-Time Home Buyer Programs: Loans, Grants and Down Payment Help
Quick answer
First time home buyer programs: First-time home buyer programs include FHA loans (3.5% down), VA and USDA loans (0% down for eligible buyers), conventional 3% down programs like Fannie Mae HomeReady and Freddie Mac Home Possible, and state and local down payment assistance such as grants and forgivable or deferred loans. You usually qualify if you have not owned a home in the past three years.
Buying your first home is easier with help. Here are the main federal loan programs, the types of state and local down payment assistance, and exactly how to find the programs you qualify for.
Who counts as a first-time home buyer?
Many programs use HUD’s definition: you have not owned a principal residence in the past three years. That means many people who owned a home years ago can qualify again. Single parents and some displaced homemakers may also qualify. Always check each program’s rules.
Federal loan programs
| Program | Down payment | Best for |
|---|---|---|
| FHA loan | 3.5% with 580+ credit score | Lower credit scores, smaller down payments |
| VA loan | 0% | Eligible veterans, active-duty service members, some surviving spouses |
| USDA loan | 0% | Eligible rural and some suburban areas, income limits |
| Fannie Mae HomeReady | 3% | Low to moderate-income buyers |
| Freddie Mac Home Possible | 3% | Low to moderate-income buyers |
| Conventional 97 | 3% | First-time buyers with good credit |
Down payment and closing cost assistance
Almost every state has a housing finance agency (HFA) that offers help for first-time buyers, and many cities and counties have their own programs. Common types of help:
- Grants: money for a down payment or closing costs that does not have to be repaid.
- Forgivable loans: a second loan that is forgiven if you live in the home for a set number of years.
- Deferred loans: no payments until you sell, refinance or pay off the first mortgage.
- Low-interest second loans: repaid over time at a low rate.
- Below-market first mortgages through the state HFA.
Most programs have income limits, purchase price limits and a homebuyer education requirement. Amounts vary widely by state and city.
Other programs to know
- Mortgage Credit Certificate (MCC): offered in some states; turns part of your mortgage interest into a federal tax credit.
- HUD Good Neighbor Next Door: eligible teachers, police officers, firefighters and EMTs can buy certain HUD homes in revitalization areas at a discount, with a commitment to live there.
- Employer programs: some employers, hospitals and universities offer homebuying help.
- Native American and tribal programs such as HUD Section 184 loans.
Start with your state housing finance agency and a HUD-approved housing counselor. They know every program you may qualify for.
How to find and apply
- Check your credit and estimate your budget with our affordability calculator.
- Search for your state housing finance agency and local city or county housing programs.
- Talk to a HUD-approved housing counselor (often free).
- Complete a homebuyer education course if required.
- Find a lender that works with your state’s programs.
- Get pre-approved. See how to get pre-approved.
First-time buyer checklist
- Confirm you qualify (no home in 3 years).
- Compare FHA, conventional 3%, VA, USDA.
- Search state and local assistance.
- Take a homebuyer course.
- Get pre-approved.
How much down payment do first-time home buyer programs require?
The programs above ask for very different down payments. This table shows the dollar amounts at common home prices. It covers the down payment only; closing costs, often a few percent of the loan, come on top.
| Home price | 3% (HomeReady, Home Possible, Conventional 97) | 3.5% (FHA) | 5% | 20% |
|---|---|---|---|---|
| $200,000 | $6,000 | $7,000 | $10,000 | $40,000 |
| $250,000 | $7,500 | $8,750 | $12,500 | $50,000 |
| $300,000 | $9,000 | $10,500 | $15,000 | $60,000 |
| $350,000 | $10,500 | $12,250 | $17,500 | $70,000 |
| $400,000 | $12,000 | $14,000 | $20,000 | $80,000 |
VA and USDA loans can bring the down payment to $0 for eligible buyers. Many buyers then use state or local assistance to cover part of the 3% to 3.5% and some closing costs. For more on choosing an amount, see our down payment guide.
Which first-time home buyer program fits you?
Start with your situation, then look at the programs that usually fit best. A lender or HUD-approved housing counselor can confirm what you qualify for.
| Your situation | Programs to look at first |
|---|---|
| Credit score in the 580s to 600s | FHA loan, plus state down payment assistance |
| Good credit, small savings | Conventional 97, HomeReady or Home Possible (3% down) |
| Veteran, service member or eligible surviving spouse | VA loan (0% down) |
| Buying in a rural or small-town area with moderate income | USDA loan (0% down), if the address and income qualify |
| Teacher, police officer, firefighter or EMT | HUD Good Neighbor Next Door, plus any local employer or state programs |
| Moderate income in a higher-cost area | State HFA first mortgage with down payment assistance, Mortgage Credit Certificate if available |
How assistance stacks: a worked example
Here is a simple planning example of how a first-time buyer might combine programs. The assistance amount is hypothetical; real programs vary widely by state and city.
- Home price: $300,000.
- Loan: FHA with 3.5% down, so the down payment is $10,500.
- Assistance: a state forgivable second loan of, for example, $8,000, forgiven if the buyer lives in the home for the required years.
- Buyer’s own cash for the down payment: about $2,500.
- Closing costs: paid with savings, a seller credit, or a program that also covers closing costs.
In this example, the buyer moves in with a fraction of the cash they would otherwise need. The trade-off is that a forgivable or deferred loan usually must be repaid if you sell or refinance early, so read the terms carefully.
Questions to ask before you choose a program
- Is the help a grant, a forgivable loan, a deferred loan or a repayable loan?
- If it is a loan, when is it forgiven or due? What happens if I sell or refinance early?
- What are the income limits and purchase price limits for my county?
- Is a homebuyer education course required, and how much does it cost?
- Does the program require a specific lender or loan type?
- Can the assistance cover closing costs as well as the down payment?
- How long does approval take, and will it delay my closing?
A realistic timeline for first-time buyers
| When | Step |
|---|---|
| 6 to 12 months before | Check credit, pay down debt and start saving for down payment and closing costs. |
| 3 to 6 months before | Research your state housing finance agency and local programs; talk to a housing counselor. |
| 2 to 3 months before | Take the homebuyer education course and get pre-approved with a participating lender. |
| House hunting | Make offers within the program’s purchase price limit. |
| Under contract | Submit assistance paperwork promptly; order the inspection and appraisal. |
| Closing | Review the Closing Disclosure, including any second loan, and sign. |
Common mistakes with first-time buyer programs
- Assuming you do not qualify. If you have not owned a home in three years, you may count as a first-time buyer again.
- Waiting until you have an accepted offer. Some programs take time to approve. Start early.
- Ignoring repayment terms. A deferred loan can come due when you sell or refinance.
- Choosing a lender that does not participate. Many state programs only work through approved lenders.
- Forgetting monthly costs. A small down payment means a larger loan and, often, mortgage insurance. Check the full monthly payment with our affordability calculator.
First time home buyer programs can turn a down payment that looks impossible into one you can reach this year. Start with your state housing finance agency and a HUD-approved counselor, and compare the full cost of every option.
Helpful resources: For more on first time home buyer programs, see the Consumer Financial Protection Bureau and U.S. Department of Housing and Urban Development.
First time home buyer programs: frequently asked questions
What programs help first-time home buyers?
Federal loans like FHA, VA and USDA, conventional 3% down programs like Fannie Mae HomeReady and Freddie Mac Home Possible, and state and local down payment assistance grants and loans.
Do first-time buyers get free money?
Some state and local programs offer grants that do not need to be repaid, but many offer forgivable or deferred loans instead. Most have income and price limits.
Who qualifies as a first-time home buyer?
Under HUD’s common definition, anyone who has not owned a principal residence in the past three years. Rules vary by program.
Where do I find down payment assistance in my state?
Start with your state housing finance agency, your city or county housing department, and a HUD-approved housing counselor.
Can I use first-time home buyer programs if I owned a home before?
Often yes. Many programs use HUD’s definition, which counts you as a first-time buyer if you have not owned a principal residence in the past three years. Check each program’s rules.
What credit score do I need for a first-time home buyer program?
It depends on the loan. FHA allows 3.5% down with a 580+ score, while conventional 3% down programs and many state assistance programs usually want higher scores. A lender or housing counselor can tell you which programs fit your score.
Sources: HUD: buying a home, Consumer Financial Protection Bureau, Fannie Mae, Freddie Mac, U.S. Department of Veterans Affairs, USDA Rural Development. Prices are national planning ranges, not quotes. See how we research costs.
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