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First-Time Homebuyer Programs, Grants and Loans

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Content was accurate at the time of publication.

If you’re buying a house for the first time, there are several programs created specifically to help you achieve homeownership. They include affordable loans, closing cost assistance, down payment assistance, grants and tax incentives. And even if you’ve purchased a home before, you may still be eligible if you haven’t owned one in the past three years.

Here are 12 first-time homebuyer programs available nationwide, plus information about state-by-state programs.

First-time homebuyer programs that buyers can use for conventional loans include:

1. Fannie Mae HomeReady®

The HomeReady loan program is a conventional (nongovernment) mortgage guaranteed by Fannie Mae and offered through participating lenders. Available to low- and moderate-income borrowers, HomeReady loans have low down payment requirements, allow flexible income sources and carry reduced private mortgage insurance (PMI).

Eligibility requirements

  • Down payment minimum: 3% (mortgage insurance required until loan balance reaches 80% of home value)
  • Credit score minimum: 620
  • Debt-to-income (DTI) ratio maximum: 36% (exceptions can made for up to 45% or 50% in some circumstances)
  • Income restrictions: Limited to 80% of the area median income (AMI)
  • First-time homebuyer restrictions: None

 Best for: Low- and moderate-income borrowers with at least a 620 credit score.

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2. Fannie Mae Standard 97% Loan-to-Value (LTV)

Fannie Mae has another low-down-payment loan offered through participating lenders — and this one comes with no income restrictions. The Fannie Mae Standard 97% loan requires first-time homebuyers to only put down 3%, and has flexible guidelines that allow for many down payment sources. However, borrowers will need to take a homebuyer education course. They’ll also pay standard PMI premiums, but won’t be subject to income limits.

Eligibility requirements

  • Down payment minimum: 3%
  • Credit score minimum: 620
  • DTI ratio maximum: 45%
  • Income restrictions: No income limits
  • First-time homebuyer restrictions: At least one borrower must be a first-time homebuyer

 Best for: Borrowers who have good credit, but lack the savings for a significant down payment.

 See current mortgage rates today.

3. Freddie Mac Home Possible®

Home Possible is another conventional loan program for low- and moderate-income borrowers. Home Possible loans have a low down payment minimum, discounted mortgage insurance and flexible income guidelines.

Eligibility requirements

  • Down payment minimum: 3% (private mortgage insurance required until loan balance reaches 80% of home value)
  • Credit score minimum: 660 (borrowers with no credit scores may qualify with a 5% down payment)
  • DTI ratio maximum: 43%
  • Income restrictions: Limited to 80% of the AMI
  • First-time homebuyer restrictions: None

 Best for: Low- or moderate-income borrowers seeking a low-down-payment loan with at least a 660 credit score. It’s also a great option for those with no credit score who can put down at least 5%.

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4. Freddie Mac HomeOne®

HomeOne from Freddie Mac is another conventional loan with a low down payment minimum and flexible income guidelines. This loan requires at least one co-borrower to be a first-time homebuyer — however, if all borrowers are first-timers, they’ll have to take a homebuyer education course. Buyers will pay standard mortgage insurance premiums, but won’t be subject to income limits.

Eligibility requirements

  • Down payment minimum: 3%
  • Credit score minimum: 660
  • DTI ratio maximum: 45%
  • Income restrictions: No income limits
  • First-time homebuyer restrictions: At least one borrower must be a first-time homebuyer or have not owned a home within the last three years

 Best for: Borrowers with good credit scores looking to purchase a home with a low down payment.

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There are multiple first-time homebuyer programs available for buyers interested in a government-backed loan, such as:

5. FHA loans

FHA loans are backed by the Federal Housing Administration (FHA) and follow mortgage guidelines set by the U.S. Department of Housing and Urban Development (HUD). Popular with first-time buyers, FHA loans have low down payment requirements and flexible qualification guidelines. But while FHA mortgages don’t have income restrictions, they are subject to maximum loan limits based on the borrower’s county and property type. FHA borrowers pay both an upfront and an annual mortgage insurance premium.

Eligibility requirements

  • Down payment minimum: 3.5% with a 580 (or higher) credit score; 10% with a credit score between 500 and 579
  • Credit score minimum: 580 with a 3.5% down payment; 500 with a 10% down payment
  • DTI ratio maximum: 43% (exceptions up to 50% allowed in some cases)
  • Loan limits: Subject to FHA mortgage limits based on county and property type
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: Borrowers with limited down payment savings or blemishes in their credit history.

See current FHA loan rates today.

6. FHA 203(k) loans

Borrowers purchasing a fixer-upper can combine the costs of buying a home and renovating it into one loan with an FHA 203(k) mortgage. Guaranteed by the FHA, these loans follow the same basic requirements as standard FHA loans. There are two types of FHA 203(k) loans: limited, for minor improvements and repair costs below $35,000, and standard, for larger repair projects. Borrowers may need to set aside contingency reserves to complete the repairs.

Eligibility requirements

  • Down payment minimum: 3.5% with a 580 (or higher) credit score; 10% with a credit score between 500 and 579
  • Credit score minimum: 580 with a 3.5% down payment; 500 with a 10% down payment
  • DTI ratio maximum: 43%
  • Loan limits: FHA mortgage limits based on county and property type
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: Borrowers purchasing a fixer-upper who want a low down payment or need a program with lower credit score minimums.

7. VA loans

The U.S. Department of Veterans Affairs (VA) offers a loan program to active-duty service members, veterans and eligible surviving spouses. VA loans have no down payment requirement or income limits but offer flexible credit guidelines. Borrowers won’t pay ongoing mortgage insurance, but they do pay an upfront funding fee.

Eligibility requirements

  • Down payment minimum: No down payment required with full VA entitlement
  • Credit score minimum: No minimum score, but many participating lenders require a 620 credit score
  • DTI ratio maximum: 41% (exceptions made in some circumstances)
  • Borrower requirements: Must meet VA’s minimum service requirement
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: VA loans are ideal for eligible military borrowers, especially those seeking a no-down-payment loan.

 See current VA mortgage rates today.

8. USDA loans

The U.S. Department of Agriculture (USDA) offers two types of mortgages: USDA guaranteed loans and USDA direct loans. Both USDA loan programs offer no-down-payment loans to borrowers purchasing in rural areas.

The guaranteed loan program, provided through participating lenders, is aimed at low- and moderate-income borrowers. Buyers in that program must pay an upfront and annual guarantee fee. In the direct loan program, the USDA finances the mortgages directly. These loans are aimed at very low- and low-income borrowers and don’t come with a guarantee fee.

Eligibility requirements

  • Down payment minimum: No minimum down payment
  • Credit score minimum: No minimum, but participating lenders may require a 640 credit score
  • DTI ratio maximum: 41%
  • Location requirements: Property must be located in a designated rural area
  • Income restrictions: Up to 115% of median household income
  • First-time homebuyer restrictions: None

 Best for: Very-low, low- and moderate-income homebuyers purchasing in designated rural areas.

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9. Good Neighbor Next Door

Good Neighbor Next Door is a mortgage program offered by the U.S. Department of Housing and Urban Development (HUD) for public service professionals like police officers and teachers. Eligible borrowers receive a 50% discount on the purchase price of HUD properties in designated revitalization areas. And if they finance the home with an FHA loan, the minimum down payment is only $100. To receive the purchase price discount, borrowers take on a silent second mortgage, meaning they won’t make any payments or pay interest, as long as they remain in the home for three years.

Eligibility requirements

  • Borrower requirements: Must be a full-time law enforcement officer, teacher (pre-K through 12th grade), firefighter or emergency medical technician
  • Property requirements: Must purchase a HUD home
  • Down payment minimum: $100
  • Credit score minimum: Varies by loan program
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: People in public service careers who want to purchase a home in a revitalized area and are willing to live in the home they purchase for at least three years.

 Learn more about other options for low- and no-down-payment mortgages.

10. HUD Homes

This program gives buyers an opportunity to purchase foreclosed homes owned by HUD at below-market prices. Borrowers can use a wide variety of loans to buy a HUD home, depending on the home’s condition. Notably, while a borrower can review listings in their state, they’ll need to work with a HUD-registered real estate agent or broker to actually bid on a property.

Eligibility requirements

  • Down payment minimum: Varies by loan program
  • Credit score minimum: Varies by loan program
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: Buyers looking for a deeply discounted home who can take on the cost and responsibility of renovations and repairs.

11. HomePath

Much like HUD, Fannie Mae owns foreclosed properties and HomePath is where they’re listed online. First-time homebuyers who take Fannie Mae’s education course, HomeView®, can receive up to 3% in closing cost assistance when they purchase a HomePath home, and borrowers can combine the HomePath Ready Buyer Program with a HomeReady mortgage.

Eligibility requirements

  • Down payment minimum: Varies by loan program
  • Credit score minimum: Varies by loan program
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: Borrowers who want to find a deeply discounted home.

Learn about other closing cost and down payment assistance programs.

12. Native American Direct Loan

The Native American Direct Loan (NADL) is a VA loan available to Native American veterans or veterans married to a Native American spouse. Like all VA mortgages, the NADL program doesn’t require a down payment. and borrowers receive lower interest rates and reduced closing costs. Unlike other VA loans, buyers receive financing directly from the VA.

Eligibility requirements

  • Borrower requirements: Must be a Native American veteran who is a member of a participating tribe (veterans with a Native American spouse also qualify)
  • Property requirements: The home must be on federal trust land
  • Down payment minimum: No down payment required with full VA entitlement
  • Credit score minimum: No minimum score
  • Income restrictions: None
  • First-time homebuyer restrictions: None

 Best for: Eligible veterans seeking a low-cost, no-down-payment loan.

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In addition to the nationwide first-time homebuyer programs covered above, many state housing finance agencies, local governments and community organizations offer first-time homebuyer loans, grants and other buyer initiatives.

Many first-time homebuyer programs are open to buyers who haven’t owned a property in the past three years. This includes divorced spouses who have only jointly owned a home with an ex-spouse in the last three years.

State and local governments, as well as community organizations, offer various first-time homebuyer programs — these include down payment assistance programs and other initiatives. To find programs in your area, choose your state from the dropdown lists above, or review HUD’s list of local homebuying programs.

Choosing the best mortgage lender will depend on the loan type you’re applying for, how much you want to borrow and many other factors. Review our guides to the best mortgage lenders, top FHA lenders and best VA lenders.

The typical first-time homebuyer is currently 35 years old, according to the latest data from the National Association of Realtors (NAR).

The federal first-time homebuyer tax credit is no longer available, but there are many tax breaks for homebuyers. Some are deductions, which save you money by reducing your taxable income. Others are credits, which directly reduce your tax bill by a set dollar amount.

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