First-time homebuyer programs: How to get grants, loans, down payment help

Key takeaways

• Every state offers first-time homebuyer programs that can help with down payments, closing costs and affordable loan terms.
• Federal options like FHA, VA, USDA and conventional loans can often be combined with state-level assistance for greater benefits.
• Eligibility requirements and program details vary by state, so buyers should check their state housing finance agency for the most current information.

Across the country, countless federal and state programs are available to help first-time homebuyers with down payments, closing costs and loan terms used to purchase a home. This guide explains federal options, breaks down programs in all 50 states and U.S. territories, and details how to apply.

A first-time homebuyer program is a government or private initiative that helps buyers with upfront costs or makes mortgages more affordable. These programs are meant to lower barriers for people who might not have enough savings or who need better loan terms.

Most programs define a first-time buyer as someone who has not owned a home in the past three years. This includes buyers who have never owned a home and those who owned one before but have not owned recently. Some programs make exceptions for veterans or buyers in targeted areas.

Assistance can come in several forms. The programs include grants that do not need to be repaid; forgivable loans that are erased after a set period if residency requirements are met; deferred-payment loans that require no payments until the home is sold, refinanced or the mortgage is paid off, and mortgage credit certificates that offer an annual tax credit based on mortgage interest paid. Most programs require a minimum credit score to qualify.

FHA, VA and USDA loans are government-backed options that help buyers with different needs. FHA loans are available to most buyers and require a minimum 3.5% down payment with a credit score of 580 or more. VA loans are for eligible veterans, active-duty service members and qualifying surviving spouses, offering zero down payment and no private mortgage insurance. USDA loans are designed for buyers in rural and many suburban areas, also with zero down payment, but income limits apply.

Sources: FHA, VA and USDA

For more details, see how to qualify for an FHA loan, what is a VA loan, and USDA loans. You can also review types of mortgage loans for a broader overview.

Applying for a first-time homebuyer program typically involves several steps.

• Start by checking your credit score and reviewing your credit report for errors.
• Next, research programs available in your state through your state’s housing finance agency.
• Then, get mortgage preapproval to understand your budget.
• Gather financial documents such as pay stubs, tax returns and bank statements.
• Many state programs require you to complete a homebuyer education course.
• Apply through an approved lender that participates in the program.
• Finally, track deadlines, as some programs have limited funding or application windows.

For a full overview of the buying process, see buying a home in 10 steps.

Most first-time homebuyer programs share a common set of requirements. Use this checklist to see where you stand before you apply:

• Credit score meets the minimum. State programs typically require 620 to 660. FHA loans accept 580 or higher.
• Income falls within program limits. Most programs cap eligibility based on the area's median income.
• Purchase price is within the program maximum. Many programs set a ceiling on the home's sale price.
• The property will be your primary residence. Investment properties and second homes usually do not qualify.
• You have not owned a home in the past three years. This is the standard definition of a first-time buyer for most programs.
• Homebuyer education course is completed. Some programs require this before you can receive assistance.
• The home is in an eligible location. Geographic restrictions may limit programs to certain counties or cities.

Learn more about how your credit score affects your options.

Every state has a housing finance agency that runs programs for first-time homebuyers. These programs often include down payment assistance, low-interest loans and mortgage credit certificates. The details change often, so it’s important to check your state’s agency website for the latest information. Once you know what programs you qualify for, you can search for homes on Homes.com and learn what to expect from a starter home.

Sources: State and territory first-time homebuyer program websites

Program details, income limits and credit score requirements change frequently. Always check your state's housing finance agency website for the most current information.

First-time buyers often make avoidable mistakes that can delay or derail their purchase. Use this checklist to stay on track:

• Check your credit score early. Errors or low scores can take months to fix, so review your credit report before you start the process.
• Get preapproved before you shop. Skipping preapproval leads to looking at homes outside your budget, which wastes time.
• Track application deadlines. Some programs have limited funding and close their application windows quickly.
• Compare multiple programs. Not every program offers the same terms. Researching more than one option can lead to better assistance.
• Budget for closing costs. These can add 2% to 5% of the purchase price and are often overlooked.
• Complete required homebuyer education courses. Many state programs require them, and skipping the course can disqualify you.
• Avoid large purchases or new credit lines before closing. Either one can lower your credit score and put your loan at risk.

For more practical advice, see first-time homebuyer tips.

Yes. Many buyers use a federal loan, such as FHA or USDA, along with state-level down payment assistance. Check with your lender to confirm which combinations are allowed.

Many state programs require it. Some federal programs, like HomeReady and Home Possible, also require homebuyer education. Courses are often available online and may take a few hours to complete.

You may still qualify. Most programs define "first-time buyer" as someone who hasn't owned a home in the past three years. If it's been longer than three years since you last owned, you may be eligible again. For definitions of common terms, see the glossary of essential terms for homebuyers.