A Guide to First-Time Home Buyer Programs

In this article:

• First-time home buyer loans
• Down payment assistance
• Down payment grants
• Discounts and vouchers
• Mortgage Credit Certificates
• State and local programs
• Loan programs for Native Americans

When buying your first home, having your finances lined up and money available for the purchase can be a hurdle to becoming a homeowner. But you might have a number of options to help your “someday” of owning a home start today. That could come in the form of a loan you pay back, a grant you don’t need to repay, and local discounts.

Here’s some context: 55% of prospective first-time buyers who plan to get a mortgage reported pausing or delaying their buying process at least once to save up for a down payment, according to the 2025 Zillow Consumer Housing Trends Report. That doesn’t have to be you. Here's an overview of some options to get you started:

Types of first-time home buyer programs

First-time home buyer programs are usually designed for buyers who haven’t owned a home in the last three years. So, even if you've owned a home in the past, one of these buyer programs or grants could apply to you.

Out of the 44% of home buyers who purchased for the first time, 60% of them said they received some sort of down payment assistance, according to the 2024 Zillow Consumer Housing Trends Report. Here are some options:

First-time home buyer loans

In 2024, just under half (48%) of first-time buyers said they put less than 20% down on their first home, while 18% of first-timers put down 5% or less. Many first-time home buyer loans give the flexibility to make a smaller down payment and still enjoy lower interest rates and other benefits.

Conventional loan program

Conventional loans are not backed by the government, and are instead offered by private lenders with their own eligibility requirements. 

In general, a conventional loan requires:

• Credit score: 620 or higher
• Down payment: 3% or more
• Debt-to-income ratio: Around 45%

Your lender might have stricter requirements based on their full review of your financial profile. After closing, conventional loans are often purchased by investors who prefer low-risk investments. A conventional loan is a possible option for first-time buyers, but is typically less favorable than an FHA loan if they’re seeking financial assistance.

FHA loan program

A Federal Housing Administration loan can be an affordable option for first-time home buyers because the qualification requirements are typically not as strict as for other loan programs. FHA loans are insured by HUD's Federal Housing Administration and are designed to encourage lenders to lend to borrowers who don't have perfect credit or significant upfront cash.

FHA borrowers buying a median-priced, one-unit, single family home could save $800–$1,400 in their first year of homeownership through this type of loan.

• Credit score requirements: 580 or higher (lower scores accepted with higher down payments)
• Minimum down payment: 3.5%
• Limits: Mortgage Insurance Premium is required for almost all FHA loans.

FHA Section 203(k)

A fixer-upper may be priced lower than a newer property, but affording the actual improvements could present issues. That's where the FHA Section 203(k) loan comes in.

Backed by the Federal Housing Administration, this loan allows you to borrow funds to fix up a property that requires a lot of improvements. In order to get the 203(k) loan, you must also be approved for an FHA loan; then the 203(k) is rolled into it.

• The 203(k) loan amount must be more than $5,000.
• The maximum is generally $35,000 (but can vary by county).
• A minimum 3.5% down payment is required (may be higher based on your credit score).
• Limits: Costly mortgage insurance premiums, higher interest rates, and a consultant inspection. If applying with a co-borrower, FHA considers the lowest median credit score between the two of you. Managing repairs to the home could be difficult and time-consuming.

USDA loan program

A U.S. Department of Agriculture (USDA) loan is an option for buyers looking for homes in approved rural locations regardless of their intention to grow crops or raise livestock. USDA loans are great for first-time home buyers with limited income because they are fully guaranteed by the USDA, which reduces concerns that lenders may have about the buyer defaulting on their mortgage.

• Credit score requirements: 640 or higher
• Minimum down payment: Little or no money down
• Limits: Strict eligibility based on income and location of home

VA Loan Program

A U.S. Department of Veterans Affairs (VA) loan is an option for U.S. military members including veterans, active duty service members, and their family. VA loans are backed by the VA, and representatives can help buyers through the process of acquiring the loan or offer assistance if the buyer is at risk of defaulting on their mortgage.

• Credit score requirements: No restriction
• Minimum down payment: Funding fee only, can be rolled into the mortgage
• Interest rate: Lower than conventional loans
• Limits: Eligibility restrictions apply; the less you put down, the higher the VA funding fee will be.

Here are some more specific types of conventional loan options:

HomeReady loan program

Fannie Mae’s HomeReady loan program is designed for low- to moderate-income buyers and is one of the most flexible conventional options available. It caps qualifying income at 80% of the area median income (AMI) for the property’s location. A notable feature for very low-income first-time buyers: Fannie Mae offers a $2,500 borrower credit that can be applied toward down payment or closing costs for eligible very low-income purchase transactions.

• Credit score requirements: 620 minimum
• Minimum down payment: 3%
• Benefits: Low down payment; flexible income sources; reduced mortgage insurance costs; $2,500 credit available for very low-income first-time buyers.
• Limits: Income cap at 80% AMI may exclude moderate-income buyers; homebuyer education required when all borrowers are first-time buyers; mortgage insurance required for LTV above 80%.

Conventional 97 loan program

The Conventional 97 is Fannie Mae’s straightforward low-down-payment option for first-time buyers — no income limits, no geographic restrictions, and no complicated eligibility tiers. At least one borrower on the loan must be a first-time homebuyer. The down payment can be as low as 3%, and funds can come from gifts, grants, or eligible Community Seconds loans.

The program is limited to one-unit primary residences (including eligible condos, co-ops, PUDs, and MH Advantage® homes) and requires all loans to be fixed-rate. Private mortgage insurance (PMI) is required, but can be cancelled once your loan balance reaches 80% of the original value. It also terminates automatically at 78% if your loan is current.

• Credit score requirements: 620 minimum
• Minimum down payment: 3%
• Benefits: No income or geographic limits; 3% down payment; PMI cancellable at 80% LTV.
• Limits: At least one borrower must be a first-time homebuyer; limited to one-unit primary residences; fixed-rate mortgages only; PMI required until 80% LTV.

Home Possible loan program

If you're a low- or very low-income buyer, Freddie Mac's Home Possible loan program is worth exploring. Designed to help more borrowers overcome the down payment barrier, Home Possible requires as little as 3% down and accepts flexible sources for those funds, including family gifts, employer assistance programs, secondary financing, and even sweat equity.

Like HomeReady, your qualifying income must be at or below 80% of the area median income (AMI) for the property's location, making it specifically targeted at buyers who need the most support.

Mortgage insurance is required for loans with less than 20% down, but it can be cancelled once your loan balance drops below 80% of the home's appraised value, helping to lower monthly costs over time.

• Credit score requirements: No specific minimum listed; eligibility is determined through Freddie Mac's Loan Product Advisor.
• Minimum down payment: 3%
• Benefits: Low down payment with broad flexibility on funding sources. Income-targeted eligibility. Mortgage insurance cancellation once sufficient equity is reached. Credit fee caps for qualified borrowers.
• Limits: Income is capped at 80% of AMI, which may exclude moderate-income buyers in lower-cost markets. Mortgage insurance is required at higher loan-to-value ratios.

HomeOne Loan Program

Freddie Mac's HomeOne loan program is a strong option if you're a first-time buyer who doesn't meet the income limits for programs like Home Possible. HomeOne has no income limits and no geographic restrictions. Like Home Possible, it requires 3% down, but it is exclusively for fixed-rate mortgages and is limited to one-unit primary residences. At least one borrower on the loan must be a first-time homebuyer, and when all borrowers are first-time buyers, completion of a homebuyer education course is required.

• Credit score requirements: No specific minimum listed. Eligibility is determined through standard underwriting.
• Minimum down payment: 3%
• Benefits: No income or geographic limits. 3% down payment. Accessible to a wide range of first-time buyers.
• Limits: Fixed-rate mortgages only. Restricted to single-unit primary residences. Homebuyer education is required when all borrowers are first-time buyers. Mortgage insurance is required for a loan-to-value ratio above 80%.

Down payment assistance

Programs designed for down payment assistance are typically reserved for first-time buyers who are acquiring a loan for their primary home. These programs typically work in conjunction with loan programs such as those offered by the FHA, VA, USDA, Fannie Mae, and Freddie Mac. We’ll cover all these options in this article.

If you qualify for a down payment assistance program, your state or local municipality will distribute funds, usually in the form of a second mortgage. These loans are often interest-free, and sometimes the loan will include deferred payments. That means you can wait to repay your loan until you resell your home, or pay off your mortgage (including if you decide to refinance).

There are also other down payment assistance programs in the form of lump-sum grants that you don’t need to pay back.

• Benefits: Upfront cash for your down payment with deferred repayment and little or no interest. Note that every down payment program has different requirements and offerings.
• Limits: There are income restrictions, and assistance is only available with an approved loan program. Funds are generally distributed as a second loan, and not all are offered at 0% interest.

Pro tip: You can use Zillow's down payment assistance page to find what you may qualify for. You can also view down payment assistance programs on individual Zillow listings. Just scroll to the “down payment assistance” section of a listing and click on “check eligibility.” Once you submit your responses to the six questions that pop up, you'll get a list of down payment assistance programs you may be eligible for.

Closing cost assistance

Some first-time home buyers qualify for programs that reduce closing costs. The majority of these fees are paid at closing when the property title is transferred to the buyer. Closing costs fluctuate based on your area, the type of home you buy, and the type of loan you get. Some sellers might agree to cover some of these costs.

Down payment grants

First-time home buyer grants are typically given in the form of a lump-sum payment that does not need to be repaid (though there are exceptions). You can apply a grant toward closing fees or your down payment to help reduce your total home buying costs. The grant does not cover the full purchase amount of the home.

Keep in mind that some grants are given in the form of a low-interest loan with deferred repayment, meaning you'll need to pay the money back later, often when you resell your home. Most grants have income, profession and/or neighborhood restrictions in order to qualify, in addition to the first-time home buyer requirement.

The federal government gives funds to states and other municipalities to distribute locally with guidelines around first-time ownership and home buyer education. Some cities offer substantial first home buyer grants that primarily target lower-income buyers. These grants are often available for buyers in specific professions (like teaching or firefighting) or people who are buying in specific neighborhoods. Several nonprofits also offer grants to help first-time home buyers.

• Benefits: Cash you do not have to pay back immediately, if at all.
• Limits: Possible income limits, profession limits, or neighborhood restrictions. Some grants are offered as an interest-bearing loan that you are required to pay back when you resell the home.

Discounts and vouchers

First-time home buyers can save money on their purchase through programs that offer discounts on or toward the property itself. Savings can be substantial through these programs, which are available through the U.S. Department of Housing and Urban Development (HUD).

HUD discount programs include:

• Good Neighbor Next Door: takes 50% off a home's listed price.
• Energy Efficient Mortgage Loans: help homeowners finance improvements to save on future energy costs.
• Homeownership Choice Vouchers: can be used toward the purchase of a home.

Note that each program has specific buyer (and often, property) eligibility. Let’s take a closer look at these options.

Housing Choice Voucher

The Housing Choice Voucher is available via HUD for qualified first-time buyers to put toward the purchase of a property. It’s restricted to buyers who currently receive public housing assistance along with those who meet low-income requirements. For more information, contact your local Public Housing Agency (PHA).

• Benefits: Qualified first-time home buyers can use Housing Choice Vouchers as payment toward a residence and may receive monthly assistance for certain homeownership expenses. Some PHAs may offer an assistance grant for down payments; this is highly dependent on the agency handling the voucher.
• Limits: Those accepted into the program may need to meet certain income and employment requirements. Pre-assistance homeownership and housing counseling programs may need to be completed as well.

Good Neighbor Next Door program

If you're a teacher (pre-kindergarten through 12th grade), firefighter, law enforcement officer, or emergency medical technician, you qualify for HUD's Good Neighbor Next Door program. Designed to connect qualified buyers in these professions to single-family homes in targeted revitalization areas, this program offers a very significant 50% discount off the home sales price. 

The property must be located in a specifically designated revitalization area, which you can find by searching the HUD Homes website. Once listed on this site, a property is only available for purchase for seven days, and available listings are updated weekly. Buyers must also agree to live in the home as their principal residence for 36 months.

• Benefits: Qualified buyers may benefit from a lower down payment as a result of the reduced sales price.
• Limits: If more than one buyer is interested in a home, a lottery is held to determine who can submit an offer. Additionally, approved buyers must sign a second mortgage and promissory note in the amount of the discount. However, interest and payments are not required if the 36-month occupancy requirement is met.

Fannie Mae HomePath

Fannie Mae’s HomePath program offers buyers the opportunity to purchase Fannie Mae–owned foreclosed homes, often at competitive prices and with competitors than the open market. All HomePath properties are sold as-is, so buyers should budget for potential repairs after closing. A key feature is the First Look Initiative, which gives owner-occupants a 30-day exclusive window to submit offers before investors are permitted to participate. 

For first-time buyers, the HomePath Ready Buyer program offers an added incentive: complete Fannie Mae’s free HomeView online homebuyer education course and you can receive up to 3% of the purchase price as a closing cost credit. The course covers the full homebuying process and takes approximately six to eight hours to complete.

• Benefits: Competitive pricing on foreclosed homes; up to 3% closing cost credit for first-time buyers who complete the education course; 30-day investor-free offer window; $500 credit for using a conventional mortgage.
• Limits: Homes sold as-is (no seller repairs); buyer must occupy as primary residence within 60 days; limited inventory varies by location.

Freddie Mac HomeSteps

Freddie Mac’s HomeSteps program is the Freddie Mac equivalent of HomePath. It markets and sells Freddie Mac–owned real estate owned homes at competitive prices across the country. Like HomePath, HomeSteps follows the Freddie Mac First Look Initiative, giving owner-occupant buyers a 30-day exclusive window to submit offers before investors can participate.

A notable advantage of HomeSteps financing (where available through participating lenders) is that it does not require mortgage insurance. The minimum down payment through HomeSteps financing is 5%.

• Benefits: Competitive pricing on foreclosed inventory; 30-day investor-free offer window; no mortgage insurance with HomeSteps financing; homes available nationwide.
• Limits: Homes sold as-is; HomeSteps financing only available on eligible properties through participating lenders; inventory varies by market.

Energy Efficient Mortgage (EEM) loan

Available through HUD, the Energy Efficient Mortgage program helps first-time home buyers access cash to implement energy efficient home improvements that lead to lower energy costs. 

First, buyers must qualify for a Federal Housing Administration- (FHA) backed mortgage for the purchase of a primary residence. Then, the costs of the energy efficient improvements are added to the total loan. Note that borrowers only need to qualify for the amount of the loan used to purchase the home, not the total loan amount.

• Benefits: Home buyers can access more money to make improvements through their mortgage without having to provide more money upfront. Future energy bills will be lower than they would be if upgrades hadn't been made.
• Limits: Prospective improvements must be cost-effective, meaning future savings must be more than the cost of improvements made. Cost-effective tests and a home energy assessment must be completed before qualifying.

Mortgage Credit Certificates

After a home purchase, state and local Housing Finance Agencies offer interest-savings programs that allow qualified buyers with limited income to use a tax credit for part of their mortgage interest.

• The tax credit typically ranges between 20 and 40% of your total mortgage interest.
• The IRS limits the credit to $2,000 per year.
• You can claim the remainder of your mortgage interest as an itemized deduction.

Please consult a tax professional to learn more about what this program could mean for your finances.

• Benefits: You can save on total interest payments.
• Limits: The program can have costly application fees. There are income and home purchase price restrictions. The IRS limitations make the credit less impactful in areas with a high cost of living.

State and local programs

Every state and most major cities have their own programs to help people afford their first home. .Depending on where you want to buy, these programs might offer benefits ranging from down payment assistance to low-interest mortgages. And these local programs also go by different names. Check what programs you may qualify for based on your location by using HUD’s state-by-state directory. There, you can get more information on programs and talk to your local HUD office.

State and local programs

California

There are many first-time home buyer programs in California, including mortgages like the CalPLUS FHA Loan Program. If you need cash toward buying a home, the MyHome Assistance Program provides qualified first-time buyers with a deferred loan of up to 3.5% of the purchase price for FHA loans or to 3% of the purchase price for conventional loans. And repayment of the MyHome Assistance Program loan is deferred.

Florida

Through the Florida Housing Finance Corporation, first-time home buyers with a credit score of 640 and above may qualify for the Homebuyer Program, which offers a 30-year fixed-rate mortgage. Eligible borrowers can also pair this with a separate down payment assistance second mortgage of up to $10,000 to help cover down payment and closing costs.

Illinois

The Illinois Housing Development Authority (IHDA) administers a suite of mortgage and down payment assistance programs available statewide to eligible first-time home buyers. All IHDA programs are paired with a 30-year, fixed-rate first mortgage. Note that all buyers must contribute at least $1,000 or 1% of the purchase price (whichever is greater). A minimum credit score of 640 is required, and homebuyer education is required for all borrowers prior to closing.

IHDA offers three primary down payment assistance tiers: IHDAccess Forgivable; IHDAccess Deferred; and IHDAccess Home. Each has its own requirements.

New York

The State of New York Mortgage Agency (SONYMA) gives first-time home buyers access to low-interest and low-down-payment mortgages, in addition to down payment assistance programs. Achieving the Dream is the lowest interest-rate program that's also flexible enough for the diverse housing stock in New York. Down payment requirements can be as low as 3% (a 3% down payment assistance forgivable loan is available). These mortgages can be used for one- to four-family homes, co-ops and condominiums.

Pennsylvania

The Pennsylvania Housing Finance Agency (PHFA) offers a comprehensive set of home purchase loan programs and paired assistance loans for first-time buyers across the state. PHFA loans are 30-year, fixed-rate mortgages with competitive interest rates. There are three primary mortgage options: the Keystone Home Loan Program; PHFA Preferred™ (Lo MI); and the Keystone Government Loan Program. The latter covers FHA, VA, and USDA loans.

Texas

The Texas State Affordable Housing Corporation (TSAHC) has special programs for first-time home buyers along with home buyers who meet certain professional or income requirements. The Homes for Texas Heroes Home Loan Program offers a fixed interest rate loan with a down payment assistance grant or forgivable second-lien loan of up to 5% for those in helping professions like teaching, nursing, EMS, law enforcement, and military. First-time home buyers can also apply for a Mortgage Credit Certificate.

The Home Sweet Texas Home Loan Program offers similar benefits for low- and moderate-income buyers with eligibility open to all professions (and it's not limited to first-time home buyers).

Washington

Through the Washington State Housing Finance Commission, home buyers who meet income requirements can find programs that make homeownership affordable. The Home Advantage Program provides access to low-interest mortgages and can be combined with the Home Advantage Downpayment Assistance Program. The latter offers between 3 and 4% of the purchase price, 0% interest and payment deferred for 30 years.

City programs

Here are some examples of large cities that have first-time home buyer programs:

Houston, TX

Houston's Housing and Community Development Department offers the Homebuyer Assistance Program (HAP) for first-time home buyers in the city whose household income is at or below 80% of Area Median Income. This assistance includes:

• Up to $50,000 in down payment assistance.
• Structured as a no-interest, forgivable loan.
• Forgiveness after 5 years if the buyer lives in the home as their primary residence.

New York, NY

First-time buyers can apply for assistance in New York City through state-wide programs. There is also one popular NYC-specific program: the HomeFirst Down Payment Assistance Program. This entails:

• Up to $100,000 for down payment or closing costs.
• Forgiveness over 10–15 years depending on the loan amount.

San Francisco, CA

The Mayor's Office of Housing and Community Development (MOHCD) has a few mortgage and down payment assistance programs for first-time home buyers in San Francisco.

The city’s Downpayment Assistance Loan Program (DALP) is especially popular:

• Offers up to $500,000 to bid on a property on the open market.
• Applications are entered into a lottery; your lottery number determines when your application is processed.

Seattle, WA

Seattle's Office of Housing partners with local organizations to offer down payment assistance to first-time home buyers who are at or below 80 % of the area median income:

• Assistance can be up to $55,000.
• Amount and terms vary based on the type of home and the administering organization.
• Funded through the Seattle Housing Levy and administered through local nonprofit partners.

Loan programs for Native Americans

If you are Native American, there are a couple of specialized programs to help you purchase a home with a zero or low down payment. One program is for Native American veterans, and another is for American Indian and Alaska Native families.

Native American Direct Loan (NADL)

This loan option is for Native American veterans and their family members. You may qualify if you are:

• A Native American enrolled in an American Indian tribe or Alaska Native village.
• A Pacific Islander or Native Hawaiian.
• A non-Native American veteran married to a Native American.

Funded by the VA, this program provides financing to buy, build or renovate homes on Federal Trust Land.

• Credit score requirements: No specific score is listed, but applicants must have good credit.
• Minimum down payment: None if approved for an NADL loan.
• Benefits: No down payment required. No private mortgage insurance. Low closing costs.
• Limits: There must be a Memorandum of Understanding between your tribal government and the VA regarding the use of trust lands. You must have a VA home loan Certificate of Eligibility. You must meet credit standards and have proof of income for mortgage and homeownership costs.

Indian Home Loan Guarantee Program (Section 184)

Established by Congress in 1992, the Indian Home Loan Guarantee Program is available through the HUD Office of Native American Programs. This program offers loans with a low down payment option and flexible underwriting for:

• American Indian and Alaska Native families.
• Alaska villages, tribes, or tribally designated housing entities.
• Native Hawaiians (via Section 184A loans).

Section 184 loans can be used for homes on or off native lands, but not all states are eligible locations.

• Credit score requirements: No minimum credit score
• Minimum down payment: 2.25%
• Limits: Loans must be made in an eligible area. Not all states are eligible.

For more resources, visit our Financing Resources page, and stay informed with more articles addressing your mortgage questions.

Disclaimer: This article contains information obtained from third-party sources and is for informational purposes only and is not intended to be relied upon as financial advice, guarantees or warranties of any kind. Nor is it an endorsement of any third-party organization or service.