First-Time Homebuyer Programs, Grants and Loans

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.

Federal first-time homebuyer programs for conventional loans

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

• Fannie Mae HomeReady®
• Fannie Mae Standard 97% Loan-to-Value (LTV)
• Freddie Mac Home Possible®
• Freddie Mac HomeOne®

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).

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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.

 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.

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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.

Federal first-time homebuyer programs for government-backed loans

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

• FHA loan programs
• FHA 203(k) loans
• VA loan programs
• USDA loan programs
• Good Neighbor Next Door
• HUD Homes
• HomePath
• Native American Direct Loan

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 FHA mortgage insurance premium.

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.

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.

 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.

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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.

 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.

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.

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.

First-time homebuyer programs by state

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.