First-Time Homebuyer Programs and Loans
First-time homebuyer programs are available to help qualified borrowers achieve the dream of homeownership. Depending on the program, buyers who have previously owned a home may also qualify for first-time homebuyer loans and programs if they haven’t owned property in the past three years.
Mortgage lenders, local governments and community organizations offer various first-time homebuyer programs, including affordable loans, tax incentives, closing cost assistance and down payment assistance programs. Here is a list of 12 first-time homebuyer programs:
- Fannie Mae HomeReady
- Fannie Mae Standard 97% Loan-to-Value (LTV)
- Freddie Mac Home Possible
- Freddie Mac HomeOne
- FHA loans
- FHA 203(k) loans
- VA loans
- USDA loans
- Good Neighbor Next Door
- HUD Homes
- HomePath Ready Buyer Program
- Native American Direct Loan
- First-time homebuyer programs by state
- Mortgage rate trends
- Frequently asked questions
Fannie Mae HomeReady®
Who is eligible for a Fannie Mae HomeReady loan?
→ Down payment minimum: 3% (mortgage insurance required until loan balance reaches 80% of home value)
→ Credit score minimum: 620
→ Debt-to-income ratio (DTI) maximum: 36% (exceptions made up to 45% or 50% in some circumstances)
→ Income restrictions: Limited to 80% of the area median income (AMI)
Should I get a Fannie Mae HomeReady loan?
The HomeReady loan program is ideal for low- and moderate-income borrowers with credit scores of at least 620.
Fannie Mae Standard 97% Loan-to-Value (LTV)
Who is eligible for a Fannie Mae Standard 97% loan?
→ Down payment minimum: 3% (private mortgage insurance required until loan balance reaches 80% of home value)
→ Credit score minimum: 620
→ DTI maximum: 36% (exceptions made up to 45% or 50% in some circumstances)
→ Income restrictions: No income limits
Should I get a Fannie Mae Standard 97% loan?
Fannie Mae’s Standard 97% loan option is ideal for borrowers who have good credit and high incomes, but lack the savings for a significant down payment.
Freddie Mac Home Possible®
Who is eligible for a Freddie Mac Home Possible loan?
→ 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 maximum: 45%
→ Income restrictions: Limited to 80% of the area median income (AMI)
Should I get a Freddie Mac Home Possible loan?
The Home Possible loan is ideal for borrowers seeking a low-down-payment loan with at least a 660 credit score, or those with no credit score who can put at least 5% down.
Freddie Mac HomeOne®
Who is eligible for a Freddie Mac HomeOne loan?
→ Down payment minimum: 3% (private mortgage insurance required until loan balance reaches 80% of home value)
→ Credit score minimum: 660
→ DTI maximum: 45%
→ Income restrictions: No income limits
Should I get a Freddie Mac HomeOne loan?
The HomeOne loan is a good option for high-income borrowers with good credit scores looking to purchase a home with a low down payment.
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 amounts based on the borrower’s county and property type.FHA borrowers pay both an upfront and an annual mortgage insurance premium. But thanks to changes made in 2023, most new buyers will pay a lower annual mortgage insurance premium — 0.55% of the loan amount, down from 0.85%.
Who is eligible for an FHA loan?
→ 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 maximum: 43% (exceptions up to 50% allowed in some cases)
→ Loan limits: Subject to FHA mortgage limits based on county and property type
Should I get an FHA loan?
Borrowers with limited savings for a down payment or blemishes in their credit history may have better approval chances with an FHA loan than other loan programs.
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 Federal Housing Administration (FHA), these loans follow the basic requirements for a standard FHA loan.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.
Who is eligible for an FHA 203(k) loan?
→ 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 maximum: 43% (exceptions up to 50% allowed in some cases)
→ Loan limits: Total value of property subject to FHA mortgage limits based on county and property type
Should I get an FHA 203(k) loan?
FHA 203(k) loans are a great option for borrowers purchasing a fixer-upper with a low down payment or lower credit scores.
VA loans
Who is eligible for a VA loan?
→ Down payment minimum: No down payment required
→ Credit score minimum: No minimum score (though most participating lenders will require a 620 credit score)
→ DTI maximum: 41% (exceptions made in some circumstances)
→ Borrower requirement: Must meet VA’s minimum service requirement
Should I get a VA loan?
VA loans are ideal for eligible military borrowers, especially those seeking a no-down-payment loan.
USDA loans
The U.S. Department of Agriculture (USDA) offers two mortgage programs: the Single Family Housing Guaranteed Loan Program and the Single Family Housing Direct Home Loans. Both USDA loan programs offer no-down-payment loans to borrowers purchasing in rural areas.The Guaranteed 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 program, the USDA finances the mortgages directly. It is aimed at very low- and low-income borrowers and doesn’t charge a guarantee fee.
Who is eligible for a USDA loan?
→ Down payment minimum: No minimum down payment
→ Credit score minimum: No program minimum (though participating lenders may require a 640 credit score)
→ DTI maximum: 41% (exceptions made up to 44%)
→ Income limits: Up to 115% of median household income
→ Location requirements: Property must be located in a designated rural area
Should I get a USDA loan?
USDA loans are ideal for very-low, low- and moderate-income homebuyers purchasing in designated rural areas.
Good Neighbor Next Door
Good Neighbor Next Door is a mortgage loan program offered by the U.S. Department of Housing and Urban Development (HUD) for public service professionals. Eligible borrowers receive a 50% discount on the purchase price of HUD properties in designated revitalization areas. 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.
Who is eligible for a Good Neighbor Next Door loan?
→ Borrower requirement: Must be a full-time law enforcement officer, teacher (pre-K through 12th grade), firefighter or emergency medical technician
→ Property requirement: Must purchase a HUD home
→ Residency requirements: Must live in the home for at least three years
→ Down payment minimum: Must meet the requirements of the loan program you’re using
→ Credit score minimum: Must meet the requirements of the loan program you’re using
Should I get a Good Neighbor Next Door loan?
This program is best for borrowers in public service careers who want to purchase a home in a revitalized area and are willing to remain in the property for at least three years.
HUD Homes
Who is eligible for a HUD Home?
→ Down payment minimum: Must meet the requirements of the loan program you are using
→ Credit score minimum: Must meet the requirements of the loan program you are using
Should I get a HUD Home?
Purchasing a HUD home is best for buyers looking for a deeply discounted home who can take on the cost and responsibility of repairing a home.
HomePath Ready Buyer™ Program
The HomePath program from Fannie Mae isn’t a loan program, but it does make homeownership more accessible and affordable to borrowers. The program provides homebuyer education and access to Fannie Mae-owned (foreclosed) property listings before they’re available to investors.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.
Who is eligible for the HomePath Ready Buyer Program?
→ Property requirement: Must purchase a HomePath property
→ Borrower requirement: Must complete the Fannie Mae HomeView course to receive up to 3% in closing cost assistance
→ Down payment minimum: Must meet the requirements of the loan program you are using
→ Credit score minimum: Must meet the requirements of the loan program you are using
Should I get a HomePath Ready Buyer Program loan?
Borrowers who plan to finance a property with a HomeReady Mortgage may find a deeply discounted home by looking at HomePath properties.
View more options you may have for mortgage down payment assistance.
Native American Direct Loan
Who is eligible for a Native American Direct Loan?
→ Borrower requirement: Must be a Native American veteran or a veteran with a Native American spouse
→ Down payment minimum: No down payment required
→ Credit score minimum: No minimum score (but most lenders require a 620 credit score)
→ DTI maximum: 41% (exceptions made in some circumstances)
Should I get a Native American Direct Loan?
The Native American Direct Loan is ideal for eligible veterans seeking a low-cost, no-down-payment loan.
Learn more about other options for no-down-payment mortgages.
First-time homebuyer programs by state
In addition to nationwide first-time homebuyer programs, many state house financing agencies, local governments and community organizations offer first-time homebuyer loans and other buyer initiatives.
Mortgage rate trends
While mortgage interest rates remain below the high levels reached in the fall of 2022 when a 30-year fixed rate peaked at 7.08%, rates have more recently seen slight movement within the 6.00% to 6.75% range. Despite these heights, economists predict mortgage rates may drop by the end of the year. Lower interest rates translates to more buying power and potentially lower monthly mortgage payments, which is good news for new buyers looking to purchase a home.
Frequently asked questions
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 addition to national first-time homebuyer loans, state and local governments, as well as community organizations, also offer various first-time homebuyer programs — these include down payment assistance programs and other initiatives. To find programs in your area, review HUD’s state listings.
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 for best mortgage lenders, top FHA lenders and best VA lenders.