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Buying a home is no small feat — but there are programs designed to assist you in your journey toward owning a home. These programs for first-time homebuyers offer down payment or closing cost assistance and low down payment mortgage options.
Check out all the ways these programs can benefit you, as well as some options for first-time homebuyer programs under state and federal programs:
- Benefits of first-time homebuyer programs
- National first-time homebuyer programs
- States with first-time homebuyer programs
- States with programs for student loan borrowers
What are the benefits of a first-time homebuyer program?
If you’re a first-time homebuyer, these programs can make it easier for you to buy your first home by offering a form of financial assistance.
Here’s a closer look at some of the benefits they can provide:
- Down payment assistance: The down payment is often the largest cost associated with buying a home, which often makes it the largest obstacle for first-time homebuyers. As a result, many first-time homebuyer programs offer down payment assistance in the form of grants, forgivable loans, or payment-deferred loans.
- Closing cost assistance: Since closing costs can often add up to an additional 2%-5% of the home’s sale price, first-time homebuyers often need help covering these costs as well. Similar to your down payment, you may be able to get a grant or a loan to offset the amount of money that you need to bring to the closing table.
- Government loan programs: Government-insured loans offer a guarantee that protects the lender from taking a loss if you default on the loan. In exchange for this reassurance, lenders offer more flexible qualifying standards and lower down payment requirements on these loans.
- Tax credits: Although the Housing and Economic Recovery Act’s $7,500 credit for first-time homebuyers ended in 2010, some state and local governments still offer tax credit options. Plus, owning a home can also help you save money on your taxes because you’re able to deduct certain homeowner expenses, such as mortgage insurance, from the income used to calculate your taxes.
- Homebuyer education: If you aren’t sure where to start with the home-buying process, many first-time homebuyer programs include a homebuyer education component. These classes and resources can help educate you on your loan options, the buying process, and how to apply for a mortgage.
Learn More: First-Time Homebuyer Tips
5 national first-time homebuyer programs
There are many homebuyer assistance programs available on a national scale (plus five types of mortgage loans). Here’s a list of five of the most popular options to help you get started in your search.
Find Out: How to Find the Best Mortgage Lender
FHA loan
An FHA loan is a mortgage that is insured by the Federal Housing Administration, a government agency that sets standards for how homes are constructed and financed in the U.S.
- Minimum down payment (or minimum required investment) is 3.5%
- Lower credit score requirements
Requirements
- 500 to 579 credit score when paired with a 10% down payment
- 580+ credit score to qualify for a 3.5% down payment
- Plan to use the home as your primary residence for at least one year
- Buy a one-to-four unit property
Learn more about FHA loans
Fannie Mae HomeReady Mortgage program
Fannie Mae’s HomeReady Mortgage program helps homebuyers who might qualify for a mortgage, but might not have enough for a large down payment.
- Meant to help lower-income buyers become homeowners
- Minimum down payment is 3%
- Funds for the down payment can come from gifts, grants, or another loan
Requirements
- Credit score of 620+
- Make less than 100% of your area’s median income
Learn more about the Fannie Mae HomeReady Mortgage program
Freddie Mac Home Possible Mortgage
Freddie Mac’s Home Possible Mortgage program gives low-to-moderate income homebuyers more credit flexibility to help them buy a home.
- Meant to help lower-income borrowers become homeowners
- Minimum down payment is 3%
- No credit score requirement
Requirements
- Make less than 80% of your area’s median income
Learn more about the Freddie Mac Home Possible Mortgage
HUD’s Good Neighbor Next Door program
HUD’s Good Neighbor Next Door program helps law enforcement officers, K-12 teachers, firefighters, and emergency medical technicians afford a home at a discounted price.
- Designed to help educators, emergency medical technicians, firefighters, and law enforcement officers become homeowners
- Gives you the ability to save up to 50% off of the list price of the home
Requirements
- Employed as one of the above professions
- Plan to live in the home for at least three years
- Buy a home in an approved revitalization area
- Borrow a silent second mortgage that’s worth the same amount as the home price discount
Learn more about HUD’s Good Neighbor Next Door program
HomePath Ready Buyer program
Fannie Mae’s HomePath Ready Buyer program assists borrowers with closing costs, but they must successfully complete an online education course first.
- Provides assistance with closing costs (up to 3% of the home’s purchase price)
Requirements
- Complete an approved homebuyer education course
- Buy an eligible, foreclosed property from HomePath.com
Learn more about the HomePath Ready Buyer program
10 states with first-time homebuyer programs
There are many homebuyer assistance programs available depending on the state you live in, as well. Here are some of the most popular options in the following states:
California
The California Housing Finance Agency offers a selection of affordable loans for borrowers with low to moderate income, as well as zero-interest down payment assistance loans for first-time homebuyers.
To qualify, you will need to meet certain income limits and sale price limits, plus any credit minimums set by your lender. You’ll also need to attend a first-time homebuyer education course and to pledge to live in the home as a primary residence.
Florida
Florida Housing’s First Time Homebuyer (FTHB) Program offers 30-year, fixed-rate loans to first-time homebuyers through participating lenders. Eligible buyers are also privy to a second mortgage program, meant to assist with down payments and closing costs.
To be considered eligible for this program, you must complete a homebuyer education class and be able to qualify for a mortgage through your lender, including having a qualifying FICO score.
Georgia
The Georgia Dream Homeownership Program allows participants to qualify for up to $5,000 in closing costs and down payment assistance.
Like many of the other programs listed, this program has income and purchase price limits. Additionally, the borrower can’t have liquid assets worth more than $20,000 or 20% of the home’s purchase price, whichever is greater.
Illinois
The 1st Home Illinois Program offers first-time homebuyers low-interest, 30-year loans and up to $7,500 in down payment and closing cost assistance.
To be considered eligible, the home must be used as a primary residence and must be located in Cook, Marion, St. Clair, or Winnebago counties. Additionally, the borrower must complete a homebuyer education course and contribute at least $1,000 to the transaction.
Michigan
The MI Home Loan Program offers Michigan’s first-time homebuyers up to $7,500 in down payment assistance. The maximum sale price for this program is $224,500 and household income limits apply.
Additionally, the borrower must have a credit score of at least 640.
New York
New York’s Achieving the Dream Program allows buyers to finance up to 97% of the property’s value and receive up to $15,000 in down payment and closing cost assistance.
The assistance must be used to finance a primary residence and the borrower must also be able to meet certain income, credit, and underlying requirements.
North Carolina
North Carolina offers a down payment assistance program known as the 1st Home Advantage Program. Their assistance comes in the form of a 0%-interest, deferred second mortgage that’s forgiven after 15 years. The home must serve as your primary residence and you must meet certain income limits.
Borrowers must also be a legal resident of the United States and have a credit score of 640 or higher.
Ohio
The OHFA Homebuyer Program offers down payment and closing cost assistance worth up to 5% of the home’s purchase price, which is forgiven after seven years.
Eligible first-time homebuyers must meet certain income and purchase price limits, have a credit score of at least 640, and complete a homebuyer education course.
Pennsylvania
The Pennsylvania Housing and Finance Agency offers a mortgage credit certificate meant for first-time homebuyers. It pays 20% to 50% of your mortgage interest, capped at $2,000 annually.
To qualify, you must meet certain income and purchase price limits, which vary by county. You must also have a mortgage affidavit signed by your lender.
Texas
In Texas, the My First Texas Home Program is available to first-time homebuyers and veterans. It provides eligible buyers with access to a 30-year, fixed-rate loan, plus up to 5% of the loan amount in a down payment assistance grant. The program can also be combined with the Texas Mortgage Credit Certificate program for a dollar-for-dollar reduction in tax liability.
To qualify for this program, you need to have a credit score of at least 620 and you must meet certain income limits, which vary by county, You’ll also need to purchase a property that falls under certain purchase price limits.
Find your state
Keep Reading: Do You Count as a First-Time Homebuyer? The Answer Might Surprise You
Some states even have programs targeted for student loan borrowers
You might think that having student loans means you shouldn’t buy a home. However, that’s not necessarily the case. Some states even have assistance programs aimed at helping people with student loans buy a house.
Here are some options for the states listed below:
- Maryland Mortgage Program: If you have at least $25,000 in student loan debt, you may qualify for a discounted mortgage rate and up to $5,000 in down payment assistance when you purchase a home in a “sustainable community.”
- Ohio’s Grants for Grads Program: This program offers down payment assistance to those who have earned a degree within the last four years.
- Rhode Island’s Ocean State Grad Grant Program: Rhode Island provides $7,000 in forgivable down payment assistance to those who have graduated in the last three years.
Read On: How to Buy a House With Student Loan Debt
Learn More: Everything You Need to Know About Mortgage Credit Certificates (MCC)
