First-Time Home Buyer Programs, Grants and Loans | 2025

Find the best home loans for first-time buyers

Buying your first home can be an overwhelming experience, but first-time home buyer programs are here to help.

If the thought of researching home loans for first-time buyers seems daunting, don’t worry. Many programs and grants help make homeownership more accessible and affordable for first-time buyers.

This first-time home buyers guide details the various grants, loans, and assistance programs designed specifically for people like you and turns your dream of owning a home into a reality.

In this article (Skip to...)

• First-time home buyer programs
• First-time home buyer loans
• Finding and applying
• FAQ

>Related: How to buy a house with $0 down: First-time home buyer

What is a first-time home buyer program?

A first-time home buyer loan program helps individuals or families purchase their first home with financial assistance.

These programs, offered by federal, state, and local governments, nonprofits, and some employers, make homeownership more accessible by providing benefits for first-time home buyers, such as:

• Lower minimum down payment requirements
• Lower interest rates
• Down payment assistance (grants or low-interest loans)
• Closing cost assistance
• Relaxed credit score requirements
• Homebuyer education courses

The best first-time home buyer programs have eligibility criteria based on income, home’s purchase price, and first-time buyer status. Exploring different types of mortgage loans for first-time buyers can help overcome common barriers and make homeownership a reality.

Who qualifies for first-time home buyer programs?

To qualify for first-time home buyer programs, you typically must:

• Be a first-time homebuyer (haven’t owned a home in the past 3 years)
• Meet income and purchase price limits
• Have a credit score that meets the program’s minimum requirement
• Use the home as your primary residence
• Complete a homebuyer education course, if required

Eligibility criteria vary by program and location, so check specific requirements. Many .gov websites provide details on housing assistance and the types of home loans for first-time buyers in your area.

Types of first-time home buyer programs

First-time home buyers can access various loan programs and grants to help with down payments and closing costs. These include non-profit aid, government-backed mortgages, and tax incentives at both local and federal levels. Educational programs are also available to guide buyers through the home-buying process.

Let’s explore some of the most sought-after loans and grants for first-time home buyers.

Down payment assistance for first-time home buyers

Down payment assistance programs (DPAs), offered by state or local governments, help first-time home buyers with upfront costs. These programs provide grants or loans to cover a portion or all of the down payment and closing costs, making homeownership more attainable. On average, buyers using DPAs save almost $6,000 at closing and $11,000 over the life of their loans.

Down payment assistance loans

While DPAs come in a variety of flavors, all are designed to support home buyers in meeting the upfront costs of purchasing a home.

• Low-interest loans are additional mortgages with reduced interest rates that are paid back in installments over several years.
• Deferred-payment loans are interest-free second mortgages that are repaid when the homeowner sells, refinances, or pays off the primary mortgage.
• Forgivable loans are a type of second mortgage that does not need to be repaid, provided the homeowner remains in the home for a predetermined period and maintains their mortgage payments.

Down payment assistance grants

First-time home buyer grants are essentially monetary gifts to assist with the initial down payment or closing expenses. Generally speaking, these grants are given to borrowers with low to moderate earnings.

They also vary in size and availability depending on where you live. There are also different requirements to qualify for assistance, including a minimum credit score or income limits.

Down payment savings match programs

A down payment match program offers matched funds up to a predetermined amount for down payment and closing expenses. The Homebuyer Dream Program (HDP), for example, provides matching funds up to $7,500 for eligible first-time home buyers who complete a homebuyer education course and meet specific household income and purchase price limits.

Closing cost assistance for first-time buyers

Closing cost assistance programs significantly reduce out-of-pocket expenses for first-time buyers, covering fees such as appraisals, title insurance, and loan origination. This help can free up money for home decorating or future savings.

Homebuyer education and counseling programs

Homebuyer education courses are like a roadmap for buying your first home. They teach you all the steps, from the types of mortgages to finding a good deal. For those stepping onto the property ladder, homebuyer education classes can be the difference between a shaky start and a solid foundation when buying your first home. Many first-time home buyer programs require completion of such a course.

Mortgage Credit Certificates (MCCs) for first-time buyers

Mortgage Credit Certificates, or MCCs, allow new buyers to claim a tax credit for a portion of their annual mortgage interest. Tax credits like these make more available money accessible to qualify for a home loan and help with monthly mortgage payments.

An MCC can be the difference between a property that’s just out of reach and one that’s a good financial fit.

First-time home buyer loan options

Conventional loans

Conventional loans are a popular choice for first-time home buyers because they offer flexibility. They’re not backed by the government, which means there are a variety of loan options out there. For buyers, this means more competitive interest rates and different down payment requirements, which can be as low as 3% of the home’s purchase price. But you’ll pay private mortgage insurance (PMI) if you put less than 20% down. However, you can drop PMI once you build enough equity in the home.

Fannie Mae HomeReady mortgage

The Fannie Mae HomeReady program is tailored for first-time home buyers with moderate incomes. HomeReady offers low down payments—as low as 3%—and you can even use money from gifts, grants, or community assistance for your down payment and closing costs.

This program also considers the income of everyone living in the home, not just the borrower. That means a buyer could qualify for a loan using income from parents or roommates.

Freddie Mac Home Possible mortgage

Freddie Mac’s Home Possible is a first-time home buyer program that helps low-income borrowers get a mortgage. With down payments as low as 3%, Home Possible aims to help those who might struggle to save for a larger down payment. Moreover, it offers flexibility with sources of funds, meaning down payment money can come from various sources including family, employer assistance, or even sweat equity.

FHA loans

FHA loans, backed by the Federal Housing Administration, are popular among borrowers with smaller down payments or credit issues. Buyers with credit scores as low as 580 can qualify with a 3.5% down payment, while those with scores of 500 can qualify with a 10% down payment.

FHA mortgage rates are often lower than conforming rates, but mortgage insurance premiums (MIP) can make the overall cost higher. MIP includes an upfront fee of 1.75% and an annual fee of 0.55% of the loan amount.

FHA mortgage insurance must be paid for the life of the loan. But borrowers can refinance into a new loan type to cancel those premiums down the road. The home purchased must be the buyer’s primary residence.

VA loans

The Department of Veterans Affairs offers the VA loan to eligible active-duty servicemembers, veterans, and some surviving spouses. VA loans offer 100% financing, simplified loan approval standards, and access to the lowest mortgage rates available.

In addition, VA loan rates consistently beat rates for all other common loan types. VA mortgage rates can often be as much as 40 basis points (0.40%) lower than rates for a comparable conventional loan. In terms of mortgage affordability, the VA loan is hard to beat if you’re eligible.

USDA loans

Available in rural areas and low-density suburbs, the U.S. Department of Agriculture offers its USDA loan as another no-money-down mortgage you can use to finance a home. This loan option features lower mortgage rates, zero down payment, and cheaper mortgage insurance for borrowers with low to moderate income.

The only catch? The home has to be in a designated rural area according to USDA standards. That usually means it has to be located in a city with a population of less than 20,000.

Specialized first-time home buyer programs

HomePath Ready Buyer Program

The HomePath Ready Buyer Program is perfect for first-time buyers looking for a deal on a foreclosed home. Offered by Fannie Mae, this program gives you up to 3% in closing cost assistance if you complete their educational course and buy a HomePath property. This first-time home buyer program is ideal for lower-priced homes that need a bit of work.

First-time home buyer incentives for community heroes

Several specialized programs recognize the contributions of community professionals and provide first-time home buyer grants and loan benefits to make homeownership more accessible.

• The Good Neighbor Next Door program offers a 50% discount on homes in revitalization areas for teachers, firefighters, police officers, and EMTs. Buyers must commit to living in the home for three years.
• Teacher home loan programs provide down payment assistance and preferential mortgage rates tailored for educators.
• Nurse home loans that may provide incentives such as first-time home buyer grants or relaxed credit score requirements.
• Physician mortgage loans often waive private mortgage insurance (PMI) and offer higher loan limits.

Each of these first-time home buyer programs is tailored to help those who give so much to our communities to establish their own homes within them.

Energy-efficient mortgage (EEM)

An energy-efficient mortgage (EEM) is great for first-time buyers interested in making their home more energy-efficient. If a home needs upgrades like new insulation, windows, or solar panels, an EEM lets you roll the cost of these improvements into your mortgage. This means you only have one payment and you can start saving on your energy bills right away. It’s a forward-thinking option that can lower living costs over time.

Native American Direct Loan (NADL)

For first-time home buyers who are either Native American or married to one, the Native American Direct Loan (NADL) program is a valuable resource. NADL offers special terms: low interest, no down payment, and no private mortgage insurance required. It’s specifically for buying, building, or improving homes on federal trust land.

First-time home buyer programs for students and graduates

If you’re a recent college graduate, there are programs that may assist you in securing your first mortgage. Take Maryland’s “You’ve Earned It!” initiative, which provides interest rate discounts on mortgages, as well as down payment assistance, to recent graduates who have earned a degree in the past three years.

Just like many graduate-focused homeownership programs, this initiative encourages you to stay in the state by requiring you to live in the home for a certain period, ensuring that the support is benefiting local communities and keeping educated professionals in the area.

State and local first-time home buyer programs

The U.S. Department of Housing and Urban Development (HUD) offers a directory of first-time home buyer loan programs by state. For more information, see our complete guide to first-time home buyer grants in your state.

• California Housing Finance Agency (CalHFA): CalHFA offers a range of home loans for first-time buyers, including fixed-rate mortgages and down payment assistance programs. Borrowers can also access first-time home buyer incentives like closing cost assistance and homebuyer education to improve their eligibility.
• Texas State Affordable Housing Corporation (TSAHC): TSAHC offers loans for first-time home buyers with fixed rates, low down payment options, and even forgivable second mortgages. Special first-time home buyer benefits are available for teachers, veterans, and first responders.
• Florida Housing Finance Corporation (FHFC): FHFC provides home loans for first-time buyers with competitive interest rates and down payment assistance. Programs like the Florida First Mortgage Loan offer a 30-year fixed-rate loan, while the Florida Assist Program gives eligible borrowers up to $10,000 toward upfront costs.

If you’re wondering how to get a first-time home buyer loan in your state, check HUD’s directory for programs available in your area.

Nonprofit first-time home buyer assistance

Charities and nonprofits offer first-time home buyer grants to help lower-income buyers cover housing costs and learn about homeownership. Eligibility depends on income and other criteria.

• Neighborhood Assistance Corporation of America (NACA): NACA helps low-income home buyers by offering mortgage education and connecting them with participating lenders. The major benefits for first-time home buyers with NACA loans include no down payment, no closing costs, and no credit score check
• Habitat for Humanity: This global nonprofit builds affordable homes for low-income families. Through volunteer efforts, Habitat for Humanity keeps housing costs low and provides home loans for first-time buyers, creating a clear path to homeownership for those facing financial barriers.

Qualifying for grants and home loans for first-time buyers

If you’re wondering how to get a first-time home buyer loan, the key is knowing where to look and what programs you qualify for. Finding the best mortgages for first-time buyers can feel overwhelming, but the right guidance makes securing a home loan much easier.

Here’s a step-by-step guide to help you through the process:

1. Research available programs

Start by exploring first-time home buyer programs offered by the U.S. Department of Housing and Urban Development (HUD), your state and local governments, and non-profit organizations. Look for down payment assistance programs, closing cost assistance, and specialized loan programs like FHA loans, VA loans, and USDA loans.

2. Check your eligibility

Review the eligibility criteria for each program, which may include factors such as income limits, credit score requirements, and purchase price limits. Some first-time home buyer programs may also require you to complete a homebuyer education course.

3. Determine your budget

Assess your financial situation and determine how much you can afford to spend on a home. Consider factors like your household income, monthly payments, and potential mortgage insurance costs.

4. Get pre-approved

Contact participating lenders, such as mortgage lenders or loan officers, to get pre-approved for a loan for first-time home buyers. This process will give you a clear idea of your loan amount and interest rate options.

5. Find a home

Work with a real estate agent or Realtor to find a single-family home, condominium, or townhouse that meets your needs and fits within your budget. Keep in mind that some home loans for first-time home buyers may have specific requirements for the type of home you can purchase.

6. Apply for assistance

Once you’ve found a home, submit your application for the first-time home buyer programs you qualify for. Be prepared to provide documentation such as proof of income, tax returns, and bank statements.

7. Close on your home

After your application is approved and you’ve completed any necessary homebuyer education courses, you can close on your new home. Be sure to review your loan documents carefully and ask questions if anything is unclear.

Remember, the best home loans for first-time buyers make homeownership more affordable for moderate-income households. These programs can reduce your down payment, offer tax credits, and help secure a competitive interest rate.

FAQ: Grants and home loans for first-time buyers

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