Navigating the homebuying process for the first time can feel overwhelming. The good news is there are plenty of first-time homebuyer programs designed to make it more affordable and achievable. From down payment assistance to reduced mortgage rates, these programs can help turn your dream of homeownership into a reality.

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What are first-time homebuyer programs?

First-time homebuyer programs are financial tools and assistance initiatives created to support people purchasing their first home. They’re designed to lower financial barriers, like high down payments, credit score hurdles, or out-of-pocket closing costs. These programs can come from a variety of sources, including the federal government, state housing finance agencies, nonprofits, and even employers.

These resources can take several forms:

• Low-interest or forgivable loans for down payments
• Reduced mortgage insurance premiums
• Tax credits or grants
• Special mortgage products with lower credit requirements

The exact program that’s right for you depends on your income, location, credit profile, and homeownership goals. Here are seven standout first-time homebuyer programs you should know.

#1: FHA loans

The Federal Housing Administration (FHA) loan is perhaps the most well-known first-time homebuyer program. It’s not exclusive to first-timers, but it’s especially popular among them due to more flexible credit and down payment requirements.

Key benefits:

• Down payments as low as 3.5%
• Lower credit score requirements (as low as 500, but most lenders put the floor at 580)
• More forgiving debt-to-income ratios

While FHA loans require mortgage insurance premiums (MIP), the lower barriers to entry make them ideal for first-time buyers who might not qualify for a conventional loan.

#2: USDA loans

If you're buying in a qualifying rural or suburban area, the U.S. Department of Agriculture (USDA) loan might be a perfect fit. This is one of the few options that offers 100% financing, meaning you don’t need to put up a down payment.

Key benefits:

• No down payment required
• Reduced mortgage insurance costs
• Competitive interest rates

USDA loans have income limits and are only available in certain geographic areas, but they're an excellent option for first-time buyers who qualify.

#3: VA loans

For eligible service members, veterans, and surviving spouses, VA loans — backed by the Department of Veterans Affairs — are a top-tier option. They’re widely regarded as one of the best mortgage products on the market.

Key benefits:

• 0% down payment
• No private mortgage insurance (PMI)
• Lower average interest rates

VA loans also tend to have more lenient underwriting standards, but they do require a VA funding fee, which can be rolled into the loan.

#4: Fannie Mae HomeReady® and Freddie Mac Home Possible®

These conventional mortgage programs are aimed at low- to moderate-income borrowers and offer competitive terms with flexible requirements.

Key benefits:

• Down payments as low as 3%
• Reduced mortgage insurance premiums
• Allows co-borrowers who won’t live in the home (e.g., parents)

Both programs also allow income from boarders and other non-traditional sources, which can help more first-time buyers qualify.

#5: Good Neighbor Next Door

If you work in a public service role — maybe you’re a teacher, firefighter, law enforcement officer, or EMT — the Good Neighbor Next Door program from HUD might be a unique opportunity. It offers deep discounts on homes in revitalization areas.

Key benefits:

• 50% off the home’s list price
• Down payments as low as $100 with an FHA loan
• No competition from investors during the listing period

Buyers must commit to living in the home for at least 36 months. This program is limited by availability, but the savings are significant.

#6: State and local assistance programs

Nearly every U.S. state offers first-time homebuyer programs, many of which include grants or second mortgages for down payment and closing cost assistance. Some programs offer discounted mortgage rates through Housing Finance Agencies (HFAs).

Key benefits:

• Grants that don’t need to be repaid
• Deferred second mortgages with 0% interest
• Homebuyer education and counseling support

Program details vary widely, so start by checking what’s available in your area. Some cities and counties also run localized initiatives for targeted neighborhoods or buyer groups.

#7: Mortgage Credit Certificate (MCC) programs

An MCC allows first-time buyers to convert a portion of their annual mortgage interest into a federal income tax credit. It’s typically offered through state or local housing agencies.

Key benefits:

• Reduces your tax bill, dollar-for-dollar
• Can be claimed annually for the life of the loan
• Helps reduce effective housing costs

While not every lender offers MCCs, they can lead to significant savings over time — especially in the early years of your mortgage when interest payments are highest.

Who qualifies as a first-time homebuyer?

Surprisingly, the definition of “first-time homebuyer” is broader than many people assume. Most programs define it as someone who hasn’t owned a home in the last three years. That means if you’ve rented for a while or went through a foreclosure in the past, you may still qualify.

Eligibility often depends on:

• Income level (usually a percentage of your area’s median income)
• Credit score (some programs accept scores as low as 500)
• Property location and type
• Completion of a homebuyer education course

How to get started with a first-time homebuyer program

First-time homebuyer programs can dramatically reduce the cost and stress of buying your first home. Whether you’re looking for a low down payment, tax advantages, or help with closing costs, there’s likely a program tailored to your situation. Taking the time to explore your options — and compare mortgage rates side by side — can help you maximize your budget and buy with confidence.

Follow these steps to get started:

1. Check your eligibility: Start with federal programs, then explore what your state and city offer.
2. Get pre-approved: Work with a lender who’s experienced with first-time buyer programs and ask them which products you might qualify for.
3. Compare rates and terms: Even with assistance, the mortgage rate you lock in will impact your budget long-term.
4. Take a homebuyer course: Many programs require or recommend this. It can also make you a more confident buyer.

Once you’re ready to compare rates, you can use our mortgage rate tables to find the best rates and first-time homebuyer-friendly lenders in your area. It only takes a few minutes — and could save you thousands over the life of your loan.

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