It’s hard to save for your first home when you’re also paying rent. First-time homebuyer grants and down payment assistance can reduce your upfront costs. Low down payment mortgages can also help you buy with less savings.
The right choice depends on your income, location, and whether the assistance must be repaid. We checked official program guidelines to compare the benefits, requirements, and application routes below. Start with local assistance, then compare the mortgages you can pair with it.
First-Time Homebuyer Grants vs. Loans
A homebuyer grant helps pay certain purchase expenses. A mortgage finances the home purchase and must be repaid. Some assistance programs provide a second mortgage instead of a grant, so the repayment terms matter as much as the amount offered.
Your down payment is the money you contribute toward the purchase price. Your closing costs cover expenses such as lender fees, title services, and certain prepaid charges. Assistance may cover one or both, but the program decides which expenses qualify.
Homebuyer assistance generally falls into these categories:
- Grants: You generally don’t repay the funds if you meet the program’s conditions. Check for occupancy requirements and any circumstances that could trigger repayment.
- Forgivable Loans: The debt is forgiven after you meet specific conditions for a set period. If you sell the home or move out too soon, you may have a balance to repay.
- Deferred-Payment Loans: Payments are postponed, but the debt remains. Repayment may become due when you sell, refinance, move out, or reach the end of the loan term.
- Repayable Second Mortgages: You make payments on an additional loan. Include its interest and monthly payment when you compare the total cost.
A program that offers no monthly payment isn’t necessarily a grant. Ask for the repayment agreement before you accept the assistance.
Who Qualifies as a First-Time Homebuyer?
Many programs consider you a first-time homebuyer if you haven’t owned a home during the previous three years. You may qualify even if you bought a home earlier in life. The exact definition depends on the program, so check its ownership rules before you rule yourself out.
Not every option on this page requires first-time homebuyer status. FHA, VA, and USDA mortgages can serve eligible repeat buyers, and some assistance programs do too.
Other requirements may include an income limit, purchase price limit, homebuyer education course, and a minimum credit score. The property usually must be your primary residence. Condo, manufactured home, and multiunit property rules can differ from those for a single-family house.
Mortgage approval and assistance approval are separate decisions. You must meet both sets of requirements if you plan to combine them.
Compare First-Time Homebuyer Grants and Programs
Start with the options that fit your location and income, then compare their costs. The table summarizes common choices; the sections below explain the conditions and where to apply.
| Program | Main Financial Benefit | Main Eligibility Rule | Repayment or Ongoing Cost | Where to Apply |
|---|---|---|---|---|
| State and local assistance | Down payment or closing cost aid | Local income, property, and ownership rules | Grant or loan terms vary | Housing agency or participating lender |
| National Homebuyers Fund | Assistance up to 5% of the mortgage amount | Participating program’s requirements | Forgiveness or repayment varies | Participating lender |
| HomePath Ready Buyer | Up to 3% of the purchase price toward closing costs | Eligible first-time buyer of a HomePath home | Closing cost credit; mortgage still requires repayment | Through the purchase offer and agent |
| Employer assistance | Grant or loan amount varies | Employer’s employment and housing rules | May depend on continued employment | Human resources or benefits department |
| HomeReady | As little as 3% down; some buyers qualify for a $2,500 credit | Qualifying income up to 80% of area median income | Mortgage payments and private mortgage insurance | Participating lender |
| Home Possible | As little as 3% down; some buyers qualify for a $2,500 credit | Qualifying income up to 80% of area median income | Mortgage payments and private mortgage insurance | Participating lender |
| Conventional 97 | 3% down payment | At least one first-time buyer; eligible one-unit home | Mortgage payments and private mortgage insurance | Lender that offers the product |
| FHA mortgage | As little as 3.5% down | FHA and lender qualification requirements | Mortgage payments and FHA mortgage insurance | FHA-approved lender |
| USDA Guaranteed | No down payment for eligible buyers | Eligible rural address and household income | Mortgage payments and guarantee fees | USDA-approved lender |
| USDA Direct | Usually no down payment; possible payment assistance | Low or very low income and other USDA requirements | Mortgage payments; subsidy repayment may apply | USDA Rural Development |
| VA mortgage | Often no down payment or monthly mortgage insurance | Eligible military service or surviving spouse status | Mortgage payments; funding fee may apply | VA-approved lender |
| Good Neighbor Next Door | 50% discount on an eligible HUD home’s list price | Eligible occupation and property | Mortgage payments; discount repayment may apply if conditions aren’t met | Agent and HUD property listing process |
The down payment is only part of the cash you may need. A zero-down-payment mortgage can still leave you responsible for closing costs, inspections, and other purchase expenses.
First-Time Homebuyer Grants and Down Payment Assistance
Check these sources before you settle on a mortgage lender. Some assistance programs require you to use a specific lender or mortgage product, and funding can run out before the end of the year.
State and Local Homebuyer Assistance
Start with your state’s housing finance agency and the housing departments for the city or county where you want to buy. Their programs may provide grants, forgivable loans, or other second mortgages for a down payment and closing costs. Some programs accept repeat buyers or target particular neighborhoods and occupations.
Use HUD’s state resources to find local housing information. Then check the program administrator’s current requirements and participating lender list.
Before you apply, confirm the details that affect your purchase:
- Income Limits: Ask whether the program counts only qualifying borrowers’ income or income from other household members too.
- Property Limits: Check the permitted locations, purchase prices, and home types before you make an offer.
- Repayment Terms: Find out what happens if you sell, refinance, move out, or stop meeting another condition.
- Required Contributions: Ask whether you must contribute some of your own money, even if the assistance covers most upfront costs.
- Funding and Timing: Confirm whether the program is accepting applications and when funds must be reserved.
Some local assistance can work with a conventional mortgage through Community Seconds. This is compatible second-mortgage financing, not a separate grant application through Fannie Mae. The local provider sets the assistance terms, and your lender checks whether the loans can be combined.
National Homebuyers Fund Down Payment Assistance
The National Homebuyers Fund offers down payment and closing cost assistance through participating lenders. Assistance can reach 5% of the mortgage loan amount, and you don’t have to be a first-time buyer to qualify.
Repayment depends on the specific program. Assistance may be forgiven immediately, forgiven after a period of years, or require repayment. Don’t assume every National Homebuyers Fund option has a three-year forgiveness period.
Ask a participating lender which program operates in your state and request its current income, credit score, and repayment requirements. You can also compare home loans for low-income buyers if income limits or mortgage qualification are your main concerns.
HomePath Ready Buyer Closing Cost Assistance
The HomePath Ready Buyer program can provide eligible first-time buyers with up to 3% of the purchase price toward closing costs. It applies to Fannie Mae-owned HomePath properties, so you can’t use it for any home on the market.
Complete Fannie Mae’s HomeView homebuyer education course and meet the program’s buyer and occupancy rules. Ask your agent to confirm the offer documents and timing before you submit an offer. The assistance must be requested through the purchase process; it isn’t automatically added at closing.
This credit helps with eligible closing expenses. You still need a mortgage or other funds to buy the property, and the home may need repairs.
Employer-Sponsored Homebuyer Assistance
Some employers and labor unions offer help with a home purchase. The benefit may be a grant, forgivable loan, or other financial assistance, and the rules can depend on your job and where you buy.
Ask your human resources or benefits department about housing assistance. Request the written terms, especially any repayment requirement if you leave the employer. Have your mortgage lender review the benefit before you count it toward your purchase funds.
Low Down Payment Mortgages for First-Time Homebuyers
These mortgages reduce the down payment you need, but they don’t eliminate the debt or other purchase costs. Compare the interest rate, mortgage insurance, fees, and monthly payment alongside any assistance you can use.
HomeReady Mortgages With a 3% Down Payment
The HomeReady mortgage permits a down payment as low as 3% for eligible buyers. Total qualifying income generally can’t exceed 80% of the area median income for the property’s location. First-time and repeat buyers can qualify.
For certain purchase loans, a $2,500 credit helps with the down payment or closing costs. At least one borrower must be a first-time homebuyer, and qualifying income can’t exceed 50% of area median income. The credit is temporary and has been extended into February 2027. Ask your lender about its own closing and delivery deadlines.
Fannie Mae’s automated underwriting system no longer imposes a universal minimum credit score. Manual underwriting rules and lenders’ own credit score requirements still apply, and mortgage approval depends on more than your credit score.
In most cases, private mortgage insurance applies when the down payment is below 20%. If all borrowers who’ll live in the home are first-time buyers, at least one must complete homebuyer education.
Apply through a participating lender. Fannie Mae buys eligible mortgages from lenders; it doesn’t process your mortgage application directly.
Freddie Mac Home Possible Mortgages
The Home Possible mortgage also permits as little as 3% down for eligible purchases. Qualifying income can’t exceed 80% of area median income. Eligible gifts, grants, employer assistance, and secondary financing may help cover the upfront costs.
Some buyers qualify for a $2,500 credit toward the down payment or closing costs. At least one borrower must be a first-time homebuyer, and qualifying income can’t exceed 50% of area median income. Freddie Mac’s settlement requirements extend this temporary credit through February 28, 2027. Your lender may set an earlier deadline.
The credit score requirement depends on how the loan is evaluated. For a manually underwritten fixed-rate purchase of a one-unit home, the minimum credit score is 660. Automated underwriting follows different rules, and lenders can impose their own requirements.
Private mortgage insurance usually applies with a small down payment. Ask about education requirements and property restrictions before you apply. Additional rules can affect manufactured homes and loans with a co-borrower who won’t live with you.
Conventional 97 Loans With a 3% Down Payment
Fannie Mae’s standard 97% loan-to-value mortgage option allows eligible buyers to put 3% down. At least one borrower must be a first-time homebuyer, and the standard option doesn’t have HomeReady’s income limit.
The loan must meet the program’s property and underwriting requirements. Eligible purchases include one-unit primary residences, certain condos, and co-ops. The mortgage must have a fixed interest rate and a term of up to 30 years.
Private mortgage insurance applies at this down payment level. If you qualify for both Conventional 97 and HomeReady, ask your lender to compare their interest rates, mortgage insurance, and assistance options.
FHA Loans for Buyers With Limited Savings
FHA loans are mortgages from approved lenders that the Federal Housing Administration insures. They can be worth comparing if your savings or credit history make a conventional mortgage harder to qualify for.
Under FHA rules, a credit score of at least 580 can permit a 3.5% down payment. A credit score from 500 to 579 generally requires at least 10% down. Lenders can set higher credit score requirements, and these thresholds don’t guarantee approval.
The lender also evaluates income, debts, and the property. The home must meet FHA requirements and serve as your primary residence.
FHA loans have upfront and annual mortgage insurance premiums. For most new FHA mortgages with terms longer than 15 years, annual mortgage insurance lasts for the loan term if the initial down payment is below 10%. With at least 10% down, the annual premium generally lasts 11 years.
FHA loan limits depend on the county and property type. Check the FHA mortgage limit lookup before you set your price range, then apply through an FHA-approved lender.
USDA Guaranteed Loans With No Down Payment
A USDA Guaranteed loan can finance an eligible home without a down payment. You apply through an approved lender, and the property must be in a USDA-eligible rural area. Check the exact address instead of assuming that a home qualifies because the area looks rural.
Household income generally can’t exceed 115% of the applicable median household income limit. Household size and permitted adjustments affect eligibility. The lender also checks whether your income can support the mortgage payment.
The program has an upfront guarantee fee and an annual fee. The upfront fee may be financed, but that increases the amount you owe. Ask the lender for the current fee amounts and total monthly payment.
Use the USDA property eligibility tool to check a home’s location. USDA doesn’t impose a program-wide minimum credit score for Guaranteed loans, but lenders can set their own credit score requirements.
USDA Direct Loans for Low-Income Homebuyers
The USDA Direct Loan program serves low- and very-low-income applicants in eligible rural areas. You apply through USDA Rural Development. Applicants must meet additional USDA requirements and be unable to obtain suitable financing elsewhere.
A down payment usually isn’t required, and eligible borrowers can receive payment assistance. Some or all of that subsidy may need to be repaid when ownership transfers or you stop living in the home. Ask your local Rural Development office to explain both the payment assistance and the later repayment rules.
VA Loans for Eligible Military Homebuyers
VA home loans can help eligible veterans, service members, and surviving spouses buy a primary residence. You need a Certificate of Eligibility and must meet the lender’s income and credit requirements. The benefit can be used by eligible first-time or repeat buyers.
A down payment often isn’t required, and there’s no monthly mortgage insurance. A down payment may still be necessary because of your entitlement, the purchase price, or the appraisal.
VA doesn’t set a minimum credit score, but lenders can. A one-time funding fee may apply, although certain borrowers qualify for an exemption. Ask the lender to confirm your fee status and explain which closing costs you’ll need to pay.
Homebuyer Programs for Specific Borrowers and Properties
These options address particular occupations, tribal eligibility, or property improvements. Check the restrictions before you count their benefits toward your homebuying budget.
Good Neighbor Next Door Home Discounts
Good Neighbor Next Door offers eligible law enforcement officers, pre-K through 12th-grade teachers, firefighters, and emergency medical technicians a 50% discount on the list price of certain HUD-owned homes. The homes must be in designated revitalization areas, and occupation-specific location rules apply.
You must live in the home as your primary residence for 36 months. HUD records a second mortgage for the discount amount. No interest or payments are required on that second mortgage if you meet the program’s conditions, but noncompliance can trigger repayment.
The program has limited inventory and a seven-day purchase window for listed properties. If you’re considering a qualifying property, our guide to buying a HUD home explains the purchase process.
Native American Direct Loans for Eligible Veterans
The Native American Direct Loan program provides direct VA financing for eligible veterans who are Native American or married to a Native American spouse. The home must be on federal trust land, and the tribal government must have an agreement with VA.
You need a Certificate of Eligibility and must meet credit and income requirements. Benefits include no down payment in most cases, no private mortgage insurance, and a 30-year fixed-rate mortgage. A funding fee may apply. Contact a VA Native American Direct Loan coordinator to start the application.
FHA 203(k) Loans for Home Purchases and Repairs
An FHA 203(k) loan combines the home purchase and eligible renovation costs in one mortgage. Repairs are financed, so you’ll repay those costs with interest.
The Limited 203(k) option covers eligible nonstructural work and permits total rehabilitation costs up to $75,000 under current rules. The Standard 203(k) option can cover structural repairs and other major work. It requires a HUD-approved consultant.
FHA qualification and mortgage insurance rules still apply. Before you make an offer, ask a 203(k) lender whether the work qualifies and what contractor documents, reserves, and completion deadlines you’ll need.
Energy Efficient Mortgages for Home Improvements
An FHA Energy Efficient Mortgage can add eligible energy-saving improvements to a home purchase loan. A home energy assessment identifies the improvements and checks whether the projected savings justify their cost.
For the approved energy package, FHA bases income qualification on the mortgage amount before those improvement costs are added. Eligible costs can also increase the mortgage beyond normal FHA limits. You still borrow and repay the improvement funds, so compare the higher mortgage payment with the expected utility savings.
Costs and Repayment Rules to Check Before You Apply
Compare the whole financing package before you choose the largest assistance amount. A program may require a particular mortgage, and its interest rate or fees can affect how much you pay over time.
Ask each lender for an itemized estimate of your cash needed at closing and your total monthly payment. Include property taxes, homeowners insurance, mortgage insurance, association dues, and any second-mortgage payment in your budget.
Private mortgage insurance can often be removed from a conventional mortgage later, but cancellation has conditions. For many eligible loans, you can request cancellation when the balance reaches 80% of the home’s original value. Automatic termination generally occurs at the scheduled 78% point if payments are current. Our guide to avoiding or removing private mortgage insurance explains the main options.
Example of Upfront Costs With Homebuyer Assistance
Suppose you buy a $250,000 home with a 3% down payment. For this hypothetical example, assume $7,500 in closing costs and $10,000 in approved assistance that can cover both categories.
| Expense or Assistance | Amount |
|---|---|
| Down payment | $7,500 |
| Assumed closing costs | $7,500 |
| Total before assistance | $15,000 |
| Approved assistance | −$10,000 |
| Remaining amount | $5,000 |
The $10,000 reduces the immediate cash requirement, but its terms determine whether you owe it later. Your actual purchase could also require inspection fees, moving costs, or cash reserves. An earnest money deposit you’ve already paid may reduce the remaining cash due at closing.
Questions to Ask About Homebuyer Assistance Repayment
Read the assistance agreement before you accept the funds. Ask the administrator or lender to answer these questions in writing:
- Forgiveness: When is the debt forgiven, and does forgiveness happen gradually or all at once?
- Selling: What amount would you owe if you sold before the required period ended?
- Refinancing: Would refinancing trigger repayment or require the assistance provider’s approval?
- Occupancy: What happens if you move out or rent the home?
- Employment: Does the assistance depend on staying with a particular employer?
- Combining Programs: Can you use another grant, seller credit, or assistance loan with this program?
How to Apply for First-Time Homebuyer Assistance
Check assistance early enough to coordinate it with your mortgage application. Some programs require education, a participating lender, or a funding reservation before closing.
- Identify the state, city, or county where you plan to buy. Check local assistance and any national program that fits your circumstances.
- Confirm the income, ownership, and property rules. Ask how the program calculates income and whether your planned home type qualifies.
- Contact a participating lender or the program administrator. Confirm that the program is accepting applications and that your lender can combine it with your mortgage.
- Complete the required homebuyer education. Confirm which course is accepted and when the certificate must be submitted.
- Prepare your documents. These commonly include identification, income records, tax returns when required, bank statements, and information about your debts.
- Request a written financing comparison. Check the assistance amount, repayment agreement, interest rate, monthly payment, and remaining cash needed.
- Confirm funding and deadlines before closing. Don’t assume assistance is approved until you have the required written confirmation.
For the broader purchase process, use our first-time homebuyer guide. It covers mortgage preapproval, home searches, offers, and closing.
