First-time home buyer loans and programs to help you buy

The path to homeownership can hit a financial roadblock before it even begins. First-time buyers face a unique challenge that repeat homeowners don't: they can't tap into equity from a previous sale to fund their down payment and closing costs. But they're not without options. A growing number of loans, grants, and assistance programs exist specifically to help qualified buyers overcome this hurdle. Here's what you need to know about bridging that gap.

Key takeaways:

• There are a variety of loan options and assistance programs designed to help make homeownership more attainable and affordable for time-time buyers.
• First-time buyers have access to a wide range of support, including low-down-payment conventional loans, zero-down government mortgages, and state-level grants that do not need to be repaid.
• Eligibility for these programs varies based on your credit score, income limits, and property location.

Who qualifies as a first-time home buyer?

Though the term may sound straightforward, it’s possible to qualify for some first-time home buyer assistance programs if you’ve owned a home but not recently. According to the U.S. Department of Housing and Urban Development, a first-time home buyer is someone who has not owned a principal residence in the previous 3 years, though you may also qualify if you are:

• A single parent who owned a home with a former spouse and is now buying alone.
• A displaced homemaker who previously owned a home with a spouse.

Each first-time home buyer program sets its own eligibility requirements. Programs designed for low- to middle-income borrowers may also have income limits you’ll need to fall within. In addition to the requirements set by the program, you’ll need to meet the eligibility criteria set by the lender or financial institution issuing the loan and go through the underwriting process.

Check your credit score, debt-to-income ratio (DTI) and other qualifying factors before applying for a specific first-time home buyer program, grant, or mortgage. In addition to these factors, the federal funds rate may impact your mortgage rate.

Common first-time home buyer requirements

While meeting the 3-year rule technically makes you a first-time buyer, each individual assistance program and mortgage set their own eligibility requirements. To qualify, you will typically need to meet guidelines used in the primary mortgage market related to:

• Credit score: You must meet the program's minimum credit score to demonstrate that you’re a reliable borrower.
• Debt-to-income (DTI) ratio: Lenders and program administrators will evaluate your DTI to ensure your monthly debt payments do not consume too much of your income.
• Income limits: Programs designed for low- to moderate-income borrowers typically have strict caps on how much you can earn annually based on your area's median income.
• Location: Some programs require you to purchase a home within a targeted city, county, or designated rural area.
• Primary residence status: Most assistance programs require the home to be your primary residence, meaning you cannot use the funds to buy a vacation home or an investment property.

How first-time home buyer loans and programs work

  Here are some of the many types of support available to first-time home buyers.

Loans vs. grants vs. assistance programs

Let’s look at the types of financing available to first-time home buyers.

• Mortgage loans: This is the primary money you borrow from a lender to pay for the house itself, which you must repay with interest over a set term. You may work with a mortgage banker to get your loan. Your mortgage may eventually be sold and packaged on the secondary market.
• Grants: A grant is a sum of money provided to you for a down payment or closing costs that never has to be repaid.
• Forgivable loans: A secondary loan that does not need to be repaid if you live in the home as your primary residence for a specified number of years.
• Low-interest loans: Down payment assistance that comes as a second mortgage with a low interest rate, which you repay alongside your primary mortgage.

Government, state, local, and nonprofit programs

First-time home buyer support is funded across several levels. Federal government programs generally offer standardized low-down-payment mortgages that are available nationwide. State and local programs, which are usually managed by housing finance agencies (HFAs), provide the actual cash grants and down payment assistance tailored to local residents. There are also nonprofit organizations that offer alternative affordable housing paths, specialized financing, and educational counseling.

FHA loans

FHA loans are a type of government-backed loan from the Federal Housing Administration (FHA) and are popular because they offer flexible credit requirements. Eligible home buyers who have a credit score of at least 580 can take out an FHA home loan with a 3.5% down payment. Keep in mind that FHA loans require you to pay both an upfront mortgage insurance premium and ongoing annual mortgage insurance.

VA loans

VA loans are offered by the Department of Veterans Affairs (VA) to qualified veterans, service members, and surviving spouses. VA loans don’t require a down payment and have flexible credit score requirements for borrowers. In addition to requiring no down payment, VA loans do not require ongoing private mortgage insurance (PMI).

USDA loans

U.S. Department of Agriculture (USDA) loans are designed for eligible low-to moderate-income buyers in certain rural areas. Some USDA loans don’t require a down payment. Lenders typically require a credit score between 620 and 640. As of September 2026, Rocket Mortgage does not offer USDA loans.

Conventional 97 loans

A conventional 97 loan lets eligible home buyers borrow up to 97% of the home’s value with a down payment as low as 3%. To qualify, at least one borrower must be a first-time home buyer with a minimum credit score of 620. Unlike FHA loans, you can eventually request to cancel your private mortgage insurance (PMI) once you reach 20% equity in your home. Conventional loans have different requirements than government-backed loans.

HomeReady^®

HomeReady² is a specialized conventional loan program backed by Fannie Mae. It requires only a 3% down payment and is built specifically for low-to moderate-income buyers. HomeReady^® features reduced mortgage insurance costs and flexible underwriting rules that allow you to use income from non-borrower household members to help you qualify.

Home Possible^®

Similar to HomeReady^®, the Home Possible® program is backed by Freddie Mac. It requires a 3% down payment³ and caters to very low-to low-income buyers with flexible credit rules.

Programs for specific professions and communities

The Good Neighbor Next Door program is sponsored by the U.S. Department of Housing and Urban Development (HUD) and is offered to teachers, emergency medical technicians, firefighters, and law enforcement officers. The program offers a generous 50% off select HUD properties.

Government-sponsored mortgage financing enterprise Fannie Mae offers first-time home buyers the chance to buy a foreclosed property for as little as 3% down with their HomePath program. You can even apply for up to 3% of your closing costs back through the program as well.

The Section 184 program is sponsored by the Department of Housing and Urban Development and encourages lenders to serve Native communities. Borrowers can finance their home with a low down payment and expect flexible underwriting.

For those who don’t meet the guidelines of many loans types, there are also private mortgages to consider.

First-time home buyer grants and assistance programs

First-time home buyer costs can seem overwhelming. The good news is that there are a variety of different first-time home buyer loans and grants to help you come up with the money to cover your down payment and closing costs. You can always ask your lender questions if anything is unclear.

Down payment assistance

Your down payment is a percentage of the total home purchase price that you cover upfront. As the cost of houses has soared in the last 15 years, so has the minimum down payment needed to buy one. Fortunately, many participating lenders accept down payment assistance, which can help you come up with the funds needed if you haven’t been able to save up a full down payment.

Down payment assistance programs are typically grants or low- to no-interest loans, and many are exclusive to first-time home buyers. The specific assistance programs you qualify for can impact how you can use your funds and whether you’ll need to pay them back.

Closing cost assistance

There are also government-sponsored and private programs that can help you cover your closing costs. Closing costs are additional fees you pay at the end of the mortgage process. Closing costs are typically around 3% - 6% of the total loan amount. Like down payment assistance, closing cost assistance can come as a grant or loan.

Home buyer education programs

If you aren’t sure how to start your home search, there are online educational programs and resources available to help. A good first-time home buying class can be free or low-priced and can teach you about your home loan options, the buying process, and how to apply for a mortgage. Browse real estate courses online and look for ones aimed at first-time home buyers. It’s worth noting that some educational programs may require specific courses.

Mortgage interest tax credits

Mortgage interest tax credits are a related assistance category offered through some programs. A Mortgage Credit Certificate (MCC) allows eligible first-time home buyers to claim a federal tax credit for a portion of the mortgage interest they pay each year, which reduces their overall tax burden and frees up income to make homeownership more affordable.

How to find a first-time home buyer program in your state

Each state has its own resources aimed at helping first-time home buyers, but many people are unaware that these programs exist or know where to find them. Here are some ways you can find applicable programs in your state:

Search HUD and housing finance agency resources

HUD has a directory of home-buying resources for all 50 states. When you click on your state, you can find links to home buying programs or your state’s housing authority website.

Check state and local program websites

Most states have a housing authority website that provides information about affordable housing programs in the area. For example, the California Housing Finance Agency and the Texas State Affordable Housing Corporation each offer their own programs to help first-time home buyers. Your city or county may also offer their own first-time home buyer programs.

Ask lenders and nonprofits about eligible programs

Once you’ve found a lender you want to work with, ask them if they can recommend any programs offering down payment assistance or first-time home buyer grants. There are also various non-profit organizations that specialize in helping borrowers find affordable housing. These groups often offer educational resources and access to first-time home buyer programs.

Rocket Mortgage ONE+ program

Rocket Mortgage offers the One+ program that allows qualifying borrowers to purchase a home with just 1% down. Rocket Mortgage covers 2% of the down payment to bring the total down payment to 3% - the minimum needed for a conventional loan. To be eligible, your qualifying income must be less than or equal to 80% of the median income in the county where property is located. You’ll need a credit score of at least 620, and the home must be your primary residence.

Nonprofit and alternative home buyer assistance

You might qualify for charitable or nonprofit assistance if you have low to moderate income. Charities and nonprofits are nongovernment organizations that can offer you educational and financial resources when you buy a home. Nonprofits usually have income limits and requirements that dictate the type of home buyer who can receive assistance.

Habitat for Humanity

One of the most well-known housing nonprofits is Habitat for Humanity, an international organization that offers “simple, decent, and affordable” housing for low-income families. Volunteers build homes for those in need, and Habitat for Humanity makes no profit on the home after you close. This makes their homes much more affordable than local options.

Neighborhood Assistance Corporation of America (NACA)

The Neighborhood Assistance Corporation of America (NACA) is another nationwide nonprofit that can help you buy a home. NACA offers “financially unstable” households mortgage counseling and education. NACA’s team members also help low-income families find lenders to work with them. NACA loans don’t require a down payment, closing costs, or a minimum credit score to qualify.

Like government programs, many charities and nonprofits are region-specific. HUD keeps a running list of approved nonprofits available in every state and county. You can learn more about local housing programs available to you by visiting HUD’s website.

Homeownership vouchers

Homeownership vouchers are another government assistance category. Through the HUD Housing Choice Voucher homeownership program, eligible families who receive Section 8 rental assistance may be able to use their voucher subsidies to help meet monthly mortgage payments rather than paying rent.

Employer-sponsored home buyer programs

Some employers have housing incentives in place to help employees cover down payments and closing costs. Your employer may offer a grant or loan that’s forgivable over time, and your labor union might also offer closing cost assistance. Set up a meeting with your manager or HR representative and ask if your workplace offers any kind of down payment or closing cost assistance.

Steps to get ready for your first home purchase

If you’re looking to get started on your home-buying journey, here’s a game plan.

Make sure you are financially ready

Evaluate your finances by checking your credit score, calculating your debt-to-income ratio, and verifying your income. Understanding your available cash for a down payment and estimating your future housing expenses will help you determine your readiness and affordability.

Get prequalified for a mortgage loan

Prequalification can help buyers understand potential loan options before shopping. By getting prequalified or preapproved, you will know exactly how much a lender is willing to let you borrow, which narrows down your search to homes you can afford.

Shop for homes and make an offer

Partner with a trusted real estate agent to tour homes that fit your budget. Once you find the right property, your agent will help you draft a competitive offer and negotiate the terms with the seller.

Finalize your loan and close

Once your offer is accepted, you will complete the mortgage process by submitting final documents to your lender. The lender will order an appraisal and underwrite the loan. At closing, you will sign the final paperwork, pay applicable closing costs, and receive the keys to your new home.

FAQ

Here are the answers to some frequently asked questions about buying your first home.

What is the best loan for first-time home buyers?

The best option for first-time home buyers depends on your eligibility, down payment, credit score, military status, property location, and income. For example, buyers with excellent credit may prefer a Conventional 97 or regular conventional loan, while buyers with lower credit scores may find an FHA loan more accessible. If you’re having trouble qualifying for either of these types of loans, you may also want to learn more about portfolio loans.

Are there first-time home buyer loans with zero down?

Yes, both VA and USDA loans do not require down payments for eligible borrowers and properties. VA loans are available to qualifying military members, while USDA loans are for low-to-moderate-income buyers in eligible rural areas.

Do first-time home buyer grants have to be repaid?

Repayment depends on whether assistance is structured as a grant, loan, low-interest loan, forgivable loan, or shared appreciation loan. True grants do not have to be repaid, but forgivable loans, deferred loans, and shared appreciation loans do carry repayment terms.

The bottom line: First-time home buyers have options for financial help

There are a variety of different grants, loans, and financial programs designed to help make homeownership more affordable and attainable for first-time buyers. Assistance can include help with down payments and closing costs, tax credits, or education. You might be able to get help from your local, state, or federal government if you meet certain income standards.

Charities, nonprofits, and employer programs are also available to eligible buyers. These programs vary by state, but you can easily find programs you qualify for through HUD’s website.

Ready to explore your options? Start your mortgage application today.

¹ To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be need, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

² Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

³ Rocket Mortgage does not currently offer USDA loans.

⁴ Clients will receive a lender credit of $2,500 when their income is equal to or below 50% of the median in their area. One client must be a first-time home buyer. Valid for Home Possible and HomeReady purchase loans locked on or after February 27, 2026. Offer is not available with any other discounts or promotions. Offer cannot be retroactively applied to previously closed loans or loans already in process; offer is not transferable. Rocket Mortgage reserves the right to cancel/modify this offer at any time. Additional restrictions/conditions may apply. This is not a commitment to lend.

⁵ The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

⁶ Client will be required to pay a 1% down payment, with the ability to pay a maximum of 3%, and Rocket Mortgage will cover an additional 2% of the client’s purchase price as a down payment, or $2,000. Maximum grant amount is $7,000. Offer valid on primary residence, conventional loan products only. Maximum loan amount of $350,000. Cost of mortgage insurance premium passed through to client effective January 2, 2024. Offer valid only for home buyers when qualifying income is less than or equal to 80% area median income based on county where property is located. Not available with any other discounts or promotions and cannot be retroactively applied to previously closed loans or loans that have a locked rate. This is not a commitment to lend. Rocket Mortgage reserves the right to cancel/modify this offer at any time. Additional restrictions/conditions may apply.