Every state offers first time home buyer programs
So you’re planning to buy your first home. Congratulations! It’s a big step; one of the most important milestones in your life.
And you might be pleasantly surprised by the wide array of first time home buyer programs designed to help you.
From low- or zero-down loans, to down payment assistance and closing cost grants, there are tons of programs for first time home buyers.
The only question is, which one is right for you?
Verify your home buying eligibility (May 26th, 2020)In this article (Skip to…)
- Low-down-payment loans for first time buyers
- Zero-down-payment loans for first time buyers
- Down payment assistance
- Closing cost assistance
- Getting home buying help from family
- First time home buyer programs by state
Low-down-payment loans for first time home buyers
Many mortgages come with low down payments: as little as 3% or 3.5% of a home’s purchase price.
Sometimes, this is possible because a loan is guaranteed by the federal government.
That includes mortgages backed by the Federal Housing Administration (FHA loans), Department of Veterans Affairs (VA loans), or U.S. Department of Agriculture (USDA loans).
Or, a mortgage may come with a low down payment because it is eligible for purchase by the mortgage giants Fannie Mae and Freddie Mac. These are called conventional loans.
FHA loans
The smallest down payment you can make with an FHA loan is 3.5%. But it’s easier to qualify for an FHA-backed mortgage than a Fannie or Freddie one.
Your application may be considered even if your credit score is as low as 580 (with a 3.5% down payment) or 500 (with a 10% down payment).
And your lender may not be as bothered if your existing debt burden (your “debt-to-income ratio” or DTI) is big.
For many types of loans, lenders want to see your debt-to-income ratio at 40% or below. FHA loans can allow yours to be as high as 50%.
So it’s easier to qualify for an FHA loan if you currently have a lot of monthly debt you’re paying off.
The downside? FHA loans do have a higher down payment (3.5%) than a conventional loan from Fannie or Freddie (3%).
Plus, your mortgage insurance costs are likely to be higher, at least over the long term. So you may end up wanting to refinance sooner.
Verify your FHA home loan eligibility (May 26th, 2020)FHA 203(k)
The FHA offers a specialist loan for those who want to buy “fixer-upper” homes, called the FHA 203(k) mortgage. This might be especially appealing to first time home buyers on a budget.
The problem with buying a fixer-upper is that you typically need a mortgage to buy the property and a separate loan to do the rehab work. Once the project’s finished you then refinance the two loans into one new mortgage. But that’s costly and cumbersome.
The FHA 203(k) lets you borrow the purchase and rehab costs in a single loan. You get the latter in stage payments or installments (“draws”) as the work reaches pre-set milestones.
Verify your FHA 203(k) home loan eligibility (May 26th, 2020)Fannie and Freddie (conventional) loans
“Conventional” loans have two clear advantages over FHA ones.
The first is that your down payment can be as low as 3%.
And the second is that you can ask to stop paying for mortgage insurance as soon as your loan balance drops below 80% of the appraised value of your home.
A conventional loan is one that is backed by the federal government, unlike FHA, VA or USDA.
Fannie Mae brands its 3%-down conventional loans as HomeReady, while Freddie Mac calls its Home Possible.
So why doesn’t everyone go for a Fannie or Freddie mortgage? Because you’ll need more robust finances and a higher credit score than with an FHA loan.
Expect your lender to require a score of 620 or higher and for your debt burden to be lighter than the FHA’s threshold allows.
Verify your conventional home loan eligibility (May 26th, 2020)Zero-down-payment loans for first time buyers
There are two prominent mortgage loans that don’t require any down payment at all: the VA loan and USDA loan.
But they both have special eligibility requirements, so not all first time home buyers will qualify.
VA loans
VA loans are backed by the US Department of Veterans Affairs. And you can get one only if you’re a veteran with an honorable discharge, a current service member or a member of a very small number of other, closely related groups.
VA loans are arguably the best mortgages out there. If you’re eligible, you’ll need zero down payment, and there’s no minimum credit score (though individual lenders can set their own).
And — after an affordable initial payment that can be added to your loan balance — you won’t have any mortgage insurance costs.
Better yet, VA loans typically come with lower rates than other mortgages.
Verify your VA home loan eligibility (May 26th, 2020)USDA loans
USDA loans are backed by the US Department of Agriculture (USDA) and promote rural development. So you cannot get one in metropolitan areas, though a surprising number of suburbs are eligible.
You can look up whether a home you want is in an eligible area using a tool on the USDA’s website.
But you, as well as the home, have to be eligible. That means you’ll need a low or median income compared to your area’s averages. You’ll also need OK credit (a 640+ score) and easily manageable existing debts (a DTI of 41% or lower).
In exchange, you could get a zero down payment, a below-average mortgage rate, and reduced mortgage insurance premiums.
Verify your USDA home loan eligibility (May 26th, 2020)Down payment assistance programs
There are more than 2,000 down payment assistance programs operating across the nation. And many of them put first time buyers at the head of the line.
Many are run by state or local governments or by nonprofits. And a lot of mortgage lenders are happy for you to access them for help.
Each of these first time home buyer programs has its own rules:
- Some provide outright grants that never have to be repaid
- Some offer low-interest loans that are progressively forgiven the longer you live in the home until you owe nothing
- Others just provide low-interest loans that you repay in parallel with your mortgage
Which you get will depend on what’s available where you live.
>> Related: Down payment assistance programs in all 50 states
Closing cost assistance programs
Closing costs typically cost between 2% and 5% of a home’s appraised value. That’s $4,000-$10,000 on a $200,000 home loan.
As a result, closing costs may be a significant burden for first time home buyers with limited savings.
Luckily, some first time home buyer programs offer help with closing costs as well as down payments. And, if you hunt around, you may find other sources that will give you grants or loans.
For example, motivated sellers and even some lenders will occasionally help with closing costs, though the latter may require a slightly higher mortgage rate in return.
Getting home buying help from family
Typically, your lender won’t mind if you accept “gift money” toward your down payment from a family member or even sometimes a friend.
But you’ll have to prove that you really are accepting a gift, rather than a loan disguised as a present.
So your benefactor has to sign a document to that effect, and may need to show where the money came from.
>> Related: How to give and receive a cash down payment gift for a home
Verify your home buying eligibility (May 26th, 2020)First time home buyer programs by state
Click on your state below to see some of its statewide first time home buyer programs.
Note that this list only includes a few key options for each state. There are usually others, including programs at a more local level.
So be sure to conduct your own online search for first time home buyer assistance in your area. Or speak to your state’s housing finance office for advice.
First time home buyer programs in Alabama
Step Up — Down payment assistance from the Alabama Housing Finance Authority
Mortgage Credit Certificates — Federal tax reduction for Alabama home buyers
HUD resources AL — More Alabama first time home buyer programs
First time home buyer programs in Alaska
First Home Limited — Low-rate home loans for Alaska first-time homebuyers
Closing cost assistance — Loans up to 4% of the purchase price for closing costs, funded by the Alaska Housing Finance Corporation
HUD resources AK — More programs for Alaska first time homebuyers
First time home buyer programs in Arizona
Home Plus — Down payment assistance for Arizona home buyers
Arizona first time home buyer loans — List of accessible loans by the AZ Department of Housing
HUD resources AZ — More programs for Arizona first time homebuyers
First time home buyer programs in Arkansas
FHA First Time Home Buyer Programs — Low-Interest Loans, Credit Assistance, and Expert Advice for first-time homebuyers
ADFA Programs — ADFA Homeownership and Down Payment Assistance Programs make purchasing a home more affordable
HUD resources AR — More programs for Arkansas first time homebuyers
First time home buyer programs in California
CalHFA — MyHome Assistance Program — Up to $10,000 in down payment assistance
First Home Mortgage Program — Grant for down payment and closing costs assistance, for borrowers in L.A. and Orange counties
HUD resources CA — More California first time home buyer programs
First time home buyer programs in Colorado
CHFA mortgage programs — A down payment assistance grant that can get you up to three percent of your first mortgage
Aurora’s Home Ownership Assistance Program — Offers first-time homebuyers up to $10,000 in financial assistance with zero interest
HUD resources CO — More programs for Colorado first-time homebuyers
First time home buyer programs in Connecticut
CHFA Loans — Offers a low fixed-rate 30-year mortgage and down payment assistance
Smartclose Program — Lets first-time home buyers borrow an additional $5,000 at 0% interest to be put toward closing costs
HUD resources CT — More programs for Connecticut first-time homebuyers
First time home buyer programs in Delaware
Delaware First-Time Homebuyer Tax Credit — Claim a tax credit for up to 35% of the annual interest paid on your mortgage
Chenoa Down Payment Assistance Program — Offers help with down payment and closing costs for first-time homebuyers
HUD resources DE — More programs for Delaware first-time homebuyers
First time home buyer programs in Florida
Use the First Time Homebuyer program “Wizard tool” from the Florida Housing Finance Corporation to get you to your best program
Contact List for Florida state and city programs — Compare programs and grants for first time home buyers
HUD resources FL — More programs for Floria first-time home buyer
First time home buyer programs in Georgia
Georgia Dream Homeownership Program — Down payment assistance that is repaid when a property is sold or refinanced
Homestretch Down Payment Assistance Program — First-time homebuyers may receive up to $7,500 in multiple Georgia counties
HUD resources GA — More programs for Georgia first-time home buyers
First time home buyer programs in Hawaii
Hawaii Housing Finance and Development Corporation — Offers low down payment options to first-time homebuyers
HawaiiUSA’s First-Time Homebuyer Program — One of several credit unions in Hawaii running programs for first-time buyers
HUD resources HI — More programs island-by-island for Hawaii first-time homebuyers
First time home buyer programs in Idaho
Idaho Housing And Finance Association First Loan Program — A loan with a lown payment and closing cost assistance, plus homebuyer tax credits
Homeownership vouchers — Help by county or city
HUD resources ID — More programs for Idaho first-time homebuyers
First time home buyer programs in Illinois
Downpayment Plus Program — First-time home buyers may be eligible for a grant of up to $6,000 from the Federal Home Loan Bank of Chicago
1STHomeIllinois — Offers up to $7,500 in assistance for down payment and/or closing costs from the Illinois Housing Development Authority
HUD resources IL — More programs for Illinois first-time homebuyers
First time home buyer programs in Indiana
Indiana Home Solution — Down payment assistance of up to 6% from the Indiana Housing and Community Development Authority
First Time Home Buyer Program — Up to $8,000 from FHLBank Indianapolis
HUD resources IN — More programs for Indiana first-time homebuyers
First time home buyer programs in Iowa
FirstHome program — Offers grants or loans to first-time homebuyers through the Iowa Finance Authority
First Time Home Buyer program — Save for your down payment in a tax-deductible account
HUD resources IA — More programs for Iowa first-time homebuyers
First time home buyer programs in Kansas
Kansas Housing’s First Time Homebuyer Program (PDF) — 0% interest loan to the value of up to 20% of the purchase price, which will be forgiven if the buyer lives in the home for over 10 years
HUD resources KS — More programs for Kansas first-time homebuyers
First time home buyer programs in Kentucky
Down payment assistance — Louisville residents can get a partially forgivable loan
Statewide down payment assistance — up to $6,000 from the Kentucky Housing Corp.
HUD resources KY — More programs for Kentucky first-time homebuyers
First time home buyer programs in Louisiana
Direct Homebuyer Assistance Program — Provides down payment and closing cost assistance to eligible first-time home buyers in New Orleans
First-time Homebuyers Assistance Program — Provides assistance to buyers purchasing a home in the city of Kenner
HUD resources LA — More programs for Louisiana first-time homebuyers inside and outside New Orleans and Kenner
First time home buyer programs in Maine
First Home Loan — Up to $3,500 toward down payment and closing costs
HUD resources ME — More programs for Maine first-time homebuyers
First time home buyer programs in Maryland
Housing Choice Voucher Homeownership Program — Federally funded and locally administered homeownership assistance program that helps eligible buyers to purchase decent and safe housing in Baltimore
Maryland Mortgage Program — Offers down payment assistance through the state’s Dept. of Housing and Community Development
HUD resources MD — More programs for Maryland first-time homebuyers
First time home buyer programs in Massachusetts
MassHousing — Down payment assistance for up to 5% of the purchase price or $15,000 (whichever is less) from MassHousing
HUD resources MA — More programs for Massachusetts first-time homebuyers
First time home buyer programs in Michigan
MI Home Loan program — Offers down payment assistance of up to $7,500
HUD resources MI — More programs for Michigan first-time homebuyers
First time home buyer programs in Minnesota
Deferred Payment Loan — For first-time home buyers: borrow up to $10,000 at 0% and pay nothing till you move or refinance
Minnesota Housing Start Up loan program — Repayable, low-interest loans for down payment and closing costs up to $17,000
HUD resources MN — More Minnesota first time home buyer programs
First time home buyer programs in Mississippi
Smart Solution — Mississippi Home Corp. offers up to 3% as a cash advance for down payment and closing costs
Mortgage credit certificate — Tax credit equal to 40% of the annual interest paid on the mortgage loan
Housing Assistance for Teachers — Grant funds up to $6,000 in eligible parts of the state
HUD resources MS — More Mississippi first time home buyer programs
First time home buyer programs in Missouri
Community Action Agency of St. Louis County — Deferred or forgivable loans for down payments from $3,000 to $5,000
Cash Assistance Loan — The Missouri Housing Development Commission offers up to 4% of the home price as a loan. Stay in residence more than five years and the loan will be progressively forgiven until you owe nothing in Year 10
HUD resources MO — More Missouri first time home buyer programs
First time home buyer programs in Montana
MBOH Plus 0% Deferred Down Payment Assistance Program — Up to 5% of sales price, maximum $6,500, available as a 0% APR loan that you only pay back when you move or refinance
80% Combined Program — A 30-year first-position mortgage loan at 80% loan-to-value plus a 20% second mortgage. Lets you escape mortgage insurance
HUD Resources MT — More Montana first time home buyer programs
First time home buyer programs in Nebraska
First Home Program — The Nebraska Investment Finance Authority enables you to buy a home with as little as $1,000 down. You get a 10-year second mortgage at 1% interest to cover the rest
HUD resources NE — More Nebraska first time home buyer programs
First time home buyer programs in Nevada
Mortgage Credit Certificate Program — The Nevada state government provides first-time home buyers a federal income tax of up to 30% of the interest paid on a mortgage loan each year
Home is Possible — First time home buyers can borrow up to 4% of the home price for down payment and closing costs. The loan is forgivable if you stay in the residence 15 years
HUD resources NV — More Nevada first time home buyer programs
First time home buyer programs in New Hampshire
Home Flex Plus (PDF) — Cash assistance available for down payment and closing costs. The loan is forgivable on its fourth anniversary. You can borrow 2% or 3% of the home price
HUD resources NH — More New Hampshire first time home buyer programs
First time home buyer programs in New Jersey
First-Time Homebuyer Mortgage Program — Up to $10,000 as an interest-free, five-year forgivable second loan with no monthly payment. You owe nothing after five years
First-Time Homebuyer Program — Special loans for Trenton residents
HUD resources NJ — More New Jersey first time home buyer programs
First time home buyer programs in New Mexico
FIRSTHome — The New Mexico Mortgage Finance Authority says first-time buyers can put as little as $500 down with its loan programs
HUD resources NM — More New Mexico first time home buyer programs
First time home buyer programs in New York
State of New York Mortgage Agency (SONYMA) — Borrow up to 3% of the home purchase price with a 0% APR loan. No monthly payments and the loan’s forgiven after you remained in residence for 10 years
HomeFirst — NYC only: “up to $40,000 toward the down payment or closing costs on a 1-4 family home, a condominium, or a cooperative in one of the five boroughs of New York City”
HUD resources NY — More New York first time home buyer programs
First time home buyer programs in North Carolina
NC 1st Home Advantage Down Payment — A 0%, deferred second mortgage, which is forgiven at the end of 15 years. Lets you borrow up to $8,000
HUD resources NC — More North Carolina first time home buyer programs
First time home buyer programs in North Dakota
Down payment Assistance — First time home buyers in Fargo are eligible for down payment and closing cost assistance
FirstHome program — The North Dakota Housing Finance Agency says eligible borrowers need make only a minimum $500 out-of-pocket cash investment
HUD resources ND — More North Dakota first time home buyer programs
First time home buyer programs in Ohio
Your Choice! Down Payment Assistance — Borrow 2.5% or 5% of the home’s purchase price. Use for down payments or closing costs. “This assistance is forgiven after seven years. If you sell or refinance your home within seven years, you must repay all of the assistance provided“
HUD resources OH — More Ohio first time home buyer programs
First time home buyer programs in Oklahoma
OHFA Homebuyer Down Payment Assistance — At closing, offers 3.5% or 4% toward your total loan amount
HOME Investment Partnerships Program — Provides down payment and closing costs assistance to eligible buyers in Oklahoma City. The loan is forgivable after five years
HUD resources OK — More Oklahoma first time home buyer programs
First time home buyer programs in Oregon
Home Purchase Assistance Program — Down payment and closing costs assistance for first time home buyers in Portland
Down Payment Assistance Programs for First Time Homebuyers — First time home buyers may be eligible for up to $15,000 in down payment and/or closing costs. That link takes you to a list of organizations in the state that administer the funds
HUD resources OR — More Oregon first time home buyer programs
First time home buyer programs in Pennsylvania
First Time Home Buyer Program — Down payment and closing costs assistance for Centre County. Up to $10,000 as a loan, repayable when you move, sell, refinance, or finish paying your mortgage
PHFA Home loan — “Possible down payment and closing cost assistance,” according to the website
HUD resources PA — More Pennsylvania first time home buyer programs
First time home buyer programs in Rhode Island
Down Payment and Closing Cost Assistance Program — Loans of $2,500-$20,000. Loans under $15,000 are forgiven after five years as long as you don’t move sell or refinance. It’s 10 years for higher amounts
HUD resources RI — More Rhode Island first time home buyer programs
First time home buyer programs in South Carolina
Homebuyer Assistance Program — Buyers in Lexington count can borrow up to $5,000. The loan should be forgiven if you don’t move, sell, or refinance within five years.
SC Housing Palmetto Home Advantage Program — 3%, 4% or 5% forgivable down payment assistance
HUD resources SC — More South Carolina first time home buyer programs
First time home buyer programs in South Dakota
South Dakota Housing Development Authority First-Time Homebuyer — Zero interest loan with no monthly payments. “Due-on-sale or satisfaction”
HUD resources SD — More South Dakota first time home buyer programs
First time home buyer programs in Tennessee
Great Choice Plus down payment assistance — From the Tennessee Housing Development Agency. Borrow up to 5% of the purchase price. No interest, no monthly payments. You’ll pay the loan back when you sell, move out of, or refinance your home
HUD resources TN — More Tennessee first time home buyer programs
First time home buyer programs in Texas
First Time Home Buyer Grants — A grant so you don’t have to repay this. Get up to 5% of the purchase price. Some forgivable loans within the program
My First Texas Home — Affordably borrow your down payment and closing costs to the value of 5% of the mortgage loan
HUD resources TX — More Texas first time home buyer programs
First time home buyer programs in Utah
Utah Housing Corporation (UHC) (PDF) — Borrow up to 6% of the purchase price as a 30-year loan (second mortgage) “with an interest rate of 2% higher than the First Loan interest rate”
Veteran First Time Homebuyer Grant Program — Gifts $2,500 to Veterans who purchase their first home in Utah
HUD resources UT — More Texas first time home buyer programs
First time home buyer programs in Vermont
Vermont Housing Finance Agency’s ASSIST program — Borrow up to $5,000 with no interest or monthly payments. Repay when you sell, refinance or pay your mortgage in full
HUD resources Vermont — More South Carolina first time home buyer programs
First time home buyer programs in Virginia
Virginia Housing Development Authority — Get an outright grant that doesn’t have to be repaid. You can receive up to 2%-2.5% of the home price
HOMEownership Down Payment and Closing Cost Assistance program — Another grant with a condition that you have to live in the house for a certain period. Provided by the Virginia Department of Housing and Community Development
HUD resources VA — More Virginia first time home buyer programs
First time home buyer programs in Washington state
Washington State Housing Finance Commission (WSHFC) — A range of down payment assistance programs. Borrow up to $10,000 ($15,000 for buyers with a disability or disabled family member living with them). Most loans have low rates and are deferred, so you only pay them back when you move, sell, refinance, or finish paying your mortgage
City and county programs are listed on that WSHFC webpage and some of those may be more generous. For example, if you’re buying within that Seattle city limits, you could borrow up to $55,000
HUD resources WA — More Washington state first time home buyer programs
First time home buyer programs in West Virginia
West Virginia Housing Development Fund — Borrow $5,000-$10,000 toward your down payment as a 15-year loan with a 2% interest rate
HUD resources WV — More West Virginia first time home buyer programs
First time home buyer programs in Wisconsin
Capital Access Advantage — The Wisconsin Housing and Economic Development Authority’s (WHEDA’s) standard down payment assistance program
First Time Home Buyer (FTHB) Advantage — Another WHEDA offering: a preferred, fixed-interest rate for qualified first-time home buyers
HUD resources WI — More Wisconsin first time home buyer programs
First time home buyer programs in Wyoming
Home$tretch DPA Loan Product from the Wyoming Community Development Authority (WCDA) — Offers up to $10,000 as an interest-free second loan. No monthly payments and due only when you sell or refinance. Forgiven after 30 years
Amortizing DPA Loan Product — Also from the WCDA, this provides a fixed-rate loan that you pay down over 10 years
HUD resources WY — More Wyoming first time home buyer programs
Verify your new rate (May 26th, 2020)
