There are several programs for first-time buyers that can make buying a home a reality.
We’ve compiled a complete list of the best first-time homebuyer programs and grants.
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First-Time Homebuyer Programs and Grants
2020 First-Time Homebuyer Assistance Programs | |
Good Neighbor Next Door Program (GNND) |
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HUD Homes |
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Homeownership for public housing residents | Provides vouchers to first-time homebuyers to use towards purchasing a home |
Programs for Public Housing Residence
For residences in public housing, the situation may qualify to buy the home they’re renting with HUD’s public housing program. Public Housing Authorities (PHA) can sell their public housing home/apartment/condo to organization residences.
Good Neighbor Next Door Program
The Good Neighbor Next Door program provides homes for 50% off for teachers, police officers, and EMT’s and provides closing cost assistance.
A $100 down payment is all that is required for this great program. Search for available properties in your area on the HUD Homestore website.
Read More» Information about the GNND Program
HUD Dollar Home Program
HUD (Department of Housing and Urban Development) sells foreclosed FHA homes that have been on the HUD website for more than six months.
Local Governments can offer homes to low-income families to help revitalize a community. You can view these eligible HUD homes on the HUD website.
Click here for more information on the dollar home program with HUD.
Down Payment Assistance Programs
You can check different first time home buyer programs, down payment assistance programs, and grants in your state by going to the HUD website.
Be sure to also check your local county website for more information on first-time buyers, down payment assistance programs, and grants.
Some states and counties offer various forms of homebuyer assistance programs for down payment assistance and closing costs for home buyers.
First-Time Homebuyer Loans
2020 First-Time Homebuyer Loan Requirements |
• 580+ credit score for FHA loans with 3.5% down |
• 620+ credit score for all other loan programs |
• 43% - 50% debt-to-income ratio |
• Two years of stable employment and income history |
• 12-36 month waiting period after a bankruptcy |
• Must occupy the property as your primary residence |
Loan Type | Min Credit Score | Down Payment | Max DTI Ratio | Income Limit |
FHA Loan | 580 | 3.5% | 43%-50% | NA |
VA Loan | 580-620 | No down payment | 50% | NA |
USDA Loan | 640 | No down payment | 50% | 115% of area median income |
203k Loan | 640 | 3.5% | 45% | NA |
Conventional Loan | 620 | 5% - 20% | 43% | NA |
HomeReady /Home Possible Loans | 620 | 3% | 50% | 80% of area median income |
Conventional 97 | 680 | 3% | 43% | NA |
First-Time Homebuyer Loans with a Low Down Payment
FHA Loans
FHA loans help more potential homebuyers become homeowners for the first time than any other mortgage loan type. The guidelines to qualify for these loans are much more flexible than a traditional home loan.
It is usually recommended to work on improving your credit scores before applying for a mortgage.
If you have a minimum 580 credit score, you can qualify for an FHA loan with just 3.5% down. For a $200,000 house, that means you will just need $7,000 for your down payment.
The best thing for first-time homebuyers is that your down payment for an FHA loan can be a gift from a family member or friend. This means you can get into your new home with little or no money upfront.
2020 FHA Loan Requirements |
• 580 credit score with 3.5% down |
• 500-579 score with 10% down |
• Maximum 50% debt-to-income ratio |
• Two years of stable employment and income history |
• For primary residence only |
• 24 month waiting period after a foreclosure or bankruptcy |
• 1% of student loan debt added to DTI ratio |
HomeReady Loans
The HomeReady loan program is targeted at first-time homebuyers. A low down payment of just 3% is required, which is even less than FHA loans.
This program is exclusively for first-time homebuyers who plan to occupy the property as their primary residence. You will also need to have a real estate agent to purchase a home through the program.
Home Possible Loans
The Home Possible loan program by Freddie Mac is similar to the HomeReady program. It’s designed for low-to-median income first-time homebuyers requiring just a 3% down payment.
Home Possible Loan Benefits |
• 3% down payment |
• Low interest rates |
• Alternate income sources excepted |
• Fixed mortgage payments |
• Low mortgage insurance rates |
• PMI can be canceled at 80% LTV |
Conventional Loans
Conventional loans are the most common type of mortgage loan used today. A conventional mortgage doesn’t require PMI with a loan-to-value ratio of 80%, making it an attractive loan option for first-time buyers with 20% to put down.
2020 Conventional Loan Requirements |
• Minimum 620 credit score |
• 3% - 20% down payment |
• 36-48 month waiting period after a bankruptcy or foreclosure |
• Maximum 43% debt-to-income ratio |
• Two years of stable employment history |
• Proof of income (W2's, tax returns) |
Conventional 97 Loan
Fannie and Freddie created a 97% loan-to-value (LTV) mortgage loan program that helps first-time buyers achieve the dream of homeownership.
These conventional 97 mortgage loans allow borrowers to put a low down payment of just 3% instead of up to 20% for a conventional loan. Like with FHA loans, the down payment can also be a gift from a friend or family member.
203k Loans
If you’re in the market to purchase a fixer-upper home, then a 203k loan may be a perfect fit for you. These rehab loans are an extension of the FHA loan program.
FHA 203k loans give you money to purchase a property and cash to renovate it with a single loan, making it an ideal mortgage for first-time homebuyers purchasing a rehab home.
FHA 203k loans’ requirements are similar to a standard FHA loan, except the credit score requirement is 640.
2020 FHA 203k Loan Requirements |
• Minimum 620 credit score |
• 24 month waiting period after a bankruptcy or foreclosure |
• Maximum 43%-50% debt-to-income ratio |
• For primary residence only |
HomePath ReadyBuyer Loans
The Homepath ReadyBuyer loan program is for first-time homebuyers who wish to purchase a HUD home as their primary residence. The Fannie Mae Ready Buyer mortgage program is available for all properties on the Homepath website.
First-Time Homebuyer Loans with No Down Payment
USDA Loans
The USDA home loan program from the U.S. Department of Agriculture is for low-to-moderate-income home buyers in rural areas of the country. No down payment is needed, and the mortgage insurance premium (MIP) rate is much lower than FHA MIP rates.
You may qualify if you’re buying a property in a USDA eligible location, and your income does not exceed 115% of the median income in your area.
2020 USDA Loan Requirements |
• 640 minimum credit score |
• Total household income less than 115% of the average in your area |
• Maximum 43%-50% debt-to-income ratio |
• Two years of stable employment history |
• Occupy the property as your primary residence |
• Prove of income (Two years of tax returns and W2's) |
• Must be in an eligible rural area |
• Work with an approved USDA lender |
VA Loans
The Veterans Administration has a home buyer program for active and retired Vets. VA loans require NO down payment, reducing the upfront costs associated with getting a mortgage.
VA mortgage loans are the cheapest mortgage available because no mortgage insurance is required with zero down.
2020 VA Loan Requirements |
• 580-620 minimum credit score |
• 50% maximum debt-to-income ratio |
• Past 2 years of tax returns and W2's |
• 24 month waiting period after a bankruptcy or foreclosure |
• For primary residence only |
Budget for all Homeownership Costs
Being a homeowner comes with more costs than just principal and interest payments. Property taxes, homeowners insurance, mortgage insurance premiums, and HOA fees may also be required. All of which, minus HOA fees, are usually included in your monthly mortgage payment.
Know what you can afford so you don’t waste your time looking at homes over your budget.
How much home can you afford calculator
Ask your lender
Not every mortgage lender will approve first-time homebuyers who are using a grant or some assistance. Make sure you ask your loan officer if they can use the type of grant you have.
Other lenders may be able to help you find down payment assistance or grants for first-time homebuyers that will help you achieve your dream of homeownership.
