First-Time Home Buyer Programs

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In addition to the first-time home buyer programs offered by your state, the federal government offers its own programs through different federally-backed agencies. These agencies were all created with the purpose of providing affordable housing to their respective target groups. Your state will usually offer more general programs that you could be eligible for but federal-backed loans provide unique benefits nationally. Each program has specific eligibility requirements and different benefits, so you should make sure you research all of your options offered by both state and federal agencies before making a decision.

How to Apply for First-Time Home Buyer Programs
Federal Mortgage Programs Information
NoProgramTypeAgency
1HomeReady ProgramLow-CreditFannie Mae
2HomePossible ProgramLow and Moderate Income EarnersFreddie Mac
3FHA LoanLow and Moderate Income EarnersFederal Housing Administration
4USDA LoanRural AreasU.S. Department of Agriculture
5VA LoanRestricted Eligibility to Certified VeteransU.S. Department of Veterans Affairs
6Good Neighbor Next Door ProgramRestricted Eligibility to Certain CareersU.S. Department Housing and Urban Development
7Dollar Homes ProgramSupplementary Program for Local GovernmentsU.S. Department Housing and Urban Development

The agencies that offer these mortgages do not issue mortgages themselves. Instead, they have programs that provide insurance on or supplement eligible mortgages issued by approved lenders. The programs make conventional mortgages cheaper and more accessible. If you are choosing to buy a property in another state, it is important to consider the cost of living before choosing the lowest interest rate because some areas may be very expensive to live in even if properties are not very expensive.

1. HomeReady Program

The Federal National Mortgage Association (Fannie Mae) is a government-sponsored association that provides funding for mortgages by buying them from mortgage lenders. By doing this, Fannie Mae is able to reduce both the requirements and the cost of a conventional mortgage. When a conventional loan is insured by a Federally-backed agency, it has to be within the conforming loan limits limits set by that agency. Conforming loans like the ones offered by Fannie Mae typically have lower mortgage insurance premiums and competitive mortgage rates.

Requirements:
  • Minimum 3% down payment (contributed by the borrower)
  • Your income must be lower than 80% of your county’s median income
  • Maximum debt-to-income (DTI) ratio of 45%
  • Your mortgage amount must not exceed the limits set by Fannie Mae
  • Minimum credit score of 620 (Credit scores above 680 get cheaper mortgages)
  • First-time home buyers must take a homeownership education course

For more information about the benefits and additional resources, visit Fannie Mae’s official website.

2. HomePossible Program

The Federal Home Loan Mortgage Corporation (Freddie Mac) is a government-sponsored association that provides liquidity, stability, and affordability to housing markets. Like Fannie Mae, Freddie Mac purchases mortgages from external mortgage lenders and sponsors conforming loans. These loans also have lower mortgage insurance premiums and competitive mortgage rates. Freddie Mac differs from Fannie Mae because Freddie Mac typically buys their mortgages from much smaller lenders. Their primary mortgage program, the HomePossible Program also has slightly different guidelines.

Requirements:
  • Minimum 3% down payment (no borrower minimum contribution)
  • Your income must be lower than 80% of your county’s median income
  • Maximum debt-to-income (DTI) ratio of 45%
  • Minimum credit score of 620 (Credit scores above 680 get cheaper mortgages)
  • First-time home buyers must take a homebuyer education course

For more information about the HomePossible Programs, HomePossible updates, and eligibility details, visit Freddie Mac’s official website.

3. FHA Loan

The Federal Housing Administration (FHA) is a federal U.S. government agency that insures mortgages issued by FHA-approved lenders. These mortgages are targeted toward low-income earners and can have minimum down payment requirements of as low as 3.5%. FHA Mortgage Insurance Premiums are also lower than most private mortgage insurance premiums. FHA mortgage rates are very competitive and the latest rates can be found on our FHA loan rates page. These loans only have mortgage terms of 15 or 30 years but you can choose whether you want a fixed or adjustable-rate mortgage.

Requirements:
  • Minimum credit score of 500
  • Minimum down payment of 10% (3.5% for credit scores 580+)
  • Debt-to-income (DTI) ratio of less than 43%

For more information, visit the FHA Loans page.

4. USDA Loan

The United States Department of Agriculture (USDA) is a federal U.S. government agency that insures mortgages issued by USDA-approved lenders. These mortgages are targeted towards home buyers that purchase property within designated rural areas. There are significant benefits to getting a USDA Loan, which include lower eligibility requirements, lower mortgage insurance premiums, and multiple USDA Loan programs. Like FHA Loans, USDA Loans have mortgage terms of only 15 or 30 years but you can choose between a fixed or adjustable-rate mortgage.

Requirements:
  • Household income less than 115% of your state’s median household income
  • Debt-to-Income (DTI) ratio of less than 41%

For more information, visit the USDA Loans page.

5. VA Loan

The United States Department of Veterans Affairs (VA) is a federal U.S. government agency that insures mortgages issued to certified veterans by VA-approved lenders. VA also offers other programs that can assist you even if you already have a mortgage. VA loans have low VA mortgage rates, no minimum down payment requirement, and no mortgage insurance premiums. VA Loans are one of the best loans you can get because even if you have good credit, they still provide benefits that reduce your monthly mortgage payments.

Requirements:
  • Obtain a Certificate of Eligibility (COE) through a lender, online application, or mail application
  • There is no official minimum credit score requirement but most lenders will look for a score of at least 620
  • You must make an upfront payment equal to the amount that the price of your home exceeds its market value

For more information on the VA Loan program and how to apply for a COE, visit the VA Loans page.

6. Good Neighbor Next Door Program

The United States Department of Housing and Urban Development (HUD) is a government agency that provides a number of federal programs to help make housing more affordable. Like VA Loans, the Good Neighbor Next Door Program is restricted to home buyers with certain careers. These careers include law enforcement officials, teachers, firefighters, and emergency medical technicians (EMTs). Mortgages provided by this program offer several benefits that make them one of your best choices if you qualify. In revitalization areas, homes are listed exclusively through this program for 7 days. You can receive up to a 50% discount on homes in HUD’s inventory.

Requirements:
  • Credit score of at least 500 with a 10% minimum down payment ($100 down payment for credit scores above 580)
  • Agree to live in this house for at least 3 years

For more information about the Good Neighbor Next Door Program and for additional eligibility requirements, read this guide written by HUD.

7. Dollar Homes Program

The important thing to note about the Dollars Home Program is that these homes are not sold to home buyers at $1, but they eventually become the homes that HUD sells to home buyers.

The HUD Dollar Homes Program provides housing opportunities through local governments. As the name implies, unappealing homes are sold for only $1 each to local FHA agencies. These homes typically require several repairs and modifications to make them habitable. The local agency uses the community and non-profit organizations to repair the house and then resells it to low to moderate-income home buyers. These homes are then sold through HUD at a significant discount compared to regular homes.

First Time Home Buyer Programs For Largest States

For the most part, federal home buyer programs focus on providing financing opportunities through cheap loans with low down payments and credit score requirements. These opportunities allow eligible individuals to buy a property much faster than they could by using a conventional mortgage. Even though they do provide some unique benefits for homebuyers when it comes to financing, they may not target specific demographics that are struggling to purchase a property within specific states. For this reason, many states have their programs specific to their regions only.

First Time Home Buyer Programs in California

California has different programs that provide unique financing opportunities as well as down payment assistance. The most popular first time home buyer programs in California are “CalHFA” and “CalPLUS.” Both programs build on the structure of a conventional loan, so they are usually very similar to conventional loans.

The “CalHFA” program provides a 30-year fixed mortgage that has a fixed interest rate throughout the mortgage lifetime. The mortgage rate a borrower receives largely depends on the financial circumstances of the borrower, current mortgage rates, and the lender. This program does not offer any considerable benefits, so it might be wise to look for another program unless a lender offers very favorable terms on this loan. It is also wise to shop around because different lenders may provide different loan terms including mortgage insurance premiums and interest rates. When it comes to the “CalPLUS” program, it is very similar to the “CalHFA” with the exception of the closing costs. The “CalPLUS” program has an option to get a no-closing-cost mortgage, which may be beneficial for homebuyers who do not have enough money to cover the down payment as well as closing costs.

First Time Home Buyer Programs in Texas

Texas has one of the most favorable programs out of all the largest states. The most popular first time home buyer programs in Texas are “My First Texas Home Program” and “Home Sweet Texas Home Loan Program.” These programs are offered through the Texas Department of Housing & Community Affairs (TDHCA), which target first time home buyers and are generally easy to use.

The “My First Texas Home Program” provides a 30-year fixed-term mortgage with low mortgage rates. A borrower may also be eligible to receive a grant in the form of a forgivable second-lien loan for up to 5% of the house value. This forgivable loan is offered as down payment assistance, and it is a unique benefit that most loans do not offer. This program has certain limitations on income, credit score, and property value, so a borrower should ensure that they meet the requirements before applying for this loan. In addition to that, only single-unit properties and some duplexes are eligible for this program. The “Home Sweet Texas Home Loan Program” is very similar to the program mentioned above. It has the same restrictions except for the one that requires a borrower to be a first-time homebuyer. This means that virtually anyone can apply for this program as long as they meet the requirements. A borrower applying for a “Home Sweet Texas Home” should expect a higher interest rate than the rate offered for “My First Texas Home Program” although it is still lower than most conventional loans.

First Time Home Buyer Programs in Florida

Florida offers many first time home buyer programs as well as various assistance programs that can be used by first time home buyers as well as current homeowners. Two main first-time homebuyer programs Florida offers are “Florida HFA Preferred Conventional Loan Program (Florida First)” and “Florida HFA Preferred 3% PLUS Conventional Loan Program.” Both programs have similar eligibility requirements that include a minimum credit score, income limit, residency restrictions, and others. Both programs offer 30-year fixed mortgages with low interest rates and low mortgage insurance premiums. The difference between the two programs is that “Florida HFA Preferred 3% PLUS”automatically enrolls a borrower into a grant consideration. This means that a borrower who applies for “Florida HFA Preferred 3% PLUS” may expect to receive a 3% to 5% grant that can go towards covering the down payment.

First Time Home Buyer Programs in New York

New York provides multiple state-specific first time home buyer programs through the State of New York Mortgage Agency (SONYMA). The most popular first time home buyer programs in New York are “Achieving the Dream” and “Low Interest Rate.”

Both of the programs target low to moderate-income households who have not owned a property for at least 3 years. This means that even if a person has owned property, but for some reason has lost it over 3 years ago, they are considered eligible first-time homebuyers. “Achieving the Dream” program provides a 30-year fixed mortgage that can be used to purchase 1-4 unit homes, condominiums, and cooperatives. It also can be issued for a loan-to-value (LTV) ratio of up to 97% with additional programs that can be used to cover the down payment. The maximum interest rate (APR) that is charged on this loan right now is 3%, but it is subject to change over time. Another popular program is called “Low Interest Rate.” The largest difference between the two programs is the income limits. The “Low Interest Rate” program is open to more people because the income limit for this program is $102,120 while the income limit for “Achieving the Dream” is only $81,690. It is important to note that income limits may vary depending on the area of interest. The maximum interest rate currently charged on the “Low Interest Rate” mortgage is 3.375%, which is slightly higher than the interest charged on the “Achieving the Dream” program.

First Time Home Buyer Programs in Pennsylvania

Pennsylvania Housing Finance Agency (PHFA) is an organization created by the state government to provide affordable housing programs to the people living in the state of Pennsylvania. Pennsylvania offers two main first time home buyer programs as well as various additional assistance programs that focus on covering down payments and closing costs. The two statewide programs that are available for first-time homebuyers are “HFA Preferred” and “Keystone Home Loan.”

The “HFA Preferred” program provides a 30-year fixed mortgage to low to moderate income households with low interest rates. Generally, it is very similar to a conventional loan in a way that the down payment may be lower than 20%, but private mortgage insurance must be bought in this case. Generally, anyone can receive this mortgage as long as their income is below the maximum income limit for their county.

The “Keystone Home Loan” program provides a financing opportunity for first time home buyers with lower borrowing requirements. This loan program allows a borrower to put down from 3% to 5% and is insured by the Pennsylvania Housing Insurance Fund (PHIF). On the other hand, it requires a credit score of 660, which is higher than the average mortgage loan requires. The interest rate for this loan depends on the lender, the financial situation of the borrower, and the mortgage rates.

First Time Home Buyer Programs by State

The following table provides a quick summary of the main lending programs provided by each state. All of them have different requirements, so it is important to learn more about them before looking for an approved lender.

StateLending AgencyMain Lending Programs
AlabamaAHFAStep Up
Mortgage Credit Certificate
AlaskaAHFCFirst-Time Homebuyer Loans
My Home
ArizonaADHHOME Plus Down Payment Assistance
ArkansasADFAMove Up
Mortgage Credit Certificate
CaliforniaCalHFACalHFA FHA
CalPLUS FHA
ColoradoCHFAFirstStep
HomeAccess
ConnecticutCHFAHFA Advantage®
Homebuyer Mortgage Program
DelawareDSHAHomeownership Loan
District of ColumbiaDCHFADC Open Doors
DC4ME
Mortgage Credit Certificate
FloridaFHFCFL Assist
GeorgiaGDCAGeorgia Dream
HawaiiHHFDCMortgage Credit Certificate
Hula Mae
IdahoIdaho HousingDown Payment Assistance
IllinoisIHDAIHDAccess Forgivable
IHDAccess Deferred
IHDAccess Repayable
IndianaIHCDAFirst Place
Next Home
IowaIowa Finance AuthorityFirstHome
KansasKHRCFirst Time Homebuyer
KentuckyKHCConventional Preferred
LouisianaLHCDelta 100
MaineMaineHousingFirst Home Loan
MarylandMaryland DHCDMaryland Mortgage Program
MassachusettsMassHousingMassHousing Mortgage
MichiganMSHDAMI Home Loan
MI Home Loan Flex
Mortgage Credit Certificate
MinnesotaMHFAStart Up
MississippiMHCSmart Solution
MRB7
MissouriMHDCFirst Place
MontanaMontana HousingHome Loan Programs
NebraskaNIFAFirst Home
NevadaNevada Housing DivisionHome Is Possible
New HampshireNHHFAHome Flex Plus
New JerseyNJHMFAFirst-Time Homebuyer Mortgage
HFA Advantage
Down Payment Assistance
New MexicoMFA New MexicoFirstHome
New YorkSONYMAAchieving the Dream
North CarolinaNCHFANC Home Advantage Mortgage™
North DakotaNDHFAFirstHome
OhioOHFADown Payment Assistance
OklahomaOHFADown Payment Assistance
OregonOHCSDown Payment Assistance
PennsylvaniaPHFAKeystone Home Loan
Keystone Government Loan
Rhode IslandRIHRIHousing Loan
South CarolinaSC HousingSouth Carolina Home Buyer
South DakotaSDHDAFirst-Time Home Buyer Program
TennesseeTHDAGreat Choice
TexasTDHCATexas Homebuyer Program
UtahUHCFirstHome
VermontVHFAASSIST Down Payment
VirginiaVHDADown Payment Assistance
Closing Cost Assistance
WashingtonWSHFCHome Advantage
West VirginiaWVHDFHomeownership Program
WisconsinWHEDADown Payment Assistance
WyomingWCDAFirst-Time Home Buyer Program
Any calculators or content on this page is provided for general information purposes only. Casaplorer does not guarantee the accuracy of information shown and is not responsible for any consequences of its use.