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Homebuyer.com
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This article was checked for accuracy as of October 2, 2024. Learn more about our commitments to accuracy and your mortgage education in our editorial guidelines.
Updated: October 2, 2024
This article tracks housing and first-time home buyer bills in Congress. None of the programs featured are passed into law. This article is for informative and planning purposes only.
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Along with low-down payment mortgages and no-down payment options, such as the USDA mortgage and VA mortgage, there are 16 first-time home buyer grants and programs that make buying your first home more affordable and accessible.
First-time home buyer programs are mortgage loans and benefits that help renters achieve their American Dream of homeownership.
First-time buyer programs are broadly grouped into 3 categories:
First-time buyer programs expand homeownership opportunities to new groups of people. They’re particularly beneficial to buyers for whom making a big down payment or paying real estate fees is cost-prohibitive.
Eligibility may be based on job title, household income, or status as a first-time buyer. Programs are typically inclusive, lenient, and offered at low mortgage rates.
Check your eligibility and begin your application now.
An affordable mortgage is a government-backed mortgage with relaxed down payment requirements, reduced mortgage insurance fees, or discounts for qualified buyers.
Our analysis of mortgage statistics shows more than 1 million first-time home buyers use affordable mortgages each year. Here are the programs first-time buyers use.
HomeReady is a 3-percent down payment mortgage that offers reduced mortgage rates and lower loan costs for low- and moderate-income home buyers.
HomeReady is a modified conventional mortgage, backed by Fannie Mae. It requires a minimum 620 credit score and allows a debt-to-income ratio of up to 50%. Buyers can use it to finance Accessory Dwelling Units and may use Cannabis industry income as part of their application.
Home buyers using HomeReady to purchase a property in default can receive an extra $500 closing cost credit and up to 3 percent toward their mortgage closing costs via Fannie Mae’s HomePath foreclosure sale program.
Home Possible is a 3-percent down payment mortgage similar to HomeReady. It offers low- and moderate-income home buyers reduced mortgage rates and loan fees and is available as a fixed-rate or adjustable-rate loan.
Home Possible requires eligible buyers to have a 660 credit score while allowing up to 50% DTI. Home Possible is based on a Freddie Mac conventional mortgage.
Compare HomeReady and HomePossible side-by-side.
Conventional 97 is a 3-percent down conventional mortgage for home buyers who are not low- and moderate-income earners. The program is sometimes called the Standard 97 LTV, which is shorthand for a “standard conventional 97% loan-to-value mortgage”.
Program eligibility requires a 620 credit score, a 50% debt-to-income ratio, and buyers must meet the definition of a first-time home buyer.
The Conventional 97 is available as a fixed-rate mortgage for 1-unit properties only, which includes single-family homes, eligible condos, and townhomes.
The FHA mortgage is the original affordable housing mortgage loan.
Created as part of the New Deal in 1934, the FHA loan is an inclusive 3.5% down payment mortgage backed by the Federal Housing Administration (FHA). FHA mortgage guidelines are lenient with credit scores, income sources, and credit history.
The FHA mortgage is popular with the “house hacker” crowd for its comparatively low mortgage rates for multi-unit homes.
Home buyers using an FHA-backed mortgage in 2024 are limited to loan sizes of $498,257 for 1-unit homes in most parts of the country, and $1,149,825 in high-cost areas.
Find your local FHA mortgage loan limit here.
The USDA mortgage is an affordable housing mortgage program for buyers in non-urban communities. According to the USDA eligibility map, 91% of the United States land mass qualifies as non-urban.
The U.S. Department of Agriculture backs USDA mortgages.
USDA loans do not require a down payment, and buyers using the USDA mortgage average the smallest down payment of all government-backed loan types.
Homebuyer.com’s collection of mortgage statistics shows the typical USDA mortgage is made at a loan-to-value of 97.76 percent, with mortgage rates averaging 24.7 basis points below comparable conventional home loans.
The VA mortgage is a home affordability loan program for active-duty military members, veterans of the armed services, and surviving spouses. The Department of Veterans Affairs backs the VA mortgage, available to buyers as fixed- or adjustable-rate mortgages in all 50 states.
VA mortgages require a minimum 580 credit score and never charge mortgage insurance. Eligible military buyers can use VA loans to purchase any residential property as a primary residence except for non-warrantable condos and co-ops.
Since early-2023, the FHFA First-Time Home Buyer Mortgage Rate Discount is applied automatically to all mortgages for buyers meeting three mortgage criteria:
Eligible first-time buyers get a mortgage rate discount of up to 1.75 percentage points off today’s mortgage rates, increasing a buyer’s home purchasing power by approximately 19 percent. Mortgage lenders apply the discount automatically, which varies by credit score, down payment size, property type, and loan program.
| Credit Score | Down Payment | Loan Type | Mortgage Rate Discount |
| 620 | 3% | Fixed | 1.75% |
| 640 | 3% | Fixed | 1.50% |
| 660 | 3% | Fixed | 1.25% |
| 680 | 3% | Fixed | 0.50% |
| 700 | 3% | Fixed | 0.50% |
| 720 | 3% | Fixed | 0.25% |
| 740 | 3% | Fixed | 0.25% |
| 760 | 3% | Fixed | 0.25% |
Cash grants are non-repayable gifts to first-time home buyers to help purchase their first home.
Mortgage lenders do not issue cash grants.
Home buyers should apply for cash grants with government and local organizations directly, which do a public good, HUD studies show cash grants increase homeownership rates by 34 percent.
Here are some common first-time home buyer cash grants and buyer incentives available to home buyers today:
The National Homebuyers Fund is a non-profit public benefit corporation that sponsors home buyers with up to 5 percent of a home’s purchase price. In exchange for the organization’s cash grant, home buyers agree to live in their home as a primary residence for at least five years.
The National Homebuyers Fund cash grant is typically used together with a standard mortgage loan, such as a conventional, FHA, USDA, or VA home loan, as a five percent down payment. Buyers cannot apply directly for the National Homebuyers Fund grant – only a mortgage lender can do it. For a list of participating lenders, call (916) 444-2615.
The Good Neighbor Next Door Program (GNND) is a U.S. Department of Housing and Urban Development (HUD) program that sells repossessed homes to first-time home buyers at half-price.
Good Neighbor Next Door is available to teachers, firefighters, law enforcement officials, and emergency medical technicians who want to live in the same community where they work.
Home buyers who want to buy a Good Neighbor Next Door property must search for homes on the HUD website, and apply for their mortgage through a HUD-approved lender.
Closing cost assistance programs are incentive programs that pay up to 100 percent of a first-time home buyer’s closing costs, including title insurance fees, real estate transfer taxes, and mortgage discount points.
Closing cost assistance is handled outside of the mortgage approval sequence.
Home buyers searching for closing cost assistance programs can search the National Council of State Housing Agencies’ website at https://www.ncsha.org/about-us/about-hfas/ or perform a similar search through local homebuying programs at HUD.gov.
Eligibility criteria may be out-of-date and program funding may be expired, so check with each local agency before applying for a program.
Down payment assistance is a first-come, first-served cash grant to help make homes affordable.
Cash grants can range from $500 to $50,000 which buyers can apply to closing costs, discount points, and down payments on a home.
The most common form of down payment assistance is seller concessions, which is when a home seller pays some or all of a home buyer’s settlement fees. Seller concessions are negotiated by a buyer’s agent and included in a purchase offer agreement.
Other forms of down payment assistance include federal and local tax credits, which are automatically applied by the IRS, and forgivable grants for buying a home and living in it for a predetermined number of years, usually five.
Down payment loans are loans made by non-profit and community organizations at ultra-low rates, used for a buyer’s down payment percentage. Interest rates for a down payment loan are often in the one-percent range and amortized over 30 years.
A $25,000 down payment loan at 1% would cost a home buyer $80 per month.
Some mortgage program guidelines disallow down payment loans, so check with your lender before applying. Your lender may have other low-down payment options available for you.
A deferred mortgage is a modified mortgage loan that requires no payments whatsoever so long as you live in your home. A deferred mortgage only comes due when you sell your home or refinance it.
Mortgage banks and brokers don’t issue mortgages with deferred mortgage payments. The best place to find a deferred mortgage is with a municipal government or local foundation, which may issue deferred mortgage loans in amounts up to $25,000.
Deferred mortgages are often limited to low- to moderate-income first-time buyers with a decent credit history and record of on-time payments.
Congress regularly introduces first-time home buyer bills to help renters pursue of the American Dream of homeownership. Some bills pass into law. Others do not.
Here are several first-time home buyer programs in progress with the current Congress.
The First-Time Homebuyer Act of 2024 gives eligible first-time home buyers a federal tax credit of up to $15,000 that can used at closing to make a down payment and pay closing costs, or be paid by the Treasury as a tax refund.
The First-Time Homebuyer Act of 2024 is a bi-cameral bill. It’s sometimes called the Biden First-Time Buyer Tax Credit because it was announced as part of the administration’s push for affordable housing and modeled after the Obama First-Time Buyer Tax Credit, which created more than 2.6 million new homeowners.
The Downpayment Toward Equity Act is a cash grant that awards up to $20,000 to first-generation, first-time home buyers, plus an additional $5,000 to buyers from socially or economically disadvantaged backgrounds.
The bill’s language allows home buyers to use their $25,000 cash grant to make a down payment, pay closing costs or real estate taxes, or access lower mortgage rates.
The DASH Act is a comprehensive housing bill, similar to the Biden Tax Credit bill, giving eligible first-time buyers a $15,000 federal income tax credit.
To qualify for the DASH Act as the bill’s written, home buyers must be low- to moderate-income earners, meet specific residency requirements, and purchase a home whose price is no more than 10 percent above the area’s conforming mortgage loan limit.
The HELPER Act is a mortgage bill allowing teachers, firefighters, and law enforcement officers to obtain mortgages without a down payment or monthly mortgage insurance.
HELPER stands for “Homes for Every Local Protector, Educator, and Responder.”
The HELPER Act is a bipartisan, bicameral bill with strong support and a long list of co-sponsors. The bill is piggybacked on the FHA mortgage program and could pass into law at any time.
The $10,000 Mortgage Credit Relief program is a proposal President Biden floated during his 2024 State of the Union address. The program would give eligible first-time home buyers two annual tax credits of $5,000 to offset the costs of carrying a higher mortgage.
A first-time home buyer is a person who has not owned their main residence in the 36 months prior. A person who owned a home previously and has not owned a home in 3 years is a first-time home buyer for the second time.
Home buyers with no money for a down payment can use housing grants, down payment assistance, and forgivable mortgages to purchase a home with no money down. Some home buyers are eligible for 100% mortgages via the USDA and VA loan programs.
An NHF grant is a housing grant for first-time home buyers awarded by the National Homebuyers Fund. NHF awards housing grants for up to 5 percent of a home’s purchase price.
Most first-time home buyers use a conventional 30-year fixed-rate mortgage to purchase their first home, but that doesn’t make it the “best loan” for first-time buyers. Mortgages are not one-size-fits-all. Let a mortgage company pre-approve your mortgage and give you advice.
No, most first-time home buyer programs were created to promote homeownership among Americans, and healthy neighborhoods and communities. Some programs target lower-income households, but many serve buyers with all incomes.
This article, "16 First-Time Home Buyer Grants and Programs," authored by Dan Green, is based on extensive professional mortgage experience and includes references to trusted sources such as industry-leading financial institutions and expert research from the following websites:
This article was last updated on October 2, 2024.
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