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14 First-Time Home Buyer Grants and Programs in 2023

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The typical home buyer spends seven years saving to make a down payment. That’s a long time to devote to planning to buy a home – especially because home values rise over time. 

You’re chasing a moving target. So, stop waiting. You don’t need 20% down to buy a home. 

16 first-time home buyer programs make it possible to stop renting and start owning sooner. Cash grants, tax credits, and mortgage rate discounts can help you achieve your American Dream now – without the wait.

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Here is a collection of first-time home buyer programs, grants, and mortgages for 2023.

14 First-Time Home Buyer Programs [2023 Updates]

What is a First-Time Home Buyer Program?

First-time home buyer programs are mortgage loans and special incentives that widen the pool of eligible U.S. home buyers. Programs are backed by governments and public and private banks.

First-time buyer programs include:

  1. Low-down payment mortgages, which are mortgages that allow a down payment of 5 percent or less
  2. No-down payment mortgages, which are mortgages that don’t require a down payment
  3. Mortgage loans that give interest rate discounts to first-time buyers 
  4. Mortgage loans that relax approval standards for first-time buyers
  5. Mortgage loans with favorable terms based on a buyer’s profession

First-time buyers can apply for mortgages online or in person. Mortgage companies can issue first-time buyer approvals in minutes.

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What Are the Different Types of First-Time Home Buyer Programs?

There are six first-time home buyer mortgage programs, each backed by the U.S. government, which endorses more than one million loans for first-timer buyers per year.

Note: the No Closing Cost Mortgage is not a first-time home buyer mortgage program, although many first-time buyers use it.

1. The FHFA First-Time Home Buyer Mortgage Rate Discount

For all loans in 2023, the Federal Housing Finance Agency (FHFA) discounts first-time home buyer interest rates so homes are more affordable.

To receive the first-time buyer mortgage rate discount, home buyers must: 

  • Be a first-time home buyer
  • Use any conventional, 30-year fixed-rate mortgage
  • Earn an income at or below the area’s typical household income

Eligible buyers get automatic mortgage rate discounts of up to 1.75 percentage points off conventional 30-year fixed-rate mortgage rates, which reduces monthly mortgage payments by as much as 20 percent.

Mortgage rate discounts vary among first-time buyers based on credit score, down payment size, property type, and loan program. 

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2. HomeReady

HomeReady is a 3-percent down payment loan offering reduced mortgage rates and costs for low- and moderate-income home buyers. HomeReady requires a minimum 620 FICO score.

Buyers who use HomeReady to purchase a HomePath property receive a $500 closing cost credit. Buyers can also use the HomePath Ready Buyer program and receive a 3 percent cash contribution toward the mortgage closing costs.

Get started with a HomeReady approval here.

3. Home Possible

Home Possible is a 3-percent down payment mortgage similar to HomeReady. It offers reduced mortgage rates and costs for low- and moderate-income home buyers. It is available as a fixed-rate or adjustable-rate loan. 

Home Possible requires a 660 minimum FICO score and shines as a low-down-payment mortgage for multi-generational households.

Get started with a Home Possible approval here.

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4. Conventional 97

Conventional 97 is the 3-percent down conventional mortgage for home buyers who earn too much income to qualify for HomeReady or Home Possible. Conventional 97 is a catch-all, low-down payment mortgage for single-family homes. It requires a 620 FICO score and is available as a 30-year fixed-rate mortgage only.

Get started with a Conventional 97 approval here.

5. FHA Mortgage

The FHA mortgage is a 3.5-percent downpayment mortgage loan for residential properties. It’s backed by the Federal Housing Administration (FHA) and requires a 580 FICO score. However, the FHA makes credit score exceptions for buyers with credit scores as low as 500 and buyers with no credit history whatsoever. 

The FHA mortgage program is the most inclusive low-down payment program. It’s excellent for multi-unit properties, too.

Get started with an FHA mortgage approval here.

6. USDA Mortgage

The USDA mortgage is a 100% mortgage backed by the U.S. Department of Agriculture for homes in non-urban communities, which covers 91 percent of the United States land mass.

USDA mortgages allow 100% financing for buyers with a minimum 580 credit score. USDA mortgage rates are often the lowest of all the low-down-payment mortgage loans.

Get started with a USDA approval here.

7. VA Mortgage

The VA mortgage is a 100% mortgage backed by the Department of Veterans Affairs. It’s available to active-duty military members, veterans of the armed services, and surviving spouses.

VA loans require a minimum 620 credit score and never need mortgage insurance. Eligible buyers can use VA loans to purchase residential, 1-4 unit properties in all 50 states and U.S. territories. 

Get started with a VA mortgage approval here.

What Is a First-Time Home Buyer Grant?

A first-time home buyer grant is a cash award paid to new homeowners at the time of purchase. Governments award grants at the federal, state, and local levels. Charitable organizations and housing foundations give cash grants, too.

First-time home buyers don’t have to repay grants because, by definition, grants are contributions toward homeownership, which is a public good. Research shows that making $10,000 cash grants available to first-time buyers increases an area’s homeownership rates by 34 percent.

When new homeowners move into a neighborhood:

  • Neighborhoods thrive on additional tax income
  • Businesses prosper from new local spending
  • Families build generational wealth through real estate

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Popular First-Time Home Buyer Grants

In its last session, Congress introduced 10 bills offering tax credits and cash grants to home buyers, including the $15,000 First-Time Home Buyer Tax Credit and the LIFT Act, which offers ultra-low mortgage rates for eligible buyers.

Let’s look at the first-time home buyer grants that may be available to you.

1. The National Homebuyers Fund

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 cash grant, home buyers sign an agreement that says they’ll live in the home and make it their residence for at least five years.

Renters cannot directly apply for the National Homebuyers Fund grant – only your mortgage company can do it. Call (916) 444-2615 to get a list of participating lenders.

Get pre-approved to buy a home today.

2. Forgivable Mortgages

Forgivable mortgages are mortgages released after a homeowner satisfies a specific condition – often making on-time payments for five years. 

Here’s how it works: A first-time buyer uses a conventional mortgage to finance a home and makes a down payment using a $15,000 forgivable mortgage.

Five years later, if the buyer still lives in the home and has made payments on-time payments, the lender forgives the $15,000 mortgage, and its lien is released from title.

If you’ve heard of cities paying people to move to their town, you’ve seen forgivable mortgages in action. Governments love forgivable mortgages because they boost homeownership, neighborhood, and community investment — the three pillars of a robust economy. 

Homebuyer.com offers a nationwide forgivable mortgage through our instant mortgage application. Recipients must have an average credit rating, qualify for an FHA loan, and agree to use a 30-year fixed-rate mortgage, among other qualifications.

3. Discounted Homes from HUD

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 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. To apply for Good Neighbor Next Door, find a home on the HUD website and apply for the mortgage online.

4. Closing Cost Assistance Programs For First-Time Buyers

Closing cost assistance programs are home buyer stimulus plans that pay up to 100% of a buyer’s purchase closing costs, including title expenses, transfer taxes, and mortgage fees.

The National Council of State Housing Agencies website hosts an active list of closing cost assistance programs. Buyers must satisfy minimum credit standards and meet local income thresholds. Homes must meet minimum safety and quality standards.

5. Down Payment Assistance Programs (DPA)

Many state and local governments offer first-come, first-served cash grants to first-time buyers to help with home affordability. Grant sizes range from $500 to $50,000, and buyers can use them for mortgage closing costs, mortgage rate reductions, and down payments on a home.

Grants may require home buyers to earn an income within the area’s lower two quartiles and may enforce a minimum credit score requirement.

To find housing grants and programs available in your area, visit your municipality website, search for “housing assistance” or “housing grants,” and review the program requirements for down payment assistance.

6. Down Payment Loans

Down payment loans are loans made by non-profit and community organizations that replace a home buyer’s down payment with borrowed cash. Interest rates on down payment loans are often in the one-percent range and amortized over 30 years for ultra-low payments.

To find whether down payment loans are available in your area, check with your municipal government’s housing administration, which can provide local connections. 

Some mortgage programs disallow down payment loans, so buyers should check with their lender before applying.

Get started with a mortgage approval here.

7. Deferred Mortgages

Deferred mortgages are modified mortgages that require no repayment while you live in your home. Deferred mortgages are payable only when you sell your home or refinance it.

Municipal governments and local foundations issue deferred mortgages up to $25,000. 

They’re frequently limited to first-time buyers whose income falls below area averages and whose credit history shows a record of on-time payments.

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Congress & First-Time Home Buyer Programs

Congress supports first-time home buyers and introduces legislation to help renters become first-time homeowners each session.

Congress is expected to introduce two significant bills in its current session. One is a tax credit. The other is a cash grant.

1. The $15,000 First-Time Home Buyer Tax Credit

Tax credits are reductions to a person’s federal tax liability to promote specific buyer behaviors, such as buying a first home.

The IRS issues tax credits to homeowners for certain home upgrades and improvements. Also, many homeowners claim mortgage interest paid as a federal tax deduction. 

However, the big win for this year’s home buyers would be the $15,000 tax credit for first-time home buyers.

The 2023 First-Time Home Buyer Tax Credit Act is modeled after the version from 2009, so the IRS tax code for its passage already exists. The updated version of the popular first-time buyer program proposes to refund up to $15,000 in tax liability to first-time home buyers retroactively to December 31, 2020.

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2. The $25,000 Downpayment Toward Equity Cash Grant 

The Downpayment Toward Equity Act is a home buyer grant that awards up to $20,000 cash to first-generation home buyers and an additional $5,000 to buyers from socially or economically disadvantaged backgrounds.

Home buyers can use grant money to make a down payment, pay closing costs or real estate taxes, and access lower mortgage rates via discount points.

The Downpayment Toward Equity Act of 2023 is not yet enacted. It was re-introduced in June 2023 in the House of Representatives with more than 30 bill co-sponsors.

3. The DASH Act

The DASH Act is a comprehensive housing bill. It incentivizes home builders to build more homes and expands homeownership opportunities for first-time buyers. The bill targets low- and moderate-income Americans and includes a $15,000 first-time home buyer tax credit.

To qualify for the full DASH Act tax credit, home buyers meet income and residency requirements and must purchase the subject property for no more than 110 percent of the local conforming mortgage loan limit.

The DASH Act is a bill in Congress and not yet passed into law.

Read more about the DASH Act.

4. The HELPER Act

The HELPER Act is a mortgage bill for home buyers that exempts teachers, firefighters, law enforcement officers from downpayment and monthly mortgage insurance requirements. HELPER stands for “Homes for Every Local Protector, Educator, and Responder.” The bipartisan bill has more than 70 co-sponsors.

To qualify for a HELPER Act Mortgage, home buyers must work full-time as a teacher or first responder, have four years of consecutive work experience, and plan to purchase a one-unit home or condominium.

The HELPER Act is a bill in Congress and not yet passed into law.

Read more about the HELPER Act mortgage.

Frequently Asked Questions from the Chat

What is a first-time home buyer?

A first-time home buyer is any person who has not owned a primary residence in the prior 36 months. Eligibility is based on the purchase date. People who owned a home previously, and have not owned a home in 3 years, are first-time home buyers. There are other exceptions, too. 

Read more about who qualifies as a first-time home buyer.

How do you buy a house if you have no money?

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. 

Read more about buying a house with no money.

What is an NHF grant?

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.

Which loan is best for first-time home buyers?

Most first-time home buyers use 30-year fixed-rate mortgages backed by Fannie Mae or Freddie Mac to purchase their first home, but that doesn’t make the 30-year fixed the “best loan” for first-time buyers. Mortgages are not one-size-fits-all. Get pre-approved and let your lender advise you on which mortgage loan is best for you.

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