First-time buyer programs: down payment help that’s actually real

Who counts as a "first-time buyer"

It’s not always literally first-time. Most programs use a wider definition: you haven’t owned a primary residence in the last 3 years. So someone who owned a home a decade ago, rented for the last 5 years, and is buying again often qualifies.

Some programs add additional criteria: income limits (typically 80–120% of area median income), property limits (must be primary residence, often only single-family or 2–4 unit), and educational requirements (HUD-approved homebuyer course, 6–8 hours).

Federal loan programs (the big four)

These aren’t "first-time-buyer-only," but most first-time buyers end up using one. See our deeper guide on types of loans for details on each.

• FHA — Federal Housing Administration

  3.5% down minimum (with credit ≥ 580). More forgiving on credit and DTI than Conventional. Mortgage insurance is permanent for most cases. Loan limits vary by county.

• VA — Department of Veterans Affairs

  0% down for eligible veterans, active-duty servicemembers, and certain surviving spouses. No PMI. One-time funding fee instead. The strongest loan program in America by margin — if you qualify, this is almost always the best option.

• USDA — Rural Development

  0% down for rural and certain suburban areas. Income capped at 115% of area median. Property must be in a USDA-eligible zone (a surprising amount of suburbia qualifies — check the map).

• Conventional 97 / HomeReady / Home Possible

  3% down Conventional loans for buyers under income limits. PMI required, but cancellable when LTV drops to 80%. Often a better long-term cost than FHA for buyers with decent credit.

State and local down-payment assistance (DPA)

Every state has at least one DPA program, often run through the state’s Housing Finance Agency (HFA). They come in five flavors.

• Grants

  Free money toward down payment or closing. Doesn’t have to be repaid. Typical amount: $5k–$15k. Usually has income and education requirements.

• Forgivable second loans

  A second mortgage that’s forgiven if you stay in the home for X years (typically 5–10). Move out or refinance early and the remaining balance becomes due. ~$10k–$50k typical.

• Deferred-payment second loans

  A no-interest second mortgage you don’t repay until you sell, refinance, or pay off the first mortgage. Acts like an interest-free loan against future home equity.

• Repayable second loans

  A second mortgage with low (often subsidized) interest. You make a monthly payment on it from day one. Common for higher-income buyers who don’t qualify for grants.

• Mortgage Credit Certificates (MCCs)

  A federal income-tax credit equal to a percentage of mortgage interest paid each year. Adds to your effective income on the loan application — sometimes letting you qualify for more home.

Common state-DPA examples

These are real, well-known examples to give you a sense of what exists. Programs change — verify current details with the agency.

• CalHFA (California) — MyHome Assistance Program, ZIP and Forgivable Equity Builder grants. Up to 3% of purchase price as a deferred or forgivable second.
• SONYMA (New York) — Down Payment Assistance Loan up to $15,000 (NYC up to $30,000). 10-year forgivable.
• TSAHC (Texas) — Home Sweet Texas / Homes for Texas Heroes grants up to 5% of loan amount, never repayable. Special tier for teachers, EMS, peace officers, veterans.
• FHA Plus (Massachusetts) — MassHousing downpayment assistance pairs with low-interest first mortgages. Up to $30,000 for some areas.
• Florida Hometown Heroes — Up to $35,000 for eligible essential workers (teachers, healthcare, public safety, and many others).

Local & city programs

Many cities and counties run their own programs on top of the state offering. Common examples:

• City-funded forgivable seconds for buyers in specific neighborhoods (often urban-renewal target areas).
• Closing-cost-assistance grants from municipal Community Development Block Grant (CDBG) funds.
• Police, teacher, firefighter, EMS programs — discounts, grants, or below-market loans for essential workers buying within the jurisdiction they serve.
• Good Neighbor Next Door (HUD) — 50% off list price on HUD-foreclosure homes for teachers, firefighters, EMTs, and law-enforcement officers in revitalization areas. You must live in the home for 3 years.

Employer-assisted housing

A small but growing benefit. Some employers offer:

• Down-payment loans repayable through payroll deduction, often at zero interest.
• Down-payment grants (often vesting over a few years of continued employment).
• Closing-cost assistance as a one-time relocation benefit.
• Counseling and education programs partnered with HUD-approved counselors.

Universities, hospitals, large public employers, and some Fortune 500s have these programs. Check your benefits portal or talk to HR.

What you give up to use these programs

• Time

  Most programs require a HUD-approved homebuyer course (6–8 hours, often online). Some require additional counseling.

• Flexibility

  Income limits and property requirements can constrain your options. A grant that excludes 4-bedroom homes won’t work for a family that needs one.

• Resale flexibility

  Forgivable seconds and deferred loans become due if you sell before the forgiveness term ends. Plan to stay in the home long enough to satisfy the term.

• Interest-rate flexibility

  Some programs require you use a specific bond-funded mortgage product, which may have a slightly higher rate than the open market. Run the math — sometimes the assistance is worth it; sometimes a regular Conventional 3% down is cheaper over time.

How to actually apply

1. Talk to a loan officer first. They’ll tell you which programs you qualify for in your state — they see them weekly. Don’t apply blindly.
2. Take the homebuyer education course early. You’ll need the certificate before underwriting. Doing it in week 1 means you’re not scrambling in week 3.
3. Know your timeline. Programs have application windows — some are first-come/first-served and run out of funding. Apply as soon as you have a property under contract.
4. Keep documents organized. Income verification, tax returns, bank statements, ID. The same documents the loan requires, formatted slightly differently for the program.

Common questions