First-time homebuyer programs include federal loan options with low down payments (FHA, VA, USDA), Fannie Mae and Freddie Mac programs starting at 3% down, HUD-approved housing counseling, and state/local down payment assistance grants that can cover 3%–5% of the purchase price.
"First-time homebuyer" programs reduce the cash and credit barriers to homeownership through lower down payments, below-market rates, or direct down-payment assistance. The term is broader than it sounds — many programs define "first-time buyer" as someone who hasn't owned a primary residence in the past three years, so previous homeowners who've rented for a few years may qualify.
Fannie Mae's HomeReady and Freddie Mac's Home Possible programs allow conventional loans with 3% down and accept income from household members beyond the primary borrower. Both require completion of a homebuyer education course. Eligibility is based on area median income limits — income cannot exceed 80% of AMI in most cases. These programs carry PMI below 20% down but at reduced rates compared to standard conventional PMI.
Every state has a housing finance agency (HFA) that offers down payment assistance (DPA) programs — typically grants or forgivable second mortgages covering 3%–5% of the purchase price. Eligibility rules (income limits, purchase price caps, property location) vary by state and program. The HUD directory of HFAs links to every state's programs. Local municipalities and nonprofits also administer DPA — check with your state HFA and local housing authority.
HUD-approved housing counselors provide free or low-cost guidance on budgeting, credit improvement, mortgage options, and navigating the homebuying process. Many DPA programs require completion of a counseling course. Finding a counselor before you start shopping can save significant time and money.
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