20 Best First-Time Home Buyer Programs
Buying your first home isn’t just a financial milestone—it’s a minefield of decisions, hidden perks, and misunderstood rules.
💡 Key Takeaways: Quickfire Answers for Confused First-Time Buyers
- Can I really buy a home with no money down? Yes, with VA, USDA, or select DPA programs.
- What’s better—FHA or Conventional? Depends on credit. FHA for low scores (580–619), Conventional for scores 620+.
- Can I stack programs? Absolutely. Smart buyers layer federal, local, and private aid.
- Are grants the same as loans? Nope. Grants = free money. Loans = repayable (sometimes forgivable).
- Can my profession unlock benefits? Yes. Teachers, nurses, veterans, and first responders have exclusive options.
- Is credit more important than income? They’re both gatekeepers. Improve both if you can.
- What’s the biggest mistake buyers make? Ignoring local programs and settling for just one benefit.
🔑 “I Don’t Have a Down Payment. Can I Still Buy a Home?”
Yes, with these 3 rockstar zero-down programs 👇
| Program | 💳 Min. Credit | 💰 Down Payment | 💡 Secret Sauce | 🎯 Best For |
|---|---|---|---|---|
| VA Loan | ~620 | 0% | No PMI, limited fees | Veterans + spouses |
| USDA Guaranteed | 640 | 0% | Rural homes, moderate income | Suburban/rural buyers |
| NACA | N/A (credit-blind) | 0% | No fees, no MI, below-market rates | Persistent buyers with discipline |
💬 Insider Tip: Even if you’re not eligible for VA/USDA, you can stack FHA + DPA for a near-zero cash deal.
🧠 “Should I Get FHA or Go Conventional?”
It depends on one number: your credit score.
| Credit Score | 💼 Best Loan Option | 💸 Mortgage Insurance | 🔁 Can Cancel? | 🧮 Cost Over Time |
|---|---|---|---|---|
| 580–619 | FHA 203(b) | MIP (lasts forever if <10% down) | ❌ | Higher overall |
| 620–659 | Toss-up | PMI (HomeReady/Home Possible) | ✅ At 20% equity | Lower if PMI cancels |
| 660+ | HomeReady® / Home Possible® | PMI | ✅ | Significantly cheaper |
🧮 Pro Tip: If your score is 610, jump to 620 and save thousands long-term with a cancellable PMI.
💸 “What If I Can’t Afford Closing Costs?”
You can eliminate them with layered DPA programs and private lender grants.
| Source | 🎁 Type | 🔁 Repayment | 📍 Where To Find |
|---|---|---|---|
| State HFAs | Grant, forgivable or deferred loan | Depends on type | State housing agency websites |
| Private Lenders | Grants ($5K–$10K+) | No repayment | BofA, Wells Fargo, etc. |
| Municipal Programs | Local bonuses for areas or professions | Often forgivable | City gov websites |
💬 Real-World Hack: Stack a $10K grant from Bank of America with FHA + a state DPA. Boom: $0 at closing.
🧭 “There Are 20 Programs—How Do I Pick the Right One?”
Use this cheat-code decision matrix:
| Factor | 🔍 What To Check | 🚀 Suggested Programs |
|---|---|---|
| Credit below 620 | Can’t go conventional | FHA + State DPA |
| Eligible veteran | 100% financing, no PMI | VA Loan |
| Buying rural | Check USDA map | USDA Guaranteed/Direct |
| Low-income buyer | ≤80% AMI | HomeReady®, Home Possible® |
| No savings at all | Down + closing help | FHA + Grant + MCC |
| Public servant | Community discounts | Good Neighbor Next Door, FL Hometown Heroes |
🛠️ “What If I Want More Than Just a Loan?”
Add-ons like MCCs and forgivable DPA loans supercharge your deal.
| Add-On | 💰 What It Does | 🏡 Who Offers It | 💡 Why It Matters |
|---|---|---|---|
| MCC | Annual tax credit on interest paid | State HFAs | Can save $2K/year |
| Forgivable DPA | Covers 3–5% of price | State + city programs | Turns into free money if you stay |
| Private Grants | $5K–$10K | Major banks | Offsets closing costs |
💥 “What Are the Most Powerful Local Programs?”
These are hyper-targeted, high-value, and often ignored by major banks.
| Program | 📍 Location | 💰 Benefit | 🧠 Smart Strategy |
|---|---|---|---|
| Raleigh Enhanced Assistance | Raleigh, NC | Up to $60K (deferred) | Buy in targeted area for max help |
| Greensboro Homebuyer Program | Greensboro, NC | $20K–$25K, extra $5K–$10K in bonus zones | Public employees get bonus cash |
| CalHFA MyHome | California | Up to 3.5% as deferred loan | Pair with FHA to go nearly $0 down |
| FL Hometown Heroes | Florida (statewide) | Up to $35K DPA | Open to 50+ essential professions |
| TX My First Texas Home | Texas | 5% DPA, repayable at sale | Great for buyers with income under cap |
🧮 “Is This Just Too Complicated?”
Not if you follow the 5-Step Pro Buyer Game Plan.
- Credit Check + DTI Review: Know your score and monthly debt. Target 620+ for options.
- Complete Homebuyer Education: Required by most programs—do it early.
- Research State + Local HFAs: Find your best DPA + MCC options at the state level.
- Interview Multiple Lenders: Ensure they’re approved for FHA, VA, USDA, and your state’s HFA.
- Layer + Apply: Combine mortgage + DPA + tax credits for max affordability.
🔮 “Where’s the Market Headed?”
3 Trends First-Time Buyers Must Know
| Trend | 🚨 What It Means |
|---|---|
| Credit score tightening | Lenders will likely favor borrowers with 640+ |
| Shared equity models rising | Watch for programs like CA Dream for All |
| Private sector grants expanding | Expect more $5K–$10K grants from big banks |
✅ Final Word: Your Financing Strategy Is Everything
Don’t walk blindly into the biggest financial decision of your life. Treat your mortgage like a startup business plan—optimize the capital stack, minimize long-term costs, and use every tool in the assistance ecosystem.
The most successful first-time buyers aren’t just eligible. They’re strategic.
📌 They know their credit.
📌 They find the best DPA combo in their zip code.
📌 And they don’t settle for one offer.
FAQs
🗨️ Q: “If I’m self-employed, can I still qualify for these programs?”
Absolutely, but the underwriting bar is higher. Most programs—whether FHA, VA, or conventional—accept self-employed applicants, but documentation standards are stricter. You’ll typically need:
- 2 full years of tax returns
- Profit & loss (P&L) statements, possibly year-to-date
- Bank statements for business and personal accounts
- Proof that your income is stable or increasing
Pro Insight: Many self-employed buyers accidentally hurt their chances by writing off too many expenses, reducing their taxable income. Lenders assess your net income, not your gross revenue.
| 📁 Document | 📊 Why It Matters |
|---|---|
| 1040 Tax Returns (2 years) | Shows actual income used for qualifying |
| Schedule C or K-1 | Identifies business type and deductions |
| YTD P&L | Demonstrates ongoing business health |
| 1099s (if applicable) | Confirms client payments |
🔎 Pro Tip: If your income dipped in the most recent year, expect tougher scrutiny or a lower loan amount.
🗨️ Q: “Can I use these programs to buy a fixer-upper or rehab property?”
Yes—but only with the right combination of financing tools. The most powerful options here are FHA 203(k) and Fannie Mae’s HomeStyle® Renovation Loan.
| 🔨 Loan Type | 🏠 Best For | 💡 Benefit | 📉 Downside |
|---|---|---|---|
| FHA 203(k) | Buyers with lower credit | Combines purchase + renovation in 1 loan | Complex, slow approval process |
| HomeStyle® | Buyers with 620+ credit | Conventional version; higher loan limits | Strict contractor requirements |
What makes them unique?
- You can finance both the home AND renovation costs into one mortgage.
- They require licensed contractors, itemized bids, and often a HUD consultant.
- Down payments are still low (3.5% for FHA, 3%–5% for HomeStyle®).
Don’t overlook: You can stack DPA programs on top of these, but the total loan (home price + reno budget) must fall within local lending limits.
🗨️ Q: “Do I lose assistance if I refinance later?”
Usually, yes—if it’s a forgivable or deferred second mortgage. Most Down Payment Assistance (DPA) programs come with strings attached: you can’t refinance, sell, or rent out the property before a specific time period (usually 5–15 years), or the assistance becomes repayable.
| ⏳ Forgiveness Structure | 🧾 Common Terms |
|---|---|
| Forgivable | Forgiven gradually (e.g., 20% per year over 5 years) |
| Deferred | Payable in full at sale or refinance |
| Repayable | Immediate repayment via scheduled payments |
🏡 Exception: Some programs allow refinancing into another affordable product if it benefits the borrower, but you must get written approval from the DPA administrator.
🔐 Pro Tip: Before refinancing, check the lien status of your second mortgage. Many homeowners mistakenly believe DPA loans vanish after closing—they don’t.
🗨️ Q: “I have student loans. Will that ruin my chances?”
Not necessarily—but your Debt-to-Income (DTI) ratio must survive the test.
| 💳 Debt Type | 🧮 DTI Calculation Method |
|---|---|
| FHA | 0.5% of loan balance OR actual payment (whichever is higher) |
| Conventional (Fannie/Freddie) | Actual payment shown on credit report |
| USDA | 1% of balance if payment not listed |
Why it matters: If your student loans are in deferment or forbearance, lenders might use a default monthly estimate, even if you’re not paying anything.
Best-case scenario? You’re on an income-driven repayment (IDR) plan with a low monthly obligation clearly shown on your credit report.
🔎 What’s a safe DTI?
- Ideal: ≤36%
- FHA Max: ~43%
- VA/USDA: May allow up to 50% with compensating factors
🎓 Pro Tip: Consolidating or switching to an IDR plan before pre-approval can drastically improve your loan eligibility.
🗨️ Q: “Do I have to repay the Mortgage Credit Certificate (MCC)?”
Nope—it’s a tax credit, not a loan. The Mortgage Credit Certificate reduces your federal income tax bill every year, dollar-for-dollar, based on a percentage of your mortgage interest (usually 20–50%).
| 💵 MCC Value Example | 📆 Annual Savings |
|---|---|
| $1,200/year credit | Over 30 years = $36,000 |
| $2,000/year credit (typical cap) | Even more valuable in high-interest loans |
Bonus: You can still deduct mortgage interest on your taxes—the MCC only reduces the creditable portion.
💡 Just don’t forget to:
- Apply before closing
- Submit IRS Form 8396 every year
- Alert your tax preparer—many aren’t familiar with MCCs!
🗨️ Q: “I heard DPA programs slow down closings. True?”
They can—but only if you or your lender aren’t prepared. Delays happen when:
- The buyer doesn’t complete the required homebuyer education in time
- The lender isn’t approved to originate DPA loans
- The program administrator has a slow underwriting timeline (common with government programs)
| 🕒 Typical DPA Approval Times | 🚦 Risk Level |
|---|---|
| Private lender grants | 🟢 Fast (1–3 days) |
| State HFA programs | 🟡 Moderate (5–14 days) |
| Local gov. programs | 🔴 Slow (2–4+ weeks) |
🔧 Solution: Work with a lender who knows your state/local programs cold and can start DPA documentation concurrently with mortgage underwriting—not after.
🗨️ Q: “What’s the most overlooked program on this list?”
The NACA Purchase Program—by far. It’s a unicorn in the homebuying world:
- No down payment
- No closing costs
- No mortgage insurance
- No fees
- No credit score requirement
- Below-market fixed rate
But here’s the catch: It’s extremely rigorous. You’ll attend workshops, submit intense documentation, and undergo financial counseling that can take months. Still, if you’re patient and disciplined, the savings can easily exceed $20K–$40K over the life of the loan.
| 🧠 Feature | 🎯 Why It’s Unique |
|---|---|
| No MI or fees | Huge long-term savings |
| Manual underwriting | Opens the door to buyers with thin files |
| Below-market rates | Lower monthly payments |
Underrated Strategy: Use NACA if you’re committed to financial wellness and not in a hurry. It’s a marathon, but the reward is unparalleled.
🗨️ Q: “Do I have to be a U.S. citizen to qualify for these programs?”
Not always. Many mortgage programs are open to non-citizens, but the type of residency matters—a lot.
| 🛂 Status | ✅ Eligible for Most Programs? | 📄 Required Documentation |
|---|---|---|
| U.S. Citizen | Yes | Standard ID + SSN |
| Permanent Resident Alien (Green Card Holder) | Yes | Green Card + SSN |
| Non-Permanent Resident Alien | Often | Valid visa + SSN + proof of legal residency |
| DACA Recipient | Sometimes (case-by-case) | Valid EAD + SSN + residency docs |
Lender discretion plays a huge role. Even if Fannie Mae or FHA guidelines allow it, some banks will still have overlays (extra internal rules) that exclude non-citizens unless they’ve been employed in the U.S. for multiple years.
💼 FHA, VA, and USDA accept permanent residents with proper documentation. Fannie Mae and Freddie Mac are generally more flexible, provided the borrower has a valid Social Security number and lawful presence.
💬 Pro Note: DPA programs follow stricter local rules—some state-funded grants are citizen-restricted, even if the main loan is allowed. Always double-check.
🗨️ Q: “If I’m buying a condo, do these programs still work?”
Yes, but the property type can complicate things. Condos are eligible under FHA, VA, USDA (rarely), and conventional loans, but the entire condo project must meet specific approval criteria.
| 🏢 Loan Type | 🧾 Project Approval Needed? | 🔍 Approval Resource |
|---|---|---|
| FHA | Yes, condo must be FHA-approved | FHA Condo Lookup Tool |
| VA | Yes, VA-approved condo list applies | VA Condo Database |
| Conventional (HomeReady/Home Possible) | Project review required (less strict) | Handled by lender |
| USDA | Rare—must be in rural zones + meet other property standards | Case-by-case basis |
🔐 What can go wrong?
- Budget issues: If the HOA has poor reserves or ongoing litigation, the project may be rejected.
- Owner-occupancy ratio: FHA and VA require a minimum number of units to be primary residences.
- Insurance: Inadequate master policy coverage will disqualify the project.
🏗️ Pro Tip: If the project isn’t FHA-approved, FHA “Single-Unit Approval” (aka spot approval) may still be possible. But expect more paperwork and slower processing.
🗨️ Q: “Can I buy a manufactured or mobile home with these programs?”
Yes, but it’s a different ballgame. Not all programs allow manufactured housing, and those that do have tight restrictions on the home’s foundation, age, and HUD certification.
| 🏡 Program | 🏷️ Allowed? | 🔍 Key Requirements |
|---|---|---|
| FHA | ✅ Yes | Must be on permanent foundation; built after 6/15/1976 |
| VA | ✅ Yes | Home must be classified as real property + titled appropriately |
| USDA | ✅ Yes | Must be new or never moved from original site |
| Conventional (HomeReady/Home Possible) | ⚠️ Limited | Fannie/Freddie restrict to certain lenders and loan types |
🧠 Biggest misconception? Buyers think any “mobile home” will qualify. But if the property was moved from one location to another, FHA and USDA will likely deny it. Lenders treat multi-move units as unstable collateral.
💡 Also important: The home must be real property, not personal property. That means you must own the land (not lease it), and the home must be affixed to a foundation per HUD standards.
🗨️ Q: “What happens if I break the residency requirement on a DPA?”
You trigger repayment—immediately. Most forgivable or deferred Down Payment Assistance loans come with a minimum owner-occupancy period, typically 5 to 15 years. Move out early? You’ll likely owe some or all of the assistance back.
| 🏠 Occupancy Type | ⏳ Common Term | 💣 Penalty If Broken |
|---|---|---|
| Forgivable Loan | 5–15 years | Pro-rated repayment based on time left |
| Deferred Loan | No term, but due at sale/refi | Full repayment |
| Grant | Immediate ownership | No repayment unless fraud or misuse |
🛑 Important: These restrictions are enforced through second liens on your property. Even if there’s no monthly payment, your title will show the debt—and you can’t refinance or sell without addressing it.
📚 Pro Tip: Some programs will waive the repayment if the owner dies or is medically unable to live independently. Check your agreement’s “hardship clauses.”
🗨️ Q: “Can I use these programs for a multi-family property?”
Yes—but with major caveats. You can use FHA, VA, and some conventional loans to purchase 2–4 unit properties, but you must live in one unit as your primary residence.
| 🏘️ Units | ✅ Program Eligibility | 🧾 Down Payment Needed |
|---|---|---|
| 2 Units | FHA, VA, HomeReady®, Home Possible® | FHA: 3.5%, Conv: 5–15% |
| 3–4 Units | FHA, VA (w/ conditions), Conv (tougher) | FHA: 3.5% (if self-sufficient) |
| 5+ Units | ❌ Not allowed | Requires commercial financing |
💡 What lenders check:
- Rental income potential
- Whether the property is self-sufficient (rental income must cover operating costs)
- Whether borrower has landlord experience (especially on 3–4 units)
🏗️ Under FHA, for 3–4 units, your DTI must include vacancy factors and projected rental income. If the property isn’t cash-flow neutral, your loan could be denied—even with great credit.
🔍 VA Loans: Rare but powerful. You can buy a 4-plex with zero down, as long as you occupy one unit and the others pass VA appraisal standards.
🗨️ Q: “Do I need perfect credit to use a DPA or grant?”
Not even close—but “bare minimum” won’t cut it either. Most DPA programs have credit floors, even if the underlying mortgage (e.g., FHA) allows lower scores.
| Program Type | 🧾 Typical Min Credit Score |
|---|---|
| FHA + DPA | 620–640 (even if FHA allows 580) |
| HomeReady® / Home Possible® | 620–660 |
| USDA | 640 (automated approval needed) |
| VA + DPA | 620–640 (depends on lender) |
🚨 Watch out for:
- Medical collections or recent late payments
- Thin credit files (few active accounts)
- High credit utilization (>30% of available credit)
🧠 Instead of “perfect,” aim for “clean + consistent.” DPA providers want to see:
- On-time rent history
- No major delinquencies in past 12 months
- Responsible use of credit
📈 Pro Strategy: If your score is close (e.g., 615), use a rapid rescore service with your lender. Pay down revolving debt, update errors, and gain points fast—often within 1–2 weeks.
🗨️ Q: “Can I still qualify if I’ve had a bankruptcy or foreclosure?”
Yes—but the timing and loan type matter enormously. Federal and conventional programs each have mandatory waiting periods post-bankruptcy or foreclosure, and some offer shorter paths if you’ve re-established credit responsibly.
| ⚖️ Event Type | ⏳ FHA/VA Waiting Period | ⏱️ Conventional (Fannie/Freddie) | 🚜 USDA Waiting Period |
|---|---|---|---|
| Chapter 7 Bankruptcy | 2 years from discharge | 4 years | 3 years |
| Chapter 13 Bankruptcy | 1 year (with on-time payments + court approval) | 2 years from discharge | 1–3 years |
| Foreclosure | 3 years | 7 years | 3 years |
🧠 What lenders look for post-bankruptcy/foreclosure:
- Clean payment history since discharge
- Stable employment
- Rebuilt credit (ideally >620)
- Reasonable explanation of financial hardship
Critical caveat: These timelines reset if you had a foreclosure after a bankruptcy. You can’t “double count” the clock.
🔎 Pro Strategy: Apply through FHA first—it’s the most lenient post-hardship. Use the extra time to boost your credit and transition to a conventional refinance later, shedding FHA’s MIP.
🗨️ Q: “Can I buy a house with someone who’s not my spouse—like a friend or sibling?”
Absolutely—but ownership and liability must be crystal clear. Co-buying is increasingly common among millennials and Gen Z buyers, but you need to plan for legal, financial, and logistical complexities.
| 👯 Co-Buyer Type | ✅ Loan Allowed? | 💬 Tips for Success |
|---|---|---|
| Sibling | Yes (all loan types) | Use a co-ownership agreement |
| Friend | Yes | Define % ownership + exit strategy |
| Unmarried Partner | Yes | Both should be on title + mortgage |
| Parent/Child (Occupant) | Yes | Consider multi-generational loan options |
| Parent/Child (Non-Occupant) | Yes (FHA allows co-signer) | Parent helps with income/Debt-to-Income |
💼 Ownership models to consider:
- Joint Tenancy (equal rights, right of survivorship)
- Tenants in Common (flexible shares, no survivorship)
⚖️ Key Move: Draft a cohabitation or co-ownership agreement covering:
- Who pays what
- Buyout clauses
- What happens if one party wants to sell
🧠 Pro Tip: FHA allows a non-occupant co-borrower (like a parent) to help you qualify—even if they won’t live in the home.
🗨️ Q: “Can I use rental income from roommates or future tenants to qualify?”
Sometimes—depending on loan type and how the income is documented. Underwriting guidelines vary, but boarder income and accessory dwelling unit (ADU) income can both count in specific cases.
| 💵 Income Type | 🏠 Loan Programs That Allow It | 📎 Requirements |
|---|---|---|
| Boarder (roommate) income | HomeReady® only | 12 months documented history; cannot be family |
| ADU rental income (garage/guest house) | HomeStyle®, Home Possible®, some FHA | Lease agreement + appraised rental value |
| Future rental income (2–4 unit purchase) | FHA, VA | Must live in one unit; rental projections needed |
Boarder income is one of the most underutilized tools. Fannie Mae’s HomeReady® program allows up to 30% of total qualifying income to come from a roommate as long as they’ve lived with you for at least a year and paid rent.
📎 Tip: Collect canceled checks or digital transfer records—Venmo screenshots won’t cut it.
🔍 FHA is stricter: They generally won’t allow boarder income unless it’s for family support in hardship cases.
🗨️ Q: “What if I want to house hack or use Airbnb—is that allowed?”
Rarely with first-time buyer assistance. Most DPA and government-backed loans strictly prohibit short-term rentals, at least for the initial owner-occupancy period (typically 12 months minimum).
| 🏡 Strategy | ⚖️ Permitted Under These Loans | 🔒 Restrictions |
|---|---|---|
| House hacking (long-term tenants) | FHA, VA, USDA, HomeReady® | Must occupy 1 unit full-time |
| Short-term rentals (Airbnb) | ❌ Not allowed initially | Violates owner-occupancy clauses |
| Renting rooms after 12 months | ✅ Allowed (if owner remains in unit) | Must check local DPA terms |
| STRs in multi-unit properties | ❌ Almost always restricted | Lenders disfavor volatile income sources |
🚫 Violating occupancy rules can trigger DPA clawbacks, mortgage acceleration, or insurance revocation. It’s not worth risking your entire loan over a few months of Airbnb cash.
💡 Want flexibility? Consider a conventional loan without layered DPA, and purchase a property zoned for legal STRs—just don’t try to retrofit a DPA deal into a rental business.
🗨️ Q: “I don’t want to max my preapproval—can I buy below my limit?”
Yes, and you should. Lenders approve based on what you can afford, not what’s comfortable. Borrowing below your max increases your financial buffer and improves loan terms.
| 📊 Financial Benefit | 💡 Impact |
|---|---|
| Lower debt-to-income ratio | Boosts approval odds, especially for DPA |
| Smaller loan balance | Reduces PMI and interest paid over time |
| Higher residual income | Required for VA loans and a smart strategy for all buyers |
| Stronger negotiating power | Sellers favor buyers with headroom in budget |
🧠 Smart buyers leave at least 10% headroom between what they’re approved for and what they actually offer. That keeps room for:
- Home maintenance
- Unexpected repairs
- HOAs or property tax increases
- Lifestyle flexibility
🔎 Pro Insight: Underwriting sees conservative spending as a positive compensating factor, especially on borderline DTI files.
🗨️ Q: “I heard interest rate buydowns are a thing—can I use one with these programs?”
Yes—but coordination is key. Temporary buydowns (like 2-1 buydowns) and permanent rate buydowns are allowed on most FHA, VA, and conventional loans if structured properly—even with DPA layered in.
| 💲 Buydown Type | ⌛ Duration | 🎯 How It Works |
|---|---|---|
| 2-1 Buydown | 2 years | Year 1 = 2% below full rate, Year 2 = 1% below, Year 3 = full rate |
| 1-0 Buydown | 1 year | Year 1 = 1% below rate |
| Permanent Buydown | Life of loan | Use seller credit to lower rate for good |
🏡 Most common use: In high-rate markets, buyers negotiate seller-paid buydown credits as part of purchase price. These can be layered with DPA if:
- All credits are disclosed
- DPA doesn’t prohibit it (check local guidelines)
- The lender is experienced with buydown math
📌 Example: You negotiate a $10K seller credit. You apply $6K toward a buydown and $4K to closing costs. If your DPA covers your down payment, you’ve now reduced both rate and cash needed at close.
💬 Note: Some local grant programs limit how much seller credit can be used for rate reduction. Always check with your lender’s compliance team.
