The main first-time homebuyer programs in the U.S. are FHA loans (3.5% down), VA loans (0% down for eligible veterans and service members), USDA loans (0% down in eligible rural areas), and Fannie Mae and Freddie Mac conventional loans with 3% down. On top of those, every state housing finance agency runs down payment assistance, usually as grants or low-cost second loans that can cover part or all of the down payment and closing costs.
“First-time buyer” is broader than it sounds. For most programs it means anyone who hasn’t owned a home in the past three years, so a divorced parent or someone who sold years ago may qualify. This guide explains each program’s real requirements, who each one fits best, and how to stack a loan with state assistance.
Who counts as a first-time homebuyer
HUD and most state agencies use a three-year rule: you’re a first-time buyer if you haven’t had an ownership interest in a principal residence during the three years before the purchase. Many programs also count a displaced homemaker or a single parent who only owned a home with a former spouse while married. Some state programs drop the first-time requirement entirely for buyers in targeted areas, often census tracts the agency has marked as underserved.
Not every program on this list requires first-time status. FHA, VA and USDA loans are open to repeat buyers too. They show up on first-time buyer lists because their low down payments and flexible credit rules fit people buying their first home.
The major programs compared
Figures below are federal or agency rules for 2026. Individual lenders can set stricter credit score minimums, so treat the scores as floors, not guarantees of approval.
| Program | Minimum down | Credit score guideline | Mortgage insurance or fees | Main eligibility limits |
|---|---|---|---|---|
| FHA | 3.5% (10% with scores 500 to 579) | 580+ for 3.5% down; many lenders want about 620 | 1.75% upfront plus 0.55% a year for most borrowers | Loan limits from $541,287 to $1,249,125 for a single-family home in 2026, by county; must be your primary home |
| VA | 0% | No VA minimum; lenders often want 580 to 620 | No monthly mortgage insurance; funding fee 2.15% on first use with under 5% down, waived for many disabled veterans | Service history eligibility and a Certificate of Eligibility |
| USDA Guaranteed | 0% | Lenders usually look for about 640 for automated approval | 1% upfront and 0.35% a year | Eligible rural or suburban area; household income generally up to 115% of area median |
| Fannie Mae HomeReady / Freddie Mac Home Possible | 3% | Lender minimums commonly 620 or higher | PMI, often at reduced rates, cancellable at 80% loan-to-value | Income up to 80% of area median income; homebuyer education if all borrowers are first-time buyers |
| Fannie Mae 97% LTV / Freddie Mac HomeOne | 3% | Lender minimums commonly 620 or higher | Standard PMI, cancellable | No income limit, but at least one borrower must be a first-time buyer; conforming loan limit $832,750 in most areas |
One change from late 2025: Fannie Mae removed its fixed 620 minimum credit score for loans run through its Desktop Underwriter system, letting the automated review weigh the whole file instead. In practice, many lenders still apply their own 620 cutoff, so a lower score may mean shopping several lenders.
FHA loans: flexible credit, permanent insurance
FHA loans are insured by the Federal Housing Administration, part of HUD. They’re popular with buyers who have credit scores in the 580 to 680 range or higher debt-to-income ratios, because FHA pricing doesn’t rise as sharply for lower scores as conventional PMI does. The down payment can come entirely from a gift or an approved assistance program.
The trade-off is mortgage insurance. With less than 10% down, FHA’s annual premium lasts for the life of the loan, so the only way to remove it is to refinance. With 10% or more down, it ends after 11 years. FHA also has stricter property condition rules, which can complicate buying a fixer-upper. Since May 2025, FHA loans are no longer available to borrowers who are non-permanent residents.
VA and USDA loans: zero down for those who qualify
VA loans are backed by the Department of Veterans Affairs for eligible veterans, active-duty service members, many National Guard and Reserve members, and some surviving spouses. They allow 100% financing with no monthly mortgage insurance, which makes them one of the lowest-cost options available. The funding fee drops to 1.5% with 5% down and 1.25% with 10% down on first use, and veterans receiving VA disability compensation are generally exempt. You can use the benefit more than once.
USDA Guaranteed loans cover homes in areas the Department of Agriculture classifies as rural, which includes many small towns and outer suburbs. Check a specific address on USDA’s eligibility map before ruling it out. Income limits count all adults in the household, not just the borrowers, and in most counties the limit for a household of one to four people is around $120,000, higher in expensive areas. USDA also runs a Direct loan program for low-income buyers with payment assistance that can lower the effective rate.
Example: Marcus left the Army four years ago and is buying a $300,000 home with a VA loan and no down payment. His first-use funding fee is 2.15%, or $6,450, which he finances, making his loan $306,450. He pays no monthly mortgage insurance. A conventional loan with 3% down on the same home would have required $9,000 at closing plus PMI of perhaps $150 to $250 a month until he reached 20% equity.
Fannie Mae and Freddie Mac 3% down loans
Conventional loans that meet Fannie Mae and Freddie Mac standards make up most U.S. mortgages, and both agencies allow 3% down in specific programs. HomeReady and Home Possible target low- and moderate-income buyers with incomes up to 80% of the area median and often come with lower PMI costs. Fannie’s standard 97% loan-to-value product and Freddie’s HomeOne have no income limit but require at least one first-time buyer.
The main advantage over FHA is that PMI goes away. You can request cancellation once your balance reaches 80% of the original value, and it ends automatically at 78% under the Homeowners Protection Act. For buyers with credit scores of about 700 or higher, conventional 3% down is often cheaper over time than FHA. For lower scores, FHA may cost less at first, so compare both loan estimates.
State and local down payment assistance
Every state has a housing finance agency, and many cities and counties run their own programs. Assistance usually comes in one of these forms:
- Grants that don’t need to be repaid, sometimes with a requirement to live in the home for a set period.
- Forgivable second loans that are erased gradually, for example over five or ten years, as long as you keep living there.
- Deferred second loans with no payment until you sell, refinance or pay off the first mortgage.
- Low-interest repayable second loans with a small monthly payment.
- Mortgage credit certificates, offered in some states, which turn part of your mortgage interest into a federal tax credit each year.
Assistance commonly ranges from a few thousand dollars to 3% to 5% of the price, and some high-cost cities offer more. Most programs have income and purchase price caps, require a homebuyer education course, and work only with participating lenders. Funding is often first come, first served and can run out partway through the year.
Example: Tanya earns $68,000 and is buying a $260,000 condo. Her state agency offers a deferred second loan for 4% of the price, or $10,400, paired with an FHA first mortgage. That covers her $9,100 down payment and $1,300 of closing costs. She brings about $4,500 of her own money for the remaining closing costs and has no payment on the second loan until she sells or refinances. The agency’s income limit for her county is $96,000, so she qualifies with room to spare.
How to apply for first-time buyer help
- Pull your credit reports and fix any errors a few months before you apply.
- Calculate your household income the way programs do, counting all adults who’ll live in the home if you’re looking at USDA or a state program.
- Look up your state housing finance agency and any city or county programs, and note their income limits, price caps and list of approved lenders.
- Complete a homebuyer education course. Many programs accept online courses, and HUD-approved housing counseling agencies offer them free or at low cost.
- Get loan estimates from at least two participating lenders, asking each to show the numbers with and without assistance.
- Read the assistance terms closely: repayment triggers, how long you must live in the home, and whether refinancing makes the second loan due.
- Get preapproved, then shop within the program’s price limit.
HUD also runs Good Neighbor Next Door, which offers 50% off the list price of certain HUD-owned homes in revitalization areas to law enforcement officers, firefighters, EMTs and pre-K through 12th grade teachers who agree to live there for 36 months. Listings are limited and go by lottery when several people apply.
Common questions
What credit score do I need for a first-time homebuyer loan?
FHA allows 580 for 3.5% down under HUD rules, and VA and USDA have no official minimums, but most lenders want roughly 620 to 640. Conventional 3% down loans usually need about 620 or more through most lenders. Higher scores bring better rates and lower mortgage insurance on conventional loans.
Can I get down payment assistance with a conventional loan?
Yes. Fannie Mae and Freddie Mac allow approved assistance programs as a source of down payment and closing cost funds, and many state agencies pair their help with HomeReady or Home Possible loans. Ask whether the lender participates in your state’s program.
Do I have to repay down payment assistance?
It depends on the program. Grants and forgivable loans usually don’t need to be repaid if you meet the occupancy terms, while deferred loans come due when you sell, refinance or pay off the mortgage. Read the documents before closing so there are no surprises later.
Is there a federal first-time homebuyer grant in 2026?
There is no national first-time homebuyer grant program available to all buyers. Proposals have appeared in Congress, but none had become law as of November 2026. Assistance comes from state, county and city programs and from some lenders.
Can I use an FHA loan if I’ve owned a home before?
Yes. FHA has no first-time requirement. You generally can have only one FHA loan at a time, with exceptions for situations such as relocating for work or a growing family.
Before you apply
- Confirm whether you meet the three-year first-time buyer rule.
- Check your credit score and reports and fix any errors.
- Compare FHA and conventional 3% down quotes on the same home price.
- If you’ve served, request your VA Certificate of Eligibility.
- Check addresses on the USDA eligibility map if you’re open to rural or outer suburban areas.
- Find your state agency and local programs through HUD’s homebuying page, and use the CFPB’s Buying a House guide to compare loan estimates.
Editorial note: This article is general information, not financial or legal advice. Program rules, limits and fees were checked as of November 2026 and can change; confirm current terms with HUD, the VA, USDA, your state housing finance agency and your lender.