First-Time Homebuyer Assistance Programs You Should Know About

The average price of a new home in the United States in 2026 is approximately $410,000. For many first-time buyers, the math feels impossible — especially the down payment. A 20 percent down payment on a $410,000 home is $82,000. Even at 3.5 percent (the FHA minimum), you're looking at over $14,000 in cash before closing costs.

But here's what most first-time buyers don't realize: a significant number of programs exist specifically to help with down payments, closing costs, and affordable mortgage terms. Some are federal. Some are state-run. Some are offered by cities, counties, and nonprofits. Many can be combined. And most go underutilized because people simply don't know about them.

FHA Loans

Federal Housing Administration loans are the most widely used first-time buyer tool in the country. Backed by the government (but issued by private lenders), FHA loans allow a down payment as low as 3.5 percent with a credit score of 580 or higher. If your credit score is between 500 and 579, you can still qualify with a 10 percent down payment.

FHA loans have more flexible underwriting than conventional mortgages, making them accessible to buyers with lower credit scores, smaller savings, or higher debt-to-income ratios. The trade-off is mortgage insurance premiums — both an upfront premium (1.75 percent of the loan amount, which can be rolled into the loan) and an annual premium that's added to your monthly payment.

You don't have to be a first-time buyer to use an FHA loan, though they're most popular with first-time buyers. FHA loans can be used for single-family homes, condos, and some multi-family properties.

Down Payment Assistance Programs

Nearly every state offers some form of down payment assistance (DPA) for first-time homebuyers, and many cities and counties do as well. These programs come in several forms: grants (money you don't have to repay), forgivable loans (loans that are forgiven if you stay in the home for a set number of years), deferred-payment loans (no monthly payments; the loan comes due when you sell, refinance, or move), and matched savings programs (you save a set amount and the program matches it).

Eligibility typically depends on your household income (often limited to 80 to 120 percent of area median income), the purchase price of the home, and whether you're a first-time buyer (which HUD defines as someone who hasn't owned a home in the past three years — so even previous homeowners can qualify if enough time has passed).

The amounts vary widely. Some programs offer a few thousand dollars. Others cover up to five percent of the purchase price or more. To find programs in your area, visit the Down Payment Resource Center at downpaymentresource.com or contact a HUD-approved housing counselor.

USDA Rural Development Loans

If you're buying in a rural or suburban area — and the definition is broader than you might think — USDA loans offer one of the best deals available: zero down payment required. These loans are backed by the U.S. Department of Agriculture and are available to buyers in eligible areas whose household income doesn't exceed 115 percent of the area median.

The property doesn't need to be a farm or even in a stereotypically rural area. Many suburban communities and small towns qualify. You can check property eligibility at the USDA's eligibility site. USDA loans have competitive interest rates and lower mortgage insurance costs compared to FHA loans.

VA Loans

If you're a veteran, active-duty service member, or eligible surviving spouse, VA loans are hard to beat. They require no down payment, no private mortgage insurance, and offer competitive interest rates. VA loans are backed by the Department of Veterans Affairs and issued by private lenders.

There is a one-time funding fee (which can be rolled into the loan), and you'll need a Certificate of Eligibility from the VA. Some veterans with service-connected disabilities are exempt from the funding fee entirely.

State Housing Finance Agency Programs

Every state has a housing finance agency (HFA) that offers mortgage programs specifically designed for first-time and lower-income buyers. These programs often feature below-market interest rates, reduced fees, or built-in down payment assistance. Some state HFAs offer mortgage credit certificates (MCCs), which provide a federal income tax credit equal to a percentage of the mortgage interest you pay each year — effectively reducing your monthly housing cost for as long as you hold the mortgage.

To find your state's housing finance agency, search for your state name plus "housing finance agency" or visit the National Council of State Housing Agencies at ncsha.org.

Homebuyer Education

Most assistance programs require you to complete a homebuyer education course before closing. These courses — typically four to eight hours and available online or in person — cover the home buying process, mortgage options, budgeting, and home maintenance. Many are offered free or at low cost by HUD-approved counseling agencies.

Even if your chosen program doesn't require it, completing a homebuyer education course is one of the smartest moves you can make. Studies consistently show that educated buyers are less likely to default on their mortgages and more likely to build long-term equity.

Sources

• U.S. Department of Housing and Urban Development. "Resources for Homebuyers." hud.gov

• Consumer Financial Protection Bureau. "Buying a House." consumerfinance.gov