First-Time Home Buyer Programs and Loans
Updated: September 13, 2022
Down Payment Assistance (DPA) Programs for First-Time Home Buyers
Down payment assistance usually falls into one of four categories:
- Second mortgages that are paid monthly along with your first mortgage
- Second mortgages with deferred payments due only when you move, sell, or refinance
- Second mortgages that are forgiven over a number of years (often five) but must be repaid if you move, sell, or refinance too early
Most down payment assistance programs are offered at the city and county level. Many work only with particular lenders, but most programs will work with FHA loans (popular with first-time homebuyers thanks to lenient credit requirements and a low minimum down payment, but borrowers pay upfront and annual mortgage insurance premiums) as well as VA and USDA loans (no down payment required, but fees or mortgage insurance are).
Assistance programs might include income limits, home price caps, and the purchase of a home in a qualified area.
Some programs allow you to use their money for closing costs as well as a down payment. Many programs require homebuyer education courses.
Then there’s gift money. Many mortgage types allow down payment gift funds from family members or close friends.
First Time Home Buyer Programs by State
These first-time home buyer assistance guides are the perfect next-step in your home buying journey. You’ll learn which assistance programs exist for your state and how to apply to them.
Additional State and Local Resources
Contact your state housing finance agency for information about programs administered by your state.
The Department of Housing and Urban Development lists some local and state assistance programs.
Here’s another list of FHA Down Payment Grants .
Yet another way to look into local programs you might qualify for is to ask your loan officer about down payment assistance grants and loans. The loan officer will also know which programs the lender can accept.
Federal First-Time Home Buyer Programs
Several government programs are available. The following are but two.
Good Neighbor Next Door
With this HUD program , law enforcement officers, firefighters, emergency medical technicians, and pre-K through 12th-grade teachers can receive 50% off the price of a foreclosed home in a “revitalization area.” They must live in the home for at least three years.
Homepath Ready Buyer Program
Borrowers can receive up to 3% in closing cost assistance toward the purchase of a foreclosed property owned by Fannie Mae , and may be able to make a down payment as low as 3% when taking out a HomePath conventional mortgage.
Nonprofit First-time Home Buyer Programs
Several nonprofits offer financial assistance to homebuyers. You’ve heard of an FHA loan, but what about a NACA mortgage?
Neighborhood Assistance Corporation of America
The largest HUD-certified nonprofit organization, NACA , provides a mortgage with a below-market fixed rate with no down payment, no closing costs, no fees, and no private mortgage insurance. It focuses on low- and moderate-income people and communities and partners with particular large lenders.
Habitat for Humanity
Individuals and families who demonstrate a need for safe, affordable housing and are willing to put in “sweat equity” may contact their local Habitat organization for information.
National Homebuyers Fund
This nonprofit organization offers a down payment assistance grant of up to 5% of the mortgage loan, or a second mortgage loan with 0% interest that is forgiven after three years. The National Homebuyers Fund requires the use of an FHA, USDA, VA, or Fannie Mae 30-year fixed-rate loan. You’ll need to work with a participating mortgage lender.
Employer-Sponsored First-Time Home Buyer Programs
A number of companies like Red Gold, an Indiana tomato processor, help employees buy homes by offering direct down payment assistance, investing in affordable housing for workers, or guiding employees to government-sponsored grants and low-interest loans.
Learn About SoFi Home Loans
Buying your first home can be nerve-wracking, but SoFi supports first-time homebuyers every step of the way and offers great fixed-rate home mortgage loans.
Shop around and then come home to SoFi, where you’ll find competitive rates and access to a host of SoFi perks. And again, first-time homebuyers who qualify can put just 3% down.
Ready to get started?
We’ll help you discover whether this year is the year you make your dreams of homeownership a reality.
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