Jun

2025

First-Time Homebuyer Programs and Loans

By Derek Stratton | mortgage | Comments Off

First-Time Homebuyer Programs and Loans

Updated: November 21, 2025

Who Qualifies as a First-Time Homebuyer?

You might be surprised to learn that you could qualify as a first-time homebuyer even if you’ve owned a home in the past. (And of course, if you’re purchasing for the very first time, you could qualify.)

Many lenders and homebuyer programs follow the U.S. Department of Housing and Urban Development’s definition of a first-time homebuyer. The agency states that as long as you have not owned a principal residence in the three years prior to closing on a new home, you can be considered a first-time buyer. A single parent who has only previously owned a home with a former spouse would also be considered a first-time homebuyer, as would those who have only owned a home that didn’t sit on a permanent foundation (such as some manufactured homes).

As a first-time homebuyer, you would have the same considerations as other buyers when it comes to figuring out how to pay for a property: You may need a down payment, and you’ll likely need to make regular mortgage payments as well. That’s where these helpful programs come in.

Down Payment Assistance (DPA) Programs

If you haven’t saved up an adequate down payment and don’t think you’ll be receiving a gift from family or friends to close the gap, a Down Payment Assistance (DPA) program may be for you. Assistance might come in the form of a grant or a loan; sometimes mortgage loans are forgivable over a number of years if you continue to live at the home. In addition to being a first-time homebuyer, you may need to meet other qualifications, including being within a certain income limit or purchasing in a specific geographical area.

Most DPA 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).

Some programs allow you to use the money they provide to cover closing costs, while others do not. Many require homebuyer education courses. Consider these options:

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Conventional Home Loans with Low Down Payments

You’ve probably heard the rule of thumb that homebuyers should put down 20% up front toward the cost of their new property. This is certainly ideal, but things are considerably different for most first-time homebuyers. On average, the typical down payment for a first-time homebuyer in 2024 was 9%, versus 23% for a repeat purchaser, according to the National Association of Realtors^®.

Many lenders will loan to first-time homebuyers who put down as little as 3%, provided the borrower has a good credit score and meets other requirements, such as purchasing private mortgage insurance (PMI) to temper the risk for the lender. Some loans also qualify for the Federal Housing Finance Agency discount, which debuted in early 2023 and automatically provides for a mortgage rate discount for eligible first-time buyers.

Take a look at these home loan options that have low down payments:

Program	What it is	Minimum Down Payment	Typical Qualifications	Typically Offered By
Conventional 97	This loan, with guidelines established by Fannie Mae, allows first-time homebuyers to put only 3% down and finance the other 97% of their purchase. It is a fixed-rate mortgage with a term not exceeding 30 years.	3%	• At least one borrower must be a first-time buyer. • Home must be borrower’s primary residence. • If all borrowers are first-time owners, a homeowner education program may be required. • No income limits. • Credit score of at least 620, although it takes a score of 680+ to qualify for all features of this loan.	Many lenders offer this type of mortgage.
HomeOne	This fixed-rate loan is backed by Freddie Mac and can be used for purchases or no-cash-out refinancing.	3%	• No income limits. • At least one borrower must be a first-time homebuyer. • Homeowner education is required if all borrowers are first-time homebuyers. • At least one borrower must have a usable credit score; minimums are set by lenders. • Manufactured homes are not eligible for this loan.	Many lenders offer this option.
Home Possible	Also backed by Freddie Mac, this loan stands apart for allowing co-borrowers who do not live in the home the opportunity to sign on to a loan for a one-unit property. It also allows borrowers to have another financed property, good news for those who need to sell a home they already own. And it allows adjustable-rate loans.	3%; borrowers have the ability to source their down payment from employer-assistance programs, family members, secondary financing, even sweat equity. And buyers who share their home with a tenant can use rental proceeds as qualifying income for the mortgage.	• Borrowers are not required to be first-time buyers. • Must be within 80% of area median income for the census tract where the home is located. • Credit score of 660 or better.	Many lenders offer this option.
HomeReady	This Fannie Mae program has many of the same features as the Conventional 97, including the option to put just 3% down on the price of a home. HomeReady, however, is designed for those in the low- to moderate-income bracket.	3%	• Borrowers are not required to be first-time buyers. • If all borrowers are first-time owners, a homeowner education program may be required. • Must be within 80% of area median income for the census tract where the home is located.	Many lenders offer this option.

Government Programs for First-Time Homebuyers

Loans backed by the U.S. government are appealing for many first-time homebuyers because they may require a low down payment (or none at all) and have more lenient standards regarding borrowers’ credit scores.

If you’re already starting to feel like there are as many types of loans as there are types of homebuyers, you’re not wrong. Use this chart to determine which government-backed loans you might want to explore further.

Program	What it is	Minimum Down Payment	Typical Qualifications	Typically Offered By
FHA Loan	The Federal Housing Administration (FHA) insures mortgages for single-family and multifamily properties, making relaxed credit requirements possible. FHA loans usually have lower rates than comparable conventional loans. It is also possible to add income from an accessory dwelling unit (ADU) to a borrower’s possible income for the purposes of qualifying for a mortgage.	The minimum down payment is 3.5%, however those with a FICO® credit score between 500 and 579 will need to put down 10%. The down payment can come in the form of a gift or grant from a government or nonprofit homebuying program.	FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, which can be rolled into the loan. As of May 2025, monthly MIP for new homebuyers is 0.15% to .75% — most often 0.55%. High and low earners may apply for an FHA loan, but they must have at least two established credit accounts.	Approved private lenders.
VA Loan	VA loans are available to eligible active-duty military members, veterans, reserve members, National Guard members, and certain surviving spouses.	There is no down payment required.	• To receive a VA loan, a veteran, service member, reserve member, National Guard member, or surviving spouse first has to apply for a Certificate of Eligibility. • Most mortgage lenders will want to see a FICO credit score above 620. • The home you wish to purchase will need to be appraised by a VA-approved appraiser. • No private mortgage insurance is required.	Approved private lenders.
USDA Loan	This fixed-rate loan program is for low- and moderate-income buyers living in rural areas. It allows for the purchase of a new home but also allows borrowers to wrap some renovation costs into a home purchase. The loan can be used for modular or manufactured housing.	There’s no down payment for those who qualify.	• Median household income of the borrower cannot exceed 115% of the median income in the area where you are buying. • You must occupy the home. • There is no minimum credit score but applicants must “demonstrate a willingness and ability to handle and manage debt,” according to the USDA.	Approved private lenders.
Native American Direct Loan	If a veteran or their spouse is a Native American, they may qualify for a Native American Direct Loan (NADL) to purchase, construct, or improve a home on federal trust land. The VA issues these 30-year, low-fixed-rate loans directly to borrowers.	There is no down payment required in most cases, and private mortgage insurance is not required.	• As with a typical VA loan you must apply for and receive a Certificate of Eligibility from the VA. • You must also meet the VA’s credit standards, although the agency does not specify its threshold. • Your tribal government needs to have an agreement with the VA spelling out each party’s responsibility in the loan.	Work directly with a NADL coordinator to apply for this loan. To make an appointment, email [email protected] or call 888-349-7541 (TTY: 711).
Energy-Efficient Mortgage	The Federal Housing Administration’s Energy Efficient Mortgage (EEM) program helps families finance energy efficient improvements with their FHA-insured mortgage. The idea is that lower energy costs will help increase the funds available for mortgage payments. The energy loan is capped at the lesser of: 5% of the property’s value; 115% of the median area price of a single family dwelling; or 150% of the conforming Freddie Mac Limit.	The minimum down payment is 3.5%, however those with a FICO credit score between 500 and 579 will need to put down 10%.	Qualifications are the same as for an FHA mortgage (see above) with the following adjustments: • A buyer will only have to qualify for the base amount of the mortgage, not including the cost of efficiency upgrades. • The home and plans for the energy efficiency upgrades will need to be assessed by a qualified energy assessor.	Approved private lenders.
Good Neighbor Next Door	With this U.S. Department of Housing and Urban Development (HUD) program, single-family homes in areas targeted for revitalization are listed for sale exclusively to eligible buyers, who can receive 50% off the price of the home and roll renovation costs (within certain limits) into their financing of the home purchase.	If the purchase is financed with an FHA loan, you can put as little as $100 down.	• You must be employed full-time as a law enforcement officer, firefighter, emergency medical technician, or pre-K through 12th-grade teacher (public or private school). • Buyers must make the home their primary residence for at least three years. • HUD requires borrowers to sign a second mortgage for the discounted amount, although you will pay no interest or principal as long as you stay for three years. • There are no income limits or credit requirements for this loan, although buyers using FHA financing will have to qualify for an FHA loan.	You may finance this loan through any lender, but for maximum benefits you’ll want an FHA-backed loan.
HomePath Ready Buyer Program	HomePath gives buyers purchasing their primary residence a chance to make offers and purchase Fannie Mae-owned foreclosed properties before they’re available to investors. First-time buyers of these properties who complete Fannie Mae HomeView, an education course, may receive up to 3% in closing cost assistance. Many buyers combine this program with a HomeReady mortgage.	See HomeReady mortgage, above.	Anyone can purchase a HomePath property.	See HomeReady mortgage, above.

First-Time Homebuyer Programs by State

Many first-time homebuyer programs are managed at the state or local level. Find options for your state under “State Homebuyer Programs” in the chart below. It’s also always a good idea to look at your state housing finance agency’s site for information about its programs (find yours under “State Housing Agency,” in the chart below).

The Department of Housing and Urban Development also lists some local and state assistance programs.

Yet another way to look into local programs you might qualify for: Ask your loan officer about down payment assistance grants and loans. The loan officer will also know which programs the lender can accept.

Relocating? Learn more about the cost of living in your chosen state.

First-time homebuyer programs by state.

Learn more about first-time homebuyer programs in your chosen state.

Select a state to view current programs:

Nonprofit Programs for First-Time Homebuyers

Several nonprofits offer financial assistance to homebuyers. Some are national while others work only in certain regions. Many focus on lower-income homebuyers, and they often include financial literacy and home ownership training among their services. Here are just a few of the nonprofit programs for first-time homebuyers:

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 and affordable housing, and who 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. You don’t need to be a first-time homebuyer to qualify. The National Homebuyers Fund provides financing through FHA, USDA, VA and conventional mortgages. You’ll need to work with a participating mortgage lender. Credit score requirements and allowable debt-to-income ratios are flexible.

Employer-Sponsored Programs for First-Time Homebuyers

Some companies 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. Wesleyan University, for example, offers programs for its employees. Check your employee benefits policy to see if you’re fortunate enough to work for a company or organization that provides this benefit.

The Takeaway

Many programs exist to make home ownership possible for first-time homebuyers, but you will have to do some work to research your options and take advantage of them. The good news? You may qualify as a first-time buyer even if you have previously owned a home.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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FAQ

What is a first-time homebuyer?

A first-time homebuyer is someone who has never owned a home, as well as anyone who hasn’t owned a principal residence in the last three years. Certain other groups, including those who have only previously owned a home with a former spouse, also qualify.

How do you buy a house if you have no money?

The VA and USDA have programs that make it possible for eligible applicants to purchase a home with no money down. Some state and nonprofit programs also provide down payment assistance. You will, however, still need to be able to make payments on a home loan.

What is Biden’s $25,000 Downpayment Toward Equity Act?

The Downpayment Toward Equity Act would have provided $100 billion in direct assistance to help first-time, first-generation homebuyers purchase a home. The funds would have reduced mortgage rates and also helped cover down payments and closing costs. Alas, the Act did not pass in Congress.

What is the new California program for first-time homebuyers?

The Dream for All program provided down payment assistance in connection with a mortgage for first-time homebuyers. The program was paused for new applicants shortly after it debuted in early 2023 because funds were quickly exhausted.

Does Michigan have a down payment assistance program?

The Michigan State Housing Development Authority offers a $10,000 down payment assistance program for low- and middle-income homebuyers. Applicants must complete a homebuyer education program to qualify.

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Jun

2025

Arkansas First-Time Home Buying Assistance Programs & Grants for 2025

By Dana Jennings Jelter | mortgage | Comments Off

Arkansas First-Time Home-Buying Assistance Programs & Grants

The median selling price of an Arkansas home hit $266,500 in June 2025, a 4.2% increase in 12 months, Redfin reported. In some areas, the increases were steeper. Centerton, Harrison, and Searcy all saw double-digit percentage increases in prices year-over-year. Centerton’s median home price is now $442,500.

Fortunately, buyers who are struggling with the costs of purchasing their first home in Arkansas may be able to get some financial help through programs offered by the state and some cities. Longstanding federal programs can also improve a buyer’s chances of success.

Recommended: First-Time Homebuyer Guide

Who Is Considered a First-Time Homebuyer in Arkansas?

Here’s something you should know as you start your search for a home loan: For most programs in Arkansas, there is no first-time buyer requirement. For those that do have a requirement, applicants are considered first-time homebuyers if they haven’t owned a home for at least the past three years. (Veterans, veterans’ spouses, and those buying in targeted areas also may qualify for this program.)

Before you start the application process, whether assistance is offered by a state or city, it’s a good idea to be clear on the specific eligibility standards.

Recommended: Understanding Mortgage Basics

3 Arkansas Housing Programs for First-Time Homebuyers

Most homebuyer programs in Arkansas are designed for low- to moderate-income buyers who need help finding affordable loan terms or coming up with a down payment and/or closing costs.

Program participants typically must meet requirements regarding income, credit scores, and debt-to-income (DTI) ratio. They may also encounter limits on how much the home that’s being purchased can cost, and the home must be owner occupied. Also, at least one borrower may have to complete a homebuyer education course.

The Arkansas Development Finance Authority (ADFA) offers several assistance programs first-time homebuyers might want to consider.

ADFA Move-Up Loan Program
ADFA SmartStart First-Time Homebuyer Loan Program
ADFA Down Payment Assistance Program

1. ADFA Move-Up Loan Program

The ADFA’s Move-Up offering provides an affordable 30-year fixed-rate mortgage to qualifying low- to moderate-income homebuyers. Borrowers can choose from several different mortgage types, including conventional, FHA, VA, or USDA loans.

Benefits and qualifications include:

• Low-income buyers who are at or below 80% of the area median income may qualify for a lower interest rate

• Loan can be combined with other ADFA programs (down payment assistance and mortgage credit certificate)

• Annual income limit is $142,000

• Minimum credit score of 640

• Maximum DTI of 45%

• Must take homebuyer education course if you’re a first-time buyer with a conventional mortgage

• Terms may vary based on type of loan

• No prepayment penalty

• Maximum purchase price is $424,100

• Type of homes allowed may vary based on loan type

To learn more, go to the ADFA website and read about the Move-Up Loan Program. You can get started on your application once you’ve found a participating lender.

You can get started by working with a participating lender .

2. ADFA SmartStart First-Time Homebuyer Loan Program

ADFA makes use of IRS rules to issue tax-exempt mortgage revenue bonds. The savings, generated from the tax-exemption, are passed along to low- and middle-income homebuyers, who receive a below-market interest rate on a 30-year fixed-rate mortgage loan for a lower monthly payment.

Benefits and qualifications include:

• Applicants must be first-time homebuyers or experienced homebuyers who are buying in a select group of counties

• Purchase price of a home cannot exceed $425,000

• Minimum credit score: 640

• Household income cannot exceed limits, which vary by location

• Can be combined with ADFA Down Payment Assistance program (see below)

To learn more, go to the ADFA website and read about the SmartStart Program. You can get started on your application once you’ve found a participating lender.

3. ADFA Down Payment Assistance

If you qualify for an ADFA first mortgage, you also may benefit by pairing it with a second mortgage for a down payment or closing costs from the ADFA Down Payment Assistance Program.

Benefits and qualifications Include:

• $1,000 to $15,000 in assistance in the form of a 10-year second mortgage with a rate matching that of your ADFA first mortgage

• Cash back at closing to cover items paid outside of closing

• Must be paired with ADFA first mortgage

• Must meet ADFA Move-Up program guidelines

To learn more, go to the ADFA website and read about the Down Payment Assistance Program. You can get started on your application once you’ve found a participating lender.

A participating lender can help you apply for this program.

Get matched with a local
real estate agent and earn up to
$9,500^‡ cash back when you close.

Pair up with a local real estate agent through HomeStory and unlock up to
$9,500 cash back at closing.^‡ Average cash back received is $1,700.

Connect with an agent

Other Arkansas Homebuyer Programs by Location

If you’ve already chosen the part of Arkansas you hope to make your home, you also may want to research local buyer assistance programs. (And if you aren’t sure where to put down roots, check out a guide to the best affordable places in Arkansas to live.)

Check back occasionally for new offers. Some first-time homebuyer programs base their opportunities (and deadlines) on the funds they expect to become available. When their money runs out, they may press pause.

Some local programs include:

Crawford-Sebastian Community Development Council Programs

The Crawford-Sebastian Community Development Council’s Homeownership and Asset Development Center provides homebuyer counseling and education programs as well as down payment assistance in the form of grants and forgivable loans. For information on the benefits and requirements of various programs, you can check out the Homeownership Program page, email [email protected], or call 479-785-2303.

City of Jonesboro Homeownership Assistance Program

Jonesboro’s Homeownership Assistance Program was created to help low- and moderate-income homebuyers who wish to purchase a property in the city. The program offers qualifying first-time homebuyers a grant that can be used for their down payment and closing costs. For information, you can go to the Homeownership Assistance Program page, email [email protected], or call 870-336-7170.

City of Little Rock Down Payment Assistance Program

Little Rock’s down payment assistance program offers up to $5,000 to qualifying low- and moderate-income first-time homebuyers through a forgivable second loan. For information, check out the program brochure or ask your Arkansas lender about applying.

City of Pine Bluff Homebuyer Assistance Program

Pine Bluff’s Economic and Community Development Department offers this program, which was created to help low- and moderate-income buyers. Qualified applicants may receive assistance of $2,000 for a down payment and up to $3,000 of eligible closing costs. For requirements and approved lenders, check out the program’s brochure .

How to Apply to Arkansas Programs for First-Time Homebuyers

Follow the links under each program to find participating lenders or other contacts.

Federal Programs for First-Time Homebuyers

Several federal government programs are available for people with low credit scores or limited funds for a down payment. They are sometimes for repeat homeowners, but these national programs are generally created for people who are buying a first home or who haven’t owned a home in several years.

The mortgages tend to be for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

Federal Housing Administration (FHA) Loans

The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from an approved-lenders list of institutions participating in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

Limits for FHA loans in 2025 range from $524,225 for single units to $1,008,300 for four-unit properties. Higher-cost areas tend to have higher limits.

In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). A DTI of up to 57% is allowed for FHA loans, vs. a typical 45% maximum for a conventional loan.

Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

FHA loans without exception require mortgage insurance premiums (MIP): This includes a fee of 1.75% of the base loan amount, usually rolled into the loan, upfront. Borrowers must carry annual premiums for the life of the loan. As of 2025, new homebuyer monthly MIP is 0.15% to 0.75%. With a down payment of at least 10%, the removal of mortgage insurance is possible after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137.

To learn more about options, including FHA loans for refinancing and rehabbing properties, read about FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

Low- and very low-income borrowers may make an affordable 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

The Home Possible mortgage is for buyers who have a credit score of 660 or higher. Once you pay off 20% of the loan, the Home Possible mortgage insurance becomes unnecessary, which will lower your mortgage payments.

Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

Fannie Mae HomeReady Mortgages

Fannie Mae HomeReady^® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site.

Fannie Mae Standard 97 LTV Loan

The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

Department of Veterans Affairs (VA) Loans

Active members of the military, veterans, reservists, and surviving spouses who are eligible may apply for loans backed by the Department of Veterans Affairs. These loans designed for those who serve our country can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

Another VA loan advantage is that they do not require PMI for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

Native American Veteran Direct Loans (NADLs)

Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.

US Department of Agriculture (USDA) Loans

No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, check out this USDA website.

HUD Good Neighbor Next Door Program

This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

Visit the HUD program page.

First-Time Homebuyer Stats for 2025

Here are some stats on homebuyers and the homebuying process.

• Percentage of buyers nationwide who are first-time buyers: 24%

• Median age of first-time homebuyers: 38

• Median down payment for first-time homebuyer: 9%

• Median home price in Arkansas: $266,500

• Median down payment: $26,232

• Average rent in Arkansas: $1,400

• Average credit score in Arkansas: 695

Additional Financing Tips for First-Time Homebuyers

In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

• Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. For the purposes of IRA withdrawals, a first-time homebuyer is someone who has not owned a principal residence in the last two years. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

• Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

• 401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you may be able to borrow as much as 50% of your 401(k) balance, up to $50,000, within a 12-month period and incur no taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

• State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

• The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

• Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

• Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

The Takeaway

Low- and moderate-income first-time homebuyers in Arkansas may be able to pair a mortgage with down payment assistance. Other first-time buyers can shop for a mortgage on their own that’s a good fit.

SoFi Mortgages: simple, smart, and so affordable.

View your rate

FAQ

Should I take first-time homebuyer classes?

Yes! Good information is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are required for many government-sponsored loan programs. And for everyone else, this experience is a great way to get acquainted with the home-buying process before you dive into your search in earnest.

Do first-time homebuyers with bad credit qualify for homeownership assistance?

Often they do. Many government and nonprofit homeowner assistance programs are available to people with lower credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications.

What credit score do I need for first-time homebuyer assistance in Arkansas?

Most homebuyer programs in Arkansas require a minimum credit score of 640.

Requirements may vary from one program or organization to the next, though, and some programs may use criteria other than credit scores to determine a borrower’s eligibility.

Is there a first-time homebuyer tax credit in Arkansas?

Not at present, although there are other programs to help first-time homebuyers.

Is there a first-time veteran homebuyer assistance program in Arkansas?

Veterans may qualify for an ADFA mortgage and mortgage credit certificate, or the Home American Rescue Plan.

What is the average age of first-time homebuyers?

The average age of a first-time homebuyer has increased to an all-time high of 38, according to data from the National Association of Realtors®.

Photo credit: iStock/BlazenImages

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q225-211

Jun

2025

Arizona First-Time Home Buying Assistance Programs & Grants for 2025

By Dana Jennings Jelter | mortgage | Comments Off

Arizona First-Time Home Buying Assistance Programs & Grants

First-time homebuyers in Arizona are facing many of the same challenges as buyers across the rest of the country — including high costs. But perhaps they are feeling the pinch even more. The median selling price of an Arizona home hit $440,600 in June 2025, down just 3.1% year over year in the year’s first quarter, after rising consistently during the second half of 2025, Redfin reported. In some popular Arizona communities, the numbers soar higher still. For example, in Scottsdale, the home sale price median is currently $861,520.

The median home sale price in the U.S. is $438,357, according to Redfin data, just below the Arizona median.

Wherever they are coming from, first-time homebuyers may feel as if the keys to their first homes are dangling further out of reach, but fortunately, they may be able to get financial help through programs offered by the state and some counties. Some longstanding federal programs could also improve a buyer’s chances of success. These programs can help prospective homebuyers save on their down payment, mortgage, and closing costs.

Who Is Considered a First-Time Homebuyer in Arizona?

For a number of Arizona’s home mortgage loan programs, you’re considered a first-time buyer if you haven’t owned a home in the last three years. It’s a good idea, though, to be clear on each program’s specific eligibility standards before you start the application process.

It’s a good idea, though, to be clear on each program’s specific eligibility standards before you start the application process.

💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

5 Arizona Programs for First-Time Homebuyers

Most first-time homebuyer programs in Arizona are designed to help low- to moderate-income buyers working to come up with a down payment and/or closing costs when they purchase a house. Generally, that assistance comes in the form of a second mortgage that is fully forgiven if the buyer stays in the home for a set amount of time (usually three years).

During that time, buyers don’t have to make a monthly payment or pay interest on the second loan. But if they sell the home before the full three years is up, they will be required to repay a portion of the assistance they received.

Participants must meet limits regarding their income, credit scores, and debt-to-income ratio. Typically, the home must be the buyer’s primary residence, and there may be limits on how much the home can cost. Also, at least one of the buyers may be required to complete a homebuyer education course.

Read on for details about Arizona’s homebuyer programs.

Home+Plus Down Payment Assistance Program
Home in Five Advantage and Home in Five Platinum programs
Pima Tucson Homebuyer’s Solution Program
Tucson Pima County HOME Down Payment Assistance Program
Mortgage Credit Certificate Program

1. Home+Plus Down Payment Assistance Program

The Arizona Industrial Development Authority’s Home+Plus Home Buyer Down Payment Assistance
Program offers qualifying buyers a 30-year fixed-rate mortgage paired with up to 4% down payment assistance (DPA) to use toward the down payment and/or closing costs.

Depending on your eligibility and the home you plan to buy, you may have the option of choosing from different types of mortgages, including an FHA, VA, USDA, Fannie Mae, or Freddie Mac home loan.

Availability: Statewide

Assistance Amount: Up to 5% of the home’s purchase price

Type of Assistance: Second mortgage, fully forgiven after five years in the home

Benefits and Qualifications Include:

• Annual income can’t be more than $146,503

• All borrowers must have a minimum credit score of 620

• Maximum DTI ratio allowed is 45% (50% in some cases)

• Mortgage insurance is required if the first mortgage is a Fannie Mae or Freddie Mac loan and the down payment is under 20%, but the cost may be lower than for coverage outside the Home+Plus program

• You don’t have to be a first-time homebuyer to qualify

• At least one borrower must complete a homebuyer education course before the loan closes

To Apply: If you’re interested in Home+Plus assistance, a good first step may be to find a participating lender that is familiar with the program and can take you through the process.

2. Home in Five Advantage and Home In Five Platinum programs

Home in Five Advantage and Home in Five Platinum are offered to low- to moderate-income homebuyers in Arizona’s Maricopa County. Qualified borrowers can receive assistance with their down payment and closing costs, as well as a loan with a competitive interest rate.

Eligible K-12 teachers, first responders, military personnel and veterans, and individuals who earn up to $49,500 annually may receive an additional 1% in assistance.

Availability: Maricopa County, city of Phoenix

Assistance Amount: Up to 6% of the home’s purchase price

Type of Assistance: Second mortgage, fully forgiven after three years in the home

Benefits and Qualifications Include:

• Annual income can’t be more than $141,820

• All borrowers must have a credit score of 640 or above (680 for some loan types)

• Maximum DTI ratio allowed is 50%

• No maximum purchase price

• At least one borrower must complete a homebuyer education course

• Buyers must occupy the purchased home as their principal residence within 60 days of closing

• Must be a new or existing single-family home, condominium, or townhome

Homebuyers in designated low-income neighborhoods may receive an additional 0.5% in assistance through the Home in Five Advantage BOOST program. Your lender can help you check your eligibility for this extra support.

To Apply: A trained loan officer with an approved lender can help you get started.

3. Pima Tucson Homebuyer’s Solution Program

The Pima Tucson Homebuyer’s Solution Program (PTHS) is provided by the Industrial Development Authority of the county of Pima and the City of Tucson. The program offers qualified homebuyers multiple first 30-year fixed mortgage options (including FHA, VA, USDA, Freddie Mac, and Fannie Mae loans) along with a forgivable second mortgage that can be used for a down payment (typically 2% to 5%) and closing costs.

Availability: Pima County and city of Tucson

Assistance Amount: Available at multiple levels

Type of Assistance: Assisted and unassisted rate mortgages and second mortgage, fully forgiven after three or 30 years

Benefits and Qualifications Include:

• There is neither a first-time homebuyer nor purchase price qualification

• Typical income cap is $126,351

• Minimum credit score of 640 and maximum DTI of 45%

• Buyers must occupy the property as their principal residence

• Borrowers must complete a homebuyer education course

To Apply: Contact an approved lender.

4. Tucson Pima County HOME Down Payment Assistance Program

Qualified homebuyers in Tucson and Pima County can receive down payment assistance through the Community Investment Corporation’s HOME Down Payment Assistance Program Assistance is based on family size and household income.

Availability: Pima County and City of Tucson

Assistance Amount: Up to 20% of purchase price

Type of Assistance: Second mortgage; forgiveness depends on loan amount and duration

Benefits and Qualifications Include:

• Maximum income of $101,550, depending on family size

• Maximum DTI of 45%

• Maximum purchase prices of $333,925 for existing homes; $389,491 for new properties

• No cash assets over $10,000 and homebuyer must contribute at least $1,000 of their own funds to the purchase and have the equivalent of two months’ worth of mortgage payments on reserve in the bank

• Buyers must occupy the property as their principal residence during the affordability period

• Borrowers must complete a homebuyer education course

• Inspection of property typically required

To Apply: Contact one of these approved counseling agencies for more information and assistance:

• Administration of Resource and Choices

• Chicanos Por La Causa

• Family Housing Resources

• Pima County Community Land Trust

• Pio Decimo Center

• Primavera Foundation

5. Mortgage Credit Certificate Program

Borrowers can use a mortgage credit certificate (MCC) to claim a portion of their annual mortgage interest, dollar for dollar, up to $2,000, as a federal tax credit every year for the life of their loan.

Applicants must be first-time homebuyers (you can’t have owned a home within the past three years) unless you’re a qualified military veteran or buying in a designated area. The nonprofit Community Investment Corporation administers the MCC program; income and purchase price limitations may vary by county.

To Apply: You can apply for the credit certificate when you take out a home loan through a state-approved participating lender. You can schedule an appointment with Arizona’s Community Investment Corporation (CIC) to learn more. The organization is not always accepting applications, so check back.

Get matched with a local
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Federal Programs for First-Time Homebuyers

A number of federal government programs exist for people with low credit scores or limited down payment funds. Although they are sometimes for repeat homeowners, these national programs can be very helpful for people who are buying a first home or who haven’t owned a home in several years.

The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

Federal Housing Administration (FHA) Loans

The FHA, a part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders participating in the FHA loan program. Loans offer competitive interest rates and require down payments of 3.5% of the purchase price. Borrowers typically need FICO® credit scores of 580 and up. A buyer with a score as low as 500 must put down 10% or more.

FHA loan limits in 2025 range from $524,225 for single units to $1,008,300 for four-unit properties, with higher limits in high-cost areas.

In addition to looking at your credit score, lenders will examine your debt-to-income ratio (DTI, or your monthly debt payments compared with your monthly gross income). FHA allows a DTI of up to 57%, vs. a typical 45% maximum for a conventional loan.

Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

FHA loans always require mortgage insurance premiums (MIP): This includes a fee of 1.75% of the base loan amount, which can be rolled into the loan, upfront. Borrowers also carry annual premiums for the life of the loan. As of 2025, monthly MIP for new homebuyers is 0.15% to 0.75%. A down payment of at least 10% allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be about $137.

To learn more about these loans, including FHA loans for refinancing and rehabbing properties, read up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

Low- and very low-income borrowers may make just a 3% down payment on a HomePossible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

The Home Possible mortgage is for buyers who have a credit score of at least 660. Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

Fannie Mae HomeReady Mortgages

For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site.

Fannie Mae Standard 97 LTV Loan

Department of Veterans Affairs (VA) Loans

They have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†

Native American Veteran Direct Loans (NADLs)

Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. The VA is the direct lender on NADLs and charges a funding fee. Learn more by emailing [email protected].

US Department of Agriculture (USDA) Loans

No down payment is needed on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers will pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

The USDA also issues direct loans to low- and very low-income people. Check out this USDA website for eligibility requirements.

HUD Good Neighbor Next Door Program

Visit the HUD program page for more information.

First-Time Homebuyer Stats for 2025

Ever wonder where you fit amid the mix of buyers who are out there shopping for a home? Here are some stats to consider:

• Percentage of buyers nationwide who are first-time buyers: 24%

• Median age of first-time homebuyers: 38

• Median down payment percentage for first-time homebuyers: 9%

• Average credit score in Arizona: 712

• Median single-family home value for Arizona properties: $434,739

• Average home price per square foot in Arizona: $252

Recommended: Understanding Mortgage Basics

Additional Financing Tips for First-Time Homebuyers

In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you as a homebuyer in Arizona. Some examples:

• Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. A first-time homebuyer, for the purposes of IRA withdrawals, is someone who has not owned a principal residence in the last two years. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

• 401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, within a 12-month period without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

• The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. (This doesn’t lower your mortgage payments, but can still be a good way to save.) Any additional interest paid can still be used as an itemized deduction.

To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

• Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

• Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

The Takeaway

If you can qualify for one of the many homebuyer programs in Arizona, or a federal program, you may be able to achieve your goal of purchasing a property, despite housing costs being above the national average. You may also want to look into what commercial lenders offer to see what your options are in terms of covering your down payment, mortgage, and closing costs.

SoFi Mortgages: simple, smart, and so affordable.

View your rate

FAQ

Should I take first-time homebuyer classes?

These courses can be helpful for prospective homeowners and can provide important information about how the process works and what to expect. First-time homebuyer classes are required for many government-sponsored loan programs. And for everyone else, this experience is a great way to get acquainted with the home-buying process before you dive into your search in earnest.

Do first-time homebuyers with bad credit qualify for homeownership assistance?

Often they do. Many government and nonprofit homeowner assistance programs are available to people with lower credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. Yet almost any lending program has credit qualifications so it can be important to build your credit before you go house hunting.

Is there a first-time homebuyer tax credit in Arizona?

Yes. First-time buyers in Arizona can apply for the mortgage credit certificate program, which allows borrowers to claim a portion of their annual mortgage interest as a federal credit every year.

Is there a first-time homebuyer assistance program for veterans in Arizona?

VA-backed home loans are available nationwide to eligible service members, veterans, and eligible surviving spouses. If you’re a veteran and you and/or your spouse are Native American, you may qualify for a VA direct loan. Arizona’s Home in Five Advantage program also offers special benefits for service members and veterans.

What credit score do I need for first-time homebuyer assistance in Arizona?

Most programs in Arizona require a score of 580 to 680, but some will accept a lower score. And some programs use criteria other than credit scores to determine a borrower’s eligibility.

What is the average age of first-time homebuyers?

The average age of a first-time homebuyer has increased to an all-time high of 38, according to data from the National Association of Realtors®.

Photo credit: iStock/BCFC

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q225-210

Jun

2025

California First-Time Home Buying Assistance Programs & Grants for 2025

By Dana Jennings Jelter | mortgage | Comments Off

California First-Time Home-Buying Assistance Programs & Grants

Who Is Considered a First-Time Homebuyer in California?

The definition of first-time homebuyer is broader than it seems at first glance.

In California and many other locations, a first-time buyer is anyone who has not owned a primary home in the past three years. There may be exceptions for veterans and others worth exploring, too.

💡 Quick Tip: SoFi’s award-winning mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made more than $9.4 billion in home loans so we know a thing or two about what makes homebuyers happy.‡

7 California Programs for First-Time Homebuyers

The California Housing Finance Agency(CalHFA) offers both conventional and government-backed first mortgages. Down payment and/or closing cost assistance is available in many of the programs.

For all of the loans listed below, buyers must have a minimum credit score of 640, 660, or 680, depending on certain factors, and meet income limits . Homebuyer education counseling is required by one occupying household member.

California Housing mortgages can be used for single-family homes, condominiums, planned unit developments, manufactured housing, and in some cases, guesthouses and accessory dwelling units.

Here’s a closer look at the agency’s programs for first-time homebuyers.

CalHFA FHA Loan
CalPLUS FHA Loan
CalPLUS Access FHA
CalHFA VA Loan
CalHFA USDA Loan
CalHFA Conventional Loan
CalPLUS Conventional Loan
MyHome Down Payment Assistance

1. CalHFA FHA Loan

This program offers a 30-year fixed-rate mortgage to first-time buyers. The CalHFA FHA loan can be combined with the CalHFA down payment assistance programs. In addition to the requirements listed above, debt-to-income limits may apply.

2. CalPLUS FHA Loan

The CalPLUS FHA loan is a 30-year fixed-rate FHA loan with a slightly higher interest rate than the FHA loan listed above. It can be paired with CalHFA Zero Interest Program (ZIP) for closing cost assistance.

3. CalPLUS Access FHA

The CalPLUS Access FHA loan is an FHA-insured 30-year first mortgage with a slightly higher fixed interest rate than CalHFA’s standard FHA program. CalPLUS Access FHA is combined with MyAccess for closing costs or down payment assistance.

4. CalHFA VA Loan

The CalHFA VA loan is a 30-year, fixed-rate VA mortgage available to veterans who can show a valid certificate of eligibility. Borrower requirements may differ slightly from the CalFHA programs; qualifying veterans may need to make no down payment.

5. CalHFA USDA Loan

The CalHFA USDA loan is a 30-year fixed-rate mortgage loan guaranteed by the USDA. It can be combined with the MyHome Assistance Program and the MyHome and School Program for down payment and closing cost assistance for first-time homebuyers. The USDA has its own income limits, which may be more restrictive than CalHFA limits. (See below for more information on USDA loans.)

6. CalHFA Conventional Loan

The CalHFA Conventional loan is a 30-year, fixed-rate loan insured through private mortgage insurance instead of the government. Buyers must meet the same requirements as CalHFA government-backed loans listed above.

7. CalPLUS Conventional Loan

The CalPLUS Conventional loan is a 30-year, fixed-rate loan with a slightly higher interest rate than a CalHFA conventional loan. It can be paired with the CalHFA ZIP program to help homebuyers cover closing costs.

8. MyHome Down Payment Assistance

The MyHome Assistance program works with CalHFA government and conventional first mortgages. Borrowers of government-backed mortgages can apply for a junior loan of up to 3.5% of the home purchase price (or the appraised value, whichever is less) to help with down payment and closing costs. Payments are deferred until you sell the home, refinance your mortgage, or pay your mortgage in full.

Conventional loan borrowers may be eligible for a MyHome loan as well. But in this case the junior loan is up to 3% of the home purchase price (or appraised value, whichever is less).

Get matched with a local
real estate agent and earn up to
$9,500^‡ cash back when you close.

Pair up with a local real estate agent through HomeStory and unlock up to
$9,500 cash back at closing.^‡ Average cash back received is $1,700.

Connect with an agent

Recommended: First-Time Homebuyer Guide

How to Apply to California Programs for First-Time Homebuyers

The California Housing Finance Agency website provides details on each of its mortgage, down payment, and closing costs programs. Also on the website is an interactive tool that buyers can use to determine if they are eligible for CalHFA programs and if so, which program might best suit their situation.

The agency does not lend directly, but does list participating lenders . It’s especially important for first-time buyers, who may be unfamiliar with the mortgage lending process, to compare interest rates, fees, and other costs among lenders to find the most affordable loan.

Federal Programs for First-Time Homebuyers

A number of U.S. government-sponsored programs exist for people with low credit scores or limited down payment funds. They are sometimes meant for repeat homeowners, but these national programs can also be very helpful for people who are buying their first home, or who haven’t owned a home in several years.

These mortgage programs are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

Federal Housing Administration (FHA) Loans

The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders participating in the FHA loan program.

• Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 and higher. Those with lower credit scores (as low as 500) must put down at least 10%.

• In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA allows a DTI of up to 57%, vs. a typical 45% maximum for a conventional loan.

• Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

• FHA loans always require mortgage insurance premiums (MIP): This includes a fee of 1.75% of the base loan amount, which can be rolled into the loan, upfront. Borrowers also carry annual premiums for the life of the loan. As of 2025, monthly MIP for new homebuyers is 0.15% to 0.75%. A down payment of at least 10% allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be about $137.

You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

Freddie Mac Home Possible Mortgages

Very low- and low-income borrowers may make a 3% down payment on a Home Possible^® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

The Home Possible mortgage is for buyers who have a credit score of at least 660. Once you’ve paid off 20% of your loan, the Home Possible mortgage insurance can be canceled, which will lower your mortgage payments.

Fannie Mae HomeReady Mortgages

For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

Fannie Mae Standard 97 LTV Loan

Department of Veterans Affairs (VA) Loans

Eligible active-duty members of the military, veterans, reservists, and surviving spouses may apply for loans backed by the Department of Veterans Affairs. These loans designed for those who serve our country can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment.

• Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

• VA loans do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%.

• These loans have more flexible credit score requirements. In some cases, even those who have experienced foreclosure or bankruptcy can qualify.

Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

Native American Veteran Direct Loans (NADLs)

Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. (Contact them at [email protected].) The VA requires no mortgage insurance, but it does charge a funding fee.

US Department of Agriculture (USDA) Loans

The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA website.

HUD Good Neighbor Next Door Program

This program can help police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

Go to the HUD program page.

California First-Time Homebuyer Stats for 2025

This is a snapshot of the recent home-buying experience in California.

• Median home sale price: $860,300

• 3% down payment: $25,809

• 20% down payment: $172,060

• Average credit score (vs. 715 nationwide): 722

Financing Tips for First-Time Homebuyers

In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

• Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. A first-time homebuyer, for the purposes of IRA withdrawals, is someone who has not owned a principal residence in the last two years. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

• 401(k) loans. If your employer permits you to borrow from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, within a 12-month period without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. Worth noting: You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 or even 25 years to repay.

• The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas may be able to claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

However, it’s important to note that not all locations offer this program, and funding can run out in those areas that do. You can check with your county’s housing department to learn more.

• Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

• Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

The Takeaway

California may well be among the priciest markets for first-time homebuyers to break into, but state programs make it easier for some of them to call the Golden State home. Help can be available for qualified borrowers to assist with the funding of down payments, mortgages, and closing costs. Other first-time buyers can explore government-backed and conventional loans on their own.

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FAQ

Should I take first-time homebuyer classes?

Do first-time homebuyers with bad credit qualify for homeownership assistance?

Is there a first-time homebuyer tax credit in California?

No statewide first-time homebuyer tax credit is currently active in California, but programs exist that offer tax benefits and financial assistance for first-time homebuyers. Certain county agencies — including the Los Angeles County Development Authority (LACDA) — issue mortgage credit certificates when funding is available. Consult a lender or real estate agent for more information.

Is there a first-time veteran homebuyer assistance program in California?

Yes. CalHFA offers a VA loan to first-time borrowers. California veterans may also may find options in the federal VA loan programs listed above.

What credit score do I need for first-time homebuyer assistance in California?

CalHFA programs require a credit score of 640, 660, or 680, depending on certain factors. There are other private, state, and federal loan programs that borrowers with lower scores may be able to access.

What is the average age of first-time homebuyers in California?

There seems to be little data about California first-timers, but the average age of a first-time homebuyer in the U.S. is at an all-time high of 38, according to data from the National Association of Realtors®.

Photo credit: iStock/trekandshoot

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Jun

2025

Student Budget Calculator

By Derek Stratton | Uncategorized | Comments Off

Student Budget Calculator

June 13, 2025

Managing student finances can feel overwhelming, but with the right tools, it can be simpler than you think. SoFi’s student budget calculator helps you gain a clear picture of your expenses for the school year.

Understanding what you’ll need to pay for tuition, dorm living or off-campus rent, textbooks, eating out, and more can help you make informed choices throughout the year and build a solid foundation for your financial future.

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