By Walecia Konrad

(Last Updated – 06/2025)

Florida’s fast-growing population, robust job growth, and new industries all make for a hot real estate market. Even though home prices dropped 3.2% in the last year to an average value of $389,400, they remain above the national average of $367,711 (rising 1.4%), according to Zillow.

If you are looking to break into the housing market, there’s help available. For those who qualify, the state offers programs to assist with down payment, mortgage, and closing costs. Here, take a look at some of the options available.

Florida Programs for First-Time Homebuyers

The Florida Housing Finance Corporation (also called FHFC or Florida Housing) offers first-time buyers a variety of assistance programs which typically include homebuyer education classes. These can help buyers understand how much mortgage they can afford and how the lending and closing processes work.

Here are details regarding available programs in Florida.

1. Florida Housing Finance Corporation’s Homebuyer Program

This program offers 30-year fixed-rate FHA, VA, and USDA government-backed loans as well as conventional loans that can be paired with FHFC’s down payment assistance second mortgages. (See below for details.)

Single-family homes, townhomes, approved condos, two- to four-unit homes with the buyer residing in one of the units, modular homes, and mobile homes are allowed.

Buyers must have a credit score of at least 640 and meet the income and purchase price limits in the county where the home is located.

2. Florida Assist Second Mortgage

This program offers up to $10,000 for down payment and closing costs via a 0% interest deferred second mortgage to be used only with a Florida Housing first mortgage.

The second loan is not forgivable, but repayment is deferred until the home is sold, the borrower moves, or the first mortgage is refinanced. Borrowers must meet the same requirements as they do for their first mortgage.

3. HFA Preferred and HFA Advantage Plus Second Mortgage

These forgivable second mortgages allow participants to borrow 3%, 4%, or 5% of the total loan amount for down payment and closing costs. There are no payments, and the loan is forgiven at 20% a year over a five-year term.

4. FL HLP Second Mortgage

The Florida Homeownership Loan Program (FL HLP) offers a loan up to $10,000 for down payment and closing costs with a 3.00% interest rate. The loan is paid over a 15-year term, unless the borrower moves, sells, or refinances, at which time the loan must be paid back in full.

Because there is a monthly payment associated with this loan, it will be considered in an applicant’s debt-to-income ratio when the homebuyer is applying for a first mortgage.

5. Local Homebuyer Assistance Programs

The Hometown Heroes program supports community workers such as law enforcement officers, firefighters, EMTs, educators, health care professionals, and child care operators or employees can receive up to 5% of the first mortgage amount (up to $35,000) in down payment and closing cost assistance if they are first-time homebuyers who meet income and purchase price limits and have a credit score of at least 640.

Military members and veterans are also eligible, and are exempt from the first-time homebuyer requirement.

The assistance takes the form of a 0% interest, 30-year deferred second mortgage that must be repaid if the borrower sells the home, moves, or refinances the first mortgage.

Hometown Heroes can also offer lower-than-market rates on an FHA, VA, USDA, Fannie Mae or Freddie Mac first mortgage and reduced upfront fees.

6. Local Homebuyer Programs

There are some city and area-specific homebuyer programs in areas such as Jacksonville that help first-time buyers in Florida. Be sure to check with the county, city, and local home advocacy organizations where you are buying for other assistance opportunities.

💡 Quick Tip: SoFi’s award-winning mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made $7.5 billion in home loans so we know a thing or two about what makes homebuyers happy.‡

Who Is Considered a First-Time Homebuyer in Florida?

The Florida Housing Finance Corporation is a 45-year-old state agency that provides affordable housing opportunities to first-time and low- to moderate-income homebuyers looking for their place in the Sunshine State.

It considers anyone who has not owned a primary home in the past three years a first-time homebuyer.

In some targeted areas of the state, repeat buyers may also apply for first-time homebuyer programs. And typically veterans need not be first-time buyers.

Recommended: Understanding the Different Types of Mortgage Loans

How to Apply to Florida Programs for First-Time Homebuyers

The Florida Housing website includes the Homebuyer Loan Program Wizard , an interactive tool that can help you determine your eligibility for Florida first-time homebuyer programs. Florida Housing is not a lender, but the Wizard tool provides a list of approved lenders by location.

It is 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. A first-time homebuyer guide can also be helpful in providing a foundation for your property pursuits.

Federal Programs for First-Time Homebuyers

Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to 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.

If you qualify for one of these loans through Florida Housing, that’s advantageous. If not, you can apply for them on your own. Notice that the credit score requirement could be higher with Florida Housing.

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 that participate 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.

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 loans allow a DTI ratio of up to 57% in some cases, vs. a typical 45% to 50% 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: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. Here’s an example:

•   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.

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 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

Eligible active-duty members of the military, veterans, reservists, and surviving spouses may apply for loans backed by the Department of Veterans Affairs. VA loans, which 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 benefit of VA loans is that they do not require private mortgage insurance (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.

💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

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. You can learn more by emailing [email protected].

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 people with low- and very low-incomes. For loan basics and income and property eligibility, head to this USDA site .

HUD Good Neighbor Next Door Program

This program helps police officers, firefighters, EMTs, 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.

Florida First-Time Homebuyer Stats for 2024

Here’s a snapshot of Florida homebuyers:

•  Average home value: $389,400

•  3% down payment: $11,682

•  20% down payment: $77,880

•  Average credit score: 707 (vs. 715 nationwide)

Who Is Considered a First-Time Homebuyer in Massachusetts?

The definition is broader than you might realize. In addition to someone who has never owned a home, you are considered a first-time homebuyer if you haven’t owned a house in the last three years.

According to the U.S. Department of Housing and Urban Development (HUD), you can also qualify as a first-time homebuyer when seeking a home mortgage loan if you are a single parent who has only owned a home with a partner while married, or a displaced homemaker who has only owned a home with a spouse.

Many of the state programs that help first-time buyers with mortgage loans and down payment assistance require you to take a homebuyer education course. This can help you learn the mortgage basics. Looking to live in the Bay State but not sure where to settle? Check out a list of the best affordable places to live in Massachusetts.

Recommended: First-Time Homebuyer Guide

3 Massachusetts Programs for First-Time Homebuyers

There are several types of mortgage loans you may qualify for as a first time homebuyer in Massachusetts. Each has certain criteria, including income and purchase price limits.

1. My Mass Mortgage: ONE Mortgage

This program offers 30-year fixed interest rate loans to low- and moderate-income first-time homebuyers in Massachusetts. You can pay either 3% or 5% as a down payment, depending on the type of home you’re buying. No private mortgage Insurance is required.

To be eligible, you must meet asset and income limits, make the required down payment, be a first-time homebuyer, and meet credit and underwriting requirements. The home you are buying must be your primary residence through the life of the loan, and you need to complete a homebuyer education program.

2. My Mass Mortgage: MassHousing Mortgage

MassHousing Loan provides low-interest fixed rate loans and mortgage payment protection. To qualify, you must meet income guidelines, have good credit, and complete a homebuyer education course.

3. MassHousing: Down Payment Assistance

With a MassHousing Mortgage, you can get up to $30,000 to cover your down payment (the amount depends on which community you live in) . The assistance provides up to 10% of your home’s purchase price.

As you’re exploring your options, you can use a mortgage calculator to see what your monthly payments would be.

How to Apply to Massachusetts Programs for First-Time Homebuyers

The easiest way for the first-time homebuyer in Massachusetts to get started, is to contact a participating lender . They’ll review your situation and show you the best options for buying a home.

Not sure how much you should spend on a house? This home affordability calculator can help.

Federal Programs for First-Time Homebuyers

Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to 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, 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 that participate 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.

In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments divided by your monthly gross income). FHA loans allow a DTI ratio of up to 57% in some cases, 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: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which 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 around $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 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.

Unlike an FHA loan, the 97 LTV loan has no upfront mortgage insurance fee and does have cancellable mortgage insurance. The loan is for just one-unit single-family homes, co-ops, condos, and planned unit developments.

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. VA loans, which 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 benefit of VA loans is that they do not require private mortgage insurance (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.

Regional loan centers are closed to the public, but for more information you can email [email protected]

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, head to this USDA site .

HUD Good Neighbor Next Door Program

This program helps police officers, firefighters, emergency medical technicians, and teachers of students in pre-K through 12th grade 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.

Massachusetts Homebuyer Stats for 2025

Here’s some data about Massachusetts home sales.

•   Median home sale price in Massachusetts: $658,600

•   Number of homes for sale: 18,185

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

•   Median age of first-time homebuyers: 38

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. After reading up on how to choose a mortgage term, check out these tips on how to lower your mortgage payment:

•  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. When it comes to IRA withdrawals, the IRS considers anyone who has not owned a primary residence in the past two years a first-time homebuyer. 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 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.

•  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

Massachusetts has programs that can help qualified first-time homebuyers get a low-interest mortgage or assistance with the down payment and closing costs. There are also federal-government-backed and conventional loans buyers can consider.

By Susan Guillory

(Last Updated – 06/2025)

Are you a first-time homebuyer in Connecticut? You’re looking at a tough market in the Constitution State. In April 2025, home prices in Connecticut were up 7.6% year-over-year. The median price of a Nutmeg State home is $451,100, according to Redfin. This home-buying guide was crafted to help first-time homebuyers. But hey, that raises a question…

7 Connecticut Programs for First-Time Homebuyers

The Connecticut Housing Finance Authority leads the way in offering mortgages and down payment assistance to low- and moderate-income buyers.

Here are the programs.

1. Homebuyer Mortgage Program

Connecticut Housing Finance Authority mortgages with below-market interest rates can be paired with down payment assistance for those who qualify. Borrowers must be first-time homebuyers or purchasing in a targeted area. There are home price and income limits .

Borrowers must attend a free homebuyer education course, which will explain the home-buying process and mortgage basics.

2. HFA Advantage and HFA Preferred Loan Programs

This program for first-time buyers and people purchasing in a targeted area provides mortgage loans with lower monthly mortgage insurance costs. And mortgage insurance premiums end when the borrower reaches 20% equity.

You must meet sale price and income limits (see this chart).

3. Military, Teacher, and Police Homeownership Programs

Connecticut Housing offers benefits to active-duty military members, veterans, and surviving spouses who meet purchase price and income limits. The agency has a similar program for teachers and police officers .

Another mortgage and down payment program is for applicants who are disabled or who have a disabled member of the household.

4. Down Payment Assistance Program Loan

This very low-rate second mortgage program provides a loan of up to $15,000 at an attractive rate to help with a down payment or closing costs.

Borrowers must apply and qualify for a Connecticut Housing mortgage with a participating lender and demonstrate the ability to repay that mortgage and the second loan to qualify.

5. Time to Own: Forgivable Down Payment Assistance

This program provides 0.00% interest loans with no monthly payment required. Each year, 10% of the balance will be forgiven until the loan is fully forgiven in 10 years. The loan amounts are as follows:

•   Homes in high- or very high-opportunity areas : up to $50,000

•   Homes in other areas: up to $25,000

Borrowers must qualify and receive a Connecticut Housing mortgage, and must have been a resident of Connecticut for at least the preceding three years.

The Time to Own loan may be used with other down payment assistance programs.

6. Another Down Payment Assistance Program

The Housing Development Fund (HDF) offers down payment assistance to qualified first-time homebuyers (the applicant and any non-borrowing spouse must be first-time buyers). With the CT Forever program, first-time homebuyers can borrow up to $28,000 in down payment assistance at 1.00%. (If they sell within 10 years of purchase, the price must be affordable to homebuyers.) The Live Where You Work program offers first-time homebuyers up to $25,000 in down payment and closing cost assistance at 0.00% interest if they are buying a home in the town where they work. The SmartMove Homeownership second mortgage charges 3.00% on a loan for up to 25% of the home’s purchase price to help with down payment and qualified closing costs.

To be eligible, you must have not had a bankruptcy in the past four years or a foreclosure in the past seven years. You must have funds available to cover at least 1% of the purchase price, pre-closing costs, and emergency reserves, and be able to demonstrate a steady work history and on-time bill payment.

7. City Programs in Connecticut

Some cities also offer homeownership help. You might want to look into your city of choice and consult the list compiled by the CHFA.

How to Apply to Connecticut Programs for First-Time Homebuyers

To apply for a mortgage offered by the Connecticut Housing Finance Authority, contact one or more participating lenders .

To apply for Housing Development Fund down payment assistance, create an account and upload documents.

Do you know how much you can afford to pay for a house? This home affordability calculator could help.

Federal Programs for First-Time Homebuyers

Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to 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, 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 that participate 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.

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 loans allow a DTI ratio of up to 57% in some cases, 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: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which 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 around $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 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

Eligible active-duty members of the military, veterans, reservists, and surviving spouses may apply for loans backed by the Department of Veterans Affairs. VA loans, which 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 benefit of VA loans is that they do not require private mortgage insurance (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, head to this USDA site .

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. For more information, visit the HUD program page.

First-Time Homebuyer Stats for 2024

•   Median home sale price in Connecticut: $451,500

•   3% down payment: $13,545

•   20% down payment: $90,300

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

•   Median age of first-time homebuyers: 38

•   Average credit score (vs. average U.S. score of 715): 726

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. The IRS considers anyone who has not owned a primary residence in the past two years a first-time homebuyer. 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 can borrow up to 50% of your 401(k) balance, up to $50,000, in a year 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 longer 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.

Finally, this home affordability calculator can show you how much you can afford to spend on a home.

The Takeaway

First-time homebuyers in Connecticut may be able to take advantage of attractive home loan and down payment assistance options. Those who don’t fit within the parameters may be able to find good mortgage opportunities on their own.

By Kenny Zhu

(Last Updated – 06/2025)

If you’re thinking of buying a home in Delaware, you will likely be interested in knowing that for qualified buyers, there can be help with your down payment, mortgage, and closing costs.

Owning a home in Delaware can be somewhat more expensive than the national average. The current home value is, on average, $402,409 (up 2.0% year over year) versus the national average of $367,741.

If you are of lower or middle income, however, the Delaware State Housing Authority offers a number of homebuyer assistance programs that can help you make ends meet. The help comes in the form of home loans, down payment assistance, and tax credits. There are also other programs at the federal level that may help you purchase a property. Read on for the details.

2 Delaware Programs for First-Time Homebuyers

The Delaware State Housing Authority (DSHA) offers homebuyer assistance programs to encourage homeownership across the First State.

The programs are for both first-time homebuyers — generally people who have not owned a principal residence in the past three years — and repeat homebuyers.

Some have qualifying income or location requirements. You’ll also need to ensure that you’re obtaining your mortgage through a participating DSHA-approved lender in order to be eligible for any of the benefits.

1. DSHA Homeownership Loans

DSHA offers 30-year fixed-rate mortgages through conventional, FHA, VA, and USDA loan programs for first-time and repeat homebuyers alike. The mortgages may be underwritten at rates that are either at or below market, helping homebuyers afford a house.

The “Welcome Home” program includes:

•   Smart Start First Mortgage: Unassisted first mortgage.

•   First State Home Loan: 3% of the final loan amount for down payment and closing costs.

•   Diamond in the Rough: 5% of the final loan amount for down payment and closing costs. Available only to homebuyers who qualify for the FHA 203(k) Limited Program.

Under its “Home Again” program, the DSHA also offers Smart Start and First State Home Loans to homebuyers (first-time and repeat) who exceed the income limits for “Welcome Home.”

Learn more about these programs on the DSHA site .

2. Delaware First-Time Homebuyer Tax Credit

The state of Delaware allows eligible first-time homebuyers to claim up to 35% of their annual mortgage interest paid in the form of a federal tax credit of up to $2,000 a year.

Like some of the programs above, the mortgage credit certificate typically requires you to qualify as a first-time homebuyer.

You can learn more on the DSHA website .

💡 Quick Tip: Don’t overpay for your mortgage. Get your dream home or investment property and a competitive rate with SoFi Mortgage Loans.

Who Is Considered a First-Time Homebuyer in Delaware?

The Department of Housing and Urban Development (HUD) defines a first-time homebuyer as someone who hasn’t owned a principal residence within the past three years (including a spouse), a single parent (who may have owned a house with a former spouse), and a displaced homemaker who has only owned a house with a spouse.

Remember that those who aren’t first-time homebuyers may still qualify for homebuyer loans and down payment assistance through the DSHA. Make sure to check the specific requirements of your program to confirm.

Recommended: Guide for First-Time Homebuyers

How to Apply to Delaware Programs for First-Time Homebuyers

To qualify for one of DSHA’s Homeownership Loans, you’ll need to apply through a participating lender and meet all of the income, credit, and target location requirements.

Step 1: Verify That You Meet Income and Credit Requirements

To qualify for DSHA homebuyer benefits, you’ll need to have a credit score of 620 or higher and an annual household income at or below the limits set by the DHSA.

Qualifying first-time homebuyers often also need to complete a housing counseling course.

Step 2: Apply for a Mortgage Through a Participating Lender

To obtain DSHA homebuyer benefits, you will need to apply for a mortgage directly through a lender that participates in the program. This applies regardless of whether you’re trying to obtain a conventional, VA, USDA, or FHA home loan.

Participating DSHA lenders can be found on the DSHA website, as noted above.

Keep in mind that even though you may qualify under the housing authority’s minimum requirements, a lender may issue its own set of underwriting requirements.

Step 3: Find a Home and Finalize Your Mortgage Application

Once you submit an offer that’s accepted by the seller, you’ll need to contact your lender directly and provide the details of the property you wish to purchase so the lender can complete the underwriting process.

It’s essential that you remain responsive during this stage of the process to ensure that everything goes according to plan. Your loan officer will coordinate with you and your real estate agent to confirm an appropriate closing date, ensure that all necessary reviews are completed, and validate your DSHA benefits.

It can typically take from 30 to 45 days from the time your offer is accepted to closing day. The timeline may vary, though, based on the complexity of your deal.

Federal Programs for First-Time Homebuyers

Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to 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, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Here’s more about how the program works:

•   Homebuyers choose from a list of approved lenders that participate 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 low credit scores, in the range of 500 to 579, must put at least 10% down.

•   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 loans allow a DTI ratio of up to 57% in some cases, vs. a typical 45% to 50% 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: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years.

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 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.

Unlike an FHA loan, the 97 LTV loan has no upfront mortgage insurance fee and does have cancellable mortgage insurance. The loan is for just one-unit single-family homes, co-ops, condos, and planned unit developments.

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.

•   VA loans, which 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%.

•   VA loans can 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. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. While the VA doesn’t require mortgage insurance, it does charge a funding fee. For more details, contact [email protected].

US Department of Agriculture (USDA) Loans

No down payment is required on these loans that are guaranteed by the Department of Agriculture in specified areas. Borrowers must meet USDA income requirements, and will 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 borrowers. For loan basics and income and property eligibility, head to this USDA site .

HUD Good Neighbor Next Door Program

If you are a police officer, firefighter, emergency medical technician, or teachers, you may qualify for these mortgages in the areas you 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.

Delaware First-Time Homebuyer Stats for 2025

Here are some stats about home buying in Delaware:

•   Median home sales price in Delaware: $359,900

•   3% down payment: $10,797

•   20% down payment: $71,980

•   Average credit score in Delaware: 714

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. The IRS considers anyone who has not owned a primary residence in the past two years a first-time homebuyer. 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 can 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 if 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 you to borrow from a 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, in 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 longer 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, but you may want to do the math to be sure.

•  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

Qualified first-time homebuyers in Delaware can leverage homebuyer assistance programs to help with the down payment, mortgage, and closing costs. These may be offered by the state or the federal government and can make homeownership more affordable. It’s also worthwhile to compare what these and offers from other lenders to find the right fit for your situation.

Who Is Considered a First-Time Homebuyer in Alabama?

Let’s take this on first, because the answer is a little counterintuitive.

A first-time homebuyer isn’t just anyone who has never owned a home. It’s anyone who hasn’t held an ownership interest in a primary residence over the past three years. Chances are if you’re buying a home, for the first time or the first time in recent memory, you’re going to need a home mortgage loan, and newcomers to the process have lots of options.

Recommended: First-Time Homebuyer’s Guide

4 Alabama Housing Programs for First-Time Homebuyers

Alabama Housing Finance Authority programs are generally dedicated to low- to moderate-income homebuyers with decent credit who need help with a down payment or closing costs.

Here are details about the AHFA’s main offerings.

1. First Step

AHFA has reintroduced a longtime program, now called First Step, offering first-time or repeat homebuyers below-market interest rates and up to $10,000 in down payment assistance. Nearly 50,000 Alabama households have benefitted from the program financed through Mortgage Revenue Bond loans.

The First Step program features the following:

•   Fixed-rate, 30-year mortgages.

•   Special low mortgage interest rates on FHA, VA, USDA, and Freddie Mac’s HFA Advantage conventional loans

•   Down payment assistance up to $10,000 or 4% of the home price, whichever is lower

•   Down payment funds secured by a 10-year second mortgage combined with the 30-year, fixed-rate First Step mortgage

•   Loan servicing by AHFA’s ServiSolutions, so homeowners write one check each month

To apply, contact a participating lender .

Email [email protected] to get help finding a lender in your area.

2. Step Up

Step Up is the flagship homeownership program of Alabama Housing and is designed specifically for moderate-income first-time and repeat homebuyers who can afford a mortgage, but need help with the down payment. It provides down payment assistance of up to 4% of the home’s sales price (up to $10,000) in the form of a second mortgage packaged with a 30-year, fixed-rate first mortgage.

The Step Up program features the following:

•   Down payment assistance repayable over 10 years.

•   HFA Advantage conventional, FHA, or VA loans

•   Qualifications including a minimum credit score of 640 for borrowers with incomes below 80% of area median income, or 680 for borrowers with incomes above 80% of area median income but less than $159,200

•   Requirement of a debt-to-income (DTI) ratio of less than 45%

•   Income cap of $159,200, regardless of household size or location

•   Homeownership education course requirement for borrowers

3. Affordable Income Subsidy Grant

In addition to Step Up, the Affordable Income Subsidy Grant provides lower-income HFA Advantage conventional loan borrowers with 0.50% to 1% of their total loan amount to assist with closing costs.

The grant is available to both first-time and repeat homebuyers whose income is under 80% of the area median income for the property’s location.

In addition:

•   Homebuyers must have a credit score of 640 or higher

•   DTI must be 45% or lower

•   Must complete a homeownership education course

4. Mortgage Credit Certificate

The mortgage credit certificate allows borrowers to reduce their federal tax liability, dollar by dollar, by a percentage of their annual mortgage interest paid, up to $2,000, for the life of the loan. Any remaining interest can be claimed as an annual mortgage interest dedication.

The certificate can be used with any 30-year fixed-rate amortizing mortgage offered by an AHFA participating lender. You must be a qualified homebuyer or buying a home in a targeted area.

The home purchase price must be under $665,173 for targeted areas or under $544,233 for non-targeted areas.

Mortgage credit rates are based on the loan amount:

•   20% MCC for loans of $150,001 or greater: no cap

•   30% MCC for loans of $100,001 to 150,000: $2,000/year cap

•   50% MCC for loans of $100,000 or less: $2,000/year cap

How to Apply to Alabama Programs for First-Time Homebuyers

If you are seeking AHFA homebuyer assistance, you’ll need to seek out a participating lender. Be sure to verify whether you fall within the prescribed income and purchase price limits. The lender can guide you after that.

If you haven’t crunched some numbers to see how much house you might be able to afford, use a home affordability calculator to do the math.

Recommended: Understanding the Different Types of Mortgage Loans

Federal Programs for First-Time Homebuyers

Several federal government programs exist for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to 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, 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 that participate in the FHA loan program. 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.

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.

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 will allow a DTI of up to 57%, vs. a typical 45% maximum for a conventional loan.

FHA loans always require mortgage insurance: This includes an upfront fee of 1.75% of the base loan amount, which can be rolled into the loan, and 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 around $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 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

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.

Another benefit of VA loans is that they do not require private mortgage insurance (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, head to 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.

For more information, visit the HUD program page.

Alabama First-Time Homebuyer Stats for 2025

•   Median home price in Alabama: $289,700

•   Number of homes for sale: 26,883

•   Average home value: $234,142

•   Median down payment: $32,550

•   Percent of sales over list price: 16.1%

•   Housing units owner-occupied: 69.9%

•   Average credit score in Alabama: 685

•   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%

Additional Financing Tips for First-Time Homebuyers

In addition to federal and state government-sponsored lending programs, while you’re using a mortgage calculator to project mortgage payments, you might want to hone your knowledge about 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. The IRS defines a first-time homebuyer, for the purposes of IRA withdrawals, as 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 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.

•  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

First-time homebuyers in Alabama of modest means may be able to take advantage of attractive mortgage and down payment/closing cost programs. Other first-time buyers can hunt for a fitting home loan on their own.