From grants to low-interest loans, this state-by-state guide to first-time homebuyer programs is your map to making homeownership possible
Published 3:00 pm Thursday, December 19, 2024
From grants to low-interest loans, this state-by-state guide to first-time homebuyer programs is your map to making homeownership possible
Buying your first home can feel like a huge leap. With rising home prices, a competitive housing market, and the weight of all those extra costs, it’s easy to feel overwhelmed. Over half of prospective homeowners say that the high cost of living is preventing them from saving for a down payment. But there’s a wealth of first-time home buyer incentives designed to help make homeownership more accessible, easing the financial burden along the way. Whether in need of help with the down payment, securing a better mortgage rate, or reducing tax liabilities, there are programs tailored to first-time buyers.
In this comprehensive guide, MakeMyMove breaks down everything to know about first-time home buyer incentives—how they work, who qualifies, and how to make the most of these opportunities. If you’ve been dreaming of homeownership, these programs might just be the key to making that dream a reality.
Types of first-time home buyer programs
First-time home buyer incentives are programs designed to assist individuals who have never owned a home. These incentives come in many forms, including:
Down payment assistance programs (DPA)
For many first-time buyers, saving enough for the down payment is the biggest hurdle. Traditional mortgage lenders often require a 20% down payment, but down payment assistance programs can significantly reduce this burden.
Even if you think you’ve saved enough for a down payment, it’s worth checking if you qualify for down payment assistance. These programs can reduce the amount of cash needed upfront and help keep more money in your pocket.
Tax credits
Tax credits are another powerful incentive for first-time home buyers. One of the most common programs is the Mortgage Credit Certificate, which allows you to claim a portion of your mortgage interest as a tax credit.
This can reduce your annual tax bill, freeing up more money to put toward mortgage payments or saving for the future. Tax credits vary by state, so be sure to check what’s available in your area.
Low-interest loans and specialized mortgages
Many first-time home buyers can take advantage of mortgage programs that offer lower interest rates, reduced down payment requirements, or more lenient credit score guidelines. These programs are specifically designed to make it easier for new buyers to enter the market and include:
- FHA loans: Insured by the Federal Housing Administration, these loans offer down payments as low as 3.5% and more flexible credit score requirements.
- VA loans: Available for military service members, veterans and their families—these loans offer no down payment and competitive interest rates.
- USDA loans: If you’re purchasing a house in a rural area and meet certain income criteria, a USDA loan offers 100% financing and very low interest rates.
- Conventional 97 loans: These loans allow for a down payment as low as 3%, which can help to avoid private mortgage insurance.
Grants
Grants are essentially free money that can be used for various expenses related to purchasing a home, such as down payments or closing costs. While grants are less common than loans or tax credits, they do exist and are often tied to specific geographic areas or have income limits.
Some grant programs are offered by non-profit organizations, while others are administered at the state or local level.
How to find first-time home buyer programs
Navigating the sea of first-time home buyer programs can be a bit tricky, but there are ways to streamline the search. Here are a few tips for finding the right incentives for any situation:
Consult with a real estate agent
A good real estate agent who works with first-time home buyers can help you understand the various incentives available in your area. They’re often familiar with local and state programs and can guide you through the application process.
Check with your local housing authority
State and local housing authorities are excellent resources for finding down payment assistance and other home buyer incentives. They can provide details on eligibility, available programs, and application deadlines.
Use online resources
Websites like the Department of Housing and Urban Development and the Federal Housing Administration offer comprehensive information about federal programs. Many states also have dedicated pages outlining available programs and their requirements.
Talk to your lender
Mortgage lenders often work with first-time home buyers and can offer guidance on loan options and assistance programs that might be available.
Tips for Maximizing First-Time Home Buyer Incentives
To make the most of the available programs, keep these tips in mind:
1. Start early
The earlier you start your research and application process, the better. Some programs have limited funds and tight deadlines, so make sure to give yourself enough time to complete the necessary paperwork.
2. Boost your credit score
The better your credit score, the more favorable loan terms you’ll be able to access. While many programs have more flexible credit requirements, improving your credit score can help you qualify for better interest rates.
3. Shop around for the best deals
Don’t settle for the first mortgage rate you come across. Compare rates from different lenders and ask about special offers or programs for first-time buyers. You might be surprised at the savings you could find.
4. Understand eligibility requirements
Each program has different criteria, so make sure you read the fine print. Some programs are only available to buyers with specific income levels or in particular locations.
5. Consult a professional
It’s a good idea to talk to a financial advisor or tax professional to understand how these incentives might impact taxes or finances in the long term.
Examples of First-Time Home Buyer Programs
Alabama Housing Finance Authority
Offers below-market, 30-year fixed mortgage interest rates and DPA. Must work with approved lenders and meet standards for creditworthiness.
Alaska Housing Finance Corporation
Must complete a home buyer education course to receive DPA.
DPA for first-time home buyers. Must attend an 8-hour home buyer education class.
Arkansas Development Finance Authority
Down payment and closing cost assistance. Must obtain an “ADFA StartSmart” or “ADFA Move-Up” first mortgage.
California Housing Finance Agency
MyHome offers a deferred-payment junior loan of up to 3.5% of the purchase price or appraised value to assist with down payment and/or closing costs. Must be a first-time home buyer and complete home buyer education counseling.
Closing cost and down payment assistance toward the purchase of a primary home in one of 14,000 minority communities in designated census tracts. The grant is available for those with DreaMaker, Standard Agency, Federal Housing Administration, and Veterans Affairs mortgages. It can also be used to purchase points from a lender to reduce your interest rate.
DPA for first-time home buyers. Aimed at supporting low-to-moderate-income home buyers to purchase a single-family home, condominium, or one-half a duplex in the City of Madison.
Credit that can be applied towards closing costs. You must purchase a primary residence in specific areas of certain cities and meet other eligibility requirements.
Colorado Housing & Financing Authority
Offers down payment assistance grants and second mortgage loans to those who are going through their first mortgage loan program. A credit score of 620 or higher and must take a home buyer education course.
Community Development Corporation of Utah
DPA for first-time home buyers, a home purchase value limit of $492,000 is required.
Connecticut Housing Finance Authority
Financing options to cover down payment and closing costs. Must qualify for a CHFA mortgage from a participating lender.
County of Maui Department of Housing & Human Concerns
First-time home buyers DPA program. Must be a current Maui resident and must complete a home buyer education class.
Delaware State Housing Authority
Assistance for first-time or repeat buyers, tax credits, and DPA. A minimum credit score of 620, and there are caps to the home’s purchase price.
Detroit Down Payment Assistance
Provides grants up to $25k for down payment, closing costs, etc. Available to people who haven’t owned a home in the last three years, resided in Detroit for at least a year, and meet requirements to withhold after the purchase of the home.
Fannie Mae Federal Grant Program
First-time home buyers can receive up to 3% of the purchase price in closing cost assistance toward the purchase of a HomePath property upon completion of an online home buyer education course. Must be at or below 100% of the median income for your area. Recipients must also buy a HomePath property, which is a foreclosed home owned by Fannie Mae.
Florida Housing Finance Corporation
Florida Housing’s second mortgage program to assist borrowers with down payment assistance and closing costs. A minimum credit score of 640 is required, and the buyer must work with an approved lender.
Georgia Department of Community Affairs
Georgia Dream Homeownership Program provides affordable mortgage financing for eligible home buyers as well as down payment and closing cost assistance.
Down payment and closing cost assistance in the form of a 0% deferred loan. Must take a home buyer education course to qualify.
Housing and Urban Development (HUD)
Get 50% of the list price of a home, and eligible properties are located in revitalization areas. To qualify, you must be (or have been) a full-time law enforcement officer, firefighter, emergency medical technician, or teacher.
Three active programs are available offering forgivable loans, deferred loans, and zero-interest loans. A credit score of 640 or higher is required, with a debt-to-income ratio of 50% or lower.
Indiana Housing & Community Development Authority
Down payment assistance, low-interest rate loans and tax credits available. Credit score must be 640 or greater and must be a legal U.S. resident purchasing a home.
Down payment and closing cost assistance programs in conjunction with their mortgage programs. Varies from program to program, must be a first-time home buyer, veteran, or be purchasing a home in a targeted area to qualify for the first program. Buyer’s credit score must be over 640 to qualify for any program.
Helps first-time home buyers with down payment and closing cost assistance. First-time home buyers, Kansans who have a median income at or below 80% of their area qualify.
The Regular Down Payment Assistance Program is available to all KHC first-mortgage loan recipients. Home buyers must have a 620 credit score or higher.
Down payment assistance programs and help with closing costs. DPA can be in the form of a loan but the closing costs can be provided through a grant. For first-time home buyers with a minimum credit score of 640, the property must be located in Louisiana.
Mortgage program for borrowers who have never lived in a home owned by their biological parents or legal guardians. The program is also available to borrowers who have been in foster care at some point in their childhood. Offers low fixed interest rates, down payment and closing costs assistance and education classes.
MakeMyMove Relocation Assistance
Financial assistance is available in multiple communities across the country which can be used towards closing costs or a down payment on a home. Amount and requirements vary by community.
Offers a loan for down payment and closing costs with your home loan.
Michigan State Housing Development Authority
Offers DPA loans, federal tax credits, classes and workshops. Minimum credit score of 640, first-time home buyer (repeat home buyers in some areas can still qualify), sales price limit of $224,500 statewide.
Loan programs for both first-time and repeat home buyers, along with refinancing options. Applicants are required to complete an approved home buyer education course. A minimum credit score and house price limits depending on the location within the state must be met.
Requirements in certain counties require you to be a first-time home buyer to receive the down payment assistance. Must also use an approved lender and take a home buyer education class.
Missouri Housing Development Commission
Offers three different programs for home buyers in Missouri. Affordable interest rates, down payment assistance, or tax credits to help prospective buyers in a competitive market. The “first place program” requires you to be a first-time home buyer or veteran.
Montana Department of Commerce
Must qualify for a Regular Bond Program Loan to receive DPA.
Nebraska Investment Finance Authority
Provides first and second mortgage loans, the first mortgage loan includes down payment and closing cost assistance. Different programs including one geared for first-time home buyers and another for military members.
Program offering 5% of the home loan value to apply toward down payment or closing costs. A minimum credit score of 640 and the buyer must complete a home buyer education course.
DPA, closing cost assistance and other perks. Must complete a home buyer education course.
New Jersey Housing and Mortgage Finance Agency
The NJHMFA DPA provides up to $15,000 for qualified first-time home buyers to use as a down payment and closing cost assistance when purchasing a home in New Jersey. Must be paired with a NJHMFA first mortgage loan.
New Mexico Mortgage Finance Authority
Provides home buyers with down payment and closing cost assistance as well as competitive interest-rate mortgage loans. A credit score of at least 620 is required and buyer must be willing to take pre-purchase home buyer counseling.
North Carolina Housing Finance Agency
Down payment assistance for first-time home buyers and military veterans. Must have a credit score of 640 or higher, be a first-time home buyer or military veteran.
North Dakota Housing Finance Agency
Offers loan programs with down payment and closing cost assistance. To receive the extra assistance, you must be considered a low-income buyer and complete a home buyer education course.
Offers a variety of loans with different perks depending on your situation. DPA, tax credits, veteran-related benefits and benefits for people with higher education. Open to people who have not had an ownership interest in their primary residence in the last three years and must be purchasing a home in the listed target areas.
Oklahoma Housing Federal Agency
Must have a credit score of 640 or higher, use an approved lender, and be a legal U.S. resident to qualify for DPA.
Oregon Housing and Community Services
DPA funds are awarded to certain organizations to disperse. Must complete a home buyer education course.
Pennsylvania Housing Finance Agency
Various loans and programs are available based on your situation. One is the PHFA grant to help with downpayment and closing costs. Must be obtaining an HFA PreferredTM (Lo MI) loan and attend in person if the credit score is lower than 680.
Assistance for down payment and/or closing costs for first-time home buyers. Be a first-time home buyer with a minimum credit score of 660, complete a home buyer education course, and obtain a RIHousing-funded first mortgage.
South Carolina State Housing Finance & Development Authority
Multiple DPA programs are available.
Tennessee Housing Development Agency
Buyer is required to attend a home buyer education class to receive DPA.
Texas Department of Housing & Community Affairs
Offers various programs with benefits like DPA. The “My First Texas Home” program is only available for first-time homeowners and veterans.
Texas State Affordable Housing
This nonprofit is offering two different loan programs as well as grants for DPA. “Home Sweet Texas” is open to any Texan, “Home for Texas Heroes” is limited to those within a certain career field, and you do have to be a first-time home buyer for some of the additional grants.
Vermont Housing Finance Agency
DPA for first-time home buyers, also offers tax credits. Available with a VHFA program.
Virginia Department of Housing and Community Development
Down payment and closing cost assistance for first-time home buyers.
Provides home loans, free first-time home buyer courses and grants to cover closing costs and down payment. First-time home buyer or repeat buyer purchasing in areas of economic opportunity.
Washington Housing Finance Commission
DPA when you use a mortgage program through the Washington State Housing Finance Commission and also have a credit score of at least 620.
Have to apply for a Wells Fargo fixed-rate conventional loan to qualify for a down payment grant.
West Virginia Housing Development Fund
Down payment assistance or help with closing costs. Have to have a loan through the Homeownership Program.
Wisconsin Housing and Economic Development Authority
Must purchase a home in the state using a WHEDA Advantage Conventional loan or WHEDA Advantage FHA loan to qualify for DPA.
Wyoming Community Development Authority
DPA with a credit score of 620 or higher.
Unlocking the door to homeownership
Becoming a homeowner is an exciting milestone but it can be financially challenging, especially for first-time buyers. Fortunately, with the right-first-time home buyer incentives, you can significantly reduce your costs and increase your chances of success. From down payment assistance to tax credits, there are numerous programs designed to help you achieve your homeownership dreams.
Remember, the key to unlocking the door to homeownership is knowledge. By doing your research, understanding the eligibility requirements, and taking advantage of the various incentives, you can make your first home purchase a reality. Stay informed, work with professionals, and take advantage of these opportunities to set yourself up for financial success as a homeowner.
Now, go ahead—your first home is waiting.
This story was produced by MakeMyMove and reviewed and distributed by Stacker.
