First-time buyers can get help that repeat buyers usually can't: low down payment loans, homebuyer education, and down payment assistance from state, city and county programs. This guide covers who qualifies as a first-time buyer, which options are built for you, and the steps in order. For the full purchase process from offer to closing, see how to buy a house.
Step 01 of 07
Find out if you count as a first-time buyer
The definition is broader than most people expect. HUD, and most assistance programs that follow it, treat you as a first-time homebuyer if you have not owned your principal residence in the past three years. Under HUD's definition:
- If one spouse qualifies, both are treated as first-time buyers.
- A single parent who only owned a home with a former spouse while married can qualify.
- A displaced homemaker who only owned with a spouse can qualify.
- Owning a home that was not on a permanent foundation, such as some mobile homes, may not count against you.
Owning a rental or vacation home in the last three years can disqualify you for some programs and not others. Some programs drop the first-time requirement for veterans or for homes in targeted areas. Always check the specific program's rule.
Step 02 of 07
Take a homebuyer education course
Many down payment assistance programs require a homebuyer education certificate, and some low down payment loans do too. Courses are offered by HUD-approved housing counseling agencies, in person or online, and some are free. You can find a HUD-approved counselor through the CFPB.
Take the course early. The certificate often has to be in your file before the lender can approve the assistance, and the material is useful before you start shopping, not just before closing. Check which courses your program accepts before you sign up, because some programs accept only certain providers.
Step 03 of 07
Know the loans built for first-time buyers
You don't need 20% down. The main low down payment options are:
- FHA loans. 3.5% down with a credit score of 580 or higher, or 10% down from 500 to 579. Flexible on credit history. Carries an upfront and an annual mortgage insurance premium. How FHA loans work.
- Conventional 97 loans, HomeReady and Home Possible. 3% down. HomeReady (Fannie Mae) and Home Possible (Freddie Mac) are for buyers earning up to 80% of the area median income and include reduced mortgage insurance. Private mortgage insurance can be removed later.
- VA loans. 0% down for eligible veterans, service members and some surviving spouses. No monthly mortgage insurance.
- USDA loans. 0% down in eligible rural and suburban areas for households earning up to 115% of the area median income.
Figure 1
Minimum down payment on a $300,000 home
VA
USDA
Conventional, 3% down
FHA, 3.5% down
20% down (no mortgage insurance)
Source: HouseBuyerGuides.com calculations. VA requires no down payment with full entitlement. USDA requires none in eligible areas for eligible incomes. Conventional 3% applies to qualifying buyers and programs. FHA 3.5% requires a 580+ credit score.
View data tableHide data table
| Value | |
|---|---|
| VA | $0 |
| USDA | $0 |
| Conventional, 3% down | $9,000 |
| FHA, 3.5% down | $10,500 |
| 20% down (no mortgage insurance) | $60,000 |
Our types of home loans guide compares them side by side, including the 2026 loan limits.
Step 04 of 07
Find down payment and closing cost assistance
This is where first-time status pays off most. Assistance comes in several forms:
- Grants that you never repay
- Forgivable loans that are erased if you live in the home for a set number of years
- Deferred loans with no payment until you sell, refinance or pay off the mortgage
- Mortgage credit certificates in some states, which give you a federal tax credit for part of your mortgage interest
Figure 2
What $10,000 of assistance does to your cash to close
- Your cash
- Assistance
Without assistance
With $10,000 of assistance
Source: HouseBuyerGuides.com calculations. Example: $300,000 home, 6.5% 30-year fixed rate for every loan type, closing costs estimated at 3% of the price. Real rates, fees and costs vary by lender, loan type and location. Assistance amounts, rules and what they can pay for vary by program.
View data tableHide data table
| Your cash | Assistance | Total | |
|---|---|---|---|
| Without assistance | $19,500 | $0 | $19,500 |
| With $10,000 of assistance | $9,500 | $10,000 | $19,500 |
Most states have a housing finance agency program, and many cities and counties add their own on top. Search your state or city on this site to see every program we track for your area, or answer a few questions on the program finder. The down payment assistance guide explains how to apply.
Step 05 of 07
Get your finances loan-ready
Before you apply for a mortgage, spend a month or two on these:
- Pull your credit reports at AnnualCreditReport.com and dispute errors.
- Pay revolving balances down. Utilization is one of the fastest ways to move a score.
- Avoid new debt. No new car loans or store cards until after closing.
- Document your savings. Lenders look at two months of statements. Large deposits that aren't from your paycheck will need a paper trail, and gift money needs a signed gift letter.
- Keep your job steady. Lenders usually want a two-year work history. A change within the same field is usually fine, but ask a lender before switching.
Step 06 of 07
Choose a lender that offers your programs
Not every lender offers every assistance program. Start with the participating lender list on your state housing agency's site or on the program's page here, then compare Loan Estimates from at least two or three of them. Ask each lender:
- Which assistance programs do you close regularly, and how long do they take?
- What credit score, income and price limits apply?
- Is the interest rate higher with the assistance than without it?
- What are your fees for the assistance loan itself?
When you are ready, get pre-approved.
Step 07 of 07
Shop, offer and close
From here you follow the standard steps: tour homes within your program's price limits, make an offer with inspection, appraisal and financing contingencies, and close. Leave extra time before the closing date, because many assistance programs need to approve the file after the lender does. The step-by-step buying guide covers this part in detail.
Mistakes first-time buyers make most often
- Shopping before checking programs. Buyers find a home, then learn it is over the program's price limit or outside its area.
- Choosing a lender first. The lender you pick might not offer the program you qualify for.
- Changing credit or jobs during the loan. A new car payment a week before closing can kill the approval.
- Skipping the inspection to make an offer stronger. Do this only if you can afford a surprise repair.
- Emptying savings. Keep a cushion after closing. Some assistance programs limit how much savings you can keep, so ask what the limit is rather than guessing.