Login / Signup


11 First-Time Homebuyer Programs and Grants

Updated on February 19, 2024

At a Glance

  • The article provides a comprehensive overview of 11 programs and grants designed to assist first-time homebuyers.
  • These programs and grants include various loan programs from Fannie Mae, Freddie Mac, Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA).
  • Other programs include HUD’s Good Neighbor Next Door and Dollar Homes Program, as well as local first-time buyer programs and grants.
  • The article emphasizes the importance of exploring all available options and making the most of the support available to achieve homeownership.

Buying your first home is an exciting milestone in life. However, it can also come with its fair share of challenges, especially when it comes to financing your dream abode. The good news is that there are various programs and grants available to assist first-time homebuyers in their journey. Let’s take a closer look at 11 such programs and grants that might just make your quest for a new home a little easier!

1. Fannie Mae Standard 97% LTV Loan

The Fannie Mae Standard 97% LTV loan is an excellent option for those who are just starting on their homeownership journey. This program allows you to secure a mortgage with only a 3% down payment, making it more affordable than traditional loans. Plus, you can use gifted funds for the down payment in most cases, making it even more accessible.

With the Fannie Mae Standard 97% LTV loan, you can finally achieve your dream of owning a home without having to save up for a large down payment. This is especially beneficial for first-time homebuyers who may not have a substantial amount of savings. By only requiring a 3% down payment, this program allows you to get into the housing market sooner and start building equity in your own property.

Furthermore, the option to use gifted funds for the down payment opens up even more possibilities for potential homeowners. If you have generous family members or friends who are willing to contribute towards your down payment, you can take advantage of their support and make your homeownership dreams a reality.

2. Fannie Mae HomeReady Loan

If you’re a first-time homebuyer with a lower income or a limited down payment, the Fannie Mae HomeReady loan program might be perfect for you. This program allows you to finance up to 97% of the home’s value and provides options for down payments as low as 3%. It’s a great way to break into the housing market without draining your savings account.

What sets the HomeReady loan program apart from other options is its flexibility in accepting non-traditional sources of income. Traditional lenders often rely solely on employment income, but HomeReady takes into account rental payments and roommate contributions as valid sources of income. This is particularly beneficial for individuals who have a steady income from renting out a property or sharing living expenses with a roommate.

Another advantage of the HomeReady loan program is the education and counseling it provides to borrowers. Fannie Mae offers online courses and resources to help first-time homebuyers navigate the complex process of purchasing a home. These resources cover topics such as budgeting, credit management, and understanding mortgage terms, empowering borrowers to make informed decisions.

3. Freddie Mac HomeOne Loan

The Freddie Mac HomeOne loan program is designed specifically for first-time homebuyers with limited income or savings. With a down payment requirement of just 3%, this program makes homeownership more achievable for many individuals and families.

This type of mortgage loan is designed to make financing accessible for prospective buyers who want a fixed rate. The main purpose of this loan is to offer liquidity in the housing market, allowing homeowners to buy property in areas that have competitive rates.

What’s unique about the HomeOne loan program is that it doesn’t have any geographic restrictions. Whether you’re looking to settle down in a bustling city or a quiet rural area, this option could be the doorway to your dream home.

4. Freddie Mac Home Possible Loan

Another excellent option for first-time homebuyers is the Freddie Mac Home Possible loan program. Designed to increase homeownership opportunities for low and moderate-income borrowers, this program offers various features that make buying a home more accessible.

With a low down payment requirement of 3%, flexible sources of funds for down payments and closing costs, and reduced mortgage insurance coverage, the Home Possible loan program eases the financial burden associated with purchasing a home.

This loan allows you to get a minimum of $726,201 for properties in most states. If you are planning to get a house in Alaska, Guam, Hawaii, and the US Virgin Islands, you may get a minimum of $1,089,000.

5. FHA Loan

The Federal Housing Administration (FHA) loan is a popular choice for first-time homebuyers, thanks to its low down payment requirement (as low as 3.5%) and more lenient credit score criteria.

The FHA loan keeps the down payment at 10%, making it a good option for people who do not have the necessary funds. You can even use a personal loan to cover it. It may also be used by people with low credit scores or none at all.

Additionally, the FHA loan program offers flexible eligibility guidelines, making it easier for individuals with a limited credit history or lower income to qualify for a mortgage. If you’re in search of a loan option that offers more accessibility, the FHA loan program may be the perfect fit for you!

6. HUD’s Good Neighbor Next Door Program

Are you passionate about giving back to your community? If so, HUD’s Good Neighbor Next Door program might be the ideal option for your first home purchase.

This program provides substantial discounts of up to 50% off the listed price of a home in designated revitalization areas. As a requirement, participants must commit to living in the property for at least three years, making it an excellent opportunity for those who want to invest in a neighborhood’s future while becoming homeowners themselves.

7. VA Loan

If you are a current or former member of the military, you may be eligible for a VA loan, a mortgage guaranteed by the Department of Veterans Affairs. VA loans offer several benefits, including no down payment requirement, lower interest rates, and flexible credit guidelines.

The VA loan program is a fantastic way to honor and support those who have served our country while achieving the dream of homeownership. It only requires a credit score of a minimum of 620, and it doesn’t charge anything for mortgage insurance.

Moreover, the flexible mortgage terms provided by this program ensure that you can find a loan that fits your unique financial situation and long-term goals. Whether you prefer a shorter loan term to pay off your mortgage faster or a longer term to have lower monthly payments, the VA loan gives you the flexibility to choose what works best for you.

8. USDA Loan

Rural areas and small towns offer their unique charm and affordable housing options. The USDA loan program aims to make homeownership in these locations more accessible. They allow for 100% financing, provided you have a minimum credit score of 100.

With zero down payment requirements and low interest rates, the USDA loan program eases the financial burden of first-time homebuyers looking to settle down in a rural or suburban oasis. Additionally, income limits may be more forgiving under this program, giving more aspiring homeowners a chance to secure a loan.

9. HomePath Ready Buyer Program

Fannie Mae’s HomePath Ready Buyer program is specifically tailored for first-time homebuyers interested in purchasing a Fannie Mae-owned home. This program offers educational courses that can help you understand the home-buying process better.

One of the great advantages of this program is that it offers competitive interest rates and flexible mortgage terms, ensuring that you find a loan that suits your financial situation and long-term goals.

Upon completion of the required education course, buyers can become eligible for up to 3% in closing cost assistance. With the HomePath Ready Buyer program, you can gain the knowledge and financial support necessary to make informed decisions throughout your home-buying journey.

10. HUD’s Dollar Homes Program

If you’re up for a unique homeownership adventure, HUD’s Dollar Homes program may be worth exploring. This program offers housing units that have been acquired by HUD for just $1 (plus closing costs).

While these homes often require significant repairs and renovations, it can be an excellent opportunity for those willing to put in the effort. Not only does it allow you to become a homeowner at an incredibly low cost, but it also provides a chance to breathe new life into a community by revitalizing a property.

11. Local First-Time Buyer Programs and Grants

Finally, don’t forget to explore the various local first-time buyer programs and grants available in your area. These programs are often designed to address the specific needs and challenges faced by homebuyers in a particular locality or state.

Local programs may offer down payment assistance, attractive interest rates, or even grants that don’t require repayment. Reach out to your local housing authority or government to find out more about the options available to you.

The Bottom Line

Before starting your journey as a first-time homebuyer, remember to explore all the options at your disposal. These 11 programs and grants are just the tip of the iceberg—there’s a world of support waiting for you in your pursuit of homeownership. So, don’t be afraid to get creative, ask questions, and make the most of every opportunity that comes your way. Happy house hunting!

Frequently Asked Questions (FAQ)

What is the Fannie Mae Standard 97% LTV Loan?

This is a loan program that allows first-time home buyers to secure a mortgage with just a 3% down payment.

Who is eligible for the Fannie Mae HomeReady loan program?

First-time homebuyers with a lower income or a limited down payment are eligible for this loan program.

What is a Freddie Mac HomeOne loan?

This is a loan program designed especially for first-time homebuyers with limited income or savings. It requires a down payment of just 3%.

What is the Freddie Mac Home Possible loan program?

This loan program is designed to increase homeownership opportunities for low and moderate-income borrowers. It features a low down payment requirement, flexible sources of funds, and reduced mortgage insurance coverage.

What is an FHA loan?

An FHA loan is a mortgage insured by the Federal Housing Administration. It is popular among first-time homebuyers due to its low down payment requirement and lenient credit score criteria.

What is HUD’s Good Neighbor Next Door program?

This program offers substantial discounts on homes in designated revitalization areas for individuals committed to living in the property for at least three years.

What is a VA loan?

A VA loan is a mortgage guaranteed by the Department of Veterans Affairs. It offers several benefits to current or former members of the military, including no down payment requirement, lower interest rates, and flexible credit guidelines.

What is a USDA loan?

The USDA loan program aims to make homeownership in rural areas and small towns more accessible. This loan allows for 100% financing.

What is the HomePath Ready Buyer program?

This program is tailored for first-time homebuyers interested in purchasing a Fannie Mae-owned home. It offers educational courses to better understand the home-buying process.

What is HUD’s Dollar Homes program?

This program offers HUD-acquired housing units for just $1, plus closing costs. These homes often require significant repairs and renovations.

JOIN OUR NEWSLETTER
I agree to have my personal information transfered to MailChimp ( more information )
Join over 100,000 visitors who are receiving our newsletter and learn more about finance, immigration, and more!
We hate spam. Your email address will not be sold or shared with anyone else.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

Get the Checklist