Loan Programs and Down Payment Help for First-Time Buyers
For many first-time homebuyers, saving for a down payment feels like the biggest obstacle to homeownership. The good news is that dozens of first-time buyer loan programs and down payment assistance options exist at the federal, state, and local levels—many of which are underutilized simply because buyers don’t know about them.
This comprehensive guide covers the loan programs, grants, and assistance options available in 2026 to help you get into your first home with less money upfront and better terms than you might expect.
Federal Loan Programs for First-Time Buyers
FHA Loans: The Go-To for Flexible Qualification
FHA loans remain one of the most popular choices for first-time buyers, requiring just 3.5% down with a credit score of 580 or higher. The program is particularly valuable for buyers who are still building their credit or who have recovered from past financial difficulties. FHA loans are more forgiving of lower credit scores and higher debt-to-income ratios than conventional financing. For a detailed comparison with conventional options, see our FHA vs. conventional loan guide.
VA Loans: Zero Down for Those Who Served
Eligible veterans, active-duty service members, National Guard members, and qualifying surviving spouses can access VA loans with no down payment requirement and no private mortgage insurance. VA loans also have competitive interest rates and limited closing costs. If you’ve served in the military, this should be your first financing option to explore.
USDA Loans: Zero Down in Eligible Areas
The USDA Rural Development program offers zero-down-payment mortgages for moderate-income buyers purchasing in eligible rural and suburban areas. Many buyers are surprised to learn that USDA-eligible areas include suburbs and small cities—not just farmland. Check the USDA eligibility map to see if the areas you’re considering qualify.
Conventional Low-Down-Payment Programs
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs offer conventional loans with as little as 3% down. These programs feature reduced mortgage insurance rates compared to standard conventional loans and allow income from non-borrower household members to help with qualification. Income limits apply, typically capped at 80% of the area median income.
State and Local Down Payment Assistance
Every state offers some form of down payment assistance (DPA), and many cities and counties have their own programs as well. These programs come in several forms.
Grants
Down payment grants are essentially free money that doesn’t need to be repaid. Many state housing finance agencies offer grants of $5,000 to $15,000 or more for qualifying first-time buyers. Eligibility is typically based on income limits, purchase price limits, and completing a homebuyer education course.
Forgivable Loans
Some DPA programs provide a second mortgage that is forgiven after a set period—typically five to ten years—as long as you continue to live in the home. If you sell or refinance before the forgiveness period ends, you may need to repay all or part of the assistance.
Deferred-Payment Loans
These programs provide down payment funds as a loan with no monthly payments required. Repayment is deferred until you sell, refinance, or pay off the first mortgage. Interest rates may be very low or even 0%, making this an attractive option for buyers who need help with upfront costs.
Matched Savings Programs
Individual Development Account (IDA) programs match your savings at ratios of 2:1 or even 3:1. If you save $3,000 in a matched savings program with a 3:1 match, you’d have $12,000 for your down payment. These programs typically require participants to complete financial education and save consistently over a set period.
Employer Assistance Programs
An often-overlooked resource is employer-assisted housing. Some employers—particularly larger companies, hospitals, universities, and government agencies—offer down payment assistance or favorable loan terms to employees as a recruitment and retention benefit. If your employer offers such a program, it can be combined with other assistance for maximum benefit.
How to Find and Apply for Assistance Programs
With so many programs available, finding the right ones can feel overwhelming. Start with your state’s Housing Finance Agency (HFA), which administers most state-level programs. The HUD website maintains a directory of state and local programs. Many real estate agents and mortgage lenders are also knowledgeable about available programs in their areas.
When applying for assistance, you’ll typically need to meet income requirements based on the area median income, purchase a primary residence within program price limits, complete a HUD-approved homebuyer education course, and work with an approved lender. The application process varies by program but generally involves documentation similar to a standard mortgage application.
An experienced real estate agent can be invaluable in navigating these options. Connect with an agent through NearbyRealtors who knows your local market and can point you toward the programs you qualify for. Read our complete first-time buyer’s guide for a full overview of the buying process.
Combining Multiple Programs for Maximum Benefit
In many cases, you can stack multiple assistance programs. For example, you might use an FHA loan with a state down payment grant and a local forgivable loan to cover closing costs. This layering approach can dramatically reduce your out-of-pocket costs. Some buyers have purchased homes with zero or near-zero cash at closing by strategically combining programs.
Work with a knowledgeable mortgage lender and real estate agent to identify all the programs you qualify for and understand how they can work together. The right professional team can save you thousands of dollars and make homeownership accessible years sooner than you thought possible.
Start Your Homeownership Journey Today
Don’t let the down payment barrier stop you from exploring homeownership. With the right programs and professional guidance, buying your first home may be more achievable than you think.
Get matched with a qualified real estate agent through NearbyRealtors who can connect you with down payment assistance programs and lenders experienced in first-time buyer financing. Your path to homeownership starts with the right team in your corner.