Okay, so here's what happened last month. I was working with a couple in their mid-thirties who'd been renting for years and finally decided they were ready to buy. They had decent credit, stable jobs, and about $8,000 saved up. The problem? They thought that wasn't nearly enough to buy a home. Sound familiar?
I walked them through the numbers, showed them what programs they qualified for, and three months later they closed on their first house with help from a state down payment assistance program that covered most of their closing costs. Here in Louisville, we see this all the time—people who think homeownership is out of reach when really, they just need to know where to look.
Here's the thing about buying your first home in 2026—it's not easy, but it's also not impossible. The landscape has changed a lot from what your parents experienced. According to the National Association of REALTORS®, first-time buyers now make up just 24% of all home purchases, down from 32% in 2023. The median age has climbed to 38, and you'll probably need a household income around $97,000 to compete in today's market.
But here's what most people don't realize: there are more assistance programs available now than ever before. Down Payment Resource reports a record 2,624 programs nationwide as of Q3 2025, offering an average of $18,000 in benefits.
If you're a first-time home buyer—or think you might qualify as one—there are federal, state, local, and nonprofit programs designed specifically to help you afford the down payment, closing costs, and other expenses that come with buying a home. You just need to know where to look and what you qualify for.
Let me simplify this for you, because the definition isn't as straightforward as you might think.
According to the U.S. Department of Housing and Urban Development, you're considered a first-time home buyer if you haven't owned a principal residence in the previous three years. That's it. Even if you owned a home a decade ago, sold it, and have been renting since, you can qualify as a first-time buyer for most programs as long as three years have passed.
There are also some additional categories that might surprise you. Single parents who owned a home with a former spouse can qualify, even if they were on the title during the three-year window, as long as they haven't owned another home since. Displaced homemakers who owned a home only with a spouse while married may also qualify. And veterans and active-duty military members sometimes get special consideration, even if they don't meet the standard definition.
Most help programs are aimed at buyers with moderate to low incomes. The definition of "moderate income" changes a lot depending on where you live. In some rural areas, that could mean a family making less than $60,000 a year. The limit could be $120,000 or more in cities with high costs, depending on the area median income (AMI).
Before you sign up for any specific programs, you should also check your credit score, debt-to-income ratio (DTI), and other things that make you eligible. There are different minimums for different types of loans. For example, FHA loans only require a 3.5% down payment and a credit score of 580 or higher. Most of the time, you need at least 620 for a conventional loan, but some programs for first-time buyers are more flexible.
Finding the right assistance program feels overwhelming at first. I get that. When I first started working with first-time buyers, even I was surprised by how fragmented the information is. But there are a few reliable places to start:
The Department of Housing and Urban Development maintains a directory of homebuying resources for all 50 states. Click on your state and you'll find links to programs and your state housing authority website. It's not the prettiest interface, but it works.
Most states have a housing finance agency that administers first-time buyer programs. These agencies offer low-interest mortgages, down payment assistance, and sometimes even grants that don't need to be repaid. The programs update regularly, so make sure you're looking at current offerings.
Cities and counties often run their own assistance programs separate from state offerings. These tend to be smaller pots of money, but they're also less competitive. A quick search for "[your city] first-time home buyer program" usually gets you there.
Once you've found a lender you want to work with, ask them directly about available programs. At AmeriSave, our loan officers can help you identify which down payment assistance programs you qualify for based on your location and financial situation. We work with these programs regularly and know which ones are actually active versus technically available but out of funding.
Find nonprofits in your area that help people find affordable housing. NeighborWorks America, local Habitat for Humanity chapters, and community development financial institutions (CDFIs) are all groups that can help you learn more and find programs that can help you that you might not be able to find on your own.
The costs of buying a home—down payment, closing costs, moving expenses—add up fast. Fortunately, there are several types of programs designed to ease that financial burden. Think of it like this: each program addresses a different piece of the affordability puzzle.
A government loan is a mortgage backed by a federal agency, which means the agency insures the lender against losses if you default. This insurance makes lenders more willing to approve loans with lower down payments, more flexible credit requirements, or both.
The major government loan programs include FHA, VA, and USDA loans. We'll cover these in detail in the next section, but the key thing to understand is that government backing doesn't mean the government lends you the money directly. You still get your mortgage from a regular lender—the government just reduces the lender's risk.
This is where things get really interesting. Down payment assistance (DPA) programs help you cover the upfront cost of your down payment, which is often the biggest obstacle to homeownership.
According to Down Payment Resource, there were 2,624 active DPA programs nationwide as of Q3 2025, offering an average benefit of $18,000. Municipalities fund 38% of these programs, followed by nonprofits at 21% and state housing finance agencies at 18%.
Grants that you don't have to repay at all
Forgivable loans that are forgiven if you stay in the home for a specific period (often 5-10 years)
Deferred loans that only need to be repaid when you sell, refinance, or move
Low-interest second mortgages that you repay over time alongside your primary mortgage
Some programs are restricted to first-time buyers, but about 38% of programs serve repeat buyers too, according to the same Down Payment Resource Q3 2025 report.
Federal and state tax deductions can reduce your taxable income, saving you money year after year.
The mortgage interest deduction lets you deduct interest paid on up to $750,000 of mortgage debt ($375,000 if married filing separately) for your primary residence and one second home. For most first-time buyers, that covers your entire loan.
Some states and local governments also offer mortgage credit certificates (MCCs), which provide a dollar-for-dollar tax credit for a portion of your mortgage interest. Unlike a deduction, a credit directly reduces your tax bill. Check with your state housing authority to see if MCCs are available in your area.
Closing costs typically run 3-6% of the total loan amount. On a $300,000 home, that's $9,000 to $18,000 due at closing in addition to your down payment.
Like down payment assistance, closing cost assistance comes through government-sponsored and private programs, often in the form of grants or low-interest loans. Many down payment assistance programs allow you to use the funds for closing costs too, giving you flexibility in how you allocate the money.
If you're not sure where to start, a home buyer education course can walk you through the entire process. The U.S. Department of Housing and Urban Development maintains a list of HUD-approved housing counseling agencies that offer free or low-cost classes.
Understanding different loan types and choosing the right one
How to shop for a home and make an offer
The mortgage application process from prequalification to closing
Managing your finances after you buy
How to maintain your home and avoid foreclosure
Some assistance programs actually require you to complete an education course before you can access funding. But even when it's not required, the education is worth it. A study by NeighborWorks America found that borrowers who completed home buyer education were 31% less likely to become seriously delinquent on their mortgages.
Federal programs are available to anyone who's a U.S. citizen or legal resident, regardless of which state you live in. Let's walk through the main options.
Federal Housing Administration (FHA) loans are probably the most popular option for first-time buyers. The FHA backs these loans, which means lenders can offer more favorable terms.
Here's what makes FHA loans attractive:
Minimum down payment of just 3.5% if your credit score is 580 or higher. If your score is between 500 and 579, you'll need 10% down.
Flexible credit requirements compared to conventional loans. You can qualify with a credit score as low as 500, though most lenders prefer to see at least 580.
Higher debt-to-income ratios are allowed. The FHA will typically approve borrowers with DTIs up to 50% if they have compensating factors.
Property types include single-family homes, 2-4 unit properties (if you live in one unit), condos, townhomes, and manufactured homes that meet FHA standards.
According to HUD's National Homeownership Month 2025 report, 72.6% of Ginnie Mae's new loan issuances in 2025 supported first-time home buyers. FHA loans make up a significant portion of that volume.
The trade-off is that FHA loans require mortgage insurance premiums (MIP)—both an upfront premium (1.75% of the loan amount) and an annual premium (0.55% to 1.05% depending on your loan details) that's divided into monthly payments. You'll pay this insurance for the life of the loan if you put down less than 10%.
If you're a veteran, active-duty service member, or qualifying surviving spouse, VA loans are hands-down one of the best options available. The Department of Veterans Affairs backs these loans, and they come with incredible benefits. There's no down payment required in most cases, and you won't pay private mortgage insurance (PMI) or monthly mortgage insurance. The competitive interest rates are typically lower than conventional loans, and the VA sets flexible credit standards with no minimum credit score requirement—though lenders set their own minimums. There are also limits on closing costs, and you can require the seller to pay some of your costs.
According to Ginnie Mae's 2025 data, 504,894 VA loans were securitized in the first nine months of 2025, with nearly 25% going to veteran first-time home buyers.
You will pay a one-time VA funding fee, which ranges from 1.4% to 3.6% of the loan amount depending on your down payment and whether it's your first VA loan. But this can be rolled into the loan, and it's far less than what you'd pay in monthly mortgage insurance with an FHA loan.
U.S. Department of Agriculture (USDA) loans target rural and some suburban areas. If you're buying in an eligible area, these loans offer tremendous value.
No down payment for most qualified borrowers
Competitive interest rates below conventional loan rates
Income limits that vary by area but generally cap household income at 115% of the area median
Property location requirements—the home must be in a USDA-eligible area
Lenders typically look for credit scores between 620 and 640 for USDA loans, though exceptions can be made.
AmeriSave does currently offer USDA loans. We can also help you explore FHA, VA, and conventional options.
If your credit score is strong and you're looking at conventional financing, the Conventional 97 program might work for you.
Put down just 3% of the purchase price
Qualify with a credit score of 620 or higher
Use gift funds from family or approved sources for your down payment
At least one borrower must be a first-time home buyer, and you will pay private mortgage insurance (PMI) until you reach 20% equity. But PMI on conventional loans can be cancelled once you hit that threshold, unlike FHA loans where you're often stuck with insurance for the life of the loan.
Are you a teacher, emergency medical technician, firefighter, or law enforcement officer? The Good Neighbor Next Door program, sponsored by HUD, offers a 50% discount on select HUD-owned homes.
You must:
Work full-time in one of the eligible professions
Live in the home as your primary residence for at least three years
Purchase the home in a HUD-designated revitalization area
Sign a second mortgage for the 50% discount amount, which is forgiven after three years
The catch is that available properties are limited and sell fast. But if you find one in an area where you want to live, it's an incredible deal.
Fannie Mae's HomePath program lets first-time home buyers purchase Fannie Mae-owned foreclosed properties with as little as 3% down.
You can also receive up to 3% of the purchase price back as a closing cost credit if you complete a HUD-approved home buyer education course before you close. This essentially makes your down payment and closing costs much more affordable.
The Section 184 program , sponsored by HUD, encourages lenders to serve Native American communities.
Low down payment (as low as 2.25% for loans under $50,000)
Flexible underwriting standards
Available nationwide on tribal trust land, in designated Indian areas, and in other approved areas
No maximum income limits for most borrowers
If you're eligible, this program can make homeownership significantly more accessible.
Beyond government programs, nonprofit organizations offer financial and educational resources to moderate and low-income buyers.
Habitat for Humanity is probably the most well-known housing nonprofit. They build homes for low-income families and sell them at no profit, making them much more affordable than market-rate homes.
Demonstrable financial need
Ability to repay a mortgage
Willingness to partner with Habitat (this often means contributing "sweat equity" by helping build homes)
The process takes time and the homes aren't available everywhere, but if you qualify, it's a path to homeownership that wouldn't otherwise exist.
The Neighborhood Assistance Corporation of America is a nationwide nonprofit that helps low to moderate-income families buy homes.
No down payment
No closing costs
No private mortgage insurance
No minimum credit score requirement
Below-market interest rates
The catch is that NACA requires you to go through their extensive home buyer counseling program, which can take several months. You'll also need to demonstrate financial responsibility and a willingness to engage with their process. But if you're patient and committed, NACA can get you into a home with essentially no money down.
HUD maintains a list of approved housing counseling agencies by state and county. Many of these organizations offer local assistance programs in addition to education.
These smaller nonprofits often have relationships with local lenders, know about funding sources you won't find in a Google search, and can advocate for you throughout the process.
There are a few more categories of assistance worth knowing about.
Most homebuying assistance comes through state and local programs. Individual programs vary significantly depending on where you live, but common offerings include:
Down payment assistance in the form of grants, deferred loans, or forgivable loans
Below-market interest rate mortgages through state housing finance agencies
Property tax exemptions or reductions for first-time buyers
Match savings programs where your savings are matched dollar-for-dollar up to a certain amount
You can find a complete list of state-specific resources on the HUD program page.
For example, the Missouri Housing Development Commission offers first-time buyers 30-year fixed-rate FHA, VA, USDA, and conventional loans at below-market rates, plus down payment assistance of up to 4% of the loan amount through forgivable loans.
The Pennsylvania Housing Finance Agency offers the Keystone Advantage Assistance Loan Program, which provides up to 4% of the purchase price (or $6,000, whichever is lower) as a 10-year no-interest second mortgage.
Programs like these exist in nearly every state.
Some employers offer housing benefits to help workers buy homes, especially in areas with high costs or industries with a lot of competition.
Grants that don't need to be repaid
Forgivable loans that are forgiven after you work for the company for a certain number of years
Low-interest loans with favorable repayment terms
Closing cost assistance
Check with your HR department or employee benefits coordinator to see what's available. Labor unions sometimes offer similar programs for their members.
If you're a student considering buying property—maybe you're tired of rent, or you want to build equity while you're in school—the same first-time buyer programs generally apply.
The challenge is that student loan debt can affect your debt-to-income ratio and your ability to qualify. However, there are income-driven repayment plans that can lower your monthly payment and improve your DTI.
Some students buy multi-unit properties (duplexes, triplexes) and rent out the other units to offset their mortgage payment. This strategy, sometimes called "house hacking," can make homeownership more affordable while you're in school.
There's no single "best" loan for first-time home buyers. The right option depends on your specific circumstances. Let me break down how to think through this decision.
If it's above 620, you have access to most loan types. Below 620, you'll likely need FHA financing or a portfolio lender willing to work with your situation.
This determines whether you need zero-down financing (VA or USDA), low-down financing (FHA at 3.5% or Conventional 97 at 3%), or if you can put down more to avoid mortgage insurance.
Calculate your monthly debt payments (student loans, car payments, credit cards) divided by your gross monthly income. Most lenders want to see a DTI under 43%, though FHA loans allow higher ratios with compensating factors.
Rural or suburban areas outside city limits—USDA loans offer zero-down financing if the property qualifies
Multi-unit properties (2-4 units) where you'll live in one unit—FHA loans allow you to use rental income from the other units to qualify
Manufactured homes—FHA and VA loans both allow manufactured housing if it meets specific standards. According to HUD's 2025 data, more than 26,000 HUD-code manufactured homes were produced in Q1 2025 alone, up 8% from the previous year.
Fixer-uppers—FHA 203(k) loans let you finance the purchase price plus renovation costs in a single loan
If you have 20% down, a conventional loan will get you the best rates and no mortgage insurance
If you have 5-10% down, conventional financing still works, but you'll pay PMI until you reach 20% equity
If you have 3-5% down, FHA or Conventional 97 loans are your best options
If you have little to no down payment, VA loans (for veterans) or USDA loans (for eligible rural properties) are ideal. You can also layer down payment assistance programs to cover most or all of your down payment.
This is where things get interesting. According to Down Payment Resource Q3 2025 data, 273 programs nationwide have no income limits, making them accessible to moderate-income buyers who might not qualify for traditional low-income assistance.
Grants that you never have to repay—these should always be your first priority
Forgivable loans that disappear if you stay in the home for the required period (usually 5-10 years)
Deferred loans that only come due when you sell or refinance
Career-specific programs for teachers, healthcare workers, emergency responders, or other public service professions
AmeriSave's loan experts can walk you through each option and help you determine which program makes the most sense for your unique circumstances. We work with first-time buyers every day and know which programs are actively funding versus just listed on websites but out of money.
A VA loan with no down payment might seem great because you don't have to put any money down right away. But if you compare it to a regular loan where you put down 10%, do the math:
What is the interest rate for each choice?
If you have mortgage insurance, how much do you pay each month?
How much interest will you pay on the loan over its entire term?
How long do you want to live in the house?
Sometimes paying a little more up front saves you tens of thousands of dollars in interest over the life of the loan. Sometimes, the monthly cash flow from a loan with a low down payment or no down payment is more important than long-term savings.
Think about the market and where you are.
First-time home buyers are having a hard time because they can't afford it. The National Association of REALTORS®' 2024 Profile says that the average age of first-time home buyers went from 35 to 38. The percentage of first-time buyers dropped to 24% of all purchases, which is the lowest level since tracking began in 1981.
But things are very different depending on where you are. Prices are staying the same or even going down in some markets, but they keep going up in others. According to Freddie Mac data from November 2025, interest rates reached their highest point in July 2025 at 6.75% and then dropped to 6.26% by September. This has a big impact on how cheap things are.
All of this is important when you pick a loan. In a market with a lot of competition, a conventional loan with a bigger down payment might help your offer stand out. If the market is slow and there are more homes for sale, you might care more about how low your monthly payments are than how competitive the price is.
We talked about a lot of things, so let me go over what we talked about.
People who want to buy their first home in 2026 will have a hard time paying for it. A person who buys something is usually 38 years old and makes $97,000 a year. First-time buyers only make up 24% of all purchases. That's hard.
But you can also get more help than ever before. A record 2,624 programs offer an average of $18,000 in benefits to help with closing costs, down payments, and other costs of owning a home. The FHA, VA, and USDA all have federal programs that let you borrow money with little or no down payment. State and local programs give out money in the form of grants and loans that don't have to be paid back. They also have lower interest rates than the market.
You don't need a lot of money or good credit to buy a house. You need to know what programs are out there, find a lender who knows about them, and be ready to put in the work.
It takes time, usually three to six months from start to finish. But owning a home makes you richer in ways that renting doesn't. According to data from the Federal Reserve from November 2025, homeowners are worth 40 times more than renters. Owning their own homes is still how most American families build wealth for their children and grandchildren.
If you're not sure, do it. Before you start looking for a home, get preapproved, take a class on how to buy a home, find out about local programs that can help you, and talk to a lender who works with first-time home buyers. Having a home is part of the American dream. It might seem impossible, but it is possible with the right help and information.
This is what you should do next.
Talk to a lender about your options. Every day, we help people buy their first home at AmeriSave. We can help you find the right federal programs, state help, and down payment options for you.
We understand that this is too much for you. That's why we've created tools and information to help. You can see different loan options, get prequalified, and keep track of your application all in one place on our digital platform.
Are you ready to look at your options as a first-time buyer? Let's get together and figure this out. Start your mortgage application with AmeriSave today.
People often want to know about programs that help people buy their first home.
If you can get a VA or USDA loan, the lowest interest rate is 0%. VA loans are available to veterans, active-duty military members, and surviving spouses who meet certain requirements. You don't have to pay a down payment or get mortgage insurance. You don't have to put any money down for a USDA loan. You can use one to buy a home in a rural or suburban area that meets the requirements.
If your credit score is 580 or higher, you need to put down 3.5% for an FHA loan. If your score is between 500 and 579, you need to put down 10%. You can get a regular loan with just 3% down with the Conventional 97 program.
According to the National Association of REALTORS®, the median down payment for first-time buyers in 2024 was 9%, the highest level since 1997. But that's just the average, so half of the buyers paid less. You can save a lot of money on your own if you use programs that help with down payments. The Q3 2025 Homeownership Program Index, which you can find in November 2025, says that there are 2,624 programs available across the country. The average benefit is $18,000, which is a lot of money to put down and pay for closing costs.
No. There are a lot of different types of loans, and each one has its own credit score requirements. You will need to put down 10% of the loan amount if your credit score is less than 580. You can get an FHA loan with a score as low as 500. For the option with a 3.5% down payment, most FHA lenders want to see at least 580.
Most regular loans require a credit score of at least 620, and the same is true for the Conventional 97 program for first-time home buyers. The VA doesn't set a minimum credit score for VA loans, but most lenders want to see a score between 580 and 620.
You should either look into FHA financing or work on raising your credit score before you apply if your score is less than 620. Pay off any debts you already have, make all of your payments on time, and fight any mistakes on your credit report. Even small changes to your score can help you get better rates and terms.
You don't even need a certain credit score to get help from some nonprofit programs, like NACA. But they do need a lot of help with money and proof that you can handle a mortgage responsibly.
Here's a realistic breakdown, but everyone has their own time frame:
If your financial papers are in order, it might only take one to two days to get prequalified. This gives you a rough idea of how much money you have to spend.
It could take a few weeks to a few months to find a house, depending on the market and how picky you are. The National Association of REALTORS® says that 55% of people who bought their first home looked at at least 10 homes before making a decision.
It usually takes 30 to 45 days to close after making an offer. This includes the appraisal (1–2 weeks), the home inspection (1–2 weeks), the final approval and underwriting of the mortgage (2–3 weeks), and the closing itself.
You will have to wait an extra month or two to get the money if you are using some help programs that make you take classes on how to buy a home.
If you're buying a home for the first time, you should expect the process to take three to six months, from when you start looking seriously to when you get the keys. It could take 6 to 12 months from your first contact with a nonprofit like NACA that needs a lot of counseling to close.
It all depends on what kind of help you got and how your loan works.
If you sell or move before the time is up (usually 5 to 10 years), you may have to pay back some or all of the money. If you got a loan or grant that doesn't have to be paid back and you have to stay in the house for a certain amount of time, then this is true. A lot of programs let you pay back less if you stay for 3 years instead of the required 5. For example, you would only have to pay back 40% of the original amount.
You will have to pay back the full amount when you sell, but it will come out of the money you make. If your house went up in value, this might not be a money problem.
If you sell your main mortgage before two years, you won't be able to exclude any profit from the sale from your capital gains taxes (up to $250,000 for single filers and $500,000 for married couples). You would have to pay capital gains taxes on the profit.
In real life, it can also be expensive to sell quickly. You will have to pay the REALTOR®'s fees, which are usually between 5% and 6% of the sale price, as well as any repairs and closing costs that need to be made to get the house ready to sell. You might not have enough equity to cover these costs if you're moving in the next two to three years, especially if you didn't put down a lot of money.
That said, things happen in life. People lose jobs, families get bigger, and relationships end. Even if it's not the best thing to do, you can usually make it work financially if you really have to move.
Yes, most of the time, but it depends on the program. Most federal programs, like FHA loans, require that at least one borrower be a first-time buyer.
For the Conventional 97 program to work, at least one of the borrowers must be buying their first home. You can still qualify if your spouse has owned a home before but you haven't, or if neither of you has owned a home in the last three years.
Some state and local programs that help people buy homes are stricter and only let first-time buyers borrow money. Some are more strict.
Reading the eligibility requirements for each program you want to apply to is the most important thing. If you're not sure, ask the program administrator. Don't think you're not qualified just because your partner used to own a house.
You might not believe this happens a lot, but it does. A lot of people think they won't be able to get help because their income is too high for programs that help people with low incomes buy things.
But Down Payment Resource's data from the third quarter of 2025 (which we looked at in November 2025) shows that there are 273 programs across the country that don't have any income limits. Cities, businesses, and nonprofits that want to help low-income people in ways other than traditional housing assistance often pay for these programs.
You should also look into programs that limit how much money you can make based on the average income in your area (AMI). People who live in cities with high living costs, like San Francisco, New York, or Boston, and make between $100,000 and $150,000 a year may still be below 120% of AMI and be able to get help.
Programs for teachers, healthcare workers, emergency responders, and public servants that are specific to their fields often have higher or no income limits. These programs know that even people who work hard have trouble making ends meet.
Don't forget about tax breaks like mortgage interest deductions and mortgage credit certificates. There are no income limits on these.
People ask me this a lot, and there isn't just one answer.
If you wait to save a bigger down payment, you might be able to get lower monthly mortgage payments, not have to pay mortgage insurance if you reach 20%, more equity in your home from the start, and maybe even better loan terms and interest rates.
You keep paying rent instead of building equity • Home prices might go up faster than you can save
Interest rates could go up (but they could also go down) • It could take months or even years longer to buy a home.
John Burns Research and Consulting says that only one-third of Americans own a home by the time they turn 30. This is less than the 47% it was in 1984. A lot of people wait years to save up enough for a down payment they can afford. The average first-time buyer is 38 years old.
I usually tell people not to wait if they have enough money for at least 3–5% down and an emergency fund that can cover 3–6 months of expenses after they close. You should also be able to easily pay the bill each month. If you need to, use down payment help to make up the difference.
Prices of homes don't always go up, but they do tend to go up over time. Every year you wait means another year of rent payments that don't help you build equity. Do the math for your own situation, but for most first-time buyers who have enough money, it's better to buy sooner with help than to wait years to buy without help.
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