First Time Home Buyer Programs 2026: Get $5K-$25K FREE Money + 0% Down Options
Buying your first home in 2026? You could get $5,000-$25,000 in FREE grant money, plus 0% down payment loans. Here's every federal, state, and local program available - and how to stack them for maximum savings.
⚡ Top 5 First-Time Buyer Programs
1. FHA Loan
3.5% down, 580 credit score
2. VA Loan (Veterans)
0% down, no PMI
3. USDA Loan (Rural)
0% down, low rates
4. State Grants
$5K-$25K FREE money
5. Conventional 3%
3% down, 620 credit
🎯 See Which Programs You Qualify For
Get pre-approved and find out which first-time buyer programs you qualify for. Free in 3 minutes:
Federal First-Time Buyer Programs
The federal government offers 4 main loan programs for first-time buyers. These are available nationwide and have the lowest down payments.
Program #1: FHA Loans (3.5% Down)
FHA loans are the most popular first-time buyer program. They're backed by the government and accept low credit scores.
| Requirement | FHA Standard | Notes |
|---|---|---|
| Down Payment | 3.5% | $14K on $400K home |
| Credit Score | 580 | 500-579 = 10% down |
| DTI Ratio | 50% | Very flexible |
| PMI | 0.55-0.85% | For life (unless 10%+ down) |
| Loan Limits | $524K-$1.2M | Varies by county |
| First-Time Buyer? | No | Anyone can use FHA |
✅ FHA PROS:
• Low down payment (3.5%)
• Low credit score OK (580)
• High DTI allowed (50%)
• Gift money allowed for down payment
• Can combine with state grants
❌ FHA CONS:
• PMI for life (unless 10%+ down)
• Upfront PMI fee (1.75% of loan)
• Loan limits (can't buy expensive homes)
• Property must meet FHA standards
Program #2: VA Loans (0% Down, Veterans Only)
VA loans are the BEST first-time buyer program if you're a veteran, active military, or surviving spouse. 0% down and no PMI!
✅ VA LOAN BENEFITS:
• 0% down payment (buy with $0 down!)
• No PMI (save $200-300/month)
• Lower rates than FHA/Conventional
• No loan limits (for full entitlement)
• Flexible credit (580-620 minimum)
• Can reuse multiple times
Example Savings:
$400K home: VA 0% down vs FHA 3.5% down = $14K savings upfront + $250/month PMI savings = $104K over 30 years!
Program #3: USDA Loans (0% Down, Rural Areas)
USDA loans offer 0% down for homes in rural and suburban areas. Covers 97% of US geography!
| Requirement | USDA |
|---|---|
| Down Payment | 0% |
| Credit Score | 640 |
| Income Limit | 115% of AMI |
| Location | Rural/suburban only |
| PMI | 0.35% (lower than FHA) |
Program #4: Conventional 3% Down
Conventional 3% down programs (HomeReady, Home Possible) are great for first-time buyers with good credit (680+).
💡 CONVENTIONAL 3% BENEFITS:
• Only 3% down ($12K on $400K home)
• PMI drops off at 20% equity (unlike FHA)
• Lower PMI than FHA if good credit
• Higher loan limits than FHA
• No upfront PMI fee
Requirements:
• 620 credit minimum (680+ for best rates)
• Income limits (varies by area, typically $100K-$150K)
• First-time buyer OR low-income
🎯 Get Pre-Approved for First-Time Buyer Programs
See which federal programs you qualify for (FHA, VA, USDA, Conventional 3%). Free pre-approval in 3 minutes:
Get Pre-Approved (See Your Programs)State Down Payment Assistance Programs ($5K-$25K FREE)
Every state offers down payment assistance (DPA) grants for first-time buyers. This is FREE MONEY you don't have to repay!
Top 10 State DPA Programs
1. California (CalHFA)
- • Grant: Up to $15,000 (3% of purchase price)
- • Income limit: $150,000-$200,000 (varies by county)
- • Credit: 660 minimum
- • Combine with: FHA, VA, Conventional
2. Texas (TSAHC)
- • Grant: Up to $20,000
- • Income limit: $95,000-$120,000
- • Credit: 640 minimum
- • Special: Teacher/veteran programs
3. Florida (Florida Housing)
- • Grant: Up to $10,000
- • Income limit: $90,000-$110,000
- • Credit: 640 minimum
- • Combine with: FHA, VA, USDA
4. New York (SONYMA)
- • Grant: Up to $25,000
- • Income limit: $120,000-$180,000
- • Credit: 620 minimum
- • Special: NYC has higher limits
5. Pennsylvania (PHFA)
- • Grant: Up to $12,000
- • Income limit: $100,000
- • Credit: 640 minimum
- • Forgivable: After 10 years
💰 HOW STATE GRANTS WORK:
1. Apply through approved lender
2. Take homebuyer education course (8 hours online, $75-150)
3. Get pre-approved for mortgage
4. Grant applied at closing (reduces cash needed)
5. Some grants are forgivable (free after 5-10 years)
6. Some are second mortgages (0% interest, repay when sell)
Example: $400K home in California
• FHA 3.5% down = $14,000
• CalHFA grant = $12,000
• You only need: $2,000 + closing costs!
Mortgage Credit Certificate (MCC) - Save $2,000/Year
MCC tax credit gives you 20-50% of your mortgage interest back as a tax credit (not deduction). Saves $2,000-$4,000/year!
Example: MCC Savings
Loan Details:
- • $400K loan at 6.5% = $26,000/year interest
- • MCC rate: 30%
- • Tax credit: $7,800/year
- • Max credit: $2,000/year (IRS limit)
Annual Savings:
- • Tax credit: $2,000/year
- • 30-year savings: $60,000
- • Effective rate: 6.5% → 6.0%
How to Stack Programs for Maximum Savings
The secret is combining multiple programs. Here's how to get $20K-$40K in total assistance:
Example: Maximum Stacking Strategy
Buyer Profile:
- • First-time buyer in California
- • Income: $120,000/year
- • Credit score: 680
- • Buying: $500,000 home
Programs Stacked:
- • FHA loan: 3.5% down = $17,500
- • CalHFA grant: $15,000 (covers most of down payment)
- • MCC tax credit: $2,000/year savings
- • Employer match: $10,000 (if offered)
Total Assistance:
- • Down payment grant: $15,000
- • Employer match: $10,000
- • MCC (30 years): $60,000
- • Total: $85,000 in assistance!
Cash Needed at Closing:
- • Down payment: $17,500
- • Minus CalHFA grant: -$15,000
- • Minus employer match: -$10,000
- • Closing costs: $12,000
- • Total cash needed: $4,500!
Who Qualifies as a "First-Time Buyer"?
Good news: You might qualify even if you've owned a home before!
📐 FIRST-TIME BUYER DEFINITION:
You qualify if:
✅ Haven't owned home in past 3 years (most common)
✅ Never owned a home (obviously)
✅ Divorced/separated and lost home in settlement
✅ Single parent who only owned with ex-spouse
✅ Owned only manufactured home not on permanent foundation
✅ Owned only property not in compliance with building codes
Example: You owned a home 5 years ago, sold it, and have been renting since. You qualify as first-time buyer for most programs!
Application Process: Step-by-Step
- Check Eligibility (Day 1)
Visit your state housing finance agency website. Check income limits, credit requirements, and eligible areas. Most states have online eligibility calculators.
- Take Homebuyer Education Course (Week 1)
Required for most grants. 8-hour online course costs $75-150. Covers budgeting, home shopping, mortgage process. Get certificate at end.
- Find Approved Lender (Week 1-2)
Not all lenders offer state DPA programs. Use your state's approved lender list. Interview 3-5 lenders to compare.
- Get Pre-Approved (Week 2)
Submit application with income docs, credit check, bank statements. Lender will tell you which programs you qualify for and how much assistance.
- Apply for Grant (Week 2-3)
Lender submits grant application on your behalf. Some states have limited funding (first-come, first-served). Apply early!
- Find Home (Week 4-8)
Shop within price limits. Home must meet program requirements (FHA standards, USDA rural area, etc.).
- Close with Assistance (Week 12)
Grant funds applied at closing. Reduces cash you need to bring. Sign grant agreement (forgivable or repayable terms).
🎯 Ready to Get Your First Home?
Get pre-approved and see which programs you qualify for. Find out how much FREE money you can get:
Frequently Asked Questions
Can I use gift money for down payment?
Yes! FHA, VA, USDA, and Conventional all allow gift money from family. Requirements: Gift letter stating it's a gift (not loan), Donor's bank statement showing funds, Paper trail (wire transfer or check). You can use 100% gift money for down payment on FHA/VA/USDA. Conventional requires 5% of your own funds if less than 20% down.
What if I have student loans?
Student loans are OK! Lenders count 0.5-1% of balance as monthly payment for DTI. Example: $50K student loans = $250-500/month payment for qualification. Strategy: Get on income-driven repayment (IDR) to lower payment, or pay down balance before applying. FHA allows 50% DTI, so student loans are manageable.
Do I have to repay down payment assistance?
Depends on program type: Forgivable grants: Free after 5-10 years (stay in home that long). Second mortgage: 0% interest, repay when you sell or refinance. Deferred payment loan: Repay after 30 years or when you sell. True grants: Never repay (rare, usually under $5K). Check your specific state program terms.
Can I buy a condo or townhouse?
Yes, with restrictions: FHA: Condo must be FHA-approved (check HUD list). VA: Condo must be VA-approved. Conventional: Condo must be Fannie Mae approved. USDA: Single-family only (no condos). Townhouses: Usually OK for all programs. Check with lender for specific condo approval.
What if my state runs out of grant money?
Many states have limited funding. Strategy: Apply early in year (January-March when funding resets), Get on waitlist if funds exhausted, Check local city/county programs (separate funding), Consider employer assistance programs, Use FHA/VA with 0-3.5% down (no grant needed). Some states get additional funding mid-year.
📚 Related First-Time Buyer Guides
Meet Sarah
Senior Mortgage Advisor & VA Loan Specialist
Sarah Mitchell brings over 12 years of mortgage industry expertise, specializing in VA loans and first-time homebuyer programs. As a certified NMLS professional, she has helped thousands of veterans and military families achieve homeownership through specialized loan programs. Her deep understanding of VA benefits and down payment assistance programs makes her a trusted advisor for service members transitioning to civilian life.
EXPERTISE:
KEY ACHIEVEMENT:
Helped 2,500+ veterans secure home loans