First-time home buyer programs lower the money you need to buy a home, and several of them do not require you to be a first-time buyer.
A first-time home buyer program is any loan or assistance option that lowers the money or credit you need to buy your first home. The big ones are FHA, VA, USDA, and conventional 3% down loans, plus down payment assistance. This guide compares the main first-time home buyer programs side by side, using the rules from HUD, the VA, USDA, Fannie Mae, and Freddie Mac. It also shows which ones skip the first-time rule entirely.
Last updated: November 12, 2026
Guidance reference: HUD Handbook 4000.1 (Update 18, August 12, 2026); VA Pamphlet 26-7 (Ch. 3; Ch. 8, VA updated July 9, 2026); USDA HB-1-3555 and fiscal year 2027 fee notice; Fannie Mae Selling Guide B5-6-01 (HomeReady); Freddie Mac Guide (Home Possible); HUD 2026 FHA loan limits; FHFA 2026 conforming loan limits
First-Time Home Buyer Programs in 2026: The Short Answer
As of November 2026: FHA allows 3.5% down with a credit score of 580 or higher (HUD FHA handbook: credit score and down payment). VA loans need no down payment for eligible borrowers with full entitlement (the VA guaranty you have not already used), as long as the price is not above the appraised value (VA purchase loans). USDA guaranteed loans need no down payment when the home’s area and the household income qualify, with household income (after certain deductions) up to 115% of the area median (USDA guaranteed loans). HomeReady and Home Possible allow 3% down with qualifying income at or under 80% of the area median (Fannie Mae HomeReady rules; Freddie Mac Home Possible). Most of these programs do not require you to be a first-time buyer.
What Counts as a First-Time Home Buyer?
Most programs define a first-time home buyer as someone who has not owned a home in the last three years. So if you sold your last home four years ago, you count again. If you are buying with someone else, often only one of you needs to meet the rule.
Here is the part most people miss: the biggest programs do not care if you have owned before. FHA, VA, USDA, and HomeReady are open to repeat buyers. The first-time rule mostly shows up in standard 3% down conventional loans and in some down payment assistance programs.
Low Down Payment Options, Side by Side
| Program | Lowest down payment | Credit score | Income limit | Mortgage insurance | First-time buyer required? |
|---|---|---|---|---|---|
| FHA | 3.5% (580+) or 10% (500–579) | 500 minimum (HUD) | None | 1.75% upfront + 0.55% yearly on most 30-year loans of $726,200 or less with under 5% down | No |
| VA | 0% | No VA minimum | None (residual income test instead) | None monthly; one-time funding fee unless exempt | No |
| USDA | 0% | No USDA-set minimum | 115% of the local median | 1% upfront + 0.35% yearly | No |
| HomeReady (Fannie Mae) | 3% | Varies by loan and lender | 80% of the local median | Private mortgage insurance (can be removed) | No |
| Home Possible (Freddie Mac) | 3% | Varies by loan and lender | 80% of the local median | Private mortgage insurance (can be removed) | No |
| Standard conventional 97% | 3% | Varies by loan and lender | None | Private mortgage insurance (can be removed) | Yes, at least one buyer |
Sources: HUD FHA handbook: credit score and down payment; HUD FHA handbook: mortgage insurance table; HUD mortgage insurance rules (2023); VA purchase loans; VA entitlement and limits; USDA guaranteed loans; USDA 2027 fee notice; Fannie Mae HomeReady rules; Fannie Mae 97% LTV options; Freddie Mac Home Possible.
“Local median” means the area median income: a local income benchmark agencies use to set eligibility limits.
With most conventional loans, you can ask to remove private mortgage insurance once your balance reaches 80% of the home’s original value, if you meet the requirements. It generally ends on its own when the balance is scheduled to reach 78%, if your payments are current. FHA mortgage insurance follows different rules. Source: CFPB.
Not sure which column you fit in? We compare your estimated payment and upfront costs on each program side by side.
Compare My OptionsFHA: A Low-Down-Payment Option
FHA is backed by HUD. It allows scores down to 500. A 580 score or higher allows 3.5% down; from 500 to 579, you need 10% down. The seller can agree to pay up to 6% of the price toward your closing costs, but not toward your down payment. The cost is mortgage insurance: 1.75% upfront, and 0.55% a year on most 30-year loans of $726,200 or less with less than 5% down. Sources: HUD FHA handbook: credit score and down payment; HUD FHA handbook: seller-paid costs; HUD FHA handbook: mortgage insurance table.
In 2026, the FHA limit for a one-unit home runs from $541,287 to $1,249,125 depending on your county, and higher in Alaska, Hawaii, Guam, and the U.S. Virgin Islands (HUD 2026 FHA loan limits). Every FHA rule is broken down in our post on FHA loan requirements.
VA: Zero Down, No Monthly Mortgage Insurance
If you served, compare this one first. A VA loan needs no down payment for eligible borrowers with full entitlement, and it has no monthly mortgage insurance. If the price is above the appraised value, you pay the difference in cash. The VA does not set a minimum credit score, and we do not add one. Many lenders set their own minimum score. We do not. You still need a Certificate of Eligibility, and the lender still reviews your credit, your income, and the appraised value of the home under VA rules. Sources: VA purchase loans; VA entitlement and limits.
Instead of a score cutoff, the VA uses residual income: the money left each month after your house payment, debts, and living costs. There is a one-time VA funding fee, which can be added to the loan. Veterans who receive VA disability compensation, and a few other groups, do not pay it (VA funding fee rules). The seller can agree to pay your closing costs, plus up to 4% of the value in other costs paid for you. See our VA seller concessions guide for what counts toward that 4%.
USDA: Zero Down When the Home and Income Qualify
A USDA loan needs no down payment. Start by checking the address and the household-income limit on USDA’s eligibility site. You must also meet credit, repayment, occupancy, and other program requirements. Many small towns and outer suburbs qualify. Household income, after certain deductions, must be at or under 115% of the local median. For loans in USDA’s 2027 fiscal year (October 1, 2026 to September 30, 2027), the fees are 1% upfront and 0.35% a year, lower than FHA. The seller can agree to pay up to 6% of the price toward closing costs. Sources: USDA guaranteed loans; USDA 2027 fee notice.
Conventional 3% Down: HomeReady, Home Possible, and Standard 97%
Fannie Mae and Freddie Mac both offer 3% down conventional loans. HomeReady (Fannie Mae) and Home Possible (Freddie Mac) cap your income at 80% of the local median, but you do not have to be a first-time buyer. The standard 97% loan has no income limit, but at least one buyer must be a first-time buyer.
One note on income: USDA counts the income of everyone in the household, even people who are not on the loan. HomeReady and Home Possible look at the qualifying income of the borrowers on the loan. The same family can be over one limit and under another, so check each program on its own.
At 3% down, all three need a fixed rate, a one-unit home you will live in, and a loan at or under the standard conforming limit (the cap on loans Fannie Mae and Freddie Mac buy: $832,750 for one unit in most counties in 2026). If every buyer on the loan is a first-time buyer, at least one must finish a homebuyer education course. The seller can agree to pay up to 3% of the price toward closing costs when you put down less than 10%. Sources: Fannie Mae 97% LTV options; Freddie Mac Home Possible; FHFA 2026 loan limits; Fannie Mae seller-paid cost limits.
Down Payment Assistance: Covering the Rest
Down payment assistance, or DPA, is money from a state, city, county, or national program that covers some or all of your down payment and closing costs. It comes in three main forms:
- Grants that you never pay back.
- Forgivable second loans that go away if you stay in the home for a set number of years.
- Repayable second loans with a monthly payment or a payment due when you sell or refinance.
The national program we use most is the National Homebuyers Fund (NHF) FHA option available through our team. NHF runs other programs with different terms; the terms here are for this one. It pairs with an FHA loan and has no income limit. It comes two ways: 3.5% of the price as an additional loan alongside your mortgage that is forgiven after three years if you keep living in the home and do not sell or refinance first, or 3.5% or 5% as a 10-year loan with its own monthly payment, at a rate two percentage points above your main mortgage. It needs a 580 score and an approval from the lender’s computerized review. It is open to first-time and repeat buyers, and at least one buyer must finish a homebuyer education course.
Most states, and many cities and counties, also run their own programs. Many change their rules or run out of money during the year, so we check what is open where you are buying when we compare your options.
When assistance must be repaid
Down payment assistance is not free money with no strings. Each program has its own credit floor, income limit, and payback terms, and those terms sit on top of the loan’s own rules. Always ask how and when it gets paid back before you pick one.
Illustrative Example: Down Payments on a $350,000 Home
| Program | Minimum down payment |
|---|---|
| VA | $0 |
| USDA | $0 |
| HomeReady or Home Possible (3%) | $10,500 |
| Standard conventional 97% (3%) | $10,500 |
| FHA, 580+ score (3.5%) | $12,250 |
| FHA, 500 to 579 score (10%) | $35,000 |
Illustrative only. Not a loan offer or a quote. Your actual numbers depend on your loan.
No down payment does not mean no upfront costs. Closing costs and prepaid items (homeowners insurance, property taxes, and interest paid at closing) come on top of the down payment. This is where costs the seller agrees to pay for you matter. On this same $350,000 home, the seller could pay up to $21,000 toward closing costs on FHA or USDA (6%), and up to $10,500 on a conventional loan with less than 10% down (3%). On a VA loan, the seller can pay all normal closing costs and still pay up to $14,000 in other costs for you (4% of VA’s reasonable value, if the home appraises at $350,000).
Pair FHA with the 3.5% forgivable option above, and that help covers the 3.5% down payment. The 5% option covers the down payment with money left toward closing costs, but it is a 10-year loan with its own monthly payment, so it counts against your debt-to-income.
Want to see the money you would need to close, with seller help and assistance built in? We do the math before you make an offer.
Run My NumbersFirst-Time Buyer Myths That Cost Money
❌ Myth: “You need 20% down to buy a house.”
✅ Fact: VA and USDA can need 0% for eligible buyers and homes. FHA needs 3.5%. Conventional 3% down loans exist. You do not need 20% down. A larger down payment also reduces how much you borrow.
❌ Myth: “First-time buyer programs are only for first-time buyers.”
✅ Fact: FHA, VA, USDA, and HomeReady are open to repeat buyers. Only some programs require first-time status.
❌ Myth: “You need a 620 credit score to buy a home.”
✅ Fact: HUD allows FHA scores down to 500. The VA sets no minimum. A 620 cutoff is usually one lender’s own rule. Sources: HUD FHA handbook: credit score and down payment; VA entitlement and limits.
❌ Myth: “Down payment assistance is only for very low incomes.”
✅ Fact: Some programs have no income limit at all, including the National Homebuyers Fund program we use most. Source: National Homebuyers Fund.
How to Pick the Right First-Time Buyer Program
Start with eligibility you already have
If you served, check VA first. If the home might be in a USDA area, check the address and your income. VA and USDA are the two main loans with no down payment.
Know your credit score
580 or higher allows FHA at 3.5% down. From 500 to 579, FHA needs 10% down, and VA has no minimum score.
Check your income against the local limit
HomeReady, Home Possible, and USDA all have income limits. Your area’s limit decides if those are on the table.
Get pre-approved and compare
Compare the payment, the mortgage insurance, and the money you need to close on each program before you write an offer. Final approval still depends on the appraisal and the rest of the file.
First-Time Home Buyer Programs: FAQ
What are the first time home buyer programs in 2026?
The main programs in 2026 are FHA loans with 3.5% down, VA loans with no down payment for eligible veterans and service members, USDA loans with no down payment for eligible homes and incomes, conventional 3% down loans like HomeReady and Home Possible, and down payment assistance from state, local, and national programs. Sources: HUD FHA handbook: credit score and down payment; VA purchase loans; USDA guaranteed loans; Fannie Mae HomeReady rules; Freddie Mac Home Possible.
What qualifies you as a first-time home buyer?
For most programs, you count as a first-time home buyer if you have not owned a home in the last three years. That means someone who sold a home four years ago can be a first-time buyer again. Many programs, like FHA, VA, USDA, and HomeReady, do not require first-time buyer status at all. Source: Fannie Mae 97% LTV options.
What is the best home loan for a first-time buyer?
It depends on your situation. If you served, compare a VA loan first: no down payment, no monthly mortgage insurance, and no minimum credit score set by the VA. If you have a lower credit score, FHA allows scores down to 500. With strong credit and income under the local limit, a 3% down conventional loan can cost less. Sources: HUD FHA handbook: credit score and down payment; VA purchase loans; VA entitlement and limits.
How much do I need to put down as a first-time home buyer?
You may need nothing down. VA and USDA loans allow 0% down for eligible buyers and homes. FHA needs 3.5% with a 580 score. Conventional loans like HomeReady and Home Possible need 3%. As an illustrative example, on a $350,000 home, that is $0, $12,250, or $10,500. No down payment does not mean no upfront costs: closing costs and prepaid items still apply. Sources: HUD FHA handbook: credit score and down payment; VA purchase loans; USDA guaranteed loans; Fannie Mae HomeReady rules.
Can a first-time buyer get a home loan with bad credit?
It can be possible. HUD allows FHA credit scores down to 500 with 10% down, and the VA sets no minimum score. No minimum score does not mean no credit review. What matters most is what caused the low score and how the last 12 months look. Sources: HUD FHA handbook: credit score and down payment; VA entitlement and limits.
Is there down payment assistance for first-time buyers?
Yes. State housing agencies, cities, counties, and national programs offer grants and second loans that cover some or all of the down payment and closing costs. Each has its own income limits, credit rules, and repayment terms, and some programs open and close during the year.
Do veterans have to be first-time buyers to use a VA loan?
No. The VA loan has no first-time buyer rule, and you can use it more than once. VA can restore entitlement you used before, for example after you sell the home and pay off that loan. If your first VA loan is still open, you may still have entitlement left to buy another home with a VA loan. Sources: VA purchase loans; VA eligibility and reusing your benefit.
What credit score do first-time home buyers need?
It depends on the loan. HUD allows FHA scores down to 500 with 10% down and 580 with 3.5% down. The VA sets no minimum score, and neither do we. For conventional loans, credit requirements vary by loan and lender. Sources: HUD FHA handbook: credit score and down payment; VA entitlement and limits.
Related Pages
About the Author
J.D. Peck is an Area Manager and Mortgage Loan Originator (NMLS #314883) with the JD.Mortgage Team at Paramount Residential Mortgage Group, Inc. (NMLS #75243), based in Colorado Springs. 25+ years, 3,100+ closed loans, Scotsman Guide Top Originator 2026. Lending in 49 states. New York excluded.
Last updated: November 12, 2026. Program facts sourced from HUD Handbook 4000.1, VA Pamphlet 26-7, USDA HB-1-3555, the Fannie Mae Selling Guide, and the Freddie Mac Guide.
Source: JD.Mortgage Team at PRMG, First-Time Home Buyer Programs in 2026, updated November 2026, https://jd.mortgage/first-time-home-buyer-programs/
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