First-Time Home Buyer Programs and Help Worth Knowing About

If you are buying your first home, you do not have to figure it all out alone or save for years to reach 20% down. A mix of federal loan programs, state and local assistance and education resources exists to help first-time buyers get into a home. Programs and rules change over time, so think of this as a map of where to look.

Loan Programs Built for Accessibility

• FHA loans: insured by the Federal Housing Administration, these allow 3.5% down with a credit score of 580 or higher and tend to have flexible credit guidelines. They include mortgage insurance, including a 1.75% upfront premium. FHA loan limits vary by county.
• Conventional low down payment loans: eligible buyers may put down as little as 3%. Private mortgage insurance applies with less than 20% down, but it can be removed once you reach 80% loan-to-value.
• VA loans: eligible veterans, service members and certain surviving spouses may buy with $0 down with full entitlement, with no monthly mortgage insurance, though most borrowers pay a funding fee.
• USDA loans: for eligible rural and some suburban areas, these may allow no down payment for buyers within income limits.

State and Local Assistance

Beyond the loan itself, many states, counties and cities offer help with upfront costs. Assistance may come as:

• Grants that do not need to be repaid
• Deferred or forgivable second loans that may be forgiven after you live in the home a certain number of years
• Low-interest second loans for down payment and closing costs

Some programs focus on specific neighborhoods, income levels or professions. Your state’s housing finance agency website is a good place to start your research, and your loan officer can help you understand which programs may work with your loan.

Homebuyer Education

Many assistance programs require a homebuyer education course, and even when it is optional, it is worth taking. These courses cover budgeting, credit, the loan process and what to expect as a new owner. HUD-approved housing counselors can also offer one-on-one guidance.

Watch the Fine Print

Assistance programs often come with conditions. Some require you to live in the home as your primary residence for a set number of years, repay the help if you sell or refinance early, or stay below a maximum purchase price. Some have limited funding that is distributed first come, first served. Read the terms carefully and ask your loan officer how a program would interact with your mortgage before you commit.

Possible Tax Considerations

Homeowners may be able to deduct mortgage interest and property taxes if they itemize, and some areas offer property tax exemptions for primary residences. Rules change, so check with a tax professional about your situation.

How to Get Started

1. Review your credit and budget so you know where you stand.
2. Research your state and local assistance programs.
3. Talk with a lender about which loans and programs you may qualify for.
4. Complete a homebuyer education course if required.

Learn more on our first-time home buyer page, then reach out to FLO Mortgage. A loan officer can help you sort through programs and build a plan.

This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.