A first-time homebuyer loan allows a buyer with a low or mid-range income and limited savings to finance a home purchase. Typically, these types of loans come with a below-market rate, and sometimes lower mortgage insurance premiums. You can often pair them with down payment and closing cost assistance, so they’re ideal if you don’t have the means to put a substantial amount of money down on a home.
Many first-time homebuyer loan programs only require that you haven’t owned a home in the last three years, not that you’re a true first-time buyer. Often, all it takes to qualify is an acceptable credit score and income level (determined by program), the completion of a homebuyer class and a contribution of some of your own funds to the purchase.
Many mortgage lenders offer first-time homebuyer loans, sometimes through partnerships with a state housing finance agency, or HFA. Here are these first-time homebuyer loan programs by state.
First-time homebuyer loan programs by state
2010-2020 U.S. Regional Growth
From 2010 to 2020, the population in the South and West grew the most, according to 2020 Census findings. Whether you’re planning to follow the influx of residents to growth states or buy somewhere local, virtually every state has a first-time homebuyer program to help you more easily afford a down payment, closing costs and your mortgage payments.
How can a first-time homebuyer loan help me?
When you buy your first home, you’ll need to make a down payment on the purchase and pay for closing costs on your mortgage. These are costly expenses, and if you don’t have much in the way of savings, they can be difficult to accumulate.
That’s where a first-time homebuyer loan comes in. First-time homebuyer loan programs typically come with a 30-year fixed-rate mortgage — the loan you’ll use to pay for the home — and down payment assistance, either a grant or a second mortgage for a portion of the home’s purchase price, usually up to a certain amount. Grants don’t have to be repaid, and some second mortgages can be forgiven after a period of time, while others have to be paid back when you pay off your first mortgage. It all depends on the program.
Down payment help isn’t the only upside. First-time homebuyer loans also come with competitive interest rates, so even if you don’t need down payment assistance, you can still obtain a more affordable mortgage through one of these programs.
There’s at least one other benefit, too: To be eligible for a first-time homebuyer loan, many programs require you to take a homebuyer education class. These courses go over everything you need to know to prepare you for homeownership, so they’re especially valuable if it’s your first time buying. Some are free, and there are usually both in-person and online options.
How can I find a mortgage lender?
Many mortgage lenders offer first-time homebuyer loan programs or work with organizations that do. To find a lender, you can:
- Locate your state’s housing finance agency website in the tables above and look for a list of “approved” or “participating” lenders.
- Look up lender reviews and testimonials through Bankrate.
- Visit the U.S. Department of Housing and Urban Development’s State Information page, locate your state and search for “Homebuying programs” or “Homeownership assistance.” In addition to state-level programs, this resource can help you find programs by city, county or town.