15 First-Time Homebuyer Grants and Programs for 2025

If you’re tired of renting, it may be time to purchase your first home. Being a first-time homebuyer is nerve-wracking, but many of the myths about buying a home just aren’t true.

You don’t need a perfect credit score, and you don’t need 20% for a down payment. Many first-time homebuyer programs, grants, and down payment assistance programs are available to help you secure the financing you need to purchase your first home.

Federal Housing Administration (FHA) Loans

FHA loans are a popular choice for first-time buyers who may have lower credit scores or limited funds for a down payment. Backed by the U.S. Department of Housing and Urban Development (HUD), these loans offer flexible qualification criteria.

FHA Loan Requirements

• Credit Score and Down Payment: A credit score of at least 580 qualifies you for a 3.5% down payment. Scores between 500 and 579 require a 10% down payment.
• Employment History: A steady employment history of at least two years is preferred.
• Primary Residence: The home must be your primary residence.
• Property Appraisal: An FHA-approved appraisal is necessary.

It’s important to note that FHA loans require mortgage insurance premiums (MIP). If your down payment is less than 10%, you’ll pay MIP for the life of the loan. With a down payment of 10% or more, MIP can be canceled after 11 years.

FHA loan limits vary by area. You can view the loan limits for your area here.

Energy Efficient Mortgage (EEM) Program

The Energy Efficient Mortgage (EEM) Program allows first-time homebuyers to roll the cost of energy-efficient home upgrades into their mortgage. This option helps homeowners reduce utility bills while maintaining the same down payment and loan limit.

Key Features

• No Additional Qualification: The cost of energy improvements is included in your FHA loan amount without requiring separate approval.
• Eligible Upgrades: Includes energy-saving equipment, solar panels, wind technology, insulation, and HVAC improvements.
• Cost-Effectiveness Requirement: The improvements must be cost-effective, meaning the projected energy savings should outweigh the cost of the upgrades.
• Requires a Home Energy Assessment: A qualified energy assessor will determine eligible improvements.

This program is backed by the Federal Housing Administration (FHA), so it works similarly to an FHA loan but with added benefits for energy-efficient renovations. Buyers should work with their lender to determine eligibility.

Fannie Mae Programs

Fannie Mae offers several programs to assist first-time homebuyers in achieving affordable homeownership.

1. HomeReady Mortgage Program

The HomeReady® Mortgage is designed for creditworthy low-income borrowers, offering:

• Down Payment: As low as 3% of the purchase price.
• Credit Score: Minimum of 620 required.
• Private Mortgage Insurance (PMI): Required but can be canceled once 20% equity is achieved.

Additionally, beginning March 1, 2025, Fannie Mae is extending a $2,500 credit to very low-income purchase (VLIP) first-time homebuyers to assist with down payment or closing costs. To qualify:

• Income Limit: Borrower’s income must be less than or equal to 50% of the area median income (AMI) for the property’s location.
• First-Time Homebuyer Requirement: At least one borrower must be a first-time homebuyer.

This credit aims to reduce upfront costs, making homeownership more accessible.

2. HomePath Ready Buyer Program

This program offers up to 3% of the purchase price in closing cost assistance for buyers of Fannie Mae-owned foreclosed properties, known as HomePath properties. To qualify:

• Homebuyer Education: Completion of a homebuyer education course is required.
• Property Restriction: Assistance applies only to HomePath properties.

This initiative helps buyers manage closing costs while purchasing foreclosed homes.

3. 97% Loan-to-Value (LTV) Mortgages

Fannie Mae provides 97% LTV financing options, allowing for a 3% down payment. Key features include:

• Eligibility: At least one borrower must be a first-time homebuyer.
• Property Type: The loan must be for a one-unit principal residence, including eligible condos and co-ops.
• Mortgage Type: Fixed-rate mortgages with a maximum term of 30 years are eligible.

This option is ideal for buyers with limited funds for a down payment.

Freddie Mac Home Possible Mortgage

Freddie Mac’s Home Possible® Mortgage is designed to help low- to moderate-income borrowers, including first-time homebuyers, achieve affordable homeownership. This program provides flexible terms and a low down payment requirement, making it a great option for those with limited savings.

Key Features

• Low Down Payment: Qualifying buyers can purchase a home with as little as 3% down.
• Income Limits: Borrower income cannot exceed 80% of the Area Median Income (AMI) for the home’s location.
• Credit Flexibility: A minimum credit score of 660 is typically required.
• Mortgage Insurance (MI): PMI is required, but can be canceled once the loan balance reaches 80% of the home’s appraised value.
• Eligible Properties: Single-family homes, condos, and manufactured homes are allowed if they serve as the borrower’s primary residence.
• Co-Borrower Flexibility: Non-occupant co-borrowers, such as family members, can help qualify without needing to live in the home.

Starting in 2024, Freddie Mac introduced a $2,500 credit for very low-income borrowers to assist with down payment and closing costs. To qualify, the borrower’s income must be at or below 50% of the AMI for the home’s location. This credit reduces upfront costs, making homeownership more accessible for those in need of extra financial support.

United States Department of Agriculture (USDA) Loans

If you’re looking to buy a home in a rural area, a USDA loan could be a great option. This program offers 100% financing, meaning no down payment is required. It’s designed to help low- to moderate-income buyers purchase homes in designated rural areas.

Key Features

• No Down Payment: Qualified borrowers can finance the entire purchase price of the home.
• Lower Credit Requirements: While lenders set their own criteria, USDA loans are generally more flexible for borrowers with lower credit scores.
• Upfront Guarantee Fee: There is a 1% upfront guarantee fee, which can be rolled into the loan balance to minimize out-of-pocket costs.
• Annual Fee: Borrowers pay an annual fee of 0.35% of the remaining loan balance, which is added to monthly payments.
• Location-Based Eligibility: The home must be in a USDA-designated rural area.

USDA loans make homeownership more affordable for buyers in qualifying areas by reducing upfront costs and offering competitive loan terms. If you’re unsure whether a property qualifies, you can check using the USDA’s online eligibility tool or speak with an approved lender.

Veterans Affairs (VA) Loans

For active-duty service members, veterans, and eligible surviving spouses, VA loans offer a path to homeownership with no down payment and no private mortgage insurance (PMI) required. These loans are backed by the U.S. Department of Veterans Affairs (VA) and provide favorable terms to help veterans and their families secure affordable housing.

Key Features

• No Down Payment: Eligible borrowers can finance 100% of the home’s purchase price.
• No PMI Required: Unlike conventional loans, VA loans don’t require private mortgage insurance.
• Flexible Credit Requirements: There’s no official minimum credit score, but most lenders prefer a FICO score of at least 580.
• Competitive Interest Rates: VA loans often come with lower interest rates compared to conventional mortgages.
• Funding Fee: A one-time VA funding fee applies, which can be rolled into the loan amount. Some veterans, such as those with service-connected disabilities, may qualify for an exemption.

VA loans are an excellent option for first-time homebuyers who qualify, as they reduce upfront costs and provide more flexible credit requirements than traditional loan programs.

Native American Direct Loan (NADL)

The Native American Direct Loan (NADL) Program is designed specifically for Native American veterans and their families, offering a zero-down payment mortgage with no PMI and minimal closing costs. This program provides direct financing through the VA rather than private lenders, making qualification easier.

Key Features

• No Down Payment: Borrowers can finance 100% of the home purchase.
• No PMI: Unlike conventional and FHA loans, there is no mortgage insurance requirement.
• Lower Closing Costs: NADL loans keep upfront expenses low.
• Fixed Interest Rate: These loans come with a 30-year fixed-rate term to provide predictable monthly payments.
• Property Requirements: The home must be located on Federal Trust Land and serve as the primary residence.

For eligible Native American veterans, the NADL program offers an affordable way to become a homeowner with fewer upfront costs and simplified qualification criteria.

HUD’s Good Neighbor Next Door (GNND) Sales Program

For public service professionals, the Good Neighbor Next Door (GNND) Program offers a 50% discount on HUD-owned homes in designated revitalization areas. Eligible participants include law enforcement officers, firefighters, emergency medical technicians (EMTs), and teachers working in pre-K through 12th grade.

Key Features

• 50% Off HUD Homes: Buyers can purchase select homes at half the appraised value.
• 3-Year Residency Requirement: Homebuyers must commit to living in the home for at least 36 months.
• Limited Availability: Properties are only available for a 7-day listing period, so buyers must act quickly.
• Primary Residence Only: This program is not for investment properties.

The GNND program is a unique opportunity for public servants to purchase affordable housing while contributing to community revitalization.

HUD Dollar Homes Program

The HUD Dollar Homes Program is aimed at making homeownership more accessible by offering foreclosed FHA homes for just $1. These properties are single-family homes that have remained unsold for over six months and are made available to local governments and nonprofit organizations to support community housing initiatives.

Key Features

• $1 Purchase Price: Local governments can acquire eligible HUD-owned properties for redevelopment.
• Limited Inventory: Availability varies, and homes may not always be listed.
• Community Revitalization Focus: Governments often resell these properties to low- and moderate-income homebuyers.

First-time homebuyers should check with their local housing authorities or HUD’s website for potential opportunities under this program.

HUD 203(k) Rehab Loans

If you’re looking to buy a fixer-upper, the HUD 203(k) loan allows you to finance both the home purchase and renovation costs into a single mortgage. This loan is backed by the Federal Housing Administration (FHA) and is an excellent option for buyers who want to purchase and renovate a property without needing separate loans.

Key Features

• Covers Renovation Costs: Funds both the home purchase and required repairs.
• Low Down Payment: Borrowers may qualify with as little as 3.5% down.
• Flexible Use of Funds: Can cover structural repairs, appliance upgrades, and cosmetic renovations.
• Two Loan Types:
  • Standard 203(k): Covers major structural repairs and renovations.
  • Limited 203(k): Designed for minor improvements, with a maximum renovation budget of $35,000.

The HUD 203(k) loan is a great tool for first-time buyers who are willing to invest in renovating a home while securing long-term financing at competitive rates.

See also: How to Buy a HUD Home (And When You Should)

Additional Homebuyer Grants and Programs

Exploring various assistance programs can make the journey to homeownership more attainable. Here are some notable options:

National Homebuyers Fund (NHF)

The National Homebuyers Fund (NHF) offers down payment and closing cost assistance to low- and moderate-income homebuyers. Established in 2002, NHF has provided over $517 million in assistance, helping more than 57,900 individuals and families achieve homeownership.

Key Features:

• Assistance Amount: Up to 5% of the mortgage loan amount, which can be used for down payment and/or closing costs.
• Repayment Terms: The assistance is available as a grant (which does not require repayment) or a forgivable loan (which is forgiven after three years, provided you remain in the home).
• Eligibility: Open to first-time and repeat homebuyers. Income limits are generous, and the program accommodates various credit profiles.

To apply, work with a participating lender who can guide you through the process and determine your eligibility.

Employer-Sponsored Homebuyer Assistance Programs

Some employers and labor unions offer housing incentives to assist employees with purchasing a home. These programs may provide grants or forgivable loans to cover down payments and closing costs.

Key Features:

• Financial Assistance: Employers may offer funds that do not require repayment if certain conditions are met, such as continued employment for a specified period.
• Eligibility: Programs often target employees relocating for work or those in critical roles.

Check with your human resources department to see if your employer offers such programs.

State and Local Homebuyer Grants

Many state and local governments provide grants and assistance programs to first-time homebuyers. These programs often offer financial aid that does not require repayment, provided you meet certain criteria.

Key Features:

• Assistance Amount: Varies by program; some offer a percentage of the home’s purchase price, while others provide a fixed dollar amount.
• Eligibility: Typically based on income, purchase price limits, and completion of homebuyer education courses.

To find programs in your area, visit the U.S. Department of Housing and Urban Development (HUD) website and select your state to view available options.

Conclusion

Buying your first home may feel overwhelming, but there are plenty of grants, loans, and assistance programs designed to help make homeownership more accessible. Whether you need a low down payment, closing cost assistance, or special financing options, these programs provide valuable support to first-time buyers.

From FHA and USDA loans to state and employer-sponsored grants, exploring all your options can help you find the best financial solution for your situation. If you qualify for multiple programs, consider working with a lender who can guide you through the application process and help you maximize your benefits.

Be sure to check HUD’s website and local housing agencies for up-to-date information on assistance programs available in your area. With the right resources, buying your first home can become a reality sooner than you think.