The most useful thing to know about first-time home buyer programs is what the phrase actually covers. At the federal level, there is no check waiting for you — no grant, no tax credit, despite what recycled headlines suggest. What the federal government offers instead is a cheaper way in: loan programs that cut the required down payment to 3.5%, 3%, or nothing at all, and that accept credit profiles a standard loan would price harshly. The actual cash — down payment assistance, forgivable seconds, tax credits — comes from state housing finance agencies, layered on top of these federal loans.
This guide maps the federal layer. If you are buying in North Carolina, Georgia, or South Carolina, the state guides linked at the end cover the cash layer.
You are probably a first-time buyer. The definition is looser than the name: for Fannie Mae and Freddie Mac, anyone with no ownership interest in a home in the past 3 years qualifies. The IRS uses 2 years for its IRA exception, and HUD's Good Neighbor Next Door uses 12 months. Owning a house a decade ago rules out almost nothing.
FHA: The Best-Known Route, With a Catch
An FHA loan is a regular mortgage from a regular lender, insured by the Federal Housing Administration. That insurance is why lenders accept 3.5% down with a credit score of 580 or higher (500–579 requires 10% down). For 2026, FHA will insure single-family loans up to $541,287 in most of the country, and up to $1,249,125 in the most expensive markets.
The catch is the insurance itself. You pay an upfront premium of 1.75% of the loan, then an annual premium — most commonly 0.55% for a 30-year loan with the minimum down payment — added to every monthly payment. On a $350,000 home with 3.5% down ($12,250), the loan is $337,750, the upfront premium is $5,911 (usually financed into the loan), and the annual premium starts at about $155 a month.
And unlike conventional mortgage insurance, FHA's does not cancel when you build equity. Put down less than 10% and the premium runs for the life of the loan — the only exit is refinancing into a conventional loan later. FHA is often the right door to walk through and the wrong loan to keep for thirty years.
Conventional 3% Down: Often the Better Deal
Fannie Mae and Freddie Mac both back mortgages with just 3% down — less than FHA's minimum, a point many buyers never hear. The programs differ mainly in who qualifies:
- Conventional 97 (Fannie) and HomeOne (Freddie) — no income limits, but at least one borrower must be a first-time buyer under the 3-year rule.
- HomeReady (Fannie) and Home Possible (Freddie) — income capped at 80% of your area's median, but open to repeat buyers, with cheaper mortgage insurance and more flexibility on co-borrowers and boarder income.
The decisive advantage over FHA is that private mortgage insurance cancels. Once you reach 20% equity — through payments, appreciation, or both — PMI goes away without a refinance. A buyer with a 680+ score usually pays less over time on a 3%-down conventional loan than on FHA; below that, FHA's flatter pricing tends to win. Run both against your own numbers rather than assuming.
VA and USDA: The Zero-Down Programs
Two federal programs eliminate the down payment entirely, each for a specific population.
VA loans serve veterans, active service members, and many surviving spouses. Zero down, no monthly mortgage insurance, and consistently among the lowest rates available. The cost is a one-time funding fee: 2.15% of the loan for a first use with less than 5% down (on a $300,000 loan, $6,450, usually financed), falling with a larger down payment — and waived entirely for veterans receiving VA disability compensation and most surviving spouses. If you are eligible, a VA loan is very hard to beat.
USDA loans finance 100% of homes in eligible rural and semi-rural areas — a map that covers more territory than the word “rural” implies, including the outer edges of many metro areas. Household income must stay under 115% of the area median (around $119,850 for a 1–4 person household in most areas as of 2026, higher in some counties). Instead of mortgage insurance there is a 1% upfront guarantee fee and a 0.35% annual fee — cheaper than FHA's equivalent. The USDA eligibility map on rd.usda.gov settles both the property and income questions in a few minutes.
The Narrow but Remarkable Ones
Good Neighbor Next Door sells HUD-owned homes in designated revitalization areas at 50% off list price to law-enforcement officers, pre-K–12 teachers, firefighters, and EMTs who commit to living there for 36 months. The discount is structured as a silent second mortgage that forgives itself after the three years. The honest caveat: inventory is tiny, because it depends on HUD foreclosures in specific neighborhoods. Worth a look if you are in an eligible profession; not worth building a plan around.
Mortgage Credit Certificates convert 10–50% of your annual mortgage interest into a dollar-for-dollar federal tax credit (capped at $2,000 a year when the rate exceeds 20%), every year you live in the home. They are federal in mechanism but issued by state housing agencies through participating lenders, generally to first-time buyers within income limits — and not every state currently offers them, so this one is a question to ask your state agency, not your bank.
The IRA exception lets each person withdraw up to $10,000 from an IRA, once per lifetime, without the 10% early-withdrawal penalty — under the IRS 2-year definition, with the money used within 120 days. Income tax still applies to traditional IRA withdrawals, and 401(k)s get no such exception. Useful at the margin; rarely a reason to drain retirement savings.
Common mistake: waiting to buy until a federal grant arrives. The $15,000 tax credit and $25,000 down payment grant that surface in news feeds are proposed bills, introduced repeatedly since 2021 and never passed. The one real federal change for 2026 is quieter: mortgage insurance premiums — PMI, FHA MIP, the VA funding fee — became tax-deductible again for itemizers starting with the 2026 tax year. Helpful, but not a reason to time a purchase.
How the Programs Compare
| Program | Down payment | Mortgage insurance | Who it's for |
|---|---|---|---|
| FHA | 3.5% (580+ score) | 1.75% upfront + ~0.55%/yr, usually life of loan | Lower scores, thin credit |
| Conventional 97 / HomeOne | 3% | PMI, cancels at 20% equity | First-time buyers, any income |
| HomeReady / Home Possible | 3% | Reduced PMI, cancels at 20% equity | Income ≤ 80% of area median |
| VA | 0% | None (one-time funding fee) | Veterans, service members, surviving spouses |
| USDA | 0% | 1% upfront + 0.35%/yr | Eligible areas, income ≤ 115% of median |
Where the Actual Money Is
Every program above makes buying cheaper to enter; none of them hands you cash. Down payment assistance — deferred second mortgages, forgivable loans, occasionally outright grants — lives at the state level, run by housing finance agencies and layered on top of an FHA, VA, USDA, or conventional first mortgage from this list. The amounts are real: five figures in most states, with income and purchase-price limits attached.
We cover the three states our calculators serve in detail: North Carolina, Georgia, and South Carolina. Elsewhere, search your state's housing finance agency by name — every state has one.
Before any of it, know your number. A program that stretches you into a payment you cannot carry is not assistance. The affordability guide walks through sizing the budget, and the mortgage calculator turns any price, rate, and down payment into the full monthly payment — taxes, insurance, and PMI included.