First-Time Homebuyer Programs and Grants in 2026

· February 25, 2026 · ·Real Estate

Understanding First-Time Homebuyer Programs

If you have never owned a home – or have not owned one in the last three years – you likely qualify as a first-time homebuyer under most federal and state programs. This designation unlocks a wide range of benefits: lower down payments, reduced mortgage insurance, down payment grants, tax credits, and below-market interest rates. In 2026, these programs are more accessible than ever, but they come with specific eligibility rules, income limits, and application timelines you need to understand before you start house hunting.

Federal Loan Programs

FHA Loans

Backed by the Federal Housing Administration, FHA loans are the most popular choice for first-time buyers. Key features:

  • Down payment: As low as 3.5% with a credit score of 580+. Borrowers with scores of 500-579 can qualify with 10% down.
  • Credit score: Minimum 500 (with 10% down) or 580 (with 3.5% down). More forgiving than conventional loans.
  • Mortgage insurance: Upfront MIP of 1.75% of the loan amount plus annual MIP of 0.55%-1.05%, depending on loan term and LTV. MIP lasts for the life of the loan if you put down less than 10%.
  • Loan limits: Vary by county. In 2026, the standard floor is $498,257; the ceiling in high-cost areas is $1,149,825. Check HUD website for your county specific limit.
  • Property requirements: The home must be your primary residence and pass an FHA appraisal, which is stricter than conventional (checks for health and safety issues like peeling paint, handrails, and working utilities).

VA Loans

Available to active-duty military, veterans, and eligible surviving spouses. VA loans are one of the best mortgage products in existence:

  • Down payment: Zero. VA loans require no down payment at all.
  • Mortgage insurance: None. Instead, there is a one-time VA funding fee of 1.25%-3.3%, which can be rolled into the loan. Disabled veterans are exempt.
  • Credit score: No VA-mandated minimum, but most lenders require 620+.
  • Interest rates: Typically 0.25%-0.50% lower than conventional rates.
  • Loan limits: No limit for borrowers with full entitlement (first-time VA loan use).

USDA Loans

The U.S. Department of Agriculture Rural Development program offers zero-down-payment loans for homes in eligible rural and suburban areas (which cover about 97% of the U.S. land mass):

  • Down payment: Zero.
  • Income limit: Household income must not exceed 115% of the area median income. For a family of four in most areas, that is roughly $110,000-$130,000.
  • Mortgage insurance: Upfront guarantee fee of 1.0% plus annual fee of 0.35% – significantly cheaper than FHA MIP.
  • Eligibility: Use the USDA online map tool to check if your target property is in an eligible area. Many suburban communities on the outskirts of major metro areas qualify.

Conventional 97 and HomeReady/Home Possible

Not a government program per se, but Fannie Mae HomeReady and Freddie Mac Home Possible loans deserve mention:

  • Down payment: 3% minimum.
  • Income limit: 80% of area median income (HomeReady) or no limit in underserved areas.
  • PMI: Required but cancellable once you reach 20% equity – a key advantage over FHA.
  • Credit score: Minimum 620, with better rates at 680+.

Down Payment Assistance Grants and Programs

Unlike loans, grants do not need to be repaid. These programs can cover part or all of your down payment and closing costs:

  • Chenoa Fund: Offers 3.5% or 5% of the purchase price as either a forgivable second loan (forgiven after 36 months of on-time payments) or a repayable second loan. Available nationwide through participating FHA lenders.
  • NACA (Neighborhood Assistance Corporation of America): Provides below-market-rate mortgages with zero down payment, zero closing costs, and no PMI. Requires completion of a homebuyer workshop and membership. Available in most major metro areas.
  • National Homebuyers Fund (NHF): Offers up to 5% of the loan amount as a grant for down payment and closing costs. Available in all 50 states through approved lenders.
  • Employer-assisted housing programs: Major employers in healthcare, education, and government often offer down payment assistance or forgivable loans as employee benefits.

State-Specific Programs: Highlights

Texas

The Texas State Affordable Housing Corporation (TSAHC) offers two programs: the Homes for Texas Heroes program (for teachers, first responders, veterans, and corrections officers) and the Home Sweet Texas program (for all qualified first-time buyers). Both provide 30-year fixed-rate mortgages with up to 5% in down payment assistance as a grant or forgivable second lien. Income limits vary by county, typically $100,000-$130,000 for a household.

California

The California Housing Finance Agency (CalHFA) offers the MyHome Assistance Program, providing a deferred second loan of up to 3.5% (FHA) or 3% (conventional) of the purchase price for down payment or closing costs. The CalHFA also offers a forgivable equity builder loan of up to $20,000 for first-generation homebuyers. Income limits are based on area median income, generally around $180,000-$200,000 in high-cost counties.

Florida

The Florida Housing Finance Corporation offers the Florida Assist program: a $10,000 second mortgage at 0% interest, deferred until you sell, refinance, or pay off the first mortgage. The Hometown Heroes program provides up to 5% of the first mortgage amount for down payment and closing costs to Florida-based workers in over 50 community professions. Income limit: $150,000.

New York

The State of New York Mortgage Agency (SONYMA) offers the Achieving the Dream program with rates approximately 0.375% below standard SONYMA rates and up to $15,000 in down payment assistance (or $30,000 in targeted areas). The Down Payment Assistance Loan (DPAL) is a second mortgage at 0% interest for the life of the loan. Purchase price limits apply and vary significantly between New York City ($927,000) and upstate areas ($548,000).

How to Qualify: Step by Step

  1. Verify your first-time buyer status. Most programs define this as not having owned a home in the past three years. Some programs offer exceptions for single parents or displaced homemakers.
  2. Check income limits. Most programs cap eligibility at 80%-150% of the area median income. Use HUD income limit lookup tool.
  3. Complete homebuyer education. Nearly all programs require a HUD-approved homebuyer education course, typically 6-8 hours, available online or in person for $50-$100 (sometimes free).
  4. Get pre-approved with a participating lender. Not all lenders offer every program. Ask specifically which state and federal programs they participate in before applying.
  5. Gather documentation. You will need tax returns (2 years), pay stubs (30 days), bank statements (2 months), ID, and Social Security number.
  6. Apply early. Many state programs have limited annual funding and operate on a first-come, first-served basis. Apply as soon as funding opens – some programs exhaust their allocation within weeks.

Timeline: From Application to Keys

  • Weeks 1-2: Complete homebuyer education course and gather financial documents.
  • Weeks 2-4: Apply for pre-approval with a participating lender. Research and apply for applicable DPA programs.
  • Weeks 4-12: Search for a home within program price limits. Make an offer.
  • Weeks 12-16: Complete inspection, appraisal, underwriting, and DPA program approval. Note: DPA programs often add 1-2 weeks to the standard closing timeline.
  • Week 16-18: Close on your home.

Total timeline: approximately 4-5 months from first steps to closing, though motivated buyers with clean finances can sometimes close faster.

Common Mistakes to Avoid

  • Not shopping multiple lenders. Rates and program availability vary significantly between lenders. Get at least three quotes.
  • Ignoring income limits. Your household income counts, not just the primary borrower. A two-income household may exceed limits even if one income is modest.
  • Skipping homebuyer education. Most programs require it. Complete it early so it does not delay your timeline.
  • Waiting too long to apply. Many DPA programs have annual funding caps. Apply at the start of the fiscal year when funds are freshest.
  • Forgetting about ongoing costs. A zero-down-payment loan still requires you to budget for property taxes, insurance, maintenance, and potential PMI or MIP.

The Bottom Line

First-time homebuyer programs exist to make homeownership achievable, and in 2026, there are more options than ever. Between FHA, VA, and USDA loans at the federal level and dozens of state-specific DPA grants and tax credits, many first-time buyers can purchase a home with little to no money out of pocket. Start with homebuyer education, check your eligibility for multiple programs, and work with a lender experienced in first-time buyer financing. Your path to homeownership may be shorter and more affordable than you think.