Key takeaways:
- Your first-time home buyer benefits include down payment and closing cost assistance, grants, tax benefits, and low-interest or forgivable loans.
- Eligibility depends on factors like income, location, home price, and use of an approved lender.
- Federal, state, local, non‑profit, and lender‑sponsored programs can unlock these savings.
Purchasing your first home is a major investment, and it often comes with a number of surprises. If this next chapter in life feels out of reach, rest assured there’s support available. There are a number of first-time home buyer benefits designed to make homeownership more affordable, from down payment assistance to tax credits and more.
Whether you’re buying your first home in Lansing, MI or Tucson, AZ, this guide will help you discover the benefits you can receive as a first-time home buyer and how to qualify. Let’s get started.
Are you considered a first-time home buyer?
If you are buying a home for the first time or haven’t owned a primary residence in the past three years, you’re considered a first-time home buyer.
Here are a few examples of who may be considered a first-time buyer:
- You’ve never owned a home before.
- You previously owned a home but haven’t in the past three years.
- You shared ownership with a spouse in the past, but are now buying solo.
- You’ve been renting, living with family, or haven’t held a mortgage in three years.
- You’re buying in a designated redevelopment area, where some programs relax the rules (even for repeat buyers).
Note: The definition can vary slightly depending on the program, so don’t rule yourself out too quickly. If you’re unsure, talk to a mortgage lender, housing counselor, or real estate agent.
Who offers assistance for first-time home buyers?
First-time home buyer programs are available through a variety of local and national sources. Here are the main places to look:
- State and local housing agencies: A lot of states and cities offer down payment assistance, grants, or low-interest loan programs through their housing finance agencies.
- Federal programs: Many types of home loans including FHA, VA, and USDA loans can make buying a home more affordable with low down payments or flexible credit requirements.
- Nonprofit organizations: Groups like NeighborWorks provide homebuyer education and financial support.
- Banks and mortgage lenders: Many offer first-time buyer incentives, including reduced rates, special loan terms, or access to grant programs.
- Credit unions: Member-focused lenders may offer more flexible terms and exclusive programs for qualified buyers.
First-time home buyer benefits and programs
Buying a home for the first time comes with plenty of challenges, but there are also several benefits and programs designed to make the process more affordable. Here are some of the most common benefits available:
Down payment and closing cost assistance
One of the most common dilemmas for new buyers is coming up with enough cash upfront. Many programs offer low-interest or no-interest loans to cover down payments or closing costs. In some cases, these loans are deferred until you sell the home (or even forgiven after a set number of years).
Grants
Unlike loans, grants don’t need to be repaid. These are typically offered by state or local governments and nonprofit organizations to help cover part of your down payment or closing costs. To qualify, you’ll typically need to meet certain income limits or agree to live in the home for a specific period.
Government-backed loans
Federal loan programs like FHA, VA, and USDA loans make it easier to qualify for a mortgage with a low down payment or less-than-perfect credit. This is especially helpful for buyers who do not meet conventional loan requirements. Let’s break it down:
- FHA loans require as little as 3.5% down with a credit score of 580 or higher.
- VA loans offer 0% down for eligible veterans, active-duty service members, and surviving spouses.
- USDA loans provide 100% financing for homes in rural or suburban areas.
Tax Benefits
Some programs offer Mortgage Credit Certificates (MCCs), which let you claim a portion of your mortgage interest as a credit on your federal tax return.
Homebuyer education
Many assistance programs require or recommend completing a homebuyer education course. These workshops cover budgeting, understanding your mortgage, and maintaining your home.
How to find assistance programs available in your area
- Visit your state or local Housing Finance Agency (HFA) website, which often lists available grants, loans, and down payment help.
- Check the National Council of State Housing Agencies (NCSHA) website for links to programs by state.
- Talk to approved mortgage lenders or local real estate agents.
How to qualify for first-time homebuyer assistance
Qualifying for first-time home buyer assistance depends on the program and your location. While each program has its own rules, these are some common requirements you’re likely to see:
- Income and home price limits: Many programs are designed for low- to moderate-income buyers, so your earnings (and sometimes the price of the home you’re buying) may need to fall within a specific range. Check your state’s Housing Finance Agency via the National Council of State Housing Agencies site.
- First-time buyer status: Most programs require that you haven’t owned a primary residence in the past three years. However, some options are available to repeat buyers under special conditions (i.e. purchasing in a redevelopment area).
- Eligible occupation: Certain programs are designed for people in helping professions (i.e. teachers, nurses, and firefighters). These often come with additional savings or housing discounts.
- Completion of a homebuyer education course: A homebuyer class is commonly required to qualify for grants, loans, or down payment assistance. Even when it’s optional, it’s a smart move.
- Use of an approved lender: If you’re applying for a state or local housing program, you’ll usually need to go through a lender that’s authorized to work with that program.
Why first-time home buyers should get assistance
Without the advantage of home equity or years of savings, getting into the market can feel out of reach. Here is why support for first-time home buyers matters, and why it benefits everyone:
- Home prices are steep. With today’s housing costs and interest rates, saving up for a down payment isn’t easy, especially when starting out.
- Many buyers have limited savings. First-time buyers often haven’t built up equity or long-term savings yet.
- Homeownership builds wealth. Buying a home helps you build equity and invest in your future.
- It supports the housing market. Starter homes make room for others to move up, keeping the housing market healthy and active.
- It strengthens communities. Homeownership encourages long-term neighborhood involvement and stability.
The bottom line on first-time home buyer benefits
Buying your first home is a huge step and yes, it can feel overwhelming. But the good news is, you don’t have to do it alone. First-time home buyer programs are here to help, offering everything from down payment assistance and low-interest loans to educational tools.
If you’re wondering how to buy your first home, a great place to start is by exploring what first-time homebuyer programs are available in your state. A trusted lender or real estate agent can walk you through your options and help you figure out what fits your budget and lifestyle.
Frequently asked questions
Is there an income level to qualify?
Yes, many first-time home buyer programs have income limits. These vary depending on where you live and the size of your household. Normally, these limits are designed to help low and moderate-income buyers, so you may still qualify if you earn a steady income.
To find current income limits, check your state’s Housing Financing Agency (HFA) website, which can be found on the National Council of State Housing Agencies site.
Can you qualify for a first-time home buyer loan if you have student loans?
Having student loans doesn’t automatically disqualify you. Lenders will consider your debt-to-income ratio to see if you can comfortably manage a mortgage along with your other monthly payments.
Are there any federal or state tax credits for first-time buyers?
There’s no federal tax credit available right now, but some states and local governments offer tax incentives. It’s worth checking with your state’s housing agency to see what’s available near you.
What is the $15,000 first-time homebuyer tax credit?
This proposed first-time homebuyer tax credit would give eligible buyers 10% of the home’s purchase price (up to $15,000) as a refundable credit to help cover down payment or be claimed on tax returns. While widely discussed, this specific federal tax credit has not been enacted.
How much do I need for a down payment on a house?
It varies depending on your financial position, goals, and loan type. While 20% is preferred by lenders, many first-time home buyer programs now allow for much lower down payments.
>>Read: Down Payment on a House: How Much Do You Really Need?