Man, woman and their two children sitting on a porch petting their dogs.

Ready to take your first steps toward homeownership?

Even if it’s new territory, you probably know the homebuying process involves significant financial planning. And it’s important to know beforehand what you can afford. Homebuyers are typically advised to put 20% down, but this is more of a recommendation than a rule — and doesn’t work for every homebuyer.

The details can seem a little intimidating, but don’t fret. You have a handful of resources to help you proceed with your homebuying journey. These national and state programs are designed to help first-time homebuyers like you make their dream of owning a home a reality.

What are homebuyer programs?

These programs were designed to support and encourage homeownership, especially for individuals who may not be able to afford a home without additional financial support, including those with lower income or credit scores or lack the savings to put toward a down payment.

By providing assistance for both down payments and closing costs, as well as favorable interest rates, first-time homebuyer programs reduce upfront costs and increase a person’s, couple’s or family’s chance to purchase and own a home.

Who qualifies for homebuyer programs?

A number of factors can impact whether you qualify, including:

  • Where you live
  • The lender you work with
  • Requirements specific to the program you select

Many of these programs have requirements for credit scores, maximum income and minimum down payment. In the next section, we will break down the available homebuyer programs, what they offer and what you’ll need to qualify.

Types of homebuyer programs

As we mentioned above, the programs and support available to you will depend on what state and/or city you live in (more on that later), but there are also federal and national programs dedicated to providing first-time homebuyer assistance. As you work through the homebuying process, be sure to check out the mortgage loan options below. Keep in mind that this information can change.

Federal Housing Administration (FHA)

An FHA loan is a mortgage that is insured by the Federal Housing Administration (FHA) that requires a low down payment and low closing costs. Because of the flexibility these loans offer, they are especially popular among first-time homebuyers and homebuyers with low or moderate incomes.

FHA loan qualifications:

  • 5% down payment if your credit score is at least 580
  • 10% down payment if your credit score is 500-579
  • Proof of consistent income and employment
  • Home must be primary residence

Fannie Mae

The Federal National Mortgage Association (commonly known as Fannie Mae) offers a HomeReady mortgage program that works with local lenders to offer loans to borrowers with lower incomes.

HomeReady loan qualifications:

  • Completion of a homeownership education course
  • 3% down payment
  • Credit score of at least 620
  • Income must be no more than 80% of your area’s median income
  • Home must be primary residence

Freddie Mac

The Federal Home Loan Mortgage Corporation (usually referred to as Freddie Mac) offers a Home Possible Advantage mortgage that is similar to Fannie Mae’s HomeReady program in terms of criteria.

Home Possible Advantage loan qualifications:

  • Completion of a homeownership education course
  • 3% down payment
  • Credit score of at least 660
  • Income must be no more than 80% of your area’s median income

VA Loan

Backed by the U.S. Department of Veteran Affairs, VA loans often require no down payment or mortgage insurance, making it an appealing choice for those in the military community.

VA loan requirements:

  • Military connection (active service members, veterans, and surviving spouses) with a minimum term of service
  • Certificate of eligibility (COE)
  • Credit score of at least 580-620, depending on the lender

USDA Rural Development

The U.S. Department of Agriculture also offers mortgage assistance that allows 100% financing with reduced mortgage insurance and/or below-market mortgage rates.

USDA loan qualifications:

  • Live in an eligible rural or suburban area (population under 20,000)
  • Credit score of at least 640 (but can vary by lender)
  • Income limitations that vary by region and are based on the number of people in the household
  • Home must be primary residence

Down Payment Assistance

Here are a few alternative sources:

  • Grants: Provides down payment assistance as a gift that you won’t have to pay back
  • Forgivable loans: Second mortgages that you won’t have to pay back, as long as you stay in the home for a certain number of months or years
  • Deferred-payment loans: Second mortgages that you don’t have to pay back until you move, sell or refinance your first mortgage
  • Matched savings programs: You deposit money into an account and the bank, agency or organization matches the amount deposited.

Keep in mind, qualification for down payment assistance, and how much you’re offered, is often determined by your household income and credit history and also varies state by state.

What first-time homebuyer programs are available in your state?

In addition to the federal and national programs we discussed, each state has its own programs for homebuyers. Find the program currently available for your state below.

State/ Programs
Alabama Alabama Housing Finance Authority
Alaska Alaska Housing Finance Corporation
Arizona Arizona Department of Housing
Arkansas Arkansas Development Finance Authority
California California Housing Finance Agency
Colorado Colorado Housing and Finance Authority
Connecticut Connecticut Housing Finance Authority
Delaware Delaware State Housing Authority
Florida Florida Housing Finance Corporation
Georgia Georgia Department of Community Affairs
Hawaii Hawaii Housing Finance & Development Corporation
Idaho Idaho Housing and Finance Association
Illinois Illinois Housing Development Authority
Indiana Indiana Housing & Community Development Authority
Iowa Iowa Finance Authority
Kansas Kansas Housing Resources Corporation
Kentucky Kentucky Housing Corporation
Louisiana Louisiana Housing Corporation
Maine Maine State Housing Authority
Maryland Maryland Mortgage Program
Massachusetts Massachusetts Department of Housing and Community Development
Michigan Michigan State Housing Development Authority
Minnesota Minnesota Housing
Mississippi Mississippi Home Corporation
Missouri Missouri Housing Development Commission
Montana Montana Housing
Nebraska Nebraska Investment Finance Authority
Nevada Nevada Housing Division
New Hampshire New Hampshire Housing
New Jersey New Jersey Housing and Mortgage Finance Agency
New Mexico Housing New Mexico
New York New York State Homes and Community Renewal
North Carolina North Carolina Housing Finance Agency
North Dakota North Dakota Housing Finance Agency
Ohio Ohio Housing Finance Agency
Oklahoma Oklahoma Housing Finance Agency
Oregon Oregon Housing and Community Services
Pennsylvania Pennsylvania Housing Finance Agency
Rhode Island Rhode Island Housing
South Carolina South Carolina Housing
South Dakota South Dakota Housing Development Authority
Tennessee Tennessee Housing Development Agency
Texas Texas State Affordable Housing Corporation
U.S. Virgin Islands Virgin Islands Housing Finance Authority
Utah Utah Housing Corporation
Vermont Vermont Housing Finance Agency
Virginia Virginia Housing
Washington Washington State Housing Finance Commission
Washington, D.C. Department of Housing and Community Development
West Virginia West Virginia Housing Development Fund
Wisconsin Wisconsin Housing and Economic Development Authority
Wyoming Wyoming Community Development Authority

 

Home is where the heart is

The journey to homeownership is a personal one and can play a significant role in you and your family’s lives for years to come. It’s a big decision and often a significant investment. Homebuyer programs can make it possible, helping you find a home you love and that serves your needs, while maintaining your financial health.

Ally Home is here to support both experienced homebuyers and first-time homebuyers with several resources, from checklists to pre-approval within minutes, and even an educational, downloadable homebuyers guide to help you every step of the way.

Get one step closer to buying your new home.

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