First-time home buyer programs: federal, state and local help

First-time home buyer programs come in four layers. Loans backed by the Federal Housing Administration (FHA), Veterans Affairs (VA) and the Department of Agriculture (USDA) lower the down payment. State housing agencies add lower-rate mortgages and down payment help. Cities, counties and nonprofits add grants and below-market homes. A tax credit is the fourth layer.

Each layer has its own income limits, and most of the help is a loan or a lower price, not free money. A state-by-state series of our guides is coming.

What counts as a first-time home buyer?

HUD, the federal housing department, defines it in its FHA handbook as someone with no ownership interest in another property in the three years before the loan case number is assigned. That includes a divorced or legally separated person whose only ownership was shared with a spouse. So you can qualify even if you owned a home years ago.

Programs bend the rule in set ways:

• HOME-funded programs. HOME is the federal HOME Investment Partnerships Program, which gives grants to state and local governments. Its law also counts displaced homemakers and single parents who owned only with a spouse. It also counts someone whose only home was not on a permanent foundation or could not be fixed to code for less than the cost of a new one.
• State mortgage bond and tax credit programs. The tax code lets agencies skip the three-year test for homes in "targeted areas" and for veterans who have not used that exception before.
• No first-time rule at all. The FHA, VA and USDA pages we read set none. The Consumer Financial Protection Bureau (CFPB) says some state and local programs also serve people who owned before.

Layer 1: government-backed loans (FHA, VA and USDA)

FHA insurance, VA guarantees and USDA guaranteed loans work the same way: a private lender makes the loan, and the agency covers part of the lender's loss if you stop paying. The exception is USDA direct, where USDA lends. None is a grant, and you still must qualify.

The FHA figures come from HUD's FHA handbook, and its August 2026 update still shows them. Lenders can set stricter rules than the agencies, so a lender may ask for a higher score. FHA loan limits vary by county. USDA's address checker shows whether a home is in an eligible area.

Layer 2: state housing finance agency programs

Every state has a housing finance agency, a state-chartered authority that runs homebuyer programs. The National Council of State Housing Agencies (NCSHA) lists them all, and says these agencies have provided affordable mortgages to more than 3.4 million families buying their first homes.

Typical help is an affordable mortgage plus down payment assistance, usually with income and purchase price limits. The assistance takes different shapes:

• A deferred loan you repay when you sell or refinance.
• A forgivable loan that shrinks each year you stay.
• A subsidized loan from the program itself.

Florida shows how much the terms vary. Its Florida Assist program offers up to $10,000 as a deferred loan that is not forgivable, and its 3%-to-5% option is forgiven 20% a year over five years. Florida Housing works only through approved lenders and offers its down payment help only with its own first mortgage, and its limits differ by county. Read the repayment terms before you sign.

Layer 3: city, county and nonprofit programs

Local governments can pass down state or federal money. HUD's HOME program sends grants to state and local governments. Florida's SHIP program sends state funds to all 67 counties and 55 cities, which can use them for down payment help.

Local programs also sell below-market-price homes: a household under an income limit buys a home priced under the market, and a resale cap keeps it affordable. Most are sold first come, first served or by lottery, as in how housing lotteries work. Two kinds are common:

• Community land trusts. The HOME rules define one as a nonprofit that holds land to keep housing permanently affordable, requires affordability for at least 30 years and keeps a first right to buy a home when it is resold.
• Habitat for Humanity. Local affiliates choose buyers who need housing, earn no more than 60% of area median income and agree to put in "sweat equity" (helping build homes, taking classes or volunteering). Payments stay at or under 30% of gross monthly income. Habitat says it does not give houses away.

See housing types and what area median income means.

Layer 4: the mortgage credit certificate

A mortgage credit certificate (MCC) is a tax break, not a loan. A state or local agency issues it with a new mortgage on your main home. Each year you claim part of your mortgage interest as a federal tax credit on Internal Revenue Service (IRS) Form 8396.

• The agency sets the share, between 10% and 50%. Above 20%, the credit is capped at $2,000 a year.
• Example (made up): 20% share and $8,000 of interest paid gives a $1,600 credit.
• A credit cannot exceed your tax bill, and unused credit carries forward 3 years.
• Federal law also caps the home price and your income for an MCC.
• Selling within 9 years may mean repaying some.

The IRS says to contact the agency before you get the mortgage. Not every agency offers an MCC. Florida Housing has issued none since December 31, 2020, though local agencies there may still offer them.

Is there a federal grant for first-time home buyers?

We found none that any buyer can claim. HUD's buying-a-home page lists FHA loans and a few programs for specific groups, and links to programs in your state. The CFPB's list of special loan programs points to state, local and nonprofit programs for down payment help. That help usually comes as a loan, a forgivable loan or a lower price, and each program has an application, an income limit and a lender.

An ad promising "free government money" is a warning sign. The Federal Trade Commission (FTC) says the government will not contact you out of the blue about grants, does not award grants for personal needs, and never charges a fee to receive one. Never pay to be "matched" with a program, and never give out your Social Security or bank account number to "see if you qualify."

What we track: homes for sale at below-market prices

As of October 5, 2026, the open listings we track include 361 homes for sale in 30 states. These are income-restricted homes priced below market through a program, not market-rate homes. Of the 361, 250 are first come, first served, 79 are lotteries and 32 are waitlists. Separately, 72 of them are limited to first-time buyers.

Prices are shown where a listing posts one. New Jersey's low end is the bottom of one listing's sale-price range, which covers very low to moderate income tiers. An income limit is the most a household of four may earn to buy that home. See them in the listings, or read about affordable homes for sale.

Where to start

1. Check your credit reports. The CFPB's Owning a Home page has a credit report checklist. Scores matter: FHA sets 580 for the lowest down payment, and Florida Housing, for one, requires 640.
2. Talk to a HUD-approved housing counselor. Counselors give independent advice, often at little or no cost. Use the CFPB's counselor tool or call HUD at (800) 569-4287.
3. Find your state agency. Use the NCSHA directory. Ask about county income and price limits, approved lenders and any homebuyer class.
4. Get a lender pre-approval. That is a written estimate of what you can borrow. Pick a lender the program approves, and ask about FHA, VA, USDA and an MCC.
5. Check local programs. Ask your city and county, then browse the listings, try the eligibility check (what you type stays in your browser) and read how to qualify for affordable housing. For rentals, see income-restricted apartments.