What are the best first-time home buyer loans?
First-time home buyers can choose from a variety of mortgage loans and assistance programs that make buying a house more affordable.
Popular first-time home buyer loans include the conforming mortgage — which requires just 3% down and a 620 credit score — and the FHA mortgage, which allows lower FICO scores starting at 580. Some first-time buyers can qualify with no down payment at all using a VA loan or USDA loan.
The only real question is, which first-time home buyer loan is right for you? Here’s what you should know.
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About first-time home buyer loans and programs
First-time home buyer loans can make buying a house easier, with lower down payment and credit score requirements than other mortgages. In addition, every state offers first-time home buyer assistance programs that could help with your down payment or offer tax advantages.
We’ll go over each program in detail below. But here’s a quick, high-level rundown to give you an idea of the range of first-time home buyer loans and programs available:
Conventional loans
Conventional conforming loans are the most common type of mortgage — what most people think of as a “standard” home loan. First-time home buyers can generally qualify for a conventional loan with at least 3% down and a FICO score of 620 or higher.
Government-backed loans
Government-insured FHA, VA, and USDA loans offer flexible qualification requirements for first-time home buyers. FHA loans are popular with lower-credit borrowers; they require a FICO score of just 580 with 3.5% down. VA loans and USDA loans allow zero down payment but have special guidelines to qualify. VA loans are for home buyers with a military service history, while USDA loans are only available in eligible “rural” areas.
Specialty home loans
Some first-time home buyers take advantage of specialty loan programs. These can be tailored to your profession; for example, there are mortgages for medical workers, teachers, and first responders. There are also specialized home loans for buying certain property types, like fixer-uppers, “green” homes, manufactured homes, and more. You can find more information on these below.
Down payment assistance
Down payment assistance (DPA) programs are available in every state. These can offer cash assistance toward your down payment and often closing costs, too. The money might take the form of a grant or low-interest loan; these loans are often forgiven after five to 10 years. Every program has its own guidelines, but DPAs are often for low- and moderate-income first-time home buyers.
Private home buyer assistance
State-run down payment assistance programs aren’t the only way to get help buying a house. Many first-time home buyers use gift money from a family member toward their down payment. Others rely on contributions from the seller or credits from the lender to help pay closing costs. If you aren’t eligible for down payment assistance, ask your lender about these alternative options.
First-time home buyer tax breaks
Some states offer mortgage credit certificates (MCCs) that can reduce your federal tax bill by up to $2,000 each year. Other tax breaks have been proposed but are not yet written into law (for example, Biden’s $15,000 tax credit for first-time buyers). Homeowners can also take advantage of mortgage tax deductions, but only if they itemize their tax deductions. Speak with a tax professional to learn more.
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First-time home buyer loan requirements
Most loan programs that are popular with first-time home buyers (including conforming loans, FHA loans, and VA loans) do not require you to be a first-time home buyer to qualify.
For specialized loan programs that do have a first-time buyer requirement, a “first-time home buyer” is usually defined as someone who hasn’t owned property in the last three years.
Anyone who applies as a first-time home buyer will need to meet their lender’s minimum requirements for income, credit score, credit history, and down payment. These guidelines vary by lender and loan program, but most first-time buyers can easily qualify with a credit score of 620 or higher and a down payment of at least 3 percent.
Requirements for common first-time home buyer loans
| Loan Type | Min. Down Payment | Min. Credit Score | Max. Loan Amount* |
| Conventional Loan | 3% | 620 | $ |
| FHA Loan | 3.5% | 580 | $ |
| VA Loan | 0% | 580-620 (varies) | None |
| USDA Loan | 0% | 640 | None |
| Jumbo Loan | 10-20% (varies) | 680-600 (varies) | Often $2-3 million (varies) |
*Loan limits vary by county and change annually. Maximum loan amount represents the baseline single-family loan limit for 2025.
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First-time homebuyer loan programs
Mortgage loans aren’t one-size-fits-all. They have different guidelines and requirements, wile some loans are tailored to specific borrowers. These include loan programs for borrowers with low-to-moderate incomes, lower credit scores, and limited upfront cash.
Fortunately, the most common mortgage programs are suitable for most first-time homebuyers. These include:
- Conventional loans (min. 3% down)
- FHA loans (min. 3.5% down)
- VA loans (min. 0% down)
- USDA loans (min. 0% down)
- Jumbo loans (min. 10-20% down)
Let’s dig into each program in a little more detail.
Conventional loan
Conventional loans are the most popular type of home loan. ‘Conventional’ simply means these loans are not backed by the federal government (unlike some programs listed below). Most are also ‘conforming loans,’ meaning they fall within conforming loan limits.
Conventional mortgages can work for a primary residence, a second home, or an investment property.
Standard conventional loans require a 5% down payment and a minimum 620 credit score. But this isn’t your only conventional option as a first-time homebuyer. Other options include the conventional 97 loan, Fannie Mae’s HomeReady, and Freddie Mac’s Home Possible, all of which require just 3% down for a one- to four-unit property.
While the conventional 97 and HomeReady programs allow a 620 credit score, Home Possible usually requires a minimum 660 credit score. But check with your lender as these minimums can vary.
Check your conventional loan eligibility. Start hereFHA loan
FHA mortgage loans, which are backed by the Federal Housing Administration, are also popular among first-time homebuyers. These loans require just 3.5% down with a minimum 580 credit score, or 10% down with a credit score between 500 and 579.
The biggest downside of an FHA loan is that you’ll have to pay mortgage insurance premiums (MIP) regardless of your down payment amount. By comparison, conventional loans only charge private mortgage insurance (PMI) if you put less than 20% down.
The FHA itself doesn’t create these loans. You’ll need to apply with an FHA-approved mortgage lender. Most major banks and lenders offer FHA loans, so they’re not difficult to find.
Note that FHA loans are only for purchasing or refinancing a primary residence. You cannot use an FHA loan to buy an investment property unless you purchase a multi-unit home and live in one of the units yourself.
Check your FHA loan eligibility. Start hereVA loan
If you are an active-duty service member, a veteran, or a surviving spouse, a VA loan is another option. This is an attractive program because there’s no down payment or monthly mortgage insurance.
The VA mortgage program is backed by the U.S. Department of Veterans Affairs and offered by most mainstream mortgage lenders.
VA loans typically have the lowest mortgage interest rates of any program. Coupled with their no-down-payment feature, this makes a VA mortgage one of the most affordable loans on the market. So it’s definitely worth applying if you have a military service history.
Check your VA loan eligibility. Start hereUSDA loan
This loan, backed by the U.S. Department of Agriculture, is another zero-down program. To qualify, you’ll need to have a low or average income for your area and purchase a home in a qualified “rural” area. However, “rural” isn’t as restrictive as it sounds; about 97% of the U.S. landmass is eligible.
Unlike VA loans, USDA loans have both an upfront and an annual mortgage insurance fee. Although, the USDA’s mortgage insurance cost is lower than for an FHA loan.
USDA loans also tend to have below-market interest rates which help keep mortgage payments affordable. So if you think you might qualify, it’s worth applying.
Check your USDA loan eligibility. Start hereJumbo loan
A jumbo loan is a mortgage that exceeds the conforming loan limit set by the Federal Housing Finance Agency (FHFA).
For 2025, the conforming limit is $ in most areas. It’s higher in more expensive areas like Los Angeles, New York City, and Washington DC, where the single-family loan limit is $. If your mortgage amount is above the local loan limit, it’s considered a jumbo loan.
Jumbo loans are available to first-time home buyers. However, they typically involve a higher down payment, starting at 10-20 percent. In addition, you’ll need a higher credit score to qualify. The minimum FICO score varies from lender to lender but can range from 680 to 700 or above.
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Specialty first-time homebuyer loans
Most first-time home buyers will use one of the five mainstream mortgage programs listed above. However, those with unique home-buying needs might prefer a specialized program.
Here are a few examples of specialized first-time home buyer loans.
Construction and rehab loans
If you’re building a home, a construction loan lets you finance the cost of the lot, materials, labor, and permits. One option is a construction-only loan which covers only the building process. You’ll then refinance into a permanent mortgage upon completion of the home.
Another option is a construction-to-permanent loan. This covers the construction cost and the completed home. Conventional, FHA, VA, USDA, and jumbo programs have construction loan options.
If you’re buying and renovating an existing fixer-upper home, you can also finance the purchase price and eligible renovations into a single rehab loan.
Rehabilitation loan options include:
Housing finance agency (HFA) loans
If you’re a first-time buyer with low-to-moderate income, HFA loans can make homeownership more accessible and affordable. With these loans, state housing agencies partner with Fannie Mae or Freddie Mac to provide affordable financing.
Those who apply and qualify for an HFA loan can receive a lower monthly payment and assistance with their down payment and closing costs. Repeat buyers can also take advantage of this program.
To qualify, your income can’t exceed your state’s HFA limit and you’ll likely need a 620 credit score or higher. In addition, you’ll be required to take a homebuyer education class.
State-run mortgage loan programs
Some states have conventional and government mortgage programs specifically for first-time home buyers. These are typically based on one of the five standard loan programs above, but include additional perks like below-market mortgage rates, down payment assistance, and/or mortgage credit certificates (MCCs).
To learn more and find first-time home buyer loans in your state, see: Complete guide to down payment assistance in all 50 states.
Mortgage loans for public servants
A few mortgage lenders offer home loans for buyers in specific professions. These are often for public servants like teachers, doctors, nurses, firefighters, and other first responders.
Such home loans can offer perks like lower interest rates or closing cost assistance. But make sure you compare all your options before buying; you might find that a standard mortgage program is more affordable in the end.
Good Neighbor Next Door
If you’re a teacher, a law enforcement officer, a firefighter, or an EMT, you might qualify for the U.S. Department of Housing and Urban Development’s Good Neighbor Next Door program.
Good Neighbor Next Door (GNND) can offer up to a 50% discount when buying a home in a targeted revitalization area. You must live in the home for at least three years to qualify.
Ask your mortgage lender for more information if you’re interested in GNND.
Native American home loans
Some loans are also tailored to Native American home buyers.
One such option is a Section 184 Native American home loan. To qualify, you must be a member of a federally recognized tribe. These loans are backed by HUD, so you’re required to use a HUD-approved lender. You can use the loan to purchase, construct, or rehabilitate a home on and off native lands.
If you’re a Native American veteran or service member, you might be eligible to receive a loan directly from the VA. You can use funds to buy or improve a property purchased on federal trust land. These loans have no down payment, no mortgage insurance, and low interest rates.
Energy-efficient mortgages
An energy-efficient home can create a comfortable living space, increase your resell value, and even lower your utility costs. You can use an energy-efficient mortgage (EEM) to buy an ENERGY STAR-certified home or to finance energy-efficient improvements.
EEM loan options include:
- Fannie Mae’s HomeStyle Energy Mortgage
- Freddie Mac’s GreenCHOICE Mortgage
- FHA’s Energy Efficient Mortgage
- VA’s Energy Efficient Mortgage
First-time homebuyer assistance programs
Saving up for a down payment and closing costs is typically the biggest obstacle to buying a home. But many first-time home buyers don’t realize there are assistance programs available to help with these upfront costs.
State and local down payment assistance
Some state and local agencies help eligible buyers with their down payment and/or closing costs. Down payment assistance can take four different forms:
- A grant that never has to be repaid
- A forgivable loan that you don’t have to repay after a certain number of years
- A deferred loan that you pay when you move, sell, or refinance
- A second mortgage that you pay monthly in tandem with your main mortgage
Ask your loan officer about local programs or conduct your own online research. You can search, “down payment assistance in [your state or city],” or visit your state’s Department of Housing and Urban Development website.
Mortgage credit certificates
A mortgage credit certificate is a dollar-for-dollar tax credit that reduces the amount a homeowner owes on their annual federal taxes. MCCs can reduce a borrower’s tax bill by up to $2,000 each year. These are often built into first-time home buyer loan programs offered by state HFAs.
Contact your local housing finance authority to learn more.
Lender assistance programs
Some lenders offer their own down payment assistance and specialized mortgage loans. These are typically private lenders (who aren’t affiliated with a bank) and portfolio lenders (who don’t sell their mortgages).
They might offer low- or no-down-payment loans without mortgage insurance. Or, they might offer a cash credit toward your closing costs.
If you find a lender offering down payment assistance, be sure to compare its mortgage rates and loan terms carefully to ensure you aren’t paying more over the life of your loan in exchange for upfront savings.
Verify your home buying eligibility. Start here
First-time home buyer loans FAQ
Most first-time home buyers use a standard conventional loan. These have lenient requirements, allowing just 3 percent down and FICO scores starting at 620. First-time home buyers with lower credit might prefer an FHA loan, which requires a FICO score of just 580. Your lender will show you all the loan types for which you’re eligible and help you choose the best one for your situation.
A first-time home buyer is usually defined as anyone who has not owned property in the last three years. So even repeat buyers, if they haven’t owned a house recently, could qualify as first-time home buyers.
Home buyers should aim to save at least 7-10 percent of their target home price. This would cover a minimum down payment of 3-5 percent as well as closing costs, which are usually 2-5 percent of the loan amount.
An FHA loan is usually worth it if your credit score is too low to qualify for a conventional loan. While the FHA’s mortgage insurance premiums are a downside, these loans do come with lower interest rates and easier qualification standards. Keep in mind that you can use an FHA loan to buy your home and then later, once your credit score and equity have risen, refinance to a conventional loan with no PMI.
First-time home buyers typically need a down payment of three to five percent. Those who qualify for a VA loan or USDA loan do not need a down payment. (Although, they still have to pay upfront closing costs.)
If you qualify for a conventional loan, the minimum down payment on a $300,000 house is 3 percent or $9,000. If you have lower credit and plan to use an FHA loan, the minimum down payment is 3.5 percent or $10,500. VA and USDA loan borrowers can put $0 down.
You’re probably eligible for first-time home buyer loans if you haven’t owned a house in the last three years. You also need to meet your lender’s requirements for down payment, credit score, income, and debt-to-income ratio (DTI). You can quickly get prequalified or preapproved online to learn whether you qualify for a home loan.
Get started on your first-time home buyer loan
If you’re ready to get serious about buying a house, talk to a mortgage advisor about your first-time home buyer loan options. There’s a wide range of programs available and it’s important to find the loan that best meets your needs. This will make it easier to qualify and should reduce your mortgage costs, too.
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