Breaking into homeownership is the traditional cornerstone of generational wealth in the United States. Fortunately, aspiring buyers do not need a 20% down payment to purchase their first property.
Top Mortgage Programs for First-Time Buyers
Review our mortgage guide for comprehensive lending background.
- Conventional 97 / HomeReady / Home Possible: Requires as little as 3% down with credit scores as low as 620. Private Mortgage Insurance (PMI) is removable once you attain 20% equity.
- FHA Loans: Backed by the Federal Housing Administration, requiring 3.5% down for credit scores of 580+. Note that FHA carries upfront and annual Mortgage Insurance Premiums (MIP) for the life of the loan.
- VA Loans: Guaranteed by the Department of Veterans Affairs. Offers 0% down payment, no monthly mortgage insurance, and competitive interest rates for eligible military service members.
- USDA Loans: Designed for rural and suburban homebuyers with low-to-moderate incomes, offering 0% down financing.
Down Payment Assistance (DPA) Grants
| Assistance Type | Repayment Terms | Typical Amount |
|---|---|---|
| Forgivable Second Mortgage | Forgiven after 5 years of occupancy | 3% – 5% of purchase price |
| Deferred-Payment Second Loan | Paid when home is sold or refinanced | Up to $15,000 |
| Outright Housing Grants | Never repaid | $2,500 – $10,000 |
Protecting Your New Home Asset
Lenders require that hazard coverage be in place before closing. Refer to our guide on homeowners insurance coverage and costs to budget accurately. Additionally, keep a dedicated reserve fund in a high-yield savings account for unforeseen repairs.