ClearFirst-Time Homebuyer Programs Worth Knowing About in 2026
Key takeaways
- Many programs define "first-time buyer" as not having owned a home in the past three years, not literally never having owned one.
- Low-down-payment options include FHA (3.5% down), Conventional 97 (3% down), VA (often 0% down), and USDA (0% down in eligible areas).
- Down payment assistance grants and low-interest second loans from states, cities, and employers are often stackable with a primary loan.
- A Roth IRA allows a penalty-free withdrawal of up to $10,000 in earnings for a first home purchase, on top of contributions.
On this page
Most people who'd qualify as a "first-time" buyer under these programs don't realize it, because the term doesn't mean what it sounds like: many define it as not having owned a home in the past three years, not literally never having owned one. That mismatch between the name and the actual rule is a big part of why these programs go underused.
Comparing the four main loan types
| FHA | Conventional 97 | VA | USDA | |
|---|---|---|---|---|
| Minimum down payment | 3.5% | 3% | Often 0% | 0% |
| Mortgage insurance | Required for the life of the loan, in most cases | PMI, cancellable at 20% equity | None | — |
| Credit requirements | More flexible than many conventional loans | Standard conventional requirements | — | — |
| Who it's for | Buyers backed by a federal program with flexible credit needs | Buyers who want PMI to end early, via Fannie Mae/Freddie Mac lenders | Eligible veterans and service members | Eligible buyers in rural and some suburban areas, low-to-moderate income |
Down payment assistance programs
Many states, cities, and even some employers offer grants or low-interest second loans specifically to help cover a down payment or closing costs, often stackable with an FHA or conventional loan. These programs vary enormously by location — a state housing finance agency website is usually the fastest way to find what's actually available where you're buying.
Tax-advantaged ways to save for a down payment
A Roth IRA allows a penalty-free withdrawal of up to $10,000 in earnings for a first home purchase (on top of your original contributions, which can always be withdrawn tax- and penalty-free). This makes a Roth IRA a legitimate, if secondary, down payment savings vehicle for buyers who are also already saving for retirement.
How to actually find what applies to you
- Search your state's housing finance agency for down payment assistance and first-time buyer loan programs.
- Ask a few different lenders directly which programs they participate in — not all lenders offer every program.
- Check with your employer or union, since some offer homebuyer grants as an employee benefit.
- Compare the true cost (including mortgage insurance) of each loan option, not just the minimum down payment.
Was this article helpful?
Frequently asked questions
What counts as a "first-time" homebuyer?
Many programs define it as not having owned a home in the past three years, rather than literally never having owned one — which surprises people who assume they've aged out of eligibility.
What's the minimum down payment for an FHA loan?
As low as 3.5%, with more flexible credit requirements than many conventional loans, though mortgage insurance is required for the life of the loan in most cases.
Do VA loans require a down payment?
Often no down payment at all for eligible veterans and service members, and no private mortgage insurance.
Can I use retirement savings toward a down payment?
Yes — a Roth IRA allows a penalty-free withdrawal of up to $10,000 in earnings for a first home purchase, in addition to your original contributions, which can always be withdrawn tax- and penalty-free.
Where can I find down payment assistance programs?
Your state's housing finance agency website is usually the fastest way to find grants or low-interest second loans available where you're buying.