Only 28% of first-time homebuyers put down 20% or more in 2021, according to a National Association of Realtors Confidence Index Survey. While that number may seem low, it makes more sense when you consider that Americans are dealing with crippling inflation and high levels of personal debt.

Additionally, many buyers are taking advantage of programs that help first-time homebuyers get into a home, often with down payments lower than 20%. These programs are especially valuable when the market is competitive.

Credible makes it easy to research your mortgage options and compare rates from multiple lenders.

First-time homebuyer programs are usually government-sponsored programs that help people buy their first home. The federal government manages several programs, but state and local governments also oversee programs to assist first-time buyers. 

While program features vary by state, they typically offer low interest rates, down payment assistance, and more flexible qualification requirements. 

Specific qualifying criteria can vary by program, but eligibility requirements typically include the following:

Different programs help buyers with different aspects of the homebuying process. To find homebuyer assistance programs in your area, check out these helpful resources:

One of the most common ways to get help buying your first home is to apply for a government-backed mortgage through the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA), or the Department of Veterans Affairs (VA). 

These agencies don’t create loans; approved mortgage lenders offer these specialized loans, and the government insures them to reduce the lender’s risk. That’s how lenders can finance mortgages with low interest rates, reduced closing costs, and other benefits that help homebuyers purchase a home.

Here’s a quick look at what each program offers first-time homebuyers:

One option to help with your down payment is a down payment assistance loan, which is a second mortgage you take out with the first mortgage to buy your home. 

These second mortgages come with low interest rates and are designed to help you with your down payment and closing costs. Down payment loans typically come in one of two forms:

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You may qualify for a grant to help you cover your down payment. Requirements vary by provider, but this assistance is often given to low- or moderate-income buyers who don’t earn at least 80% of the median income for their area.

For example, you might consider applying for a down payment assistance grant through the National Homebuyers Fund. You may be eligible to receive down payment assistance of up to 5% of the mortgage loan amount for a down payment and closing costs.

The good news is you can apply for more than one grant, so it’s wise to apply for any grant you may be eligible for. Refer to your local or state government for information on first-time buyer down payment assistance programs.

Most first-time buyer programs offer a helping hand to cover your closing costs in addition to a lower down payment. 

For example, Fannie Mae’s HomePath Ready Buyer program provides closing costs assistance of up to 3%. You may receive assistance through a grant, forgivable loan, or a low-interest loan, but the program only covers Fannie Mae’s foreclosed properties.

Although many buyer assistance programs are available from national sources, other programs are offered on a state-by-state basis. You can find a wide array of programs with varying features depending on your state. View an extensive list of state homebuying resources from HUD.

The primary objective of these homebuyer programs is to give first-timers an advantage since they face so many challenges as new buyers, such as: 

To explore your mortgage options, visit Credible to compare rates and lenders.