The Best First-Time Buyer Programs: Your Key to Affordable Homeownership

Buying a home is one of the biggest financial decisions most people will ever make. For a first-time buyer, the process can feel overwhelming—especially when it comes to how to get home financing with limited savings, lower credit scores, or little understanding of available assistance. That’s why understanding the best first-time buyer programs is critical to getting started on the right foot.

In this guide, we’ll break down everything you need to know about first-time buyer programs, highlight some of the best first-time buyer programs available in 2025, and explain how to get home financing even if your credit isn't perfect.

Why First-Time Buyer Programs Matter

According to the National Association of Realtors, 26% of homebuyers in 2023 were first-time buyers. Many of them faced challenges such as:

• High down payment requirements

• Rising interest rates

• Strict credit score guidelines

• Limited inventory of affordable homes

Programs designed specifically for first-time buyers aim to ease these burdens. Whether it’s through down payment assistance, reduced interest rates, or flexible lending requirements, these programs can open the door to homeownership.

What Qualifies as a First-Time Buyer?

The U.S. Department of Housing and Urban Development (HUD) defines a first-time buyer as:

• Someone who hasn't owned a home in the past three years

• A single parent who only owned a home with a former spouse

• A displaced homemaker who only owned a home with a spouse

• Someone who has only owned a principal residence not permanently affixed to a foundation

So even if you've owned a home in the past, you might still qualify for first-time buyer programs.

The Best First-Time Buyer Programs in 2025

Let’s dive into some of the best first-time buyer programs available right now:

1. FHA Loans (Federal Housing Administration)

• Down payment: As low as 3.5%

• Credit score: 580 minimum (with 3.5% down)

• Benefits: More lenient on credit history and debt-to-income ratios

• Perfect For: Buyers with low to moderate credit scores

• Learn More: www.hud.gov

2. Conventional 97 Loan (Backed by Fannie Mae)

• Down payment: 3%

• Credit score: 620+

• Benefits: Low private mortgage insurance (PMI), available to first-time buyers only

• Perfect For: Buyers with good credit but limited savings

• Learn More: www.fanniemae.com

3. HomeReady and Home Possible Loans

• Down payment: 3%

• Credit score: 620+ (HomeReady) / 660+ (Home Possible)

• Benefits: Income-based eligibility, reduced PMI, flexible underwriting

• Perfect For: Buyers with stable income and good credit

4. VA Loans (For Veterans and Active Military)

• Down payment: 0%

• Credit score: Typically 620+

• Benefits: No PMI, competitive interest rates, flexible guidelines

• Perfect For: Veterans, service members, and qualifying spouses

• Learn More: www.va.gov

5. USDA Loans (For Rural and Suburban Areas)

• Down payment: 0%

• Credit score: 640+

• Benefits: Low interest rates, no PMI, rural location eligibility

• Perfect For: Buyers in qualifying rural or semi-rural areas

• Learn More: www.usda.gov

6. State and Local Assistance Programs

Most states and cities offer their own first-time buyer programs, including:

• Grants or forgivable loans for down payments

• Tax credits for homebuyers

• Homebuyer education courses

For example, the Texas State Affordable Housing Corporation (TSAHC) offers down payment assistance and mortgage credit certificates. Check your local housing authority or website for options near you.

How to Get Home Financing With Bad Credit

If your credit isn’t where you want it to be, don’t give up. Here are strategies to help you qualify:

1. Start with an FHA Loan: Accepts credit scores as low as 580 with 3.5% down. Some lenders may go even lower with higher down payments.

2. Use a Co-Signer: A trusted family member with strong credit can help you qualify.

3. Work with a Housing Counselor: HUD-approved counselors can help you build a plan to improve credit and finances.

4. Pay Down Debt: Lower your credit utilization and settle any collections if possible.

According to Experian, improving your credit score by just 30 points could save you thousands over the life of a mortgage.

Tips for First-Time Buyers

• Get Pre-Approved Early: Know what you can afford and show sellers you're serious.

• Understand Your Budget: Include property taxes, insurance, and HOA fees.

• Don’t Skip the Inspection: Always get a professional home inspection.

• Take a Homebuyer Course: Many first-time buyer programs require this—and it’s packed with useful knowledge.

Final Thoughts on The Best First-Time Buyer Programs

The best first-time buyer programs are designed to make homeownership accessible, especially for those who thought it was out of reach. Whether you’re wondering how to get home financing, seeking first-time buyer programs, or trying to understand the process of buying a home, there are options out there for you.

As a local DFW Realtor, I specialize in helping first-time buyers and those with credit challenges. If you’re ready to take the first step or just want to explore your options, contact me today at mariocottman.com

Let’s make your dream of buying a home a reality!

Sources:

• National Association of Realtors (www.nar.realtor)

• HUD.gov (www.hud.gov)

• Fannie Mae (www.fanniemae.com)

• VA.gov (www.va.gov)

• USDA.gov (www.usda.gov)

• Experian (www.experian.com)

• TSAHC (www.tsahc.org)