First Time Home Buyer Programs in 2026: FHA, Conventional, and Down Payment Help

If you're buying your first home in 2026, the good news is there are more programs available than most people realize. The bad news is figuring out which one is right for you can feel overwhelming. Lets break it down simply.

FHA loans are the most popular option for first time buyers and for good reason. You only need 3.5% down with a 580 credit score. If your score is between 500 and 579 you can still qualify but you'll need 10% down. FHA loans are backed by the Federal Housing Administration which means lenders take on less risk and can be more flexible with approval. The main downside is mortgage insurance. FHA loans require both an upfront mortgage insurance premium (1.75% of the loan amount, usually rolled into the loan) and a monthly premium that stays for the life of the loan if you put less than 10% down.

Conventional loans from Fannie Mae and Freddie Mac can work for first time buyers too. Programs like HomeReady and Home Possible let you put down as little as 3%. You'll need a 620+ credit score and the private mortgage insurance (PMI) goes away once you hit 20% equity. If you've got decent credit, the monthly cost can actually be lower than FHA when you factor in the insurance.

VA loans are available if you're a veteran, active duty military, National Guard, Reserve, or an eligible surviving spouse. The terms are incredible: zero down payment, no mortgage insurance ever, and below market rates. If you qualify, this is almost always the best option.

USDA loans offer zero down payment for properties in eligible rural and suburban areas. There are income limits (your household income can't exceed 115% of the area median) but you'd be surprised how many areas qualify. Worth checking even if you don't think you're in a "rural" area.

Here's something that surprises almost every first time buyer we work with: there are down payment assistance programs in every single state and most people have no idea they exist.

Down payment assistance (DPA) comes in several forms. Some programs offer forgivable grants where you literally don't have to pay the money back as long as you stay in the home for a certain period (usually 5-10 years). Others provide a silent second mortgage with deferred payments, meaning you don't make payments on it and it only comes due when you sell or refinance. Some offer below market rate second mortgages that you pay back monthly but at a very low rate.

The amounts vary but $5,000 to $20,000 in assistance is common, and some programs offer up to 5% of the purchase price. On a $300,000 home, 5% is $15,000 which is enough to cover your entire down payment on an FHA loan.

Eligibility requirements also vary by program. Some have income limits, some have purchase price limits, some require you to complete a homebuyer education course. But many of them have more relaxed requirements than you'd expect. We've seen programs with no income limits and no geographic restrictions.

The key thing to know is that your loan officer should be able to tell you which DPA programs are available in your area and which ones you qualify for. If they can't, find a different loan officer. At Roxford Holdings we make it a point to match every first time buyer with whatever assistance programs fit their situation.

Your credit score is important but its not the only thing that matters and its definitely not something that should stop you from buying a home if your score isn't perfect.

For FHA loans, the minimum is 580 for the 3.5% down option. Between 500 and 579, you need 10% down. For conventional loans, the minimum is usually 620 but you'll get better rates at 680 and even better at 740+. VA and USDA technically don't have minimum credit score requirements set by the government but most lenders have their own minimums, usually around 580-640.

What if your score is below 580? You've still got options. The Homeownership Empowerment program that we offer works with credit scores from 580 and offers 3.5% down. For ITIN holders and DACA recipients, we have specific programs designed for those situations.

Here are some quick ways to improve your credit score before applying. Pay down credit card balances to below 30% of the limit, ideally below 10%. Don't open any new credit accounts. Don't close old credit cards even if you don't use them. Make every payment on time for at least 3-6 months. Dispute any errors on your credit report (you'd be surprised how common these are).

One important thing: don't let anyone pull your credit until you're actually ready to shop for a mortgage. Every hard inquiry drops your score a little bit. When you are ready, all mortgage inquiries within a 14-45 day window count as one inquiry so its fine to shop multiple lenders at once.

Getting pre approved is the first real step toward buying a home and it gives you a huge advantage when you're making offers. Sellers take pre approved buyers way more seriously than buyers who haven't talked to a lender yet.

The pre approval process starts with a conversation. You'll talk to a loan officer about your financial situation: your income, debts, savings, and the type of home you want to buy. They'll pull your credit (this is the one time a hard inquiry is expected and worth it).

Then you'll submit some documents. For most programs this includes recent pay stubs (last 30 days), W-2s from the last two years, two months of bank statements, and tax returns if you're self employed or have complex income. If you're using a down payment assistance program, there might be additional documentation required.

Within 1-3 business days you should have a pre approval letter. This letter tells sellers and agents that a lender has reviewed your financials and is willing to lend you up to a certain amount. Its not a final approval (that comes during underwriting after you're under contract) but it's a strong signal that you can close.

The pre approval is usually good for 60-90 days. If you don't find a home in that window, it can be updated with refreshed documents. Don't worry about it expiring, that's totally normal.

Here's a tip that a lot of first time buyers miss: get pre approved before you start seriously looking at homes. It tells you exactly how much you can afford so you don't waste time looking at houses outside your budget. It also shows sellers and listing agents that you're a serious buyer, which matters a lot in competitive markets.

Closing costs are the fees you pay when you actually close on the house. They're separate from your down payment and they catch a lot of first time buyers off guard because nobody talks about them until the end.

Typical closing costs on a home purchase run 2-5% of the purchase price. On a $300,000 home, thats $6,000 to $15,000. These costs include things like the appraisal fee ($400-800), title insurance ($1,000-3,000), lender fees (origination, processing, underwriting), prepaid property taxes and insurance, recording fees, and various smaller charges.

There are several ways to handle closing costs without draining your savings. First, you can negotiate seller concessions where the seller pays some or all of your closing costs. This is especially common in buyer's markets or when the property has been sitting for a while. The max seller contribution depends on your loan type and down payment amount.

Second, some loan programs allow lender credits where the lender covers some of your closing costs in exchange for a slightly higher rate. This makes sense if you'd rather keep cash on hand than get the absolute lowest rate.

Third, some of the down payment assistance programs we mentioned earlier can also be used toward closing costs, not just the down payment. Check with your loan officer about the specific programs available to you.

One last thing that catches people off guard: you'll need to bring certified funds to closing (cashier's check or wire transfer). Personal checks don't work for the closing amount. Plan ahead and have your funds ready a couple days before the closing date so you're not scrambling at the last minute.