Main Content

First Time Home Buyer Programs

First-Time Home Buyer Programs of 2021

Buying your first house can be intimidating.  In my experience dealing with buyers the most intimidating part is understanding which loan is best for them.   Most buyers only get 1 or 2 loans in a lifetime so it’s difficult to understand exactly what you want or need.

Knowing where to find the right loan and assistance programs makes the process easier, especially if you have less-than-perfect credit or need help with a down payment.

Learn more about the first-time home buyer programs available from the Maryland Department of Housing and Community Development, or DHCD, as well as national loan programs that may benefit you.

National first-time home buyer programs

These loans, available in all 50 states, offer flexible underwriting requirements that come in handy when you’re a first time home buyer. If you’ve had credit issues or struggled to save up a big down payment, be sure to explore these national mortgage options.

Conventional mortgage

BEST FOR: Low down payment, Limited mortgage insurance premiums

WHAT YOU NEED TO KNOW

First-time home buyers can get a conventional home loan with as little as 3% down if the mortgage meets requirements set by Fannie Mae and Freddie Mac. And if you put at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to qualify for a conventional mortgage, but a score around 740 earns you the best interest rates.

FHA loans

BEST FOR: Low credit score, Low down payment

WHAT YOU NEED TO KNOW

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

VA loans

BEST FOR: Military, Low down payment

WHAT YOU NEED TO KNOW

Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to military members, veterans and surviving spouses. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you’ll likely have to pay a VA funding fee.

USDA loans

BEST FOR: Low down payment, Rural

WHAT YOU NEED TO KNOW

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.