Category: Mortgages

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Why Pre-Approval Matters

Getting pre-approved for a mortgage is one of the first steps in buying a home. A pre-approval letter tells sellers you are a serious buyer. It shows that a lender has reviewed your finances and is willing to lend you up to a certain amount.

In a competitive market, sellers often will not consider offers without a pre-approval letter. Getting pre-approved before you start shopping also tells you exactly how much home you can afford, so you do not waste time looking at homes outside your budget.

Pre-Qualification vs. Pre-Approval: Know the Difference

These two terms are often confused. They are not the same thing.

Feature	Pre-Qualification	Pre-Approval
Credit check	Soft pull or none	Hard pull
Documents verified	No	Yes
How strong it is	Weak estimate	Strong commitment
Time to complete	Minutes	1 to 3 days
Seller confidence	Low	High

Always aim for a full pre-approval, not just pre-qualification. Sellers and real estate agents know the difference.

What You Need to Get Pre-Approved

Lenders will ask you to provide documents that prove your income, assets, and identity. Gather these before you start the process to speed things up.

Income Documents

• W-2 forms from the last 2 years
• Federal tax returns from the last 2 years
• Recent pay stubs (last 30 days)
• If self-employed: 2 years of tax returns plus a profit and loss statement

Asset Documents

• Bank statements from the last 2 to 3 months (all accounts)
• Investment account statements
• Retirement account statements
• Gift letter if you are receiving down payment help from family

Debt Information

• Statements for any existing loans (auto, student, personal)
• Credit card statements
• Any other monthly obligations

Identity Documents

• Government-issued photo ID (driver’s license or passport)
• Social Security number

What Lenders Look At

Lenders evaluate four key areas when reviewing your pre-approval application.

1. Credit Score

Your credit score is one of the first things a lender checks. Here are the minimums for common loan types:

Loan Type	Minimum Credit Score
Conventional	620
FHA	580 (3.5% down) or 500 (10% down)
VA	580 to 620 (lender-set)
USDA	640 (lender-set)

A higher score gets you better rates. Moving from 620 to 740 can reduce your mortgage rate by 0.5% or more, saving tens of thousands over the life of the loan. See our full guide on how to improve your credit score if you want to boost it before applying.

2. Income and Employment

Lenders want to see steady income. Most require 2 years of employment history in the same field. If you recently changed jobs, that is usually fine as long as you stayed in the same industry.

Self-employed borrowers face more scrutiny. Lenders average your last 2 years of net income from tax returns. Recent income increases may not count if your tax returns do not reflect them yet.

3. Debt-to-Income Ratio

Your DTI is your total monthly debt payments divided by your gross monthly income. Most conventional lenders want a back-end DTI under 43%. FHA and VA can go higher with strong compensating factors.

A lower DTI means more loan options and better rates.

4. Down Payment and Assets

Lenders want to see that you have enough for the down payment plus closing costs. They also want to see reserves, meaning money left over in your accounts after closing. Two to three months of mortgage payments in savings is a common requirement.

Soft Pull vs. Hard Pull: What Happens to Your Credit

Pre-approval requires a hard inquiry on your credit. This can drop your score by 2 to 5 points temporarily.

If you shop multiple lenders for the best rate, do it within a 14 to 45 day window. Credit scoring models treat multiple mortgage inquiries within that window as a single inquiry. This protects you when rate shopping.

How to Get the Best Pre-Approval

Step 1: Check and improve your credit before applying. Pull your free report from AnnualCreditReport.com. Dispute any errors. Pay down credit card balances if possible. Give yourself 30 to 60 days to boost your score if you have time.

Step 2: Calculate your budget. Use a mortgage calculator to estimate your monthly payment. Factor in property taxes, homeowners insurance, and HOA fees in addition to principal and interest.

Step 3: Gather your documents. Prepare everything on the document list above before you contact any lender. Having documents ready speeds up the process significantly.

Step 4: Shop at least 3 lenders. Rates and fees vary more than most buyers realize. Getting quotes from 3 or more lenders can save $1,000 or more over the life of the loan.

Step 5: Submit your application. The lender will pull your credit, verify your documents, and issue a decision. This usually takes 1 to 3 business days.

Step 6: Receive your pre-approval letter. The letter specifies the loan amount, loan type, and expiration date. Share it with your real estate agent and include it with any offers.

How Long Does Pre-Approval Last?

Most pre-approval letters are valid for 60 to 90 days. If your letter expires before you find a home, contact your lender to renew it. They may need updated pay stubs and bank statements.

What Can Kill a Pre-Approval

Getting pre-approved is not a guarantee your loan will close. Several things can cause problems between pre-approval and closing.

• Taking on new debt: Do not buy a car, furniture, or take out any loans while under contract.
• Job loss: Losing your job after pre-approval can make the loan fall through.
• Large unexplained deposits: Lenders will ask about big deposits in your bank account. Document the source.
• Credit score drop: Maxing out a credit card or missing a payment after pre-approval can cause problems.
• Property issues: If the appraisal comes in low or the home has major defects, the loan may not close as expected.

Related Reading

Once you have your pre-approval, explore your loan type options. See our guides on best first-time homebuyer loan programs and FHA loan requirements to find the right fit for your situation.

Frequently Asked Questions

How long does mortgage pre-approval take?

Most lenders issue a pre-approval letter within 1 to 3 business days after you submit all required documents. Some online lenders can do it same-day.

Does mortgage pre-approval hurt your credit?

Yes, a pre-approval causes a hard credit inquiry, which can lower your score by a few points. However, multiple mortgage inquiries within a 14 to 45 day window are treated as a single inquiry by most scoring models.

What credit score do I need to get pre-approved for a mortgage?

Most conventional loans require a minimum of 620. FHA loans allow scores as low as 580 with 3.5% down. VA and USDA loans have no official minimum but lenders usually require 580 to 640.

How long is a pre-approval letter good for?

Most pre-approval letters are valid for 60 to 90 days. After that, you may need to update your documents and get a new letter if you have not found a home yet.

What is the difference between pre-qualification and pre-approval?

Pre-qualification is a quick estimate based on unverified information you provide. Pre-approval involves a full credit check and document review. Pre-approval is much stronger and sellers take it more seriously.

Rates as of May 2026.

Disclosure: Some links in this article are affiliate links. We may earn a commission if you apply for a product through our links, at no extra cost to you. Our team researches and reviews each product independently. This does not affect our editorial opinions.

Coming up with a down payment is one of the hardest parts of buying your first home. The good news is that there are hundreds of grant and assistance programs designed to help. This guide covers the best options available in 2026.

What Are Down Payment Assistance Programs?

Down payment assistance (DPA) programs help buyers cover the down payment and sometimes closing costs. They come from federal, state, county, and city sources. Some are grants that never need to be repaid. Others are loans with low or no interest.

Types of Down Payment Assistance

1. Grants

Grants are free money. You do not pay them back. They are usually the most competitive programs because everyone wants them. Income limits often apply.

2. Forgivable Loans

These are loans that are forgiven after a set period, usually 5 to 10 years. You must stay in the home during that time. If you sell or refinance early, you may have to repay part or all of it.

3. Deferred-Payment Loans

No monthly payments required. The loan is repaid when you sell, refinance, or pay off the first mortgage. There is usually no interest or low interest.

4. Matched Savings Programs

You save a set amount and the program matches your savings. For every dollar you save, the program may add $1, $2, or more up to a cap.

Federal Programs

HUD-Approved Homebuyer Programs

The U.S. Department of Housing and Urban Development (HUD) approves housing counseling agencies across the country. These agencies can connect you with local assistance programs. Many offer free or low-cost homebuyer education courses that are required by most DPA programs.

Fannie Mae HomeReady

Fannie Mae’s HomeReady program allows a 3% down payment. It also allows income from a boarder or rental unit to count toward qualifying income. This is not a direct grant, but it can be combined with DPA programs.

Freddie Mac Home Possible

Similar to HomeReady, Home Possible offers a 3% down payment option. It also has income limits tied to the area median income.

State Programs

Every state has a housing finance agency that manages down payment assistance programs. Here are some examples:

State	Program	Max Assistance	Type
California	CalHFA MyHome	3.5% of purchase price	Deferred loan
Texas	My First Texas Home	5% of loan amount	Deferred loan
Florida	Florida Housing	$10,000	Deferred loan
New York	SONYMA Conventional Plus	3% of purchase price	Grant
Illinois	IHDA Access	$10,000	Forgivable loan
Georgia	Georgia Dream	$7,500	Deferred loan
Washington	Washington State Housing Finance	Up to 4% of loan	Deferred loan
Arizona	HOME Plus	Up to 5% of loan	Grant

Income Limits for Down Payment Assistance

Most programs have income limits. They are usually set as a percentage of the Area Median Income (AMI). Common limits are 80% to 120% of AMI, depending on the program and household size.

For example, if the median income in your area is $70,000 per year, a program capped at 80% AMI would limit eligibility to those earning under $56,000.

How to Find Programs in Your Area

Here are the best ways to find programs near you:

1. HUD.gov: Search their database of HUD-approved housing counselors and programs by state.
2. Your state housing finance agency: Every state has one. Google your state name plus “housing finance agency.”
3. Down Payment Resource: A national database of assistance programs searchable by location.
4. Your lender: Ask your mortgage lender about local programs they participate in.
5. City or county housing office: Some cities have programs independent of the state.

Requirements to Qualify

Requirements vary by program, but most share these common criteria:

• Must be a first-time homebuyer (usually defined as not owning a home in the past 3 years)
• Meet income limits
• Buy a primary residence (not an investment property)
• Complete a HUD-approved homebuyer education course
• Work with an approved lender
• Meet minimum credit score requirements (typically 620+)

Employer-Sponsored Programs

Some employers offer homebuying assistance as a benefit. This is more common with large companies, hospitals, universities, and government employers. Ask your HR department if your employer has a program.

Non-Profit Programs

Organizations like Habitat for Humanity, Neighborhood Assistance Corporation of America (NACA), and local community development corporations also offer down payment help and below-market mortgages.

NACA is especially notable — they offer mortgages with no down payment, no closing costs, and no PMI, though you must complete their counseling process.

How to Apply for Down Payment Assistance

1. Check your credit score and improve it if needed
2. Research programs available in your state and county
3. Complete a homebuyer education course
4. Find an approved lender who participates in the program
5. Get pre-approved for your mortgage
6. Apply for the DPA program simultaneously
7. Shop for a home within the program’s price limits

Need to improve your credit before applying? Read our guide on how to improve your credit score in 2026.

If you are looking for personal loan options to cover moving or other pre-purchase costs, see our picks for the best personal loans of 2026.

Frequently Asked Questions

Do I have to repay down payment assistance?

It depends on the program. Grants do not need to be repaid. Forgivable loans are forgiven after a set period. Deferred loans are repaid when you sell or refinance. Always read the terms carefully.

Can I use down payment assistance with an FHA loan?

Yes. Most DPA programs are designed to work with FHA loans. They can cover the 3.5% FHA down payment and sometimes closing costs.

What is a HUD-approved lender?

A HUD-approved lender is one that has been vetted and approved by the Department of Housing and Urban Development to originate FHA loans and work with HUD assistance programs.

Can I use down payment assistance to buy any home?

Most programs only apply to primary residences. There are also purchase price limits. Vacation homes and investment properties are almost never eligible.

How long does it take to get down payment assistance approved?

The timeline varies by program. Most take 2 to 4 weeks after you apply. Some can be faster if the program has available funds. Apply early in the homebuying process.

Rates as of May 2026. Rates and terms change often. Check with each lender for the most current information.

Disclosure: Some links in this article are affiliate links. We may earn a commission if you apply for a product through our links, at no extra cost to you. Our team researches and reviews each product independently. This does not affect our editorial opinions.

One of the biggest questions first-time buyers ask is: how much money do I need to put down? The answer depends on the type of loan you choose. This guide explains your options and how to save for a down payment.

How Much Down Payment Do You Need?

The down payment amount depends on your loan type and credit score. Here is a quick overview:

Loan Type	Minimum Down Payment	Credit Score Required
Conventional	3%	620+
FHA	3.5%	580+
FHA (lower score)	10%	500-579
VA	0%	Varies by lender
USDA	0%	640 typical

Down Payment by Home Price

Here is what each down payment percentage looks like in real dollars:

Home Price	3% Down	3.5% Down	10% Down	20% Down
$200,000	$6,000	$7,000	$20,000	$40,000
$300,000	$9,000	$10,500	$30,000	$60,000
$400,000	$12,000	$14,000	$40,000	$80,000
$500,000	$15,000	$17,500	$50,000	$100,000

Is a 20% Down Payment Required?

No. A 20% down payment is not required. It is a common myth. The benefit of putting down 20% is that you avoid private mortgage insurance (PMI). But many buyers can purchase a home with as little as 3% down.

The trade-off is that a smaller down payment usually means:

• Higher monthly payments
• More interest paid over the life of the loan
• PMI or mortgage insurance costs

Down Payment Assistance Programs by State

Many states offer programs to help with down payments. These programs can provide grants (free money) or low-interest loans. Common types include:

• Deferred-payment loans: No payments until you sell or refinance
• Forgivable loans: Forgiven after a set period if you stay in the home
• Grants: Do not need to be repaid
• Matched savings programs: State matches your savings up to a limit

To find programs in your state, visit your state’s housing finance agency website or HUD.gov.

Examples of State Programs

• California: CalHFA offers up to 3% down payment assistance
• Texas: My First Texas Home provides 5% assistance
• Florida: Florida Housing offers up to $10,000
• New York: SONYMA programs help with down payment and closing costs
• Illinois: IHDAaccess offers up to $10,000 in grants

How to Save for a Down Payment

Here is a practical plan to save your down payment:

1. Set a target date: Decide when you want to buy and work backward.
2. Open a dedicated savings account: Keep your down payment separate from everyday money.
3. Automate transfers: Set up an automatic transfer to your down payment account each payday.
4. Cut one large expense: Reducing dining out, streaming services, or a gym membership adds up fast.
5. Save bonuses and tax refunds: Put windfalls directly into your down payment fund.
6. Look for extra income: Freelancing, selling items, or a side job can speed things up.

A high-yield savings account can help your down payment grow faster. Read our guide to the best savings account interest rates in 2026 to find a good option.

What About Closing Costs?

Do not forget about closing costs. These are fees you pay when the deal closes. They usually run 2% to 5% of the loan amount. On a $300,000 loan, that is $6,000 to $15,000.

Common closing costs include:

• Loan origination fee
• Appraisal fee
• Title insurance
• Attorney fees
• Prepaid taxes and insurance

Some sellers will pay closing costs as part of the deal. You can also ask your lender about rolling them into the loan.

Should You Put Down More Than the Minimum?

A larger down payment has real benefits:

• Lower monthly payment
• Less interest paid over time
• No PMI with 20% down on a conventional loan
• More equity from day one
• Better chance of approval if your credit is borderline

But there is a trade-off. Putting more money down means less cash for:

• Emergency fund
• Home repairs and improvements
• Moving costs
• Other financial goals

Most experts suggest keeping 3 to 6 months of expenses in savings even after you close on a home.

Can You Use a Personal Loan for a Down Payment?

Most mortgage lenders do not allow personal loans for down payments. The lender needs to verify the source of your funds. If you borrowed the money, it increases your DTI ratio and can disqualify you.

However, a personal loan could help with closing costs in some cases. Always check with your lender before using borrowed funds. See our list of the best personal loans of 2026 if you need to cover other pre-purchase expenses.

Savings Calculator: How Long to Save for a Down Payment?

Here is a simple way to estimate your timeline:

1. Decide on your target home price
2. Multiply by your down payment percentage
3. Add estimated closing costs (2%-5% of loan amount)
4. Subtract any gift funds or assistance
5. Divide the total by your monthly savings rate

Example: $300,000 home, 3.5% down ($10,500) + $9,000 closing costs = $19,500 needed. Saving $800/month = about 24 months to close.

Frequently Asked Questions

What is the minimum down payment to buy a house in 2026?

The minimum is 0% for VA and USDA loans, 3% for conventional, and 3.5% for FHA loans with a 580+ credit score.

Can I buy a house with no down payment?

Yes, if you qualify for a VA or USDA loan. VA loans are for veterans and active-duty service members. USDA loans are for buyers in eligible rural and suburban areas.

Are down payment assistance programs free money?

Some are grants that do not need to be repaid. Others are low-interest loans or forgivable loans. Terms vary by program and state.

Does a bigger down payment lower my mortgage rate?

Often, yes. Lenders see a larger down payment as lower risk, which can result in a slightly better interest rate. The difference may be small, but it adds up over 30 years.

Can a family member give me money for a down payment?

Yes. Gift funds are allowed on most loan types. The giver must provide a signed gift letter stating the money is not a loan and does not need to be repaid.

Rates as of May 2026. Rates and terms change often. Check with each lender for the most current information.

Disclosure: Some links in this article are affiliate links. We may earn a commission if you apply for a product through our links, at no extra cost to you. Our team researches and reviews each product independently. This does not affect our editorial opinions.

An FHA loan is one of the most popular home loan options for buyers with lower credit scores. But you need to meet certain requirements to qualify. This guide breaks down every FHA loan requirement for 2026 in plain language.

What Is an FHA Loan?

An FHA loan is a mortgage backed by the Federal Housing Administration. Because the government insures it, lenders can offer lower credit score requirements and smaller down payments than conventional loans.

FHA loans are a good fit for first-time buyers, buyers with past credit problems, and anyone who does not have a large down payment saved up.

FHA Loan Credit Score Requirements

The FHA sets two credit score tiers:

• 580 or higher: You qualify for the minimum 3.5% down payment.
• 500 to 579: You may qualify with a 10% down payment.
• Below 500: You do not qualify for an FHA loan.

Most FHA lenders prefer a score of 580 or higher. Some lenders add their own minimum, often 620. Always compare multiple lenders if your score is on the lower end.

Not sure where your credit stands? Read our guide on how to improve your credit score in 2026 before you apply.

FHA Loan Down Payment Requirements

The down payment amount depends on your credit score:

Credit Score	Minimum Down Payment
580+	3.5%
500 to 579	10%

On a $300,000 home, a 3.5% down payment is $10,500. A 10% down payment is $30,000. The down payment can come from your savings, a gift from a family member, or a down payment assistance program.

Debt-to-Income (DTI) Ratio Requirements

Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. The FHA has two DTI limits:

• Front-end DTI: Your housing costs (mortgage, taxes, insurance) should not exceed 31% of your gross monthly income.
• Back-end DTI: All your monthly debts (housing plus student loans, car payments, credit cards) should not exceed 43% of your gross monthly income.

Some lenders will approve you with a back-end DTI up to 50% if you have strong compensating factors like a large down payment or significant savings.

Employment and Income Requirements

FHA lenders want to see that you have stable income. Here is what they typically look for:

• Two years of steady employment history
• Current employment or a job offer letter if you recently started
• If self-employed, two years of tax returns showing consistent income
• No specific income minimum — your DTI ratio matters more than the dollar amount

FHA Mortgage Insurance Requirements

All FHA loans require mortgage insurance. This protects the lender if you default. You pay two types:

• Upfront MIP: 1.75% of the loan amount, paid at closing (or rolled into the loan).
• Annual MIP: Paid monthly. Ranges from 0.45% to 1.05% depending on your loan term and down payment.

For most FHA loans with less than 10% down, the annual MIP stays for the life of the loan. If you put down 10% or more, MIP drops off after 11 years.

Property Requirements

The home you buy must meet FHA minimum property standards. The FHA wants the home to be safe, sound, and secure. An FHA-approved appraiser will check for:

• No major structural defects
• Working heating, plumbing, and electrical systems
• Roof in good condition
• No lead paint hazards (especially for homes built before 1978)
• Safe access to the property

FHA Loan Limits in 2026

FHA loan limits vary by county. For 2026, the standard single-family FHA loan limits are:

• Low-cost areas: up to $498,257
• High-cost areas: up to $1,209,750

Check the HUD website to find the exact limit in your county.

How to Qualify for an FHA Loan: Step by Step

1. Check your credit score — aim for 580+
2. Calculate your DTI ratio
3. Save your down payment (3.5% or 10%)
4. Gather documents: W-2s, tax returns, bank statements, pay stubs
5. Find an FHA-approved lender
6. Get pre-approved
7. Shop for a qualifying home
8. Complete the FHA appraisal and inspection
9. Close on your loan

FHA vs. Conventional Loan: Which Is Better?

Feature	FHA Loan	Conventional Loan
Min. Credit Score	500	620
Min. Down Payment	3.5%	3%
Mortgage Insurance	Life of loan (if <10% down)	Removed at 20% equity
Loan Limits	County-based limits	Higher limits available

FHA loans are better when your credit score is below 620. Conventional loans can save money over time if you have good credit because PMI drops off.

Tips to Improve Your Chances of Approval

• Pay down credit card balances before applying
• Avoid opening new accounts in the months before your application
• Resolve any collections or past-due accounts
• Save more than the minimum down payment
• Lower your DTI by paying off small debts first

Need more help with debt? See our guide to the best personal loans of 2026 for ways to consolidate high-interest debt before you apply for a mortgage.

Frequently Asked Questions

What is the minimum credit score for an FHA loan in 2026?

The FHA minimum is 500. With a score of 500 to 579, you need a 10% down payment. With a 580 or higher, you can put down 3.5%. Most lenders set their own minimum at 580 or 620.

Can I get an FHA loan after bankruptcy?

Yes. After a Chapter 7 bankruptcy, you must wait two years from the discharge date. After a Chapter 13, you can apply after one year of on-time payments with court approval.

How long does FHA mortgage insurance last?

If you put down less than 10%, mortgage insurance stays for the life of the loan. If you put down 10% or more, it drops off after 11 years.

Can I use gift money for my FHA down payment?

Yes. The entire down payment can come from a gift from a family member, employer, union, or nonprofit. The gift giver must sign a letter confirming the money does not need to be repaid.

What is the FHA loan limit in my area?

FHA loan limits are set by county and change each year. In 2026, limits range from $498,257 in low-cost areas to $1,209,750 in high-cost areas. Check the HUD website for your county’s specific limit.

Rates as of May 2026. Rates and terms change often. Check with each lender for the most current information.

Disclosure: Some links in this article are affiliate links. We may earn a commission if you apply for a product through our links, at no extra cost to you. Our team researches and reviews each product independently. This does not affect our editorial opinions.

Buying your first home is a big deal. The good news is there are many loan programs made just for first-time buyers. These programs can lower your down payment and make it easier to qualify.

This guide covers the best first-time homebuyer loan programs in 2026. We will compare FHA, USDA, VA, and conventional loans so you can pick the right one.

What Is a First-Time Homebuyer Loan?

A first-time homebuyer loan is a mortgage with special benefits. These benefits often include lower down payments, lower interest rates, or easier credit requirements. Many programs also allow buyers who have not owned a home in the past three years.

Best First-Time Homebuyer Loan Programs in 2026

1. FHA Loans

FHA loans are backed by the Federal Housing Administration. They are one of the most popular options for first-time buyers.

Key features:

• Down payment as low as 3.5% with a 580 credit score
• Down payment of 10% with a credit score of 500 to 579
• Mortgage insurance required for the life of the loan
• Available through most banks and lenders

FHA loans are a great choice if your credit score is not perfect. The lower down payment also makes it easier to save up before you buy.

2. VA Loans

VA loans are for veterans, active-duty service members, and surviving spouses. They are backed by the Department of Veterans Affairs.

Key features:

• No down payment required
• No private mortgage insurance (PMI)
• Competitive interest rates
• No minimum credit score set by VA (lenders set their own)

If you qualify, the VA loan is one of the best mortgage options available. The no-down-payment feature alone can save you tens of thousands of dollars.

3. USDA Loans

USDA loans are backed by the U.S. Department of Agriculture. They are for buyers in rural and suburban areas.

Key features:

• No down payment required
• Lower mortgage insurance than FHA loans
• Income limits apply (usually up to 115% of area median income)
• Property must be in an eligible rural area

USDA loans are a hidden gem for buyers outside major cities. You can check if a property qualifies on the USDA website.

4. Conventional Loans with 3% Down

Some conventional loans let you put down just 3%. These include Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs.

Key features:

• Down payment as low as 3%
• Credit score of 620 or higher usually required
• PMI required but can be removed once you reach 20% equity
• No income limits for some programs

If you have a good credit score, a conventional loan can save you money over time compared to FHA loans. PMI drops off once you build equity.

Comparison Table: First-Time Homebuyer Loan Programs

Loan Type	Min Down Payment	Min Credit Score	PMI/MIP	Best For
FHA	3.5%	580	Yes (life of loan)	Lower credit scores
VA	0%	Varies	No	Veterans/military
USDA	0%	640 (typical)	Yes (lower than FHA)	Rural/suburban buyers
Conventional 3%	3%	620	Yes (removable)	Good credit buyers

What About Down Payment Help?

Many first-time buyers struggle with the down payment. If you need extra funds, a personal loan may help cover closing costs or other expenses. Check out our guide to the best personal loans of 2026 for options.

You can also look into down payment assistance programs. We cover those in detail in another article below.

How to Choose the Right Program

Here is a simple way to pick your loan:

• Military service? Go with VA loan first.
• Buying in a rural area? Check USDA eligibility.
• Credit score below 620? FHA is your best bet.
• Good credit and stable income? Consider conventional 3% down.

Steps to Apply for a First-Time Homebuyer Loan

1. Check your credit score and report
2. Save for your down payment and closing costs
3. Get pre-approved by at least two lenders
4. Compare rates and loan terms
5. Submit your full application with the chosen lender
6. Complete the home inspection and appraisal
7. Close on your new home

Common Mistakes to Avoid

• Opening new credit accounts before closing
• Changing jobs right before applying
• Making large cash deposits without documentation
• Skipping the pre-approval step
• Not comparing multiple lenders

For tips on building your credit before applying, see our guide on how to improve your credit score in 2026.

Frequently Asked Questions

What credit score do I need to buy a home for the first time?

It depends on the loan type. FHA loans accept scores as low as 500. VA and USDA loans vary by lender. Conventional loans usually need 620 or higher.

Can I get a first-time homebuyer loan with no money down?

Yes. VA and USDA loans both offer zero down payment. You still need to cover closing costs unless the seller agrees to pay them.

How long does it take to close on a first-time homebuyer loan?

Most closings take 30 to 60 days from application to closing. FHA and USDA loans can sometimes take a bit longer due to extra inspections.

What is mortgage insurance and do I have to pay it?

Mortgage insurance protects the lender if you stop making payments. FHA loans require it for the life of the loan. Conventional loans drop PMI once you reach 20% equity. VA loans do not require mortgage insurance.

Are there income limits for first-time homebuyer programs?

USDA loans have income limits set at 115% of the area median income. HomeReady and Home Possible have income limits in some areas. FHA and VA loans do not have income limits.

Rates as of May 2026. Rates and terms change often. Check with each lender for the most current information.