In Practice

Bringing New Affordable, Mixed-Income Housing to a Small Colorado Community

Sagebrush Apartments, Fort Lupton, Colorado’s first new affordable housing development in 15 years, consists of 72 affordable housing units renting to households at a range of income levels. Photo credit: Rob Smith, The Michaels Organization

In April 2024, Fort Lupton, Colorado’s first new affordable housing development built in 15 years opened its doors to residents. Built by developer The Michaels Organization, Sagebrush Apartments is helping Fort Lupton realize its larger redevelopment goals of increasing residential and commercial opportunities in the downtown Fort Lupton area known as Vincent Village. Thanks to Sagebrush Apartments’ location, residents enjoy easy access to nearby retail and other amenities, and the use of income averaging allows the development to serve households earning a range of incomes.

Meeting Community Needs

The 72-unit Sagebrush Apartments is helping fulfill needs identified by the Fort Lupton Master Plan, including increasing the number of multifamily housing and renter-occupied units for the community of approximately 10,000 people located 30 miles from downtown Denver. When Fort Lupton adopted the plan in 2018, less than 15 percent of the city’s housing stock consisted of multifamily units, with the most recent multifamily development completed in 2005. Community outreach during the master planning process revealed the absence of “missing middle” housing as a particular concern as well as the shortage of units affordable to low-income households. As the commercial redevelopment of the Vincent Village area took shape, building new affordable housing became a priority for local officials, helping to prompt The Michaels Organization’s involvement, reported James Weglarz, regional vice president at Michaels.

Sagebrush Apartments features many family-sized units and includes a playground. Photo credit: Rob Smith, The Michaels Organization

Sagebrush is filling a gap in the local housing market; developers are building little affordable housing, and the city’s housing stock is aging, said Weglarz, presenting a housing challenge to residents of many income levels and household sizes. To address these needs, Sagebrush offers various unit sizes. Approximately one-third of the units have one bedroom, approximately one-half have two bedrooms, and the remainder have three bedrooms. Amenities at Sagebrush include a 2,300-square-foot clubhouse, a fitness center, and a pet park. The development’s efficiency and environmental features have earned it certification from Enterprise Green Communities, and the building’s architecture and landscape design, which features drought-resistant native plants, blend in with the aesthetic of the area and provide visual interest throughout the year.

Michaels used income averaging to ensure that Sagebrush serves residents earning a range of incomes, from 30 percent to 80 percent of the area median income. As Fort Lupton grows, Sagebrush reinforces the city’s commitment to ensuring affordability in the downtown area, because it occupies one of the area’s last remaining developable parcels. Sagebrush also is strategically located between commercial and single-family zoning districts, helping ease the transition from commercial to residential zones. Residents have easy access to major transportation routes, grocery stores, medical facilities, commercial areas, and the recently built public library.

Overcoming Financing Challenges

Development costs for Sagebrush totaled $25 million, and although assembling a financing stack for affordable housing developments often is difficult, funding Sagebrush felt particularly challenging, reported Weglarz. Land for affordable housing often is donated, leased, or sold to developers at a nominal price, but Michaels had to pay market price for the Sagebrush site, contributing to the funding gap. To help offset costs, the Fort Lupton Housing Authority helped negotiate a payment in lieu of taxes agreement with the city. Equity raised from the sale of low-income housing tax credits also was part of the financing package for Sagebrush, although winning approval of the competitive credits required three applications, said Weglarz. The Colorado Department of Local Affairs supplied additional funding from the state’s Housing Trust Fund. Project-based rental housing vouchers from the Weld County Housing Authority, which supports 20 households living at Sagebrush, allowed Michaels to secure a mortgage with more favorable terms than would otherwise have been possible, said Weglarz. Finally, Sagebrush will use HUD’s Risk Sharing Initiative, administered in the state by the Colorado Housing and Finance Authority, to undergo a permanent loan conversion.

The need for a project like Sagebrush Apartments in Fort Lupton was confirmed by the rapid lease-up of Sagebrush units. Weglarz reported that within 3 months, residents leased all 72 units at the development, reflecting the demand for affordable housing in Fort Lupton at a range of income tiers. Serving the community in this way, Weglarz believes, was instrumental in fostering the positive reception Sagebrush Apartments has received from the Fort Lupton community.

Can I buy a house with low income?

Yes, you can buy a house with a low income by qualifying for low-income home-buying programs and special mortgage loans. This is because there is no minimum income requirement for buying a house.

However, your ability to qualify depends on a variety of factors specific to your financial situation. A mortgage lender will examine your credit score, debt-to-income ratio, and down payment to determine if you qualify.

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Do you qualify for low-income home loans?

Wondering if you qualify as low income? The U.S. Department of Housing and Urban Development (HUD) says you’re low income if your household earns 80% or less of the area median income (AMI). Some loan programs even help borrowers earning up to 100% of the AMI.

Not sure where you fall? Use Fannie Mae’s AMI lookup tool. Plug in your ZIP code to see what counts as low income in your area.

AMI is the midpoint of all incomes in your area: half earn more and half earn less. The Department of Housing and Urban Development (HUD) uses AMI to divide income into brackets.

Extremely low income: 0%–30% of AMI

Very low income: 31%–50%

Low income: 51%–80%

Moderate income: 81%–120%

Middle income: 121%–165%

High income: 165% or more

Family size is also important. Here’s a quick example: if the area median income is $100,000, a household earning up to $80,000 may qualify for low-income home-buying programs. Knowing your income bracket helps you figure out which low-income loan options or down payment assistance programs you might qualify for. It’s the first step in learning how to buy a house with low income.

Low income home buying programs

Many programs can help people buy a house based on their income. These low-income home-buying programs offer different types of assistance: some lower your monthly mortgage payment, some cover closing costs, and others let you buy a house with no money down.

Each program has different rules and benefits, but all of them make it easier to buy a house with low income.

Program Description Who Is Eligible HomeReady Low down payment, flexible sources of funds. Income limits based on area Home Possible Low down payment, flexible credit terms. Income limits based on area Down Payment Assistance Grants or loans to cover the down payment and closing costs. Low- to moderate-income families State or Local Assistance Various grants, loans, or tax credits. Low- to moderate-income families. Hud Homes Discounted homes sold by HUD. Low- to moderate-income families Good Neighbor Next Door Significant discounts on homes for essential workers and first responders. Must commit to living in the property as a primary residence for at least 36 months. Mortgage Credit Certificates Tax credit to reduce federal income tax liability. First-time home buyers who meet income requirements

HomeReady and Home Possible

Fannie Mae’s HomeReady and Freddie Mac’s Home Possible are both low-income home loans, but with built-in benefits. Each requires only a 3% down payment that can come from gifts, grants, or other approved sources. Sellers can also cover up to 3% of closing costs. Both offer reduced private mortgage insurance (PMI), which means lower monthly payments than standard conventional mortgages.

HomeReady offers more assistance by allowing you to count income from a renter—if they have lived with you for at least a year—to increase your qualifying income. To qualify, your household income must be under the local income limits, and your credit score needs to be 620 or higher.

State and local down payment assistance programs (DPAs)

DPAs help low-income buyers cover their down payments and closing costs. These programs are run by government agencies, non-profits, and community groups. Most are built for low-income home buyers, and have easier eligibility requirements.

Some even make it possible to obtain a zero-down mortgage depending on the program and where you’re buying.Assistance usually comes as a home-buying grant or a deferred loan, sometimes forgivable if you stay in the home five to ten years. Check our guide to DPAs in every state to find down payment assistance programs near you.

HUD Homes

WHUD homes are properties the Federal Housing Administration (FHA) takes back after foreclosure, and then sells at a discount through a low-income home buying program.

To qualify, you must live in your home as your primary residence for at least 12 months and can’t have purchased another HUD home in the past two years.These homes are sold as is, often need repairs, and are bought through a bidding process. You’ll need a HUD-approved real estate agent or mortgage broker to place a bid. To browse listings, visit hudhomestore.com. For program information, check hud.gov.

Good Neighbor Next Door

The Good Neighbor Next Door program helps teachers, police, firefighters, and EMTs buy HUD foreclosure homes at a 50% discount. You can buy a new home with an FHA mortgage with a modest down payment of just $100.

Homes are listed on hud.gov, and bids must pass through a HUD-approved real estate agent. If accepted, the discount becomes a second mortgage with no interest or payments.Live in the home for three years, and the second mortgage is forgiven, which reduces your upfront homeownership cost by half.

Mortgage Credit Certificates (MCCs)

Mortgage Credit Certificates (MCCs) offer a tax break that can increase your home-buying budget. If you meet income limits, you may qualify for a tax credit worth a percentage of your mortgage interest. Lenders can factor that credit into qualifying income, which may help you qualify for a larger loan amount. Many states, counties, and cities offer MCCs, but their rules vary. Check with your local housing finance agency to see what’s available and how it can support your path to affordable housing.

Low-income home loans

Even if you don’t qualify for a low-income home-buying program, you still have options. Government-backed loans, such as FHA, VA, and USDA, make homeownership possible for buyers in a range of financial situations. Some even offer a zero-down-payment loan, which means that you can buy a home without saving a large lump sum.Here, we discuss how these mortgage options work and what to expect.

Loan Type Credit Score Down Payment Unique Requirements FHA loans 580 for 3.5% down, 500 for 10% down 3.5% with a 580+ score, 10% with a 500-579 score Primary residence required, mortgage insurance necessary VA loans Varies by lender, often 580+ No down payment required Must be a qualifying service member, veteran, or eligible spouse; primary residence only USDA loans Usually 640 No down payment required Must be in a qualifying rural area, income limits apply, primary residence only

FHA loans

FHA loans, backed by the Federal Housing Administration, help low-income borrowers and first-time buyers qualify with lower credit score requirements and more flexible DTI ratios. You can get approved with a credit score of 580 and put down just 3.5% or go as low as 500 with a 10% down payment. Many FHA lenders accept higher debt-to-income ratios (up to 45%), making this a popular low-down payment mortgage option. This type of mortgage is among the most common choices for buyers figuring out how to buy a house with low income.

VA loans

VA loans, backed by the Department of Veterans Affairs, let veterans, active-duty service members, and surviving spouses buy a house with no down payment or mortgage insurance, and 100% financing, even for a refinance. There’s no official credit score requirement, although many lenders look for scores between 580 and 620. A one-time funding fee applies, but can be rolled into the loan amount. Sellers can cover up to 4% of the purchase price in closing costs, which means that some people buy a house with no money.

USDA loans

USDA loans offer zero-down-payment loans for eligible buyers in rural areas. The standard option, called the USDA Guaranteed Loan, is available through approved lenders and supports buyers earning up to 115% of the area median income (AMI). There’s also a Direct Loan Program for very low-income borrowers earning between 50% and 80% of the AMI.Most lenders require a credit score of 640 or higher, and these loans typically have lower interest rates and mortgage insurance costs than do FHA or conventional loans. Use the USDA eligibility map to check if the property and your income qualify.

HFA home loans

Housing Finance Agency (HFA) loans are backed by Fannie Mae or Freddie Mac and offered through state and local agencies. Home loans for low-income buyers often come with reduced mortgage insurance, discounted rates, and down payments as low as 3%. A credit score of 620 is typically required, although programs vary by state. Contact your local housing finance authority to see if you qualify for this low-income home buying program.

Manufactured and mobile home loans

Manufactured homes can be financed with many mainstream mortgage options, including FHA, VA, and conventional loans, if the home sits on a permanent foundation and qualifies as real estate. Some programs have stricter terms. For example, HomeReady requires a 5% down payment instead of 3%. Lenders may also limit eligibility based on the home’s age or foundation type. If the home doesn’t qualify as real estate, you may need a personal loan like FHA Title II, though these aren’t considered mortgage loans.

How to qualify for a low-income home-buying program

Most low-income home-buying programs follow the same basic rules. If you’re trying to figure out how to buy a house with low income, you’ll need to meet certain requirements related to income, credit, and eligibility.

Income must fall within the local Area Median Income (AMI) limits

Must be a first-time home buyer (no ownership in the past three years)

Minimum credit score of 580, though some programs accept lower with extra steps

Debt-to-income (DTI) ratio usually must be 43% or lower

Completion of a HUD-approved homebuyer education course

Must live in the home as your primary residence

Must be a legal U.S. resident

If you check these boxes, you may qualify for programs in your area. Reach out to your local housing agency or HUD-approved housing counselor to explore your options.

How to buy a house with low income

Buying a home with a low income and no savings is possible, especially if you qualify for a no-down-payment mortgage. Low-income home loans are built to help people with limited cash become homeowners, without waiting years to save up.

The tips below can help you buy a house with low income. Whether you’re using a low-income home loan, down payment assistance program, or zero-down mortgage, the goal is the same: get you into a home you can afford.

1. Improve your credit score

A higher credit score increases your chances of loan approval and helps you qualify for lower mortgage rates. Check your credit report and work on improving your score by paying down debts and making timely payments.

2. Save for a down payment

Many loan programs require as little as 3% down or no down payment at all. However, you’ll still need to pay closing costs, and may need cash reserves to assure lenders of your ability to make payments.

3. Lower your debt-to-income ratio

Paying down debts, especially high-interest credit card balances, improves your debt-to-income ratio and increases your odds of mortgage approval.

4. Explore first-time home buyer programs

Because of the flexible rules and government support of these programs, lenders can offer lower interest rates and credit score requirements.

5. Create a realistic budget

Owning a home involves ongoing costs like insurance, taxes, and maintenance. Model your budget to include these expenses and start saving accordingly.

6. Consider a co-signer

If you’re on the edge of qualifying, a co-signer can help. Both parties are responsible for payments and share in the home’s equity.

FAQs about low-income home buying programs

I make $25K a year. Can I buy a house? Yes. On $25K a year, you may afford around $580 a month for housing. With a 6% rate and a 3% down payment, you could buy a house worth around $100,000. Talk to home lenders for low-income buyers to get an accurate estimate based on your location and debt. Can I buy a house with low income and no down payment? Yes. USDA and VA loans are low-down payment options, with 0% down if you qualify. FHA loans and grants can help with down payment requirements, which makes it possible to buy a home even if you don’t have savings. What’s the lowest amount you can put down on a house? The lowest is 0% through VA or USDA loans. FHA loans require at least 3.5% down, and conventional loans start at 3%. With FHA, you’ll pay a mortgage insurance premium (MIP), while conventional loans with less than 20% down require private mortgage insurance (PMI). Can I get a grant to buy a house? Yes. Many state and local programs offer grants to help with down payments or closing costs. These low-income home-buying grants do not have to be repaid as long as you meet the program’s terms, such as staying in the home for a set number of years or using it as your primary residence. Can the government help me buy a house? Yes. The government supports the home-buying process for low-income buyers with a range of programs, including special loans, tax credits, and down payment assistance. Some are nationwide, whereas others are specific to states or cities. These programs are especially helpful if you’re buying your first home or have limited income. What programs are available for first-time home buyers? Programs like FHA, VA, USDA, HomeReady, and Home Possible offer flexible credit rules and low down payments. Some may charge a higher interest rate, but this trade-off is often an easier qualification. How do I buy a house without proof of income? Bank statement loans and other nontraditional options can help. These allow you to show income through deposits, retirement funds, or assets instead of W2s or tax returns. How do you rent to own? You rent a home with the option to buy later. A portion of your rent goes toward the future home purchase. It’s helpful if you need time to save or build credit. Can I rent to own with no down payment? No. Most rent-to-own agreements require an upfront option fee, which acts as a small-down payment. This gives you the right to buy the home later.

Ready to take the next step?

Start by comparing low-income home loans from multiple lenders. This helps you find the right fit for your budget and see which low-income home-buying programs you qualify for.

Click the links below to connect with lenders and explore your options today.

Guest Commentary written by Jason Ward Jason Ward is co-director of the RAND Center on Housing and Homelessness. He is also an economist at RAND and a professor of policy analysis at Pardee RAND Graduate School.

The spiraling cost of housing in California has affected virtually every facet of life.

California has the nation’s largest unsheltered homeless population and among the highest rates of cost-burdened renters and overcrowded homes.

One reason for the seemingly endless upward trajectory of rents is how expensive it is to build new apartments in California. Those costs are a major contributor to “break-even rents,” or what must be charged for a project to be financially feasible.

I recently led a study that compared total apartment development costs in California to those in Colorado and Texas. The average apartment in Texas costs roughly $150,000 to produce; in California, building the same apartment costs around $430,000, or 2.8 times more. Colorado occupies a middle ground, with an average cost of around $240,000 per unit.

For publicly subsidized, affordable apartments — a sector that California has spent billions on in recent years — the gap is even worse. These cost over four times as much as affordable apartment units in Colorado and Texas.

There’s no single factor driving these huge differences. Land costs in California are over three times the Texas average. “Hard costs,” or those related to improving the land and constructing buildings, are 2.2 times those in Texas. California’s “soft costs,” which include financing, architectural and engineering fees, and development fees charged by local governments, are 3.8 times the Texas average.

There are some unavoidable California-specific costs, like ensuring buildings are resilient to shaking from earthquakes. But the truly lifesaving seismic requirements explain only around 6% of hard-cost differences, the study estimated. The state’s strict energy efficiency requirements add around 7%.

California’s high cost of living may drive up the price of labor, but we found that construction wage differences explain only 6% to 10% of hard-cost differences for market-rate apartments. However, for publicly subsidized apartment projects, which are often mandated to pay union-level wages, labor expenses explain as much as 20% to 35% of the total difference in costs between California and Texas.

“Soft costs” in California are a major culprit. California property developers pay remarkably high fees for architectural and engineering services — triple the average cost in Texas. It’s five times as much or more if you’re building publicly funded, affordable apartments in the Los Angeles and San Francisco metro areas.

Seismic engineering requirements play a role. The bigger factor are complex and burdensome design requirements for affordable housing. These are dictated by state and local funding sources, and have little to do with habitability or safety but contribute substantially to these astonishing differences.

Development fees to local governments make up the largest soft-cost difference in California. Such fees, which were the subject of a 2024 U.S. Supreme Court case, average around $30,000 per unit. In Texas, the average is about $800. (Again, Colorado occupies a middle ground at around $12,000.)

In San Diego, for example, these fees on average eat up 14% of total development costs per apartment.

But the biggest thing driving up California apartment costs? Time.

A privately financed apartment building that takes just over two years to produce from start to finish in Texas would take over four years in California. It takes twice as long to gain project approvals and the construction timeline is 1.5 times longer.

That means land costs must be carried for longer, equipment and labor are on jobsites longer, and that loans are taken out for a longer term, and so on.

Most of the differences that the study uncovered stem from policy choices made by state and local governments. Many are legacies of the so-called “slow growth movement” in California, which has shaped housing production since the 1980s.

Those efforts worked. Population growth in the state went negative for a few years after 2020, due primarily to the high cost of housing. Even more recently, California’s growth was half the numbers seen in Texas and Florida, with younger and higher earners disproportionately leaving.

These departures have dire implications for the state’s fiscal future and political influence nationally. California recently lost a congressional seat for the first time in its history. If current national population trends hold, it could lose four or five seats in 2030.

The California Legislature has become increasingly focused on reducing the cost of living, but meeting this goal requires substantial progress on lowering housing costs. New proposals to exempt urban infill housing production from state environmental law and a package of permitting reforms are steps in that direction.

Will policymakers also take lessons from Texas and Colorado’s cheaper housing methods? That remains to be seen. But the future of California may well hinge on it.

First-time home buyer qualifications are surprisingly flexible

Knowing who qualifies as a first-time home buyer can open doors to various special loan programs and assistance.

While it may seem like these benefits are exclusive to those who have never owned a home, many lenders extend eligibility to anyone who hasn’t held property in the past three years.

So, whether you’re venturing into homeownership for the first time or making a comeback, you could still reap the financial advantages of qualifying as a first-time home buyer.

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What is a first-time home buyer?

A first-time home buyer hasn’t owned a primary residence in the past three years. Moreover, first-time home buyers are eligible for special homeowner programs that offer help like down payment assistance and favorable mortgage loan terms to ease the purchase process.

Who qualifies as a first-time home buyer?

First and foremost, to meet the first-time home buyer rules, an individual must not have owned a primary residence during the three years prior to the purchase of a new home. In other words, you are a first-time home buyer if you have not owned a property for the previous three years, regardless of whether you have been renting, living with family, or in another circumstance that did not require real estate ownership.

However, the rules around who qualifies as a first-time home buyer can be surprisingly flexible due to the number of specialty home loan programs designed to help people purchase their dream homes.

Understanding the qualifications for first-time home buyers is the first step toward homeownership. Here, we’ll break down the various scenarios under which different individuals qualify, making it easier for you to see where you might fit in.

Renters looking to own

If you’ve been renting and haven’t owned a home in the past three years, there’s good news for you. First-time home buyer programs are specifically created with you in mind, with the goal of assisting renters in becoming homeowners by providing them with support like lower down payment requirements and even closing cost assistance.

Single parents and caregivers

If you’re a single parent re-entering the workforce after going through a divorce, you may wonder about your eligibility as a first-time buyer. The good news is that even if you previously owned a home with a former spouse, you may still meet most first-time home buyer qualifications. This can be true even if your name is on the deed or mortgage.

Similarly, if you’ve stepped away from your career to provide unpaid care to a family member, your journey toward buying a home is not out of reach. There are opportunities designed to support you in meeting the qualifications for a first-time home buyer.

Investment property owners

Owning investment property doesn’t disqualify you from being a first-time buyer. If you’ve been renting a property while not owning a primary residence yourself for at least three years, you still qualify. This scenario often surprises many potential buyers, who assume previous property investments disqualify them.

Mobile home owners

Those who own a mobile home but have not owned a stationary home on a permanent foundation qualify as well. This distinction acknowledges the unique characteristics of mobile versus traditional homeownership and provides opportunities for mobile home owners to transition to a permanent residence.

Veterans and service members

Our nation’s heroes, including veterans and active service members, enjoy special qualifications for first-time home buyer programs. VA loans, for instance, may allow for no down payment and no private mortgage insurance, making the dream of homeownership more attainable and affordable for those who’ve served our country.

Educators, firefighters, EMTs, and law enforcement

Dedicated to serving our communities, educators, firefighters, EMTs, and law enforcement officers may qualify for unique homeownership programs. Programs like Good Neighbor Next Door offer substantial discounts on homes, acknowledging the vital role these professionals play in our communities.

Additionally, many lenders offer nurse home loans and doctor mortgages to help newly certified medical professionals buy their first homes.

Target area buyers

Are you looking to make a difference in certain communities? Purchasing a home in designated target areas can offer more lenient qualifications and incentives. These programs aim to revitalize neighborhoods and make homeownership accessible, often with benefits like reduced home prices or tax incentives.

First-time home buyer requirements

Having explored the types of buyers who fall under the first-time home buyer umbrella, it’s important to understand the next layer of qualifications that pave the way to homeownership.

For those who meet the initial eligibility requirement, a few more common rules typically need to be met to qualify for a first-time home buyer loan program. Let’s explore each of these to ensure you’re fully prepared for what lies ahead.

Down payment requirements

Contrary to the belief that a 20% down payment is always needed, many first-time home buyer programs offer much lower requirements—sometimes as little as 3%. Some programs, like VA and USDA loans, may even waive the down payment requirement entirely for qualifying applicants.

Debt-to-income requirements

Your debt-to-income ratio (DTI) is a critical measure lenders use to gauge your ability to manage monthly payments. A DTI of 43% or lower is generally preferred, though some programs may permit higher ratios. This ratio helps lenders determine if you can comfortably afford your mortgage alongside your existing debts.

Credit score requirements

A healthy credit score is the cornerstone of your home buying eligibility. Most first-time home buyer programs require a minimum credit score, often around 620, to qualify for conventional loans. However, some programs, like FHA loans, are more lenient, allowing scores as low as 580 or even lower with higher down payments.

Credit history

Beyond just your credit score, lenders will review your credit history for patterns of responsible credit use. Late payments, high credit card balances, and accounts in collections can be red flags. A clean credit history paints a picture of financial reliability.

Employment history

A stable employment history, generally for the last two years, is key for mortgage loan approval. Lenders use this to verify income stability and predict future earning potential. Frequent job changes or gaps in employment can raise concerns about income consistency.

Income stability

Lenders look for steady, reliable income when assessing loan eligibility. This means having a consistent work history, typically for the last two years, and evidence that your income will continue. It reassures lenders that you have the means to sustain mortgage payments over time.

Income limits

Many first-time home buyer programs set income limits based on the Area Median Income (AMI) to ensure accessibility. Your eligibility for certain loan types and assistance programs may be influenced by your household income relative to the AMI in your area. Income limits help make sure that moderate and low-income households are truly benefiting from these programs .

The qualifications for a first-time home buyer can differ between lending institutions, so conducting thorough research is key. Moreover, these requirements may significantly vary depending on the specific first-time home buyer loan you choose.

If you’re considering applying for down payment assistance, remember that these programs have their own set of guidelines.

First-time home buyer qualifications by state

First-time home buyer eligibility varies by state, including differences in legal definitions, occupancy rules, eligibility criteria, and available assistance programs. Below is a breakdown of key states and their general first-time home buyer requirements.

For a full overview of all state requirements, refer to our comprehensive guide.

First-time home buyer eligibility in California

California considers a first-time home buyer as someone who hasn’t owned and occupied a home in three years, with exceptions for veterans and those buying in federally designated target areas. The state provides assistance through CalHFA Conventional, CalHFA FHA/VA/USDA, and MyHome Down Payment Assistance. To qualify, buyers must meet California first-time home buyer requirements:

Live in the home as a primary residence.

Meet income and price limits, which vary by county (up to $180,000 in high-cost areas). Find current limits on the CalHFA website.

Have a credit score of 620+ for FHA/VA loans, or 640–660+ for conventional loans.

Maintain a debt-to-income ratio up to 45% (50% with strong credit).

Own no other residential property at closing.

Complete an approved home buyer education course with one-on-one counseling.

First-time home buyer eligibility in Colorado

Colorado defines a first-time home buyer as someone who hasn’t owned a primary residence in three years, though many CHFA programs allow repeat buyers, especially in targeted areas. The state offers affordable loans and assistance through CHFA FirstStep, CHFA Preferred, and CHFA SmartStep. To qualify, buyers must meet Colorado first-time home buyer requirements:

Use the home as a primary residence.

Meet income limits (up to $162,000 based on county and household size). Check current limits on the CHFA website.

Have a minimum credit score of 620 (660+ for more flexible debt-to-income options).

Maintain a debt-to-income ratio up to 50% (55% with strong credit).

Contribute at least $1,000 of personal funds toward the purchase.

Own no other residential property at closing.

First-time home buyer eligibility in Florida

Florida describes a first-time home buyer as someone who has not owned a primary residence in the past three years. The state provides assistance through Florida First and Hometown Heroes, offering affordable mortgage options and down payment assistance. To qualify, buyers must meet Florida first-time home buyer requirements:

Use the home as a primary residence.

Meet income and purchase price limits (e.g., ~$118,000 income cap in Miami-Dade). Find current limits on the Florida Housing website.

Have a minimum credit score of 640.

Qualify for FHA, VA, USDA, or conventional loans through approved lenders.

Maintain a debt-to-income ratio up to 45% (50% with strong credit).

Complete a HUD-approved home buyer education course before closing.

First-time home buyer eligibility in Illinois

Illinois does not require first-time buyer status for most IHDA programs, though it is required for Mortgage Credit Certificates and certain down payment assistance options. The state offers IHDAccess Forgivable, IHDAccess Deferred, and IHDAccess Repayable to help buyers afford homeownership. To qualify, buyers must meet Illinois first-time home buyer requirements:

Use the home as a primary residence.

Meet income and purchase price limits, which vary by county. Find current limits on the IHDA website.

Have a minimum credit score of 640.

Maintain a debt-to-income ratio up to 45% (50% with strong credit).

Contribute at least $1,000, or 1% of the home’s price, from personal funds.

Complete home buyer education for at least one borrower.

First-time home buyer eligibility in New York

New York regards a first-time home buyer as someone who hasn’t owned a primary residence in three years, with exceptions for veterans and buyers in federally targeted areas. The State of New York Mortgage Agency (SONYMA) offers affordable mortgages through programs like Achieving the Dream and Low Interest Rate loans. To qualify, buyers must meet New York first-time home buyer requirements:

Use the home as a primary residence.

Meet income and purchase price limits, which vary by region. Find current limits on the SONYMA website.

Have a minimum credit score of 620 (640+ for conventional loans).

Contribute at least 1% of the purchase price from personal funds.

Complete homebuyer education before closing.

First-time home buyer eligibility in Pennsylvania

Pennsylvania defines a first-time home buyer as someone who hasn’t owned a primary residence in three years, with exceptions for veterans and purchases in targeted areas. The Pennsylvania Housing Finance Agency (PHFA) offers affordable mortgage options through programs like the Keystone Home Loan. To meet Pennsylvania first-time home buyer requirements:

Use the home as a primary residence.

Meet income and purchase price limits, which vary by county. Find current limits on the PHFA website.

Have a minimum credit score of 660.

Contribute at least $1,000 or 1% of the purchase price from personal funds.

First-time home buyer eligibility in Texas

Texas considers a first-time home buyer as someone who hasn’t owned a primary residence in three years, with exceptions for veterans and purchases in targeted areas. The My First Texas Home (MFTH) program offers affordable loans and down payment assistance through the Texas Department of Housing and Community Affairs (TDHCA). To meet Texas first-time home buyer requirements:

Use the home as a primary residence.

Meet income and purchase price limits, which vary by county. Find current limits on the TDHCA website.

Have a minimum credit score of 620.

Complete home buyer education before closing.

Types of first-time home buyer loan programs

You might be wondering who qualifies as a first-time home buyer or how to navigate the maze of mortgage options. The good news is that there are specialized mortgage programs designed just for people like you.

These mortgage loans often come with perks like lower down payments and more forgiving credit score requirements, all to make that step onto the property ladder a bit less steep. And most popular low-down-payment mortgages are open to both repeat and first-time buyers.

Conventional loan

This is a popular choice for people buying their first home. It has a fixed interest rate and monthly payments that stay the same for the life of the loan. Conventional mortgages usually have a down payment requirement of at least 3% to 5% of the price of the home, which makes them available to a large number of buyers.

FHA loan

The Federal Housing Administration (FHA) backs FHA loans, which assist first-time buyers with low credit scores or limited down payment resources. You can qualify for an FHA loan with a down payment as low as 3.5% of the purchase price.

It is important to note that mortgage insurance premiums (MIP) are required on FHA loans throughout the life of the loan. However, many borrowers choose to refinance their FHA loans into a different loan type, such as a conventional mortgage. This strategy is often used to eliminate MIP once sufficient home equity has been accumulated

VA loan

The Department of Veterans Affairs offers attractive terms and benefits to eligible veterans, active-duty service members, and surviving spouses. VA loans usually do not require a down payment or mortgage insurance. They also have more flexible qualification guidelines, making them an excellent choice for those who meet the requirements.

USDA loan

The U.S. Department of Agriculture offers USDA loans for buyers in suburban and rural areas. These mortgage loans often have low or no down payment requirements and favorable terms. Income limitations and property location criteria apply.

Fannie Mae HomeReady Mortgage

Fannie Mae aims to increase homeownership among more moderate and low-income Americans through its HomeReady mortgage. With only a 3% down payment needed, this home loan program provides affordable mortgage interest rates. Additionally, HomeReady allows non-borrower household income to help qualify and offers flexibility regarding income sources.

Freddie Mac Home Possible

Similar to Fannie Mae, Freddie Mac’s mission is to help more moderate and low-income Americans purchase their dream homes with its Home Possible mortgage program. It allows for a down payment as low as 3% and offers flexible sources of down payment funds, including gifts, grants, or loans from family, employers, or community organizations.

Home Possible mortgages have reduced mortgage insurance requirements, making them more affordable. Borrowers may also benefit from competitive interest rates and options for fixed-rate mortgages or adjustable-rate mortgages.

State-specific programs

Many states offer unique opportunities through housing finance agencies, local initiatives, and nonprofit organizations aimed at supporting first-time buyers. These state-specific programs often collaborate with approved lenders to offer tailored assistance, such as grants for down payments, special loan terms, and educational resources to navigate the home buying process successfully.

For example, in Texas, the Texas State Affordable Housing Corporation (TSAHC) provides remarkable options for first-time home buyers. The TSAHC offers programs like the Homes for Texas Heroes and Home Sweet Texas Home Loan Programs, which not only present competitive interest rates but also down payment and closing cost assistance up to 5% of the loan amount.

Whether you’re in Texas or another state, exploring local first-time home buyer programs can uncover valuable resources to help you achieve your dream of homeownership.

Related: For a list of state-specific programs and grants, please visit our state content hub and select your state to explore what programs and grants are available to you.

First-time home buyer assistance programs

Understanding the requirements for first-time home buyer grants and assistance is key to qualifying for financial aid to make purchasing a home more affordable. Many programs offer reduced down payments, closing cost assistance, and even tax credits to help first-time buyers overcome financial hurdles.

Eligibility for first-time buyer grants often depends on factors like income, location, and home price limits. Before applying, be sure to research available programs and verify that you meet the specific requirements for first-time home buyer grants in your area.

Down payment assistance programs (DPAs)

DPAs help with upfront costs like down payments and closing fees. Requirements vary, but many accept first-time buyers with low or moderate incomes. Types of down payment assistance include:

Low-interest loan: Repaid alongside your mortgage.

Repaid alongside your mortgage. Interest-free forgivable loan: No payments; loan forgiven in stages.

No payments; loan forgiven in stages. Home buying grant: A cash gift with no repayment.

There are over 2,000 DPA programs nationwide. At least one is likely available where you want to buy.

Financial assistance options

First-time home buyer grant requirements vary by program, so check your eligibility. Many grants, tax credits, and closing cost assistance programs are not widely advertised. Some programs are broadly available, while others are designed for specific groups.

For example, the Good Neighbor Next Door program offers a 50% reduction on a home’s purchase price, but only for teachers, firefighters, and EMTs buying a single-family home. In addition, the property must be listed for sale by the U.S. Department of Housing and Urban Development (HUD) in a revitalization area.

Some down payment assistance programs let you choose the level of help you need. For example, the Florida Housing Finance Corporation lets residents choose from:

Florida Assist: Borrow up to $7,500 at 0% APR with no monthly payments. Repay the whole loan amount in the event of “the sale, transfer, satisfaction of the first mortgage, refinancing of the property or until such a time the mortgagor ceases to occupy the property” HFA Preferred and HFA Advantage PLUS: You may be able to borrow a Fannie Mae or Freddie Mac second mortgage of 3%, 4%, or 5% of the first loan’s value. At the end of each year of the second mortgage’s five-year term, 20% of the loan is forgiven. So, at the end of the fifth year, you owe nothing The Florida Homeownership Loan Program: Borrow a second mortgage at 3% over 15 years. You pay it back monthly in parallel with your main mortgage

However, not all DPAs offer a variety of programs. So look for as many local financial assistance options as you can find and compare them.

Homebuyer education

Many first-time home buyer grants require completion of a homebuyer education course. These courses, often HUD-approved, offer insights into the home buying process and financial management.

Mortgage credit certificates (MCCs)

A mortgage credit certificate provides a tax credit of up to $2,000 per year for the life of your loan. MCCs, offered through participating lenders, can significantly reduce your tax liability, making homeownership more affordable over time.

Qualifying for first-time home buyer assistance

Each DPA program is independent and gets to set its own rules. Some will help anyone, while others restrict their offerings to first-time buyers.

Programs are often based on a borrower’s household income and require the completion of a homebuyer education course before becoming eligible.

The three-year rule is also a significant guideline in determining who qualifies as a first-time home buyer. And this rule goes for both owning a home and having one’s name on a mortgage agreement within the past three years.

However, specific requirements for first-time home buyer grants vary by program. You need to track down the ones that serve your area and ask. Check local .gov websites for eligibility details, including income limits and maximum home prices.

Is it easier to qualify as a first-time buyer?

A mortgage lender won’t waive its rules for you just because you’re a borrower who qualifies as a first-time home buyer. Lenders still need to verify that you can afford your monthly payments.

That means you’ll go through the full underwriting process, which involves verifying your credit, income, savings, and personal financial information, just like any other home buyer would.

But that’s in your interest as much as the lender’s. Who wants to be saddled with a home loan amount they can’t afford? The application process will ensure you get a house within your means and a reasonable monthly mortgage payment.

How to get the most out of first-time home buyer benefits

When it comes to getting the most out of the benefits available to first-time home buyers, using effective strategies can make a big difference. Here are four important tips that will help you get the most out of buying a home.

Research first-time home buyer incentives

Guidelines on who qualifies as a first-time home buyer can differ from one lending institution to another, so it’s essential to do your research and understand the various incentive programs available.

Usually, these programs help first-time buyers by giving them money, grants, or loan options with friendly terms. Look into local, state, and federal programs to see if you can get help.

Look into down payment programs, loans that don’t have to be paid back, and tax credits that can help make buying a home less expensive. By taking advantage of these programs, you can save a lot of money up front and have more money to spend.

Work with knowledgeable professionals

The process of buying a home can be hard to understand, especially for first-time buyers. Working with experts like real estate agents, Realtors, lenders, and mortgage brokers can make a world of difference.

Choose a reputable real estate agent who works a lot of first-time home buyers. They can help you understand the process, give you good advice, and negotiate on your behalf. In the same way, a lender who knows what they’re doing can help you look at different mortgage options and find the best rates and terms for your situation.

Budget for additional expenses

Aside from the purchase price, it’s important to think about and budget for other costs that come with owning a home. Among these costs are property taxes, homeowner’s insurance, maintenance costs, renovations or repairs, and private mortgage insurance (PMI) if needed.

By figuring out these costs ahead of time and adding them to your budget, you can avoid unpleasant financial surprises down the road. Proper budgeting ensures that you can comfortably afford not only the mortgage payments but also the ongoing costs of home ownership.

Be mindful of future resale value

As a first-time home buyer, you should think about the property’s resale value down the road. While you may intend to stay in the house for the foreseeable future, life circumstances can change. Location, school districts, neighborhood development, and amenities can all have an impact on the desirability and potential appreciation of your property.

Prioritize properties in areas with high market potential and growing infrastructure. This approach will help protect your investment and give you more options if you decide to sell in the future.

FAQ: First-time home buyer requirements

Are you a first-time buyer if you’ve owned a property before? You may be. But not if you currently own your own home. Many lenders and assistance programs apply a three-year rule. You count as a first-time buyer if you haven’t owned a home or had your name on a mortgage agreement within the previous three years. What if I’m a first-time buyer and my partner isn’t? You may still count as a first-time buyer. Most lenders and DPA programs follow the policy of the U.S. Department of Housing and Urban Development. HUD says a first-time buyer is an individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers). So you should be fine. What is the minimum income required to qualify for first-time buyers? There’s no minimum income required to buy a house. But lenders will closely examine your personal finances to ensure you can manage the mortgage payments along with your other financial obligations. How much you have to earn will depend on your existing debts, your down payment, and the home price you hope to afford. Can I buy a house with no money out of pocket? It’s rare, but not impossible. You’d probably need help from a down payment assistance program or your family to cover everything you need. Remember, you have to pay closing costs as well as the down payment. So even borrowers with zero-down-payment mortgages often need some help—or savings. What’s the minimum credit score for a first-time homebuyer? Technically, it’s 500. But that’s an FHA loan with a down payment of 10% or higher. With a 3.5% down payment, you’d need a score of at least 580. Other types of mortgages typically require higher minimum scores, around 620 or 640. And some individual lenders may want higher FICO scores than those minimums. How much money do I really need to buy a house? Minimum down payments are typically 3–5% of the home purchase price. But you need to budget another 2-5% of the purchase price for other home-buying expenses. Those include upfront fees, closing costs, earnest money, prepaid property taxes, and homeowners insurance. Don’t forget: Some down payment assistance programs can help with these other costs. So search out the best one in the area where you’re buying. Is it hard to get a first-time buyer loan? It depends on what you mean by hard. Most lenders love first-time buyers and will do all they can to help. Plus, down payment and closing cost assistance can lower your out-of-pocket costs. The hard part is often finding the right home for your price point and doing all the administrative work required. However, millions have successfully bought their own homes in the past, so don’t lose heart; the process might be tough, but it’s certainly not impossible!

Check your eligibility as a first-time home buyer

Many people wrongly assume they don’t meet the criteria of a first-time home buyer and miss out on potential benefits.

You can estimate your homeownership eligibility based on your credit score, income, savings, and debts. But a mortgage lender gets the final say. So if you’re ready to start house hunting, the first thing you should do is get a lender’s stamp of approval.

To check your mortgage rates and make sure you can afford the house you want, get pre-approved by a lender below.