First-time homebuyers dropped to a historic low of 21% of all home purchases in 2025—well below the traditional 40% norm. But that doesn't mean the door to homeownership is closed. With over 2,000 down payment assistance programs available nationwide, help exists for those willing to seek it out.

The Down Payment Hurdle

For most first-time buyers, the down payment represents the single biggest obstacle to homeownership. Even with an FHA loan requiring just 3.5% down, that's still $17,500 on a $500,000 home—money that many renters simply don't have saved.

"We have haves and have-nots," acknowledges Jessica Lautz, Deputy Chief Economist at the National Association of Realtors. "First-time home buyers are really struggling to get in."

The good news: free money exists to help bridge that gap.

National Down Payment Assistance Programs

Several programs operate across state lines, offering assistance regardless of where you're buying:

National Homebuyers Fund (NHF)

The NHF offers grants and three-year forgivable loans to low- and moderate-income buyers. Key details:

  • Assistance up to 5% of your mortgage loan amount
  • Can be used for down payment and/or closing costs
  • Works with conventional, FHA, VA, and USDA loans
  • Available as a grant (no repayment) or forgivable loan

Chenoa Fund

This nationwide program specifically targets the FHA 3.5% down payment requirement:

  • Provides 3.5% or 5% of the home's purchase price
  • Can fully cover the down payment for FHA loans
  • Forgivable after 36 consecutive on-time payments on your first mortgage
  • Also available as a repayable installment loan option

State and Local Programs Worth Exploring

Most states operate their own homebuyer assistance programs through housing finance agencies. Here are a few standouts:

New Jersey

The First-Time Homebuyer Mortgage Program can be combined with NJHMFA Down Payment Assistance, which provides:

  • Up to $15,000 based on the county where you're purchasing
  • Interest-free, five-year forgivable second loan
  • No monthly payment required

Florida

The Sunshine State offers 70 different first-time buyer grants and programs funded through 2026. Many provide thousands in assistance through a combination of state agencies, counties, and cities.

Washington State

The Washington State Housing Finance Commission (WSHFC) reports that the typical buyer receives $10,000 in down payment assistance through their programs.

FHA Loans: The First-Time Buyer's Best Friend

FHA loans remain the most popular choice for first-time buyers, and for good reason:

  • Low down payment: Just 3.5% down with a 580+ credit score
  • Flexible credit requirements: More forgiving than conventional loans
  • Higher loan limits: For 2026, the FHA ceiling reaches $1,249,125 in high-cost areas

Most down payment assistance programs are designed to work alongside FHA loans, making them an ideal combination for first-time buyers.

How to Qualify

While specific requirements vary by program, most share common eligibility criteria:

First-time buyer status: Generally defined as not having owned a home in the previous three years. Some programs extend this to buyers who haven't owned in a specific location.

Income limits: Most programs target low- to moderate-income buyers, typically defined as earning below 80% to 120% of the area median income.

Credit requirements: Minimum credit scores typically range from 580 to 640, depending on the program.

Homebuyer education: Many programs require completion of a HUD-approved homebuyer education course.

Occupancy: You must plan to live in the home as your primary residence.

Finding Programs in Your Area

Start your search with these resources:

  • USA.gov: The federal government maintains a comprehensive guide to home buying assistance programs
  • Your state housing finance agency: Every state has one, and they can direct you to available programs
  • HUD-approved housing counselors: Free counseling services can help you navigate options
  • Local lenders: Many lenders specialize in down payment assistance programs and can guide you through the process

The Bottom Line

Yes, homeownership has become harder to achieve. But it's not impossible, especially if you're willing to do the research. Thousands of dollars in grants and forgivable loans go unclaimed every year simply because buyers don't know they exist.

If homeownership is your goal for 2026, start exploring your options now. That $10,000 or $15,000 in assistance could be the difference between continuing to rent and finally owning your own home.