Reviewed by Jeff Shin, NMLS #1041652. Updated .
Who counts as a first-time home buyer
Under HUD’s definition, you are a first-time home buyer if you have not owned a principal residence in the past three years. That means many people who owned a home years ago qualify again. Individual programs can use their own definition, so check the one you are applying for.
First-time home buyer loan programs
- FHA. Insured by HUD, with more flexible credit rules. Per HUD, a 580 credit score qualifies for the minimum 3.5% down payment. Mortgage insurance applies. See FHA loans.
- Conventional 97, HomeReady, and Home Possible. Fannie Mae and Freddie Mac allow a 3% down payment on eligible first-time buyer loans. HomeReady and Home Possible add income limits and reduced mortgage insurance. Read HomeReady checks and Home Possible vs. FHA.
- VA. For eligible veterans and service members. The VA does not require a down payment for borrowers with full entitlement, and there is no monthly mortgage insurance. See VA loans.
- Down payment assistance. State housing finance agencies, such as IHDA in Illinois, plus some counties and cities offer grants, forgivable seconds, and deferred loans. Each has repayment rules worth reading first: down payment assistance repayment checks.
- Mortgage credit certificate. Some states offer a federal tax credit on part of the mortgage interest. See mortgage credit certificate checks.
You do not need 20% down to buy a home. More on that in do you need 20% down?
Credit scores by loan type
Minimums are set per program (full breakdown: credit score by loan type). Per HUD, FHA allows scores down to 500, with 580 or higher needed for the smallest down payment. For conventional loans, Fannie Mae removed its fixed 620 minimum for files run through its Desktop Underwriter system in November 2025 and now weighs the whole credit file, though many lenders still set their own minimum. VA does not set a minimum score, though lenders do. A higher score lowers the price on conventional loans in steps, so the same house can cost a different amount at 680 than at 740. Why the score a lender pulls can differ from your app: why your mortgage credit score is different.
Buying a house for the first time: the order of steps
- Work out a payment you are comfortable with, including taxes and insurance. Use the affordability calculator.
- Get pre-approved before you tour. A pre-approval names a price range a lender will support. Read pre-approved isn’t payment-approved.
- Pick the program after comparing at least two structures on the same house.
- Make an offer with financing contingencies you understand.
- Lock the rate, clear conditions, and review the Closing Disclosure before you sign.
The long version is in the first-time buyer guide.
Questions borrowers ask
Who qualifies as a first-time home buyer?
Under HUD’s definition, anyone who has not owned a principal residence in the past three years is a first-time home buyer. Some programs use their own definition, so check the program’s rules.
What is the best loan for a first-time home buyer?
It depends on credit, savings, and whether you are a veteran. FHA suits lower credit scores, conventional programs such as HomeReady and Home Possible often cost less with stronger credit, and VA is usually the strongest option for eligible veterans. Comparing two structures on the same house is the fastest way to know.
What credit score do I need to buy a house?
FHA allows scores down to 500 under HUD rules, with 580 or higher for the smallest down payment. Fannie Mae no longer applies a fixed 620 minimum to conventional loans run through its Desktop Underwriter system, but many lenders keep their own minimum. VA does not set a minimum, but lenders do.
Do first-time home buyers need 20% down?
No. Fannie Mae and Freddie Mac allow 3% down on eligible first-time buyer loans, HUD allows 3.5% down on FHA with a 580 score, and the VA does not require a down payment for borrowers with full entitlement.
Are there first-time home buyer assistance programs?
Yes. State housing finance agencies, such as IHDA in Illinois, and some cities and counties offer down payment and closing cost assistance. Amounts and repayment rules change by program year, so confirm the current terms before you count on them.
Sources
Program rules on this page are summarized from the agencies that set them. Lenders can add stricter requirements. Checked October 7, 2026.
First-time buyer help by city: all 33 markets
Every page in this section, not a selected eight — a hub that links a quarter of its own children is a hub that hides the other three quarters.
- Arlington Heights, IL
- Aurora, IL
- Austin, TX
- Barrington, IL
- Bolingbrook, IL
- Chicago, IL
- Dallas, TX
- Detroit, MI
- Downers Grove, IL
- Elgin, IL
- Evanston, IL
- Fort Wayne, IN
- Glenview, IL
- Grand Rapids, MI
- Hinsdale, IL
- Houston, TX
- Indianapolis, IN
- Jersey City, NJ
- Joliet, IL
- Wichita, KS
- Naperville, IL
- Newark, NJ
- Northbrook, IL
- Oak Brook, IL
- Overland Park, KS
- Palatine, IL
- Park Ridge, IL
- San Antonio, TX
- Schaumburg, IL
- Skokie, IL
- Kansas City, KS
- Wheaton, IL
- Wilmette, IL
Pages marked not licensed cover markets outside the licensed footprint. They are educational only. Jeff Shin is licensed to originate residential mortgage loans in Illinois, Indiana, Kansas, Michigan, New Jersey, Texas.
Other loan products
Not sure which of these applies to you?
That is usually the actual question. Send the situation rather than the product name — purchase or refinance, primary or investment, price range, and timeline — and you get the structures that fit, with what each one costs.