Is a First-Time Homebuyer Loan Right for You?

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Marlene Sheard

If you have never owned a home, you may be eligible for special financing programs for first-time homebuyers (FTHB). In some instances, even if you have owned a home before, you still may be eligible for first-time homebuyer loan programs, as long as you have not owned a home in the past three years. These first-time homebuyer loan programs are designed specifically to help remove obstacles to homeownership that new buyers often face, such as saving for a down payment. First-time homebuyer loan programs may vary by state, and each program has specific eligibility requirements and restrictions. To see if a FTHB loan might be right for you, check out the pros and cons below. 


  • Low and no down payment options provide buyers with limited funds an opportunity to purchase a home. 

  • Provide funds to assist with your down payment or closing costs. These come in two basic forms: 

  • Grant or second mortgage that is forgiven over a period of time 

  • Grant or second mortgage that is repaid at a lower interest rate over a period of time 

  • Low or no mortgage insurance options can help save you money on your monthly payment. 

  • Higher conditions and safety standards may be required to ensure homes receiving down payment assistance (DPA) loans are move-in ready. 

  • These higher conditions and safety standards refer to requirements for many DPA programs – such as no lead paint, no loose shingles, intact flooring. Additionally, some DPA organizations will require a home inspection and may mandate certain items on the inspection to be repaired that may not be notated on an appraisal. 

  • Free homebuyer education classes to help you prepare for the responsibility of owning a home. 


  • Limitations based on where you live and your income may apply. 

  • Location and sales price restrictions may apply which could limit your search area and the available selection of homes. 

  • Income restrictions may apply since most first-time homebuyer programs are designed to help low- and moderate-income buyers. 

  • Restrictions on the amount of time you need to own your home may apply. Many FTHB loans require that you own your home for a designated period of time. If you sell before that time period has expired, you may be required to repay or forfeit part of the down payment assistance you received. 

  • Some programs receive a limited amount of funds each year that are distributed on a first-come, first-serve basis. The challenge sometimes exists to find a home before the funds have been exhausted. 

First-time homebuyer loan programs have their advantages and disadvantages. However, the good news is that there may be several other options available to you. For additional loan options requiring little or no money down, check out eight ways to buy a home with little or no money down


By: Marlene Sheard

Marlene is a mortgage marketing representative for Ameris Bank and previous sales and marketing president for her local Home Builders Association. She enjoys sharing her experiences for the buying, selling, and financing of homes.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All loans subject to credit approval.