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First-time Homebuyer Tax Credits, Programs, and Grants

Learn About Financial Assistance When Buying a Home

While homeownership is rewarding, buying your first home can be financially stressful. Luckily, your state or community may have programs that make homeownership for first-time buyers more affordable. Read on to learn more about first-time homebuyer credits and programs, plus tips on how you can research programs in places where you want to buy.

Who Qualifies as a First-time Homebuyer?

Naturally, if you never owned a home before, you’ll qualify as a first-time homebuyer. However, you may also qualify if you’ve only owned a mobile home or an investment property—or if you’ve previously shared ownership with a former spouse. Some programs even consider those who haven’t owned a home within the last three years as a first-time homebuyer.

First-time homebuyer qualification varies, depending on the state where you buy your home.

What Are First-time Homebuyer Tax Credits?

First-time homebuyer tax credits are available through government programs that make homeownership more accessible for Americans. Tax credits can make buying your first home easier by assisting with your down payment or closing costs.

Some states offer tax credits for first-time homebuyers. These programs typically come with individual requirements on income or property size, so check your state’s website to see if you qualify.

Some programs offer mortgage credit certificates (MCC), which are tax credits for the mortgage interest you pay each month. The credit varies by how much mortgage interest you pay and where you live. First-time homebuyers are also eligible for the same tax deductions typically available to all homeowners, such as mortgage interest, mortgage insurance, or mortgage points. Consult your tax advisor for details.

What Are First-time Homebuyer Assistance Programs?

First-time homebuyer assistance programs vary, but typically help with down payments, closing costs, or qualifying for your mortgage. Programs have different requirements on credit score, income limits, minimum down payment, types of property, and mortgage insurance. Some require that you take education courses as a part of the program. Many of these programs are offered at the state level.

The U.S. Department of Housing and Urban Development (HUD) website has a page with useful links to homebuying assistance program information for the fifty states, Puerto Rico, and the District of Columbia. Visit the HUD page to learn more.

What Are First-time Homebuyer Grants?

First-time homebuyer grants are funds that typically do not require repayment. Like other assistance programs, grants can be found at the state level and have their own features and qualifications. This can include a maximum debt-to-income ratio, minimum credit score, and income limits. Some grants can also be combined with other first-time homebuyer programs or mortgage credit certificates. It’s a good idea to spend time looking through your state’s website to see if you qualify.

Are There First-time Homebuyer Courses?

Yes! Some classes are required for homebuyers who are applying for assistance programs and grants. Even if you are not required to take one, a homeownership course may be worth taking to help prepare you for owning a home.

Subjects covered may include budgeting for your mortgage, home maintenance, and juggling other debts, such as car payments. Many courses are offered in partnership with the U.S. Department of Housing and Urban Development. You can also find a course in your state using this map.

*Freedom Mortgage is not a financial advisor. The ideas outlined above are for informational purposes only, are not intended as investment or financial advice, and should not be construed as such. Consult a financial advisor before making important personal financial decisions, and consult a tax advisor regarding tax implications and the deductibility of mortgage interest and charges.

Last reviewed and updated January 2024 by Freedom Mortgage.

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