Look Up Loan Assistance

The government wants you to buy a house, and so do local jurisdictions. Federal, state, and local governments will often offer incentive programs in the form of loans or grants to buy a home in their location. Loan assistance is similar to getting a scholarship: free or reduced money to encourage homeownership. 

Examples include state loan programs with certain lenders, or down payment grants if you buy in certain areas of a city, but these offerings vary drastically even from jurisdiction to jurisdiction. 

Look up your state, county, and city's websites to see if they have housing programs available to you.

An FHA Loan is a mortgage that's insured (but not issued) by the Federal Housing Administration. These loans are administered by FHA-Approved lenders and allow borrowers to finance homes with down payments as low as 3.5%. Because of this, they are especially popular with first-time homebuyers. Even borrowers who have suffered from bankruptcy or foreclosures may qualify for an FHA-backed mortgage.

However, the lenient financial requirements for FHA borrowers is balanced with stricter requirements about the condition of the property and higher interest rates. For example, a property purchased using an FHA loan may not have any peeling or chipping paint. As such, not all properties qualify for FHA loans. Furthermore, the FHA property requirements that are absent with conventional loans may prompt a seller to prioritize other offers. 

See the FHA's Loan Requirements page for details. 

If you're a teacher, firefighter, law enforcement officer, emergency technician (EMT), or other community servant, you may qualify for special loans or grants. Make sure to look at a variety of sources–these benefits exist at all levels of government.

Large employers will often have affiliated lenders and can sometimes offer special assistance, so make sure you inquire before you settle on a lender. However, buyer beware: some employers advertise down payment assistance, but will require using their affiliated lenders in order to qualify. It is important not to automatically assume that your employer's affiliated lender will be your best bet; sometimes, the down payment assistance isn't worth the cost if the affiliated lender's interest rate is higher than that of other lenders.

Yes, there are prerequisites for almost every mortgage program, some more strict than others. Examples of requirements can include buying in specific areas, the house itself meeting certain criteria, using particular lenders, taking a home-buying course, or not exceeding a maximum income threshold. Make sure you understand the fine print before accepting these loan or grant programs.