Buying a home is widely recognized as a rite of passage for many Americans. The benefits of this investment are financially clear, but there is also an emotional and interpersonal element to being a homeowner that makes it such a distinct experience.

For millennials, though, buying a home can be a daunting experience. Both student loans and the tendency to rent in increasingly pricey locales makes saving up for an eventual down payment difficult.

This confluence of factors can make first-time homebuyers wary, but it’s not all bad news. Luckily there are programs that seek to assist first-time homebuyers in their efforts to secure a mortgage, and many of them are not as complicated as one might think. Programs are broader than many assume, assisting potential homebuyers at a range of income levels and locations, and local initiatives can often be just as helpful as federal programs. 

Check Out More Content From Our Homebuyers Week

FHA

Perhaps the most popular resource for homebuyers is the Federal Housing Administration. The agency was founded in the 1930s, at a time when millions of workers lost their jobs, the requirements for a home loan were simply too high for many Americans, and most citizens were opting to rent indefinitely. Sound familiar?

FHA loans are insured by the federal government and are typically a good match for buyers with low credit scores or who are not able to afford large down payments. Borrowers can qualify for down payments as low as 3.5 percent, but they are also obligated to purchase private mortgage insurance (aka PMI).

USDA

For buyers looking to put down roots in rural or suburban areas, a USDA loan might be a good fit. While these loans are issued by private lenders, they are insured by the United States Department of Agriculture, and they offer $0 down payments for homebuyers in qualifying areas. 

The stated purpose of these loans is to provide affordable homeownership opportunities to low-to-moderate income households to stimulate economic growth in rural and suburban communities. These loans are good for buyers under financial constraints who also have flexibility in terms of living outside urban areas. 

TN Housing Development Agency 

The TN Housing Development Agency is designed with one primary goal: “to meaningfully expand safe, sound, affordable housing opportunities for low and moderate income Tennesseans.”

More simply put, they are dedicated to seeing the universe of housing options and homeowners in Tennessee thrive. The program offers in-person classes (which are required in order for a homebuyer to receive down-payment assistance) and a plethora of resources for first-time homebuyers on their website. All THDA loans have 30-year, fixed-rate terms with a maximum down-payment assistance grant of 5 percent.

In 2017, the agency expanded its Great Choice Program with a down-payment assistance initiative that helps qualifying first-time homebuyers with up to $15,000 toward a down payment.

The new program, Great Choice Plus, seeks to draw potential residents to neighborhoods that have been less affected by Nashville’s housing boom in areas like Bordeaux, Whites Creek, North Nashville, Southeast Nashville, and Madison.

Options for Military Veterans

Another element of the THDA’s Great Choice program is their Homeownership for the Brave initiative which helps active duty service members, veterans, reservists, and their spouses purchase homes regardless of whether or not they are first-time buyers. 

The program offers reduced interest rates and the option to borrow up to 100 percent of the home’s price with a loan insured by the Department of Veterans Affairs. The VA also offers service members unique home purchase opportunities as well as assistance with housing needs like building, repair, and adaptation in the event of a disability.