The single most common misconception about US first-time buyer lending is that the flagship low-down-payment programmes require you to be a first-time buyer. They do not. They cap your income instead.

The 2026 limits you are working within

Limit	2026
Conforming loan limit, one unit, most of the US	$832,750
High-cost area ceiling	$1,249,125
Alaska, Hawaii, Guam, US Virgin Islands baseline	$1,249,125
FHA floor, one unit	$541,287
FHA ceiling, one unit	$1,249,125

The conforming limit rose $26,250 from $806,500 in 2025, driven by a 3.26% rise in FHFA's house price index between Q3 2024 and Q3 2025. Limits rose in all but 32 counties.

FHA's floor is 65% and its ceiling 150% of the conforming baseline; your county limit sits somewhere between the two.

Fannie Mae HomeReady

• Down payment from 3%
• Income limit: 80% of area median income — 2026 AMI limits took effect 13 June 2026, checked via Fannie Mae's AMI Lookup Tool
• First-time buyer status is not required. Repeat buyers are eligible
• If all occupying borrowers are first-time buyers, at least one must complete homeownership education. Fannie Mae's free HomeView course satisfies this
• Reduced and cancellable mortgage insurance

Freddie Mac Home Possible

• 3% down, with flexible funding sources — family gifts, employer assistance, secondary financing, sweat equity
• Income limit: 80% AMI, with no geographic restriction on loan amounts
• Up to 97% LTV (105% total LTV with Affordable Seconds)
• No first-time buyer requirement and no published minimum credit score
• Eligible properties: one to four units, condos, co-ops, PUDs, and manufactured homes with restrictions
• Mortgage insurance cancellable once the balance falls below 80% of appraised value

FHA

Not a first-time buyer programme at all — anyone can use it. It is the practical first-time route because of what it tolerates rather than what it restricts.

• 3.5% down at a 580 credit score; 10% down between 500 and 579
• More permissive on credit history and debt-to-income
• Gift funds allowed for the down payment

The trade-off: at 3.5% down, FHA's annual mortgage insurance premium runs for the life of the loan and does not cancel at 80% equity. See mortgage insurance explained.

VA — if you are eligible

For an eligible veteran, service member or qualifying surviving spouse, this beats all of the above: no down payment, no monthly mortgage insurance, no loan limit with full entitlement. See VA home loans in 2026.

Which route suits which situation

Your position	Look at
Eligible for VA	VA, first and foremost
Income under 80% AMI, decent credit	HomeReady or Home Possible — 3% down, cancellable MI
Damaged credit	FHA, with a plan to refinance out of MIP later
Rural area, moderate income	USDA — no down payment, no minimum score
Income above 80% AMI, strong credit	Standard conventional at 5% or more down

A note on "first-time buyer"

The standard definition used across programmes is someone who has had no ownership interest in a principal residence during the three years preceding the purchase, with additional qualifying categories such as certain displaced homemakers and single parents.

We have not verified that wording against a primary source for each programme. If first-time status is load-bearing for a grant or assistance programme you are applying to, confirm the definition that programme uses.

Do not forget state and local help

Nearly every state has a housing finance agency offering down payment assistance, below-market rates, or mortgage credit certificates for first-time buyers. These are separate from the federal programmes above and can be combined with them. Search your state's housing finance agency by name — it is the most commonly missed money in the whole process.