First-time home buyer programs by state, and the federal rules that shape all of them

State first-time buyer assistance is commonly funded with tax-exempt mortgage revenue bonds, and where it is, federal tax law sets the frame the state agency then fills in. To use that money you must have held no ownership interest in a principal residence at any time during the three years ending on the day your mortgage is executed (26 U.S.C. 143(d)(1)), your family income must be no more than 115 percent of the applicable median (143(f)(1)), and the acquisition cost of the home must be no more than 90 percent of the average area purchase price (143(e)(1)). All three were read on the Government Publishing Office's United States Code on 21 September 2026.

Quick answers

The statute does not move; the numbers it points at do. Section 143 has carried the three-year rule for decades. What gets recomputed and republished every year is the pair of area figures underneath it, the applicable median income and the average area purchase price, which is why a program sheet you read last spring can carry a ceiling that no longer applies.
Targeted areas are the big exception. In a qualified targeted area the three-year rule does not apply at all (143(d)(2)(A)) and the purchase price test is run at 110 percent of the average area price instead of 90 (143(e)(5)). Owning before does not always disqualify you, and the map decides.
There is a tax on selling early. Disposing of the home within nine years of the testing date can add a recapture amount to that year's federal tax, capped at 50 percent of the gain, with no recapture on a disposition by reason of death or more than nine years out (143(m)(1) and (m)(2)).
The loan under the assistance has its own ceilings. For 2026 the baseline conforming loan limit on a one-unit home is $832,750 and the high-cost ceiling is $1,249,125 (FHFA, conforming loan limit values for 2026, announced 25 November 2025, read 21 September 2026). The FHA floor is $541,287 and its ceiling is $1,249,125 (FHA Mortgagee Letter 2025-23, dated 11 December 2025; last read against the source on 24 August 2026, because HUD blocks automated requests). Whichever binds first is the one that matters.

BEDRWay is not a lender or a mortgage broker. We are not licensed to originate mortgages in any state, we set no rates and quote none, and nothing here is an offer of credit. We introduce you to one licensed loan officer who works where you live, and only that person can tell you what you would be offered.

Reviewed by the BEDRWay editorial team. Last reviewed 21 September 2026. Every figure names its publisher and the day it was read.

What "first-time buyer" means when money is attached to it

In ordinary speech it means you have never owned a home. In the programs that hand out money it means something narrower and easier to satisfy: no present ownership interest in a principal residence during the three years ending the day the mortgage is executed. Two consequences follow, and both are missed constantly.

Owning before is not permanent disqualification. Sell, rent for three years, and you are inside the definition again. The clock runs to the execution date of the new mortgage, not to closing on the old home.
Property that was never your principal residence does not count. An inherited share of a rental, or land, is not a present ownership interest in a principal residence. Nor is your interest in the home being financed now, which the statute excludes from the test explicitly (143(d)(3)).

The statute carves out more than the targeted-area case. Qualified home improvement and rehabilitation loans sit outside the three-year rule, and so does financing a residence for a veteran under 143(d)(2)(D). A state agency may run its program to exactly these federal lines or tighter, never looser, which is the first thing worth checking on a state page.

Why every program has an income cap and a price cap

Because the bond subsidy is conditioned on them. The income test is 115 percent of the applicable median family income; the price test is 90 percent of the average purchase price of single family homes in the statistical area the home sits in. Neither is a number an agency chose, and neither is a number an agency can waive.

That is also why the caps look so uneven across a single state. They are area figures, not state figures, so a metropolitan county and a rural one in the same state can carry ceilings that are far apart, and a household comfortably inside the limit in one county can sit outside it twenty miles away. Household size usually moves the income line too. The state pages carry the current published figures and name the agency that published them.

The recapture tax, which almost nobody mentions

This is the part of bond-funded assistance that surprises people years later. If you dispose of the home while the financing is still federally subsidized, federal tax for that year can be increased by a recapture amount. The mechanics are in 143(m): the recapture amount is the product of a federally subsidized amount set at 6.25 percent of the highest principal balance, a holding period percentage that runs up and then back down across nine years, and an income percentage. The total is capped at 50 percent of the gain on the disposition.

Three things take it off the table. A disposition more than nine years after the testing date, a disposition by reason of death, and no gain at all, since the cap is a share of a gain that has to exist. It applies to mortgage credit certificates for the same reason it applies to bond loans, because a credit allowed under section 25 also makes the debt federally subsidized (143(m)(3)). Whether it applies to you is a question for a tax professional reading your file, not for this page.

The four shapes assistance takes

State agencies build from a small set of parts, and the part you are offered changes what the help actually costs you.

Shape	How it works	What to check first
Grant	Money that is never repaid	Rare, usually small, and often the first thing to run out of funding
Forgivable second mortgage	A silent lien forgiven over a set occupancy period	The forgiveness schedule, and what selling or refinancing early triggers
Repayable second mortgage	A real second loan, sometimes deferred to sale or payoff	Whether it amortizes now or sits silent, and what happens at payoff
Mortgage credit certificate	An annual federal income tax credit on part of the interest paid	That it is a credit claimed each year, not money at the closing table

A forgivable second and a repayable second look identical on a program flyer and are not the same product. The forgivable one is a bet on staying put: leave inside the occupancy period and the unforgiven balance is generally due. That is the single most consequential thing to read before signing, and it is a state-level term, which is why the state pages below spell it out per program rather than in general here. Down payment assistance and first-time buyer grants takes each of these shapes apart by what it does at sale and at refinance, and covers the second federal pipeline, HOME, which runs on caps of its own.

Not every program is a bond program

Agencies also run assistance funded outside mortgage revenue bonds, and where the bond is absent so is section 143. Those programs can set their own definition of a first-time buyer, their own caps, and they carry no recapture tax, because there is no federal subsidy to recapture. So "am I a first-time buyer" has no single national answer: it has an answer per program, and reading which funding a program sits on is how you get it right.

Programs close, and the good pages say so

Bond authority is allocated, assistance funds are appropriated, and both run out. Agencies suspend reservations mid-year, retire products and replace them. A page telling you a program is open when its administrator closed it last quarter costs you a application and, sometimes, a contract. Every state page under this one carries a status per program, including the ones that are closed or discontinued, because knowing a door is shut is worth as much as knowing one is open.

Where the down payment floor comes from

Assistance sits on top of an ordinary loan, and the minimum that loan requires is set by the program behind it rather than by the state. Those floors, along with what every lender checks and the documents to have ready, are on the home loans page, and the comparison people usually want next is FHA against conventional. If the question is who pays that down payment rather than how large it is, the down payment assistance page is the one. If you are working out what you can carry rather than what you can be lent, the debt-to-income and closing costs calculators do the arithmetic without asking you for anything.

First-time home buyer programs by state

Each page names the housing finance agency, the products it runs today, what each is worth, who it is for, and which of them have closed. Every figure carries its publisher and the day somebody read it. They are published one state at a time rather than generated, because a program page that is confidently out of date is worse than one that does not exist yet.

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