Mortgage rates hovering near 6% have pushed the monthly payment on a typical American home well past what many renters can stretch to cover.
But a quieter obstacle sits in front of that: the down payment itself.
Nearly four in ten Americans say saving for it is the single biggest reason they haven't bought, according to repeated surveys from the National Association of Realtors.
There are thousands of first-time buyer programs run by state housing agencies, cities, counties, and nonprofits, and most of them have nothing to do with the federal government.
They offer down payment grants, forgivable loans, and below-market interest rates that many eligible buyers never even apply for.
A state housing finance agency might offer a 30-year fixed loan paired with 3% of the purchase price as a grant.
A county program might lend up to $25,000 at 0% interest, forgiven after five years if you stay in the home.
Requirements shift county by county, which is exactly why so many buyers give up before they start.
One common thread ties most programs together: income caps.
You usually can't earn more than a set percentage of your area's median income, which in high-cost metros can still mean six figures.
Credit score minimums tend to be lower than conventional loans, often in the 620 to 660 range, and many programs accept alternative credit history like rent and utility payments.
Down payment assistance often comes as a second mortgage, and that second lien has to be repaid or forgiven on a schedule.
Some carry higher interest rates on the first loan to offset the help.
Read the terms before you sign, and ask a HUD-approved counselor to walk you through them.
Start with your state housing finance agency's website, then check your city and county housing departments.
HUD maintains a searchable list of approved lenders who work with these loans.
The catch is that not every real estate agent knows the programs exist, so you may need to ask directly.
Many programs are funded in cycles and run out of money before the year ends.
Applying early in a funding period can be the difference between getting a grant and landing on a waitlist.
One more thing worth checking: some programs combine.
A state grant plus a local nonprofit loan plus a matched-savings account can stack into a serious chunk of a down payment.
Lenders who specialize in these loans know which ones play well together.
The bottom line is that the down payment hurdle is often lower than it looks, but only for buyers who do the homework.
Our take: the biggest barrier for most first-time buyers isn't the rate, it's not knowing what help is already sitting there.
Final Thoughts
Spend an afternoon on your state housing agency's site before you assume you can't afford to buy.