Buying your first home in 2025 isn’t easy — but smart strategies can help buyers overcome high mortgage rates.
If you’re a first-time buyer looking at today’s mortgage rates, it’s natural to feel overwhelmed. The average 30-year fixed rate has hovered around 6.7% so far in 2025 — far above what buyers saw just a few years ago. But the good news? There are still ways to make homeownership achievable. In this piece, we break down how first-time buyers are securing loans, what assistance is available, and how to navigate today’s lending landscape.
Where Rates and Applications Stand Now
According to Freddie Mac and the Mortgage Bankers Association (MBA):
- The average 30-year fixed rate is 6.7% as of May 2025.
- Mortgage applications from first-time buyers are down 12% compared to a year ago.
- FHA and VA loans now account for nearly 35% of first-time buyer applications — up from 28% in 2023.
“First-time buyers are relying more on low down payment programs and assistance to offset higher rates,” — mortgage analyst at MBA.
Detailed Strategies First-Time Buyers Are Using
- Exploring FHA, VA, and USDA loans: These programs offer lower down payments (as low as 3.5% for FHA, 0% for VA and USDA) and flexible credit requirements — critical for buyers with limited savings or shorter credit histories.
- Buying points: Paying upfront fees (typically 1% of the loan amount per point) can lower your interest rate by about 0.25% per point. This can make sense for buyers planning to stay in their home long-term.
- Considering ARMs carefully: While adjustable-rate mortgages may start with rates below 6%, buyers need to model future payments if rates rise after the initial period.
- Expanding search areas: Suburbs, exurbs, or smaller regional cities may offer lower home prices and property taxes. Buyers can use online tools to compare affordability and commute times.
- Improving credit scores pre-application: Even a 20-30 point credit score boost can meaningfully lower offered rates. Focus on paying down debts and correcting report errors.
Pro tip: Use mortgage calculators to model various scenarios, including rate increases, insurance, and property taxes.
Assistance Programs: More Than Meets the Eye
- Down payment assistance grants: Many states offer grants (not loans) that can cover part of a down payment or closing costs.
- Forgivable loans: Some assistance comes in the form of loans that are forgiven if you stay in the home for a certain number of years.
- Employer and union housing benefits: Large employers, hospitals, and unions sometimes offer homebuyer programs or partnerships with lenders.
- First-time buyer tax credits: Several proposals are under consideration federally; check current offerings in your state.
Key tip: Work with a HUD-certified housing counselor to explore every available program.
What This Means for Lenders and the Market
- Lenders are rolling out more flexible products — including low down payment conventional loans — to compete for first-time buyers.
- Some lenders are waiving certain fees or offering rate locks longer than the typical 60 days.
- The market is seeing fewer first-time buyers overall, but those who succeed are often better prepared and more informed.
Smart move: Get multiple loan quotes and don’t be afraid to negotiate fees or ask for lender credits.
Bottom Line: First-Time Buyers Can Succeed — With the Right Plan
High rates aren’t making it easy, but buyers who do their homework, use assistance programs, and stay flexible can still achieve their goal in 2025.
