Freddie Mac has announced a new program aimed at helping very low-income homebuyers cover some of the home purchase costs, with a $2,500 credit.

The program will be available to homebuyers earning 50% of area median income or less. The credit can go toward a down payment and other closing costs.

Credits will be made available starting March 1 through Freddie Mac’s existing low-income buyer assistance programs Home Possible and HFA Advantage.

“Today’s announcement is a vital lifeline for would-be homeowners, as studies show that down payment and closing costs are among the largest barriers to homeownership for very low-income homebuyers” said Sonu Mittal, senior vice president and head of single-family acquisitions at Freddie Mac.

There are other requirements in addition to income. In addition to a down payment, the credit can be applied toward escrow and mortgage insurance premiums.

Freddie Mac’s low-income buyer programs also include terms with down payments as low as 3%.

Freddie Mac said 51% of the mortgages it purchased in 2023 were first-time homebuyers, which is the highest since it began tracking first time buyer share three decades ago.

Freddie Mac recently launched a free online tool called DPA One, which aggregates down payment assistance programs on one platform.