first time home loan programs explained and compared

What matters most

For a first purchase, focus on the total monthly payment, cash to close, and how long you’ll keep the loan. Rates are only part of the picture; mortgage insurance, funding fees, and points can shift the real cost. Many programs also offer grants or forgivable second liens to reduce upfront cash.

Eligibility basics

Most options require you to live in the home, meet income or price limits, and complete a brief homebuyer class. Credit score flexibility varies, but steady income and manageable debts matter more than perfection. Ask lenders to show scenarios side by side in plain numbers.

Popular options compared

These widely used choices serve different needs; the right fit depends on credit, location, and service history.

• FHA: 3.5% down, lenient credit; includes upfront and monthly insurance.
• Conventional 3%: lower insurance with strong credit; stricter underwriting.
• USDA: zero down in eligible rural areas; income caps apply.
• VA: zero down for veterans; no monthly MI, but a funding fee.
• State/local aid: grants or seconds that pair with FHA or conventional.

Compare APR, total cash to close, and five-year cost before choosing, and secure a written preapproval.