Find the Right Loan for First-Time Homebuyers

FHA Loans – 3.5 % Down

Overview:

FHA‑insured loans lower the barrier to homeownership for borrowers with modest credit and savings.

Highlights:

• 3.5 % down with 580+ score (10 % with 500‑579)
• Flexible credit & DTI; DTIs to ~56 % with compensating factors
• Seller concessions 6 % to cover closing costs
• Assumable mortgage for future rate transfer

Keep in mind:

• Up‑front & annual MIP (may last life of loan)
• County loan limits apply

VA Loans – 0 % Down

Overview:

Guaranteed by the U.S. Department of Veterans Affairs, VA mortgages combine zero down with no PMI for eligible military borrowers.

Highlights:

• 100 % financing to conforming limit (and beyond with entitlement)
• No PMI & competitive interest rates
• Reusable benefit and assumability

Keep in mind:

• Funding fee 0.5–3.3 % (waived for many disabled vets)
• Primary residence only

HomeReady® (Fannie Mae) – 3 % Down

Overview:

Fannie Mae’s flagship low‑income product offers reduced PMI and accepts household or boarder income.

Highlights:

• 3 % down – gifts or grants accepted
• Reduced PMI cancellable at 20 % equity
• Boarder & non‑occupant co‑borrower income eligible
• Online homeownership education (~1 hour)

Keep in mind:

• Income cap ≤ 80 % area median (except targeted tracts)

Home Possible® (Freddie Mac) – 3 % Down

Overview:

Freddie Mac’s counterpart to HomeReady® allows broader down‑payment sources including sweat equity.

Highlights:

• Sweat equity, gifts, grants can fund entire down payment
• No borrower contribution needed on 1‑unit homes
• Discounted PMI cancellable at 20 % equity

Keep in mind:

• Income cap ≤ 80 % AMI

Conventional 97 – 3 % Down

Overview:

The standard 3 % down conforming loan with no income limits and cancellable PMI.

Highlights:

• Gift funds can cover 100 % of down payment & costs
• PMI customizable: monthly, single‑premium, or lender‑paid

Keep in mind:

• Best pricing at 700+ credit; minimum 620

FHA 203(k) Renovation – 3.5 % Down

Overview:

Finance purchase plus repairs in one loan, based on the property’s after‑improved value.

Highlights:

• Limited: ≤ $35k non‑structural work
• Standard: structural projects $5k+; HUD consultant required
• Same FHA credit & down‑payment rules

Keep in mind:

• MIP applies and paperwork is heavier

HomeStyle® Renovation – 3 % Down

Overview:

A conventional renovation mortgage allowing luxury upgrades and use on second homes or investment properties.

Highlights:

• After‑renovation LTV up to 95 %
• Luxury items (pools, ADUs) & energy projects allowed
• No upfront MI; PMI cancels at 20 % equity

Keep in mind:

• Licensed contractor required; DIY limited

Side‑by‑Side Comparison