Buying your first home is an exciting milestone in your life. But without the proper saving, research and planning, this happy time can turn into a stressful situation. First-time homebuyers often don’t realize how many different loan programs are available to them, even with a lower down payment. Before you schedule an appointment with a mortgage banker, learn the different types of mortgage programs available to you to make an informed decision.

1. FHA Loans

The Federal Housing Administration (FHA) loan program is one of the most popular among first-time homebuyers. This is because it allows for a down payment as little as 3.5%, which can be gifted from an approved source, such as a family member. FHA loans also have more flexibility for borrowers to qualify, allowing for a lower minimum credit score than other loan programs. Plus, in some situations, interest rates for FHA loans are lower than conventional mortgage loans.

2. VA Loans

Designed for military veterans and those who are currently active in the military, VA loans are one of the best mortgage programs available. For those who qualify for a VA loan, there’s no down payment required, no monthly insurance fee if you do not put down 20% and there is no prepayment penalty. These loans also typically have interest rates that are .5 to 1 percent lower than conventional interest rates. Combine the lower interest rates with no down payment and no monthly insurance fee, and the savings start adding up significantly.

3. USDA Loans

United States Department of Agriculture (USDA) loans offer homebuyers zero down payment options in certain rural and suburban neighborhoods. While USDA loans once were considered “farm loans,” you don’t have to live on a farm to take advantage of this type of mortgage. There are, however, income limitations, which vary by region. This type of loan offers many benefits, including more flexible credit qualifying terms, low monthly mortgage insurance, and great interest rates compared to a 30-year fixed loan.

Apply for Your First Home Mortgage Today

Are you looking to purchase your first home, but are unsure which loan program will best suit your needs? Our experts at Home Point Financial can help! With years of experience in the industry, combined with the dedication to our communities, we are confident that we can give the best advice and product to our customers. For more information about which loan is right for your current financial situation, be sure to contact us today. We are eager to help you purchase your first home!