20 Best Home Loans for First-Time Buyers – Purchasing your first home is an exciting milestone, but it can also come with many unfamiliar challenges. Among the most crucial choices you’ll face is selecting the home loan that best fits your needs. With hundreds of mortgage options out there, it’s easy to feel overwhelmed.
But here’s the good news: as a first-time buyer, you actually have more opportunities than most. Government programs, bank-backed offers, and private lenders have crafted home loan packages specifically designed to help new buyers transition from renting to owning with confidence.
This guide breaks down 20 of the best home loans for first-time buyers, highlighting each one’s unique features and benefits. Whether you’re dreaming of a cozy starter home, a suburban space for your family, or a condo in the city, there’s a mortgage solution that fits your financial needs and long-term goals.
20 Best Home Loans for First-Time Buyers
We’ve compiled a comprehensive list of 20 exceptional home loan options tailored to the unique needs of first-time buyers.
1. FHA Loan (Federal Housing Administration Loan)
FHA loans are a top choice for first-time buyers with limited savings or lower credit scores. With a down payment as low as 3.5% and a minimum credit score requirement of 580, this government-backed mortgage is accessible and flexible.
It’s especially helpful for those recovering from past financial difficulties, like bankruptcy or foreclosure. However, FHA loans come with mortgage insurance premiums (MIP) that can last the life of the loan unless you refinance.
2. Conventional 97 Loan
The Conventional 97 loan allows borrowers to put just 3% down, and this makes it a competitor to the FHA loan without the long-term mortgage insurance burden.
Backed by Fannie Mae, this loan requires a minimum credit score of 620 and is best for buyers with good credit but low savings. Unlike FHA loans, private mortgage insurance (PMI) can be eliminated once you build up 20% equity in your home.
3. VA Loan (Veterans Affairs Loan)
For veterans, active-duty service members, and eligible surviving spouses, the VA loan stands out as a top-tier mortgage option. It provides full financing with no down payment needed and eliminates the need for mortgage insurance.
Along with competitive interest rates and flexible credit guidelines, it remains a strong choice. One thing to note is the required funding fee, which can be added to the total loan amount.
4. USDA Loan (United States Department of Agriculture Loan)
Perfect for rural and suburban first-time buyers, the USDA loan offers 100% financing and reduced mortgage insurance costs. This government-backed loan requires that the property be in an eligible area and that the buyer meet income limits. It’s an excellent choice for those seeking affordability in non-urban regions.
5. Freddie Mac Home Possible Loan
This loan istailored for low- to moderate-income homebuyers; this loan program allows for down payments as low as 3% and accepts various sources of assistance, including gifts and grants. It’s also accessible to those with limited credit history, and private mortgage insurance (PMI) can be canceled once sufficient equity is built in the home.
6. Fannie Mae HomeReady Loan
The HomeReady loan is a great option for buyers who have a steady income but minimal savings for a down payment. It requires as little as 3% down, permits non-occupant co-borrowers such as a parent, and considers the income of other household members not listed on the loan, making it easier to qualify.
7. Good Neighbor Next Door Program
Offered by HUD, this program provides significant discounts (up to 50% off) on homes in revitalization areas for teachers, firefighters, police officers, and emergency medical technicians. You must live in the home for at least three years, but it’s a golden opportunity for community-serving professionals.
8. State-Sponsored First-Time Homebuyer Programs
Almost every U.S. state has a housing finance agency that provides loans and down payment assistance to first-time buyers. These programs often come with lower rates, tax credits, or forgivable second mortgages. Each state’s eligibility varies, so it’s worth researching your local options.
9. Bank of America Community Affordable Loan Solution
This unique loan is designed for first-time buyers in certain minority communities. It offers zero down payment, zero closing costs, and no mortgage insurance. Borrowers must complete a homebuyer certification course, but the savings make it worthwhile. Credit score requirements are also relaxed under this program.
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10. Chase DreamMaker Mortgage
This loan offers a low down payment option (as low as 3%) and reduced PMI. It’s tailored for low- to moderate-income buyers and includes homebuyer education resources to ensure informed decisions. Chase also offers grants for eligible buyers to help with closing costs.
11. Citi HomeRun Mortgage
Citi’s HomeRun loan allows for 3% down with no PMI, making it highly affordable over time. It targets underserved communities and includes options for those with non-traditional credit histories. This product also supports down payment assistance programs.
12. PNC Community Loan
The PNC Community Loan offers flexible credit requirements and allows buyers to qualify with a non-occupant co-borrower. It includes grants for closing costs and low down payment options, making it ideal for young professionals or recent graduates.
13. Wells Fargo Dream Plan Home Mortgage
This loan supports first-time homebuyers by offering down payment assistance and access to homebuyer education programs. It’s particularly beneficial for individuals in underserved communities, with down payments as low as 3% and grant opportunities available based on your income and location.
14. SoFi Mortgage for First-Time Homebuyers
SoFi provides a tech-savvy mortgage solution designed for buyers with strong credit and existing student debt. With no origination fees and down payments starting at just 3%, it appeals to millennial homebuyers seeking convenience, speed, and competitive interest rates.
15. Guild Mortgage 3-2-1 Home Loan
This program includes a $2,000 Home Depot gift card (yes, really!) for new buyers, plus low down payments and flexible credit options. It’s an excellent package for those who plan to do minor renovations or updates after moving in.
16. Movement Mortgage FHA Advantage
Movement Mortgage offers a streamlined FHA loan with quicker processing times and built-in down payment assistance for qualifying buyers. It’s great for those who need to close quickly without compromising affordability.
17. Navy Federal Credit Union HomeBuyers Choice Loan
Available to Navy Federal members (military and eligible family), this product offers 100% financing, no PMI, and competitive rates. It’s a strong alternative to VA loans for those who may not qualify.
18. TD Bank Right Step Mortgage
This program targets first-time buyers in the Northeast and Mid-Atlantic U.S., offering 3% down and lender-paid PMI. Credit requirements are moderate, and the bank also supports homebuyer education programs.
19. Union Bank’s Community Home Loan
For buyers in select California and Washington communities, Union Bank offers flexible terms with low down payments and no mortgage insurance. The program is community-focused and emphasizes financial inclusivity.
20. Homeownership Voucher Program (HUD)
Offered through local public housing authorities, this HUD-backed initiative allows eligible low-income renters to use Section 8 vouchers toward mortgage payments instead of rent. It’s a life-changing path to homeownership for those receiving housing assistance.
Final Thoughts
The best home loan for you depends on your income, credit score, location, and future plans. Take the time to compare options, research your state’s offerings, and don’t hesitate to consult with a housing counselor or mortgage advisor. Homeownership may seem daunting at first, but with the right loan in your corner, that first set of house keys is well within reach.
