First-Time Buyer? Pick the Right Loan Before You Shop Rates

Buying your first home comes with a long list of decisions. The one that shapes almost everything else is the loan program you use. It decides how much you need to save, how much mortgage insurance you pay and which rates you can get. Choosing it before you compare rates saves time and, often, real money.

Four questions that point to your loan

1. Have you served in the military, or are you a surviving spouse? If yes, start with a VA loan.
2. Are you buying outside a major city? Check whether the address qualifies for a USDA loan.
3. Is your credit still being built, or are your savings modest? An FHA loan may be the easiest path.
4. Do you have solid credit and some savings? A conventional loan is often the lowest-cost option over time.

The main first-time buyer options

VA loan: 0% down for eligible borrowers. No monthly mortgage insurance, though most borrowers pay a one-time funding fee. For veterans, service members and some surviving spouses.

USDA loan: 0% down, with annual and upfront guarantee fees. For buyers in eligible rural and suburban areas who meet income limits.

FHA loan: 3.5% down with qualifying credit. Mortgage insurance is usually required, often for the life of the loan with a small down payment. For buyers with lower credit scores or limited savings.

Conventional loan: as low as 3% down on some programs. Mortgage insurance is required below 20% down but can be removed later. For buyers with stronger credit.

What first-time buyers often miss

• USDA areas are broader than most expect. Many small towns and suburbs qualify.
• VA eligibility is commonly underused. Some eligible buyers never check and pay for mortgage insurance they could have avoided.
• FHA mortgage insurance can be long-lasting. Some buyers later refinance into a conventional loan to remove it once they have enough equity.
• Down payment help exists. Many states and cities offer assistance programs for first-time buyers. Ask lenders which ones they work with.

Before you apply

• Check your credit reports and fix any errors.
• Add up your savings for the down payment, closing costs and a cash cushion.
• Get pre-approved so you know your price range before you tour homes.
• Compare offers from at least two or three lenders on the same day, so the rates are comparable.

The bottom line

Start with the program, then the rate. Once you know which loan fits, comparing lenders becomes simpler, and you are less likely to overpay for years.

Advertising disclosure: This is a marketing and information page, not a lender or mortgage broker, and nothing here is financial, legal or tax advice. When you choose to continue, you may be directed to a partner’s site where you can share your information, and that partner may contact you. We may be compensated for these connections. Loan terms, rates, fees and eligibility are set by lenders and can change at any time.