When you’re buying your first home, the number of mortgage programs available can seem overwhelming. However, some of these options may allow you to purchase your home with less cash, lower monthly expenses or easier qualification requirements. Here’s a breakdown of some of the most popular loan programs for those who are ready to become homeowners.

  1. FHA Loans

One of the most widely used mortgage programs by first-time homebuyers is the FHA loan. Backed by the Federal Housing Administration, this program may be right for you if you don’t qualify for one of the more specialized programs listed below. Using an FHA loan, you can buy a home with a down payment as low as 3.5%. The minimum FICO credit score requirement for these loans varies by lender (at Draper and Kramer Mortgage, it’s 580 for home purchases). A notable drawback of an FHA loan is that it requires paying a monthly mortgage insurance premium that can only be removed by refinancing or paying off the loan.

  1. VA Loans

The U.S. Department of Veterans Affairs offers VA home loans for qualified military-connected borrowers. If you’re able to take advantage of this program, you can purchase a home with no down payment, no monthly mortgage insurance premiums and other potential benefits. The minimum FICO credit score requirement for these loans varies by lender (at Draper and Kramer Mortgage, it’s 580 for home purchases). VA borrowers are required to pay a VA funding fee, but this can often be financed into the loan. At Draper and Kramer Mortgage, we’re proud to never charge lender fees on our VA loans.

  1. USDA Loans

If you’re looking for a home away from urban life, a USDA loan may be the right solution for you. Should you qualify for this special program backed by the U.S. Department of Agriculture, you can purchase a home in an eligible rural location with no down payment. However, there is an upfront loan guarantee fee of 1 percent of the loan amount (which can be financed into the loan) and an annual fee of 0.35 percent of the loan amount (paid in monthly installments). The minimum FICO credit score requirement for these loans varies by lender (at Draper and Kramer Mortgage, it’s 620).  Also, your household income cannot exceed 115% of the median household income for the region.

  1. HomeReady and Home Possible Loans

Like FHA loans, HomeReady and Home Possible are mortgage programs that are popular with many first-time homebuyers. When buying a home with one of these loans, you may only need a minimum down payment as low as 3%, and although monthly mortgage insurance premiums are required, they can be removed later without refinancing or paying off the loan. However, unlike FHA loans, these programs typically have a maximum income limit, and their minimum FICO credit score requirement is usually higher (typically 620 for HomeReady and 660 for Home Possible).

  1. Renovation Loans

A renovation loan can help you expand your home search. If you find a property that is almost perfect but needs an updated kitchen, bathroom or other feature, you may be able to use a renovation loan to finance both your home purchase and renovation. Just be prepared for more paperwork and some additional requirements beyond a traditional home purchase loan. Minimum down payments for renovation loans can range from 0% to 5%. FICO credit score minimums vary by specific program and lender but may start as low as 580.

  1. Housing Finance Agency Programs

The loan options above are available nationwide to first-time and repeat homebuyers alike. However, many states and some regions offer their own special mortgage programs for residents, including those available only to first-time homebuyers. These options may include benefits such as down payment and/or closing cost assistance to reduce how much cash you need to make your purchase.


Here’s a side-by-side comparison of these programs.

Program Great for Minimum down payment Minimum FICO credit score at Draper and Kramer Mortgage
FHA Borrowers with lower credit scores or who don’t qualify for the programs below As low as 3.5% As low as 580 (home purchases only)
VA Military-connected borrowers 0% As low as 580 (home purchases only)
USDA Borrowers who want to live in eligible rural areas 0% As low as 620
HomeReady and Home Possible Lower-income borrowers As low as 3% As low as 620 (HomeReady) or 660 (Home Possible)
Renovation Borrowers who want to purchase and renovate homes 0% to 5% As low as 580
Housing Finance Agency Borrowers in regions served by a Housing Finance Agency Varies by program Varies by program


The home financing options are vast. It’s just a matter of finding the right one for you and your goals. For help learning about your options and navigating the home financing process, work with a mortgage professional! Get in touch today to find out which programs are available to you.