Government Loans

• Federal Housing Administration, or FHA, loans are popular among first-time buyers and are backed by the Department of Housing and Urban Development, or HUD. FHA loans are the easiest to qualify for, as they require a low down payment of 3.5 percent and have a desirable 30-year fixed rate. Securing an FHA loan requires a credit score of only 620, but one drawback is the limit imposed on loan amounts. VA loans with a zero down payment are available for active and honorably discharged military personnel.
  
  

HUD 203(k) Loans

• HUD offers a program that allows buyers to purchase HUD-owned homes -- foreclosed-on homes originally purchased with FHA-insured loans -- whereby you can purchase the property for only $100 down as long as you have a minimum credit score of 620. Specific details of this program vary from state to state, and HUD's website has additional information for each state. The 203(k) loan through HUD could be an effective lending option for you, if you are looking to find a deal on a foreclosed home in need of some repair. HUD's 203(k) loan allows you to finance the cost of the home and include in the loan the cost of repairs and updating of the property, from $5,000 up to more than $30,000.
  
  

First-Time Homebuyer Programs

• A few programs exist that are designed specifically for first-time homebuyers, including Fannie Mae's Home Path Mortgage and the My Community Plus First Time Home Buyer Program for teachers, police officers, firemen, nurses and other health care workers, and military personnel. Some qualifications for these programs consist of lower minimum credit scores, smaller down payments, no mortgage insurance required and no appraisal fee in some cases.
  
  

Commercial Lender Loans

• Commercial lenders such as banks and credit unions offer a number of lending options for first-time homebuyers, including fixed- and adjustable-rate mortgages, hybrid mortgages and interest-only mortgages. With a fixed-rate mortgage, your interest rate remains unchanged over the life of the loan, whereas an adjustable-rate mortgage has a fluctuating interest rate that changes in accordance with general interest rates. With a hybrid mortgage, you can expect to pay a fixed rate of interest for a specified period of time, after which the rate becomes adjustable. With a hybrid mortgage such as a 5/1 ARM, your interest remains constant for the first five years and the rate is adjusted yearly after that. An interest-only mortgage allows you to make only interest payments -- but no payments toward the principal -- for a specified period of time, after which you start making full mortgage payments in accordance with the terms of your loan.