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What Type of Home Loan is Best for First-Time Buyers?

What Type of Home Loan is Best for First-Time Buyers?

By Emily Brandenberger, Mortgage Loan Officer at The Wood Group of Fairway - a Texas mortgage lender

Emily is a former realtor, dedicated to giving clients the quality service they deserve. She has successfully transitioned from a top-producing realtor in Houston to a mortgage loan officer serving the Austin, TX and Colorado markets. Having experience in both sides of the homebuying equation enables her to provide clients with a smoother route to home ownership.

When you’re thinking of buying your first home, you’ll have a lot of questions—One of the most important things to know is which loan program fits your situation best. With several options to choose from, there’s not a single correct answer.

Don't let a big down payment or a less-than-stellar credit score prevent you from owning a home. The four programs listed here are the most commonly used for homebuyers across the country. We’re outlining the advantages and restrictions of each.


If you’ve done a little research on home loans already, you’ve probably heard of the FHA loan program. The FHA program was designed specifically to help first-time buyers.

FHA advantages:

  • Low down payment requirement of 3.5%

  • Credit scores as low as 580 can qualify

  • Available to first-time borrowers regardless of location or professional occupation

FHA restrictions:

  • You’re still responsible for a 3.5% down payment

  • You must not have bought a home within the last three years

Fairway IMC closed the #1 highest amount of FHA loans in the USA in 2018 with $2.7+ billion in FHA loan volume. Contact us for more info!


The United States Department of Agriculture (USDA) has a special home loan program for borrowers in rural areas

USDA advantages:

  • $0 down option

USDA restrictions:

  • The minimum credit score of 620 is higher than the FHA program

  • Only certain rural areas/neighborhoods are eligible (see this map for eligible areas)

  • There are maximum income limits. Check this chart to see your county’s limit


Veteran’s Affairs rewards veterans and active service members with a special VA loan program. A VA loan is generally known to be one of the best home loan options available.

VA advantages:

  • Lower interest rates

  • $0 down option

  • Lower closing costs

  • No private mortgage insurance required

VA restrictions:

  • Typically, a minimum credit score of 620 is required

  • You must be a veteran or active service member

Read more about eligibility requirements for VA loans and a list of benefits here.


A conventional loan is typically not used by first-time buyers. But if you’ve been saving for a while, it may be the best option for you.

Conventional advantages:

  • Lower interest rates

  • Fewer fees

  • Flexible mortgage insurance options

Conventional restrictions:

  • Higher down payment requirement

  • Higher credit score requirement

Don't let the fear of a down payment or poor credit score prevent you from owning in Austin. Have a question about Austin real estate? Contact one of our agents today.

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