First-Time Homebuyer Programs
Your First Home. The Right Loan to Get There.
There is no single "first-time buyer loan." There are four distinct programs — each designed for a different financial profile. This guide breaks down which one fits your situation and why.
Why the Right Program Matters
Most first-time buyers assume they need 20% down and perfect credit. Neither is true. The real question is which program aligns with your credit score, income, savings, and the neighborhood you want to buy in. Brooks Mortgage works through all four major first-time buyer pathways — and matches you to the one that gives you the best shot at closing.
FHA Loan
Federal Housing Administration
Buyers with credit scores between 500–679 or limited down payment savings.
The FHA loan is the most flexible government-backed program available. It allows non-occupant co-signers — such as a parent — and accepts 100% gifted down payments from family members. Underwriting is more forgiving than conventional, making it the go-to for buyers who have steady income but imperfect credit history.
Requires an Upfront Mortgage Insurance Premium (UFMIP) of 1.75% and monthly MIP for the life of the loan — unlike conventional PMI, it does not automatically cancel.
Key Guidelines
- 3.5% minimum down payment with a 580+ FICO score
- 500 FICO allowed with 10% down payment
- DTI up to 56.9% with strong automated underwriting approval
- 100% gifted down payment accepted from family
- Non-occupant co-signers permitted
HomeReady® & Home Possible®
Fannie Mae & Freddie Mac Conventional
Buyers with 620+ FICO and income at or below 80% of the Area Median Income.
Backed by Fannie Mae and Freddie Mac, these programs offer a lower down payment than FHA with one critical advantage: the mortgage insurance is cancellable once you reach 20% equity. For buyers who plan to stay in the home and build equity, this can save hundreds of dollars per month over the long run compared to an FHA loan.
Income limits apply. Buyers earning above 80% of the local AMI will not qualify and should look at standard conventional or FHA options instead.
Key Guidelines
- 3% minimum down payment — can be 100% gifted funds
- 620 minimum FICO; best pricing at 680+
- Income cannot exceed 80% of Area Median Income (AMI)
- PMI cancels automatically at 20% equity — unlike FHA MIP
- Requires completion of a free homebuyer education course
USDA Loan
U.S. Department of Agriculture Rural Development
Buyers targeting suburban or rural areas with household income near or below the local median.
Despite the name, the USDA Rural Development loan is not just for farms. Thousands of suburban master-planned communities across California qualify under USDA boundary maps. It is a true zero-down-payment mortgage with rates and monthly fees that are typically lower than both FHA and conventional options — making it one of the most underutilized programs available.
Geographic and income restrictions apply. Not every property or buyer will qualify — Isaac can run a quick eligibility check before you fall in love with a home.
Key Guidelines
- $0 down payment — 100% financing
- 640 FICO for automated approval; manual underwriting available below
- Rates and monthly fees typically lower than FHA
- Property must be in a USDA-designated eligible area
- Household income capped at approximately 115% of local median
State HFA & Down Payment Assistance
California Housing Finance Agency & Local DPA Programs
Buyers who qualify for FHA or conventional but need help covering the down payment or closing costs.
California's Housing Finance Agency and various county-level programs offer grants and forgivable second mortgages specifically designed to cover down payment and closing costs. When layered on top of an FHA or conventional first mortgage, a buyer can close on a home with little to no money out of pocket — the assistance covers what the first loan doesn't.
Programs have income caps and asset limits — buyers with significant cash reserves may not qualify. Availability and terms change frequently; current program details require a live review.
Key Guidelines
- Structured as 0% interest second mortgages on most programs
- Fully forgiven if the buyer remains in the home for 3–10 years
- Combinable with FHA and conventional first mortgages
- 640–660 minimum FICO typically required
- Income and purchase price limits vary by county and program
Side-by-Side at a Glance
| FHA | HomeReady / Home Possible | USDA | DPA Programs | |
|---|---|---|---|---|
| Min. Down Payment | 3.5% (580+ FICO) | 3% | $0 | Varies / covered by assistance |
| Min. FICO Score | 500 (10% down) / 580 (3.5%) | 620 | 640 | 640–660 |
| Income Limits | None | ≤ 80% AMI | ≤ 115% local median | Varies by program |
| Mortgage Insurance | Life of loan (MIP) | Cancellable at 20% equity | Annual guarantee fee | Depends on first mortgage |
| Geographic Limits | None | None | USDA-eligible areas only | County-specific |
Not Sure Which Program Is Right for You?
Isaac will review your credit, income, savings, and target area — and tell you exactly which program gives you the best path to closing. No guesswork, no pressure.
Personalized for you
Get Your Personalized Mortgage Rate
Every borrower is different. Tell us about your scenario and we'll compare programs and rates tailored to you — no obligation.
- Compare multiple loan programs side by side
- Review interest rate, APR, points, and monthly payment
- Speak directly with an experienced mortgage broker
Specialized programs available
All loan programs subject to credit approval, underwriting review, and property eligibility. Not all applicants will qualify. FHA, USDA, HomeReady, and Home Possible program guidelines, income limits, FICO minimums, and down payment requirements are subject to change. Down payment assistance program availability, income limits, purchase price limits, and forgiveness terms vary by county and program and are subject to change without notice. USDA geographic eligibility is determined by USDA boundary maps and is subject to change. This is not a commitment to lend. Brooks Mortgage, Inc. NMLS #1608346. Licensed by the California Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, License #4139. Equal Housing Lender.