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First-time buyers with 20% down payments can get conventional loans - probably with a low-interest rate and no private mortgage insurance (PMI).  

You can keep your mortgage payments low by putting 20% down. 

You might gain an edge in competitive housing markets like Houston by showing that you are a strong buyer.   

Despite this, few first-time borrowers have saved that much.  Fortunately, there are several types of mortgage loans that can help buyers get into a new home with little or no down payment:  

TYPES OF FINANCING 

These are the basic types of loans used to finance the sale/purchase of Real Property.

Conventional loan - 5% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years until you reach a 78% loan to value.  

Conventional loans are loans that are neither insured nor guaranteed by the federal government. These loans often have requirements for a higher down payment of 20% of the market value or more, unless private mortgage insurance is to be paid by the borrower. On these loans, interest rates, loan-to-value ratio, and amortization periods are usually negotiable. A good rule of thumb is that the lower the down payment and the longer the amortization period, the higher the interest rate

See Current Mortgage Rates

FHA loan – Backed by the Federal Housing Administration. 

3.5% down and a minimum credit score of 580. 

Mortgage insurance is required until you refinance, move, or pay off your loan. 

FHA loans are insured by the Federal Housing Administration. 

These loans require a small down payment and are obtained through approved lenders. By providing insurance to the lender, the FHA attracts lenders to loans they would not otherwise be interested in making. In order to qualify for FHA insurance, buyers must meet some conditions. The FHA requires that the borrower pay a mortgage insurance premium in monthly installments as a part of the regular loan payment. The FHA requires a property appraisal before it will commit to ensuring any loan. The maximum loan amount is set by the appraised value or the sale price, whichever is lower, and the buyer must pay the difference in cash. No secondary financing of any kind is allowed. Most FHA loans are made for thirty-year periods, and the interest rates are set by the market conditions.

VA loans - are available only to veterans. 

No down payment is required. 

The minimum credit score varies by lender but is often 620. 

No ongoing mortgage insurance after closing. 

These are arguably the best mortgages available, so check your eligibility if you have a military service history.

VA loans are loans that are guaranteed by the U.S. Department of Veteran Affairs. 

These loans are often available with no down payment. The guarantee is free to the Veteran. 

The Veteran must receive a Certificate of Eligibility from the VA before applying for the loan. The VA must appraise the property. A veteran applying for a VA loan must sign a document stating that he or she will occupy the property. As with FHA loans, most loans have thirty-year terms, and the interest rates are set by the market conditions. 

The maximum loan amounts for FHA and VA change periodically to accommodate real estate values over time.

USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment is required. Credit score requirements vary by lender but are often 640.  

USDA Loan Eligibility Map 

Low mortgage insurance rates Texas State Affordable Housing Corporation loans – Special home loans for public servants and low–income buyers. It's important to remember that a down payment isn't the only upfront cost when buying a house. 

Additionally, closing costs often amount to 2–5% of the loan amount.  

First-time buyers can make their upfront costs more affordable with help from the down payment and closing cost assistance programs. 

There are many types of loans available. Some of the more popular types include: 

Amortized loan -Borrowers make regular equal payments of principal and interest until they repay the loan in full. The term can be anything from 10 to 30 years, but the most common terms are 15 years and 30 years. This loan is often referred to as a fixed-rate loan.  

Adjustable-Rate Mortgage (ARM) - This loan is paid like an amortized loan, but the interest rate changes or is adjusted periodically. The rate is usually tied to some readily available index, and changes from period to period are usually limited or “capped.” This loan can often give the buyer the lowest available monthly payment at the start of the term. However, the rate will fluctuate, and so will the payments. The maximum allowable adjustment over the life of the loan is also usually capped.

Remember that your mortgage payments will also include property taxes and homeowners' insurance. Factor these homeownership costs in when estimating your home buying budget.