The Best First-Time Buyer Loans Available
First-time buyer loans include federal, state, and local programs designed to reduce barriers for new homeowners — lower down payments, flexible credit terms, and down payment assistance. Top options include FHA loans (3.5% down, 580+ credit), Conventional 97 loans (3% down, no income limits), and Missouri Housing Development Commission (MHDC) programs that provide down payment grants and low-interest assistance.
FHA Loans Lower the Down Payment Barrier
Buyers with limited savings use FHA loans to purchase with just 3.5% down. Because the Federal Housing Administration backs these loans, lenders accept lower credit — scores as low as 580 — which opens homeownership to more people without waiting years to save a 20% down payment. For many first-time St. Louis buyers, FHA is the most accessible starting point.
Conventional 97 Loans Offer 3% Down Without Permanent Mortgage Insurance
Buyers with stronger credit benefit from Conventional 97 loans, which require only 3% down and follow Fannie Mae or Freddie Mac guidelines. Unlike FHA, private mortgage insurance cancels automatically once you reach 78% loan-to-value — so you’re not paying insurance for the life of the loan. It’s often the better long-term choice for buyers who qualify.
MHDC Down Payment Assistance
The Missouri Housing Development Commission offers down payment assistance grants and low-interest loans for qualified first-time buyers. These state programs work alongside your primary mortgage to reduce the cash you need at closing — often by thousands of dollars — covering down payment and closing costs. Many buyers qualify without realizing these programs exist, and we help you determine your eligibility.
Pre-Approval Gives You a Competitive Edge
Pre-approval shows sellers you have verified financing, strengthening your offer. When you submit with a pre-approval letter, the seller knows you’ve already cleared credit and income checks, which makes your bid more attractive than offers without verified financing. The process includes credit review, income verification, and loan-amount determination before you start touring homes.
Credit Score Requirements by Program
Buyers with 580–619 scores typically qualify for FHA loans, which accept lower credit than conventional programs — making FHA the most accessible path in that range. Scores of 620 or above open conventional loans with better terms and lower long-run insurance costs. We match you to the program your credit qualifies for now, and outline what would move you into better terms.
Closing Cost Grants Reduce Upfront Expenses
Closing costs typically run 2% to 5% of the purchase price — appraisal fees, title insurance, origination charges, and prepaid taxes. On a $250,000 home that’s roughly $5,000 to $12,500. Grant programs through MHDC and local housing authorities can cover appraisal, title, and origination fees, and down payment assistance loans often include closing cost coverage, which meaningfully lowers what you bring to the table.
Frequently Asked Questions
What credit score do I need for a first-time buyer loan?
Most programs accept 580 for FHA (with 3.5% down); 620 opens conventional options. Some lenders accept 600 with compensating factors like a larger down payment or reserves.
What is MHDC and can it help me?
The Missouri Housing Development Commission offers down payment and closing-cost assistance to qualified first-time buyers. It works alongside your main mortgage to cut your upfront cash, and many buyers qualify without knowing it.
How much do I need for a down payment?
As little as 3% with Conventional 97 or 3.5% with FHA — and down payment assistance can reduce that further. VA and USDA offer 0% down for eligible buyers.
What’s the difference between FHA and Conventional 97?
Both are low-down-payment options. FHA accepts lower credit but carries mortgage insurance for the life of the loan in most cases; Conventional 97 needs stronger credit but lets PMI cancel at 78% loan-to-value.
Am I still a first-time buyer if I owned a home years ago?
Often yes — many programs define a first-time buyer as someone who hasn’t owned a primary residence in the past three years. We’ll confirm your eligibility.
Learn more: First-Time Home Buyer Guide: Loans, Programs & How to Qualify — Mortgage.com — Presents different loan categories (FHA, conventional, VA, USDA, etc.) and outlines what first-time buyers need to qualify (credit score, debt-to-income ratio, down payment), which helps demystify loan options.