Congratulations! You’ve found your dream home and can’t wait to experience peaceful mornings in your kitchen and evenings of laughter on the sofa.

But between that exciting “Yes!” and settling in with a housewarming party is the less-than-simple task of deciding on and qualifying for your ideal mortgage. Not to worry, eager first-time buyer—this road map can help clarify the array of loan choices and guide you down the path toward homeownership.

Government loans

FHA loans
Supported by the Federal Housing Administration (FHA), these mortgages offer lower down-payment requirements—as little as 3.5 percent with a minimum credit score of just 580. This greatly lessens the initial financial load, which helps make homeownership more realistic for those with a tighter budget. FHA loans do, however, have some caveats including mortgage insurance premium (MIP), MIP is really a loan-default-protection insurance policy for the lender. Generally speaking, you will have to pay annual MIP throughout the life of your loan, though there are a few avenues for removing it. For instance, if you put down more than 10 percent, your MIP will expire after eleven years. But if you put down less, your only option is to refinance into a conventional loan once you have a certain level of equity in your house—usually 20 percent.

VA loans
These loans from the Department of Veterans Affairs (VA) are a great choice for eligible veterans, active-duty service members, and their spouses because they have competitive interest rates and usually call for no down payment. Minimum service requirements apply, and some lenders may have additional credit score or income qualifications.

USDA loans
Backed by the US Department of Agriculture (USDA), these loans help to encourage rural area homeownership. They offer a zero down payment option for buyers in economic need, as long as they have a credit score of at least 640 and meet the income and other criteria. Still, there are tight property location restrictions to keep in mind; namely, the property must be in a rural area designated by USDA.

Private loans

Conventional loans
Offered by private lenders such as banks and credit unions, conventional loans may only require a 3 percent down payment from first-time homebuyers. However, if you want to avoid primate mortgage insurance (PMI)—the private-loan version of MIP—you’ll have to put down at least 20 percent. (Unlike MIP, though, you don’t have to refinance to remove it; your lender will automatically do so once you reach 22 percent equity.) On the plus side, a greater down payment may help you get a lower interest rate. Larger down payments can help lower interest rates and potentially avoid PMI with conventional loans by reducing the amount you need to borrow. Essentially, PMI safeguards the lender should you default on your loan. There are two primary kinds of conventional loans.

• Fixed-rate mortgages: As the name indicates, these loans lock you into a mortgage rate, providing the security of a consistent monthly payment throughout the life of your loan. The most common term lengths offered are fifteen and thirty years, though you may be able to go shorter if you prefer. Though it requires a larger monthly payment than a thirty-year fixed-rate loan, a fifteen-year one may have a lower overall interest rate.
• Adjustable-rate mortgages (ARMs): These usually start with a lower beginning interest rate for a set initial period, after which it may fluctuate based on market averages. If you intend to sell your house within a few years, this can be an appealing option. ARMs come with many variables, including adjustment periods (how often your rate is reevaluated, typically biannually or annually) and caps on how much your rate can be changed at every interval.

You can check out this guide for more details about these two loan types.

Jumbo loans
These are conventional loans intended specifically for financing homes above conforming loan limits set by the Federal Housing and Finance Agency (FHFA). They usually require a larger down payment—often 20 percent or more—as well as a strong credit score of about 700. Jumbo loan interest rates could be somewhat higher than those on conventional loans; recently, however, the gap has narrowed, making the rate more competitive.

With careful preparation and appropriate resources the road to homeownership can be a fulfilling one. As you begin your journey, reach out to a qualified mortgage professional, who can help you select the loan option that best fits your situation. Don’t hesitate—your dream home is waiting to be filled with laughter, love, and lifetime of memories.