If you're a renter pining to become a homeowner or a foreclosure or short-sale victim, you may think that a home loan is out of reach.

However, home loan products and home-buyer assistance programs are available from lenders, local governments and nonprofit groups eager to help renters move into homeownership.

"There are two roadblocks that most would-be buyers think they face," says Malcolm Hollensteiner, director of retail lending for TD Bank in McLean, Va. "The first obstacle is down payment accumulation. The second is purely psychological: the fear that they cannot qualify for a loan. . . . There are fantastic opportunities that people are not aware of to reduce your need for cash and to obtain a loan approval."

Lenders have special programs for new buyers with little cash and for those with low-to-moderate income or credit challenges.

"Prospective first-time buyers often think the loan process is too hard and that the closing costs are too substantial," says Ray Brousseau, executive vice president of Carrington Mortgage Services in Santa Ana, Calif. "They don't realize that there are programs for them that allow for a limited down payment and eliminate other out-of-pocket expenses, including closing costs."

In a recent poll by NeighborWorks, a network of community development organizations that provides homeownership assistance, 70 percent of those surveyed did not know about the existence of down payment assistance programs for first-time buyers.

Contacting a lender, a local government housing office or a nonprofit, HUD-approved housing counselor can start your journey to homeownership even if you believe you are years away from it.

"Buyers think about choosing a home and choosing a neighborhood, but they don't think about a mortgage as a 'product,' " says Marietta Rodriguez, vice president of national homeownership programs for NeighborWorks in Washington. "The truth is they need to shop for the right financing as much as for the right home."

A lender or housing counselor can discuss your individual financial circumstances. But if you're considering a home purchase, you should understand the basic differences between available mortgages.

• Conventional loans: These loans, which are guaranteed by government-sponsored enterprises Fannie Mae and Freddie Mac, have down payment requirements as low as 3 percent for first-time buyers. Traditionally, these loans require a down payment of 5, 10 or 20 percent. Borrowers need to pay private mortgage insurance (PMI) unless they make a down payment of 20 percent or more. Typically these loans have stricter standards for credit scores, often required to be above 660, and for debt-to-income ratios, which must be 43 percent or lower.

• FHA loans: These products, insured by the Federal Housing Administration, require a down payment of 3.5 percent and both upfront and annual mortgage insurance. Recently, the annual mortgage insurance premiums for these loans were reduced to 0.85 percent of the loan amount from 1.35 percent, making them more affordable for borrowers than in the past. Credit standards for these loans are typically looser, with most lenders requiring a score of 620 or 640.

"If all of your down payment funds are a gift, then an FHA loan is your best choice. Because for a conventional loan, you need to have your own money for at least some of the down payment," says Hollensteiner.

• VA loans: Veterans Affairs loans have no down payment or mortgage insurance requirement but are limited to eligible members of the military, veterans, spouses and some defense-related employees.

• USDA loans: Agriculture Department loans are limited by income and property location, primarily in rural areas, and have no down payment requirement, but they do require mortgage insurance.

Individual lenders, banks and credit unions also offer mortgage products within the guidelines established by their own leadership, the government or investors.

• Portfolio loans: Unlike most other conventional loans, this mortgage product is kept on the lenders' books rather than sold to investors. A lender may establish its own criteria for a loan approval.

TD Bank's "Right Step" loan product, designed for first-time buyers but also available to borrowers who have previously owned a home, requires a down payment of 3 percent. Unlike other conventional loan products with low down payments, this mortgage does not require PMI. Hollensteiner says the interest rate on these fixed-rate loans are typically slightly below average mortgage rates. The Right Step loans are kept in TD Bank's portfolio and are not sold to investors.

"There are two ways to be eligible for these loans: either through income eligibility, which means your income must be at or below 80 percent of the area median income, or you are buying a home in a census tract identified as low-to-moderate income," Hollensteiner says.

In addition, the Right Step program has the following requirements:

• A credit score of 660 or higher.

• An overall debt-to-income ratio of 38 percent, meaning that the minimum amount you pay on your mortgage and other debts every month cannot exceed 38 percent of your monthly gross income.

• Down payment funds must come from the borrower, not from a gift.

• Closing costs can be paid by the sellers.

Borrowers who can qualify for a loan but lack cash may be particularly interested in home-buyer programs. One place to search by location for downpayment assistance programs is downpaymentresource.com.

Many prospective buyers assume they make too much money to qualify for a home-buyer assistance program. But Rodriguez says that these programs typically are available to buyers who make up to as much as 120 percent of the area median income (for example, $131,040 for a four-person household in the Washington, D.C., region in 2015).

"People self-select themselves out of financial assistance because they think a 'social service' agency isn't for someone like them," Rodriguez says. "Realistically, everyone can benefit from home-buyer education even if they aren't eligible for financial aid."

Rodriguez says it is best for consumers to take a home-buyer education class the moment they think they want to buy a home.

"If you wait until after you've applied for a loan and selected a home to take a class, you've already made two of the biggest decisions associated with becoming a homeowner," says Rodriguez. "People think of these classes as social services, but very well-educated, high-income people don't always understand the nuances of loan programs. Buying a home is complex, and it's worth it to be educated."

"Most down payment assistance programs are limited to first-time home buyers, but it's important to realize that we go by the federal government's definition of a first-time buyer, which is someone who has not owned a home within the past three years," says Michele Watson, director of homeownership programs for the Virginia Housing Development Authority in Richmond. "It's great for active-duty military personnel, in particular, who have been transferred from one station to another and owned a home in the past but want to buy . . . now."

Rodriguez says one of the benefits of home-buyer education is to help people plan for future homeownership even if they aren't immediately ready.

"People say they can't afford to buy a home, but it's important to know the tradeoffs they can make, such as owning a less expensive car or working to improve their credit," Rodriguez says. "You can find out how far away you are from being ready to buy and learn how to make improvements so you're ready sooner. Housing counselors can work with people for years to help them with their finances."

Mortgage loan glossary

• Debt-to-income ratio: This ratio compares the minimum payment on your bills including your housing payments, car payments, student loans and credit card debt to your gross monthly income. Typically, lenders will allow a maximum ratio of 43 percent — meaning that your monthly debts cannot exceed 43 percent of your monthly gross income.

• Private mortgage insurance (PMI): Borrowers who make a down payment of less than 20 percent on a conventional loan must pay PMI until the loan-to-value reaches 80 percent or less. This insurance is required to protect the lender if you default on the loan.

• Lender-paid mortgage insurance: Some lenders pay the PMI upfront and then charge the borrowers a slightly higher interest rate as repayment.

• FHA mortgage insurance: FHA loans require both a single upfront mortgage insurance premium that can be wrapped into the loan and an annual mortgage insurance premium that is paid in 12 monthly installments with the borrowers' mortgage payment. This mortgage insurance must be paid for the life of the loan.

• Portfolio loan: This is a loan kept on the lenders' books rather than sold to investors. A lender may establish its own criteria for a loan approval.

Credit scores and mortgage loans

• If your score is below 620 to 640: An FHA (Federal Housing Administration) home loan is your best option because most lenders won't approve a conventional loan for borrowers with a credit score below 640. In addition, your interest rate would be much higher on a conventional loan even if you are approved.

• If your score is between 640 and 740: You should compare your options for both FHA and conventional loans because while you can likely qualify for both, your interest rate will be higher for a conventional loan. However, your mortgage insurance is likely to be higher with an FHA loan.

• If your score is above 740: Your best bet is likely to be a conventional loan because your credit score qualifies you for the lowest interest rates. Conventional loans are available now with a down payment as little as 3 percent.