First Time Home Buyer

I am not sure your income, most state will have some kind of assistant program for low-median income family to buy house with little to none down. It does have catch, but you calc it more clearly, you may find some deal.

e.g. here in NE, if your income is below 80% of averge income, you can qualify a loan program named Super-Target Loan, it is 2.99% fixed 30 years loan with 1.75 point up front. It usually use FHA type, so the downpay should be 3%, but you need to pay PMI. Yep, you may not have 3% yet, they will give you another 0% apr loan to cover this 3% closing cost and pre-pay items upto a certain limit, and this second loan will be forgivable in 10 years (10% per year). You should give out $1000 from your own pocket towards closing cost. (that's the only thing you need)

I compare it will Penfed 4.5 5/1 deal.
you need pay PMI, you need to pay point, you loan amount increased (97% vs 90%) resulting in more (maybe) interest, you closing cost will be more than penfed (since they waived most).
but
your interest and point maybe tax deductible, the second loan seems give you money over year, and you do not need to pay many downpay (save it in a savings will result at least 3%, right?)

So, I found it is pretty good choice (no need to say it is 30 year fixed), and the last thing I found out is my income just a little over 80% of average income