Needing to get a loan for our first home

This sounds like it is certainly a loan made for FHA. Since you and your brothers already own the home by inheritance the only thing necessary to have completed is a new deed which the lawyer handling your mothers affairs can complete.there is no need to buy the property. There will be the matter of estate taxes etc but this will have to also be handled by the lawyer. In order to pay your brothers for their share of the home, assuming they do not want to be on the deed, you can do a cashout re-finance and receive up to 85% of the value. This would of course depend on your income and debt ratios and meeting other guidelines to qualify for the loan. If your credit scores are indeed in the 625 or higher range you should qualify for FHA financing. You should discuss this in detail with an FHA approved lender whom you feel comfortable with.

With scores like that I would recommend an FHA loan depending on exactly where you fall. With conventional financing there will be no mortgage insurance, but they will need higher scores. FHA may have a small monthly mortgage insurance fee, but would do the loan with scores on the lower end. This is assuming your income and work history are acceptable.

Since this is an inheritance situation, you should be able to obtain conventional financing with no mortgage insurance as your brothers could provide you with a "Gift of Equity". You would be PURCHASING the property for $127,900 from your brothers, they would "Gift" you the equity in the home of roughly $42,000 leaving you with less than 70% LTV (your credit score should work at that LTV). You could even reduce the "Gift" increase the loan amount and have them pay some closing cost on your behalf. You would avoid private mortgage insurance and minimize cash out of pocket. Good Luck.