First time home buyer

[Mauricio Salom]

I'm getting ready to purchase my first home so I found two first time home buyer loans that seem pretty appealing zero money down I just have to pay closing but I'm not sure which one to go with. Loan A. Is a 7/1 ARM loan with interest at 3.5% and closing is going to be around $6k. Max amount they will loan is $350k. Loan B. Is a 30 year fixed rate with interest at 5% and closing costs around $11k to $12k. I was leaning towards loan A but after looking at a few homes with a realtor $350k isn't very competitive in the San Diego market I'm pretty limited it seems like anything around that price is scooped up quickly by cash offers. Loan B will loan me more money $400k+ to make more competitive offers but I'm not even sure I'd like to go that high. What do you guys think which loan makes more sense?