Buying your first home can be a dream come true. You’ll have a chance to visit properties and plan for your future. You could choose to build your own home or choose between various architectural styles and home ages. It can be a chance to move into a new neighborhood and put down roots.
But you’ll also need to save for a down payment and work to raise your credit score. Fortunately, regardless of your financial situation, the best mortgage lenders for first-time home buyers below can help you buy a home. From construction loans to non-qualifying loans or loans for borrowers without a credit score, read on for some of the best lenders this year.
Quick Look: Best Mortgage Lenders for First-Time Home Buyers
8 Best Mortgage Lenders for First-Time Homebuyers
Here are the nine best mortgage lenders to consider as a first-time homebuyer this year.
1. Best for Fast Closing: CrossCountry Mortgage
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Best For:
Self-employed Borrowers
securely through CrossCountry Mortgage’s website
Available in: CA, CO, CT, DC, FL, GA, IL, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA, WA
CrossCountry Mortgage, also operating as Best Rate USA, is a nationwide lender with extensive loan offerings. CrossCountry Mortgage is based in Cleveland but offers mortgages nationwide. Choose from purchase loans, bridge loans, construction loans and non-qualified (non-QM) loans.
CrossCountry offers a FastTrack Credit Approval program that can help close in as few as seven days after signing a purchase agreement. If additional documentation is needed, the timeline could be longer. Choose from conventional, jumbo, non-QM and government-backed FHA, VA or USDA loans.
Why We Love It: CrossCountry Mortgage stands out from the competition by offering a diverse range of mortgage options. With a minimum credit score of 620 for conventional loans, 660 for jumbo loans, and a remarkably low 500 for FHA loans, homeownership is more accessible for first time homebuyers. Additionally, CrossCountry Mortgage demonstrates its commitment to supporting first time homebuyers by providing $4,000 in down payment assistance.
2. Best for Non-QM Mortgages: Angel Oak Mortgage Solutions
Angel Oak Mortgage Solutions offers a wide variety of non-QM loans for borrowers who cannot get a traditional mortgage. Its offerings include bank statement mortgages, Business Bank Statement Elite mortgages, 1099 income loans, Individual Tax Identification Number (ITIN) loans, Asset Qualifier loans and loans for foreign nationals.
There is no stated minimum credit score, but it’s recommended that you have a credit score of at least 660 for loan approval and a minimum 5% down payment.
Why We Love It: Angel Oak Mortgage Solutions offers many non-traditional loans. It provides relatively shorter seasoning requirements, which can greatly benefit you if you have undergone bankruptcies or experienced negative credit events.
3. Best for Construction Loans: New American Funding
New American Funding is an excellent choice if you dream of building your first home. It offers various loan products, including government-backed mortgages, ITIN loans and construction loans.
New American Funding offers conventional fixed and adjustable rate mortgages, as well as home equity, reverse and jumbo loans. You can also choose from government-backed FHA, V, or USDA loans. It also has specific initiatives to help military service members and Hispanic and Black customers become homeowners. You can also find interest-only loans and mortgages geared toward self-employed borrowers.
For those interested in building a home, New American Funding can help you apply for a construction loan and later convert it into another loan type.
Why We Love It: New American Funding accepts credit scores as low as 580. The company offers flexible loan options, allowing you to choose the most suitable arrangement for your financial circumstances. One of the most attractive features is its low down payment requirement, which can be as little as 3% of the property’s value.
4. Best for FHA Loans: Rocket Mortgage
Rocket Mortgage is the largest FHA lender in the country, aimed at helping first-time home buyers with limited funds secure a mortgage. You can use the website or the app to apply for a mortgage and manage your loan application.
The streamlined online process, with document and asset retrieval capabilities, makes it easy to keep everything in one place and even edit pre-approval letters. You can apply for conventional, refinance, jumbo, fixed, adjustable, FHA, VA and home equity loans.
Why We Love It: We love Rocket Mortgage because of its rate lock program, which allows certain loan types to have rates locked for up to 90 days, providing ample time for house hunting. Additionally, Rocket Mortgage offers the convenience of working with loan officers over the phone if you prefer remote interactions.
5. Best for Lender Comparision: Credible Mortgage
Unlike individual mortgage lenders, Credible is a lender marketplace that allows you to compare multiple lenders. You’ll enter basic financial information and get quotes from several lenders on standard home mortgage products. Credible offers a free, fully online mortgage broker service that lets you get quotes from online lenders.
You can find conventional, FHA, VA, Jumbo and refinance mortgage offers. You’ll usually need a credit score in the mid-600s, but it varies by lender. It offers straightforward, convenient service with the possibility of finding the lowest interest rates.
Why We Love It: Credible Mortgage collaborates with lenders that offer low down payment loan options and programs specifically designed for first time buyers. It has a user-friendly online platform, which enables prospective homeowners to conveniently compare real loan offers from multiple lenders. This streamlined process eliminates the need to navigate numerous lender websites individually, saving valuable time and effort.
6. Best for Credit Monitoring: loanDepot
loan Depot is a non-bank lender that gives you convenience and efficiency online with the option to visit one or over 200 branches across the country. loanDepot offers fixed-rate and adjustable-rate conventional mortgages. You could also secure jumbo, FHA or VA loans, although conventional loans made up most of LoanDepot’s mortgage originations last year. LoanDepot also offers 10-, 15-, 20- and 30-year mortgage terms.
In addition to mortgages and home refinancing, LoanDepot offers free credit score monitoring to help you prepare to apply for a mortgage. You’ll need a minimum credit score of 620 and at least 5% down payment.
Why We Love It: You have the ability to choose shorter repayment terms, allowing you to become a homeowner sooner and potentially save on interest costs over the life of the loan. Additionally, LoanDepot provides a $1,000 Close-on-Time Guarantee, giving you peace of mind that your closing process will be efficient and timely.
7. Best for Borrowers with No Credit Score: Guaranteed Rate
Guaranteed Rate Companies is a major mortgage lender based in Chicago, Illinois. It offers various home loans, including conventional fixed-rate and adjustable-rate mortgages (ARMs), jumbo loans, interest-only loans, home renovation loans and government-backed FHA mortgages and VA loans.
It also offers flexible mortgage application options and accepts non-traditional credit, like your rent or utility payment history, to qualify for a conventional or government-backed loan. With so many options, you can work with the company to find the mortgage that meets your needs.
Why We Love It: Guaranteed Rate offers diverse loan options, including conventional, FHA, VA, and USDA loans with low down payment requirements as low as 3%. It actively participates in down payment assistance programs and offers educational resources, mortgage calculators, and personalized guidance from dedicated loan officers. Guaranteed Rate’s digital mortgage experience streamlines the application process, and its competitive rates and fees can save buyers significantly over the life of their mortgage.
8. Best for Quick Application: Ally
Ally offers conventional loans with a simplified application process. It is a good choice for low interest rates and down payment requirements. It doesn’t offer government-backed mortgages or second mortgages, but if you need a conventional loan, Ally has good options. It’s known for ultra-fast pre-approval and no lender fees. The minimum credit score required is 620, and you’ll need at least a 3% down payment.
Why We Love It: Ally offers the Ally HomeStart grant, providing up to $7,500 in down payment assistance for qualified buyers. Its online application process is streamlined and user-friendly, with transparent pricing and no lender fees. Ally’s mortgage advisors are available to guide first-time buyers through the entire process, offering personalized support and educational resources to ensure a smooth home-buying experience.
What is a First-Time Homebuyer?
A first-time homebuyer is anyone who has not previously held a mortgage or owned a home or primary residence. If this is your first home purchase, you’ll qualify as a first-time homebuyer.
Some federal programs define a first-time buyer as anyone who has not owned a home in the last three years. That opens up first-time homebuyer incentives to many more potential buyers. In addition, both first-time and other homebuyers may qualify for financial help through government-sponsored loans, grants or other incentives.
How Do First-Time Homebuyer Mortgages Work?
Like all mortgages, first-time homebuyer mortgages allow you to purchase a home without having all the capital required. When you apply for a mortgage, you could get a mortgage with as little as a 3.5% down payment. If you qualify for a VA loan, you could qualify for a mortgage with no down payment. Other mortgage lenders may require a down payment of 3% to 20%, plus closing costs.
Once approved for a mortgage and closing on a home, you own it. However, the mortgage will generally hold the title on the property until you’ve paid off the mortgage.
How to Choose a Mortgage Lender for First-Time Buyers
To choose a mortgage lender as a first-time homebuyer, consider the type of lender, interest rates and available mortgage products. Here is an overview of key considerations.
Virtual Lender vs. Brick-and-Mortar Location
You can choose from virtual lenders and physical bank locations, including banks, credit unions and other mortgage lenders.
Credit Union vs. Other Lenders
If you are already a member of a credit union, you may be able to secure lower interest rates than through a bank or other lenders. Compare options and shop around to ensure you’re getting the best available rates.
Compare Interest Rates and Fees
Interest rates and fees can add up to thousands of dollars over the lifetime of your mortgage. Check at least three lenders and compare interest rates and fees online to ensure you’ve found the best available options. Consider the total required closing costs and other expenses to ensure you have enough for the down payment plus closing to help ensure you can save more.
Understand Loan Terms
Understanding loan terms is essential. Look at interest rates and fees, as well as early repayment penalties. It can be worthwhile to have a real estate attorney review the mortgage contract and explain unfamiliar terms.
Check Existing Memberships
You can check with your local banks and credit unions to see if they offer more favorable rates for existing clients. If you find a property with an assumable loan, you could save more on interest rates by assuming the loan.
Find Out if The Company Offers Personalized Services
Some mortgage lenders offer additional personalized services like a faster closing. You can look for mortgage lenders with flexible loan solutions and excellent customer service to guide you through the mortgage application process and help you select the best available mortgage option.
How Much Should You Save for a Down Payment?
How much you’ll need to save for a down payment depends on the type of mortgage you’re applying for. An FHA loan requires as little as 3.5% down. However, that means that on a $300,000 home, you would still need $10,500 for the down payment.
If you need to make a larger down payment for a mortgage in the example above, say 20% down, you’ll need to have $60,000 saved up for the down payment. However, some lenders will approve a loan with a 10% down payment.
How to Get Help Making a Down Payment
As a first-time homebuyer, various government assistance programs and grants can help you make a down payment. Down payment assistance programs can help you get a loan or grants to use toward the down payment for your house. Find a complete list of resources here.
You can look for:
- Grants
- Forgivable loans
- Low-interest loans
- Deferred-payment loans
- Individual Development Accounts (IDAs)
How to Qualify for a First-Time Homebuyer Loan
To qualify for a first-time homebuyer loan, you must prepare all the necessary paperwork, including your legal ID, Social Security number, proof of income and information on any debts. You can work to increase your credit score and save up a larger down payment to improve your chances of loan approval. Get more tips for first-time homebuyers here.
Buying Your First Home
You can choose from many excellent mortgage lenders to help you through the mortgage application and closing process as a first-time homebuyer. To prepare your mortgage application, build your credit score, save for the down payment and closing and research enough lender options to understand interest rates, fees and first-time homebuyer programs. To get started, find questions to ask mortgage lenders here.
Frequently Asked Questions
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The credit score you need for a first mortgage depends on the type of mortgage you’re applying for. The minimum credit score for many mortgages is 620. However, you could qualify with a lower credit score if you apply for a VA, USDA or FHA loan.
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Some of the best mortgages for first-time buyers are government-backed loans, such as FHA, USDA or VA loans. These loans offer easier qualification criteria.
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Yes, you can get a mortgage even with student loan debt. Lenders look for an optimal debt-to-income ratio of 36% or less, but some will allow as high as 50%.
