Best Mortgage Lenders for First-Time Buyers
If you’ve decided it's time for a first-time home buyer mortgage and you fit the Department of Housing and Urban Development’s (HUD) definition of a first-time home buyer, many of the best mortgage lenders will offer you competitive terms on a home loan.
Best First Time Home Buyer Lenders at a Glance
|Lender||Loan Types||APR||Get an Offer|
|FHA, VA, Conventional||3.623%||Get Quote|
|FHA, Conventional||4.312%||Get Quote|
|FHA, VA, Conventional||Various quotes||Get Quote|
|FHA, VA, USDA, Conventional||Various quotes||Get Quote|
|FHA, VA, USDA, ARM, Conventional||Various quotes||Get Quote|
First-time home buyers are typically younger than those looking to purchase their second or third home. Because of their age, first-timers usually have less funds for a down payment and might also have student debts, poor credit, or financial worries that make it hard to finance a purchase. This makes it important to examine the best mortgages for first time buyers specifically.
What are the Best Mortgage Lenders for First-Time Home Buyers?
- Conventional 30-year loans at 4.375% interest
- Down payments of as low as 3%
- Minimum credit score of 620 for conventional mortgages
- Offers FHA home loans
Quicken Loans is one of the best mortgage lenders for first-time home buyers. It offers conventional 30-year fixed-rate loans at interest rates of as low as 4.375% (or 4.623% APR, encompassing interest and fees) and with down payments of as low as 3% of the value of your new home. Loan amounts vary from as low as $25,000 to as high as $3 million.
Quicken is one of the largest mortgage lenders for first time buyers to offer mortgages under the FHA home-buyer program, which accepts down payments as low as 3.5%. It also offers access to VA loans, which offers military veterans and active service members (who meet certain conditions) better rates and no down payment.
One of the great things about Quicken Loans is that you can apply online through RocketMortage by Quicken Loans. RocketMortgage claims to do everything quicker than your average mortgage provider. If you have a lot of questions and would rather talk things over, Quicken Loans’ experts are also available to speak by phone.
Biggest Perk: Fast application
- Do everything online
- FHA loans at 3.875% interest and 3.5% down payment
- Closure in 40 days or less
First Internet Bank is another of the mortgage providers that allows you to do everything online, making it a popular choice among first-time buyers. This bank offers an FHA 30-year fixed rate loan at 3.875% interest, with the usual 3.5% down payment and federal government requirement of monthly mortgage insurance.
First IB offers rates of as low as 4.25% (or 4.312% APR) for a conventional 30-year fixed-rate loan, and 3.75% (at 3.858% APR) for a conventional 15-year fixed-rate loan. First IB says it can typically close the majority of home-purchase mortgages in 40 days or less. Although business is conducted online, it has a loan team that works together with its clients to identify the documents they need to meet their closing date.
Biggest Perk: Closure in 40 days or less
- Scour the market in seconds
- Compare between different lenders
- Include FHA loans in your search
The Easy Loan Site is a little different from the examples above, in that it is an online service that allows users to compare rates between different lenders. This is a useful tool for first-time home-buyer mortgages, as it allows you to conduct market research in a matter of seconds, before investing time and money in the mortgage application process.
Simply type in your state and credit rating, along with the loan type you are looking for, and you will receive up to 10 different loan comparisons in just a few seconds. For example, a query for a 30-year fixed loan in California, with a more-or-less average credit rating of 680-699, shows rates – at time of writing – of 4.125% (4.357% APR) to 4.990% (5.087% APR). Type in the same query for Ohio, and you will find rates as low as 4.25% (4.292% APR).
The advanced search function allows users to display FHA and VA loan options, and to add more detail, such as the down payment amount.
Biggest Perk: Scour the market in seconds
- Dedicated FHA loan search
- Lowest rates on the market – by city
- See results instantly
LendingTree is another online marketplace that enables a comparison between different lenders. It has a specially dedicated search tool for FHA loans, which allows the user to see up-to-date interest rates for the portal’s top-rated FHA lenders. Users can search for FHA loans by city.
Users can also conduct a quick, free search for 30-year, 15-year, and other conventional fixed-rate loans. Conduct a simple search by city, or fill in advanced parameters to find the best rates and fees from the perspective of a first-time buyer.
Biggest Perk: Instant search results by city
- Excellent educational resources
- Submit application documents digitally
- Minimum credit score of 620 for conventional mortgages
J.G. Wentworth issues loans for specific needs, including service of first-time buyers’ loans. They offer FHA and VA loans, and provide educational resources for potential borrowers, which is useful for people who are branching into the market.
Like other forward-thinking lenders, J.G. Wentworth streamlined their application process, allowing customers to fill out paperwork through its online portal and to submit documents digitally. This lender only requires a minimum credit score of 620 for conventional mortgages, an advantage for young buyers.
Biggest Perk: Low lender fees
According to HUD, You Qualify as First-Time Home Buyer If:
- You (or your spouse) have has not owned a principal residence for at least 3 years
- You are a single parent who has only owned with a former spouse while married
- You are a homemaker who has only owned with a spouse, but are no longer financially supported by your spouse
- You have only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations
- You have only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure
Because of the unique circumstances of first-time home buyers, lenders might offer incentives such as low rates or small down payments. Many lenders offer FHA mortgages, which are home loans insured by the Federal Housing Administration. An FHA home loan requires a down payment of just 3.5% and has flexible requirements and an easier qualification process than a conventional loan. However, it does require that the borrower pay monthly mortgage insurance.
First-Time Homebuyer Programs
There are several programs specifically geared for first-time home buyers, though you are free to use any home purchase loan that you qualify for.
These programs include:
- FHA Loans
FHA loans are like many other mortgages and are made by private lenders, such as Quicken Loans. Your FHA loan, unlike a conventional loan, will be gauranteed by the federal government. This means that your lender will consider you, even if you might not qualify for a conventional mortgage.
- USDA Loans
This program, run by the U.S. Department of Agriculture, focuses on rural homes and allows 100% financing (which means 0% down payments) to low income borrowers without stable housing.
- VA Loans
The U.S. Department of Veterans Affairs helps service members, veterans, and surviving spouses buy homes with full financing. These loans do not require PMI, which can save a bundle. Private lenders can add their own requirements, but generally VA loans are a tremendous bennefit for military personel.
- Fannie Mae and Freddie Mac
Both Fannie Mae (the Federal National Mortgage Association, FNMA) and Freddie Mac (the Federal Home Loan Mortgage Corporation, FHLMC) purchase home loans from private lenders, enabling lenders to make more mortgages for borowers like you. They purchase conventional, FHA, VA and USDA loans and gaurantee loans.
- Good Neighbor Next Door Programs
This program, originally intended for teachers, now includes law enforcement, EMTs, and firefighters. It's sponsored by HUD and allows 50% discounts on the list price of homes in certain areas. If you qualify, you have to commit to living in the place you are interestd in buying for at least 3 years.
Check out these reviews of the leading mortgage lenders to see who can help you realize your dream of buying a home.