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Mortgages

Best Mortgage Lenders for First-Time Home Buyers

Updated May 02, 2023   |   12 mins read

Buying your first home is an exciting milestone, but it’s also a lot of work. There are many decisions that you’ll have to make when it comes to the house you buy, including the school district where your home is located, the type of home you choose to purchase, and the size of the property.

You also need to choose which mortgage lender you’ll be in a financial relationship with for the next few decades. Fortunately, most of the best mortgage lenders participate in programs meant to help get first-time buyers into a new home.

This page will help you find the best mortgage lenders for first-time home buyers, and it will also offer you some insight into the factors that can affect the cost of your mortgage loan.

On this page:

LendEDU’s 6 Best Mortgage Lenders for First-Time Buyers

Each of these top-rated lenders offers special incentives to first-time buyers, such as participating in government-backed programs that make it easier to qualify for a home loan.

  1. Better
  2. Rocket Mortgage
  3. New American
  4. Wells Fargo
  5. Chase
  6. loanDepot

1) Better

Simple, Online Mortgage

  • No extra fees or commission, ever
  • Instant loan estimates
  • Experience you can trust – Over $3 billion in total funded loans

Better is an ideal choice for first-time buyers because it promises that it will charge neither fees nor a commission. It also offers loans backed by the FHA which require a minimal down payment, and which have easier qualifying requirements that make them ideal for first-time borrowers.

Borrowers can get instant loan estimates, view rates right on the company’s site, and tap into resources that make navigating the process of getting a mortgage for the first time a much simpler experience. However, it’s worth noting that Better does not offer USDA or VA loans.

Here’s what you need to know about Better’s FHA mortgage program.

Ratings:

  • Overall LendEDU Rating: 5.00 / 5.00
  • Better Business Bureau Rating: A+

Lender Info:

  • States available: 36
  • Repayment options: Fixed; no ARM options on FHA loans
  • Minimum down payment: Not disclosed (3.5% estimated)
  • Lender fees: None

Full Review: Better Mortgage Review


2) Rocket Mortgage

A simpler way to buy a home or refinance.

  • Apply Online – Streamlined application available 24 hours a day, 7 days a week
  • Use RateShield Approval and lock in your rate for up to 90 days
  • Home Loan Experts available seven days a week to answer your questions

Rocket Mortgage is run by QuickenLoans and it prides itself on simplicity—which is great for home buyers trying to navigate the process of getting a mortgage loan for the first time.

Rocket Mortgage has a streamlined online application that syncs with your bank account to make the process faster and easier. After filling out just a little financial information on the website, you can review custom options and compare loan offers.

And because it offers FHA loans, first-time buyers will also find qualifying easier. Here’s what you need to know about Rocket Mortgage’s FHA mortgage loan program.

Ratings:

  • Overall LendEDU Rating: 4.92 / 5.00
  • Better Business Bureau Rating: A+

Lender Info:

  • States available: 50
  • Min. credit score: 580
  • Max. debt-to-income ratio: 43%
  • Max. loan amount: $726,525
  • Min. down payment: 3.5%

>> Full Review: Rocket Mortgage Review


3) New American Funding

Your Mortgage, Your Terms.

  • Get pre-approved in as little as 48 hours
  • Complete the entire application process online
  • Choose from a wide variety of mortgage options

New American is a direct mortgage lender that offers personalized lending options. You can apply for an FHA loan through New American, which is great for first-time buyers because qualifying is easier and down payments are lower.

New American is willing to work not only with first-time buyers but also with self-employed borrowers who may not have traditional sources of income.

There are plenty of mortgage resources on the site to help you learn about your loan options, including a mortgage glossary and helpful mortgage loan calculators.

>> Read More: Mortgage Calculator: Estimate Your Monthly Payments

Here’s what you need to know about New American’s FHA mortgage loan program.

Ratings:

  • Overall LendEDU Rating: 4.60 / 5.00
  • Better Business Bureau Rating: A+

Lender Info:

  • States available: 48
  • Min. credit score: 580
  • Loan terms: 15 or 30 years
  • Min. down payment: 3.5%

Full Review: New American Funding Review


4) Wells Fargo

Where are you in your home buying journey?

  • Get a home with as low as 3% down
  • Easily track your application online with yourLoanTrackerSM
  • Guidance and ongoing support as you purchase and grow into your new home

Wells Fargo offers several options for first-time buyers, including both FHA loans with minimal qualifying requirements as well as other options—such as VA loans and the yourFirstMortgage program, which offer low down payment requirements.

Wells Fargo is one of the nation’s biggest banks, so you can opt for in-person help if you don’t want to complete the whole mortgage application process online.

Wells Fargo is also an especially good option for people who need a little extra handholding because it provides special educational options for first-time home buyers and for union members.

Here’s what you need to know about Wells Fargo’s FHA mortgage loan program.

Ratings:

  • Overall LendEDU Rating: 4.34 / 5.00
  • Better Business Bureau Rating: F

Lender Info:

  • States available: 50
  • Loan terms: Not disclosed (15, 20, or 30 years on conventional loans)
  • Min. down payment: 3.5%

Full review: Wells Fargo Mortgage Review


5) Chase

Take advantage of today’s mortgage rates

  • Competitive mortgage and refinance rates to get you from open to closing
  • Prequalify for a fixed-rate or adjustable-rate mortgage loan
  • Get prequalified online, over the phone, or in-person

Chase is another large bank and full-service lender. And you can submit financial documents online during the loan approval process, but getting in-person help from a loan officer at your local Chase branch is an option, too.

First-time buyers will appreciate that Chase offers FHA loans and other loan programs that make it easy to buy a home even without a large down payment or perfect credit.

 And if you are an existing Chase customer, you may qualify for discounts that make obtaining and paying your loan more affordable.

Here’s what you need to know about Chase’s FHA mortgage loan program.

Ratings:

  • Overall LendEDU Rating: 4.33 / 5.00
  • Better Business Bureau Rating: F

Lender Info:

  • States available: 50
  • Loan terms: 15, 20, 25, or 30 years
  • Min. down payment: 3.5%

Full review: Chase Mortgage Review


6) loanDepot

Home Mortgage, Refinance, and Home Equity Loans

  • Fixed terms
  • Affordable monthly payments
  • Cash out up to 90% loan-to-value

loanDepot is an online mortgage lender, but it still provides the type of excellent customer service first-time home buyers often require. In fact, you can visit 150 different affiliated locations nationwide to get in-person help if you want it.

loanDepot offers both FHA and VA loans, which can ease the qualification requirements associated with traditional mortgage loans. In fact, loanDepot is one of the largest FHA and VA lenders in the country, so may it be especially ideal if you want a government-backed loan.

Here’s what you need to know about loanDepot’s FHA mortgage loan program.

Ratings:

  • Overall LendEDU Rating: 4.21 / 5.00
  • Better Business Bureau Rating: A-

Lender Info:

  • States available: 50
  • Min. credit score: 500
  • Max. debt-to-income ratio: 43%
  • Min. down payment: 3.5%

Full Review: loanDepot Mortgage Review


How We Chose the Best Lenders for First-Time Home Buyers

To find the best lenders for first-time buyers, LendEDU ranked and rated different mortgage lenders offering FHA loans. We based our rankings on the weighted average of a total of 10 different data points including:

  • BBB Rating (5%)
  • Trustpilot Rating (5%)
  • States Available (5%)
  • Lender Fees (12.5%)
  • Application Fees (12.5%)
  • Online Application (5%)
  • Fixed Terms (20%)
  • 30 Year APR (5%)
  • Customer Support (20%)
  • Zillow Rating (10%)

6 Tips for First-Time Home Buyers

If you’re buying a home for the first time, it’s helpful to know what affects your mortgage rate and how you can get help with the home purchase. Here are six tips to keep in mind as you search for the right mortgage lender.

1. Know Your Number

Your credit history is one of the most important factors that affect your mortgage rate. For most lenders, the minimum credit score to qualify for a mortgage loan is 620.

However, if you get a loan backed by the Federal Housing Administration (FHA), you can often qualify for a loan with a score of as low as 580 with a 3.5% down payment, or a score as low as 500 with a 10% down payment. Of course, these requirements may vary by lender.

You can improve your credit score if you pay bills on time and avoid taking on too much debt. It’s a good idea to check your credit report for any red flags prior to applying for a mortgage.

You should also know your debt-to-income ratio (DTI), or the amount of debt you have relative to your monthly income since this affects your ability to borrow as well. If your DTI is too high, lenders won’t give you a loan or will charge a higher rate.

2. Ask About First-Time Home Buyer Programs

First-time home buyer programs aim to help people purchase a home for the first time, either by providing down payment assistance or by making it easier to qualify for a mortgage.

There are a number of federal programs that help first-time buyers by offering less stringent qualifying requirements.

These include FHA loans, which are backed by the Federal Housing Administration, VA loans, which are backed by the U.S. Department of Veterans Affairs, and USDA loans, which are backed by the U.S. Department of Agriculture and help home buyers in rural areas.

Some states also offer local down payment assistance programs, as do mortgage lenders and charitable organizations. Ask your potential lender if they participate in any local programs to see what assistance is available to you.

3. You Can Get Pre-Approved More Than Once

Mortgage pre-approval occurs when you ask a lender to do a preliminary check of your finances to see if you qualify for a mortgage and on what terms. You don’t have to get pre-approved from just one lender, though. You can get quotes from multiple lenders.

It’s a good idea to get quotes from several different mortgage loan providers, so you can compare costs and negotiate rates to find the best deal. Aim to get quotes from at least three different lenders so you have a good basis for comparison.

4. Bigger Down Payments Lead to Lower Rates

Depending on the loan program you choose, you may be required to put little to no money down.

But just because you’re allowed to put little or nothing down on a house doesn’t mean that’s a good idea. In most cases, you could qualify for a better rate if you make a larger down payment.

Larger down payments could also prevent you from having to pay for private mortgage insurance (PMI), it will reduce your total borrowing costs, and it will protect yourself against owing more than your home is worth if real-estate values decline.

5. Choose the Right Rate

You also need to understand how different kinds of mortgages work. For example, it’s important to know the difference between a fixed-rate mortgage and an adjustable-rate mortgage.

A fixed-rate loan is one where the interest rate and monthly payment are fixed from the start and never change. You can get a 10-, 15-, or 30-year fixed-rate loan, but most people opt for 30-year loans because they provide certainty and affordable monthly mortgage payments.

>> Read More:

An adjustable-rate loan usually has a lower starting rate, but the rate is tied to a financial index and could change over time.

There are different kinds of adjustable-rate mortgages (ARMs) including 3/1, 5/1, and 7/1 ARMs. The first number refers to the number of years that the initial rate is fixed, and the second to how often rates can change each year after that initial period.

5/1 ARM may make sense if you want the lowest possible starting rate and plan to move or refinance your mortgage within four or five years. A 3/1 or 7/1 ARM could also make sense if you plan to keep your existing home or mortgage for a slightly longer or shorter period of time.

But, if you don’t end up moving or refinancing, there is always a risk your loan payment could go up.

6. Don’t Forget About Closing Costs

It’s also important to be aware that there are additional costs you have to pay when you buy a house—a lot of them. You will likely need several thousand dollars to cover costs, such as prepaid property taxes, appraisal fees, loan origination fees, transfer taxes, and title insurance.

You don’t want these costs can come as a surprise, so make sure you factor them into your overall budget.