Best Mortgage Companies For First Time Buyers

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Best Mortgage Companies For First Time Buyers

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Our experts answer readers’ home buying questions and write unbiased product reviews (this is how we review mortgages). In some cases we receive a commission from our partners. However, our opinions are our own.

If you’re a first-time home buyer and struggling with the credit and down payment requirements traditionally associated with getting a mortgage, these home loans for first-time buyers can help you overcome those hurdles and finally get you the keys. your house. . .

Note: The definition of a first-time home buyer may vary from lender to lender, but many use the US Department of Housing and Urban Development’s definition, which includes those who have owned their primary residence within the past three years. Additionally, many of the loan programs listed here allow first-time buyers to apply.

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The mortgages mentioned here have features that make them affordable for first-time buyers and other buyers with less money. All allow for low or no down payments, and many do not require private mortgage insurance (PMI).

PMI is usually required for mortgages with less than 20% down. PMI is a fee that is added to your monthly mortgage payment to cover the risk that the lender takes on by accepting a lower payment.

Many of these mortgages also have flexible loan requirements, such as allowing borrowers to use non-traditional loans to qualify. Keep in mind that some lenders will only let you in if you don’t have a traditional credit score. If your score is low, you may need to work on improving it before you can qualify for a mortgage.

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First-time home buyers are often attracted to government-backed mortgages, such as FHA loans, because of their less stringent credit requirements and lower down payments. First-time buyers may also be interested in conventional mortgages, as they offer up to 3% down payments.

How can I get help with a down payment? Chevron icon This indicates an expandable section or menu, or sometimes previous/next navigation options.

Your state or local housing authority may offer some type of down payment assistance, and many nonprofits have programs to help buyers earn money. You can search online or contact your state’s housing authority to see what’s available in your area.

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Get pre-approved by three or four lenders to get an idea of ​​the loan amount, terms and rates available to you. Once you get pre-approved, you can contact a real estate agent to find a home. You can also contact a broker first and get recommendations from them for good lenders in your area. The professionals you work with will guide you through this process.

How much should you put down on a house? Chevron icon This indicates an expandable section or menu, or sometimes previous/next navigation options.

The old-fashioned answer is 20%, but many people don’t like that much. Conventional mortgages allow up to a 3% down payment, and FHA borrowers a minimum of 3.5%. If you qualify for a USDA or VA mortgage, you don’t need a down payment.

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First-time home buyers won’t be subject to different credit score guidelines just because they’re new to the market, but some programs specifically targeted at these borrowers may meet different requirements. In general, a minimum score of 620 is required if you are trying to get a mortgage, although you can get a score of 580 or even 500.

Bank of America’s Community Affordable Loan Solution mortgage is a very affordable option for qualified borrowers because you don’t have to put down any money to close.

Flexible credit requirements: no minimum credit score; Uses rent, utility, phone, or car insurance payments to determine a history of on-time payments.

What to look for: The mortgage is only available in “designated markets,” including historically black and Hispanic neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami, the bank said in a news release. To qualify, you must meet income thresholds and complete a homebuyer certification course.

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American Dream Loans from US Bank require a minimum 3% down payment and come with generous assistance.

If past student loans have left you ineligible, you may be in luck with this loan program. Bank of America says it will work with borrowers who have an income-driven repayment plan.

This loan comes with up to $10,000 in assistance that can be used toward your down payment, closing costs, or other home buying expenses.

Flexible Credit Requirements: Accepts non-traditional credit if you don’t have a good score. If you have a credit score, it must be at least 640 to qualify. A debt-to-income ratio of less than 43% is required.

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What to look for: This mortgage is available in 25 states. You must deposit at least $1,000 of your funds at closing. Income limits apply.

PNC Bank’s PNC Community Mortgage is one of our favorite options for borrowers who can afford a small down payment.

In addition to low PMI mortgages, PNC Bank offers a $5,000 closing cost subsidy to borrowers who meet income thresholds or live in low- and moderate-income areas.

Flexible credit requirements: PNC Bank says this loan has “relaxed” requirements, and many borrowers will find it easier to qualify for a PNC Community mortgage than a conventional mortgage.

Best Mortgage Lenders For First Time Buyers Of 2023

The Navy Federal Credit Union Home Buyer’s Choice Loan is a good option for Navy Federal members who do not qualify for a mortgage backed by the US Department of Veterans Affairs because the loan works like a VA loan with no down payment or PMI.

Flexible credit requirements: No specific credit requirements are listed for this loan, but Navy Federal notes online that it considers both your credit score and your banking history with this credit union.

What to look for: You must be a member of Navy Federal Credit Union to get a mortgage with this lender. Membership is only available to veterans, members of the Armed Forces, Department of Defense or National Guard, or those who have a family member.

Wells Fargo Dream. The plan. at home. The mortgage is one of the most expensive mortgages on our list, thanks to the 3% down payment and PMI requirement. But it’s still generally an affordable option for borrowers willing to put down some money, and the $5,000 closing cost loan is a valuable perk.

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This mortgage can be combined with the Wells Fargo Dream. The plan. at home. Closing Cost Loan. With this credit, borrowers can get up to $5,000 to use toward closing costs. Credit is only available in certain areas.

What to look for: Unlike most mortgages on this list, this mortgage requires PMI, which can make it a bit more expensive than some of your other loan options for a first-time home buyer. Income limits apply.

The Northpoint 100% mortgage from Northpoint Bank is a good option for borrowers with a good credit score, but it’s not as flexible as some of the other mortgages on this list.

Northpoint has another specialty product with 0% down, EquityBuilder. With this loan, you use the money you save to make a down payment and instead invest it for a lower interest rate or shorter term.

The Best Mortgage Lenders For First Time Buyers Of 2023

What to look for: This mortgage is available in 23 states. There is no income limit for eligibility.

Citibank’s HomeRun mortgage is a good option for borrowers who need it.

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