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Best Mortgage Lenders For First Time Home Buyer – A white circle with a black border facing up the chevron. It says “click here to return to top of page”.
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Best Mortgage Lenders For First Time Home Buyer
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What Is A First Time Home Buyer? [definition & Qualifications]
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Our experts answer readers’ home buying questions and write unbiased product reviews (here’s how we rate mortgages). In some cases, we receive commissions from partners; but our opinions are our own.
If you’re a first-time homebuyer struggling with the credit and down payment requirements that usually come with getting a mortgage, these first-time home loans can help you overcome those hurdles and finally get the keys to your own home.
Note: The definition of a first-time home buyer can vary from lender to lender, but most use the U.S. Department of Housing and Urban Development’s definition, which includes anyone who has not owned their primary residence in the past three years. Additionally, many of the loan programs listed here allow first-time home buyers to apply.
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All of the mortgages listed here have special features available to first-time buyers and other cash buyers. All allow for low or no down payment, and most do not require private mortgage insurance (PMI).
PMI is usually required on mortgages with less than 20% down. PMI is a cost added to your monthly mortgage payment that helps cover the lender’s risk by lowering the down payment.
Many of these mortgages also have flexible credit requirements, such as allowing borrowers to use non-traditional credit. Remember, some lenders will only approve you if you don’t have a traditional credit rating. If you have a low score, you may need to work to improve it before you qualify for a mortgage.
What type of loan is best for first-time buyers? Chevron Icon This indicates a section or expandable menu or sometimes previous/next navigation options.
Best Mortgage Lenders For First Time Homebuyers In 2023
First-time buyers often turn to government-backed mortgages, such as FHA loans, because of the lower credit requirements and lower down payments. First-time buyers like conventional mortgages because they allow for down payments of up to 3%.
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Your state or local housing authority may offer some form of down payment assistance, and many nonprofits have programs that give money to buyers. You can search online or contact your state housing authority to see what’s available in your area.
How do I go about buying a home for the first time? Chevron Icon This indicates a section or expandable menu or sometimes previous/next navigation options.
First Time Home Buyer: Vocab Cheat Sheet
Get pre-approved by three or four lenders to get an idea of the loan amount, terms and rates available to you. After pre-approval, contact a real estate agent to start looking for homes. You can also decide to contact an agent first and get them recommendations for good lenders in your area. The professionals working with you will help guide you through the process.
How much money should be paid for the house? Chevron Icon This indicates a section or expandable menu or sometimes previous/next navigation options.
The old answer is 20%, but most people don’t put much. Conventional mortgages allow for down payments of up to 3%, while FHA borrowers need at least 3.5%. If you qualify for a USDA or VA loan, you don’t have to make a down payment.
What Credit Rating Do First Time Buyers Need? Chevron Icon This indicates a section or expandable menu or sometimes previous/next navigation options.
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First-time buyers are not subject to different credit score guidelines because they are first-time borrowers, but certain programs that specifically target these borrowers may have different requirements. If you’re trying to get a mortgage, a minimum score of 620 is required, but you can get as high as 580 or 500.
Bank of America Community Affordable Mortgages are a very affordable option for qualified borrowers because you don’t have to put down cash.
Flexible credit requirements: No minimum credit score; uses rent, utility, phone or auto insurance payments to create a history of on-time payments.
What to look for: According to the bank’s press release, this mortgage is only available in “select markets,” including historically black and Hispanic neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami. To qualify, you must meet income thresholds and complete a home certification course.
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USA Bank’s American Dream Loan requires a minimum down payment of 3% and includes plenty of down payment assistance.
If your student loans have prevented you from qualifying in the past, you may be happy with this loan program; Bank of America says it will work with borrowers on an income-based repayment plan.
This loan comes with up to $10,000 in assistance that can be used for a down payment, closing costs, or other expenses related to buying a home.
Flexible loan requirements: Accepts non-traditional loans if you have no credit. If you have a credit score, it should be at least 640. Debt to income ratio is less than 43%.
Farm: First Time Homebuyer Programs
What you need to know: This mortgage is available in 25 states. At closing, you must contribute at least $1,000 of your own funds. Income restrictions apply.
PNC Community Mortgage PNC Bank is another favorite option for borrowers who can afford small down payments.
In addition to low PMI mortgages, PNC Bank offers a $5,000 subsidy to borrowers who meet income limits or live in low- to moderate-income areas.
Flexible loan requirements: PNC Bank says this loan has “relaxed” requirements, and many borrowers find it easier to get a PNC community loan than a traditional loan.
What Is The Average Age Of First Time Homebuyers?
The Navy Federal Credit Union Homebuyer’s Choice Loan is a great option for Navy members who don’t qualify for a US Department of Veterans Affairs mortgage because it works like a VA loan with no down payment and no PMI. . .
Flexible credit requirements: There are no specific credit requirements listed for this loan, but Navy Federal Online notes that it will take into account your credit score and your banking history with the credit union.
What to look out for: You must be a member of Maritime Federal Credit Union to get a mortgage from this lender. Membership is only available to veterans, members of the Armed Forces, Department of Defense or National Guard, or family members who are members.
The Wells Fargo Dream. Level. House. Thanks to the 3% down payment and PMI requirement, the mortgage is one of the most expensive mortgages on our list. But it’s still an affordable option for borrowers looking to put down cash, and the $5,000 loan is worth a bonus.
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This mortgage can be combined with the Wells Fargo Dream. Level. House. Closed-end credit. With this loan, borrowers can use up to $5,000 toward the down payment. Credit available only in certain areas.
What to consider: Unlike most mortgages on this list, this mortgage requires PMI, which can make it a bit more expensive than other first home loan options. Income restrictions apply.
Northpointe Bank’s 100% mortgage from Northpointe is a decent option for borrowers with good credit scores, but it’s not as flexible as the other mortgages on this list.
Northpointe has another specialty 0% product called EquityBuilder. With this loan, you use your savings for a down payment and instead invest in a lower interest rate or shorter loan term.
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What you need to know: This mortgage is available in 23 states. There is no limit to how much money you can earn.
A HomeRun mortgage from Citibank is a good option for borrowers who need to apply for a non-traditional loan, but the high down payment requirements that come with it may not be worth it. Citibank’s closing cost assistance is higher than many other lenders listed here; borrowers can
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