Credit: Image via Getty Images. Illustration: Issiah Davis/Bankrate
With so many mortgage providers out there, it can be difficult to know where to start, especially if you’re a first-time home buyer. Bankrate has scrutinized several key criteria to shortlist the top mortgage lenders for first-time buyers. This includes first-time buyer and low down payment loans, down payment assistance, and other aspects to help you navigate the home buying process. Here’s our guide to the best mortgage companies for first-time home buyers in 2024.
Best mortgage lenders for first-time home buyers
| lender | credit requirements | Minimum down payment amount | bank rate score |
|---|---|---|---|
| pen federal credit union | 650 for conventional loans, 700 for jumbo loans, and 620 for FHA loans. | 3% for conventional loans, 3.5% for FHA loans, and none for VA loans. | 4.7 |
| Veterans United Home Loan | 620 for conventional and VA loans | 3% for conventional loans, 3.5% for FHA loans, and none for VA and USDA loans. | 4.9 |
| us bank | 620 for conventional loans and 740 for jumbo loans. | 5% for conventional loans, 3.5% for FHA loans, and none for VA and USDA loans. | 4.8 |
| former national bank | 620 for conventional loans, 640 for FHA loans, and 680 for VA loans. | Unpublished | 4.6 |
| wells fargo | 620 for conventional loans. | 3% for conventional loans, 3.5% for FHA loans, and none for VA and USDA loans. | 4.8 |
| better | 620 for conventional loans and 580 for FHA loans. | 3% for conventional loans, 3.5% for FHA loans, and none for VA loans. | 4.6 |
| Mr. Cooper | 620 for conventional loans, 580 for FHA loans, and 600 for VA loans. | 3% for conventional loans, 3.5% for FHA loans, and none for VA loans. | 4.6 |
| rocket mortgage | 620 for conventional loans, 680 for jumbo loans, and 580 for FHA and VA loans. | 3% for conventional loans, 10% to 15% for jumbo loans, 3.5 for FHA loans, and none for VA loans. | 4.6 |
How first-time home buyers find the best mortgage lender
There are many different types of mortgage lenders you may come across when looking for a loan, including banks, credit unions, and independent non-depository institutions. You may also come across a mortgage broker who can help you find financing offers from various financial institutions.
When searching for a lender, consider your goals and what you value in your mortgage lending experience. What type of loan are you looking for? How long do you plan to stay in the area? Do you feel safe with 24/7 support? Do you need homebuyer education? All these questions and more Other questions will help you narrow down your choices.
Once you have a short list, consider and compare mortgage offers before committing to it. Lenders include APR (Annual Percentage Rate) and interest rates in their offers, but you should actually consider the APR, which reflects the actual cost of your mortgage. Generally, the lower the annual interest rate, the cheaper the loan.
Next steps for first-time homebuyers
Buying a home is a big step, but it’s especially difficult in a housing market marked by record high prices and a significant affordability squeeze. First, let’s get a rough idea of the costs involved in purchasing a home.
If you’re sure you need financing, do some research to determine the type of mortgage you want. Options include:
That decision will help you find a lender that specializes in that type of mortgage.
Even before you start house hunting, you may want to find a lender and apply for pre-approval for two or three mortgages. A mortgage pre-approval is a written notice from your lender of the amount of money they are willing to borrow for your home. Once you’re equipped, you can start buying a home in earnest. In fact, many sellers will only consider offers from people who are pre-approved. This is to prove that you have the funds. In other words, they are “okay”.
