Best Mortgage Lenders For First-Time Homebuyers

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Buying a house for the first time can put a strain on your budget. Fortunately, first-time homebuyer programs can ease the pressure by offering some form of financial assistance. 

Considering how much home prices have increased in the past few years, it seems homebuyers could use all the help they can get to be able to afford a home. The median existing home sales price was $379,100 in October, compared to $355,700 in October 2021 and $271,900 for the year 2019, according to data from the National Association of Realtors.

The type of help offered by first-time homebuyer programs can vary, but often includes things like tax incentives, grants, interest-free loans, down payment and closing cost assistance, reduced down payment requirements, and more. The types of programs available vary depending on where you are located and whether the lender offers or works with the third-party organizations providing these programs. 

Finding a good lender, let alone one that works specifically with first-time homebuyer programs, can be challenging. That’s why we’ve done the research for you with our picks for the best mortgage lenders for first-time homebuyers.

Editorial Independence

As with all of our mortgage lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.

Best Mortgage Lenders For First-Time Homebuyers

Best With Fast Preapprovals and Closings
Guaranteed Rate
Guaranteed Rate
Best With Fast Preapprovals and Closings
Guaranteed Rate
  • Guaranteed Rate’s Standout Feature::
    Guaranteed Rate says it can provide a preapproval letter in around 15 minutes, and the company goal is to be clear to close within 10 days.

NextAdvisor’s Take

Pros
  • More than 400 branch locations nationwide
  • Operates in all 50 states and Washington, D.C.
  • Fully online mortgage application process
  • Detailed advertised rates for many of its loan products
  • Online preapproval 15 minutes
  • Fast closings
Cons
  • Lenders fees not available online
  • Some loan types are brokered off to other lenders
The Bottom Line

Guaranteed Rate is a Chicago-headquartered firm with a strong online presence and 400 branch locations  across the country. We ranked the company a top lender because of its top-of-the-line digital experience, helpful consumer tools, solid customer service, and variety of loan products, including all three government loans.

Guaranteed rate received fewer consumer complaints compared to most other lenders we reviewed. The company logged less than one complaint per 1,000 loans originated with the Consumer Financial Protection Bureau (CFPB) consumer complaint database, the agency responsible for collecting, monitoring, and responding to U.S. consumer complaints about financial services and products.

See our full review of Guaranteed Rate here.

Top Lender In Customer Satisfaction
Rocket Mortgage
Rocket Mortgage
Top Lender In Customer Satisfaction
Rocket Mortgage
  • Rocket Mortgage’s Standout Feature:
    Despite its magnitude, the company has lower-than-average consumer complaints registered on the CFPB consumer complaint database.

NextAdvisor’s Take

Pros
  • Quick and easy preapproval process
  • Entirely remote application and approval process
  • Lends in 50 states
  • Wide range of loan options
  • Strong customer service reputation
Cons
  • No physical locations
  • You’ll need to call or chat with a representative for some loan information
  • No construction loans or renovation loans
  • Advertised rates may include discount points, which increase your upfront costs
  • Difficult to find mortgage menu of loans
The Bottom Line

Rocket mortgage is the online lender for Quicken Loans and is one of the largest mortgage lenders in the U.S. We ranked the Detroit-based company as one of the best mortgage lenders because of its simple online application process, low level of consumer complaints, the transparency and accessibility of its rates and fees, and the company’s wide offering of mortgage loan products.

Rocket Mortgage stands out for the company’s high level of customer satisfaction. Rocket Mortgage originated over one million loans in 2020, making it the largest lender we reviewed by total volume.  We found 0.48 complaints per 1,000 loans — or less than half a complaint per 1,000 loans occurred. This figure is very low compared to the average complaint ratio of 2 complaints per 1,000 loans among other lenders we reviewed.

See our full review of Rocket Mortgage here.

Best for the Non-Traditional Borrower
North American Savings Bank
North American Savings Bank
Best for the Non-Traditional Borrower
North American Savings Bank
  • NASB’s Standout Feature:
    NASB has several programs that can help non-traditional borrowers get a home such as the self-employed and those with a less-than-prefect credit history.

NextAdvisor’s Take

Pros
  • Lends in 50 states
  • Has unique loans products for borrowers with credit issues or are self-employed
  • Advertises daily interest rates for purchase and refinance loans
  • Can get lower rate if rate drops during 90-day rate lock period
  • Streamlined online application process
  • Can get customized rate quote without hard credit check
Cons
  • 12 in-person branches, but only in Missouri
  • Does not offer USDA loans, construction loans, renovation loans, and home equity products
  • Higher credit score standards on FHA and VA loans
The Bottom Line

Headquartered in Kansas City, Missouri, North American Savings Bank (NASB) is a full-service bank that lends in all 50 states. North American Savings Bank has a more extensive mortgage menu than most, including options for veterans, first-time homebuyers, self-employed people, and borrowers with less-than-perfect credit histories. That’s because the bank offers VA loans, FHA loans, and mortgages for people who don’t fit conforming loan standards. NASB also has a streamlined online application process with transparent pricing for browsing borrowers.

See our full review of North American Savings Bank (NASB) here.

Best for Full Service Banking
Truist (SunTrust and BB&T) Mortgage
Truist (SunTrust and BB&T) Mortgage
Best for Full Service Banking
Truist (SunTrust and BB&T) Mortgage
  • Truist Bank’s Standout Feature:
    There is an allure of convenience to also have your mortgage through the same institution you bank with

NextAdvisor’s Take

Pros
  • Offers a full lineup of the major mortgage programs
  • Advertises sample mortgage rates on both the SunTrust and BB&T websites
  • Mortgages available in 47 states and Washington, D.C.
  • Can submit an application online, by phone, or in person
Cons
  • Gathering mortgage product information is slightly confusing because of the merger
  • Mortgages not available in Hawaii, Alaska, or Arizona
The Bottom Line

Truist Bank, now merged with Suntrust and BB&T under its name, has an extensive footprint across the U.S. through its thousands of brick-and-mortar branches and online presence. Along with the company’s solid menu of mortgage products, easy-to-use online application process, transparency of rate and fee information, and average number of complaints compared to other reviewed lenders, the brand’s website is easy to navigate with several useful resources to help with the borrowing process, such as calculators, videos, and sample mortgages.

Truist offers a comprehensive menu of online or in-person banking accounts such as checkingsavingsmoney market, and CDs. If you are in the market for a bank, looking to switch banks, or already have a Truist account, there is an allure of convenience to also have your mortgage through the same institution. Some lending institutions also give incentives or discounts to existing account holders.

See our full review of Truist Bank here.

Best Online Application Process
Sebonic Financial
Sebonic Financial
Best Online Application Process
Sebonic Financial
  • Sebonic Financial’s Standout Feature:
    Sebonic’s proprietary borrowing platform, Octane. We found Octane to be one of the best online application processes

NextAdvisor’s Take

Pros
  • Offers a streamlined digital application and closing process
  • Funds conventional loans, jumbo loans, and all three government-backed loan programs
  • Available in all 50 states and Washington, D.C.
  • Interest-only jumbo ARMs available
Cons
  • Mortgage rates aren’t published on the lender’s website
  • Doesn’t offer home equity loans, HELOCs, renovation loans, reverse mortgages, or construction loans
  • In-person branches only available in Charlotte, North Carolina; Gaithersburg, Maryland; and Las Vegas, Nevada
The Bottom Line

Sebonic Financial is the mortgage lender division of North Carolina-headquartered Cardinal Financial. Sebonic Financial scored well with NextAdvisor because of the company’s high-end digital borrowing experience, full mortgage product lineup which is available in all 50 states,  and the lender’s history of below-average customer complaints with the CFPB. Based on 2020 data, Sebonic has less than one complaint per 1,000 loans originated in the same year.

Although Sebonic’s mortgage rates and fees are not listed on the company website, the online system, Octane, makes it easy to access a quote without a credit check or drawn-out process. With Octane, borrowers can get a fast rate quote, start an application, upload documents, and sign closing documents, with real-time updates along the way. We found Octane to be one of the best online application processes compared to other lenders we’ve reviewed. It’s easy-to-use, high-tech, and we appreciate the ability to have a full-online digital experience with the option to speak to loan officers.

See our full review of Sebonic Financial here.

Wells Fargo Mortgage Lender Review 2022
Wells Fargo Mortgage Lender Review 2022
Wells Fargo Mortgage Lender Review 2022
  • Minimum Credit Score:
    620
  • Minimum Down Payment:
    0% to 3.5%, depending on the loan type
  • Can Apply Online:
    Yes
  • Operates In:
    All 50 States

NextAdvisor’s Take

Pros
  • Advertises interest rates on its website
  • Offers mortgages and other consumer products, including banking services and credit cards.
  • Offers several down-payment assistance programs
  • The bank’s mortgage calculator estimates your closing costs and provides a rate quote
Cons
  • Does not offer home equity loans or HELOC’s
  • Branch locations in 32 states
  • A series of financial scandals plus consumer complaints has damaged consumer trust in recent years
The Bottom Line

Wells Fargo is one of the biggest mortgage lenders out there, though it has a relatively standard online presence. Borrowers can take out conventional and government-backed loans, construction loans, and jumbo loans. But Wells Fargo could be a strong contender if you need help covering your down payment or you’re an existing Wells Fargo customer and qualify for a discount. It’s best not to ignore the company’s history with consumer complaints and financial scandals either.

Flagstar Bank Lender Review 2022
Flagstar Bank Lender Review 2022
Flagstar Bank Lender Review 2022
  • Minimum Credit Score:
    600 VA; 620 conventional, FHA, USDA; 660 jumbo
  • Minimum Down Payment:
    0% to 3.5% depending on loan type
  • Can Apply Online:
    Yes
  • Operates In:
    All 50 States

NextAdvisor’s Take

Pros
  • Has an extensive loan lineup for purchases, refinances, construction, and more
  • Operates 150 branches
  • Mortgages available in all 50 states and Washington, D.C.
  • $1,000 discount on closing costs for veterans and first responders on certain loan types
  • Flexible mortgage options for low-income borrowers (in certain states)
  • Full application process available online or in person
Cons
  • Credit score requirements a bit higher for FHA loans and USDA loans compared to some other lenders
  • History of regulatory actions
  • Above average consumer complaints per 1,000 loans
The Bottom Line

Flagstar can be a good option for just about any borrower, since the bank offers many types of home loans. However, you might need fair or better credit to qualify since the credit score requirements on FHA loans and USDA loans are a bit higher compared to some other lenders. The bank also has a history of consumer complaints and regulatory actions, which borrowers should be aware of.

Good for Existing Accountholder Credit
U.S. Bank Home Mortgage Review 2022
U.S. Bank Home Mortgage Review 2022
Good for Existing Accountholder Credit
U.S. Bank Home Mortgage Review 2022
  • Minimum Credit Score:
    620 (740 for jumbo)
  • Minimum Down Payment:
    0% to 10% depending on the loan type
  • Can Apply Online:
    Yes
  • Operates In:
    All 50 States

NextAdvisor’s Take

Pros
  • Large mortgage product menu
  • A digital application process
  • Loan officers available to assist you
  • Existing customer credit up to $1,000
  • Available in all 50 states
Cons
  • Advertised mortgage rates are for creditworthy borrowers
  • Not all loan programs or amounts available in all states
  • Physical branches in only 26 states
  • Limited rate and fee information online
The Bottom Line

U.S. Bank offers a variety of mortgage types and an easy, digital application process. In 26 states, you also have the option to visit a physical branch for more assistance. Based on the company website, rates are competitive for creditworthy customers. You’ll need to prequalify to get an understanding of what rates and fees each borrower can get. U.S. Bank can be a good option for existing U.S. Bank customers, who are eligible for a credit of up to $1,000. However, all borrowers should compare multiple lenders when making a decision.

Good for First-Time Homebuyers
New American Funding Mortgage Review 2022
New American Funding Mortgage Review 2022
Good for First-Time Homebuyers
New American Funding Mortgage Review 2022
  • Minimum Credit Score:
    580
  • Minimum Down Payment:
    0% to 5%, depending on the loan type
  • Can Apply Online:
    Yes
  • Operates In:
    48 States

NextAdvisor’s Take

Pros
  • Offers all the major mortgage programs and other unique products
  • Borrowers can get a rate quote, apply, upload documents, and track the progress of their loan online
Cons
  • Borrowers can’t get a rate quote without a credit pull
  • Mortgages are not available in New York and Hawaii
  • Fees aren’t disclosed until you request a loan preapproval
The Bottom Line

New American Funding is a strong contender for most borrowers — but with Spanish-speaking loan officers and homebuyer assistance programs, this lender excels in serving first-time homebuyers and the Latinx community. It offers a full menu of mortgage options and a quick digital application, but borrowers can get help within minutes if needed. But as with any financial product, it’s always a good idea to compare offers when you’re looking to take out a home loan.

Best Online Application Process
PrimeLending Mortgage Review 2022
PrimeLending Mortgage Review 2022
Best Online Application Process
PrimeLending Mortgage Review 2022
  • Minimum Credit Score:
    Not provided
  • Minimum Down Payment:
    0% to 3.5% (most loans)
  • Can Apply Online:
    Yes
  • Operates In:
    All 50 States

NextAdvisor’s Take

Pros
  • Easy online application process
  • Lends in 50 states
  • Wide range of mortgages available
  • Offers a float-down rate lock
Cons
  • Mortgage rates aren’t available online
  • Doesn’t offer home equity loans or lines of credit
  • Doesn’t publish qualification guidelines
The Bottom Line

PrimeLending is a solid choice if you’re looking for a mortgage lender. It operates in all 50 states, has an easy online application process, offers an extensive list of mortgage options for just about any borrower, and may provide closing cost and down payment assistance. And with its float-down rate-lock feature, you might be able to lower your mortgage rate before closing. Still, it’s best to compare offers among multiple lenders to make sure you’re getting the best deal.

Great for Government Loans
Fairway Independent Mortgage Lender Review 2022
Fairway Independent Mortgage Lender Review 2022
Great for Government Loans
Fairway Independent Mortgage Lender Review 2022
  • Minimum Credit Score:
    620 conventional, 600 FHA or VA, 660 jumbo
  • Minimum Down Payment:
    0% to 5%
  • Can Apply Online:
    Yes
  • Operates In:
    All 50 States

NextAdvisor’s Take

Pros
  • Offers all major mortgage types
  • Operates in all 50 states
  • Borrowers can apply for a mortgage at an office, through an app, or on the lender’s website
  • Can fund loan amounts up to $5 million
Cons
  • Mortgage rates aren’t available online
The Bottom Line

With so many options, Fairway Independent Mortgage is a strong contender if you’re looking to take out a government loan, conventional mortgage, or refinance an existing loan. While you can’t check rate quotes or lender fees online, you can apply through the website, through an app, via phone call, or at one of hundreds of offices nationwide. The application process can be completed within about 10 minutes, and you’ll be quickly connected with a loan officer.

Fast Closings
loanDepot Mortgage Lender Review 2022
loanDepot Mortgage Lender Review 2022
Fast Closings
loanDepot Mortgage Lender Review 2022
  • Minimum Credit Score:
    620 conventional, VA; 580 FHA; 700 jumbo
  • Minimum Down Payment:
    0% to 5%
  • Can Apply Online:
    Yes
  • Operates In:
    All 50 States

NextAdvisor’s Take

Pros
  • Offers digital verification for borrower income, assets, and employment.
  • Offers most major loan products
  • Operates online in all 50 states
  • Customers can get in-person help at more than 200 affiliated loan stores nationwide
  • Lender fees waived and reimbursed appraisal fees if refinancing an existing loanDepot loan
Cons
  • Information about mortgage rates and fees isn’t available online
  • You’ll need to contact a loan officer via phone, email, or office visit
  • Doesn’t offer USDA loans, home equity loans, or home equity lines of credit.
The Bottom Line

LoanDepot is a solid lender that offers help both online and in person at more than 200 offices nationwide. While the website offers a lot of general information on the homebuying process, your best bet is calling the lender to receive a rate quote and get information on fees you might pay. Once you receive a customized offer, you’ll still want to shop around for the best deal.

Which Mortgage Type Is Best for First-Time Homebuyers?

Different types of loans have different eligibility requirements, features and characteristics. The best loan for you will depend on what you can qualify for, what you need, and what you want. Some types of loans you could consider include:

Conventional loans can allow for a down payment as low as 3%. They generally have competitive rates, but do require good credit and income. If you’re not able to meet the credit requirements, you could consider an FHA loan. FHA loans require a 3.5% down payment, but offer more flexibility on credit requirements. 

If your loan exceeds the loan limits set by the Federal Housing Finance Agency, you may need a jumbo loan, which often has higher interest rates to account for the increased risk to the lender. If you have qualifying military service, you could consider a VA loan. If you’re eligible, you could be approved for a 0% down payment loan. 

Finally, you may have a choice between a fixed-rate mortgage and an adjustable-rate mortgage. With a fixed-rate mortgage, the interest rate is locked and will never change for the life of the loan. An adjustable-rate mortgage typically has a fixed rate for a specified time frame (usually several years), after which the interest rate can fluctuate up or down. While the payments can eventually change on an adjustable-rate mortgage, you can typically get a more competitive interest rate for the initial fixed-rate period. 

Best Programs for First-Time Homebuyers

First-time homebuyer programs can offer assistance in several different ways. They commonly offer the following:

  • Down payment assistance: These types of programs can help satisfy the minimum down payment required for a mortgage, and come in the form of a grant or an interest-free loan. Depending on the program, they may not require repayment as long as you agree to live in the home for several years or meet other requirements. 
  • Grants: Fees associated with obtaining a mortgage and buying a home can be significant. If you qualify for a grant, the funds can cover the down payment or closing costs. 
  • Tax benefits: Certain first-time homebuyer programs offer incentives to reduce your tax liability, helping you keep more money. 
  • Flexibility with mortgage eligibility requirements: Certain mortgage loans have more flexibility with underwriting criteria, making it easier to qualify for a loan. Examples include allowing for lower credit scores, higher debt-to-income ratios, and lower down payments. 

How to Qualify for a First-Time Homebuyer Program 

First-time homebuyer programs often have attractive financial benefits, including low interest rates, grants, and tax incentives. However, many of these programs have restrictions on who is eligible. Depending on the program, here are some things that might affect your eligibility:

  • First-time homebuyer status: Certain programs require you to qualify as a first-time homebuyer, having had no ownership interest in a property for the prior 3 years. 
  • Intended use of the property: Some first-time homebuyer programs may require that you occupy the home as your primary residence in order to be eligible for certain benefits. They may also require repayment of a loan or grant if you sell or stop using the home as your primary residence after several years. 
  • Property type: In addition to the occupancy of the home you’re purchasing, lenders and programs may also have restrictions on the type of property you intend on purchasing. This can include restrictions on whether it is a single-family home, condominium, townhome, or a multi-unit property. 
  • Your occupation: Some first-time homebuyer programs are only available for those who work in a particular industry or employer.  
  • Geographic location: Many first-time homebuyer programs are only available to those residing in a particular city, county, or state. 
  • Income: Mortgage lenders will need to review your employment and income to determine whether or not you can afford the monthly payments on a mortgage. However, it’s also possible to be ineligible if your income is too high. This can happen with programs geared toward assisting low-income individuals, and is often based on the median income of an area. 
  • Minimum down payment: As a condition of loan approval, many mortgage lenders may require a certain down payment amount. 

Credit score: Your credit score is another aspect that will be reviewed to ensure it meets the minimum required for a particular program.

How We Chose the Best First-Time Homebuyer Lenders

Our Methodology

To find the best mortgage lenders for first-time homebuyers, we first looked at all the top mortgage lenders NextAdvisor has reviewed so far. To come up with the best mortgage lenders, we use criteria to develop a framework using a weighted average score between 0 and 5 with more weight awarded to the criteria we determined to be the most important. We then narrowed the list to lenders that we identified participate in first-time homebuyer programs.

Our list doesn’t take into account key financial factors like mortgage rates, APRs, and fees, because those depend on market conditions and your individual creditworthiness. Instead of focusing on those numbers, it’s best to first determine the qualities you want in a lender and how to find the best mortgage rates. Then you’ll be prepared to find the best lender for you.

The factors we used to evaluate the best mortgage lenders: 

  • Online Convenience: A lender is scored 1 through 5 based on the company’s online application experience. A 5 is awarded if the company’s mortgage application can be completed fully online with a streamlined process, including uploading documents and a customized rate quote. A lower score is awarded if additional phone calls are needed to process an application or for a poor online user experience. 
  • Transparency: Lenders are scored 0 through 5 based on the accessibility and transparency of mortgage rates, lender fees, and credit check requirements for rates and/or fees. A 5 is awarded if the lender advertises rates and fees on its websites and doesn’t require a hard credit check to get rates and/or fees. Conversely, a lower score is awarded when consumers cannot easily access rate and fee information and/or must go through a hard credit check to access them.
  • Nationwide Availability: Lenders are scored 1 through 5 based on the company’s geographical footprint. A lender can score a 5 if it operates in all 50 U.S. States. 
  • Loan Product Variety: Lenders are scored 1 through 5 based on their loan product menu and variety of products offered. A high score of 5 is given if most or all mortgage products are available, with a lower score awarded for a limited mortgage menu. 
  • Customer Satisfaction: To measure customer satisfaction, we reviewed the number of complaints filed against each lender with the Consumer Financial Protection Bureau in 2020. We divided the total consumer complaints with the total number of loans originated over the same time period to get a complaint ratio per 1,000 loans originated. We sourced the total loans originated using publicly accessible data provided under the Home Mortgage Disclosure Act and regulated by the Federal Financial Institutions Examination Council (FFIEC)

 

Frequently Asked Questions (FAQ):

What credit score do I need as a first-time homebuyer?

This will vary depending on the type of loan you are applying for, any additional requirements by a first-time homebuyer program, and your loan characteristics. Conventional loans typically require a minimum of 620, with jumbo loans generally requiring a higher score. If you have a credit score of 580, you can qualify for an FHA loan, although with a 10% down payment or more, it would be possible to qualify for a credit score as low as 500. 

It’s my first mortgage, do I need a 20% down payment?

A 20% down payment is not required. Conventional mortgage loans geared towards first-time homebuyers allow for as little as 3%, with FHA loans requiring 3.5%. Those with qualifying military service and are eligible for a VA loan could even qualify for 0% down. You should also know that with many of these types of loans, a 20% down payment will help you avoid the requirement of having to pay monthly mortgage insurance. 

What’s the best first-time homebuyer program?

The best first-time homebuyer program will depend on your specific circumstances and which program would help you the most. If you do not have much for a down payment, consider looking into programs that offer grants or down payment assistance. Since many are location-specific, you can do a search for homebuyer assistance programs on your city, state, or county’s government websites. Programs that offer grants or tax incentives can help cover your closing costs so that you can have more money for other expenses. Finally, consider whether you need a loan with flexible underwriting requirements, such as minimum credit scores, income, and down payment needed.