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5 Tips for Finding the Best Mortgage Lenders for First-Time Buyers

April 27, 2018
Mortgage Process, Mortgages
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When you’re a first-time home buyer, shopping mortgage lenders may feel like a huge chore. But, like buying a car or choosing an insurance policy, taking time to compare your options can save you heartache as well as money.

NerdWallet researched the nation’s leading mortgage lenders and selected some of the best ones for first-time home buyers. Browse the features of the lenders highlighted below. Then check out our full list of the best mortgage lenders for first-time home buyers.

Best mortgage lenders for first-time home buyers looking at FHA loans

FHA loans offer more relaxed financial requirements than conventional loans and are a specialty of these mortgage lenders.

Quicken Loans
4.5 NerdWallet rating
  • Is the largest FHA lender in the nation
  • Has a full complement of mortgage products for buying and refinancing
  • Offers digital tools so you can complete the mortgage process entirely online
  • Quicken Loans review
4.5 NerdWallet rating
  • Embraces FHA-backed home loans
  • Finds state bond programs for first-time home buyers and limited-income households
  • Offers a full menu of fixed- and adjustable-rate home loans and refinancing
  • Flagstar Bank review

Best mortgage lenders for first-time home buyers with lower credit scores

These lenders will work with you to overcome less-than-perfect credit so you can buy your first home.  

4.5 NerdWallet rating
  • Helps borrowers find down payment assistance programs
  • Offers FHA and VA loans with a 580 credit score
  • Bilingual agents available to assist Spanish-speaking borrowers
  • New American Funding review
3.5 NerdWallet rating
  • Minimum credit score: 550 for government-backed loans
  • Offers fixed- and adjustable-rate mortgages
  • Licensed in all 50 states; branch locations in 30 states
  • Homebridge Financial Services review

Best mortgage lenders for first-time home buyers who want in-person service

These traditional lenders have branch offices across the country so you can talk to your loan officer face to face, if it’s what you prefer.

4.0 NerdWallet rating
  • Offers free consultations with a loan officer, even if you apply online
  • HomeRun loan program requires as little as 3% down
  • Closing cost credits and rate discounts available for Citibank customers
  • CitiMortgage review
4.0 NerdWallet rating
  • In-house video conferencing with loan officers to help answer questions
  • 3% down payment loan program with no mortgage insurance for first-time home buyers
  • 5% down payment program for doctors that doesn’t require mortgage insurance
  • Bank of America Mortgage review

How to look for a first-time home buyer mortgage lender

The best mortgage lenders for first-time home buyers embrace government loans, offer low down payment options, charge reasonable fees, and help you find financial assistance programs. Here are five tips to help you choose a mortgage lender when buying your first home.

1. Know your credit score and history.

Getting a first-time home buyer mortgage is like applying for college: Only those with the right combination of grades and experience are accepted. But instead of GPA and extracurricular activities, lenders look at your credit score and financial history, and both can affect your mortgage rate in a big way.

Review your credit score and report to learn more about the details lenders judge you on, like debt-to-income ratio, a big factor in deciding how much they’ll let you borrow. Keep in mind the amount you’re allowed to borrow may be different than what you can comfortably afford each month. Use NerdWallet’s home affordability calculator to zero in on a realistic number.

Don’t worry if aspects of your credit are less than stellar: With time and determination, credit problems are fixable. And healthy credit gives you more lenders and affordable loan options to choose from.

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2. Ask about first-time home buyer programs.

Some lenders partner with state agencies to offer rate discounts, down payment assistance or educational resources to help first-time home buyers purchase a home. These programs include affordable loan and grant options for public servants, veterans or those with student loans, and benefits can often be combined to make buying your first home as affordable as possible.

Although state housing and finance agencies market these first-time home buyer programs, the mortgages are handled by typical banks, credit unions and non-bank lenders. Eligibility requirements vary by state, program, property location and lender — and not all lenders participate, so be sure to ask.

3. Seek lenders who offer government-backed home loans.

State agencies aren’t the only places to find first-time home buyer mortgages, of course. Loans offered by the U.S. Department of Agriculture, U.S. Department of Veterans Affairs and the Federal Housing Administration have relaxed income, credit and down payment requirements for easier qualification.

USDA and VA loans can often be obtained with zero down payment, while FHA loans require as little as 3.5%, and minimum credit scores for all three are generally lower than for conventional loans. There are limits to how much you can borrow with a government-backed loan, and mortgage insurance — protection for the lender if you default — may be tacked on to your monthly payment.

Not all lenders offer FHA, VA and USDA home loans or their options may be limited, so always ask about availability when comparison shopping.

» MORE: 5 tips for finding the best mortgage lender

4. Compare interest rates and more.

To see current interest rates from different lenders, use our rate comparison tool. But don’t stop there.

Comparing annual percentage rates, or APRs, provides a more complete picture of what you’ll pay over the life of the loan. You’ll also want to compare application, appraisal, title and loan origination fees, which affect closing costs and vary widely depending on the lender.

And when loan officers rattle off these numbers and terms at an alarming rate, don’t just smile and nod. With mortgages, the devil is in the details — pages and pages of them.

Ensure you have all the facts by asking for clarification every step of the way. You should never feel rushed into choosing a loan that doesn’t match your needs or budget.

» MORE: How APR affects your mortgage

5. Get preapproved before house shopping

Preapproval proves a lender is willing to loan you a certain amount of money and signals to home sellers that they can rely on your offer if they accept it. It also provides an idea of what your mortgage payment and interest rate will be if you borrow that amount.

When shopping for lenders, compare preapproval options. Some lenders allow you to upload digital documents and can provide approval online in minutes, while others may require a phone call or visit to a local branch office to deliver documents in person. As you compare lenders, consider their preapproval methods and whether one fits your schedule and documentation preferences better than another.

And if you’re facing preapproval barriers, like a lower credit score or inconsistent income, ask lenders before applying if they’re willing to work around them. Some lenders will help you find errors on your application or take into account nontraditional credit data like rent payments.

» MORE: Get a mortgage preapproval

Best mortgage lenders for first-time buyers: summary

More from NerdWallet

NerdWallet’s selection of mortgage lenders for inclusion here was made based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.

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