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.
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.
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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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.
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.
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
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
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.
- 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
- 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.
- 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
- 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.
- 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
- 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
Best mortgage lenders for first-time buyers: summary
- Quicken Loans: Best for FHA loans
- Flagstar Bank: Best for FHA loans
- New American Funding: Best for lower credit scores
- Homebridge: Best for lower credit scores
- CitiMortgage: Best for in-person service
- Bank of America: Best for in-person service
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