First time home buyers are typically younger than those looking to purchase their second or third home. Because of their age, first-timers usually have less funds for a down payment and might also have student debts, poor credit, or financial worries that make it hard to finance a purchase. This makes it important to examine the best mortgages for first time buyers specifically.
Top First-Time Home Buyer Lenders Compared & Explained
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HUD First-Time Home Buyer Requirements
- You (or your spouse) have has not owned a principal residence for at least 3 years
- You are a single parent who has only owned with a former spouse while married
- You are a homemaker who has only owned with a spouse, but are no longer financially supported by your spouse
- You have only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations
- You have only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure
Because of the unique circumstances of first-time home buyers, lenders might offer incentives such as low rates or small down payments. Many lenders offer FHA mortgages, which are home loans insured by the Federal Housing Administration. An FHA home loan requires a down payment of just 3.5% and has flexible requirements and an easier qualification process than a conventional loan. However, it does require that the borrower pay monthly mortgage insurance.
The Top 5 Lenders
- Dedicated FHA loan search
- Lowest rates on the market – by city
- See results instantly
LendingTree is another online marketplace that enables a comparison between different lenders. It has a specially dedicated search tool for FHA loans, which allows the user to see up-to-date interest rates for the portal’s top-rated FHA lenders. Users can search for FHA loans by city.Users can also conduct a quick, free search for 30-year, 15-year, and other conventional fixed-rate loans. Conduct a simple search by city, or fill in advanced parameters to find the best rates and fees from the perspective of a first-time buyer.
Best for: National loan programs and financial assistance for first-time buyers
Biggest perk: Instant search results by city
- Down payments of as low as 3%
- Minimum credit score of 620 for conventional mortgages
- Offers FHA home loans
Quicken Loans is a well-known mortgage lender making things simple for first-time home buyers with down payments of as low as 3% of the value of your new home. Loan amounts vary from as low as $25,000 to as high as $3 million.Quicken is one of the largest mortgage lenders for first time buyers to offer mortgages under the FHA home-buyer program, which accepts down payments as low as 3.5%. It also offers access to VA loans, which offers military veterans and active service members (who meet certain conditions) better rates and no down payment.
One of the great things about Quicken Loans is that you can apply online through Rocket Mortgage by Quicken Loans. Rocket Mortgage claims to do everything quicker than your average mortgage provider. If you have a lot of questions and would rather talk things over, Quicken Loans’ experts are also available to speak by phone.
Best for: Calculating your budget and monthly payments
Biggest perk: Fast application
- Available 24/7
- Instant loan estimate
- Clear communication and transparency
Better is changing the mortgage industry through technology. Get 3 minute pre-approval with no impact on your credit and take your mortgage with absolutely no application, processing, origination or underwriting fees. Better has an investor matching algorithm, matching your loan with the right investor, saving you money. The entire process for your first-time home mortgage is streamlined, sending you the savings and saving you time. Borrowers save an average of $3500 on transaction costs alone. Better also offers a comprehensive F.A.Q. section and clear rate estimates right on the website.
Best for: High-tech mortgage borrowing
Biggest perk: No commission or origination fees
- Basic mortgage information is available without a signup
- Choose from fixed and adjustable rate mortgage loan offers
- Mortgage calculators let you crunch numbers and budget
LoanDepot offers homebuyers a portal to compare mortgage loan offers. You can access basic mortgage information without signing up for an account, and it’s easy to update your information and view additional loan offers in a simple and straightforward manner. A variety of loans are available to search, including hard-to-find 10- and 20-year fixed loans.
Best for: Comparing loan options
Biggest perk: Viewing additional loan types is easy thanks to the simple layout
- Lots of educational info available online
- Strong financial institution
Paramount Bank is a solid financial institution that offers both private and business banking and mortgage loans to the general public. The company is an HUD-approved lender that provides a wide variety of financial products to better assist its clients, including jumbo programs, federal-backed loans, and conventional mortgages. With pre-approval, fast online pre-approval, and cool online tools, Paramount Bank really makes mortgages easier.
Best for: Families looking to buy or refinance homes
Biggest perk: Smooth and hassle-free home loan process
First-Time Homebuyer Programs
There are several programs specifically geared for first-time home buyers, though you are free to use any home purchase loan that you qualify for.
These programs include:
- FHA Loans
FHA loans are like many other mortgages and are made by private lenders, such as Quicken Loans. Your FHA loan, unlike a conventional loan, will be guaranteed by the federal government. This means that your lender will consider you, even if you might not qualify for a conventional mortgage.
- USDA Loans
This program, run by the U.S. Department of Agriculture, focuses on rural homes and allows 100% financing (which means 0% down payments) to low income borrowers without stable housing.
- VA Loans
The U.S. Department of Veterans Affairs helps service members, veterans, and surviving spouses buy homes with full financing. These loans do not require PMI, which can save a bundle. Private lenders can add their own requirements, but generally VA loans are a tremendous benefit for military personnel.
- Fannie Mae and Freddie Mac
Both Fannie Mae (the Federal National Mortgage Association, FNMA) and Freddie Mac (the Federal Home Loan Mortgage Corporation, FHLMC) purchase home loans from private lenders, enabling lenders to make more mortgages for borrowers like you. They purchase conventional, FHA, VA and USDA loans and guarantee loans.
- Good Neighbor Next Door Programs
This program, originally intended for teachers, now includes law enforcement, EMTs, and firefighters. It's sponsored by HUD and allows 50% discounts on the list price of homes in certain areas. If you qualify, you have to commit to living in the place you are interested in buying for at least 3 years.
Check out these reviews of the leading mortgage lenders to see who can help you realize your dream of buying a home.