Credit: Images by Getty Images; Illustration by Issiah Davis/Bankrate
With so many mortgage lenders out there, it can be challenging to know where to start, especially if you’re a first-time homebuyer. Bankrate looked closely at several key criteria to help narrow down the top mortgage lenders for first-timers, including first-time buyer and low-down payment loans and down payment assistance, as well as other aspects that can help you navigate the homebuying process. Here is our guide to the best mortgage lenders for first-time homebuyers in 2024.
Best mortgage lenders for first-time homebuyers
| Lender | Credit requirements | Down payment minimum | Bankrate Score |
|---|---|---|---|
| PenFed Credit Union | 650 for conventional loans, 700 for jumbo loans, 620 for FHA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans | 4.7 |
| Veterans United Home Loans | 620 for conventional and VA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.9 |
| U.S. Bank | 620 for conventional loans, 740 for jumbo loans | 5% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.8 |
| Old National Bank | 620 for conventional loans, 640 for FHA loans, 680 for VA loans | Undisclosed | 4.6 |
| Wells Fargo | 620 for conventional loans | 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.8 |
| Better | 620 for conventional loans, 580 for FHA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans | 4.6 |
| Mr. Cooper | 620 for conventional loans, 580 for FHA loans, 600 for VA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans | 4.6 |
| Rocket Mortgage | 620 for conventional loans, 680 for jumbo loans, 580 for FHA and VA loans | 3% for conventional loans, 10%-15% for jumbo loans, 3.5 for FHA loans, none for VA loans | 4.6 |
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- Availability: All U.S. states
- Loans offered: Conventional, jumbo, FHA, VA
- Credit requirements: 650 for conventional loans, 700 for jumbo loans, 620 for FHA loans
- Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA loans
- Where to find: Branch locations and online
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Pros
- No lender fees; offers lender credits up to $2,500
Cons
- Higher minimum credit score requirements; no USDA loans
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Anyone can join PenFed Credit Union and apply for a mortgage. This nonprofit is especially worth considering if you’re looking for a new VA loan or to refinance your current VA loan.
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- Availability: All U.S. states
- Loans offered: Conventional, jumbo, FHA, VA, USDA
- Credit requirements: 620 for conventional and VA loans
- Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
- Where to find: Branch locations and online
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Pros
- Specializes in VA loans; 24/7 customer service over the phone; free credit counseling for service members
Cons
- Doesn’t offer HELOCs or home equity loans; limited number of branches
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This company offers stellar service and specializes in VA loans. If you’re a veteran, it’s a solid choice.
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- Availability: All U.S. states
- Loans offered: Conventional, jumbo, FHA, VA, USDA
- Credit requirements: 620 for conventional loans, 740 for jumbo loans
- Down payment minimum: 5% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
- Where to find: Branch locations and online
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Pros
- Several down payment and closing cost assistance programs; discounts for banking customers
Cons
- Requires a higher credit score to qualify; refinance timeline can be lengthy
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This large bank stands out for offering several forms of homebuying assistance, including thousands in grants and credits for your down payment and closing costs.
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- Availability: All U.S. states
- Loans offered: Conventional, jumbo, FHA, VA, USDA
- Credit requirements: 620 for conventional loans, 640 for FHA loans, 680 for VA loans
- Down payment minimum: Undisclosed
- Where to find: Branch locations and online
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Pros
- Branches plus online banking; first-time homebuyer and down payment/closing cost assistance programs in some states; special loan programs for first responders, professors and physicians
Cons
- Branch locations limited to five states
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This regional player could be a good fit if you’re looking for down payment or closing cost assistance, or a professional loan up to $2 million.
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- Availability: All U.S. states
- Loans offered: Conventional, FHA, VA
- Credit requirements: 620 for conventional loans, 580 for FHA loans
- Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA loans
- Where to find: Branch locations and online
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Pros
- Completely digital process, with daily online rates, three-minute preapprovals and hybrid closings
- No fees
- Price Guarantee matches or beats competitor offers
Cons
- No home equity loans or USDA loans
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This large bank dialed back on its mortgage business in early 2023, restricting it to existing bank customers. However, if you already have an account or a loan with Wells Fargo, it makes sense to see what kind of deal they’ll offer.
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- Availability: All U.S. states
- Loans offered: Conventional, FHA, VA
- Credit requirements: 620 for conventional loans, 580 for FHA loans
- Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA loans
- Where to find: Online
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Pros
- Completely digital process, with daily online rates, three-minute preapprovals and hybrid closings; no fees; Price Guarantee matches or beats competitor offers
Cons
- No branch locations; no home equity loans or USDA loans
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Better’s perks include no fees and the “One Day Mortgage,” an underwriting process that offers a decision (and, if approved, a commitment letter) in just 24 hours. In short, a strong option for buyers who want a quick, affordable online lender.
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- Availability: All U.S. states
- Loans offered: Conventional, FHA, VA
- Credit requirements: 620 for conventional loans, 580 for FHA loans, 600 for VA loans
- Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA loans
- Where to find: Online
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Pros
- Available in all states, Puerto Rico and the U.S. Virgin Islands; app to track loan status and make payments
Cons
- No branch locations; no USDA loans
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Mr. Cooper is a large national mortgage lender with a slick website, plenty of loan options and a special focus on FHA loans and first-time homebuyers. However, customer service has long been a weak point.
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- Availability: All U.S. states
- Loans offered: Conventional, jumbo, FHA, VA
- Credit requirements: 620 for conventional loans, 680 for jumbo loans, 580 for FHA and VA loans
- Down payment minimum: 3% for conventional loans, 10%-15% for jumbo loans, 3.5% for FHA loans, none for VA loans
- Where to find: Online
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Pros
- Superior customer service, including chat and screen-sharing; up to $10,000 rebate for buying and selling through affiliate Rocket Homes
Cons
- No branch locations; no USDA loans
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This leading online lender offers a wide variety of loan types, and its reputation for customer satisfaction is quite good.
How to find the best mortgage lender as a first-time homebuyer
There are several different kinds of mortgage lenders you might come across in your search for a loan, including banks, credit unions and independent and non-depository institutions. You might also encounter mortgage brokers, who can help you uncover loan offers from a variety of lenders.
As you look for a lender, consider your goals and what you might value in your experience getting a mortgage. What kind of loan are you looking for? How long do you plan to stay in the area? Would you feel better with 24/7 support? Do you need homebuyer education? All of these questions and more can help you narrow down your choices.
Once you have a short list, shop around and compare mortgage offers before committing to one. Lenders include the APR (annual percentage rate) and interest rate on an offer, but you’ll really want to consider the APR, which reflects the actual cost of the mortgage. In general, the lower the APR, the cheaper the loan will be.
Next steps for first-time homebuyers
Buying a home is a big step, and it’s especially challenging in a housing market characterized by record-high prices and a major affordability squeeze. First of all, figure out roughly how you’re going to pay for a home.
If you’re sure you’re going to have to finance, do some research to decide on the type of mortgage you want. Options include:
That decision can help lead you to a lender who specializes in that sort of mortgage.
Even before you house-hunt, you might want to lender-hunt – and to apply for mortgage preapproval with two or three. A mortgage preapproval is a written statement of how much money a lender is willing to let you borrow for a home. Once you’re armed with one, you can start shopping for homes in earnest. In fact, many sellers only consider offers from pre-approved folks, as it proves they have funding in place: They’re “good for it,” in other words.
FAQ
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A first-time homebuyer is anyone who hasn’t bought a home previously. That might mean you’re a renter, or you’re moving from your family home to your first home. For you to qualify for a first-time homebuyer loan or assistance, however, doesn’t mean you have to genuinely be a novice at homeownership. You’re classified as a first-time homebuyer if you haven’t bought a home in the past three years.
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A first-time homebuyer program is a mortgage loan geared toward novice homeowners. It typically with a lower interest rate, lower down payment requirement and other ways to save, such as lower mortgage insurance premiums. There are many different kinds of first-time buyer programs, including 3 percent down conventional loans, 3.5 percent down FHA loans and no-down payment loans for eligible military members or buyers in rural areas.
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If you’re a first-time homebuyer and lack funds for a down payment or closing costs, you might be eligible for a first-time homebuyer grant. Grants are a one-time lump sum that often don’t have to be repaid if you stay in the home for a certain period of time or meet other criteria.
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It varies widely. If you have a credit score of at least 620, for example, you might qualify for a conventional loan with a down payment as low as 3 percent of the home’s purchase price. If your credit isn’t that great, you might opt to put down slightly more — like 3.5 percent for an FHA loan. If you’re in the military or buying a home in a rural area, you might not need to set aside anything for a down payment. What’s more: In 2023, some lenders introduced 1 percent down mortgages, which come with free grants so that you only need to put down 1 percent. There’s also income-based down payment assistance, which could cover some or all of yours. Ultimately, how much you should save depends on your homebuying budget, your credit, income and many other factors.
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To determine the best mortgage lenders for first-time homebuyers, Bankrate periodically evaluates more than 80 lenders for factors relating to affordability, availability and borrower experience, assigning each a Bankrate Score out of five stars. The best mortgage lenders for first-time homebuyers generally have a Bankrate Score of 4 stars or higher. Learn more about our methodology.
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