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Best mortgage lenders for first-time homebuyers in 2022

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Photo by Getty Images/Illustration by Orli Friedman/Bankrate
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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 what low down payment products or down payment assistance they offer, what first-time buyer programs they have, and other aspects that can help borrowers navigate the homebuying process. Here is our guide to the best mortgage lenders for first-time homebuyers in 2022.


Methodology

To determine the best mortgage lenders for first-time homebuyers, Bankrate evaluated lenders based on several criteria, including accessibility, availability of first-time homebuyer, low-credit or low-down payment loan programs and other considerations, such as incentive pricing or savings.


Best mortgage lenders for first-time homebuyers

Bank of America

Bank of America mortgage review

Loan products Purchase and refinance; conventional, jumbo, FHA, VA, home equity line of credit (HELOC)
Credit requirements 620 for conventional loans; 680 for jumbo loans
Pros
  • Easy online prequalification tool
  • Low credit score and down payment requirements on select loans
  • 3 percent down payment grant (capped at $10,000)
  • Lender credit of up to $7,500 available
  • Discounts for existing customers
Cons
  • USDA loans, reverse mortgages, construction loans and home equity loans not available
Highlight Bank of America offers down payment and closing cost assistance programs to eligible homebuyers.

Chase Home Lending

Chase Home Lending mortgage review

Loan products Purchase and refinance; conventional, jumbo, FHA, VA
Credit requirements 620 for conventional loans; 640 for FHA loans and VA loans; 680 for jumbo loans
Pros
  • $500 homebuyer credit for Chase DreaMaker mortgage applicants who complete a homebuyer education course
  • Rate discounts for select Chase customers
  • $2,500 closing guarantee
Cons
  • USDA loans and construction loans not available
Highlight You could qualify for a $2,500 Chase Homebuyer Grant to help cover closing costs or lower your interest rate.

PNC Mortgage

PNC Mortgage review

Loan products Purchase and refinance; conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan, interest-only, investment property
Credit requirements 620 for conventional loans, jumbo loans and FHA loans; 640 for USDA loans
Pros
  • User-friendly online dashboard to track loan application status
  • Rapid preapprovals
Cons
  • No online prequalification tool
  • Branches only available in select states
Highlight PNC offers assistance grants of up to $5,000 to help cover closing costs.

Carrington Mortgage Services

Carrington Mortgage Services review

Loan products Purchase and refinance; conventional, FHA, VA, USDA, non-QM
Credit requirements 620 for conventional loans; 500 for FHA loans and VA loans; 550 for non-QM
Pros
  • Several loan options for first-time homebuyers
  • Available in most states
  • Considers alternative credit history for select borrowers
  • BBB-accredited with an A+ rating
Cons
  • Potentially higher mortgage rates
  • Loans not available in Massachusetts and North Dakota
Highlight Carrington Mortgage Services offers the Flexible Advantage home loan product for borrowers who are self-employed or have a low credit score, recent credit issues or a high debt-to-income (DTI) ratio.

NBKC Bank

NBKC Bank mortgage review

Loan products Purchase and refinance; conventional, jumbo, FHA, VA, HELOC, home equity loan, construction and renovation loans
Credit requirements 620 for conventional loans, FHA loans and VA loans; 680 for jumbo loans
Pros
  • Competitive interest rates
  • Educational resources for first-time homebuyers
  • Online chat support available
  • Online loan processing
  • A+ BBB rating
Cons
  • USDA loans not available
  • Construction loans and HELOCs only available in Kansas
  • Down payment assistance programs not available
Highlight NBKC Bank offers a $5,000 closing guarantee.

First-time homebuyer loan programs

There are many different kinds of loans to choose from when you’re a first-time homebuyer, including:

  • Conventional loans backed by Fannie Mae or Freddie Mac – A loan that requires only 3 percent down, but also a minimum credit score of 620 (sometimes higher, depending on the lender) and other qualifying criteria
  • FHA loans – A government-insured loan (and one of the easiest loans for first-timers to qualify for) that requires as little as 3.5 percent down if your credit score is 580 or higher, or 10 percent down if your credit score is between 500 and 579, and mandatory mortgage insurance
  • VA loans – A government-guaranteed loan for military members, veterans and spouses that doesn’t require a down payment, but does require a funding fee
  • USDA loans – A government loan ideal for moderate- to lower-income borrowers buying a home in a USDA-eligible rural area, with no down payment requirement
  • Fannie Mae’s HomePath Ready Buyer Program – Offers 3 percent in closing cost assistance to first-time homebuyers of foreclosed Fannie Mae properties, and requires completion of a buyer education course
  • Good Neighbor Next Door – A U.S. Department of Housing and Urban Development (HUD) program that assists police officers, teachers, EMTs and firefighters with buying a home in certain areas
  • FHA 203(k) – Allows you to borrow the funds you need to buy and fix up a home, all in one mortgage and with a low down payment requirement

The type of loan that’s best for you depends on many factors, including the amount you have saved for a down payment, your credit score and whether you work in a particular field or have served in the military.

First-time homebuyer grants and assistance

If you lack the funds for a down payment or closing costs, help is available, either by way of your mortgage lender or a local, federal or state housing authority or other organization.

One form of assistance for those who qualify is a first-time homebuyer grant. Grants are a one-time lump sum that helps cover your down payment or closing costs. Often, these grants do not have to be repaid if you stay in the home for a certain period of time or meet other criteria.

You can ask your lender what grants might be available to you, and also look for grants or other assistance programs in your area using Bankrate’s directory of first-time homebuyer programs by state.

In addition to grants, you might be a candidate for other financial resources as a first-time buyer, including:

  • Low-interest loans, which must be repaid (unlike grants) over several years
  • Forgivable loans, which do not have to be repaid once you pass a specific period of time, provided you stay in the home and stay up to date on your mortgage payments
  • Deferred-payment loans, which usually need to be fully repaid, but don’t charge interest
  • Savings match programs, in which a bank or other organization matches the amount you deposit with the institution

How to choose a 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 that’d be a good fit for you 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 access to 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, or 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.

Here are more tips on finding the best mortgage lender as a first-time homebuyer.

Summary: Best mortgage lenders for first-time homebuyers

With additional reporting by Allison Martin

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Written by
Erik J. Martin
Contributing writer
Erik J. Martin is a Chicago area-based freelance writer/editor whose articles have been featured in AARP The Magazine, Reader's Digest, The Costco Connection, The Motley Fool and other publications. He often writes on topics related to real estate, business, technology, health care, insurance and entertainment.
Edited by
Mortgage editor