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 2021.
Best mortgage lenders for first-time homebuyers
BB&T (Truist)
BB&T (Truist) is a full-service bank and lender, part of Truist Financial Corporation, that operates in almost every state (the exceptions: Alaska, Arizona and Hawaii). BB&T scores highly in Bankrate’s overall review thanks to its variety of loan programs and one-stop, robust platform and services.
Most importantly, for first-time homebuyers, the lender offers several options and benefits:
- Low-down payment loans, including a first-time homebuyer program with reduced mortgage insurance; CHIP (Community Homeownership Incentive Program) with no mortgage insurance; and HomeNow with mortgage insurance (all combined with a homebuyer education course)
- Conventional loans
- FHA loans for those with a lower credit score or limited down payment savings
- VA loans for eligible military members, veterans and spouses with no minimum credit score or down payment requirement
- USDA loans with no down payment requirement
- Down payment assistance
BB&T was also named one of Bankrate’s best online mortgage lenders in 2021. The bank currently has locations in some states, with its footprint increasing once its merger with SunTrust Bank is complete. One disadvantage: BB&T charges lender fees — but, if you’re already a customer, you could get incentive pricing on your mortgage, which can cut your costs.
Movement Mortgage
Movement Mortgage is a mortgage lender with a strong online presence, as well as brick-and-mortar branches, offering several loan options. For first-time homebuyers, they include:
- Low-down payment loans, including Dream to Own with closing cost/down payment assistance and no mortgage insurance; and Fannie Mae HomeReady with reduced mortgage insurance (combined with a homebuyer education course)
- Conventional loans
- FHA loans for those with a lower credit score or limited down payment savings, including FHA 203(k) loans
- VA loans for eligible military members, veterans and spouses with no down payment requirement
- USDA loans with no down payment requirement
- Down payment assistance
- Condo loans
- HomeStyle Renovation loans
Movement Mortgage also prides itself on its “6-7-1” process, which promises upfront underwriting within six hours of submitting a loan application, loan processing within seven business days and closing in one day. Borrowers can e-sign most documents in advance, as well, saving even more time.
Loans from Movement Mortgage are available in all 50 states, and you can apply for one easily by phone or online and receive a no-cost customized rate quote. Like many other lenders, however, Movement Mortgage has lender fees that can impact how much your loan costs overall.
LowRates.com
LowRates.com is an online and brick-and-mortar lender available throughout the majority of the U.S., boasting a fast loan turnaround time, with a credit decision in under 24 hours and closing in as little as 20 days.
The lender’s first-time homebuyer loan options include:
- Conventional loans
- FHA loans for those with a lower credit score or limited down payment savings, including FHA 203(k) loans
- VA loans for eligible military members, veterans and spouses with a 500 minimum credit score requirement and no down payment requirement
- USDA loans with no down payment requirement
- Down payment assistance
Keep in mind that whatever loan you choose, LowRates.com has a $1,495 origination fee. The lender’s branch locations aren’t as widespread as some other national lenders, so you might be better off applying online and pursuing a mortgage that way.
LowRates.com was also named one of Bankrate’s best mortgage lenders overall in 2021.
Rocket Mortgage
Rocket Mortgage is an online mortgage lender affiliated with Quicken Loans, known for its enticingly convenient, fast platform. The lender offers a selection of loans for borrowers, including first-time homebuyers, such as:
- Conventional loans
- FHA loans for those with a lower credit score or limited down payment savings
- VA loans for eligible military members, veterans and spouses with no down payment requirement
- Condo loans
What also helps this lender stand out is its “YOURgage” loan, which enables you to set the term of your mortgage from eight to 29 years. This can make it easy to customize a loan that suits your personal timetable.
In addition, Rocket Mortgage was named one of Bankrate’s best online mortgage lenders in 2021. Because it’s a digital lender, however, Rocket Mortgage has no branch locations. The lender also doesn’t make its fees available to the public.
Lastly, if you have a lower credit score, know that Rocket Mortgage prefers borrowers with credit scores of 580 or higher. If your score is lower than that, you might have a harder time getting a mortgage with this lender.
Cherry Creek Mortgage
Cherry Creek Mortgage has originated $60 billion in home loans across 30-plus states, with a range of loan offerings for borrowers to choose from. For first-time homebuyers, these include:
- Low-down payment loans, including Fannie Mae HomeReady (combined with a homebuyer education course)
- Conventional loans
- FHA loans for those with a lower credit score or limited down payment savings
- VA loans for eligible military members, veterans and spouses with no down payment requirement
- USDA loans with no down payment requirement
- Down payment assistance
While Cherry Creek Mortgage has an extensive presence, the lender doesn’t operate in 17 states, so check before you dig too deep into an application. Note that this lender’s fees can vary by location, as well.
Guild Mortgage
If you’re looking for a mortgage lender with a long track record, Guild Mortgage has been around since 1960 and operates more than 220 branches in 30 states, with loan programs offered online everywhere except New Jersey and New York. First-time homebuyers can choose from several loan options, including:
- Conventional loans
- FHA loans for those with a lower credit score or limited down payment savings, including FHA 203(k) loans
- VA loans for eligible military members, veterans and spouses with no down payment requirement
- USDA loans with a 600 minimum credit score requirement and no down payment requirement
- Down payment assistance
Among its benefits, Guild Mortgage promises a seamless online application and documentation submission process, with convenient e-closings available. It also boasts local in-house processing, underwriting and funding to speed the process. One downside, however, is the lack of information about lender fees available, which can make it more challenging to compare costs across loan offers.
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 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, usually via 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 mortgage lender what grants might be available to you, and also look for grants or other assistance programs from these sources:
- Housing finance agencies in your state
- Housing assistance programs by state
- DownPaymentResource.com
- National Homebuyers Fund
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, be sure to 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.
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