Natalie toggles between news stories and enterprise reporting to bring timely personal finance topics to readers. Her mission is to help inform people of all financial backgrounds about events that may affect their financial futures. Her work has appeared in numerous publications such as CNBC, Bankrate, Buzzfeed, ABC Action News, The Chicago Tribune, The Associated Press and the Tampa Bay Times. She’s appeared on various podcasts and news shows to discuss personal finance topics, including Nasdaq’s Trade Talks.
Natalie Campisi
Natalie toggles between news stories and enterprise reporting to bring timely personal finance topics to readers. Her mission is to help inform people of all financial backgrounds about events that may affect their financial futures. Her work has appeared in numerous publications such as CNBC, Bankrate, Buzzfeed, ABC Action News, The Chicago Tribune, The Associated Press and the Tampa Bay Times. She’s appeared on various podcasts and news shows to discuss personal finance topics, including Nasdaq’s Trade Talks.
Caroline Basile is Forbes Advisor’s student loans and mortgages deputy editor. With experience in both the mortgage industry and as a journalist, she was previously an editor with HousingWire, where she produced daily news and feature stories. She holds a degree in journalism from the University of North Texas. When she’s not working on finance-related content, Caroline enjoys baseball, traveling and going to concerts.
Reviewed
Caroline Basile
Caroline Basile is Forbes Advisor’s student loans and mortgages deputy editor. With experience in both the mortgage industry and as a journalist, she was previously an editor with HousingWire, where she produced daily news and feature stories. She holds a degree in journalism from the University of North Texas. When she’s not working on finance-related content, Caroline enjoys baseball, traveling and going to concerts.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
First-time home buyers often have small down payments and lower credit scores. These characteristics can make it more challenging to qualify for a mortgage—and make mortgages more expensive for those who do qualify.
Forbes Advisor compiled a list of lenders that offer first-time home buyers low-down-payment mortgages, specialty loans, flexible underwriting and reasonable costs to simplify your mortgage shopping process.
Read more
Rocket Mortgage
Available Nationwide
Available in all 50 states
Minimum credit score
580 for FHA and VA loans, 620 for conventional mortgages and 680 for jumbo loans
Days to close
Average closing time is 36 days for a conventional mortgage; 21 days for a refinance
Learn More 
On Rocket Mortgage’s Website
Available in all 50 states
580 for FHA and VA loans, 620 for conventional mortgages and 680 for jumbo loans
Average closing time is 36 days for a conventional mortgage; 21 days for a refinance
Show Summary
- Latest Mortgage Rates
- Best Mortgage Lenders For First-Time Home Buyers 2024
- Better
- Guaranteed Rate
- PNC
- Ally
- LoanDepot
- Bank of America
- Guild Mortgage
- Summary: Best First-Time Home Buyer Mortgage Lenders
- Tips for Comparing Lenders for First-Time Home Buyers
- Methodology
- What Is a First-Time Home Buyer?
- How Do First-Time Home Buyer Loans Work?
- How Much Should You Put Down on a House as a First-Time Buyer?
- First-Time Home-Buyer Programs
- First-Time Home Buyer Grants
- How To Qualify For a First-Time Home Buyer Loan
- How To Choose a Mortgage Lender as a First-Time Home Buyer
- Frequently Asked Questions (FAQs)
Latest Mortgage Rates
Best Mortgage Lenders For First-Time Home Buyers 2024
- Better: Best for Digital-Only Application Process
- Guaranteed Rate: Best for Competitive Interest Rates
- PNC: Best for Ease of Access
- Ally: Best for Fast Preapproval
- LoanDepot: Best for Refinancing a First-Time Home-Buyer Loan
- Bank of America: Best for Nationwide Availability
- Guild Mortgage: Best for Fast Closing
Summary: Best First-Time Home Buyer Mortgage Lenders
| Company | Forbes Advisor Rating | Minimum credit score | Mortgage rates | Minimum down payment | Learn More | ||||
|---|---|---|---|---|---|---|---|---|---|
| Better |  |
5.0 |  |
620 | Lower than the national average | 3% to 10% | View Rates | View rates at Better. NMLS #330511. | |
| Guaranteed Rate |  |
5.0 |  |
620 | Lower than the national average | 0% to 3.5% | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| PNC Bank |  |
5.0 |  |
620 | Lower than the national average | 0% to 3.5% | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Ally |  |
4.5 |  |
620 | Lower than the national average | 3% to 10% | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| loanDepot |  |
4.5 | |
580 | Above the national average | 0% to 3.5% | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Bank of America |  |
4.0 |  |
620 | Lower than the national average | 0% to 3.5% | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com | |
| Guild Mortgage |  |
4.0 | |
540 | Does not publicly disclose | 0% to 10% | Compare Rates | Compare rates from participating lenders in your area via Bankrate.com |
Tips for Comparing Lenders for First-Time Home Buyers
First-time home buyers often face two major roadblocks to getting a mortgage: their credit score and their lack of cash to make a large down payment. If this sounds like you, you’ll want to shop around for a lender that has low credit score minimum requirements and low down-payment options.
Apart from popular mortgage products for first-time buyers like FHA loans, many lenders have specialty loans that cater to first-time buyers. When you’re shopping for lenders, start at your own financial institution. Ask them if they have any loans that meet your needs. They might even offer customer discounts.
If you don’t get approved for a loan right away, loan officers often will work with you to get on track to qualify. It might be as simple as raising your credit score, paying down some debt or squirreling a little more away for a down payment.
Methodology
Forbes Advisor reviewed 12 mortgage lenders that do business both online and in-person throughout the United States. The lenders we reviewed represent some of the largest mortgage lenders by volume, which include banks, credit unions and online lenders.
Our scoring methodology included capturing more than 10 data points, which covered interest rates, lender fees, loan types, discounts, accessibility and borrower requirements.
The best lenders for first-time home buyers excelled in areas that are historically important for this group including low- to average-credit score requirements, low down payment options and availability of grant programs.
The following is the weighting assigned to each category:
- Loan costs: 30%
- Speed: 20%
- Credit requirements: 20%
- Loan types offered: 20%
- Access and availability: 10%
Specific characteristics taken into consideration within each category include APR, average interest rate, origination fees, minimum credit score requirements, discounts and customer service availability.
We also offered bonus points up to 5% of the score when a lender considers alternative credit data.
To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.
What Is a First-Time Home Buyer?
The U.S. Department of Housing and Urban Development (HUD) defines a first-time home buyer as someone who meets any of the following criteria:
- Someone who hasn’t owned a primary residence in three years.
- A single parent who has only owned a property with a former spouse while married.
- Someone who is a displaced homemaker and has only owned when married.
- Someone who has only owned a principal residence not permanently affixed to a permanent foundation.
How Do First-Time Home Buyer Loans Work?
One of the more popular options for first-time home buyers is a Federal Housing Administration (FHA) loan. An FHA borrower can qualify with a lower credit score than required for conventional mortgages and buy a home with as little as 3.5% down. Because of this, however, FHA mortgage interest rates tend to be somewhat higher.
First-time home buyers can get loans from their state’s Housing Finance Agency (HFA) as well, usually in partnership with a local lender. For eligible home buyers, loans from the Department of Veterans Affairs (VA) and United States Department of Agriculture (USDA) also issue loans that are easier to qualify for.
For first-time home buyers seeking a conventional loan, Fannie Mae and Freddie Mac offer the HomeReady and Home Possible mortgage products, respectively. Home buyers can finance up to 97% of their home purchase, meaning you can make down payments as low as 3%. There are some differences between the two programs, but they both require that borrowers make no more than 80% of the median income for their area.
How Much Should You Put Down on a House as a First-Time Buyer?
As a first-time home buyer, you may want to make the smallest down payment allowed: 0% for a VA loan, 3% or 5% for a conventional loan or 3.5% for an FHA loan, for example. Doing so gives you more cash for closing costs, moving expenses, an emergency fund and any necessary repairs.
However, making the minimum down payment means paying more interest and, typically, additional fees. If you get a VA loan, for instance, you’ll have to pay a one-time VA funding fee. If you get an FHA loan, you’ll have to pay an upfront mortgage insurance premium plus monthly mortgage insurance premiums. If you get a conventional loan, you’ll have to pay for private mortgage insurance every month—unless you put down 20% or more.
Pro Tip
One basis point equals one-hundredth of a percentage point, which may not sound like much, but if mortgage rates change by even 20 basis points, this could make a big difference in your payments. For instance, the difference between paying 6.5% and 6.3% on a 30-year fixed rate mortgage for a $400,000 home with 20% down would save you more than $15,000 over the loan term.
First-Time Home-Buyer Programs
There are a lot of options available to help first-time home buyers get a foot on the property ladder. The HFA homeownership programs differ by state, but all are aimed at promoting homeownership and increasing mortgage affordability for first-time home buyers as well as low- and moderate-income households.
Down Payment Assistance
HFAs offer a grant or second mortgage loan to cover your down payment and/or closing costs. Most HFAs require that these down payment assistance programs be used in conjunction with an HFA loan.
Mortgage Credit Certificates (MCCs)
The mortgage credit certificate is a tax credit program intended to help first-time home buyers offset part of their mortgage interest on a new mortgage. It gives you a dollar-for-dollar credit against your federal income tax liability, by a specific percentage of the mortgage interest that you paid.
First-Time Home Buyer Grants
To help with your down payment and closing costs, look for first-time home buyer grants and down payment assistance programs. Here are four offered by major mortgage lenders:
- TD Home Access Mortgage: Provides $5,000 toward your down payment or closing costs. You must meet income requirements and reside in a participating market.
- Chase Homebuyer Grant: Provides $2,500 or $5,000 toward points to lower your interest rate, then lender fees, then your down payment when you buy a home in an eligible census tract.
- Bank of America Down Payment Grant: Provides up to $10,000 toward your down payment when you meet income requirements and buy a home in a certain geographical area.
- Flagstar Gift Program: Provides qualified first-time home buyers up to 3% of the purchase price or up to $7,500 for the down payment or closing costs. All locations are eligible, and buyers in New York, New Jersey and California are eligible for up to $15,000.
If none of the above programs can help you, check out state and local first-time home buyer grants. A good place to start your research is with your state’s housing finance agency.
How To Qualify For a First-Time Home Buyer Loan
Before you apply, find out what your credit score is and get an estimate of your down payment based on how much you plan on spending on a home. These are two important factors lenders will look at when deciding whether you qualify for a mortgage and—if you do qualify—what your interest rate will be.
First-Time Home Buyer Loan Requirements
- You haven’t owned a home for the last three years; in some cases, it’s at least seven years
- A credit score of around 620; although some loans, like VA loans, have no minimum credit score requirements
- Meet the program’s income limits
- Occupy the property as your primary residence
- Complete a home-buyer education course or counseling
How To Choose a Mortgage Lender as a First-Time Home Buyer
As a first-time home buyer, it is highly recommended that you shop around before choosing a mortgage lender. This simple first-time home buyer tactic will allow you to compare rates and loan options. Here are some things to consider as you shop around:
- Get multiple preapprovals and official loan estimates from lenders within a 45-day window. The multiple credit checks from lenders within that period will be recorded on your credit report as a single inquiry. So the impact on your credit is the same as long as the last credit check is within 45 days of the first.
- Compare both conventional and government-backed loans. Conventional and government-backed loan products, like FHA loans, are intended to meet different needs—meaning the options you’re eligible for will depend on your situation. Try out different scenarios and ask lenders to provide several quotes so you can see who offers the best deal overall.
- Consider a mortgage broker. You may want to outsource the research process to a mortgage broker. These are licensed professionals who can identify loans that meet your needs, and then compare rates and terms so that you don’t have to. You’ll need to pay them a fee at closing, but the time you save—along with any potential rate savings—may be worth it.
Frequently Asked Questions (FAQs)
Why is my credit score important?
Your credit score is not only important for qualifying for a mortgage, but it’s also the key to getting a lower interest rate. The better your credit score, the lower your interest rate will be, which can save you quite a lot of money.
Consider that a borrower with a $300,000, 30-year mortgage with a 3% interest rate will pay $29,635.90 less over the life of the loan than a borrower who has a 3.5% rate. On a monthly basis (excluding taxes, insurance and other homeownership fees) that’s $82 in savings.
How much house can I afford?
The first step in the home-buying process is to make a budget. First, consider how much you bring in each month and how much you spend (on debt, savings, retirement, college funds, etc.). Most experts recommend spending no more than 30% of your gross monthly income on your mortgage, including taxes, insurance and applicable HOA fees. The Forbes Advisor affordability calculator will help you take the guesswork out of how much you can spend on a house.
What is mortgage insurance?
Private mortgage insurance (PMI) protects the lender in the event that you default on your mortgage. Typically, if you make a down payment of less than 20% of your home’s purchase price, you will incur PMI. How much you’ll pay for this insurance will vary, depending on factors that include the size of your down payment and your credit score.
How do I get preapproved for a mortgage?
Mortgage preapproval represents a lender’s offer to loan the buyer money based on certain financial circumstances and specific terms. Start by gathering documents your lender will need, including a copy of your Social Security card and recent W-2 forms, pay stubs, bank statements and tax returns. The lender you select will then guide you through the preapproval process.
How much money do I need for a down payment?
The larger the down payment you are able to make, the less you’ll have to finance when you purchase a home. On a conventional mortgage, making a down payment of at least 20% will prevent you from having to pay for private mortgage insurance. The minimum down payment required varies based on the type of mortgage you obtain. In 2019, the median down payment for first-time buyers was 6%.
When are you considered a first-time home buyer again?
You are considered a first-time home buyer if you have not bought or owned a primary residence typically during the three-year period up until the closing date of the home purchase. You are also considered a first-time home buyer if you only owned property with a spouse that you are no longer married to.
What type of mortgage is best for first-time buyers?
There are a lot of different options for first-time home buyers, and the best type of mortgage depends on a few different factors, including your budget, credit score and history, the type of home you’re looking to buy, and where you’re buying a home. You might find programs near you that offer grants, no-interest loans, or other incentives with certain loan and lending options, which might be worth exploring and could help you save even more.
