Mortgage

The eight greatest mortgage lenders for first time consumers

The best mortgage lenders for first time buyers in 2020

In 2020, we selected the 8 best mortgage lenders for first-time buyers. These lenders were selected for their good customer service and exceptionally good deals for first-time buyers – from low interest rates and fees to cash grants to cover down payments. Compare the options to see if one of these lenders is right for you.

Find the Right Lender for You (July 5, 2020)

Mortgage lender
Outstanding function
Minimal credit score
Average loan fees (in% of loan amount) 1
Guaranteed rate
Down payment grants
580
1.25%
PrimeLending
Completion grant
580
1.81%
Better mortgage
$ 0 fees and transparent pricing
580
0%
Flagstar bank
Down payment grants
580
1.52%
New American funding
Considered credit only 500
500
1.84%
CitiMortgage
Bad ratings
640
0.74%
caliber
Jumbo loans with 5% less
580
1.65%
Veterans United *
Helps veterans build loans
660
1.47%

* Serves only veterans, military personnel and their families

Find the Right Lender for You (July 5, 2020)

Editor's Note: Some of these lenders may compensate you for the mortgage reports if you work with them. However, this does not affect our ratings. Here you will find our complete editorial information.

In this article (Jump to …)

Reviews of the best mortgage lenders for first time buyers

Buying property is often scary, even for those who have done it several times. However, working with an excellent mortgage lender can make the process a lot easier – especially if you are new to home buying.

We selected the following eight lenders because they offer special perks that can improve your experience with first-time buyers. Your benefits range from great service to low rates, down payment assistance and beyond.

1. Guaranteed rate

Guarantee Rate is a tech-first lender with low fees, excellent customer ratings and a wide portfolio of loans – including VA and USDA mortgages.

The guaranteed rate works well with DPAs (Third Party Payment Assistance Programs) so you shouldn't have any problems using grants or loans on your deposit.

And Guarantee Rate even has its own DPA program. The "Give 2 You" program offers those who have already saved 3% of the purchase price a grant of up to USD 2,000 that can be used for closing costs or added to the down payment.

Guaranteed tariffs and requirements:

Average 30 year mortgage rate in 20192: 4.12% Average loan cost: $ 4,121 Minimum FICO credit rating: 580 Minimum deposit: 3.0% (0% for VA or USDA loans) Average customer rating3: 4.6 from 5 complaints per 1,000 mortgages4: 0.15

The guaranteed interest rate is also very important in our rating of the best online mortgage lenders.

2. PrimeLending

In a 2020 survey by The Scotsman Guide, PrimeLending became No. 7 national for consumer mortgage volume.

PrimeLending works well with government and local deposit support programs.

And it also has its own version: NeighborhoodEdge® Closing Cost Assistance. This offers qualified home buyers up to $ 2,000. However, the home you bought must be in an area with low to medium income.

PrimeLending prices and requirements:

Average 30-year mortgage rate in 2019: 4.36% Average borrowing costs: $ 4,581 Minimum FICO credit rating: 580 Minimum down payment: 3.0% (0% for VA or USDA loans) Overall customer rating: 4.6 out of 5 complaints per 1,000 mortgages: 0.14

We like PrimeLending's high customer satisfaction ratings and low customer complaints.

Interest rates look a little higher on average, but interest rates vary so much by customer that PrimeLending offers some cheap deals. You need a personalized quote to find out how it is compared for you.

3. Better mortgage

You need to love Better Mortgage's low interest rates and zero loan costs. If dollars and cents are your main concern, it should be on your shortlist of lenders where you can request a quote.

Note that the Better website does not mention deposit support. So if you rely on a data protection authority, you need to check if Better Mortgage Ball is playing.

Better mortgage rates and requirements:

Average 30-year mortgage rate in 2019: 3.89% Average credit costs: zero, nothing, zero Minimum FICO credit rating: 580 Minimum deposit: 3.0% (no VA or USDA loans) Overall customer rating: 4.3 from 5 complaints per 1,000 mortgages: 0.27

Another benefit of working with Better is that you can adjust your tariff online without sharing personal information.

The website shows you how the various tariff and fee offers are divided so that you can better understand your options. Very few lenders are so transparent about pricing.

4. Flagstar Bank

Flagstar Bank offers mortgages in all 50 states and has physical offices in Michigan, Indiana, California, Wisconsin and Ohio.

You can choose Flagstar Bank as a mortgage lender for their impressive deposit support and reputation for customer service.

Flagstar Bank pricing and requirements:

Average 30-year mortgage rate in 2019: 4.28% Average loan cost: $ 4,184 Minimum FICO credit rating: 580 Minimum deposit: 3.0% (0% for VA loans; no USDA loans) Overall customer rating: 4 , 5 out of 5 complaints per 1,000 mortgages: 0.18

The Flagstar Gift Program offers qualified buyers up to $ 2,500 for their down payment or closing costs.

And Flagstar is particularly generous with first-time buyers in its home state of Michigan. Some purchases in Detroit and the wider state of MI may be eligible for support of up to $ 7,500.

5. New American Funding

New American Funding (NAF) is a strong all-round lender with a reputation for excellent customer service and low interest rates.

However, the outstanding feature of the NAF is that applicants with a creditworthiness of only 500 are considered.

New American funding rates and requirements:

Average 30-year mortgage rate in 2019: 4.16% Average loan cost: $ 4,848 Minimum FICO credit rating: 500 (for FHA loans) Minimum deposit: 3.0% (0% for VA and USDA loans) Overall rating Customer ratings: 4.9 out of 5 complaints per 1,000 mortgages: 0.14

Note NAF's excellent customer reviews and low number of complaints, which are the best in our survey.

6. CitiMortgage

CitiMortgage is for those with decent credit who like a lot. It offers attractive prices and fees. As you suspected, it is a division of Citigroup, Inc, the huge global bank.

CitiMortgage prices and requirements:

Average 30-year mortgage rate in 2019: 3.80% Average loan cost: USD 4,032 Minimum FICO credit rating: 640 Minimum deposit: 3.0% (0% for VA loans; no USDA loans) Overall customer rating: 4 , 5 out of 5 complaints per 1,000 mortgages: 0.61

These customer complaint numbers are slightly higher than other lenders on this list. Still, less than one complaint per thousand customers is nothing to make fun of. And for the lowest average mortgage rates on the list, this can be a fair compromise.

7. Caliber Home Loans

Caliber is a relative newcomer that was founded in 2008. It has grown rapidly, also due to its personal service, which is supported by innovative technology.

Caliber rates and requirements:

Average 30 year mortgage rate in 2019: 4.15% Average loan cost: $ 4,771 Minimum FICO credit rating: 580 Minimum deposit: 3.0% (0% for VA and USDA loans) Overall customer rating: 4.4 from 5 complaints per 1,000 mortgages: 0.21

Kaliber has an unusually wide range of mortgages. This includes HomeOne, a product that is tailored for first-time buyers and enables a 3% discount and credit from 620.

However, Caliber's standout product is the Jumbo loan offering.

For the first time, home buyers who need to borrow more than traditional credit limits – currently $ 510,400 in most areas – can be a good option. Caliber offers mortgages up to $ 2.5 million with a 5% down payment.

8. Veterans United

As the name suggests, Veterans United specializes in mortgages for veterans, service members and others who are eligible for VA loans.

Veterans United appears to outdo each other in this arena. It is currently the largest VA lender in America.

Veterans United Pricing and Requirements:

Average 30-year mortgage rate in 2019: 4.0% Average loan costs: USD 3,666 Minimum FICO credit rating: usually 660 Minimum deposit: 0% for VA loans Overall customer rating: 4.7 out of 5 complaints per 1,000 mortgages : 0.15

Note the relatively high credit score requirement. That could deny some people access.

However, if you have a lower credit and struggle to qualify for a mortgage, Veterans United may be able to help.

The Lighthouse program offers veterans free credit counseling to get their scores where they need to be to buy a home.

First-time loan programs for home buyers

So these are our tips for the best mortgage lenders for first time buyers.

But what about the mortgage itself? In addition to choosing a lender, you need to choose the type of loan you use to finance your home purchase.

There are countless types of mortgages. And of course all first-time buyers have special needs.

However, most buyers will find what they are looking for with one of these four programs: the FHA loan, the conventional loan, the VA loan, or the USDA loan.

FHA loan

FHA loans are partially guaranteed by the Federal Housing Administration (FHA). They are incredibly popular with first-time buyers and offer advantages such as:

Minimum deposit of just 3.5% Low credit score requirement from 580, although some lenders set their own standardsFlexible income and debt requirementsThe ability to cover your deposit with gifted or granted money

The main disadvantage of an FHA loan is that you have usually taken out mortgage insurance for the entire term of the loan. But many FHA homeowners can refinance to get rid of this burden later.

Overall, FHA loans are great for people with slightly dubious loans and / or little down payment savings. They are generally easier to qualify than any other type of loan.

Check your FHA loan eligibility (July 5, 2020)

Conventional loans

Traditional loans (a.k.a. "compliant loans") are usually secured by Fannie Mae or Freddie Mac. They follow the rules of Fannie and Freddie, hence their nickname.

Traditional mortgages offer:

Minimum 3% deposit Minimum credit rating of 620, although lenders can set their own thresholds. You can stop paying mortgage insurance once your mortgage balance is less than 80% of the market value of your home

Fannie Mae HomeReady and Freddie Mac Home Possible loans are examples of this. And they can bring additional benefits, e.g. B. Set a roommate's rent against your income.

Check Your Eligibility for Conventional Loans (July 5, 2020)

USDA loan

USDA mortgages are partially covered by the United States Department of Agriculture (USDA). And you have to buy a house in a “rural” area to qualify. But 97% of the map of America is designated as rural, so many are surprised to be lucky.

A USDA loan has the following advantages:

No deposit Competent mortgage interest Much lower mortgage insurance payments than most other loans Only available to people with average (max. 115% median) or below average household income

If you want to buy somewhere in a place that is considered rural (and which also includes some smaller towns), this can make amazing bargains.

Check Your USDA Loan Eligibility (July 5, 2020)

VA loan

These mortgages are secured by the Department of Veterans Affairs (VA). And if you are a veteran, someone with an honorable discharge or still on duty, it is very likely that this mortgage will suit you best. Because VA loans offer:

No down payment, low mortgage interest, no ongoing mortgage insurance, easy credit threshold, low closing costs

If you are eligible, you need to be in exceptional circumstances to not find a VA loan that is your best choice.

Check your VA loan eligibility (July 5, 2020)

First time buyer granted

Many first-time buyers are shocked to find that down payment help is indeed available.

DPA (Down Payment Assistance) programs offer money for your down payment and / or closing costs. Often this money comes in the form of a grant or loan that does not have to be repaid.

Nationwide there are more than 2,000 support programs for down payments. So there is a possibility that at least one is working in your area.

Each data protection authority can set its own performance and admission criteria. However, if you are lucky with those in your area, you may receive a grant to buy homes worth thousands of dollars.

If you qualify for a deposit support program in your area, you may receive a home purchase grant in the thousands of dollars.

Other data protection authorities offer low-interest or interest-free loans. Some require that you repay them in parallel with your mortgage. However, others do not require payment until you move. And many grant your loan, provided you stay x years.

One important note: your lender must be willing to work with a DPA program so that you can use the funds.

Almost all of the best first-time mortgage lenders we have selected like to work with data protection authorities. Indeed, a couple offer their own down payment assistance.

So take some time to find out what's available where you want to buy. You can start here: Down payment assistance programs in each federal state for 2020

More resources for first time buyers

Buying your first home can seem overwhelming at first. This need not be. You can find a lot of help and support to guide you through the process.

If you're still in the "research" phase, here are some of our most popular tools and articles for first-time buyers:

Once you have chosen a lender, you should receive comprehensive instructions from your mortgage loan advisor.

And if you choose a good buyer (a real estate agent who works on your behalf but is usually paid for by your seller), you have another body of knowledge.

Review: the 8 best mortgage lenders for first time buyers

Here is a summary of the best mortgage lenders for first-time home buyers and why we selected them:

Guaranteed rate – Offers down payment grantsPrimeLending – Provides assistance with closing costs Better mortgage – $ 0 fees and transparent pricingFlagstar bank – Offers down payment grantsNew American funding – Consider credit from 500CitiMortgage – Lowest mortgage rates on averageCaliber home loan – Jumbo loans from 5%Veterans United – VA loans and credit improvement assistance

Each mortgage lender offers different interest rates and programs. So get custom offers from your top offers to find out which is the best offer for you.

Check your new tariff (July 5, 2020)

1The average loan fees come from self-reported data. Mortgage providers must submit publicly under the Home Mortgage Disclosure Act. Your own loan fees vary

2The mean interest rates come from self-reported data. Mortgage providers must submit publicly under the Home Mortgage Disclosure Act. Your own mortgage rate varies

3The average customer rating includes ratings submitted to J. D. Power, Zillow and / or LendingTree, depending on the availability of these ratings for each lender

4 The number of complaints per 1,000 mortgage customers reflects the number of official complaints registered with the Consumer Financial Protection Bureau compared to the total mortgage origins of lenders in 2019. According to self-reported data, mortgage lenders must submit publicly under the Home Mortgage Disclosure Act

Related Articles