Buying a home is one of the biggest purchases you’ll ever make. As a first-time buyer, the process can feel especially overwhelming. That’s why it’s important to find a lender that makes the homebuying experience as easy as possible. Other benefits, such as low down payment options or flexible credit requirements, can also benefit first-timers.
Many of our top picks also have programs specifically for new buyers, like down payment assistance or special mortgage programs.
Bank of America Mortgage
Chase Mortgage
Guild Mortgage
Navy Federal Credit Union Mortgage
NBKC Bank Mortgage
New American Funding
PNC Bank Mortgage
Rocket Mortgage by Quicken Loans
Comparing the best mortgage lenders for first-time buyers
Bank of America (jump to Bank of America details»)
The bottom line: Bank of America is a good mortgage lender for financial assistance, but you’ll need a decent credit score to qualify for a mortgage.
Bank of America offers down payment assistance up to $10,000 and closing cost assistance up to $7,500. This makes it a particularly attractive lender for first-time homebuyers, who often have trouble coming up with enough cash to cover these costs. Additionally, if you’re already a Bank of America customer, you may be able to receive a discount on your origination fee.
This lender has an A+ rating from the BBB and ranked above average on J.D. Power’s 2021 Primary Mortgage Origination Satisfaction Study.
Chase (jump to Chase details»)
The bottom line: Chase is a strong mortgage lender overall, especially if your income is low enough to qualify for the DreaMaker mortgage. You’ll need a decent credit score to qualify, though.
The DreaMaker mortgage is one of Chase’s strongest offerings, helping middle-to-low-income borrowers get into a home with 3% down and flexible credit requirements. Its Homebuyer Grant program also gives out up to $2,500, or $5,000 to borrowers in low-income or majority-Black areas.
Chase has an A- rating from the Better Business Bureau and ranks below average in the J.D. Power 2021 Primary Mortgage Origination Satisfaction Survey.
Guild Mortgage (jump to Guild Mortgage details»)
The bottom line: Guild Mortgage is a good option for first-time homebuyers, because it may give you a loan or grant for a down payment.
Guild Mortgage accepts alternative forms of credit and can help connect borrowers with down payment assistance programs, making it an affordable option for first-time homebuyers. It also has a digital closing option, which can streamline your closing and help you have a smoother, faster experience.
Guild has an A- rating from the BBB. In 2021, it ranked No. 1 in customer satisfaction, according to J.D. Power.
Navy Federal Credit Union (jump to Navy Federal Credit Union details»)
The bottom line: Navy Federal is a good option for people affiliated with the military, especially if you’re searching for a lender that’s friendly to people who have low credit scores and little money for a down payment.
Navy Federal offers several affordable mortgages beyond its VA loan, including a Homebuyers Choice mortgage, which is a conventional loan with no down payment required and no mortgage insurance. This lender also accepts alternative credit data, such as utility bills.
Navy Federal has an NR (No Rating) from the BBB because it’s in the process of responding to previously closed complaints. It received a high score from J.D. Power, but didn’t rank in the annual customer satisfaction study because it doesn’t meet certain criteria.
You can only become a member of Navy Federal Credit Union if you or your family is affiliated with the military, you are a Department of Defense civilian personnel or contractor, or you live with a Navy Federal member.
NBKC Bank (jump to NBKC Bank details»)
The bottom line: NBKC Bank has live online chat, which can help first-time homebuyers ask questions about the process and receive quick answers.
NBKC Bank’s online chat feature makes it quick and easy to talk to an expert and get questions you have answered. Membership may also be able to get a discount on their interest rates and fees. NBKC currently has an A+ rating from the BBB.
New American Funding (jump to New American Funding details»)
The bottom line: New American Funding is a strong mortgage lender overall, and its buydown loan and I CAN loan make it easy to customize a mortgage to your specific needs.
New American Funding’s I CAN mortgage lets you choose any mortgage term length from eight to 30 years. This level of customization means you can choose a term that’s long enough that your monthly payments remain affordable, but short enough that you save money on interest.
New American Funding has an A+ rating from the BBB.
PNC Bank (jump to PNC Bank details»)
The bottom line: PNC Bank is a good lender if you have a strong credit score, especially if you want to get a mortgage with a company you could use for a HELOC or home equity loan later.
PNC Bank offers grants up to $5,000 for homebuyers who meet income limits. It also has a PNC Community Loan that allows down payments as low as 3% with no private mortgage insurance.
This lender has an A+ rating from the BBB and ranks at the industry average in customer satisfaction, according to J.D. Power’s 2021 study.
Rocket Mortgage (jump to Rocket Mortgage details»)
The bottom line: Rocket Mortgage is a great option if you’re comfortable applying online and have a good credit score.
Rocket Mortgage has long been a top lender in customer satisfaction, earning the top spot from J.D. Power for 11 consecutive years, and ranking No. 2 in 2021. It’s a good choice if you’re looking for an easy-to-use online lender.
Rocket Mortgage currently has an A+ rating from the BBB.
Other mortgage lenders we considered
We evaluated over two dozen mortgage lenders before picking our favorites. Here are the other lenders we looked at and reasons they didn’t make the cut:
Guaranteed Rate: This lender has an easy-to-use interface and lets you close digitally, but it doesn’t have first-time homebuyer assistance like many of our top picks.Pentagon Federal Credit Union: If you have a 650 credit score, PenFed offers $500 to $2,500 in lender credit for all members, depending on how much you borrow. The credit union doesn’t have FHA or USDA mortgages, though.USAA: USAA only offers VA mortgages right now.LoanDepot: LoanDepot is a solid lender, but it doesn’t have any features that set it apart from the crowd.Better.com: This is a good online lender, but you can only get a conventional or FHA mortgage.Wells Fargo: The lender does have homebuyer assistance for lower-income buyers. However, Wells Fargo has had multiple public controversies over the past few years regarding claims of racist lending practices, creating fake bank accounts, and charging customers for insurance products they didn’t sign up for.Caliber Home Loans: Caliber doesn’t have any first-time homebuyer assistance programs.Fairway Independent Mortgage Corporation: This is a strong lender overall, but it doesn’t have products geared toward first-time buyers like some of our top picks.Truist: This lender has a few different low down payment options, including one without mortgage insurance. However, it ranked below average in customer satisfaction according to J.D. Power.Veterans United: Veterans United offers several types of mortgages, not just VA mortgages. It doesn’t have any programs for first-time buyers, though.CMG Financial: CMG has unique grant opportunities and mortgages. They could be good options, but these programs aren’t for everyone.Freedom Mortgage: This is a good lender if you have a low credit score, but you can’t fill out an application online.Flagstar Bank: This lender offers several types of home loans, but none of its features make it stand out.Movement Mortgage: Movement Mortgage will process your mortgage within seven business days. It doesn’t have any homebuyer assistance programs, though.US Bank: US Bank is particularly strong for VA mortgages, because you only need a 600 credit score.Ally: Ally has a convenient online process, but it only offers conventional mortgages.Carrington Mortgage: Carrington does have a unique program for refinancing, but not for first-time buyers.
Methodology: How we chose the best first-time buyer mortgage lenders for 2022
To choose the top mortgage lenders of August 2022, we looked at four main factors:
Loan types. Did a lender offer several types of loans to suit customers’ needs, such as conventional loans (including conforming and jumbo) and government-backed loans?Customer satisfaction. If the lender appeared in the J.D. Power 2021 Primary Mortgage Origination Satisfaction Survey, we looked at its ranking. If it wasn’t in the survey, then we read online customer reviews.Affordability. We looked at lenders’ minimum credit scores and down payment amounts. We also checked whether they offer government-backed loans, which can be more affordable for borrowers with less-than-perfect financial profiles. Finally, we looked at whether it considers alternative forms of credit, like utility bills and rent payments, for you to qualify.Ethics. Most of our top picks received an A+ from the Better Business Bureau, which measures companies’ trustworthiness. The exception is Guild Mortgage, which has a B+ due to government action against the lender.
We also looked closely at lenders with programs specifically for first-time buyers, such as down payment assistance. Most of our top picks have first-time buyer programs, and those that don’t made the list because they thrived in other criteria.
Are these mortgage lenders trustworthy?
The Better Business Bureau grades companies based on responses to customer complaints, honest advertising, and transparency about business practices. Here are the BBB grades for our top lenders:
LenderBBB gradeBank of AmericaA+ChaseA-Guild MortgageA-Navy Federal Credit UnionNRNBKC BankA+New American FundingA+PNC BankA+Rocket MortgageA+
Most of the lenders have an A+ from the BBB. Guild Mortgage and Chase have an A- rating due to government action. Navy Federal has an NR rating because it is responding to unresolved customer complaints.
In 2020, Guild Mortgage paid the United States $24.9 million when it was accused of approving FHA mortgages for people who didn’t qualify, resulting in loan defaults.
Some of the other lenders on our list have recent public controversies, too, despite their strong BBB grades.
In 2020, the Department of Justice charged Bank of America for unfairly denying home loans to adults with disabilities, even though they qualified for loans. Bank of America paid around $300,000 total to people who were refused loans. In 2019, the Department of Labor required Bank of America to pay $4.2 million to people who claimed the bank discriminated against women, Black, and Hispanic applicants in the hiring process.
The Department of Justice required JPMorgan Chase to pay $920 million for wrongful trading in 2020. The company paid the Securities and Exchange Commission $135 million in 2018 for mishandling American Depositary Receipts, certificates that let Americans invest in foreign stocks.
PNC Bank was accused in 2019 of aiding a man in carrying out a fake debt relief project, which cost customers a total of $85 million. In 2014, PNC had suspected the man of running a scheme and closed his bank accounts. But nine months later, the bank let him open more accounts.
A Navy Federal employee has claimed the lender pressured mortgage underwriters to approve loans even if they didn’t have sufficient reason to believe applicants could repay the loans. Then she filed a lawsuit and said Navy Federal retaliated against her whistleblowing by changing her job duties. She dropped the case in late 2020.
In 2019, the US Justice Department required Rocket Mortgage’s parent company Quicken Loans to pay $32.5 million for alleged mortgage fraud. The Justice Department claimed Quicken Loans approved mortgage applications it shouldn’t have. Although Quicken Loans paid the settlement, the company never admitted to mortgage fraud.
Frequently asked questions
What type of loan is best for a first-time homebuyer?
An FHA mortgage is often the best mortgage for a first-time buyer. FHA mortgages appealing to people whose finances aren’t in the best shape yet, since the minimum credit score needed to get one is 580. If you have a 10% down payment, you could even qualify with a score as low as 500.
However, the best loan will depend on your situation. With a high credit score and low DTI ratio, you may find that you’re eligible for competitive terms on a conventional mortgage, which includes both conforming and jumbo mortgages for borrowing larger amounts.
If you are an active military member or veteran, you can buy a home with no down payment with a VA mortgage. A USDA mortgage is also good for buyers who live in rural areas and earn a low-to-moderate income.
What is homebuyer assistance?
Homebuyer assistance usually refers to money that helps you cover a down payment or closing costs. The lender may give you a grant that you don’t have to pay back, or a small loan that has better terms than a regular mortgage. Some homebuyer assistance programs forgive your loan under certain circumstances — for example, the amount you have to pay back decreases the longer you live in the home and is wiped away once you live in the home for five years.
Additional resources and programs for first-time homebuyers
You may qualify for a program specific to your state or county. These often come in the form of down payment/closing cost assistance or tax benefits.
You could receive assistance if you buy a home that needs major renovations, including a Fannie Mae HomeStyle loan, Freddie Mac CHOICERenovation loan, FHA 203(k) loan, and the Energy Efficient Mortgage program.
You may qualify for the Department of Housing and Urban Development’s Good Neighbor Next Door program if you’re a teacher, firefighter, law enforcement officer, or emergency medical responder who lives in a “revitalization area.”
Go to the Good Neighbor Next Door website to search for homes in your area. Homes are listed for seven days, and you can purchase one for 50% off the listed price.
The Native American Direct Loan is for Native American military veterans, and it’s issued through the VA. You don’t need money for a down payment, and you won’t pay private mortgage insurance.
Experts’ advice on choosing a mortgage lender
We consulted mortgage and financial experts to inform these picks and provide their insights about mortgage lenders.
Insider
Our experts have also provided advice about how to know whether you’re ready to get a mortgage, and how to decide which type of mortgage is best for you.
Anthony Park, author of “How to Buy Your Perfect First Home”Lauryn Williams, certified financial planner, founder of Worth Winning Financial PlanningJulie Aragon, mortgage broker, founder of Aragon Lending TeamLaura Grace Tarpley, certified educator in personal finance, editor of banking and mortgage at Personal Finance Insider
Here’s what they had to say about mortgages. (Some text may be lightly edited for clarity.)
What factors should someone take into consideration when choosing a mortgage lender?
Anthony Park, author:
“The canned answer is to just go with the lowest rate. However, you also want to take into account who’s going to serve your loan best. Are repayments going to be easy for you? Who is most likely to be able to help you if you need to take out a HELOC or refinance later, versus somebody who’s more of a one-off type?
“They may have the lowest rates to get you involved, but they might have very, very little hand holding after the fact. I wouldn’t recommend paying an exorbitant amount more for potential services in the future, but just don’t always necessarily go with the rock-bottom lowest rate. There’s sometimes a cost with that.”
Laura Grace Tarpley, Personal Finance Insider:
“Apply for preapproval with multiple lenders. Each lender’s preapproval letter states how much it would lend to you, and it locks in your interest rate. It’s an effective way to compare lenders and see which will give you the best deal.
“But try to apply with all the lenders within a month or so. When you apply for preapproval, a lender does a hard credit inquiry. A bunch of hard inquiries on your report can hurt your credit score, unless it’s for the sake of shopping for the best rate. If you limit your rate shopping to a month or so, credit bureaus will understand that you’re looking for a home and shouldn’t hold each individual inquiry against you.”
How can someone decide between a conventional mortgage vs. a government-backed mortgage?
Anthony Park, author:
‘It really depends on if you qualify. If you do qualify for FHA or VA mortgages, those are no-brainers. just because the terms are so favorable. If you don’t qualify, you fall back by default onto conventional mortgages.”
Julie Aragon, Aragon Lending Team:
“The most common government loan that’s widely available to almost everyone is the FHA loan. There’s a couple of reasons why somebody would go with FHA instead of conventional one. Their credit is a little on the crummy side, let’s say below 700. You can get conventional with down to a 620 score, but the mortgage insurance gets really expensive. FHA doesn’t discriminate — no matter how perfect or crappy your credit is, the mortgage insurance is the same.”
How can someone know whether they’re financially ready to buy a home?
Lauryn Williams, CFP:
“You should have funds left over after everything is said and done as it pertains to purchasing the home. So if you don’t have an emergency fund plus a down payment, you’re probably not ready to purchase a home. Another thing I think about is credit card debt. While you can be approved for a mortgage with credit card debt and student loans and very little cash on hand, you put yourself in a very risky situation.”
Laura Grace Tarpley, Personal Finance Insider:
“You should be able to afford the extra costs that come with owning a home, like home repairs or lawn care. You didn’t have to budget for those things when you rented, because the landlord was responsible for maintenance.”
Mortgage and refinance rates by state
Check the latest rates in your state at the links below, and learn about first-time homebuyer programs specific to the state:
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Utah
Vermont
Virginia
Washington
Washington DC
West Virginia
Wisconsin
Wyoming