Newsletter Thursday, October 10

Credit: Images by Getty Images; Illustration by Issiah Davis/Bankrate

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 first-time buyer and low-down payment loans and down payment assistance, as well as other aspects that can help you navigate the homebuying process. Here is our guide to the best mortgage lenders for first-time homebuyers in 2024.

Best mortgage lenders for first-time homebuyers

Lender Credit requirements Down payment minimum Bankrate Score
PenFed Credit Union 650 for conventional loans, 700 for jumbo loans, 620 for FHA loans 3% for conventional loans, 3.5% for FHA loans, none for VA loans 4.7
Veterans United Home Loans 620 for conventional and VA loans 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans 4.9
U.S. Bank 620 for conventional loans, 740 for jumbo loans 5% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans 4.8
Old National Bank 620 for conventional loans, 640 for FHA loans, 680 for VA loans Undisclosed 4.6
Wells Fargo 620 for conventional loans 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans 4.8
Better 620 for conventional loans, 580 for FHA loans 3% for conventional loans, 3.5% for FHA loans, none for VA loans 4.6
Mr. Cooper 620 for conventional loans, 580 for FHA loans, 600 for VA loans 3% for conventional loans, 3.5% for FHA loans, none for VA loans 4.6
Rocket Mortgage 620 for conventional loans, 680 for jumbo loans, 580 for FHA and VA loans 3% for conventional loans, 10%-15% for jumbo loans, 3.5 for FHA loans, none for VA loans 4.6

How to find the best 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 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 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 (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.

Next steps for first-time homebuyers

Buying a home is a big step, and it’s especially challenging in a housing market characterized by record-high prices and a major affordability squeeze. First of all, figure out roughly how you’re going to pay for a home.

If you’re sure you’re going to have to finance, do some research to decide on the type of mortgage you want. Options include:

That decision can help lead you to a lender who specializes in that sort of mortgage.

Even before you house-hunt, you might want to lender-hunt – and to apply for mortgage preapproval with two or three.  A mortgage preapproval is a written statement of how much money a lender is willing to let you borrow for a home. Once you’re armed with one, you can start shopping for homes in earnest. In fact, many sellers only consider offers from pre-approved folks, as it proves they have funding in place: They’re “good for it,” in other words.

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