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Some mortgage lenders are better for first-time home buyers because they offer specific types of home loans or programs that benefit new homeowners. The best mortgage lenders for first-time home buyers offer low down payments, flexible loan terms without a pile of fees, as well as an intuitive and speedy application process.
Yahoo Finance compiled the data points, dug deep into the loan offerings of leading mortgage lenders and created the ultimate “best of” list for first-time home buyers — without conflicts of interest or compromise.
Dig deeper: Everything you need to know about first-time home buyer loan programs
The Yahoo view: Truist distinguishes itself with down payment assistance and lender credits, among other first-time home buyer advantages. However, it has only an average score for customer satisfaction.
Stars: 4.00
Read our full Truist mortgage review
Key benefits
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A Community Homeownership Incentive Program offers low or no down payments, lender credits, and no mortgage insurance to eligible borrowers in qualifying areas.
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Medical professionals may qualify for lower down payments, waived mortgage insurance, and the exclusion of student loans from debt-to-income requirements with Truist mortgages.
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Published mortgage rates default to one discount point to show a more favorable interest rate but can be adjusted to zero points.
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Scores near the average for customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.
The Yahoo view: NFCU offers several distinctive benefits, including interest rate protection on VA-backed mortgages for active and former military members. Although it has our highest star rating, it is specifically best for military-affiliated first-time home buyers.
Stars: 4.20
Read our full Navy Federal Credit Union mortgage review
Key benefits
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The Special Freedom Lock allows an interest rate reduction of up to 0.50% if mortgage rates move lower before your loan closing.
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The No-Refi Rate Drop offer allows you to tap a lower interest rate six months or later after closing — for a $250 fee but without changing your loan terms or taking on additional closing costs as you would with a refinance.
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A rate guarantee states that Navy Federal will match a better mortgage rate offered by a competing lender or pay you $1,000.
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Military Choice loans allow benefits similar to VA mortgages to current and former service members without further entitlements.
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Buy your home through a Navy Federal real estate agent partner and receive $400 or more cash back.
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Navy Federal Credit Union home loans are available to members only. Eligibility includes active duty or former members of the armed forces, Department of Defense or National Guard and family or household members.
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Ranks near the top of all the lenders considered in the latest J.D. Power Mortgage Origination Satisfaction Study.
The Yahoo view: TD Bank excels in home loan selection with the broad selection of products typical of a depository institution. And even better — it has lower rates and fees than many of its peers.
Stars: 4.00
Read our full TD Bank mortgage review
Key benefits
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TD Bank offers home equity loans, HELOCs, and medical professional loans.
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Offers a comprehensive selection of educational resources for borrowers, including calculators.
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Fee discounts are available to existing TD customers.
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Individualized rates are available by filling out a simple online form.
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Serves 15 states (CT, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT) plus Washington, D.C.
The Yahoo view: Better offers a number of home buying services, including rapid loan approval, insurance, real estate, settlement services and more into a consolidated digital experience.
Stars: 4.00
Read our full Better Mortgage review
Key benefits
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A “One Day Mortgage” offer promises a loan commitment within 24 hours of submitting paperwork and a rate lock.
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Better Mortgage claims to close loans “17 days faster than the industry average.”
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Offers loans, insurance, real estate, settlement services and more into a consolidated digital experience.
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Published interest rates are shown for borrowers with a 20% down payment, who pay closing costs with cash, have a DTI below 35%, and a credit score of 760 or higher.
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A below-average rating for customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.
Learn more: How long does it take to close on a house?
The Yahoo view: Closing costs and down payment assistance are available to eligible home buyers in some states.
Stars: 3.90
Read our full Bank of America mortgage review
Key benefits
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Bank of America offers grants up to $7,500 in closing costs and down payment assistance up to $10,000 for qualified buyers in many, but not all, states.
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Existing customers may qualify for an origination fee or interest rate deduction. You’ll likely have to sign up to draft your mortgage payments from an account to qualify.
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A home buyer program for medical professionals allows borrowers to make lower down payments and exclude student loans from debt limits. Residents and fellows can also close on a loan 90 days before starting a new position.
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In an unusual Zillow-esque move, Bank of America’s Real Estate Center features home listings, including existing and new construction properties — as well as bank-owned houses.
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A robust online experience accounts for a majority of home loan applications.
The Yahoo view: Pennymac is a major lender for loans insured by the FHA (Federal Housing Administration) and is well-equipped to guide first-time homebuyers through the government loan process.
Stars: 3.80
Read our full Pennymac mortgage review
Key benefits
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Pennymac is the second-largest FHA lender by loan volume in the nation — and is rated by Yahoo Finance as the best overall FHA lender.
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Offers a rate buydown that lowers your interest rate by 1% for one year.
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Show sellers you are a serious and qualified buyer with Pennymac’s BuyerReady Certification. You will also receive a $1,000 credit to apply to your closing costs.
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Use a real estate agent endorsed by Pennymac and get from $350 to $9,500 cash after closing.
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The Yahoo view: An early-mover in digital mortgages, Rate (previously Guaranteed Rate) promises a quick loan approval, but is rated well below JD Power’s average in customer satisfaction.
Stars: 3.80
Read our full Rate mortgage review
Key benefits
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A “Same Day Mortgage” promises loan approval — but not loan funding — within 24 hours of locking an interest rate and submitting financial documents.
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For a personal service option, Rate has hundreds of branch locations across the nation.
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Offers non-qualified mortgages for self-employed borrowers or those who want to qualify using alternative credit standards.
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Advertised rates factor in more than one discount point, are based on a 20% down payment, and a FICO score well above the national average.
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Rate scores well below average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.
The Yahoo view: Has made a commitment to offer down payment assistance and closing costs credits to advance homeownership for minorities.
Stars: 3.80
Read our full U.S. Bank mortgage review
Key benefits
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Has committed $100 million over five years to offer up to $12,500 in down payment assistance and up to an additional $5,000 in a lender fee credit to advance homeownership for minority families.
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Existing U.S. Bank customers may be eligible for a credit against closing costs up to $1,000.
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A prequalification process is free, “takes five minutes,” and does not impact on your credit.
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A loan application can be made in a loan officer’s office, by phone or online.
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U.S. Bank’s mortgage rates, as published on its website, look appealing. However, the conventional loan rates shown require a down payment of 25% and a FICO score of 740 or better. That’s well above the national average credit score of 714.
The Yahoo view: Citibank garners high customer service satisfaction scores from J.D. Power and is a legacy mortgage loan lender.
Stars: 3.80
Read our full Citibank mortgage review
Key benefits
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Citi offers a 3% down payment program with no private mortgage insurance (PMI) requirement to borrowers in specified U.S. cities.
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Citi’s Lender Paid Assistance Program can cover up to $7,500 in closing costs to qualified buyers.
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Advertised mortgage rates include substantial discount points and undisclosed credit score requirements.
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A Yahoo Finance analysis of HMDA data revealed that Citi charged below-median mortgage interest rates in 2023 with average loan costs.
Many mortgage lenders offer conventional loans backed by Fannie Mae. With the HomeReady program, you only need a 3% down payment and 620 credit score. You also might qualify with a debt-to-income ratio as high as 50%.
You must finish a home-buyer education course to qualify for this program, which is often useful for first-time buyers.
Conventional loans backed by Freddie Mac also require a 3% down payment and an online home-buyer education course. The main differences from the HomeReady program are that Home Possible loans require a 660 credit score and a 45% DTI ratio for buying a house.
Read more: How to get a 3% down mortgage with HomeReady and Home Possible programs
FHA loans can be great for first-time home buyers because you can qualify with a 580 credit score and 3.5% down payment. (You can even get an FHA loan with a score as low as 500, but you’ll need 10% down in this case.)
Learn more: What are FHA loans, and how do they work?
VA loans are for eligible active military personnel, veterans, and their families. They’re great mortgages for getting your foot in the door of homeownership because you don’t need a down payment. The U.S. Department of Veterans Affairs also doesn’t set a minimum credit score, so you can shop for lenders that accept low scores if that’s an issue.
Dig deeper: What’s a VA loan, and how do you qualify?
You also don’t need a down payment for USDA loans. These mortgages are for low-to-moderate-income borrowers buying in rural and suburban areas. As with VA loans, the U.S. Department of Agriculture doesn’t set a minimum credit score, so the credit score needed will depend on the lender.
Read more: How to qualify for a USDA loan
We seriously considered the following mortgage lenders with first-time home buyer loans for our best-of list, but they weren’t quite as strong as our top picks:
Yahoo Finance identified the best mortgage lenders by analyzing and grading leading national lenders, which were compiled from 2023 Home Mortgage Disclosure Act data. The lenders were then scored on a quintile scale for five criteria: the median interest rate offered to borrowers, rate transparency, median fees and loan costs, affordability factors including loan offerings and down payment assistance, and online educational resources and calculators featured on lender websites.
Review of the Nationwide Multistate Licensing System’s data on regulatory actions enabled a penalty to the score of any lender with a mortgage-related administrative or enforcement action within the past five years.
Advertisers or sponsorships do not influence ratings.
An FHA loan is often the best type of loan for first-time home buyers because you only need a 580 credit score and a 3.5% down payment (or a 500 credit score with 10% down). It also allows borrowers with more debt to buy a home than many other types of mortgages. These features are great for first-time buyers who may not have much money saved or haven’t had time to build up their credit yet. However, a conventional loan could be good if you’re a first-time buyer with a strong credit score and lower debt levels, because many lenders only require 3% down.
First-time home buyers should look into three government-backed loans: FHA, VA, and USDA loans. FHA loans are geared toward people with higher debt levels and lower credit scores. VA loans are for military-affiliated buyers who don’t have any money for a down payment. USDA loans are for lower-income homeowners buying in rural areas and also don’t have any money for a down payment. But conventional loans are still great mortgage options for first-time buyers with 620 credit scores and 3% down.
The best bank (or mortgage lender) will depend on your situation, but we chose Truist Bank as the best lender for first-time home buyers overall. It offers benefits for first-time buyers such as down payment assistance and lender credits.
You can put down as little as 0% as a first-time buyer getting a VA loan or USDA loan. You can also put down 3.5% for an FHA loan. Depending on the lender and how strong your finances are, you may be able to put down as little as 3% with conventional mortgages.
A 30-year mortgage term is usually best for first-time buyers. All common types of mortgage loans offer a 30-year option, and it has lower monthly payments than, say, a 15-year mortgage.
As a first-time home buyer, a 620 credit score is preferable. You can qualify for a conventional mortgage with most lenders with a 620 score. You’re able to get an FHA loan with a lower credit score, but the higher your score, the lower your rate will typically be.
An FHA mortgage is usually the easiest type of loan to get approved for because it has relatively lenient credit score requirements. But if you’re affiliated with the military and are eligible for a VA loan, you’ll likely be approved because the VA doesn’t set a minimum credit score — the requirement varies by mortgage lender.
This article was edited by Laura Grace Tarpley.