FHA is a government loan

Best First Time Buyers Mortgage Lenders in 2021

With so many mortgage lenders, knowing where to start can be difficult, especially if this is your first time homebuyer. Bankrate took a close look at several key criteria to narrow down the top first-time mortgage lenders, including the low down payment or down payment products they offer, first time buyer programs, and other aspects that can help borrowers navigate the home buying process. Here's our guide to the best first-time mortgage lenders in 2021.

Best mortgage lender for first time buyers

BB&T (Truist)

BB&T (Truist) is a full-service bank and lender to Truist Financial Corporation, which operates in almost every state (except Alaska, Arizona, and Hawaii). BB & T scores in the overall rating of Bankrate thanks to the variety of loan programs and the robust platform and services from a single source.

Most importantly, for first time buyers, the lender offers several options and benefits:

  • Low down payment loans, including a first-time purchaser program with reduced mortgage insurance; CHIP (Community Homeownership Incentive Program) without mortgage insurance; and HomeNow with mortgage insurance (all combined with a homebuyer training course)
  • Conventional Loans
  • FHA loans for those with a lower credit score or limited savings on down payment
  • VA Loans for Eligible Military, Veterans, and Spouses with No Minimum Credit or Down Payment
  • USDA loans with no down payment requirement
  • Advance payment assistance

BB&T was also named one of Bankrate's Best Online Mortgage Lenders in 2021. The bank currently has offices in a number of states, and their presence will increase following the completion of the merger with SunTrust Bank. One downside: BB&T charges lender fees - but if you're an existing customer, you can get incentive pricing on your mortgage, which can lower your costs.

Movement Mortgage

Movement Mortgage is a mortgage lender with a strong online presence and brick and mortar branches that offers various loan options. For first-time buyers, this includes:

  • Low down payment loans including Dream to Own with closing cost / down payment support and no mortgage insurance; and Fannie Mae HomeReady with reduced mortgage insurance (combined with a homebuyer training course)
  • Conventional Loans
  • FHA loans for those with a lower credit score or limited savings on down payments, including FHA 203 (k) loans
  • VA Loans for Eligible Military, Veterans, and Spouses with No Down Payment
  • USDA loans with no down payment requirement
  • Advance payment assistance
  • Condominium loan
  • HomeStyle Home Renovation Loans

Movement Mortgage also prides itself on its "6-7-1" process that promises prepayment within six hours of loan application submission, loan processing within seven business days, and completion within one day. Borrowers can also email sign most documents in advance, which saves even more time.

Movement Mortgage loans are available in all 50 states. You can simply apply for this by phone or online and receive a free, individual offer. However, like many other lenders, Movement Mortgage has lender fees that can affect the total cost of your loan.

LowRates.com

LowRates.com is an online and brick-and-mortar lender available in most of the United States. It has a fast repayment period with a loan decision in less than 24 hours and a deal in as little as 20 days.

Lender's first-time home loan options include:

  • Conventional Loans
  • FHA loans for those with a lower credit score or limited savings on down payments, including FHA 203 (k) loans
  • VA Loans for Eligible Military, Veterans, and Spouses with a minimum credit score of 500 and no down payment requirement
  • USDA loans with no down payment requirement
  • Advance payment assistance

Unlike some lenders, LowRates.com does not incur any fees when you apply for a mortgage online. (However, fees apply if you apply over the phone or in person.) The lender's branches are also not as widespread as some other national lenders. Hence, it may be better to apply online and get a mortgage that way.

LowRates.com was also named one of Bankrate's Top Mortgage Lenders in 2021.

Rocket mortgage

Rocket Mortgage is an online mortgage lender affiliated with Quicken Loans and known for its enticingly convenient and fast platform. The lender offers a variety of loans to borrowers, including first-time buyers, such as:

  • Conventional Loans
  • FHA loans for those with a lower credit score or limited savings on down payment
  • VA Loans for Eligible Military, Veterans, and Spouses with no down payment requirement
  • Condominium loan

Which also helps this lender stand out from their "YOURgage" loan, which allows you to set the term of your mortgage between eight and 29 years. This can make it easy to customize a loan that suits your personal schedule.

Additionally, Rocket Mortgage was named one of Bankrate's Best Online Mortgage Lenders in 2021. However, being a digital lender, Rocket Mortgage has no branch offices. The lender also does not make its fees available to the public.

If you have a lower credit score, you know that Rocket Mortgage prefers borrowers with a credit score of 580 or higher. If your score is lower, you may find it harder to obtain a mortgage from this lender.

Cherry Creek Mortgage

Cherry Creek Mortgage has $ 60 billion in home loans raised in more than 30 states. Borrowers can choose from a number of loan offers. For first-time buyers these are:

  • Low down payment loans including Fannie Mae HomeReady (combined with homebuyer training course)
  • Conventional Loans
  • FHA loans for those with a lower credit score or limited savings on down payment
  • VA Loans for Eligible Military, Veterans, and Spouses with no down payment requirement
  • USDA loans with no down payment requirement
  • Advance payment assistance

While Cherry Creek Mortgage has a wide footprint, the lender does not operate in 17 states. Check this out before diving too deep into an application. Note that this lender's fees may vary by location as well.

Guild mortgage

If you are looking for a long-standing mortgage lender, Guild Mortgage has been around since 1960 and operates more than 220 branches in 30 states. Loan programs are offered online everywhere except New Jersey and New York. First time buyers can choose from several loan options including:

  • Conventional Loans
  • FHA loans for those with a lower credit score or limited savings on down payments, including FHA 203 (k) loans
  • VA Loans for Eligible Military, Veterans, and Spouses with No Down Payment
  • USDA loans with a minimum credit rating of 600 and no down payment
  • Advance payment assistance

Among other things, Guild Mortgage promises a seamless online application and documentation process with practical e-closings. It also provides local in-house processing, drawing, and funding to expedite the process. One downside, however, is the lack of information about available lender fees, which can make it more difficult to compare costs between loan offers.

Initial home loan programs

There are many different types of loans to choose from if you are a first time homebuyer, including:

  • Conventional Loans sponsored by Fannie Mae or Freddie Mac - A loan that only requires 3 percent less, but also requires a minimum loan value of 620 (sometimes higher depending on the lender) and other qualifying criteria
  • FHA loan - A federally insured loan that only requires a 3.5 percent decrease if your credit score is 580 or higher, or 10 percent if your credit score is between 500 and 579, and compulsory mortgage insurance
  • VA loan - A government-guaranteed military, veteran, and spouse loan that does not require a down payment but requires a financing fee
  • USDA loan - A government loan ideal for middle to low income borrowers who are buying a USDA eligible home in a rural area with no down payment required
  • Fannie Mae's HomePath Ready Buyer Program - Offers first-time buyers of Fannie Mae foreclosed properties 3 percent assistance on closing costs and requires completion of a buyer training course
  • Good neighbor next door - A US Department of Housing and Urban Development (HUD) program to help police officers, teachers, rescue workers, and firefighters purchase a home in specific areas
  • FHA 203 (k) - Allows you to borrow the funds you need to buy and furnish a home in a mortgage and with a small down payment

The type of loan that is best for you depends on many factors including the amount you saved for a down payment, your creditworthiness, and whether you work in a particular field or have served in the military.

Grants and support for first-time buyers

If you do not have the funds to pay a down payment or closing costs, help is usually available through a local, federal, state housing authority or other organization.

One form of assistance for those who qualify is a first-time homebuyer grant. Grants are a one-time lump sum that helps cover your down payment or closing costs. Often times, these grants do not have to be repaid if you stay at home for a period of time or meet other criteria. You can ask your mortgage lender what grants may be available to you, as well as looking for grants or other assistance programs from:

In addition to grants, as a first-time buyer, you may be a candidate for other financial resources including:

  • Low-interest loanswhich, unlike grants, have to be repaid over several years
  • Forgivable Loansthat don't have to be repaid after a certain period of time, provided you stay home and keep track of your mortgage payments
  • Deferred Payment Loanswhich usually have to be repaid in full but do not charge interest
  • Savings adjust programswhere a bank or other organization compares the amount you deposit with the institution

How to Pick a Mortgage Lender as a First Time Buyer

There are several types of mortgage lenders you may come across when looking for a loan, including banks, credit unions, and independent and non-custodian institutions. You may also come across mortgage brokers who can help you find loan offers from various lenders that are a good fit for you.

When looking for a lender, consider your goals and your appreciation for 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 access to homebuyer education? All of these questions and more can help you narrow down your choices.

When you have a short list, be sure to shop around and compare mortgage offers before committing to one. Lenders quote the APR, or annual percentage and interest rate, on an offer, but be sure to consider the APR, which reflects the real cost of the mortgage. In general, the lower the APR, the cheaper the loan is.

Here are more tips on finding the best first-time mortgage lender.

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