Best Mortgage for First Time Home Buyers

Written by Banks Editorial Team
3 min. read
Written by Banks Editorial Team
3 min. read

Owning a home is a dream of many people. However, the search for mortgage for first time home buyers can be daunting. You have to shop for a reputable lender that will offer the best product to suit your needs. Some mortgages with easy approval include FHA and USDA mortgages. When buying a home for the first time, you should first check and improve your credit report before taking any other important steps.

How to Find a Mortgage for First Time Home Buyers

Seeking out a mortgage for the first time can be quite intimidating, but there are many available options for a mortgage for first time home buyers. The best options in mortgage for first time home buyers are the ones that require low down payments, offer the best interest rates, and are sourced from reputable lenders with good customer service. FHA and USDA mortgages offer the easiest approval, but may include higher rates or more house-type restrictions than other loan options. First-time home buyers should check their credit score and get pre-approved before shopping around for homes and the best loan option for them. It is important to also look at interest rates, closing costs, customer satisfaction, and product offering when finding a first-time mortgage.

When seeking mortgage for first-time home buyers with lower credit scores, the most popular mortgage is offered via the Federal Housing Administration (FHA), which belongs to the U.S. Department of Housing and Urban Development. FHA will insure the loan. This means that if you do not pay, it will reimburse the lender most of the money that is due. Additionally, FHA loans are great for first-time home buyers because it is much easier to get approved than via conventional loans.Rural loans from USDA are also a good option for mortgage for first-time home buyers, especially for buyers with low credit scores and buying homes in rural areas. USDA rural lenders can offer loan options with no down payments and low rates, even for borrowers with credit scores as low as 600.If you have a higher credit score, you can consider conventional loans, which are not connected to any government agency and are simply a deal between the home buyer and the lender. Although you will need a higher credit score to apply, these loans do attract lower interest rates than government backed mortgages. Some even require a down payment as low as 3 percent.

As a first-time home buyer, you may not be aware what your credit score is. To begin your mortgage-search process for the first time, you will want to gather your credit score to make sure you find a mortgage that works for you.

Finding the best mortgage rate for refinancing your home is also something you need to start looking into right away, as it could save you thousands of dollars each year.

Tips to Find the Best Mortgage for First Time Home Buyers

Here are some helpful tips about finding a mortgage for first time home buyers on the search for their perfect loan option.

  1. Check and improve your credit report: Utilize an online credit score calculator to gather your data.
  2. Get pre-approved: To make sure you are seeking homes in a loan range available to you, find out from a lender the maximum amount you are approved for. You can do this without committing to anything, and you become a more attractive buyer because you can prove to the seller that you are able to afford their home.
  3. Compare multiple lenders: It is important to compare loan rates to ensure you choose a loan that is right for you and your particular situation.
  4. Seek professional help: Find a realtor to help seek out the perfect home.
  5. Submit mortgage applications within a short window: The hard inquiry for a loan approval may stay on your credit score for up to two years. To keep your credit score high during your home buying process, apply for mortgages close together.
  6. Don’t apply for other loans and credit cards: Wait for the deal to be closed before applying for new loans so your credit score stays as high as possible during your mortgage search.
  7. Don’t spend all your savings on the down payment: Having a security blanket is key in case of home damages or job loss, so make sure you still have a good financial cushion to ensure you will always be able to make loan payments.
  8. Beware of scams: Scammers seek out first-time buyers and will try to gather information via email or phone pretending to be a part of your mortgage deal. Make sure you double check with your current lender contact before sending anything to a source you do not recognize.

Things to Consider when Shopping for a Mortgage for First Time Home Buyers

  • When buying a home for the first time, you will have to look and compare all the following in a mortgage from different lenders:
  • Interest rates: Sample multiple lenders in search of a low interest rate that will work for you.
  • Closing costs: Costs between lenders will vary, and the lowest interest rate may not actually be the best deal.
  • Customer satisfaction: You’ll be working with your lender for years, so you want to choose one that you trust personally.
  • Product offering: Lenders may offer adjustable rates or different loan terms, so you’ll want to shop around until you find an option that works for you.

Here you can find some of the best companies that offer mortgage for first-time home buyers:

  1. JFQ Lending: FHA loans offered and very high customer satisfaction.
  2. Bank of America: Many home loan offerings for buyers with low credit scores and options with low down payments. Offers FHA loans with down payments as low as 3.5%.
  3. Loan Depot: Low stress and easy online applications.
  4. Wells Fargo Mortgage: Offers low down payment and low interest loans to first time buyers

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