Buying your first home is a huge step - one that you likely have many questions about. When it comes to financing, many first-time home buyers may be struggling with student loans, credit card debt, little savings, and less than perfect credit.
Finding the right mortgage lender for your home is important. The wrong loan could end up costing thousands in interest over years. Yet, many first-time home buyers might feel discouraged by traditional loan requirements that seem just out of reach.
If you’re a first-time home buyer, here’s how to research the best loan options available to you.
Find an Agent
Before you start researching different lenders, it’s always a good idea to partner with an experienced, local agent. Real estate agents understand the local market and can offer valuable insight into financing options, particularly for first-time buyers.
If you don’t already have an agent, Clever can match you with a local agent who can answer any financing questions you might have. Clever agents also offer up to 1% back at closing with a commission rebate, which puts more money back in your pocket.
Research Mortgage Lenders
Finding the easiest mortgage lenders for providing financing for your home can be tedious. To help, we’ve compiled a list of the 7 top mortgage lenders for first-time home buyers.
1. Quicken Loans
This online lender offers mortgages under the FHA program, which means they accept down payments that are as low as 3.5 percent. Their requirements are flexible, which is great for applicants with low credit scores.
Applying with Quicken Loans is also fast and easy, with their intuitive Rocket Mortgage platform that walks you through every step of the process, seamlessly.
Bonus: If you have a 680 credit score, you can qualify for a down payment as low as 1 percent.
2. New American Funding
First-time home buyers who are working to improve their credit or with a thin credit report are encouraged to apply with New American Funding. This lender offers an alternative credit reporting option that lets home buyers share their personal story, ways in which they’re working to fix their credit, and details about their financial battles and successes.
This lender also makes it easier for those with inconsistent income or freelance income to qualify for financing. They provide FHA and VA loan in a variety of different loan packages.
One of the top traditional brick-and-mortar options for first-time home buyers is with CitiBank. CitiMortgage is offered throughout the country and also offers flexible guidelines on credit scoring and history. They also allow qualified buyers to put as little as 3 percent down on their home with some mortgage products.
One of the main perks to applying with CitiMortgage is their HomeRun program, which can save buyers who can’t afford a large down payment by not requiring mortgage insurance.
4. Navy Federal
If you have a military connection and can join Navy Federal Credit Union, this lender is a great option for first-time home buyers. Navy Federal has a flexible application process that makes it one of the easiest mortgage lenders for first-time buyers to partner with.
Navy Federal uses alternative credit scoring to evaluate applications and after applying a loan officer will call you directly to speak about your application, credit report, income, and cover any questions you might have. Navy Federal also offers FHA and VA loan options.
First-time buyers who are still paying student loans might want to explore working with SoFi. This online lender offers down payments as low as 10 percent and does not require buyers to purchase monthly private mortgage insurance.
Applicants with student loan debt may also qualify due to SoFi’s flexible debt-to-income limits and guidelines. SoFi also offers additional benefits and rate discounts to applicants who have a student loan or refinancing loan with SoFi.
Online lenders can offer great rates and loan packages, but if you’d rather talk with a loan officer face-to-face, Chase is an excellent traditional option for first-time home buyers. While you can apply online, you can also speak to a representative in-branch or over the phone.
The minimum down payment with Chase is 3 percent and they approve most applicants with a credit score of 620 or higher, though lower scores are also approved. In addition, existing Chase customers are eligible for rate discounts.
On the downside, Chase is only available in 22 states.
For first-time home buyers struggling to come up with down payments, Vylla is a top lender to explore. Vylla specializes in providing loans to buyers with poor or fair credit and small down payments. Their down minimum down payment is as low as 3 percent, and their application requirements are extremely flexible.
Vylla offers online application options, though applicants will not receive pre-approval decisions online. They also offer free rate locks and are available in all states except Massachusetts and North Dakota.
These are some of the easiest mortgage lenders first-time home buyers can work with. For more help with financing, contact a Clever agent who can help you connect with local credit unions or a mortgage broker to explore more options.