Best Mortgage Lenders for First-Time Home Buyers in 2023

Here is the list of the best mortgage lenders who specialize in assisting first-time home buyers by offering low-down payments, grant programs, and educational resources.

Finding the perfect mortgage can be a daunting task for first-time home buyers. It’s crucial to partner with a lender who offers the best interest rate, suitable term, and minimal closing costs, all while ensuring a seamless and swift process.

We have picked some of the best mortgage lenders tips for first-time home buyers in a variety of categories so you can quickly decide which one is right for you.

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How do I choose the best mortgage lender?

Once you have a clear idea of the mortgage type you’re seeking, discovering the perfect lender may prove simpler than anticipated. One effective approach is comparing at least three lenders, allowing them to compete for your business. In doing so, it is probable that one lender’s mortgage package will effortlessly outshine the rest – offering a superior combination of a lower interest rate and reduced fees.

How do I compare mortgage lenders?

Once you’ve determined the type of loan you require, consider the level of service and lending experience that holds significance for you. Perhaps you find value in engaging with a banker face-to-face at a physical brick-and-mortar bank. On the other hand, if you prefer minimizing contact and conducting most of the mortgage process through an app, that option may be more aligned with your style. Depending on your preferences, you can explore traditional banks, non-bank lenders, or credit unions. Alternatively, you can opt to delegate the research to a mortgage broker.

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To get an idea of your borrowing potential and the kind of interest rates on offer, it’s advisable to apply for mortgage preapproval from multiple lenders. This will give you a chance to assess each lender’s suitability for you. Keep in mind, though, that to obtain actual interest rates and fees, you’ll need to proceed with the mortgage application process with more than one lender. While this incurs an application fee regardless of your final decision, narrowing down your options with preapprovals can help. Within three business days of applying for a mortgage, you’ll receive a Loan Estimate, a standardized form that facilitates side-by-side lender comparison. This way, you can determine which lender offers the best combination of rates and fees.

How much do I need to save for a down payment?

The required down payment amount varies based on the type of home loan you choose. Conventional loans can offer down payments as low as 3%, while some buyers opt for a higher down payment of 20% to avoid private mortgage insurance. FHA loans may have down payments as low as 3.5%, depending on your credit score. VA and USDA loans, on the other hand, do not require any down payment at all.

Can I get help making a down payment?

If’re a first-time home buyer, there’s a chance you could be eligible for various benefits, including down payment assistance. These beneficial programs are typically administered by state housing authorities, although depending on your location, you might also discover city- or county-specific options. Keep in mind that there could be restrictions in terms of income and residency, and you may be required to attend a first-time home buyer class to be eligible for assistance.