HomeThe Best Mortgage Lenders for First-Time Buyers of September 2021

The Best Mortgage Lenders for First-Time Buyers of September 2021

Best mortgage lenders for first-time buyers of September 2021

Minimum credit scores are for conforming mortgages, except Navy Federal Credit Union, which is for VA mortgages.

Buying a home is one of the biggest purchases you’ll ever make. As a first-time buyer, the process can feel especially overwhelming. You probably want to use a mortgage lender that makes the homebuying experience as easy as possible.

Keep reading to learn more about our picks for the best

mortgage lenders
for first-time buyers. Many of our top picks also have programs specifically for new buyers, like down payment assistance or special mortgage programs.

The pros of Bank of America:

  • Wide range of mortgage types, including HELOCs
  • Down payment and closing cost assistance programs; receive additional loans or grants, many of which are for first-time homebuyers, depending on your state
  • Ranks second in the JD Power 2020 Primary Mortgage Origination Satisfaction Survey
  • A+ rating in trustworthiness from the BBB
  • You may receive a discount on fees if you’re already a Bank of America customer

The cons of Bank of America:

  • No USDA loans, home equity loans, reverse mortgages, or construction loans
  • Doesn’t accept alternative forms of credit

The pros of Chase:

The cons of Chase:

  • No USDA loans, home equity loans, or construction loans
  • Doesn’t accept alternative forms of credit

The pros of Guild Mortgage:

  • Wide range of mortgage types
  • Down payment assistance for first-time homebuyers and low-to-moderate income borrowers
  • Accepts alternative forms of credit
  • Option to close online instead of in person

The cons of Guild Mortgage:

  • No home equity loans, HELOCs, or construction loans
  • B+ in trustworthiness from the BBB
  • Unavailable to residents of New Jersey or New York

The pros of Navy Federal:

  • Plenty of options for military members, including VA loans, Military Choice loans, and Homebuyers Choice loans
  • Homebuyers Choice program lets first-time buyers get a conventional mortgage with no down payment
  • High score in the JD Power 2020 Primary Mortgage Origination Satisfaction Survey (Navy Federal doesn’t qualify to rank because it doesn’t meet certain criteria, but JD Power notes that the credit union would rank highly if eligible)
  • Accepts alternative credit data, such as utility bills

The cons of Navy Federal:

  • Limited options for non-military mortgages; no home equity loans, HELOCs, FHA loans, USDA loans, construction loans, or reverse mortgages
  • You can only become a member of Navy Federal Credit Union if you or your family is affiliated with the military
  • It has an NR (No Rating) in trustworthiness from the BBB because some previously closed customer complaints have been re-opened

The pros of NBKC:

  • A+ rating in trustworthiness from the BBB
  • Live online chat makes it easy to speak with an expert about your questions

The cons of NBKC:

  • No USDA loans, home equity loans, HELOCs, reverse mortgages, or construction loans
  • Doesn’t accept alternative forms of credit

The pros of New American Funding:

  • Special types of mortgages, like a buydown loan and I CAN mortgage, that help you tailor your term and payments to your needs
  • A+ rating in trustworthiness from the BBB
  • Accepts alternative forms of credit

The cons of New American Funding:

  • No USDA loans, home equity loans, HELOCs, or construction loans
  • Not available to residents of Hawaii or New York

The pros of PNC Bank:

  • A lot of types of mortgages, including home equity loans and HELOCs
  • You may qualify for the $1,500 PNC Homeownership Grant
  • A+ rating in trustworthiness from the BBB

The cons of PNC Bank:

The pros of Rocket Mortgage:

The cons of Rocket Mortgage:

  • No USDA loans, home equity loans, HELOCs, construction loans, or reverse mortgages
  • No physical locations
  • Doesn’t accept alternative credit data — you must show your credit score to get a mortgage

Other mortgage lenders we considered

We evaluated over two dozen mortgage lenders before picking our favorites. Here are the other lenders we looked at and reasons they didn’t make the cut:

  • Guaranteed Rate: This lender has an easy-to-use interface and lets you close digitally, but it doesn’t have first-time homebuyer assistance like many of our top picks.
  • Pentagon Federal Credit Union: If you have a 650 credit score, PenFed offers $500 to $2,500 in lender credit for all members, depending on how much you borrow. The credit union doesn’t have FHA or USDA mortgages, though.
  • USAA: USAA only offers VA mortgages right now.
  • LoanDepot: LoanDepot is a solid lender, but it doesn’t have any features that set it apart from the crowd.
  • Better.com: This is a good online lender, but you can only get a conventional or FHA mortgage.
  • Wells Fargo: The lender does have homebuyer assistance for lower-income buyers. However, Wells Fargo has had multiple public controversies over the past few years regarding claims of racist lending practices, creating fake bank accounts, and charging customers for insurance products they didn’t sign up for.
  • Caliber Home Loans: Caliber doesn’t have any first-time homebuyer assistance programs.
  • Fairway Independent Mortgage Corporation: This is a strong lender overall, but it doesn’t have products geared toward first-time buyers like some of our top picks.
  • SunTrust: While SunTrust doesn’t have first-time homebuyer programs, it does have a program specifically for doctors buying a home.
  • Veterans United: Veterans United offers several types of mortgages, not just VA mortgages. It doesn’t have any programs for first-time buyers, though.
  • CMG Financial: CMG has unique grant opportunities and mortgages. They could be good options, but these programs aren’t for everyone.
  • Freedom Mortgage: This is a good lender if you have a low credit score, but you can’t fill out an application online.
  • Flagstar Bank: This lender offers several types of home loans, but none of its features make it stand out.
  • Movement Mortgage: Movement Mortgage will process your mortgage within seven business days. It doesn’t have any homebuyer assistance programs, though.
  • US Bank: US Bank is particularly strong for VA mortgages, because you only need a 600 credit score.
  • Ally: Ally has a convenient online process, but it only offers conventional mortgages.
  • Carrington Mortgage: Carrington does have a unique program for refinancing, but not for first-time buyers.


To choose the top mortgage lenders of September 2021, we looked at four main factors:

  • Loan types. Did a lender offer several types of loans to suit customers’ needs, such as conventional loans and government-backed loans?
  • Customer satisfaction. If the lender appeared in the JD Power 2020 Primary Mortgage Origination Satisfaction Survey, we looked at its ranking. If it wasn’t in the survey, then we read online customer reviews.
  • Affordability. We looked at lenders’ minimum credit scores and down payment amounts. We also checked whether they offer government-backed loans, which can be more affordable for borrowers with less-than-perfect financial profiles. Finally, we looked at whether it considers alternative forms of credit, like utility bills and rent payments, for you to qualify.
  • Ethics. Most of our top picks received an A+ from the Better Business Bureau, which measures companies’ trustworthiness. The exceptions are Guild Mortgage and Navy Federal Credit Union. Guild Mortgage has a B+ due to government action against the lender, and Navy Federal has an NR (No Rating) because some customer complaints that were previously closed have been re-opened.

We also looked closely at lenders with programs specifically for first-time buyers, such as down payment assistance. Most of our top picks have first-time buyer programs, and those that don’t made the list because they thrived in other criteria.

Are these mortgage lenders trustworthy?

The Better Business Bureau grades companies’ trustworthiness based on responses to customer complaints, honest advertising, and transparency about business practices. Here are the BBB grades for our top lenders:

Most of the lenders have an A+ from the BBB. Navy Federal has an NR (No Rating) because some customer complaints that had been closed have re-opened. Guild Mortgage has a B+ due to government action.

In 2020, Guild Mortgage paid the United States $24.9 million when it was accused of approving FHA mortgages for people who didn’t qualify, resulting in loan defaults.

Some of the other lenders on our list have recent public controversies, too, despite their strong BBB grades.

In 2020, the Department of Justice charged Bank of America for unfairly denying home loans to adults with disabilities, even though they qualified for loans. Bank of America paid around $300,000 total to people who were refused loans. In 2019, the Department of Labor required Bank of America to pay $4.2 million to people who claimed the bank discriminated against women, Black, and Hispanic applicants in the hiring process.

The Department of Justice required JPMorgan Chase to pay $920 million for wrongful trading in 2020. The company paid the Securities and Exchange Commission $135 million in 2018 for mishandling American Depisitary Receipts, certificates that let Americans invest in foreign stocks.

PNC Bank was accused in 2019 of aiding a man in carrying out a fake debt relief project, which cost customers a total of $85 million. In 2014, PNC had suspected the man of running a scheme and closed his bank accounts. But nine months later, the bank let him open more accounts.

Navy Federal employee has claimed the lender pressured mortgage underwriters to approve loans even if they didn’t have sufficient reason to believe applicants could repay the loans. Then she filed a lawsuit and said Navy Federal retaliated against her whistleblowing by changing her job duties. She dropped the case in late 2020.

In 2019, the US Justice Department required Rocket Mortgage’s parent company Quicken Loans to pay $32.5 million for alleged mortgage fraud. The Justice Department claimed Quicken Loans approved mortgage applications it shouldn’t have. Although Quicken Loans paid the settlement, the company never admitted to mortgage fraud.

Frequently asked questions

What type of loan is best for a first-time homebuyer?

An FHA mortgage is often the best mortgage for a first-time buyer. You may qualify with a lower credit score and higher debt-to-income ratio than with other home loans, making FHA mortgages appealing to people whose finances aren’t in the best shape yet.

However, the best loan will depend on your situation. With a high credit score and low DTI ratio, you may find that you’re eligible for competitive terms on a conventional mortgage.

If you are an active military member or veteran, you can buy a home with no down payment with a VA mortgage. A USDA mortgage is also good for buyers who live in rural areas and earn a low-to-moderate income.

What programs are available for first-time homebuyers?

You may qualify for a program specific to your state or county. These often come in the form of down payment/closing cost assistance or tax benefits.

You could receive assistance if you buy a home that needs major renovations, including a Fannie Mae HomeStyle loan, Freddie Mac CHOICERenovation loan, FHA 203(k) loan, and the Energy Efficient Mortgage program.

You may qualify for the Department of Housing and Urban Development’s Good Neighbor Next Door program if you’re a teacher, firefighter, law enforcement officer, or emergency medical responder who lives in a “revitalization area.”

Go to the Good Neighbor Next Door website to search for homes in your area. Homes are listed for seven days, and you can purchase one for 50% off the listed price.

The Native American Direct Loan is for Native American military veterans, and it’s issued through the VA. You don’t need money for a down payment, and you won’t pay private mortgage insurance.

What is homebuyer assistance?

Homebuyer assistance usually refers to money that helps you cover a down payment or closing costs. The lender may give you a grant that you don’t have to pay back, or a small loan that has better terms than a regular mortgage. Some homebuyer assistance programs forgive your loan under certain circumstances — for example, the amount you have to pay back decreases the longer you live in the home and is wiped away once you live in the home for five years.

The experts’ advice on choosing a mortgage lender

We consulted mortgage and financial experts to inform these picks and provide their insights about mortgage lenders.

PFI Mortgage expert panel


Our experts have also provided advice about how to know whether you’re ready to get a mortgage, and how to decide which type of mortgage is best for you.

Here’s what they had to say about mortgages. (Some text may be lightly edited for clarity.)

What factors should someone take into consideration when choosing a mortgage lender?

Anthony Park, author:

“The canned answer is to just go with the lowest rate. However, you also want to take into account who’s going to serve your loan best. Are repayments going to be easy for you? Who is most likely to be able to help you if you need to take out a HELOC or refinance later, versus somebody who’s more of a one-off type?

“They may have the lowest rates to get you involved, but they might have very, very little hand holding after the fact. I wouldn’t recommend paying an exorbitant amount more for potential services in the future, but just don’t always necessarily go with the rock-bottom lowest rate. There’s sometimes a cost with that.”

Laura Grace Tarpley, Personal Finance Insider:

Apply for preapproval with multiple lenders. Each lender’s preapproval letter states how much it would lend to you, and it locks in your interest rate. It’s an effective way to compare lenders and see which will give you the best deal.

“But try to apply with all the lenders within a month or so. When you apply for preapproval, a lender does a hard credit inquiry. A bunch of hard inquiries on your report can hurt your credit score, unless it’s for the sake of shopping for the best rate. If you limit your rate shopping to a month or so, credit bureaus will understand that you’re looking for a home and shouldn’t hold each individual inquiry against you.”

How can someone decide between a conventional mortgage vs. a government-backed mortgage?

Anthony Park, author:

‘It really depends on if you qualify. If you do qualify for FHA or VA mortgages, those are no-brainers. just because the terms are so favorable. If you don’t qualify, you fall back by default onto conventional mortgages.”

Julie Aragon, Aragon Lending Team:

“The most common government loan that’s widely available to almost everyone is the FHA loan. There’s a couple of reasons why somebody would go with FHA instead of conventional one. Their credit is a little on the crummy side, let’s say below 700. You can get conventional with down to a 620 score, but the mortgage insurance gets really expensive. FHA doesn’t discriminate — no matter how perfect or crappy your credit is, the mortgage insurance is the same.”

How can someone know whether they’re financially ready to buy a home?

Lauryn Williams, CFP:

“You should have funds left over after everything is said and done as it pertains to purchasing the home. So if you don’t have an emergency fund plus a down payment, you’re probably not ready to purchase a home. Another thing I think about is credit card debt. While you can be approved for a mortgage with credit card debt and student loans and very little cash on hand, you put yourself in a very risky situation.”

Laura Grace Tarpley, Personal Finance Insider:

“You should be able to afford the extra costs that come with owning a home, like home repairs or lawn care. You didn’t have to budget for those things when you rented, because the landlord was responsible for maintenance.”

Mortgage and refinance rates by state

Check the latest rates in your state at the links below, and learn about first-time homebuyer programs specific to the state:

New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Rhode Island
South Carolina
South Dakota
Washington DC
West Virginia