The best mortgage lenders for first-time buyers: 2023

The 9 best mortgage lenders for first time home buyers

We chose the nine best mortgage lenders for first-time home buyers in 2023.

These lenders were picked for their strong customer service scores and exceptionally good deals for first-time buyers — from low rates and fees to cash grants that help cover down payments.

Compare options to see if one of these lenders is right for you.

Editor’s note: The Mortgage Reports may be compensated by some of these lenders if you choose to work with them. However, that does not affect our reviews. See our full editorial disclosures here.

In this article (Skip to...)

• The 9 best lenders
• Loan options
• Home buyer grants
• Resources for buyers
• How to get started
• Recap: The 9 best lenders

The 9 best mortgage lenders for first time home buyers

Following are our picks for the best mortgage lenders for first-time home buyers. Note that these are not ranked by quality, but rather in alphabetical order.

That’s because every first-time home buyer has unique needs — and different lenders will appeal to different borrowers depending on their situation.

So read up on the best lenders below, and choose a few that sound appealing. Then be sure to get quotes from at least 3 of your front runners and compare interest rates and fees.

Finding the lowest interest rate will lower your monthly mortgage payments and save you money in the long run. It could even boost your home buying budget. So don’t skip this step! Comparison shopping for a mortgage is one of the most important things you can do as a first-time home buyer.

1. Bank of America — Home buyer grants and unique loan options

Bank of America’s website has a whole webpage that caters to first-time buyers. This includes a First Time Homebuyer Online Edu-Series™, which provides a suite of videos designed to take the mystery out of buying your first home.

Better yet, BofA has a Down Payment Center that lets you find down payment assistance programs operating where you want to buy. It also offers its own cash help to eligible borrowers in certain states:

1. America’s Home Grant — Offers up to $7,500 in closing cost help as a grant that never has to be repaid
2. Down Payment Grant program – Again, this is a grant that doesn’t have to be repaid. But this offers up to 3% of the purchase price toward your down payment, capped at $10,000

Although Bank of America didn’t take top marks in our survey of online customer reviews, it is highly regarded. Indeed, it took the second place spot in J.D. Power’s 2020 U.S. Mortgage Satisfaction Study. And that’s a serious achievement.

2. Chase — Home buyer grants and unique loan options

Almost half of U.S. households have at least one account with Chase. So we’re looking at a serious player in financial services. And, with Bank of America, it tied for second place in J.D. Power’s customer satisfaction study. This is a first-class lender by any standard.

Chase doesn’t seem to have the same focus on first-time buyers as Bank of America. But there are some helpful articles on its website. And its easy digital interface means you can navigate your way through the application process online if you want.

Of course, if you live near a Chase branch or are happy to work with people over the phone, those are options as well. As a major nationwide bank, Chase is more accessible in-person than some of the other lenders on this list.

Chase has a couple of Housing Assistance Programs that can give you cash grants to help with your down payment and closing costs. These are available only in certain states and to eligible buyers, so you’ll want to connect with a Chase loan officer for details.

3. CMG Financial — Great customer service, unique loan options

CMG Financial may not be the household name that the first two on our list are. But many prefer dealing with smaller, more personal lenders.

And CMG has a focus on first-time buyers. Its website has a great resource center that includes a 21-page First-Time Home Buyers Guide. This will provide plenty of information to get you going.

CMG can also hook you up with a specialized first-time home buyer programs called HomeFundIt. That is an online crowdfunding platform. And it lets you raise funds toward your down payment through social media.

Another CMG innovation is the All In One Loan. This gives you one account for your mortgage and checking. So, when you make a deposit, your mortgage balance falls. And, when you make a payment, your mortgage balance rises again. What’s the point? Well, your mortgage interest is calculated on your current mortgage balance daily. So, during the period between your making a deposit and paying for something, you’ll pay less interest.

Alongside a couple of others, CMG scored a perfect 5.0 in our survey of online customer reviews. So this is a company that is doing a whole lot right.

4. CrossCountry Mortgage — Low interest rates, unique loan options

Younger home buyers often want to do everything online. But plenty would welcome a human touch when it comes to buying their first home. And CrossCountry encourages borrowers to build strong relationships with its loan officers.

If you like the idea of a friendly, knowledgeable, easily accessible guide through the loan process, this lender might suit you.

CrossCountry scored a near-perfect 4.9 in online customer reviews. So plenty of people like the personal touch. And that can only be helped by its fast service: CrossCountry says it closes most loans within 21 days.

But one of CrossCountry’s strongest points is its low average mortgage rates, based on 2020 official data. Only one lender on our list had lower mortgage rates.

Of course, rates vary a lot by customer. But if you want to save on your home loan, it’s worth getting a quote to see what CrossCountry can offer you.

5. Movement Mortgage — Great customer service, great online experience

Movement Mortgage gives away its profits. No, really! It’s wholly owned by the nonprofit Movement Foundation. So using this lender could add your bit to the $60 million it says it’s already donated to schools and communities around the world.

As importantly, your charitable instincts won’t cost you in terms of service. Because Movement received a perfect 5.0 in our survey of online customer reviews. And it reckons it can close many loans in a week using its highly developed digital technologies.

Movement tries to help borrowers with challenging finances. And you might still be approved, even if your existing debt-to-income ratio (DTI) is quite high. Of course, people with less-than-perfect finances tend to pay higher mortgage rates.

Another benefit is that Movement offers a wide range of loan products — including low-down-payment loans, new construction loans, USDA rural home loans, and FHA 203k rehab loans. So this lender may be an option if you’re looking outside the ‘traditional’ conforming loan box.

6. New American Funding — Low interest rates, flexible loan terms

New American Funding (NAF) is another lender that’s immediately likeable. In 2019, it won a Better Business Bureau Torch Award for Ethics.

NAF has a webpage dedicated to first-time buyers. And it makes a feature of down payment assistance programs. So you shouldn’t have too much trouble using grant or loan money toward a mortgage with this company.

You can also choose how to engage with NAF. You might opt for an all-online experience. Or work with your loan advisor over the phone. Or have face-to-face encounters in one of NAF’s 186 branches in 32 states. This company is licensed to operate in every state except Hawaii.

New American Funding says it views each application on its merits. And it’s prepared to look at nontraditional credit information if your score falls a little short.

Of course, that may explain why its average mortgage rates were only around the middle of our list. But you may be offered a lower interest rate if you have good credit and a decent down payment. You’ll need to apply to find out.

Finally, NAF did exceptionally well in our survey of online customer reviews, with a near-perfect score of 4.9 out of 5.

7. Prosperity Home Mortgage — Low interest rates, great customer service

Prosperity Home Mortgage (PHM) has a special program, called Home Advantage, that might appeal to many first-time buyers. If you want an FHA loan, you might be eligible for a second mortgage of up to 5% of the purchase price to help with your down payment and closing costs.

But what’s really exciting is that the second mortgage is interest-free and requires no monthly payments. And, providing you still own and live in the home after five years, the whole amount can be forgiven. So you don’t pay back a cent.

Unless you live in Alaska, Hawaii or New York, where Home Advantage is unavailable, this could well put PHM at the top of your personal list of the best mortgage lenders for first-time home buyers.

And that needn’t come with any sacrifice in other respects. Because PHM got a perfect 5.0 in our survey of online customer reviews. And its average mortgage rates in 2020 were among the lowest on our list.

Prosperity Home Mortgage has 700 branches across the U.S. and is very proud of the expertise and experience of its mortgage consultants.

8. Supreme Lending — Unique loan programs

Supreme Lending’s customers love it. Indeed, they gave it a near-perfect 4.9 score in our survey of online customer reviews. And it has an A+ rating from the Better Business Bureau.

Supreme is certainly keen to help first-time buyers. And it mentions down payment assistance programs on its website, though these vary depending on where you live.

For example, one offer available in Dallas is the Supreme Dream program, which only works with FHA loans. This can provide 100% financing with your down payment taking the form of a second mortgage. But the entire loan can be forgiven after 36 months of on-time payments.

Check with a local Supreme Lending loan officer to see what’s available where you wish to buy a home.

Supreme has competitive rates and loan costs as well. So it may be worth getting a quote to see what you qualify for, regardless of whether you want down payment assistance.

9. Veterans United — Great for veterans, service members

Unsurprisingly, Veterans United specializes in VA loans, which are backed by the U.S. Department of Veterans Affairs.

This lender is only really an option if you’re VA-eligible. That typically includes active-duty military members, veterans, National Guard and Reserves members, and surviving spouses.

If you are eligible, Veterans United may well be for you. Because it is by far the biggest lender of VA loans. And it scores highly for customer service, both in our survey of online customer reviews and on the J.D. Power 2020 U.S. Mortgage Satisfaction Study.

Better yet, VU’s average mortgage rates in 2020 were the lowest of all nine of our picks for the best mortgage lenders for first-time buyers. Of course, some of that is down to VA loans typically having lower rates than other types of mortgages. But who cares?

However, not everyone who’s eligible for a VA loan will necessarily be able to get one from Veterans United. Because it sets its minimum credit score at 640, which is the highest score threshold on our list. Still, many who are eligible for VA loans will easily clear that hurdle.

First time home buyer loan programs

So those are our picks for the best mortgage lenders for first-time buyers.

But what about the mortgage itself? Along with choosing a lender, you have to choose the type of loan you’ll use to finance your home purchase.

There are countless mortgage types out there. And of course, all first-time home buyers have unique needs.

But most buyers find what they are looking for with one of these four programs: the FHA loan, Conventional loan, VA loan, or USDA loan.

FHA loans

FHA loans are partly guaranteed by the Federal Housing Administration (FHA). They’re incredibly popular with first time home buyers, offering benefits like:

• Minimum down payment as low as 3.5%
• Low FICO score requirement starting at 580 and up, though some lenders set their own standards
• Flexible requirements for income and debt
• The ability to cover your down payment with gifted or granted money

The main drawback of an FHA loan is that you’re stuck with mortgage insurance, usually for the life of the loan. But many FHA homeowners can refinance to get rid of that burden later on.

Overall, FHA loans are great for those with slightly iffy credit and/or small down payment savings. They’re generally easier to qualify for than any other loan type.

Conventional mortgages

Conventional loans are usually backed by Fannie Mae or Freddie Mac. Those within Fannie and Freddie’s box are known as “conforming mortgages,” because they conform to certain lending rules. Most U.S. mortgage loans fall into this category.

Conforming mortgages offer:

• Minimum down payment of 3%
• Minimum credit score of 620, though lenders get to set their own thresholds
• Private mortgage insurance (PMI) that can be canceled once you have 20% home equity

There are also special conforming loan programs tailored to first-time home buyers.

For instance, Fannie Mae’s HomeReady loan and Freddie Mac’s Home Possible loan allow 3% down and come with extra benefits, such as counting rent from a roommate or renter toward your income.

USDA loans

USDA mortgages are partly backed by the U.S. Department of Agriculture (USDA). And you must buy a home in a “rural” area to qualify. But 97% of the map of America is designated as rural, so many are surprised to find themselves in luck.

A USDA loan has benefits like:

• Zero down payment
• Competitive mortgage rates
• Much smaller mortgage insurance payments than most other loans

If you want to buy somewhere in a place that counts as rural (and that includes some smaller towns), these can provide amazing bargains.

Just note that USDA loans are only available to those with average or below-average household incomes (max. 115% of your area’s median income).

VA loans

These mortgages are backed by the Department of Veterans Affairs (VA). And, if you’re a veteran, someone with an honorable discharge, or are still serving, it’s highly likely this mortgage will suit you best. Because VA loans offer:

• Zero down payment
• Low mortgage rates
• No continuing mortgage insurance
• Easy credit threshold
• Low closing costs

If you are eligible, you’d need to be in highly exceptional circumstances not to find a VA loan your best bet.

Jumbo loans

For home buyers wanting a large loan amount — typically above $ — there’s something called a jumbo loan.

This mortgage program is great if your new home is in a high-priced area. Many jumbo loans allow mortgage amounts in the millions.

However, jumbo loans also have stricter underwriting requirements. Expect to need a clean credit history, a good credit score, and a down payment of at least 10-20% if you want this type of mortgage.

First time home buyer grants

Many first-time home buyers are shocked to find out that down payment assistance actually exists.

Down payment assistance (DPA) programs offer money toward your down payment and/or closing costs. Often, this money comes in the form of a grant or loan that doesn’t have to be repaid.

There are more than 2,000 down payment assistance programs nationwide, so chances are there’s at least one operating near you.

Each DPA gets to set its own benefits and eligibility criteria. But, if you’re lucky with the ones in your area, you might receive a home buying grant worth thousands of dollars.

Other DPAs offer low- or zero-interest loans. Some require you to repay those in parallel with your mortgage. But others require no payment until you move. And many forgive your loan, providing you stay in residence in the home for x years.

One important note: Your lender has to be willing to work with a DPA program for you to be able to use the funds. And there may be rules about the type of loan you can use.

Almost all the best mortgage lenders for first-time buyers we’ve chosen are happy to work with DPAs. Indeed, a couple offer their own down payment and closing cost assistance programs.

So take a little time to find out what’s available where you want to buy. You can start here: Down payment assistance programs in every state for 2023.

More resources for first time buyers

Buying your first house can seem overwhelming. But it doesn’t have to be. You can find an awful lot of help and support to guide you through the process.

If you’re still in the ‘researching’ phase, here are a few of our favorite first-time home buyer tools and articles:

• How much house can I afford calculator
• Mortgage payment calculator
• Guide to mortgage loan types
• 2023 First time home buyer guide

Once you choose a lender, you should receive plenty of guidance from your mortgage loan officer.

And, if you choose a good buyer’s agent (a real estate agent who works on your behalf but who’s typically paid by your seller), you’ll have another fountain of knowledge.

How to get started

The first step in the homebuying process is to get a mortgage preapproval.

The pre-approval process involves filling out a mortgage application and providing financial documents — including things like your recent bank statements and tax returns.

Once the lender has verified your financial information, it can pre-approve you for a home loan. You’ll have a better idea of which mortgage product you qualify for, how much you can borrow, your down payment options, and how much your upfront costs and lender fees are likely to be.

Luckily, most lenders offer online applications these days. So you can check your eligibility relatively quickly and easily.

Recap: The 9 best mortgage lenders for first time home buyers

Here’s a recap of the best mortgage lenders for first-time buyers (in alphabetical order) and why we chose them:

• Bank of America — Home buyer grants and unique loan options
• Chase — Home buyer grants and unique loan options
• CMG Financial — Great customer service, unique loan options
• CrossCountry Mortgage — Low interest rates, unique loan options
• Movement Mortgage – Great customer service, great online experience
• New American Funding — Low interest rates, flexible loan terms
• Prosperity Home Mortgage — Low interest rates, amazing down payment assistance on FHA loans
• Supreme Lending — Unique loan programs
• Veterans United — Great for veterans, service members

Every mortgage lender offers different rates and programs. So get custom quotes from your top picks to find out which one has the best deal for you.

¹Average customer review scores sourced from LendingTree.com, Zillow.com, Bankrate.com, and J.D. Power’s most recent Primary Mortgage Origination Satisfaction Study where available for each lender

² Average interest rates and loan fees based on the most recent self-reported data all lenders are required to file under the Home Mortgage Disclosure Act (HMDA)