Being a first-time home buyer is about more than just becoming a home owner for the first time. Qualified first-time buyers may be eligible for conventional low down payment loans such as the Fannie Mae HomeReady and Freddie Mac Home Possible loan programs, government-backed low down payment loans such as the FHA loan, and zero down payment loans such as the VA loan for veterans and service people.
Here’s our list of the top 3 mortgage lenders for first-time buyers in 2021, along with useful tips to make the most out of your first-time buying experience.
In order to help lenders identify and assist first-time buyers, the Department of Housing and Urban Development has created guidelines to what constitutes a first-time homebuyer. Under these guidelines, a first-time homebuyer is an individual who meets any of the following criteria:
- An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers).
- A single parent who has only owned with a former spouse while married.
- A single parent who previously co-owned a home while they were married.
- An individual who is a displaced homemaker and has only owned with a spouse.
- An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
- An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
For many first-time homebuyers, the primary barrier to buying a home is not having the money for a down payment. Low down payment loans are one solution, because they allow first time buyers to get into a home with just a 3% down payment, instead of the usual 20%. In this section, we outline some of the other forms of assistance.
Down payment assistance. Depending where you live, down payment assistance may be available from state or local government agencies, private entities, or nonprofits. One form of assistance available to first-time borrowers across the country (except New York) is the Chenoa Fund. This program is administered by CBC Mortgage Agency, a federally chartered government agency. Provided you meet certain eligibility requirements, the Chenoa Fund may offer up to 3.5% down payment assistance.
HomePath homes. HomePath homes are foreclosed home offered for sale by Fannie Mae, one of the two government-sponsored enterprises that guarantee qualified mortgage loans via the secondary market. Benefits of a HomePath mortgage include low down payment, quick financing, and below average sale prices.
HUD home buying programs. In certain circumstances, first-time buyers may be eligible for assistance programs run by the Department of Housing and Urban Development. For example, the Good Neighbor Next Door program offers people in certain professions (law enforcement, teachers, firefighters, emergency medical personnel) discounts of up to 50% on homes in “revitalization areas”. To qualify, you must commit to living in the home for at least three years.
Buying your first home can be an exciting but daunting experience. If you don’t quite have the funds for a 20% down payment, then the alternatives range from low down payment mortgages to various forms of assistance. As always, make sure to shop around between multiple lenders before making a final decision.
Pros
- Offers Fannie Mae 3% down conventional loans
- Loan experts are on hand to assist at any time
- Full suite of non-conventional loans
Cons
- Rates not advertised publicly
- No weekend phone hours
- Not licensed in NY
AmeriSave Mortgage Corporation is a direct mortgage lender operating in 49 states and DC. Since 2002, it has financed more than $220,000 homes to the tune of $52 billion in funding. It is known for its competitive rates and streamlined application, with approvals in as quickly as 25 days. It offers a wide range of loans, making it a good choice for anyone looking to purchase a home or refinance their mortgage.
Pros
- Pre-approval letter in as little as 3 minutes
- Rate lock in as little as 30 minutes
- 3-6 weeks to close – faster than industry average
Cons
- No FHA or VA loans
- Not available in HI, MA, MN, NV, NH, VT (as of March 2021)
Better.com is a direct lender with a simple online application that can be completed any time, any day of the week. Better.com aims to revolutionize the way Americans get a mortgage – after completing an application, you can access personalized rates, talk to a dedicated non-commissioned Mortgage Expert, generate custom loan estimates, and search for mortgage discounts in your area
Better has automated much of the mortgage process. This drastically reduces the cost to originate and allows Better to pass as much of those savings as possible onto the customer and invest in customer satisfaction. Better.com was recently named Best Mortgage Lender for Customer Service by Nerdwallet.
Last but not least, rates at Better.com are backed by the Better Price Guarantee, which promises that Better won’t just match a competing price, but beat it by $1,000.
Pros
- 100% online application (in most cases)
- Quick pre-approval and closing times
- Flexible repayment terms (8-29 years)
Cons
- No branches
- Lack of support for self-employed borrowers
- Your data may be shared across Quicken partners
If you’re looking for an easy and comfortable loan, QuickLoans can help. Not only do QuickenLoans help ensure you get a mortgage that’s right for you to save time, but the platform ensures you are aware of your loans status 24/7 so you can keep track of what is required of you and what has already been done to avoid repeating steps that have already been completed, saving you time and confusion.