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Best Bank Lender for First-Time Buyers: Bank of America
Consider this if you want a mortgage lender with a range of loan products and brick-and-mortar locations throughout the country.
We chose Bank of America as the best major lender option for most first-time purchasers living in the U.S. This was based on a comparison of its branch coverage, customer service and mortgage products relative to other nationwide banks.
Bank of America Mortgage Loans
|Minimum Credit Score||660|
|Minimum Down Payment||3%|
|2017 JD Power Ranking||8|
We found that Bank of America’s larger scale and standardized home loans give most people the best chance at securing a good first-time mortgage. While your personal mortgage experience will depend heavily on the quality of your individual loan officer and your own financial details, beginning your mortgage shopping at Bank of America will at least guarantee that you have a range of loan choices and convenient brick-and-mortar access. Online and nonbank mortgage lenders may have taken the lion’s share of the mortgage market, but the value of face-to-face interaction with a local loan officer is still difficult to replace.
Best Online Mortgage Lender for First-Time Buyers: Quicken Loans Rocket Mortgage
Consider this if you’re looking for a mortgage lender that offers top-notch customer service and online resources.
We found that Rocket Mortgage by Quicken Loans was the best online option for first-time mortgage applicants. Quicken’s digital platform combines convenient features with the freedom to complete loan applications at your own pace. This approach has earned Quicken the highest J.D. Power ranking for customer satisfaction among mortgage lenders for several years in a row. Rocket Mortgage is available to applicants living anywhere in the U.S.
Rocket Mortgage Loans
|Minimum Credit Score||580|
|Minimum Down Payment||3.5%|
|2017 JD Power Ranking||1|
Accessibility is the main advantage with Rocket Mortgage. While you are required to create an account with the program’s website, the features you unlock afterward make it much easier to upload documents and enter personal details compared to doing the traditional paperwork required at a brick-and-mortar bank. If you’re a first-time buyer with questions about the process itself, you can also call Rocket Mortgage to receive direct support from a mortgage professional.
But as with any mortgage lender, getting a quote with Rocket Mortgage will result in a hard pull on your credit. In the case of Rocket Mortgage, Quicken claims that the quote process won’t lower your credit score by more than five points. Nevertheless, this means that you should only apply with Rocket Mortgage if you’re also prepared to submit the rest of your home loan applications within 45 days. This way, all of your mortgage shopping will count as a single inquiry where your credit score is concerned.
Best for First-Time Borrowers with Low Credit: SoFi
Consider this if you need a home loan lender that offers competitive rates for low credit borrowers.
SoFi is a great choice if your credit history is relatively short or if your current score is low. This newer mortgage lender employs alternative credit scoring methods to provide home financing for young borrowers who may be overlooked by lenders who use traditional underwriting standards.
SoFi Mortgage Loans
|Minimum Credit Score||Varies|
|Minimum Down Payment||10%|
At SoFi, first-time homebuyers can expect an easier approval process even if they have a limited credit history or a high debt-to-income ratio. This is ideal for recent graduates, who may be carrying large amounts of student debt that reflects poorly in a traditional mortgage application. SoFi also reduces the initial cost of getting a mortgage. Down payments start at 10%, which is lower than the traditional 20% required by other lenders in similar loan scenarios. Furthermore, SoFi charges no origination fee or mortgage insurance for any loan.
Best FHA Lender for First-Time Buyers: loanDepot
Consider this if you want an FHA loan from a mortgage lender with good service and a wide selection of refinancing options.
LoanDepot stood out as the fastest-growing Federal Housing Administration (FHA) lender in 2017, making it one of the best places to start if you’re considering an FHA loan to finance your first home purchase.
loanDepot FHA Loans
|Minimum Credit Score||580|
|Minimum Down Payment||3.5%|
Many mortgage lenders participate in the FHA loan program, but loanDepot combines good service with multiple incentives for first-time FHA applicants to choose it for the long run. Not only does loanDepot offer a wide selection of other mortgage types for FHA borrowers to refinance into, it also offers to reimburse or waive many of the upfront costs involved in refinancing. This works particularly well for FHA borrowers, who will eventually want to refinance their way out of paying the FHA mortgage insurance premium (MIP).
As a nationally available online lender, loanDepot represents one of the newer nonbank mortgage companies that have rapidly filled the space left by traditional banks in mortgage lending. For the typical first-time homebuyer, this means the company is highly focused on tailoring its development to the needs of new borrowers. As a result, loanDepot ranks well in satisfaction surveys and constantly streamlines its online origination process.