Thehomebuying processis daunting, especially for first-time buyers. The good news is that many mortgage lenders offer home loan products that can make it easier.
While rates and terms are important, new homebuyers often need providers with additional benefits, including outstanding customer service, flexible down payment options and generous homebuyer grants.
CNBC Selecthas rounded up the best mortgage lenders for first-time homebuyers in a variety of categories. (See our methodology for information on how we made our selections).
Best mortgage lenders for first-time homebuyers
- Best for flexible loan terms: PNC Bank
- Best for customer service: Bank of America
- Best for low down payments: Rocket Mortgage
- Best for low minimum credit score: Guild Mortgage
- Best for no lender fees: Ally Bank
- Best for homebuyer grants: Flagstar Bank
- Best for on-time closing: Chase Bank
- Best for veterans and military members: Veterans United
Best for flexible loan terms: PNC Bank
PNC Bank
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional, FHA, VA, USDA, physician loan, HomeReady and Home Possible, refinancing, HELOC
Terms
Fixed: 10 – 30 years, ARM: 7/6 and 10/6
Credit needed
620 for conventional, 640 for USDA, 620 for FHA, 680 for jumbo,
Minimum down payment
3% for conventional, 3.5% for FHA, 0% for USDA or VA, 15% for jumbo loan
Terms apply.
Read ourPNC Bank mortgage review
Pros
- Lower-than-average rates
- Issues loans in all 50 states and Washington, DC
- Offers USDA loans
- PNC Community Loan requires only 3% down and no PMI
- $7,500 grant for down payment or closing cost
Cons
- No home renovation or home equity loans
- High credit score requirement for FHA mortgage
- Rated below average for customer satisfaction by J.D. Power
Who's this for? PNC Bank's conventional fixed-rate mortgages can have terms as short as 10 years or as long as 30. There's no minimum loan amount and PNC approves jumbo mortgages for up to $5 million, higher than many competitors.
Standout benefits: PNC Bank offers a closing cost grant of up to $7,500 to first-time homebuyers. The Eligible borrowers can qualify for a PNC Community Loan with a down payment of 3% and no private mortgage insurance.
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Best for customer service: Bank of America
Bank of America Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, jumbo loans, doctor loans and the Affordable Loan Solution mortgage
Terms
15 – 30 years
Credit needed
Not disclosed
Minimum down payment
0% if moving forward with a VA loan; 3% if moving forward with the Affordable Loan Solution mortgage
See our methodology, terms apply.
Pros
- Offers a wide variety of loans to suit an array of customer needs
- Offers an Edu-Series for educating first-time homebuyers as well as other learning resources and materials
- Online and in-person service available
- Fixed-rate and adjustable-rate mortgages offered
- Reduced cost of mortgage insurance
Cons
- Doesn't offer USDA loans
Who's this for? Need help navigating the home loan process? J.D. Power ranked Bank of America highly for both mortgage origination and servicing and it received an A- from the Better Business Bureau.
Standout benefits: BoA's Down Payment Grant provides up to 3% of ahome'spurchase price in select markets, while the America's Home Grantoffers up to $7,500 toward closing costs.
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Best for low down payments: Rocket Mortgage
Rocket Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional, FHA, VA, jumbo, HomeReady, Home Possible
Terms
10-, 15- and 30-year fixed-term conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years.
Credit needed
620
Minimum down payment
0% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo
Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards
Read our review of Rocket Mortgage
Pros
- Largest home lender in the U.S.
- Offers 1% down mortgage
- High scores for customer satisfaction
- Shorter-than-average closing time
- Rebate of up to $10,000 for buying with Rocket Homes
Cons
- No USDA mortgages, construction loans or HELOCs
- Hard credit check required for customized rate
- Higher origination fees than the competition
- No physical branches
Who's this for? You can put 1% down for Rocket Mortgage's RocketONE+ loan with no private mortgage insurance, making this digital-only lender a no-brainer if you have less saved up for your down payment.
Standout benefits: If you buy your house through the Rocket Homes network, you could get a 1.25% rebate for closing costs, up to $10,000.Using the Rocket Visa Signature Card earns points toward a down payment on a future mortgage.
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Best for low minimum credit score: Guild Mortgage
Guild Mortgage
Annual Percentage Rate (APR)
Apply online for rates.
Types of loans
Conventional, FHA, VA, USDA, Arrive Home, Zero Down, jumbo, construction, refinancing, reverse mortgages
Terms
15 to 30 years
Credit needed
540 for FHA, VA and USDA loans; 600 for Zero Down; 620 for conventional loans, 680 for jumbo loans. Non-traditional credit option available
Minimum down payment
0% for USDA, Arrive Home™ or Zero Down; 1% for conventional loans, 3.5% for FHA loans
Pros
- Down payments as low as 0% on conventional loans
- FHA loan approval with 540 credit score
- Over 200 physical branches in 32 states
- E-closings available
Cons
- Rates not available online
- No HELOC or home equity loans
- Does not issue mortgages in New York
- Low customer satisfaction score from JD Power
Who's this for? Guild Mortgage has more flexible credit requirements than many competitors, especially on FHA loans and other government-backed mortgages. It also considers non-traditional credit information, like on-time payments for rent, utilities and insurance.
Standout benefits: Guild's Payment Advantage mortgage pays 1% of your interest rate for the first year. If rates go down, you may be eligible to refinance with no lender fees. Guild also has a 17-day closing guarantee, with qualified buyers receiving a $500 closing-cost credit if they don't close on time.
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Best for no lender fees: Ally Bank
Ally Home
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional, jumbo, HomeReady
Terms
15 – 30 years
Credit needed
620
Minimum down payment
5% for conventional loan, 3% for HomeReady loan
Terms apply.
Read our Ally Bank mortgage review
Pros
- No lender fees
- Preapproval in as little as three minutes
- Available in all 50 states
- HomeReady loan only requires a 3% down payment
Cons
- No FHA, USDA or VA loans
- No home equity lines of credit (HELOC)
- No physical branches
Who's this for? Ally Bank doesn't charge lender fees, which can equal up to 2% of your overall loan cost. That lets you put more of your money toward things like moving costs, new furniture and renovations.
Standout benefits: Ally's online preapproval process can take as little as three minutes. Along with conventional mortgages, it offers Fannie Mae HomeReady loans, which only require 3% down and a debt-to-income ratio of 50% or lower.
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Best for homebuyer grants: Flagstar Bank
Flagstar® Bank Loans
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional, fixed-rate, adjustable-rate, FHA loans, VA loans, USDA loans, Jumbo loans, HELOC, refinancing loans, renovation loans, HomeReady, Home Possible, ReFi Now, Refi Possible, Community Reinvestment Act loans
Terms
8 – 30 years
Credit needed
620 for conventional, 600 for Destination Home Mortgage, 580 for FHA loans
Minimum down payment
3% for conventional loans, 0% with Destination Home Mortgage
Terms apply. Flagstar® Bank is a Member FDIC.
Pros
- With the Flagstar Gift Program, eligible first-time homebuyers can get up to $15,000 to put towards a down payment and closing costs.
- With the Power Up program, first-time homebuyers who live in certain areas can receive a $10,000 grant
- Destination Home Mortgage allows eligible homebuyers to put 0% down.
- Wide variety of loans
Cons
- Only available inMichigan, Indiana, California, Wisconsin, New York, New Jersey, Florida, Arizona and Ohio.
Who's this for? Flagstar Bank's Gift Program allows first-time homebuyers in designated areas to receive grants and gifts covering as much as 3% of their purchase price, up to $10,000.
Standout benefits: Through the Flagstar Power-Up program, first-time buyers in select census tracts can receive up to $8,000.
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Best for on-time closing: Chase Bank
Chase Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, jumbo loans and proprietary low-down-payment DreaMaker℠ and Standard Agency mortgages.
Terms
10 – 30 years
Credit needed
620
Minimum down payment
3% for DreaMaker℠ or Standard Agency loan
Terms apply.
Read our Chase mortgage review
Pros
- Chase DreaMaker℠ loan only requires 3% down payment
- Existing customers eligible for rate reduction
- Above-average customer satisfactionscores
- Closing timeline guarantee
- Homebuyer grants of up to $7,500
Cons
- No USDA loans or HELOCs
- No closing guarantee for refinancing
- Chase homebuyer grant only available in select areas.
Who's this for? Chase guarantees eligible mortgages will close on time or borrowers get a $5,000 cash payment.
Standout benefits: The Standard Agency mortgage allows first-time buyers to put down as little as 3%. Current banking customers may qualify for a discount on their mortgage rate.
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Best for veterans and military members: Veterans United
Veterans United Home Loans
Annual Percentage Rate (APR)
Apply online for rates.
Types of loans
Conventional, jumbo, refinance, FHA, USDA, refinance
Terms
10-, 15-, 20-, 25- and 30-year fixed-rate
Credit needed
620
Minimum down payment
0% for VA loan, 3% for conventional, 3.5% for FHA
Pros
- Available in all 50 states
- Specializes in home loans for veterans
- Largest VA loan lender
- 24/7 customer service line
Cons
- Locations in only 16 states
- No HELOC or home equity loan options
Who's this for? The largest issuer of VA loans in the U.S., Veterans United specializes in lending to active-duty service members, veterans and eligible reservists and surviving spouses.
Standout benefits: Veterans United customer service team is available 24/7, making it easier for troops stationed overseas to access. Free credit counseling is also available to help get you approved for the best rate.
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More on our best mortgages for first-time homebuyers
PNC Bank
PNC Bank has over 2,300 branches in 28 states and is one of the largest mortgage lenders in the U.S. Existing customers with at least $500,000 in deposits or investments may be eligible for a rate discount. PNC's online Home Insight Planner lets you set your budget, search for homes and estimate your monthly mortgage payments.
Nationwide availability
Available in all U.S. states and the District of Columbia
Types of mortgages:
Conventional, FHA, USDA, VA, jumbo, PNC Community, medical professional, construction, renovation, refinancing, HELOCs
Minimum credit score
620 for conventional loan, 580 for FHA
Minimum down payment
0% for USDA and VA, 3% for PNC Community Loan
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Bank of America
Charlotte, North Carolina-based Bank of America is one of the largest banks in the country, with more than 4,600 branches and mortgage loan officers in more than 40 states. Existing BoA customers with at least $20,000 in deposits may qualify for a discount on their origination fee.
Nationwide availability
Available in all U.S. states and the District of Columbia
Types of mortgages
Conventional, FHA, USDA, VA, Affordable Loan Solution, jumbo, physician loan, refinancing, HELOCs
Minimum credit score
580 for FHA
Minimum down payment
0% for USDA or VA, 3% for Affordable Loan Solution
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Rocket Mortgage
One of the largest home loan providers in the U.S., Rocket Mortgage regularly tops J.D. Power's mortgage origination and servicing studies and earned an A+ rating from the Better Business Bureau. While there are no physical branches, it has an easy-to-use website and mobile app, where you can check current rates, apply for a mortgage and chat with customer service reps.
Nationwide availability
Available in all U.S. states and the District of Columbia
Types of mortgage loans offered
Conventional, FHA, VA, jumbo, RocketONE+, HomeReady, HomePossible, refinancing, home equity loans
Minimum credit score
620 for conventional, 580 for FHA
Minimum down payment
0% for VA loans, 1% for RocketONE+, 3.5% for FHA
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Guild Mortgage
Started in 1960, San Diego-based Guild Mortgagehas more than 200 branches in 32 states. It ranked highly as a mortgage servicer on J.D. Power's 2024 survey and earned an A+ from the Better Business Bureau.
Nationwide availability
Available in all U.S. states except New York
Types of mortgages
Conventional, FHA, USDA, VA, jumbo, construction, refinancing
Minimum credit score
Not disclosed
Minimum down payment
0% for USDA, VA, Arrive Home™ or Zero Down, 1% for conventional loan
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Ally Bank
A leading online lender, Ally Bank is known for its speedy preapproval process, shorter closing times and lack of lender fees, though it does not offer government-backed USDA, FHA or VA mortgages. Existing Ally Bank customers may qualify for a discount or cash-back offer on a home loan.
Nationwide availability
Available in all U.S. states and the District of Columbia
Types of mortgages
Conventional, jumbo, HomeReady, refinancing
Minimum credit score
620 for conventional
Down payment minimum
3% for HomeReady
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Flagstar Bank
Servicing 1.4 million home loans in 2023, Flagstaris among the largest mortgage providers in the U.S. by volume and 390 physical branches across 10 states. Flagstar received an A- from the Better Business Bureau but was given a below-average score on J.D. Power's 2024 mortgage servicer satisfaction survey.
Nationwide availability
All U.S. states except Texas
Types of mortgages
Conventional, USDA, VA, FHA, jumbo, refinancing, home equity loans, HELOCs
Minimum credit score
Not disclosed
Minimum down payment
0% for for VA and USDA , 3% for conventional, 3.5% for FHA
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Chase Bank
A division of JPMorgan Chase, one of the nation's oldest financial institutions, Chase has over 4,700 branches nationwide and dedicated home loan advisors in 37 states. It regularly ranks highly on J.D. Power's mortgage origination and servicer satisfaction surveys.
Nationwide availability
All U.S. states and the District of Columbia
Types of mortgages
Conventional, FHA, VA, jumbo, DreaMaker℠, Standard Agency, refinancing
Minimum credit score
620 for conventional, 580 for FHA
Minimum down payment
0% for VA, 3% for DreaMaker℠or Standard Agency; 3.5% for FHA
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Veterans United
Columbia,Missouri-based Veterans United focuses on VA loans, though it does offer other government-backed and conventional mortgages to current and former service members. It received the highest scores in J.D. Power's 2023 U.S. Mortgage Origination Satisfaction Study, as well as an A+ from the Better Business Bureau.
Nationwide availability
All U.S. states and the District of Columbia
Types of mortgages offered
Conventional, FHA, VA, USDA, jumbo, refinancing
Minimum credit score
620
Minimum down payment
0% for USDA or VA, 3.5% for FHA
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What is a mortgage and how does it work?
A mortgage is a loan used to purchase a home. In most cases, borrowers need to make a down payment upfront —usually between 3% and 20% of the home price — with the remainder of the total cost broken into smaller monthly payments over a set number of years, with interest and other charges added in.
Lenders set interest rates for their home loans, which can change almost daily depending on market forces. Your specific rate, however, will depend on your credit score, income, location and other factors.
The higher your credit score, the more likely you are to be approved for a lower mortgage interest rate.
How much do I need for a down payment?
Many people believe you need a down payment of 20% to be approved for a mortgage. But the average down payment in the first quarter of 2024 was just 13.6%, according to Realtor.com, and for first-time homebuyers, it was only 8%. (Repeat homebuyers, who can use proceeds from the sale of their old home, averaged 19%.)
Because they're backed by the federal government, VA loans and USDA loans don't require any down payment. Depending on your credit score, you can get approved for an FHA loan with as little as 3% down.
Most private lenders have community lending mortgages aimed at low- and middle-income buyers that have flexible down payment requirements. Chase's DreaMaker loan requires just 3% down, for example, and Rocket Mortgage will accept as little as 1% with its RocketONE+ loan.
Some lenders have special mortgages for physicians or other professionals: Truist, for example, offers zero-down mortgages of up to $1 million to residents, interns and fellows.
Ultimately, how much of a down payment you need to make depends on a variety of factors:
- How much you can afford: The lower your down payment, the greater your risk of owing more than your home is worth, a situation known as an upside-down mortgage.
- How much you want to pay each month: Putting less than 20% down typically means having to get private mortgage insurance, which can equal as much as 2% of your overall loan per year.
- How much of your home you want to own outright: Home equity, the value of your home minus the debt you still owe on it, is a key consideration in your wealth and net worth.
First-time homebuyer grants and programs
The state and federal government agencies, private lenders and non-profits all sponsor programs that help first-time buyers and others achieve homeownership.
Read more: How to qualify for down payment assistance
Many are in the form of grants to put toward closing costs or down payments and come with income or location requirements.
- Bank of America's Down Payment Grant provides 3% of a house's purchase price, up to $10,000, in select markets.
- Chase Bank's Homebuyer Grant provides eligible borrowers with up to $7,500 to lower their interest rate, put towards closing costs or bolster their down payment.
- PNC Bank has a $5,000 grant for low-income borrowers that can be put toward closing costs, a down payment or other prepaid costs.
- Wells Fargo's Homebuyer Access grant provides up to $10,000 towards a down payment for buyers who make no more than 120% of the average median income.
FAQs
Who is considered a first-time homebuyer?
In most cases, anyone who hasn't bought or owned a principal residence in the last three years is considered a first-time homebuyer.
Do I need to put down 20% on my home?
Most first-time and repeat homebuyers put less than 20% down — in fact, the average down payment in the first quarter of 2024 was just 13.6% Having less than 20% will typically mean you have to pay private mortgage insurance.
What's the average down payment for a first-time homebuyer?
The average down payment for a first-time homebuyer is 8%, according to Realtor.com. Because repeat buyers can use the proceeds from their home sale, their down payments average 19%.
Is there a tax credit for first-time homebuyers?
A tax credit for first-time homebuyers was instituted in 2008 but it expired in 2010 and has not been revived.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products.While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. Seeour methodologyfor more information on how we choose the best mortgages.
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Our methodology
To determine which mortgage lenders are the best for first-time homebuyers,CNBC Selectanalyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks and credit unions.
When narrowing down the best mortgages, we focused on the following features:
- Fixed-rate APR:Variable rates can fluctuate over the life of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the term.
- Types of loans offered:The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
- Fees:Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender.
- Flexible minimum and maximum loan amounts and terms:Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
- No early payoff penalties:The mortgage lenders on our list do not charge borrowers for paying off their loans early.
- Streamlined application process:We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
- Customer support:Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Minimum down payment:Although down payment amounts depend on the type of loan, we noted lenders that offer specialty loans with lower minimums that first-time buyers can take advantage of.
After reviewing the above features, we sorted our recommendations by the best for flexible terms, customer service, low down payments low minimum credit scores, no lender fees, homebuyer grants, for applying in person and for veterans and service members:
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
Listed mortgage rates and fee structures may fluctuate in accordance with the Federal fund rate.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.