As a very general statement, most first-time home buyers tend to be younger individuals or couples that are just getting started in their professional careers. Of course, there are also those who may have rented for years and are wanting to get out of apartments and have a place of their own, but this category of first time home buyers is relatively small.
Those that are younger or who have student debt and that may just be starting in their professional careers need to find the best mortgage lenders for first time home buyers. These are mortgage companies with a good selection of loan options that are uniquely accessible to this group of buyers that may have challenges with a conventional type of home loan.
FHA Loans
The best mortgage lenders for first time home buyers with lower credit scores or with limited money for a down payment are those offering FHA loans. FHA stands for Federal Housing Administration, which provides protection or a guarantee to the lender should there be a default on the mortgage.
With this guarantee or mortgage insurance, the FHA loans are available to borrowers with credit scores above 580 at 3.5% down payment, which is much better than the 620-credit score and 10-20% down required by conventional loans.
Even those with credit scores of 500-580 may be eligible, but it will require a 10% down payment rather than the 3.5%.
VA Loans
If you have been in the military or are active duty, the best mortgage lenders for first time home buyers will include those approved to offer VA loans. These loans require no down payment, and there is no private mortgage insurance (PMI) or other insurance premium to pay.
Always take the time to compare what different lenders are offering in regard to mortgage rates, even on FHA and VA loans. Look carefully at costs and fees of the loan and look for lenders with a top reputation with past and current borrowers.
To learn more about why Guaranteed Rate is one of the best mortgage lenders for first time home buyers, browse our website. To access our blogs, calculators and application, visit Guaranteed Rate.
