Are you purchasing a home for the first time? Here are 5 mortgage lenders to consider (2024)

Thehome-buying processcan seem daunting for first-time homebuyers. The good news is some mortgage lenders offer home loan products designed to provide more ease with the process, which can be very appealing to many first-time future homeowners.

To help you get started, CNBC Selectrounded up a list of the best mortgage lenders first-time homebuyers should consider. We evaluated home loan lenders based on the types of loans offered, customer support, credit score requirements and minimum down payment amount, among others (see ourmethodologybelow.)

Beyond just the lowest rates, it's important to go with the lender that offers the best loan terms to suit your needs. There's a learning curve when it comes to homeownership, but we've included anFAQ sectionbelow to help you get a better understanding of some aspects of the process.

• Best for loan variety: PNC Bank
• Best for educational offerings: Bank of America
• Best for lower credit scores: Rocket Mortgage
• Best for no lender fees: Ally Bank
• Best for no PMI: CitiMortgage

PNC Bank

Who's this for? PNC Bank has a wide variety of home loan options, making it easy for first-time homebuyers to find a loan that suits their circ*mstances. This lender offers conventional loans, FHA loans, VA loans, jumbo loans and HELOCs. On top of that, PNC Bank offers USDA loans, which can be tougher to find among some lenders. PNC Bank also has some specialized loan options, like the Community Loan, which is meant for individuals with lower cash reserves and allows for a down payment as low as 3% and no PMI (private mortgage insurance).

It also offers a Medical Professional Loan for interns, residents, fellows or doctors who have completed their residency inthe last five years. Eligible borrowers for this loan can borrow up to $1 million and won't have to pay PMI, regardless of their down payment amount.

In addition to all these offerings, PNC Bank gives eligible borrowers the chance to qualify for a $5,000 grant to be used toward closing costs. Eligible borrowers must have an income at or below 80% of the median household income for the metropolitan statistical area (MSA), or their desired property must be located in a low- or moderate-income census tract as designated by the FFIEC, according to PNC's website.

Bank of America Mortgage

Who's this for? Bank of America stands out for its first-time homebuyer educational resources. Aside from home loan calculators, which are typical for mortgage lenders to provide on their websites, Bank of America has an online "Edu-Series" for first-time home buyers. There are also guides on its website that break down key terms and a list of FAQs geared toward first-time home buyers.

Bank of America also offers a variety of loan options, including a home loan for medical professionals. With this loan, doctors, dentists, residents and fellows can make down payment minimums that are tiered based on the size of the loan they're applying for. They'll put down at least 3% on mortgages up to $850,000, at least 5% on mortgages up to $1 million, at least 10% down on mortgages up to $1.5 million and at least 15% down on mortgages to $2 million. If you're a medical professional, Bank of America will also exclude your student loan debt from your total debt when you're applying for the loan. This could bring down your debt-to-income ratio for the purposes of applying for the loan and make it easier for you to qualify.

Even if you aren't a qualifying medical professional, you can still potentially take advantage of tiered down payment terms through the Affordable Loan Solution mortgage option. With this loan, eligible borrowers can make a down payment as low as 3% on loan amounts up to $726,200, and as low as 5% on mortgages up to $1,089,300 in high-cost areas. Mortgage insurance would be required if making down payments lower than 20%, but according to Bank of America's website, the mortgage insurance would come at a reduced cost compared to that of other conventional loans.

Rocket Mortgage

Who's this for? First-time homebuyers tend to be younger and may not have a long credit history, which can make it harder to qualify for a good mortgage rate. Rocket Mortgage stands here because it accepts applicants with credit scores as low as 580. The lender also has a program called the Fresh Start program that's aimed at helping potential applicants boost their credit score before applying.

Rocket Mortgage offers conventional loans, FHA loans, VA loans and jumbo loans but not USDA loans, which means this lender may not be the most appealing for potential homebuyers who want to make a purchase with a 0% down payment. Rocket Mortgage doesn't offer construction loans (if you want to build a brand new custom home) or HELOCs, but if you're a homebuyer who only plans to purchase a single-family home, a second home, or a condo that's already on the market, this shouldn't be a drawback for you.

This lender offers flexible loan repayment terms that range from 8 – 29 years in addition to standard 15-year and 30-year terms.

Ally Home

Who's this for? Ally Bank doesn't charge any application fee, origination fee, processing fee or underwriting fees. These are what's collectively known as "lender fees" and they can cost you anywhere from a few hundred to a few thousand dollars, and eat into the money you put aside for buying your home. When you're a first-time home buyer, going through the process as affordably as possible is often top-of-mind, so saving on these fees will let you keep more of your money for other things, like renovations or moving costs.

Keep in mind, though, that Ally Bank may still charge appraisal fees and recording fees and may charge for the title search and insurance. As long as you have all the necessary documents handy and submit complete and accurate information, you can get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes.

CitiMortgage®

Who's this for? CitiMortgage gives homebuyers a chance to save big-time by waiving the PMI (private mortgage insurance) requirement on loans with down payments below 20%. This can be done by applying for a mortgage through Citi's HomeRun program, which also allows for down payments as low as 3%.

PMI is typically a required monthly charge with other home loans if you make a down payment of 20% or less. But PMI can cost you tens of thousands of dollars extra over the entire life of the loan. The money you save from not paying PMI could potentially go towards saving for a second property, a home renovation, or any other financial goal you have. HomeRun mortgages also allow borrowers to lock in a fixed rate on their mortgage so they won't have to worry about their rate increasing down the line.

Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. However, your specific mortgage rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.

Be sure to submit the necessary information for more personalized rate estimates from your desired lender.

FAQs

If you need to take out a mortgage to purchase your first home, you have options. Certain mortgage lenders stand out for first-time homebuyers by considering applicants with lower credit scores, offering lower down payments and providing useful educational resources.

Keep in mind that mortgage interest rates fluctuate often and the rate you receive will vary depending on your location,credit scoreandcredit report. While lenders may post general interest rate ranges on their websites, the best way to get a more accurate estimate of your rate is to provide the necessary information to check your rate.

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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, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best mortgages, we focused on the following features:

• Fixed-rate APR:Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan's term, which means your monthly payment won't vary, making your budget easier to plan.
• 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.
• Closing timeline:The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
• 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. Though some lenders on this list do not charge these fees, we have noted any instances in which a particular lender does.
• Flexible minimum and maximum loan amounts/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 the loan 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 minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.

After reviewing the above features, we sorted our recommendations by best for loan variety, educational offerings, lower redit scores, no lender fees and no PMI.

Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee the interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

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