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.
Definition of a first-time home buyer
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.
Other benefits of being a first-time buyer
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 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.
Our Top 3 Lenders for First-Time Home Buyers
- 100% online application (in most cases)
- Quick pre-approval and closing times
- Flexible repayment terms (8-29 years)
- 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.
- Offers Fannie Mae 3% down conventional loans
- Loan experts are on hand to assist at any time
- Full suite of non-conventional loans
- 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 400,000 homes to the tune of $105 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.
- Waives most closing costs
- Transparent, competitive rates
- Offers realtor services too
- Realty only offered in some zip codes
- Adjustable rates not advertised
Closing costs can cost you 2-6% of the price of your home, or even more if you choose to pay them off as part of your monthly payments. Fortunately, CapCenter will waive virtually all your closing costs – provided you take out a loan of $100,000 or more and live in Virginia, North Carolina, South Carolina, Maryland, or the District of Columbia. With the promise of several thousands of dollars’ worth of savings, CapCenter could potentially get your next mortgage or refinance off to a winning start.