Best Mortgage Lenders for First Time Buyers

Last reviewed: October 2026 · By the MortgageCompass Editorial Team · How we research

The best mortgage lender for a first-time buyer in the US is one that offers every low down payment program you might qualify for, works with your state’s down payment assistance and explains each step clearly. The loan program usually matters more than the brand: FHA, conventional 3% down, VA and USDA loans have very different costs, and the right choice depends mostly on your credit score, savings and eligibility. Start by working out which program fits, then choose a lender that offers it at the lowest total cost.

MortgageCompass is not a lender and no lender pays to appear here. With the average 30-year rate at 7.40% in mid-October 2026, small differences in rate, fees and mortgage insurance add up quickly, so it is worth comparing carefully.

Which first-time buyer program fits you?

First-time buyer loan comparison: cash to close and monthly cost

See which low down payment programs you may qualify for, how much cash each needs upfront and what each would cost every month.

Home price ($) Credit score Interest rate (%) Property tax and insurance per month ($) Closing costs (% of price) Eligible for VA (service member or veteran)? Buying in a USDA rural area with income under the limit?

Estimates for a 30-year fixed loan. FHA uses a 1.75% upfront premium added to the loan and a 0.55% annual premium; VA a 2.15% funding fee for first use with no down payment; USDA a 1% upfront and 0.35% annual fee. Conventional mortgage insurance varies by lender and insurer, so the figures shown are a rough guide. Down payment assistance is not included. Not financial advice.

Illustrative example for a $350,000 home at 7.40% with $450 a month in property tax and insurance. With a credit score of 680 to 719, an FHA loan costs about $2,984 a month and needs about $22,750 in cash at closing, while a conventional 3% down loan needs slightly less cash, about $21,000, but costs about $3,055 a month because of higher mortgage insurance. With a score of 760 or more, the conventional loan becomes cheaper every month too, at about $2,928, and its mortgage insurance can be removed later. For an eligible veteran, a VA loan needs no down payment and has no monthly mortgage insurance, so only closing costs of about $10,500 are due upfront.

Learn the rules of each program in our guides to FHA loan requirements and conventional vs FHA loans.

Six things a good first-time buyer lender does

Offers all the main low down payment loans. A lender that only offers one program will steer you toward it. Look for FHA, conventional 3% down options such as HomeReady or Home Possible, and VA or USDA if they apply to you.
Works with your state’s down payment assistance. Most state housing finance agencies offer grants or second loans for first-time buyers, but only through approved lenders. Ask each lender which programs it handles.
Is clear about its own credit score minimums. FHA allows scores from 580 with 3.5% down, but many lenders set their own minimum at 620 or higher. If your score is borderline, ask before you apply.
Explains mortgage insurance properly. It should show how much you will pay each month, and whether and when it can be removed.
Gives you a full Loan Estimate quickly. Compare page 2 of each one, where origination charges, points and lender credits appear.
Answers questions and keeps you updated. First-time buyers have more questions, and missed deadlines can cost you the home. Check how the lender communicates before you commit.

To compare several offers side by side, use the tool in our guide to the best mortgage lenders in the US, which shows the total cost of each Loan Estimate over the years you expect to keep the loan.

Finding help with your down payment

Down payment assistance can cover part or all of your down payment and sometimes closing costs. It usually comes as a grant, a forgivable loan that is cancelled if you stay a set number of years, or a deferred loan repaid when you sell or refinance. Programs are run by state housing finance agencies, cities and counties, and most have income and price limits and require a homebuyer education course. A HUD-approved housing counselor can help you find local programs, often for free.

Before accepting assistance, check whether it raises your interest rate, whether the second loan has to be repaid and when. Some assistance programs come with slightly higher rates, so compare the total cost with and without it.

Questions to ask every lender

Which of these programs do you offer, and which would you recommend for me and why?
What is your minimum credit score for each one?
Do you work with my state’s down payment assistance programs?
How much will mortgage insurance cost each month, and can it be removed?
How long can you lock my rate, and what does a longer lock cost?
How much cash will I need at closing in total?

Frequently asked questions

Who counts as a first-time homebuyer?

Many programs define a first-time buyer as someone who has not owned a home in the past three years, so you may qualify even if you owned a home before. Rules vary by program, so check each one.

What is the minimum down payment for a first home?

It can be zero with a VA or USDA loan, 3% with some conventional loans and 3.5% with an FHA loan if your credit score is at least 580. You will still need cash for closing costs unless the seller, a lender credit or an assistance program covers them.

How much house can I afford as a first-time buyer?

It depends on your income, debts and the rate. Our affordability guide compares common lending rules, and remember to leave room for repairs and an emergency fund after you move in.

Sources

This guide is for informational purposes only and is not financial advice. Program rules, fees and lender requirements change, and mortgage insurance estimates are approximate. Confirm eligibility and costs with a licensed lender or a HUD-approved housing counselor.

Best Mortgage Lenders for First-Time Buyers: How to Choose the Right Loan and Lender