How We Determine the Best Mortgage Lenders for First-Time Homebuyers
When you’re a first-time homebuyer, there’s a lot at stake. It’s likely to be far and away the largest purchase you’ll make in your lifetime. With thousands of dollars on the line for something as important as your first home, it’s no wonder borrowers want to find the best lender possible. SmartAsset kept all the needs new homebuyers have when researching and creating this list.
We considered firms that had the most loan and down payment options to find you the flexibility often required when paying for a first home. We looked at customer service complaints, customer service availability, first-time homebuyer guides, rates, fees, online user-friendliness and more. Our list gives you the best in each category whether you’re looking for an online lender or using VA benefits for your first mortgage.
SmartAsset reviewed top mortgage lenders in areas such as down payment programs, loan availability, first-time homebuyer education, customer satisfaction, prequalification and preapproval process, online bill pay, fees and rates and customer service. These rankings are the result of our research.
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Best Overall Mortgage Lender for First-Time Homebuyers: Quicken Loans
Quicken Loans, a lender that topped multiple categories on our best lenders of 2019 list, nabbed the top spot in our ranking for best first-time homebuyer lender after getting top marks in multiple categories. Offering 24/7 customer service with live phone calls accepted 12 hours a day and a live chat feature for all other hours, Quicken has more communication options than many other lenders.
The online lender offers all three major government loan programs: USDA, VA and FHA loans. These programs are ideal for certain first-time homebuyers as you can have low or no down payment, lower than average credit scores and favorable loan terms. The company also offers the YOURgage, which allows you to choose your loan term. While most first home purchases will be 30-year fixed-rate mortgages (the most common loan), you’ll have the option to choose your term length with Quicken’s YOURgage.
Quicken also offers first-time homebuyer education with its blog platform Zing. On this section of the site, you can read a detailed set of articles about how to buy your first home, with topics taking you from calculating your budget to closing on the home. In addition to easily accessible customer service and educational products, Quicken offers a fully online experience. That means if you live somewhere remote, don’t wish to apply in person or just prefer working online, Quicken’s Rocket Mortgage brand takes you from application to closing all online. You can upload and sign documents and communicate with your loan representative all from the comfort of your home computer.
While Quicken doesn’t offer retail banking like many of the large, bank lenders available (such as our number two pick, Chase Bank), the lender does mortgages well, as evidenced by the low number of consumer complaints. That means as a first-time homebuyer, you can rest assured Quicken takes customer service and satisfaction seriously, which is ideal when working with your first lender.
Positives aside, Quicken does have a few downsides to be aware of, including rates that aren’t always the most competitive. If you’re looking for bottom of the barrel rates, you’ll have to shop around and compare lenders, as Quicken’s generally fluctuate from average to more than average. The lender also has an average $1,150 origination fee. While most bank lenders charge this type of fee, many of the newer startup lenders have either minimized it, as Lenda has, or eliminated it entirely, like SoFi has. And, if you’re hoping to speak to someone face-to-face about your loan, that’s just not how Quicken operates. If that’s essential to your first home buying experience, our runner-up is your best bet.
Runner up for Best Overall Mortgage Lender for First-Time Homebuyers: Chase Bank
If you’re looking for an alternative to SmartAsset’s No. 1 pick, Quicken Loans, Chase Bank is a great option. Our runner up offers in-person lending and banking, high marks for customer service and a wide array of loan products. In addition to offering FHA and VA loans (along with conventional and jumbo loans), Chase has the DreaMaker® mortgage, a home purchase program for those with limited incomes.
You’ll also find that Chase’s site is easy to navigate. There’s a landing page for first-time homebuyers that includes videos, short articles and explanations and an easily navigable user design. In addition to learning about the home buying process and finding out how much house you can afford with tools and resources, Chase offers online prequalification. Unlike other lenders, you’ll input all the required data for the application rather than filling out a contact form in order for a representative to call you. That means you can find the answer to whether you qualify or not entirely online if you wish.
Current Chase customers might also enjoy keeping all financial services in one spot. The company has an app where you can monitor your savings and checkings accounts and home loans. That means you can keep everything under one roof if you wish.
Third place: SunTrust
Best VA Mortgage Lender for First-Time Homebuyers: Veterans United
Veterans United takes the top slot for best VA loan lender because the company is 100% designed for VA borrowers. The landing pages, home guides, website content and even the name is all aimed at VA mortgage applicants. You can find all the information you need about the VA loan process from applying for your certificate of eligibility, to getting a VA appraiser to assess your home. The company is also the top VA loan lender. In 2017, Veterans United originated the most VA purchase loans in the U.S. Veterans United also has a strong reputation for customer service and is available across the U.S. The company originates loans in all 50 states and has offices in 17 states.
While this lender is great for first-time VA homebuyers, those who are more familiar with the loan process or who want to rate shop may not be satisfied. Veterans United doesn’t publish current rates and doesn’t offer online prequalification or preapproval. If you’re more of a do-it-yourself type who wants to prequalify online and rate shop, you may want to try a large, online lender such as Quicken Loans for your next VA loan. That said, for those who want to understand the process and speak to an actual human being for most of the process, Veterans United makes sense for you. However, if you’d rather keep all your financial services in one spot, you might find that our runner-up, USAA Bank, or Navy Federal, both large banking operations that offer VA loans, may be a better fit for your needs.
Runner up: USAA Bank
Best Mortgage Lender for High Income First-Time Homebuyers: SoFi
SoFi is an ideal choice for borrowers seeking conventional and jumbo mortgages that have solid incomes. The lender is an online company based in San Francisco, California that started with student loan refinancing. Now working in the mortgage space, SoFi aims to shake things up by offering a 50% discount on origination fees that's exclusive to SoFi members.
Another reason SoFi’s unique is its loan qualification standards. Many lenders want a solid, lengthy employment history. SoFi will consider you for a mortgage as long as your current debt-to-income ratio (DTI) makes sense for the mortgage you’re pursuing. In other words, the maximum DTI for conventional loans is 50%, whereas a 43% maximum applies to jumbo loans.
The company also offers jumbo and conventional loans for as little as 10% down, though conventional loans require at least a 20% down payment to avoid private mortgage insurance (PMI). That means if you’re buying in a place where homes exceed conventional limits (generally $484,350), you won’t need to have the requisite 20% that most jumbo loans call for.
SoFi is tailored toward a millennial audience, meaning the website is clean, minimalist and user-friendly. You can prequalify on your mobile device or your desktop and receive your rates in two minutes. Rates and terms are also easily accessible, giving this lender high marks for transparency.
The drawback is that SoFi doesn’t operate in all 50 states and doesn’t offer any mortgage products beyond conventional and jumbo loans. That means if you’re curious about government-backed options, such as USDA, VA and FHA loans, you’ll have to find another lender.