Who Are the Best Mortgage Lenders for First-Time Buyers?

No single lender is best for every first-time buyer. The best one for you offers the loan program you qualify for at the lowest cost, which you find by comparing Loan Estimates, the standard form showing a loan's rate, payment, and closing costs, from at least three lenders for the same program. The programs built for small down payments are FHA loans (3.5% down with a credit score of 580 or higher), VA and USDA loans (no down payment for eligible borrowers), Fannie Mae HomeReady and Freddie Mac Home Possible loans (3% down for borrowers earning up to 80% of the area median income), Freddie Mac HomeOne loans (3% down for first-time buyers, with no income limit), and state housing finance agency loans that add down payment assistance.

Which loan programs fit first-time buyers?

These are the main rules as of October 2026. Loan-to-value (LTV) is the loan amount divided by the home's value, and private mortgage insurance (PMI) is a policy that protects the lender, not you, if you stop paying.

Conditions that change the choice:

• How long mortgage insurance lasts. On an FHA loan with less than 10% down, the annual premium runs for the life of the loan; with 10% or more down, it ends after 11 years. The 0.55% rate applies to loans of $726,200 or less with terms over 15 years and under 5% down. On HomeReady, Home Possible, and other conventional loans, the Consumer Financial Protection Bureau (CFPB) toolkit notes that paying the loan down early might let you cancel PMI and stop paying the premium.
• Earning more than 80% of the area median income. Freddie Mac's HomeOne loan also allows 3% down, with no income or geographic limits, for qualified first-time homebuyers using a fixed-rate loan on a one-unit primary home; homebuyer education is required when all borrowers are first-time buyers. Ask each lender which other 3%-down conventional options it offers.
• Co-borrowers who will not live in the home. HomeReady's 3% option requires every borrower to live in the home unless the financing includes a Community Seconds loan, a down payment assistance second loan that meets Fannie Mae's rules, and it is not available on high-balance loans, the larger amounts allowed only in high-cost areas. Home Possible allows a co-borrower who will not live in the home at up to 95% LTV (5% down), or 90% if an underwriter reviews the loan by hand.
• Rent history for FHA. If at least one borrower is a first-time buyer, meaning no ownership interest in a property in the past three years (or, after a divorce or legal separation, none except joint ownership with a spouse), the score is 620 or higher, and a borrower has paid rent of $300 or more on time for 12 months, the lender may count that rent history in FHA's automated scorecard.
• Homeownership education. HomeReady and Home Possible require a homeownership education course when every borrower who will live in the home is a first-time buyer. The CFPB toolkit notes that you might find a lender discount for completing a homebuyer education program.
• Residency. FHA's handbook lists U.S. citizens, lawful permanent residents, and citizens of the Federated States of Micronesia, the Marshall Islands, and Palau as eligible, and USDA requires proof of U.S. citizenship, non-citizen national status, or qualified alien status.

Loans with no down payment and minimum credit score requirements cover those two questions on their own.

Which lenders offer these programs?

Each program controls who can offer it, so ask each lender which of these it makes:

• FHA loans come from lenders FHA has approved. A mortgage broker can also offer them by originating loans for an FHA-approved lender that sponsors the broker; whether a mortgage broker can offer FHA, VA, or USDA loans explains how.
• VA and USDA loans are made by lenders and backed by the agency. Under USDA's rules, the lender documents your household income to confirm you are under the limit.
• HomeReady is a standard product for every lender that sells loans to Fannie Mae, and Fannie Mae requires no special approval to offer it. Home Possible is offered by lenders that sell loans to Freddie Mac.
• State housing finance agency (HFA) loans go through the lenders each agency approves. The California Housing Finance Agency (CalHFA), for example, makes its MyHome assistance available only through CalHFA-approved lenders, and a broker must place the loan with a CalHFA-approved wholesale lender, meaning one that funds loans brokers bring to it.

How do you find down payment assistance?

1. Check your state housing finance agency. Look up its homebuyer programs and the lenders it has approved. CalHFA's MyHome, for example, is a second loan with no monthly payments that charges simple interest (interest only on the amount borrowed) and can be used only with a CalHFA first mortgage. It covers up to 3.5% of the price or appraised value, whichever is less, with a CalHFA FHA loan, or up to 3% with a CalHFA conventional, USDA, or VA loan. Repayment comes due when you sell, transfer title, refinance or pay off the first mortgage, or if a notice of default is recorded against the home and not withdrawn. Every borrower must be a first-time buyer (no ownership of a principal residence, and no living in a home a spouse owned, in the past three years) and move in within 60 days, income must fall within CalHFA's limit for the county, and homebuyer education is required.
2. Ask a HUD-approved housing counselor. The CFPB toolkit says these counselors can help you find programs for first-time homebuyers, often for free or at low cost. Find one at consumerfinance.gov/find-a-housing-counselor or by calling HUD at (800) 569-4287; what a HUD-approved housing counselor does explains the service.
3. Ask each lender about assistance. Ask which assistance programs it is approved for, whether the help is a grant or a loan, what interest a loan charges and when it must be repaid, and which first mortgages it can be paired with.

How do you compare specific lenders?

1. Settle the program first. Use your credit score, income, down payment, and the home's location to narrow the list, and ask each lender for its own minimum score for each program.
2. Request every Loan Estimate the same way. Ask for the same program, loan amount, term, down payment, and rate-lock period on the same day, and if you are using assistance, include a lender the agency has approved.
3. Compare total cost, including mortgage insurance. The CFPB toolkit says loan costs can vary widely from lender to lender. Line up each offer's rate, monthly mortgage insurance, the lender's charges in Sections A and B, any lender credits in Section J, and the five-year cost comparison on page 3. With an FHA loan, also compare the balance you will owe, since a financed 1.75% upfront premium is added to the loan.
4. Line up the assistance terms. Put the assistance amount, any interest, and the repayment trigger next to each first mortgage's Loan Estimate.

How to choose the best lender for your mortgage walks through each line of the Loan Estimate with a worked example of paying points for a lower rate. If you are also weighing banks, see which banks give you the best mortgage rates.