About These Rates: The lenders whose rates are displayed on this page are advertising partners of BestMoney.com. This information may be different from what you see when you visit one of these lenders' sites. The terms advertised here are not offers and do not bind our lending partners. Some of the rates shown here are retrieved via the Mortech rate engine and are subject to change. These rates do not include taxes, fees, and insurance. Your actual rate and loan terms will be determined by the lender assessment of your creditworthiness as well as various other factors.

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New Home Buyer Opportunities

First-time home buyers may qualify for benefits such as low down payments or assistance with closing costs. These first home buyers programs are often regional. Lenders themselves might offer other first time buyer incentives like special programs, rates, or loans. Research our top lenders to see how their first-time buyer programs compare.

What is the Difference Between Financial Assitance Options for First Time Home Buyers and First Time Home Buyer Programs?

One opportunity for a first home buyer is receiving a predefined amount of money that is given by the government or specific organization for the specific purpose of assistance in buying a first home. This is usually available based on region.

A first home buyer program is an incentive offered by the mortgage lender which outlines special rates, terms, or benefits that are offered exclusively to first-time home buyers. These programs are highly unique to each lender.

What is a Mortgage Loan?

A mortgage is a type of loan that is used to finance the purchase of a property. This might be a single-family home, a condo unit, a multi-family dwelling or an investment property. Mortgages are also used on the commercial side to purchase industrial buildings, office space or other types of commercial property.

A mortgage is a loan that is secured by property that is being purchased. In the event the borrower can’t repay the mortgage, the lender can use the underlying property to try and recoup the remaining balance on the mortgage. 

Buying a home is generally the largest purchase that most people make. Understanding mortgage loans is critical. Getting the right mortgage for your situation can significantly impact your overall financial situation and can help you make the home of your dreams an affordable reality.

What Should a First-Time Home Buyer Look Out For?

A first-time home buyer is often at a disadvantage to more experienced buyers. You might have fewer funds available, student debt, or other financial issues that have held you back from buying your first home until now.

The good news is that first-time home buyers have some unique advantages, as mentioned above. For example, you might qualify for lower interest rates or a smaller down payment on your mortgage.

Mortgage interest rates have been dropping steadily for years and right now they’re lower than ever before. You can lock in an interest rate as low as 2.320% for a standard 30-year fixed-rate mortgage if you have good credit.

Even if your credit is less than stellar, first-time home buyers can find rates as low as 2.810%. You might also qualify for a special first-time home buyer mortgage which can lower your interest rate and down payment even further.

First-Time Home Buyer FAQs

How do I apply for a mortgage as a first-time home buyer? 

For your first mortgage, look for a lender that gives you personal attention, guides you through the process, and provides access to programs, such as state down payment assistance. Once you find a lender, you can apply for your first mortgage the same as any other borrower. Just be sure to tell your lender you may qualify for first-time home buyer programs. 

Can you consolidate debt into a first-time mortgage? 

You generally cannot take out a home mortgage for more than the purchase price of the home, even if you get a good deal on the house. Therefore, you cannot use a purchase mortgage to consolidate other debts. However, after you have owned the home for a minimum period of time and the value goes up, you may be able to refinance and use your equity to consolidate debts. 

How much deposit do I need for a first-time mortgage? 

Some programs, such as FHA loans, let you purchase a home with as little as 3.5% down. If your state has first-time home buyer programs, you may even be able to buy a home with zero down. You still need cash on hand to pay for expenses such as an appraisal and closing costs. In addition, the more money you put down on a home, the less you’ll pay in PMI and interest expense.

How much mortgage can I qualify for as a first-time buyer? 

If you’ve built a good credit history and your finances are in good shape, being a first-time home buyer shouldn’t limit how much you can borrow. You can use the Quicken Home Affordability Calculator to estimate how much house you can afford, based on the maximum mortgage you may qualify for. Or you can talk to a loan originator at your lender.

What is the average first-time buyer mortgage? 

The size of mortgages nationwide is not tracked by whether the borrowers are first-time homebuyers. However, because FHA loans are so popular with first-time home buyers, the average size of an FHA loan is a good indication. For 2016, the average FHA loan was $190,000. Remember that housing prices and mortgages vary significantly throughout the country.

Can you get a first-time mortgage at 50? 

Absolutely. In fact, you may have some advantages over people just starting out, such as a longer work and credit history, and perhaps a larger down payment. It’s never too late to get your first mortgage.

What's the difference between an adjustable and a fixed-rate mortgage?

A fixed-rate mortgage is based on a fixed interest rate. This is the rate used to calculate the monthly payments that will remain fixed over the loan term. The benefit is certainty about the level of your monthly payment over the life of the loan.

With an adjustable-rate mortgage (ARM), the interest rate can adjust periodically. Typically the interest rate is fixed for an initial period and then adjusts periodically. Sometimes there is a cap on the amount of the adjustment. Often whether the rate changes and by how much is based upon some sort of benchmark such as the rate on 1-year Treasury Bills. An ARM might start off with a lower rate than a fixed-rate mortgage, but if interest rates rise, the interest rate could skyrocket drastically, increasing your monthly payment.

Will applying for a mortgage affect my credit score?

When lenders check your credit score, it is reflected as a credit inquiry. If you apply for several mortgages within a compressed time frame of 45 days or less, these multiple inquires by mortgage lenders will show up as a single credit inquiry. 

How long will the process take?

Generally, the mortgage application process should take about 30 days. This could end up being longer or shorter. Some online lenders might be able to complete the process in as little as a week. In other cases, especially during peak periods for applications, this process can stretch out a bit longer. Applying for first home buyer exclusive loan might also elongate the process.  Much will also depend upon how prepared you are with the information the lender requires.

Buying Your First Home in 2024

Even under normal conditions, buying a house presents challenges of one sort or another for buyers. Buying a house in 2024 comes with a number of challenges.

One factor has been a dwindling supply of homes in some parts of the country. This stems from a combination of some sellers taking their home off the market and increased demand for homes in many areas. In some cases, sellers may have decided that this isn’t a good time to move, or perhaps they’ve encountered a financial situation that has led to this decision. Due to the pandemic, many families have decided to move out of congested urban areas and into suburban areas. In many cases, the lower supply and increased demand have resulted in higher prices and stiff competition.

Lender Requirements

The economic fallout from COVID-19 impacted the mortgage market in the form of stricter requirements from many lenders, many of which have continued into the current high interest rate climate today. 

These more stringent requirements vary by lender, but some examples are:

• Some lenders have raised their minimum credit scores in general, or at least require to qualify for more preferential interest rates and mortgage terms. 
• Some lenders have increased the down payment amount required to qualify for a loan.
• In some cases, mortgages that had previously been pre-approved are subject to a re-verification process prior to the finalization of the loan.
• Even government-backed loans through the FHA and VA have been impacted by some lenders’ stricter minimum requirements to obtain these loans. 

The bottom line for home buyers is that these tougher requirements may require more shopping to obtain an affordable mortgage. 

Who Can Qualify For A First-Time Home Buyer Program?

Qualifying as a first-time home buyer is important because it can help you apply for lower mortgage rates, lower monthly payments, and a smaller down payment. If you’ve never owned your own home before, there’s no question that you will qualify as a first-time home buyer and can access these first-time home buyer benefits.

However, you might be surprised to learn that you can qualify for first-time home buyer programs even if you have owned a home before. Whether you qualify depends on the circumstances:

• If you have owned your principal residence for less than 3 years, you still qualify as a first-time home buyer.
• If you are a single parent who previously co-owned a home while married, or if you co-owned a home with a former spouse from whom you no longer received financial support, you qualify as a first-time home buyer.
• If you have only owned a residence that isn’t affixed to a permanent foundation, such as a mobile home, you qualify as a first-time home buyer.

These rules enable people who you might not think of as first-time home buyers to get the same first-time home buyer benefits as those purchasing their first homes.

The Advantages of Being a First-Time Home Buyer

There are 2 major advantages to being a first time home buyer: lower down payments and tax deductions on your mortgage payments.

Many first-time home buyers find that down payments are the biggest obstacle to purchasing a home. For a house that costs $250,000, most lenders expect borrowers to put at least 20% payment down on the home’s purchase price. Most people simply don’t have $50,000 or more lying around, though. 

First-time home buyers can qualify for special first-time home buyer programs that offer down payments as low as 3%. For that same $250,000 home, you’d only have to pay $7,500 down.

You can also qualify for a government-backed mortgage from the Federal Housing Administration (FHA) if you have poor credit. These mortgages guarantee a down payment of 3.5% for first time home buyers with a credit score of at least 620 and a down payment of 10% for borrowers with a credit score of at least 580.

To qualify for an FHA loan, you must purchase private mortgage insurance. This protects your lender in the event that you default on a portion of your mortgage.

The other major benefit that first-time buyers receive is that certain mortgage expenses are tax deductible. For example, you can deduct the interest payments on your mortgage as long as your mortgage is secured by your home and is worth less than $1 million. You can also deduct up to $10,000 in state and local property taxes from your federal tax bill. 

Unfortunately, private mortgage insurance payments are no longer tax deductible due to the 2017 tax reform legislation. However, this could change again in the future. If you’re a first-time home buyer, it’s worth consulting a tax specialist about how you can use your loan payments to reduce your tax bill.

How to Choose the Best Lender for Your First Home Purchase

After finding the right home, the second-most important part of buying your first home is picking the right mortgage lender. There are a lot of factors to consider when choosing a lender for your first home mortgage:

Interest Rate

The interest rate is the first thing that most borrowers look at when comparing lenders, and for good reason. The interest rate on your mortgage plays a large role in determining how much your home will really end up costing you.

Instead of just looking at the bare interest rate, though, the best metric to look at is APR or Annual Percentage Rate. This number includes the annual interest rate plus the cost of processing fees and points. APR gives you a more accurate picture of the total cost for your mortgage.

Right now, interest rates are at all-time lows. First time home buyers with strong credit can lock in a 30-year fixed rate mortgage with an APR as low as 2.380%.

Loan Size

Another thing to consider when choosing a lender is whether they can offer the size of loan that you need. If you need a $250,000 loan, for example, then there’s no sense in using a lender that will only approve you for a $200,000 mortgage.

Keep in mind that you don’t have to borrow the entire amount you’re approved for. If, for instance, you’re approved for a loan up to $300,000, you can still purchase a home for $250,000 and only borrow the amount you need.

Loan term

The term or length of your loan can have a big impact on the APR you’re offered and your monthly payments. A 30-year loan will have lower monthly payments than a 15-year loan for the same amount, but a higher APR.

It’s important to think about how much you can afford each month and the total cost of a loan over its entire term. The longest mortgage terms are typically 30 years and the shortest are 15 years, although some lenders offer 10- or even 8-year terms.

Closing costs

After your mortgage is approved, you will need to go through what’s called a closing process. During this stage, lenders can add any number of costs to your mortgage, including origination, surveying, title, and third-party fees. When you apply for a mortgage, it’s worth checking which lenders are willing to waive or discount these fees. Some lenders offer first time home buyer programs which include lower closing fees. Your lender should be upfront about how much these fees will cost.

Customer service

It’s easy to forego customer service in favor of a slightly lower APR, but customer service can be very important when buying a home for the first time. As you go through the process of buying your first home, you’ll undoubtedly have a lot of questions. The whole process is much easier to navigate if your lender is willing to spend time on your application and offer a loan that suits your specific needs.

Many lenders now offer online applications, making it less costly and more convenient to apply for a loan. Even if you apply online, you should have access to personal loan agents and online chat support.

Buying Your First Home

First time home buyers may not have as much experience as seasoned property flippers, but you do have some important advantages working in your favor. As a first time home buyer, you can qualify for lower down payments and more favorable interest rates. You also might qualify to save money on your taxes.

Thanks to these rules for first time home buyers, anyone with a decent credit score should be able to get through the home buying process with a fair mortgage that suits your needs – and that won’t drain your bank account on day one. When comparing lenders, don’t forget to look at factors like APR, loan terms, and closing costs. Always ask what your lender can do for you as a first time buyer.

What’s Next? 

Becoming a first-time homeowner is an exciting moment in many people’s lives. Before making this major commitment, be sure to compare multiple lenders and explore which one offers the rates and terms that meet your individual needs. Not sure what to do next? Read lender reviews so you can apply for a mortgage loan with confidence.