How do I choose a mortgage lender?

Once you have an idea of the type of mortgage you're looking for, finding the right lender may be easier than you think, especially when you compare at least three lenders and let them compete for your business. It's likely one lender's mortgage package will rise above the others’ — with a lower rate and lower fees.

How do I compare mortgage lenders?

After determining what kind of loan you need, think about what type of service and lending experience is important to you. Maybe you'd prefer to talk to a banker in person at an actual brick-and-mortar bank. Or perhaps minimizing contact is more your style, and you'd like to be able to do almost the entire mortgage process on an app. Depending on what you prefer, you might focus on traditional banks, nonbank lenders, credit unions — or you might decide to have a mortgage broker do the research for you.

Apply for mortgage preapproval with multiple lenders to see how much you might qualify to borrow, what kind of rate you might be offered and also get a taste of what it would be like to work with each lender. In order to see actual interest rates and fees, you'll need to go through with applying for a mortgage with more than one lender. Since that'll cost you an application fee whether or not you go through with the loan, it'll help if you can narrow the field with your preapprovals. Once you've applied for a mortgage, you'll receive a Loan Estimate within three business days. This standard form allows you to compare lenders side by side to see who is offering you the best mix of rates and fees.

How much do I need to save for a down payment?

The amount you'll need for a down payment varies depending on the type of home loan you're using. Conventional loans can offer down payments as low as 3%, though some buyers will make down payments as high as 20% in order to avoid paying private mortgage insurance. FHA loans can come with down payments as low as 3.5%, depending on your credit score. VA loans and USDA loans do not require down payments.

Can I get help making a down payment?

As a first-time home buyer, you may qualify for down payment assistance and other types of first-time home buyer benefits. These programs are generally run by state housing authorities, though depending on where you live, you may find options that are city- or county-specific. Income and residency restrictions may apply, and you'll often have to take a first-time home buyer class in order to qualify for assistance.

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