Mortgage rates climbed a bit higher today. According to Zillow, the 30-year fixed-rate home loan rose six basis points to 6.45%, while the 15-year fixed-rate mortgage gained five basis points to 5.77%. The 10-year Treasury yield, a benchmark for mortgage rates, has generally risen since the Fed rate cut last week.

Read more: How to buy a house in 13 simple steps

Here are the current mortgage rates, according to the latest Zillow data:

30-year fixed: 6.45%

20-year fixed: 6.07%

15-year fixed: 5.77%

5/1 ARM: 7.10%

7/1 ARM: 7.17%

30-year VA: 5.94%

15-year VA: 5.44%

5/1 VA: 5.92%

Remember, these are the national averages and rounded to the nearest hundredth.

Learn more: How to get the lowest mortgage rate possible

Here are today's mortgage refinance interest rates, according to the latest Zillow data:

30-year fixed: 6.52%

20-year fixed: 5.92%

15-year fixed: 5.89%

5/1 ARM: 7.15%

7/1 ARM: 7.15%

30-year VA: 6.0%

15-year VA: 5.66%

5/1 VA: 5.70%

As with the purchase mortgage rates, these are national averages we've rounded to the nearest hundredth. Refinance rates can be higher than purchase mortgage rates, but that isn't always the case.

Use the mortgage calculator below to see how various mortgage rates will impact your monthly payments.

The free Yahoo Finance mortgage payment calculator goes even deeper by including factors like homeowners insurance and property taxes in your calculation. You can even add private mortgage insurance costs and HOA dues if they apply to you. These monthly expenses, along with your mortgage principal and interest rate, will give you a realistic idea of what your monthly payment could be.

A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. There are two basic types of mortgage rates: fixed and adjustable rates.

A fixed-rate mortgage locks in your rate for the entire life of your loan. For example, if you get a 30-year mortgage with a 6% interest rate, your rate will stay at 6% for the entire 30 years. (Unless you refinance or sell the home.)

An adjustable-rate mortgage keeps your rate the same for the first few years, then changes it periodically. Let’s say you get a 5/1 ARM with an introductory rate of 6%. Your rate would be 6% for the first five years, and then the rate would increase or decrease once per year for the last 25 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and U.S. housing market.

At the beginning of your mortgage term, most of your monthly payment goes toward interest. As time passes, less of your payment goes toward interest, and more goes toward the mortgage principal or the amount you originally borrowed.

Dig deeper: Adjustable-rate vs. fixed-rate mortgage — Which should you choose?

Two categories determine mortgage rates: ones you can control and ones you cannot control.

What factors can you control? First, you can compare the best mortgage lenders to find the one that gives you the lowest rate and fees.

Second, lenders typically extend lower rates to people with higher credit scores, lower debt-to-income (DTI) ratios, and considerable down payments. If you can save more or pay down debt before securing a mortgage, a lender will probably give you a better interest rate.

What factors can you not control? In short, the economy.

The list of ways the economy impacts mortgage rates is long, but here are the basic details. If the economy — think employment rates, for example — is struggling, mortgage rates go down to encourage borrowing, which helps boost the economy. If the economy is strong, mortgage rates go up to temper spending.

With all other things being equal, mortgage refinance rates are usually a little higher than purchase rates. So don't be surprised if your refinance rate is higher than you may have expected.

Two of the most common mortgage terms are 30-year and 15-year fixed-rate mortgages. Both lock in your rate for the entire loan term.

A 30-year mortgage is popular because it has relatively low monthly payments. But it comes with a higher interest rate than shorter terms, and because you’re accumulating interest for three decades, you’ll pay a lot of interest in the long run.

A 15-year mortgage can be great because it has a lower rate than you’ll get with longer terms, so you’ll pay less in interest over the years. You’ll also pay off your mortgage much faster. But your monthly payments will be higher because you’re paying off the same loan amount in half the time.

Basically, 30-year mortgages are more affordable from month to month, while 15-year mortgages are cheaper in the long run.

According to 2024 Home Mortgage Disclosure Act (HMDA) data, some of the banks with the lowest median mortgage rates are Bank of America and Citibank. However, it's a good idea to shop around for the best rate with not just banks, but also credit unions and companies specializing in mortgage lending.

Yes, 2.75% is a fantastic mortgage rate. You're unlikely to get a 2.75% rate in today's market unless you take on an assumable mortgage from a seller who locked in this rate in 2020 or 2021, when rates were at all-time lows.

According to Freddie Mac, the lowest-ever 30-year fixed mortgage rate was 2.65%. This was the national average in January 2021. It is extremely unlikely that rates will dip below 3% again anytime soon.

Some experts say it's worth refinancing when you can lock in a rate that's 2% less than your current mortgage rate. Others say 1% is the magic number. It all depends on what your financial goals are when refinancing, and when your break-even point would be after paying refinance closing costs.

A housing market crash happens when home values plummet due to a lack of demand for or an oversupply of homes. The factors leading to a housing market crash are varied, ranging from economic recessions to high mortgage rates that make buying a home widely unaffordable. A housing crash can have upsides for some home buyers, with lower prices making homes more affordable. For other buyers, however, a crash means losing built-up home equity and tighter finances that could lead to falling behind on mortgage payments. So, what’s ahead for the housing market in 2025?

Read more: Want to buy a house before the end of 2025? Here’s what you need to know. 

In this article:

When will the housing market crash?

Housing market crashes: Supply and demand dynamics

Housing crisis lessons for today

Signs of a housing market crash

What a crash could mean for home buyers

What a crash could mean for sellers

How to prepare for a potential housing market crash

FAQs

In general, economists don’t foresee a housing market crash anytime in 2025. According to recent insights from JPMorgan, it’s predicted that supply won’t outpace the demand for homes.

Housing experts point out that home supply is gradually increasing — but the operative word is “gradually.” Supply would have to move much faster to contribute to a crash.

“Unless there is a significant surge in the rate of unemployment, which is currently not in the forecast, the housing market is expected to continue to rebound from 2023 lows,” said Selma Hepp, chief economist of real estate data analytics firm Cotality, in an email.

Current data backs that up, with the August 2025 jobs data from the U.S. Bureau of Labor and Statistics showing unemployment at 4.3% — very little change since August 2025.

Are home prices slumping? A little bit. In a recent report, Cotality reported that July’s year-over-year home prices cooled off by 1.4% from July 2024. However, plenty of states (especially on the East Coast) still experienced price increases.

Zillow’s July 2025 Home Value and Home Sales Forecast predicts national home prices will decrease overall in 2025, ending the year 0.9% lower than they began.

Hepp anticipated that home sales would likely increase due to lower mortgage interest rates and a rise in the number of existing homes on the market. Although mortgage rates probably won’t plummet this year, they have been gradually decreasing in recent weeks.

Learn more: Why are home prices so high?

For the housing market to crash, supply and demand must be drastically out of balance, favoring supply. Looking back at the first half of 2025, we can see that while supply is increasing, the discrepancy isn’t as drastic as it was in 2008. As of July 2025, the Federal Reserve Bank of St. Louis showed a housing supply of just over nine months.

“In a normal market balanced between buyers and sellers, we would have a six-month supply of homes,” said Rick Sharga, founder and CEO of CJ Patrick Co., a market intelligence firm for real estate and mortgage companies. For comparison, the buildup to the 2008 financial crisis led to a drastic oversupply — 13 months. That was more than double the average figure of six months and more than a way to go from the current 9.2-month supply.

There’s also demand chipping away at the current market supply, likely driven in part by consumers taking advantage of declining mortgage rates. For instance, in mid-September 2025, the average rate for a 30-year fixed-rate mortgage was 6.35%. While these aren’t the rock-bottom rates seen in early 2021, those sub-3% mortgage rates are unlikely to return. Hence, buyers eager to buy are getting a foothold in the market where they can start building equity. If interest rates decline, owners can always refinance for additional savings.

Dive deeper: How historical mortgage rates compare to rates today

The housing crash that started in 2007 and contributed to the global financial crisis continues to weigh heavily on the minds of many economists and consumers. But the factors that led to that crash are not in place today.

“Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis,” Sharga said. “That includes a limited supply of homes, high levels of home equity, economic strength, and the strict guidelines mortgage borrowers must meet.”

Mortgages today also look quite a bit different. Gone are the days of the low- to no-documentation mortgage and zero-down for anyone and everyone. Today, lenders are looking for buyers willing to put skin in the game. The lowest down payments are typically with VA loans — which offer zero down — and FHA loans — offering down payments as low as 3.5%. Both loans still require stringent income, asset, and employment verification.

With those subprime lending products gone and most mortgage lenders requiring money down, today’s homeowners also have significantly more home equity than those from the early 2000s. Today, the average American has more than $300,000 in home equity.

Divounguy said that in 2007, homeowners who couldn’t afford their monthly payments typically had little home equity.

“When their home couldn’t sell, they couldn’t cut their asking price in order to sell their home,” Divounguy said. “As a result, many walked away from their homes.”

In contrast, today, people who sell have plenty of home equity and can afford to cut sale prices if they need to sell.

“Home equity is still near record highs in most housing markets,” Divounguy said. Most homeowners have extremely low monthly payments due to record-low pandemic mortgage rates. As a result, mortgage delinquency and distressed sales remain low.”

Learn more: 7 ways to build equity in your home

Whether you’re monitoring your home’s value or hoping to buy a new home, you may want to watch for indications of a future housing market crash. An economic shock such as a significant stock market crash or big, prolonged job cuts could signal the start of a housing market crash, Yun said, along with a large increase in the supply of homes.

If unemployment rose rapidly and homeowners couldn’t afford their mortgage payments, they could lose their homes to foreclosure if they couldn’t sell them, Hepp said. A large increase in foreclosures would bring home values down, leading to a potential housing crash.

“Currently, what may be a concern for some markets is the significant increase in non-mortgage related costs, such as property insurance and taxes,” Hepp said. “That may be a bigger concern for households with fixed incomes who may choose to sell their home if they can no longer afford to make their payments. If a significant number of properties were being listed as a result, that could dampen home prices and weaken a housing market. Nevertheless, with housing shortages still outweighing the impact of these additional expenses, a housing crash is not likely, especially a widespread one.”

Sharga suggested that consumers watch their local market conditions, such as whether the population and the job market is growing or declining, along with wages, home sales, and home prices.

“While a national housing crash remains very unlikely, every market is unique, and some are likely to see prices go down even as the national numbers are going up — probably not enough to designate it as a ‘crash,’ but enough to make a difference for some homeowners,” Sharga said.

Learn more: Which is more important, your home price or mortgage rate?

A housing crash is a mixed bag for home buyers. Crashes typically come with other economic undesirables, like job losses. Even if housing prices drop, many Americans could find it more difficult to qualify for a mortgage.

On the other hand, some home buyers could welcome a crash. Lower prices could mean those who have saved and are steadily employed have first dibs on more affordable housing. There’s also a small faction of buyers who think a housing crash of any kind. A December 2024 survey from LendingTree found that 36% of respondents wanted the market to crash for reasons ranging from market stability to lower property taxes. Of those, 8% of respondents feel a crash could help them buy a home.

Read more: Should you buy a house during a recession?

In a housing crash, homeowners who don’t need to sell may prefer to wait until home values regain their strength. Being “underwater” on your mortgage — owing more on your mortgage balance than the value of your home —- as many people were during the previous housing market crash doesn’t immediately impact your finances.

However, if you need to sell your house, you may need to consider more competitive pricing. Buyers in market crashes are looking for bargains, and you may end up with less profit on your home than you anticipated.

If you’re worried about when the housing market will crash again, you can take steps to protect your financial well-being.

Build an emergency fund. Experts recommend having three to six months of expenses in the bank.

Pay down your debt. Try to prioritize high-interest debt, like credit cards.

Buy within your budget. Whether the market crashes or not, it’s always wise to have a mortgage you can comfortably afford.

Make extra mortgage payments. Even a little bit extra each month can help you build equity in your home faster.

Choose a fixed-rate mortgage. Enjoy a steady mortgage payment, and don’t worry if rates increase — a fixed mortgage rate is locked in, regardless of what happens in the real estate market.

Are home prices going to drop in 2025?

Some economists anticipate a drop in home prices in 2025, though not enough to cause a housing market crash. Experts at Zillow forecast home prices to decrease by 0.9% in 2025.

Is 2025 a good year to buy a house?

The best time to buy a house is when buying makes sense for your unique financial circumstances. For some, that might mean buying a home in 2025 if their income, other debts, and employment support the mortgage payment required for the home they want. For others, 2025 could be the year to pay down debt and build up a down payment so that they qualify for a better mortgage rate in the future.

Is it possible for the housing market to crash again?

Yes, another housing market crash one day is a possibility. However, economists don’t expect a crash in the near future.

Laura Grace Tarpley edited this article.

Knowing how much house you can afford is a matter of comparing your financial situation to the factors lenders consider when approving a mortgage application. Those include a steady income, adequate savings for the down payment and closing costs, the amount of debt you carry, and your repayment history.

However, the amount of money you are approved to borrow with a mortgage and how much house you can comfortably afford can be two very different numbers. Lenders want to make loans for the highest dollar they feel comfortable with based on certain elements of a borrower’s personal finances. That's a business decision.

For you, affordability is a quality-of-life calculation. Only you know your comfort level with all of the expenses due each month.

Run the calculations in the home affordability calculator above, then aim lower than the maximum results to give you a financial cushion. Armed with this information, you can determine which type of mortgage you might qualify for — and, more importantly, how much house you can afford.

Knowing your target loan amount will help you determine how much house you can afford. In this formula, you'll use:

Your gross monthly income (before taxes and deductions)

Your monthly debt, such as vehicle and student loans and credit cards

The down payment you have saved

The loan term (e.g., 15-year versus 30-year mortgage)

The interest rate you'll qualify for

Your credit score

A sample mortgage affordability calculation could be:

Gross annual income: $70,000 (or about $5,800 per month)

Your monthly debt: $250

Down payment: $20,000

Loan term: 30 years

Interest rate: 6.5%

Once you factor in payments for private mortgage insurance (PMI), homeowners insurance, and property taxes, such a calculation might yield the result of qualifying for a mortgage up to $213,808, with a home a monthly payment of $2,100.

If you buy a place with a homeowners' association that charges dues, you will also pay a little more each month.

Dig deeper: How much house can you afford with a $70,000 salary?

When you’re determining your house budget, ask yourself two crucial questions: First, how much house can you afford up-front? Second, how much house can you afford in the long-term? The up-front costs consist of your down payment and closing costs, and the longer-term expenses refer to your monthly payments and cash reserves.

Your down payment is the amount you pay in cash when you buy the house. Let’s say you buy a $400,000 home with a $20,000 down payment. Then, you’ll take out a mortgage for the remaining $380,000.

Here are the minimum down payments for the most common types of mortgage loans:

Conforming conventional loan: 3%

Jumbo loan: Usually 10% to 20%

FHA loan: 3.5%

VA loan: 0%

USDA loan: 0%

Use these minimums to determine your true home affordability. For example, if you don’t have 3% of $400,000 — or $12,000 — you probably can’t get a conforming loan, not to mention a jumbo or FHA loan. If you don’t qualify for a USDA or VA loan, then you now know that you should buy a less expensive home. Or save more before buying.

Learn more: What is a down payment, and how does it work?

It’s easy to forget about closing costs when calculating your home-buying budget. The exact amount varies, but you can typically expect to pay 2% to 5% of your loan amount in closing costs.

So, let’s say you want to buy a $400,000 home with a conforming mortgage. You’ll need $12,000 for a down payment and 2% to 5% of the amount you’re borrowing ($388,000), which is $7,760 to $19,400. This means you’ll need a total of $19,760 to $31,400 to realistically afford the house on closing day.

Closing costs vary by mortgage lender but include expenses like a home appraisal, inspection, title search fees, credit report checks, and more.

You probably don't want to spend every last dime on your down payment and closing costs. Then you risk becoming what's known as "house poor." You should still have three to six months of expenses in an emergency fund, and ideally, you’d have some extra money set aside for inevitable house repairs or things you want to buy for the house, like furniture or decorations to make the space feel like yours.

Now that you’re a homeowner, you’ll need to make sure you can comfortably afford the monthly payments. Use our calculator to see how much you can realistically afford. You don’t want to struggle to make your payments each month. In this case, your quality of life could suffer — and you could even end up losing your home in foreclosure.

Learn more: Use our free monthly mortgage payment calculator

In addition to your salary, savings, and repayment history, debt-to-income ratio is one of the most important factors lenders use in determining the home loan you qualify for — and the interest rate you'll be charged.

To start, you'll need three things to calculate your debt-to-income ratio (DTI):

Your monthly gross income, which is before any deductions for benefits, retirement savings, taxes, and the like.

The monthly total of debt payments. That would include the minimum amount due for credit cards, student loan payments, car loans, and other monthly debt payments.

Your estimated monthly mortgage payment.

Next, you'll divide your debt by your income.

A sample calculation:

Monthly debt (including your mortgage): $2,000. Gross monthly income: $5,000. DTI: 2,000 / 5,000 = 0.40.

Another clue to examining home affordability is the 28/36 rule. Lenders use this to zero in on what you currently owe and how a mortgage will impact that debt load. It can help you determine what percentage of your income should go to a mortgage.

28% is the maximum total of your housing expenses. This is known as the front-end debt-to-income ratio, which is your mortgage, property taxes, and homeowners' insurance. Housing costs / income = front-end ratio.

You can reverse the calculation and multiply your income by 0.28 to determine a target mortgage payment.

36% is the limit to your total debt, including the mortgage and existing loans and credit balances. It's called the back-end debt-to-income ratio. All debt / income = back-end ratio.

Tip: Mortgage lenders have flexibility for well-qualified buyers. If you have a decent down payment and a credit score on the high end, they might stretch your back-end ratio as high as the low 40s. However, you will likely also pay a higher interest rate.

Read more: The best mortgage lenders for first-time home buyers

Many lenders allow you to get a conventional loan with just 3% down. They usually prefer a DTI ratio of 41% or less, but you might qualify with a ratio as high as 50%. A conventional loan is a great option if you can afford a 20% down payment, because then you won't have to pay for PMI.

You can get an FHA loan with a down payment as low as 3.5%, as long as you have a minimum 580 credit score. You'll also need a DTI of 43% or lower.

It's important to factor in the cost of FHA mortgage insurance premiums (MIPs). Unlike conventional loans, you cannot avoid MIPs by making a large down payment. Except in special circumstances, you'll likely pay MIPs for the life of the loan — keep this in mind when thinking about monthly mortgage payments.

The U.S. Department of Veterans Affairs doesn't require a down payment on VA loans. Some VA mortgage lenders might ask for a down payment, particularly if other parts of your financial profile aren't super strong. Many lenders also prefer a DTI ratio of 50% or lower.

A zero-down-payment mortgage can be a great way to get your foot in the door as a homeowner, especially as a first-time home buyer. Just remember that the lower your down payment, the higher your monthly payment. While it may be easier to afford a mortgage up-front with 0% down, it could make finances more difficult in the long run.

The U.S. Department of Agriculture also doesn't require a down payment. It also doesn't set a minimum DTI ratio requirement, though many lenders prefer your ratio to be 41% or lower for a USDA loan.

As with VA loans, remember that a 0% down payment makes homeownership more affordable at first, but it results in higher monthly payments. Both are crucial factors to consider when determining how much home you can afford.

You're buying a house. The lender is selling a mortgage. With that perspective, it's easy to understand that only you can determine true affordability. You have to make the monthly home loan payments. And you may want to travel, buy new furniture, buy a new car, save for the future — or a hundred other things.

So, a lender might approve you for a loan to buy too much house with a too-large payment. Your sense of what you can really afford may convince you to buy a house at a more reasonable purchase price with lower payments.

That's being in control of home affordability.

Learn more:

What is the monthly payment on a $600,000 mortgage?

How much is a mortgage on a $500,000 house?

What is the monthly payment on a $400,000 mortgage?

How much is the monthly payment on a $300,000 mortgage?

What is the monthly payment on a $200,000 mortgage?

Having a healthy savings stash helps build your home purchasing power. That means you can make a decent down payment and show that money is set aside for not only your housing payment but all of your monthly debt, including a car payment, credit card debt, and living expenses. A good credit report not only impacts how much home you can afford but also helps you qualify for a lower interest rate.

In addition to the mortgage loan payment, insurance premiums, and taxes, you’ll want to consider things like HOA fees, and if you put less than 20% down on a conventional loan, you’ll likely have to pay private mortgage insurance. There are also everyday expenses to factor in, such as transportation costs, childcare, or furniture for your new home.

One big clue to knowing you are in a good place financially to buy a home is when your current monthly expenses are well in hand. That means you have a comfortable household income, are well on top of credit card payments, and have set aside some cash for unexpected expenses. Your total monthly debt is within the DTI parameters we mentioned above. And your annual income is steady and perhaps even expected to grow in the years ahead.

Debt is a major part of home affordability. Your debt-to-income ratio is a key factor that lenders look at. Using a home affordability mortgage calculator can give you a clue as to how your debt impacts your homeownership qualifications.

First-time home buyers need an edge. Buying a house in 2025 takes a series of savvy financial moves, and you'll need a mortgage lender who can be a true partner in the process. This is our "best of" list — without conflicts of interest or compromise.

Why Rocket Mortgage stands out: Rocket helps renters make the leap to homeownership with a grant equal to a portion of rent paid.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, and VA loans

Minimum down payments: 1% for conventional, 3.5% for FHA, 0% for VA loans

Minimum credit scores: 620 for conventional, 580 for FHA, and 580 for VA loans

Rocket RentRewards allows current renters to apply up to 10% of what they pay in rent to closing costs, up to $5,000.

The ONE+ gives first-time home buyers a 2% grant, which allows them to make just a 1% down payment with a conventional loan.

Rocket has an above-average customer satisfaction score, as determined by J.D. Power.

Advertised mortgage rates are reduced by adding up to two discount points.

Total mortgage costs are a mixed bag. Rocket offered median interest rates to borrowers in 2024 — but much higher-than-median loan costs.

Read our complete Rocket Mortgage review.

Why Bank of America mortgages stand out: With the deep resources of a huge national brand, Bank of America offers grants to first-time home buyers.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, and VA loans

Minimum down payments: 3% for conventional, 3.5% for FHA, and 0% for VA loans

Minimum credit scores: "We don’t publish minimum credit scores," Susan Atran, senior vice president of Bank of America, told Yahoo Finance via email.

BofA offers grants up to $7,500 for closing costs and up to $10,000 in down payment assistance for qualified buyers in many, but not all, states.

Existing customers may qualify for an origination fee or interest rate deduction. To qualify, you'll likely have to sign up to draft your mortgage payments from an account.

A home-buyer program for medical professionals allows borrowers to make lower down payments and exclude student loans from debt limits. Residents and fellows can also close on a loan 90 days before starting a new position.

Bank of America is near the top of customer satisfaction rankings in the 2024 J.D. Power survey.

Bank of America's sample mortgage rates are based on an above-average credit score of 740 or higher. According to FICO, the national average is 715. Keep this in mind when comparing BofA’s mortgage rates with competitors’ rates.

Why Pennymac mortgages stand out: Pennymac is the largest lender in the nation for loans insured by the FHA (Federal Housing Administration) and is well-equipped to guide first-time home buyers through the government loan process.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, VA, and USDA loans

Minimum down payments: 3% for conventional, 3.5% for FHA, 0% for VA, and 0% for USDA loans

Minimum credit scores: 620 for conventional, 580 for FHA, 580 for VA, and 580 for USDA loans

Pennymac is the largest FHA mortgage lender by loan volume in the U.S., and FHA loans are typically geared toward first-time buyers.

The lender offers a rate buydown that can lower your interest rate by 1% for one year.

When you are preapproved for an eligible mortgage, Pennymac will give you a $1,000 credit to apply to closing costs.

Use a real estate agent endorsed by Pennymac and get $350 to $9,500 cash after closing.

Pennymac has a well-below-average rating for customer satisfaction, according to the 2024 J.D. Power study.

Why Veterans United mortgages stand out: A leading VA mortgage lender, Veterans United specializes in serving military-connected borrowers, limiting its loan selection to only those that apply to its service-related clientele.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Primarily VA loans; however, Veterans United does offer conventional, FHA, and USDA loans

Minimum down payments: 0% for VA, 3% for conventional, 3.5% for FHA, and 0% for USDA loans

Minimum credit scores: 620 for all loans

Veterans United is, by far, the highest-volume VA loan provider in the nation.

The lender offers a rich supply of educational material. The resources are deep, well-researched, and include calculators, articles, videos, and a complete VA home-buying course.

Veterans United garnered the highest score of all lenders in J.D. Power's customer satisfaction survey.

Cons

Veterans United provided only average value to borrowers in 2024, with a record of median interest rates and loan costs.

Read our complete Veterans United mortgage review.

Why U.S. Bank mortgages stand out: U.S. Bank offers rural and suburban home financing with no down payments through a USDA-backed program.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, VA, and USDA loans

Minimum down payments: 3% for conventional, 3.5% for FHA, 0% for VA, 0% for USDA loans

Minimum credit scores: 640 for all loans

U.S. Bank is a top 20 loan volume USDA lender. Mortgages backed by the Department of Agriculture have relaxed credit standards and allow no down payment to home buyers of modest means.

Existing U.S. Bank customers may be eligible for a credit of up to $1,000.

A prequalification process is free, "takes five minutes," and does not impact your credit.

US Bank's mortgage rates, as published on its website, look appealing. However, the conventional loan rates shown require a down payment of 25% and a FICO score of 740 or better. That's well above the national average credit score of 715.

Why Navy Federal mortgages stand out: Navy Federal Credit Union distinguishes itself by offering lower mortgage interest rates and loan costs than many competing lenders.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional and VA loans

Minimum down payments: 5% for conventional, 0% for VA loans

Minimum credit scores: "Navy Federal does not disclose its credit score thresholds for proprietary reasons," a public relations contact for NFCU told Yahoo Finance.

Navy Federal offered below-median interest rates and loan costs to borrowers in 2024.

The Special Freedom Lock allows you to relock your interest rate twice if rates move lower before your loan closing.

The No-Refi Rate Drop offer allows you to tap a lower interest rate six months or later after closing — for a $250 fee but without additional closing costs or changing your loan terms.

A rate guarantee states that Navy Federal will match a lower mortgage rate offered by a competing lender or pay you $1,000.

Navy Federal ranks above average in the latest J.D. Power Mortgage Origination Satisfaction Study.

Sample mortgage rates are quoted "as low as" and include discount points and a 1% origination fee. Your rate will likely differ from what is shown.

Why Guild Mortgage stands out: Guild accepts alternative forms of credit, such as utility bills and rent payments, so that borrowers without a credit score or with meager credit histories can still qualify for a mortgage.

Availability: 49 states (excluding New York) and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, VA, USDA, and the Complete Rate program

Minimum down payments: 3.5% for FHA, 0% for VA, 0% for USDA, and varies by loan type for the Complete Rate program

Minimum credit scores: 620 for conventional, 540 for FHA, 540 for VA, 540 for USDA, and no credit score for the Complete Rate program

For first-time home buyers without a credit score or lacking a long credit history, Guild's Complete Rate program can consider alternative payment histories and bank deposits.

An education program helps first-timers prepare to qualify to buy a home and can provide down payment assistance.

Guild has a below-average score for customer satisfaction as reported by J.D. Power.

Learn more: How to buy a house without a credit score

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, VA, and USDA loans

Minimum down payments: 3% for conventional, 3.5% for FHA, 0% for VA, 0% for USDA loans

Minimum credit scores: 620 for conventional, 550 for FHA, no minimum for VA, and 620 for USDA loans..

Why Rate mortgages stand out: An early-mover in digital mortgages, Rate (previously Guaranteed Rate) also offers face-to-face service in many markets.

Enhancing online convenience with a personal service option, Rate has hundreds of branch locations across the nation.

A "Same Day Mortgage" promises loan approval — but not loan funding — within 24 hours of locking in a mortgage interest rate and submitting financial documents.

Advertised rates for conventional loans factor in more than one discount point, are based on a 20% down payment, and a FICO score well above the national average.

Rate scores well below average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

Why Chase Bank mortgages stand out: Chase Bank offers a wide assortment of home-buying tools, including nearly a dozen calculators, plus videos, checklists, FAQs, and more. These are useful for first-time buyers who aren’t familiar with the home-buying process.

Availability: All 50 states and Washington, D.C.

Loans for first-time buyers: Conventional, FHA, and VA loans

Minimum down payments: 3% for conventional, 3.5% for FHA, 0% for VA, 0% for USDA loans

Minimum credit scores: 620 for all loans

Chase earns Yahoo Finance's highest 5-star rating for its abundant online learning resources, which are perfect for guiding first-time home buyers through a complicated process.

Chase offers an on-time closing guarantee of $5,000 and claims it can close a home loan as quickly as three weeks under specific guidelines.

VA loans may be eligible for a credit of $2,500 to $5,000, which can be applied to your interest rate first, then closing costs.

Chase has an above-average rating for customer satisfaction, according to the 2024 J.D. Power study.

The conventional loan interest rates on the Chase website are enhanced with strict credit standards, including 20% to 30% down payments, one discount point, and borrowers with "excellent" credit. In other words, the rate you earn could be much different.

A first-time home buyer is generally defined as someone who has never owned a home or hasn't owned one in the past three years. If you are single and previously co-owned a house with a spouse, you may also be considered a first-time home buyer.

However, additional qualifications may be imposed by the lender, state or local agency, or housing program you are applying to. Some programs may have income, credit score, or location limits and could require the completion of an educational course.

The advantages of being considered a first-time home buyer include:

Making a low — or no — down payment.

Receiving down payment or closing costs assistance.

Qualifying with a lower credit score or with relaxed credit terms.

Being entitled to tax breaks. That can include tax credits such as Mortgage Credit Certificates (MCCs), as well as other tax deductions and credits that come in and out of favor.

Many mortgage lenders offer conventional loans backed by Fannie Mae. With the HomeReady program, you only need a 3% down payment and a 620 credit score. You also might qualify with a debt-to-income ratio as high as 50%.

You must finish a home-buyer education course to qualify for this program, which is often useful for first-time buyers.

Conventional loans backed by Freddie Mac also require a 3% down payment and an online home-buyer education course. The main differences from the HomeReady program are that Home Possible loans require a 660 credit score and a 45% DTI ratio for buying a house.

FHA loans can be great for first-time home buyers because you can qualify with a 580 credit score and 3.5% down payment. (You can even get an FHA loan with a score as low as 500, but you'll need 10% down in this case.)

VA loans are for eligible active military personnel, veterans, and their families. They're excellent mortgages for getting your foot in the door of homeownership because you don't need a down payment.

The U.S. Department of Veterans Affairs also doesn't set a minimum credit score, so you can shop for lenders that accept low scores if that's an issue.

You also don't need a down payment for USDA loans. These mortgages are for low-to-moderate-income borrowers who are buying in rural and suburban areas.

As with VA loans, the U.S. Department of Agriculture doesn't set a minimum credit score, so the credit score needed will depend on the lender.

Federal programs such as VA, FDA, and USDA loans allow for easier qualifying and lower down payments. First-responders and teachers may qualify for additional assistance in programs such as the Good Neighbor Next Door.

Other low-down-payment options are administered by government-sponsored enterprises Fannie Mae and Freddie Mac, through mortgage lenders.

State housing finance authorities are the backbone of many first-time home buyer down payment and closing costs assistance programs. Some cities offer similar incentives, often in partnership with nonprofits.

Lender programs may include mortgage rate buydowns, grants applied to down payments (such as 1%-down-payment loans), and other closing costs assistance.

Programs at any level — national, state, local, or lender — can include grants and low-interest loans that are deferred or don't require payback at all.

First-time home buyers are a valuable commodity to financial institutions because buying a house can be the beginning of a long financial relationship.

You want to comparison-shop three or more lenders who are willing to:

Explain the process.

Compete for your business.

Meet deadlines and expectations.

Respond promptly.

Treat you with respect.

Once you have your lender contenders, take these three steps:

Obtain mortgage preapprovals from each before you shop for a house.

When you have a purchase contract, compare loan estimates from each lender.

Examine all loan costs, especially lender fees and origination charges.

Remember, you are the buyer — the decision is yours. Resist pressure and false deadlines. Negotiate firmly but honestly.

An FHA loan is often a good mortgage option for first-time home buyers because you only need a 580 credit score and a 3.5% down payment (or a 500 credit score with 10% down). It also allows borrowers with more debt to buy a home than many other types of mortgages. However, a conventional loan could be a better choice if you're a first-time buyer with a strong credit score and lower debt levels, because many lenders only require 3% down.

First-time home buyers should look into three government-backed home loans: FHA, VA, and USDA loans. FHA loans are geared toward people with higher debt levels and lower credit scores. VA loans are for military-affiliated buyers who don't have money for a down payment. USDA loans are for lower-income homeowners who are buying in rural areas and don't have money for a down payment. However, a conventional loan could still be a great fit for first-time buyers with 620 credit scores and 3% down.

In 2024, the median down payment among first-time home buyers was 9%, according to Realtor.com. You can put down as little as 0% as a first-time buyer getting a VA loan or USDA loan. You can also put down 3.5% for an FHA loan. Depending on the lender and how strong your finances are, you may be able to put down as little as 3% with a conventional mortgage.

A 30-year mortgage term is usually the choice for first-time buyers. All common types of mortgage loans offer a 30-year option, and it has lower monthly payments than, say, a 15-year mortgage.

As a first-time home buyer, a 620 credit score is preferable. You can qualify for a conventional mortgage with most lenders with a 620 score. However, FHA loans are often good deals for first-time buyers who might not have had time to build strong credit yet — FHA loans only require a 580 score.

An FHA loan is usually the easiest to get approved for because it has relatively lenient credit score requirements. But if you're affiliated with the military and are eligible for a VA loan, you'll likely be approved because the VA doesn't set a minimum credit score — the requirement varies by mortgage lender.

Yahoo Finance reviews mortgage lenders based on five primary considerations: 1) Interest rates. Using 2024 Home Mortgage Disclosure Act data from almost 5,000 mortgage companies, we analyze mortgage lenders based on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and total loan costs are compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We also consider whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

Laura Grace Tarpley edited this article.