Mortgages can be overwhelming for first time home buyers. Benzinga has put together a guide to mortgages and the best mortgage companies for first time home buyers in Iowa so you don’t miss a single step.
The Best Mortgage Lenders for First Time Home Buyers in Iowa
6 Best Mortgage Lenders in Iowa for First Time Home Buyers
When researching lenders, it’s important to familiarize yourself with the best lenders for first time buyers.
1. Best for Bank Statement Loans: Angel Oak Mortgage Solutions
Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio mortgage loans. Among their many customized loan solutions is their Bank Statement product for self-employed borrowers in Iowa. This loan does not require tax returns and includes a 1099 Income option for 1099 earners.
- Loan amounts up to $3 million
- 12 or 24 months personal or business bank statements
- Two years out of bankruptcy, short sale, foreclosure, or deed-in-lieu
- Owner occupied, non-owner occupied, second homes
- 1099 option available
- 40 year fixed interest only
- Delayed financing available
- Non-warrantable condos allowed
Angel Oak Mortgage Solutions offers a wide range of loan options allowing you to obtain any home loan as long as qualification requirements are met. You can also refinance into any of these loans after the fact, if you like. The customer service team is easy to reach via email, phone or the online contact form, and you can begin your journey by searching for a local advisor right on the website.
Angel Oak is headquartered in Atlanta, Georgia and is licensed in AL, AZ #0927070, licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, CO, CT, DE, DC, FL, GA #32379, ID, IL, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, NV, NH, licensed by the N.J. Department of Banking and Insurance, NM, NC, OH, OK, OR, PA, Rhode Island Licensed Lender, SC, TN, TX, UT, VT, VA, WA dba AOHL LLC, WI.
- Considers unique borrower situations
- Quick loan approval process
- Offers competitive interest rates
- Stricter qualification requirements
- Higher interest rates and fees
2. Best Overall: Quicken Loans®
Quicken Loans® offers a quick and intuitive online loan application process.
As a first time home buyer, you will also benefit from the resources offered on the Quicken Loans® website. Its resources can help you understand the home loan products it offers and how to decide which one is right for you.
If you have any questions, Quicken Loans® offers a responsive customer service team to help you out.
- Apply online through their website
- Faster loan processing times
- Variety of mortgage options
- Lack of personal interaction
- Inability to negotiate terms
3. Best for Low Credit Score: Keller Mortgage
Keller Mortgage offers lower minimum credit score requirements for its conventional mortgage products. Most lenders require a credit score of 620 or above, but Keller Mortgage accepts scores as low as 600 from its borrowers.
This can be helpful to first time buyers who have not had high enough credit scores for other lenders. Keller Mortgage agents are available to help you with any issues you encounter during your home loan process.
Its agents can also offer you access to a program that offers low rates and no origination or lender fees.
- No lender fees or origination costs
- Competitive interest rates
- Fast and streamlined application process
- Limited availability in certain states
- Limited loan options
4. Best for First Time Home Buyer Programs: Wells Fargo
Wells Fargo is an established brick-and-mortar bank that offers the convenience of online mortgages. It offers specialized mortgage products, including a program for first time buyers.
The Wells Fargo First Mortgage loan program can help you if plan to buy a home on a low-to-moderate income. You can spend as little as 3% of your home’s purchase price on your down payment.
If you complete a home buyer education course, this program can also offer you a $750 credit toward your closing costs.
- Competitive interest rates and loan options
- Strong reputation and trust in the industry
- Wide range of mortgage products to choose from
- Limited availability in certain geographic areas
5. Best for Flexible Requirements: Citi Mortgage
Citi Mortgage is a great option if you need a little bit of wiggle room on your minimum requirements. It offers a home loan program that allows for flexible credit guidelines to assist first time buyers in getting a mortgage.
This program also offers homeownership counseling and education to prepare you for all that comes with owning your home. Best of all, the citi Mortgage HomeRun program offers down payments as low as 3% of the purchase price of your home and does not require mortgage insurance.
- Wide range of financial products and services offered
- Competitive interest rates
- Strong customer support and 24/7 assistance
- Limited physical branch locations in some areas
6. Best for VA Loans: Veterans United
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
- Streamlined loan application process
- Competitive interest rates and loan terms
- Excellent customer service
- Funding fees
- Limited physical locations
The Housing Market in Iowa: An Overview
Home values in Iowa have increased in recent years, and it’s likely that they will continue to rise. Understanding the housing market is key to finding a good deal on your new home.
Total Households: 1,149,276
Median List Price: $247,450
3 Most Expensive Cities in Iowa to Buy a House:
- Le Claire
3 Most Affordable Cities in Iowa to Buy a House:
- Iowa Falls
Preparing for a Mortgage
When you decide the time is right to buy your first home, the first thing you should do is take a look at your finances. Understand how much you can afford to spend on your mortgage each month so you can get a purchase quote.
Another thing to take a look at is your credit score. Your credit score is the number included on your credit report. This number is what lenders will look at to determine whether they can assume the risk of lending to you. Your credit score is influenced by several things on your credit report, including your on-time payment history and the amount of credit you have available. There are a few ways you can work to improve your credit score before you apply for a mortgage:
- Make on-time payments on all of your current loans and credit cards
- Keep the balance on your credit cards as low as possible
- Minimize the number of times you apply for new lines of credit or loans
Have documents and information ready when you want to apply for a mortgage. Other things that lenders look at when they consider your application include:
Lenders will want to see that you have a reliable source of income and stable employment history. Expect to be asked for copies of W-2s, pay stubs and tax returns during the application process.
Lenders will also want to know whether you have other assets available to you. This is because they want assurance that you will be able to pay your mortgage even if you lose your source of income. You can provide statements for savings, checking and retirement accounts for this portion of your application. If you own a vehicle or other valuable items, you can provide information about this as well.
Lenders also look at your debt-to-income ratio. Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Your monthly debt payments include car payments, student loan payments and any other recurring monthly debt payments. Lenders will use this information to understand whether you will be able to manage monthly mortgage payments on top of your existing debt payments.
If you have make or receive any other payments, you will need to provide information about this as well. One common example is court documents that detail alimony and child support payments.
Each lender has its own variety of mortgage product options. Become familiar with the common mortgage options before selecting which one might be right for you:
Conventional loans are an accessible mortgage type because they are not insured or guaranteed by the federal government. This mortgage type often has fewer eligibility requirements and may be offered in a number of repayment terms, including the choice between fixed and adjustable mortgage rates.
FHA loans are part of a mortgage insurance program managed by the Federal Housing Administration. This is a popular option for first time home buyers because it offers lower minimum requirements. You may be eligible for a down payment as low as 3.5% with this mortgage type.
USDA loans are offered by the U.S. Department of Agriculture as part of the department’s effort to boost home ownership in rural areas. You must purchase your home as a primary residence in a qualified rural area. This mortgage type comes with some eligibility requirements. To qualify, your adjusted household income must be equal to no more than 115% of the area’s median income.
VA loans are offered by the U.S. Department of Veterans Affairs. To qualify, you must meet the eligibility requirements. VA loans allow qualified borrowers to finance up to 100% of their home purchase.
Jumbo loans are the mortgage type for you if you need to borrow more than the maximum loan limits set by the Federal Finance Housing Agency. In most of the United States, the maximum loan limit for 2019 is $484,350. You may need to look for a lender that offers jumbo loans if you are buying in a more expensive area or if you’re buying a luxury home. Note that most lenders will require a higher credit score and income level from borrowers applying for a jumbo loan.
First Time Home Buyer Programs in Iowa
You might be able to tap into a few programs that can assist you if you’re buying a home in Iowa for the first time. The programs offered by the Iowa Finance Authority include:
The FirstHome program is a good option for borrowers who don’t have excess money to use on a down payment. It offers low mortgages rates to qualified borrowers. You won’t find a payment or private mortgage insurance requirement with this program. To qualify, your home’s purchase price must be less than $283,000. You may also be eligible to receive a grant for down payment assistance.
Homes for Iowans Program
The Homes for Iowans program is another good option if you don’t have enough savings for a down payment. It offers low mortgages rates to qualified borrowers. Your down payment and private mortgage insurance requirements will vary depending on the lender and loan type you choose. To qualify for this program, your household must earn less than $133,980 and your home must cost less than $346,000. You may also be eligible to receive a grant for down payment assistance with this program.
Current Mortgage Rates in Iowa
Your mortgage rate is the interest rate you pay with each mortgage payment. Your rate is set by your lender and may vary depending on the loan type you choose. Mortgage rates in the United States fluctuate depending on a number of factors, including the current housing market. Benzinga monitors these changes and regularly updates current mortgage rate charts to reflect the most recent data.
|7/1 ARM (adjustable rate)||N/A||N/A|
|5/1 ARM (adjustable rate)||N/A||N/A|
Closing a Mortgage
After the seller of your home has accepted your offer, you will move into the closing process. Arrange a home inspection and appraisal during this process and finalize funding on your mortgage.
During this time, it’s important to stay in close contact with your lender to ensure that your mortgage is closed as soon as possible. You will need to close your loan before you will be able to move into your new home.
Get the Best Mortgage Lender in Iowa
Now you’re ready to move onto the next step! Choose a few lenders to contact and don’t be afraid to ask questions about each lender’s mortgage products and recommendations for you.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.