Best Mortgage Lenders for First Time Home Buyers in Minnesota

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Contributor, Benzinga
February 18, 2024

Jump straight to it: The best Minnesota mortgage lender for first time home buyers is Quicken Loans®.

The Land of 10,000 Lakes is known for its chilly winter weather as well as its cultural and employment opportunities. Ready to buy your first Minnesota home? As a first time home buyer, MN offers the perfect place to call home. 

Quick Look: Best Mortgage Lenders for First Time Home Buyers in MN

8 Best Mortgage Lenders in MN for First Time Buyers

Finding the right lender can be daunting. Here are the best mortgage companies for first time buyers in Minnesota:

1. Best Overall: Quicken Loans®

Quicken Loans® offers an easy-to-navigate website filled with educational resources. It includes a home buyer’s guide and mortgage calculators. You can complete the application online, but you’re not left on your own.

You can chat with an expert or get one on the phone if you have any questions along the way. You can even take a peek at its rates online so you know how it stacks up against other lenders. 

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 30-45 days

Pros

  • Apply online through their website
  • Faster loan processing times
  • Variety of mortgage options

Cons

  • Lack of personal interaction
  • Inability to negotiate terms

2. Best for Low Credit Score: Bell Bank

  • securely through Bell Bank's website
    securely through Bell Bank's website
    Rating:

Bell Bank is independently owned. The Minnesota Housing Finance Authority has approved Bell Bank to offer its mortgage products. This means it can work with a wide range of financial situations.

Bell Bank offers advice, local knowledge and excellent service. That’s what makes it one of the best lenders for first time buyers

Loan types offered: Conventional, FHA, USDA VA

Credit score requirement: 620

Average days to close a loan: 30 days

Pros

  • Competitive interest rates
  • Personalized service
  • Variety of loan options

Cons

  • Limited physical locations
  • Strict eligibility requirements
  • Limited online resources

3. Best for Self-Employed Home Buyers: CrossCountry Mortgage

  • securely through CrossCountry Mortgage's website
    securely through CrossCountry Mortgage's website
    Best For:
    Self-employed Borrowers
    Rating:
    Read Review

    Available in: CA, CO, CT, DC, FL, GA, IL, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA, WA 

CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.

It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.

Loan types offered: Conventional, FHA, USDA, VA

Credit score requirement: 620

Average days to close a loan: 21 days

Pros

  • Long-term loan programs
  • Low minimum credit score
  • No minimum DTI

Cons

  • Relatively high minimum credit score
  • No HELOCs
  • No other home equity loan options

4. Best for Mobile: Fairway Independent Mortgage Corporation

If you’re always on the go, a mobile app can help you stay in touch with your lender. Fairway Independent Mortgage Corporation offers a mobile app that will keep you in touch throughout the process.

You can securely upload documents and message your loan officer from the mobile app. It also offers several options suitable for first time buyers, including conventional, jumbo, FHA, USDA and VA mortgages. 

Loan types offered: Conventional, FHA, VA, USDA, Jumbo

Credit score requirement: 620

Average days to close a loan: 30-45 days

Pros

  • Wide range of mortgage products and services
  • Transparent and efficient loan process
  • Competitive interest rates

Cons

  • Limited physical branch locations in certain areas

5. Best for Credit Monitoring: loanDepot

loanDepot is a non-bank lender that gives you convenience and efficiency online with the option to visit one or over 200 branches across the country. loanDepot offers fixed-rate and adjustable-rate conventional mortgages. You could also secure jumbo, FHA or VA loans, although conventional loans made up most of LoanDepot’s mortgage originations last year. LoanDepot also offers 10-, 15-, 20- and 30-year mortgage terms. 

In addition to mortgages and home refinancing, LoanDepot offers free credit score monitoring to help you prepare to apply for a mortgage. You'll need a minimum credit score of 620 and at least 5% downpayment. 

Loan types offered: Conventional, FHA, VA, USDA, Jumbo

Credit score requirement: 620

Average days to close a loan: 30 days

Pros

  • Choose shorter repayment terms 
  • $1,000 Close-on-Time Guarantee
  • Possible home security, moving and smart home product discounts 
  • Use its online loan calculator to compare monthly payments and lifetime interest before deciding on a mortgage lender

Cons

  • No mortgage rates listed online
  • No USDA loans

6. Best for In-Person Service: US Bank

US Bank has branches throughout Minnesota, making it a great fit for first time buyers who want to work with someone in person. You can prequalify and start your application online.

US Bank also offers online calculators and educational resources. You can view its rates online, which simplifies your mortgage shopping.

Loan types offered: Conventional, Jumbo, FHA, VA

Credit score requirement: 620 (alternative credit considered)

Average days to close a loan: 44

Pros

  • Competitive interest rates
  • Variety of loan options
  • Excellent customer satisfaction

Cons

  • Stringent qualification requirements

7. Best for Lender Comparison: Credible Mortgage

Unlike individual mortgage lenders, Credible is a lender marketplace that allows you to compare multiple lenders. You'll enter basic financial information and get quotes from several lenders on standard home mortgage products. Credible offers a free, fully online mortgage broker service that lets you get quotes from online lenders.

You can find conventional, FHA, VA, Jumbo and refinance mortgage offers. You'll usually need a credit score in the mid-600s, but it varies by lender. It offers straightforward, convenient service with the possibility of finding the lowest interest rates.

Pros

  • Free option to compare lenders
  • Inputting information won't affect your credit score
  • Get excellent customer support

Cons

  • Not available in Missouri, New York or Rhode Island
  • You'll have to enter your info to get interest rate quotes
  • Origination fees may be higher than the average
  • No live chat feature for customer support

8. 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.

Loan types offered: VA, USDA, FHA, Jumbo

Minimum credit score: 620

Average days to close a loan: 30

Pros

  • Streamlined loan application process
  • Competitive interest rates and loan terms
  • Excellent customer service

Cons

  • Funding fees
  • Limited physical locations

The Housing Market in Minnesota: An Overview

Before you find your first home, it helps to know the market. Here’s a brief overview of Minnesota’s housing market:

Total households: 2,256,126

Median list price: $316,980

3 most expensive cities in Minnesota to buy a house:

  • Minnetonka Beach: $1,906,195
  • Woodland: $1,561,240
  • Greenwood: $1,466,319

3 most affordable cities in Minnesota to buy a house:

  • St. Cloud: $250,000
  • St. Paul: $300,525
  • Duluth: $312,700 

Preparing for a Mortgage

The mortgage process might seem mysterious. Here’s how you can get ready:

Review Your Credit

Your credit history plays an important role in the mortgage process. Your credit score, which is a 3-digit computer-generated number, determines whether you can obtain a mortgage. Your credit score and history also determine the interest rate lenders offer you. You don’t need a perfect credit history to get a mortgage, though. You can request a free report from each of the 3 credit bureaus once per year. The simplest way to make that request is through annualcreditreport.com. Review your report and contact the bureau if you see any errors. Many aspects of your credit history impact your credit score, including:

  • Whether you’ve paid your bills on time
  • How much of your available credit you have used
  • The age of your credit accounts
  • Whether you’ve had accounts go to a collection agency
  • Whether you’ve filed for bankruptcy

Decide on Your Budget

Decide how much you can afford when it comes to a monthly house payment. Your lender might approve you for more than that, but it’s best to stick with what fits your budget. 

Gather Your Documents

Prospective lenders will need to verify your financial situation. Gather together and organize your financial documents, including:

  • Your recent bank statements
  • Your recent tax returns
  • Statements from any other financial accounts
  • Pay stubs 
  • W-2s and/or 1099s

Contact Lenders

Contact multiple lenders and get a purchase quote. Compare the quotes carefully, keeping an eye on the loan terms. The interest rate may be fixed or adjustable. A fixed-rate mortgage always has the same interest rate and monthly payment. An adjustable-rate mortgage has an interest rate that lenders can change. The length of the mortgage also impacts your monthly rate. Shorter loan terms usually have a higher monthly payment.

Apply for Preapproval

Choose a lender for pre-approval. A pre-approval lets you know how much house you can buy. It also makes your offers stronger when you bid on a house. A pre-approval isn’t a commitment. You can go with a different lender if you choose to. 

Find a Home and Your Lender

Look for a home that fits your budget. Once you find one, have your agent put in an offer. If it’s accepted, choose a lender and start a formal application. 

Lenders typically have a minimum credit score requirement. Here are the minimums for several Minnesota lenders:

LenderMinimum Credit Score Required
Chase620
Homebridge Financial Services620
Keller Mortgage600
PennyMac620

Mortgage Options

When you get a mortgage quote, you may see a few mortgage options:

Conventional Loans

A conventional mortgage is a standard mortgage. It doesn’t have any government backing. Conventional mortgages can be conforming or non-conforming. A conforming mortgage meets the standards set by Freddie Mac and Fannie Mae. These two corporations are private mortgage backers that were started by Congress. They help stabilize the mortgage market. Conventional mortgages have price limits and other requirements. 

Jumbo Loans

A jumbo mortgage is a large conventional mortgage. These mortgages typically exceed Fannie Mae and Freddie Mac’s price limits. 

FHA Loans

Many first time home buyers choose FHA mortgages. These mortgages have a low down payment requirement. The Federal Housing Administration (FHA) allows down payments as low as 3.5% for borrowers with credit scores of 580 or higher. Private lenders offer these mortgages and may have higher minimum credit score requirements. 

USDA Loans

USDA mortgages help home buyers with low or moderate incomes to purchase homes in rural areas. The U.S. Department of Agriculture (USDA) oversees this program. You can get a mortgage with no down payment if you qualify. 

VA Loans

VA mortgages help current service members, veterans and some surviving spouses to buy or refinance homes. The Department of Veterans Affairs sets the rules for these mortgages. There is typically no down payment requirement and there is no mortgage insurance requirement. 

Private lenders offer all of these mortgages. They must follow the rules when it comes to conforming and government-backed mortgages. 

First Time Home Buyer Programs in Minnesota

Do you need some extra help to buy your first Minnesota home? Here are a few programs that can help:

Start Up Loan Program

This program is available to first time home buyers who meet the income and purchase price limits. You may be able to make a down payment of as little as 3%. It offers fixed-rate mortgages. 

Monthly Payment Loan

This program provides a 10-year loan of up to $15,000 to help with your down payment and closing costs. You must meet income requirements to qualify. 

Deferred Payment Loan and Deferred Payment Loan Plus

These loan programs offer a deferred loan to help with your down payment and closing costs. You don’t need to repay the loan until you sell, refinance or pay off the home. The Deferred Payment Loan is up to $8,000 and the Deferred Payment Loan Plus is up to $10,000. 

The Minnesota Housing Finance Agency offers these programs through lenders it screens and approves. 

Current Mortgage Rates in MN

Your mortgage rate is the amount you pay to borrow the money to buy a home. Lenders set interest rates based on the state of the economy and the housing market. They may offer you a higher or lower rate based on your credit history. Lenders change interest rates daily to reflect market changes. At Benzinga, we update these rates regularly to reflect these changes. 

Here are Minnesota’s interest rates: 

Loan TypeRateAPR
30-year fixed 6.695% 6.784%
15-year fixed 5.997% 6.159%
7/1 ARM (adjustable rate) 6.625% 7.415%
5/1 ARM (adjustable rate) 6.826% 7.688%
Rates based on an average home price of $256,857 and a down payment of 20%.
See more mortgage rates on Zillow

Closing a Mortgage

After you submit your mortgage application, your lender underwrites it. This means it double-checks everything. Lenders often ask for additional information. This takes some time, but eventually, your lender will tell you whether your loan is approved. If your loan is approved, the next step is your closing meeting. This is when you sign your mortgage documents and pay any funds due. 

Here is the average time it takes to close a loan for several Minnesota lenders: 

LenderAverage Days to Close 
Bank of America45
better.com21
Chase21
PennyMac10

Finding Your Minnesota Home

Finding the right home — and the right mortgage — takes time. You can get a refinance quote down the road, of course. Look for the best rate from a lender that’s trustworthy and treats you like a valued customer. Choose a home that fits your budget and won’t leave you struggling when it’s time to make your monthly payments. 

Owning a home is an investment. Over time, you build up equity in the home, which you could borrow against if needed. Buying your first home is a big deal. Choose a lender that wants your first home purchase to be a success. 

Frequently Asked Questions

Q

How do I get pre-approved in Minnesota?

A

To get pre-approved in Minnesota, 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!

Q

How much mortgage interest will I pay in Minnesota?

A

Interest that you’ll pay in Minnesota 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.

Q

How much should I save for a mortgage down payment in Minnesota?

A

Most lenders in Minnesota 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.