Friendliest Cities for Less-Experienced Borrowers

When it comes to purchasing a first home, shoppers will weigh several key factors prior to choosing a lender—what will the down payment look like? What percentage of that down payment will the homebuyer be required to put down? What types of loans are available? What credit score will be necessary in order to secure a loan, and what is the cost of living compared to monthly housing payment?

The answers are bound to be different depending on location. The online-loan marketplace LendingTree offers some insight into the relative "friendliness" of American metros by way of its annual ranking of local markets, gauging the best for first time buyers.

Considering the aforementioned factors—average down payment, average down payment percentage, share of buyers utilizing a Federal Housing Administration (FHA) loan, percentage of buyers with credit scores below 680, and share of homeowners who spend 30% of more of their monthly income on housing costs—LendingTree's research team determined that Kansas City, Missouri; Oklahoma City, Oklahoma; and Louisville Kentucky took the top three spots.

"Though each of these areas fall near the middle of the pack when it comes to the share of buyers using FHA loans, their high rankings across other categories make them appealing to first-timers," reasons LendingTree analyst and author Jacob Channel.

Oklahoma City, Kansas City, and Buffalo, New York reported the lowest down payments at $33,188 in each region, which is considerably lower than the average down payment of $63,216 across the full 50 metros.

"This means buyers in these areas likely don’t need to save up as much to make a down payment as they might in other parts of the country," notes Channel. OKC and Kansas City, along with Salt Lake City, also reported the lowest percentage of down payment paid by borrower at an average down payment percent of 10.4, which is about 4 basis points lower than the average across the 50 metros in the study.

Memphis, Tennessee; Las Vegas and Virginia Beach, Virginia were home to the largest share of buyers who have credit scores below 680. Slightly more than 25% of buyers in these areas have credit scores below 680. (A recent study showed credit requirements loosening a bit nationwide.)

The author notes that FHA loans can be especially helpful for cash-strapped, first-time buyers in expensive areas because they require a smaller down payment than some other loan types, so it's not surprising that three California cities—Los Angeles, San Diego, and Sacramento—topped the list for FHA lending.

As for the estimated debt to income ratio, Indianapolis; Raleigh, North Carolina; and Buffalo contain the smallest share of households that are spending 30% or more of their monthly income on housing, which the author calls "good news for first-time buyers who may not be earning as much as more experienced buyers."