<PAGE>
 
                                                                    EXHIBIT 10.1
                                                                                

                               FIRST AMENDMENT TO
                               ------------------
                  THIRD AMENDED AND RESTATED CREDIT AGREEMENT
                  -------------------------------------------


     THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") dated as of July 27, 1998 by and among NEW CENTURY MORTGAGE
CORPORATION, a California corporation (the "Company"), the lenders party to the
Credit Agreement referred to below (collectively, the "Lenders" and
individually, a "Lender"), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association, in its capacity as agent for the Lenders (in such capacity,
together with any successor agents appointed hereunder, the "Agent").

     WITNESSETH THAT:

     WHEREAS, the Company, the Lenders and the Agent are parties to a Third
Amended and Restated Credit Agreement dated as of May 29, 1998 (the "Credit
Agreement"), pursuant to which the Lenders provide the Company with revolving
mortgage warehousing and working capital credit facilities; and

     WHEREAS, the Company and the Lenders have agreed to amend the Credit
Agreement upon the terms and conditions herein set forth;

     NOW, THEREFORE, for value received, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Lenders agree as follows:

         Certain Defined Terms.  Each capitalized term used herein without being
         ---------------------                                                  
defined herein that is defined in the Credit Agreement shall have the meaning
given to it therein.

     2.  Amendments to Credit Agreement.  The Credit Agreement is hereby
         ------------------------------                                       
amended as follows:

         (a) Section 1.01 is hereby amended by adding the following new
definitions in correct alphabetical order:

             "Quarterly Average Leverage Ratio": for each three-month period
              --------------------------------
         ending on March 31, June 30, September 30 or December 31 of any year
         during the term of this Agreement, the ratio of (a) the average daily
         amount of Total Liabilities of NCFC and it Subsidiaries outstanding
         during such three-month period to (b) the average of the Tangible Net
         Worth of NCFC and its Subsidiaries at the end of each month during such
         three-month period.

                                      -1-
<PAGE>
 
             "Stock Repurchase Program": the stock repurchase program approved
              ------------------------
         by NCFC's Board of Directors, pursuant to which NCFC may spend up to
         $10,000,000 to repurchase shares of NCFC common stock on the open
         market or in negotiated transactions.

         (b) Section 4.13 is hereby amended in its entirety to read as follows:

             4.13  Restricted Payments.  The Company and NCFC will not make
         any Restricted Payments, other than payments not to exceed $10,000,000
         in the aggregate to be made by NCFC pursuant to the Stock Repurchase
         Program.

         (c) Section 4.15 is hereby amended in its entirety to read as follows:

             4.15  Minimum Liquidity.  The Company will not permit the sum of
         (a) Cash plus (b) the lesser of the Borrowing Base and the sum of the
         Commitment Amounts minus, in either case, the outstanding principal
         balance of all Loans, as of (i) the end of each month and (ii) the date
         of any payment made under the Stock Repurchase Program (after giving
         effect to such payment), to be less than $10,000,000.
 
         (d) Section 4.16 is hereby amended in its entirety to read as follows:

             4.16  Leverage Ratio.  The Company will not permitthe Leverage
         Ratio of the Company to be greater than 8.0 to 1.0 as of the last day
         of each fiscal quarter of the Company. NCFC will not permit (i)the
         Quarterly Average Leverage Ratio for any period of measurement to be
         greater than 10.0 to 1.0, or (ii)the Daily Leverage Ratio on any date
         to be greater than 15.0 to 1.0.

         (e) Paragraph 1 of Exhibit E is hereby amended in its entirety to read
as follows:
 
             (1)  A Mortgage Loan the entire interest in which is owned by the
         Company and which is an Eligible Mortgage Loan covering a completed
         residential property, provided that such Mortgage Loan has been pre-
         approved for purchase under a Take-Out Commitment and the aggregate
         available amount of such Take-Out Commitment is not less than the
         aggregate outstanding principal amount of Mortgage Loans pre-approved
         for delivery thereunder, and provided that at the time such Mortgage
         Loan was pledged under the Pledge and Security Agreement not more than
         180 days had elapsed from the date such Mortgage Loan was closed: the
         least of: (i) the purchase price under the Take-Out Commitment to which
         such 

                                      -2-
<PAGE>
 
         Mortgage Loan has been assigned or, if such Mortgage Loan has not been
         so assigned, the weighted average purchase price for Mortgage Loans
         under Take-Out Commitments under which such Mortgage Loan has been pre-
         approved for delivery, less three percent (3%) of the original
         principal balance, (ii) the unpaid principal amount of such Mortgage
         Loan, (iii) the Acquisition Cost of such Mortgage Loan, or (iv) at the
         election of the Agent, the Fair Market Value of such Mortgage Loan,
         less three percent (3%) of the original principal balance.

     3.  Conditions to Effectiveness of this Amendment.  This Amendment shall
         ----------------------------------------------                      
become effective when the Agent shall have received at least thirteen (13)
counterparts of this Amendment, duly executed by the Company and each Lender and
acknowledged by NCFC, provided the following conditions are satisfied:

         (a) Before and after giving effect to this Amendment, the
     representations and warranties of the Company in Section 3 of the Credit
     Agreement, Section 5 of the Pledge and Security Agreement and Section 4 of
     the Servicing Security Agreement, and of NCFC in Section 15 of the
     Guaranty, shall be true and correct as though made on the date hereof,
     except for changes that are permitted by the terms of the Credit Agreement.

         (b) Before and after giving effect to this Amendment, no Event of
     Default and no Unmatured Event of Default shall have occurred and be
     continuing.

         (c) No material adverse change in the business, assets, financial
     condition or prospects of the Company or NCFC shall have occurred since the
     Effective Date.

         (d) The following shall have been delivered to the Agent, each duly
     executed or certified, as the case may be, and dated as of the date of
     delivery thereof:

              (i)   certified copies of resolutions of the Board of Directors of
          the Company authorizing or ratifying the execution, delivery and
          performance of this Amendment;

              (ii)  a certified copy of any amendment or restatement of the
          Articles of Incorporation or the By-laws of the Company made or
          entered following the date of the most recent certified copies thereof
          furnished to the Lenders;

              (iii) certified copies of all documents evidencing any necessary
corporate action, consent or governmental or regulatory approval (if any) with
respect to this Amendment;

                                      -3-
<PAGE>
 
              (iv)   such other documents, instruments, opinions and approvals
          as the Agent may reasonably request.

     4.  Acknowledgments.  The Company and each Lender acknowledge that, as
         ---------------                                                   
amended hereby, the Credit Agreement remains in full force and effect with
respect to the Company and the Lenders, and that each reference to the Credit
Agreement in the Loan Documents shall refer to the Credit Agreement as amended
hereby.  The Company confirms and acknowledges that it will continue to comply
with the covenants set out in the Credit Agreement and the other Loan Documents,
as amended hereby, and that its representations and warranties set out in the
Credit Agreement and the other Loan Documents, as amended hereby, are true and
correct as of the date of this Amendment.  The Company further represents and
warrants that (i) the execution, delivery and performance of this Amendment is
within its corporate powers and has been duly authorized by all necessary
corporate action; (ii) this Amendment has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms (subject to
limitations as to enforceability which might result from bankruptcy, insolvency,
or other similar laws affecting creditors' rights generally and general
principles of equity) and (iii) no Events of Default or Unmatured Events of
Default exist.

     5.  General.
         ------- 

         (a) The Company agrees to reimburse the Agent upon demand for all
     reasonable expenses (including reasonable attorneys fees and legal
     expenses) incurred by the Agent in the preparation, negotiation and
     execution of this Amendment and any other document required to be furnished
     herewith, and to pay and save the Lenders harmless from all liability for
     any stamp or other taxes which may be payable with respect to the execution
     or delivery of this Amendment, which obligations of the Company shall
     survive any termination of the Credit Agreement.

         (b) This Amendment may be executed in as many counterparts as may be
     deemed necessary or convenient, and by the different parties hereto on
     separate counterparts, each of which, when so executed, shall be deemed an
     original but all such counterparts shall constitute but one and the same
     instrument.

         (c) Any provision of this Amendment which is prohibited or
     unenforceable in any jurisdiction shall, as to such jurisdiction, be
     ineffective to the extent of such prohibition or unenforceability without
     invalidating the remaining portions hereof or affecting the validity or
     enforceability of such provisions in any other jurisdiction.

                                      -4-
<PAGE>
 
          (d) This Amendment shall be governed by, and construed in accordance
     with, the internal law, and not the law of conflicts, of the State of
     Minnesota, but giving effect to federal laws applicable to national banks.

          (e) This Amendment shall be binding upon the Company, the Lenders, the
     Agent and their respective successors and assigns, and shall inure to the
     benefit of the Company, the Lenders, the Agent and the successors and
     assigns of the Lenders and the Agent.

                                      -5-
<PAGE>
 
         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
     executed as of the day and year first above written.


                       NEW CENTURY MORTGAGE
                       CORPORATION


                       By: /s/ Brad Morrice
                           --------------------------------------
                          Its:
                              -----------------------------------

 
                       U.S. BANK NATIONAL ASSOCIATION
 

                       By: /s/ Edwin Jenkins
                           --------------------------------------
                       Its: Vice President
                           --------------------------------------


                       GUARANTY FEDERAL BANK, FSB


                       By: /s/ W. James Meintjes
                           --------------------------------------
                       Its: Vice President
                           --------------------------------------
 

                       COMERICA BANK


                       By: /s/ David R. Chirchill
                           --------------------------------------
                       Its: Assistant Vice President
                            -------------------------------------



                     [Signature Page for First Amendment to
                  Third Amended and Restated Credit Agreement]

                                      -6-
<PAGE>
 
                       FIRST UNION NATIONAL BANK,
 

                       By: /s/ C. Simms
                           --------------------------------------
                       Its: Vice President
                            -------------------------------------


                       RESIDENTIAL FUNDING CORPORATION


                       By: /s/ Wendy Joseph
                           --------------------------------------
                       Its: Director
                            -------------------------------------


                       BANK ONE, TEXAS, N.A.


                       By: /s/ Mark L. Freeman
                           --------------------------------------
                       Its: Vice President
                            -------------------------------------

 
                       THE BANK OF NEW YORK


                       By: /s/ Robert W. Pierson
                           --------------------------------------
                       Its: Vice President
                            -------------------------------------
 



                     [Signature Page for First Amendment to
                  Third Amended and Restated Credit Agreement]

                                      -7-
<PAGE>
 
                       THE FIRST NATIONAL BANK OF
                       CHICAGO


                       By: /s/ Scott Miller
                           --------------------------------------
                       Its: Assistant Vice President
                            -------------------------------------



                       NATIONSBANK OF TEXAS, N.A.


                       By: /s/ Bob L. Caston
                           --------------------------------------
                       Its: Senior Vice President
                            -------------------------------------


                       FLEET BANK, N.A.


                       By: /s/ Jerry H. Pariselia
                           --------------------------------------
                       Its: Vice President
                            -------------------------------------



                     [Signature Page for First Amendment to
                  Third Amended and Restated Credit Agreement]

                                      -8-
<PAGE>
 
          THE UNDERSIGNED, NEW CENTURY FINANCIAL CORPORATION, HEREBY (1) AGREES
THAT EACH REFERENCE TO THE CREDIT AGREEMENT, OR WORDS OF SIMILAR IMPORT,
CONTAINED IN THE THIRD AMENDED AND RESTATED GUARANTY DATED AS OF MAY 29, 1998
(THE "GUARANTY") BY THE UNDERSIGNED TO THE LENDERS AND THE AGENT, SHALL BE A
REFERENCE TO THE CREDIT AGREEMENT AS AMENDED BY THE FOREGOING AMENDMENT, (2)
CONFIRMS THAT THE GUARANTY SHALL REMAIN IN FULL FORCE AND EFFECT AFTER GIVING
EFFECT TO THE FOREGOING AMENDMENT, AND (3) CONFIRMS AND ACKNOWLEDGES THAT ITS
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 15 OF THE GUARANTY ARE TRUE
AND CORRECT AS OF THE DATE OF THE FOREGOING AMENDMENT.

                       NEW CENTURY FINANCIAL CORPORATION

                       By: /s/ Brad Morrice
                           ------------------------------------
                       Its:
                           ------------------------------------

                                      -9-