Best Mortgage Lenders

Homeownership lies the heart of the American Dream for many, and it is likely that most buyers will need a mortgage in order to finance the purchase of their home.

Your mortgage is likely the largest loan you will take out, so finding the right lender is crucial to keeping your borrowing costs down. To help you in your search for the right loan, we’ve analyzed the best mortgage lenders in the market.

Keep reading to see our top picks.

On this page:

• LendEDU’s 5 Best Mortgage Lenders
• Types of Mortgage Loans
• Fixed vs Adjustable Rates
• What Affects My Rate?
• Additional Mortgage Costs

LendEDU’s 5 Best Mortgage Lenders

These are the five top mortgage lenders according to our ratings. If you’re looking for a mortgage, getting quotes from these lenders would be a great place to start.

You can click on a company in the list below to jump to their review.

1. Better
2. SoFi
3. New American Funding
4. Bank of America
5. loanDepot

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1) Better

Better operates in 35 states and aims to provide competitive interest rates and a streamlined loan approval process. Better offers:

• Conventional and jumbo fixed-rate mortgages
• Conventional and jumbo adjustable-rate loans
• FHA Loans
• Refinance loans

Here is what you need to know about Better’s conventional mortgage program:

• Minimum credit score: 620
• Down payment low: 5%
• Maximum debt-to-income ratio: Not provided
• LendEDU rating: 5/5

Full Review: Better Mortgage Review

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2) SoFi

SoFi offers many financial products, including mortgage loans. Members who borrow or invest with SoFi can qualify for special discounts on loan fees. Some of the home loans that SoFi offers include:

• Conventional and jumbo fixed-rate mortgages
• Conventional and jumbo adjustable-rate mortgages
• Refinance loans

Here is what you need to know about SoFi’s conventional mortgage program:

• Minimum credit score: Not provided
• Down payment low: 10%
• Maximum loan amount: $3 million
• LendEDU rating: 4.77/5

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3) New American Funding

New American Funding provides pre-approval for mortgage loans in as little as 24 to 48 hours. Loans offered by New American include:

• Conventional and jumbo fixed-rate mortgages
• Conventional and jumbo adjustable-rate mortgages
• Reverse mortgages
• VA Loans
• FHA Loans
• USDA Loans

Here is what you need to know about New American’s conventional mortgage program:

• Minimum credit score: Not provided
• Maximum loan-to-value: 97%
• Maximum debt-to-income ratio: Not Specified
• LendEDU rating: 4.74/5

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4) Bank of America

Bank of America is one of the nation’s largest mortgage lenders. It offers a variety of different kinds of mortgages including:

• Conventional and jumbo fixed-rate mortgages
• Conventional and jumbo adjustable-rate mortgages
• FHA Loans
• VA Loans
• Refinance loans
• The Affordable Solution mortgage for low-income borrowers

Here is what you need to know about Bank of America’s conventional mortgage program:

• Minimum credit score: 620
• Maximum loan-to-value: 97%
• Maximum debt-to-income ratio: 36%
• LendEDU rating: 4.62/5

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5) loanDepot

loanDepot is the second-largest non-bank consumer lender in the United States. loanDepot offers:

• Conventional and jumbo fixed-rate mortgages
• Conventional and jumbo adjustable-rate mortgages
• FHA loans
• VA Loans
• Refinance loans

Here is what you need to know about loanDepot’s conventional mortgage program:

• Minimum credit score: 620
• Maximum loan-to-value: 90%
• Maximum debt-to-income ratio: Undisclosed
• LendEDU rating: 4.6/5

Full Review: loanDepot Mortgage Review

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How We Chose the Best Lenders

We ranked and rated the best mortgage lenders based on the weighted average of 12 data points. These include:

• The lender’s Better Business Bureau (BBB) rating, which accounted for 10% of our score.
• The TrustPilot rating, which accounted for 5%.
• The number of states where loans were available, which accounted for 5%.
• The number of licenses and registrations, which also made up 5%.
• The number of regulatory actions, which accounted for 5%.
• The number of mortgage loan originators, which accounted for 5%.
• The lender’s customer support options, which accounted for 20%.
• The lender’s Zillow rating, which made up another 10%.
• Other rewards and extra benefits, which accounted for the final 10% of the lender’s score.

Types of Mortgage Loans

There are several different kinds of mortgage programs available to people who are interested in buying a home. It’s important to understand the differences between them, so you obtain the right type of loan for your situation.

Conventional & Jumbo Mortgages

These mortgages are widely available to virtually all qualified borrowers.

Conventional Mortgages

This is the type of mortgage loan the majority of homebuyers acquire.

Conventional mortgages fall within loan limits set by the country’s secondary mortgage buyers, which means lenders can easily sell these mortgages on the secondary mortgage market.

The specific loan limit for a loan to be a conventional loan differs by location, but loans under $480,000 are usually considered conventional mortgages.

Jumbo Mortgages

Jumbo mortgages exceed loan limits for sale to the largest buyers of mortgage debt.

They’re alternatives to conventional mortgages, and they usually refer to loans valued more than $480,000. However, some expensive parts of the country have higher loan maximums before a mortgage crosses the line into a jumbo loan.

Jumbo mortgages traditionally have had higher interest rates than conventional mortgages, but this has not been the case in recent years.

>> Read More: Best Jumbo Mortgages

Government-Backed Mortgages

The government wants to make it easier for certain groups of people, such as veterans or first-time homebuyers, to purchase houses. It can do this by insuring or guaranteeing the loans that private lenders issue.

This reduces the risk lenders face, so they can offer relaxed qualification requirements and lower rates.

Some examples of government-backed mortgages programs include:

• FHA Loans: These help borrowers with imperfect credit and low down payments to purchase a home. (Read: Best FHA Lenders)
• USDA Loans: These loans help borrowers looking to buy homes in specific rural areas to qualify with lower down payments and imperfect credit.
• VA Loans: Qualifying military members and veterans can obtain affordable loans from VA lenders with no down payment at all and less-than-perfect credit. (Read: VA Mortgage Rates)
• State and local programs: Many states also have local programs, many of which are aimed at first-time buyers or lower-income buyers.

Fixed vs Adjustable Rates

When you obtain a mortgage, you can opt for a fixed-rate loan or a variable-rate loan. There are pros and cons to each.

Fixed-rate mortgages

Fixed-rate mortgages have a set interest rate that doesn’t change for the entire life of the loan. Since the interest rate is fixed, your monthly payment doesn’t change, either. These loans are ideal if who want predictability in their monthly obligations.

Adjustable-rate mortgages

Adjustable-rate mortgages have rates that can change. The rate is tied to a specific financial index, so they can move up and down over time.

The initial interest rate on a variable-rate mortgage usually starts lower than the initial rate on a fixed-rate mortgage, but it could increase over time. However, there’s also a chance it could go down if rates decline in the future.

There are different kinds of adjustable-rate mortgages available, such as a 5/1 ARM or a 7/1 ARM.

With a 5/1 ARM, your initial interest rate is locked in for five years, and then it can change once per year for the rest of your loan term. With a 7/1 ARM, your initial rate is locked in for seven years and then can change once annually.

What Affects My Rate?

Rates change constantly based on the Prime Rate, a benchmark rate based on the federal funds rate set by the Federal Reserve.

However, not everyone who completes the application process will be offered the same mortgage rate. Your own personal financial situation will also affect what you pay when you get a mortgage. Here are five factors that affect your mortgage rate.

Read more about mortgage rates:

• 30-Year Mortage Rates

5 Factors That Affect Your Mortgage Rate

• Your credit score: A higher credit score means less risk for lenders. Getting a conventional mortgage is difficult with a score below 620, but some lenders offering government-backed mortgages will give you a loan with a score as low as 500.
• Your down payment: You’re expected to put down at least some money on most home purchases. The more you put down, the less risk you pose to the lender, so your rate will often go down as the size of your down payment increases.
• Your loan term: The length of your loan affects rates because lenders bear more risk of rate changes with longer-term loans. As a result, a 15-year mortgage will typically have a lower interest rate than a 30-year mortgage.
• The property’s use: Typically, you can get a lower rate if you take out a mortgage for a primary residence than if you borrow to buy a rental property. This is because lenders have determined borrowers are less likely to default on their own homes than real estate used for another purpose.
• Mortgage points: Buying mortgage points will reduce your ongoing mortgage rate. Points cost a set percentage of your loan value, and each point you buy reduces your loan by a small amount. Generally, the longer you stay in your home, the more likely it is that buying mortgage points will pay off.

Additional Mortgage Costs

When you take out a mortgage, you must make principal and interest payments on your loan each month. But your mortgage payment is not the only cost you need to worry about when buying a home.

>> Read More: Mortgage Calculator: Estimate Your Monthly Payments

Some of the other costs you should plan for include:

• Property taxes: In most states, you have to pay taxes to your local government in the area where your property is located.
• Homeowner’s association fees: In some neighborhoods, you are charged an HOA fee. Usually, these neighborhoods offer some amenities, such as a community swimming pool or community activities.
• Homeowner’s insurance: This protects you if your home or property is damaged or destroyed, or if you are sued because someone gets hurt in your home.
• Private mortgage insurance (PMI): If your down payment is less than 20%, most lenders will require you to take out PMI in case you default on your home loan.
• Program fees: Some government-backed mortgages charge up-front fees when you first take out your loan.
• Closing costs: There are many closing costs you have to pay when you buy your house. These cover expenses such as title insurance, deed transfers, and prepaid property tax. Closing fees can add up to thousands of dollars.

Bottom Line: Compare Quotes to Find the Best Mortgage Companies

Finding the best mortgage lender isn’t easy. You need to consider rates, loan terms, loan programs, customer service, and the lender’s reputation. You also need to know what types of loans the lender offers.

It’s important to research your options carefully to find an affordable loan—especially since you’ll be borrowing such a large amount of money and you’ll be paying it back for decades.

You should check your credit report and determine how much you can afford to pay as a down payment before you shop for a loan.

When you’re ready, compare quotes from multiple mortgage brokers and request mortgage pre-approval or pre-qualification to get an idea of the rates you’ll qualify for.