Best Online Mortgage Lenders

Researching lenders is often the first step when you’re ready to buy a home or refinance your mortgage. Your choice of lender can make a difference in how easy it is to get approved and what you’ll pay for a home loan. And you might prefer to work with an online lender rather than a traditional bank or credit union. 

Sifting through the options can be time-consuming when you have so many lenders to choose from. To make the process easier, we’ve researched the best online mortgage lenders. 

Reviews of the best online mortgage lenders 

When comparing mortgage lenders, it’s important to know what to look for. Consider the following:

• Interest rates
• Types of mortgages offered
• Fees
• Ease of application
• Customer service and support

It’s helpful to look at what might make one lender less attractive than another. Poor customer support ratings, for example, may be a dealbreaker. The following reviews offer an at-a-glance look at what makes the best online mortgage lenders stand out. 

SoFi

Rocket Mortgage

Quicken Loans

Navy Federal

How online home loans work 

Online home loans work like traditional mortgages in that they provide the money you need to buy a home. The mortgage process varies by lender, but the typical steps include:

• Prequalification or preapproval
• Application
• Appraisal (and inspection if you choose to have one)
• Documentation of your income and finances
• Final approval and closing

You must pay upfront for the appraisal and any inspections you schedule. Depending on the lender, the appraisal may be in person or virtual. If your lender requires additional documents, such as pay stubs or bank statements, you should be able to upload them through an online portal. 

Closing can also take place online. Whether you can complete closing remotely depends on which state you’re in. If you can close online, you’ll e-sign your paperwork and arrange to pay your closing costs and down payment via bank transfer. 

Pros and cons of online mortgage brokers 

Online mortgage lending may appeal to some homebuyers more than others. Looking at the benefits and potential downsides can help you decide whether it’s right for you. 

Pros

• Convenience

  You can apply online, upload your documentation, and potentially complete closing without leaving the comfort of your home.

• Speed

  Online mortgage lenders may offer faster processing times than traditional lenders for borrowers with straightforward financial situations.

• Cost

  The best online mortgage lenders offer lower rates and charge fewer fees than brick-and-mortar lenders.

Cons

• Documentation

  Special situations, such as self-employment, may require additional documentation for approval. That could delay the mortgage process if it takes you time to track down what the lender needs.

• Closing

  State laws determine what’s required for closing and what’s allowed when closing online. If your state doesn’t permit you to sign digitally, you may need to schedule an in-person closing.

• Support

  Traditional lenders may offer in-person support if you need help completing your application or sharing supporting documents. You don’t have that option with an online lender.

Our expert’s advice for first-time homebuyers

Chloe Moore

CFP®

If you’re a first-time homebuyer, you may want to consider an in-person lender over an online option. In-person lenders offer more support and are available to answer questions throughout the process. If you have outside support, such as that of a family member or close friend who has been through the process, and the cost savings is significant, an online lender is a terrific option.

Online mortgage application eligibility requirements 

Online mortgage lenders generally have the same list of criteria for a loan as traditional lenders. Your ability to qualify is based on:

• Credit scores
• Income
• Debt-to-income ratio (DTI) 

Lenders may look at your assets, including bank accounts and investment accounts, as well as what you owe to credit cards or loans. The minimum credit score can vary by lender and loan type if you’re weighing a conventional loan vs. an FHA loan, VA loan, or another government-backed loan. 

Where you live and plan to buy a home can also affect your decision. While many online mortgage lenders are licensed to offer loans in all 50 states, others have a limited lending footprint. 

How to apply for mortgages online 

Applying for a mortgage online isn’t much different from applying for a traditional one. Here’s how it works. 

1. Get preapproved. Preapproval means a lender takes an initial look at your finances and estimates what you qualify for, including the interest rate. Getting preapproval quotes from multiple lenders can help you narrow down which one you want to apply with. 
2. Organize your documents. Online lenders may require certain documents to complete your application. Bank statements, pay stubs, and tax forms are typical. If you’re self-employed, you may need cash flow or profit-and-loss statements. 
3. Apply. If you’ve selected a lender, the next step is filling out the application. You’ll fill in your personal information, tell the lender details about the home you want to buy, and upload your supporting documents. You’ll also need to agree to a hard credit check. 
4. Underwriting. Once the lender has your application, it will review it and ask for any additional documentation it needs. It will also check your credit scores. You’ll need to schedule an appraisal and any inspections. 
5. Closing. If you’re approved, the lender will schedule a closing date. You’ll get a copy of the final estimate and loan disclosures beforehand. If closing is remote, you’ll e-sign and arrange for payment of closing costs from your bank. 

The process is more or less the same whether you’re getting a mortgage to buy a home or refinancing a home loan. 

How to get the best online mortgage rates

Getting the lowest rate on a mortgage is important; it can save you money on the total cost of the loan and result in a lower monthly payment. These tips can help you find the best rates possible when shopping for a loan. 

• Check your credit. Credit scores carry significant weight in determining your interest rate. Knowing what a lender is likely to see when they check your credit can help you pinpoint what you might need to improve. 
• Get multiple quotes. It’s helpful to look at rates across a minimum of three online mortgage lenders to see how they measure up. Even a difference of half a percentage point can affect what you pay across the life of the loan. 
• Consider fixed versus variable rates. Variable-rate loans can be attractive when interest rates are low and likely to remain so. Fixed-rate loans can offer predictability if you’re uncertain which way rates might go. 
• Compare loan terms. A shorter loan term, such as a 15-year versus 30-year mortgage, could help you get a lower rate. Just be sure you can handle a larger monthly payment. 

You might consider buying discount points to reduce your rate. Buying points can add to your upfront closing costs, but doing so could save you money in interest charges if you plan to stay in the home long-term. If you haven’t made a homebuying budget yet, you may want to do it before you start shopping for online mortgage loans. 

Read More

How Much House Can I Afford? What to Consider 

FAQ 

Is an online mortgage lender better than a bank?

The choice between an online mortgage lender and a bank depends on your personal preferences and financial situation. Online lenders often offer faster processing times, a more streamlined application process, and competitive rates thanks to lower overhead costs. 

However, banks might offer more personalized service, especially if you value face-to-face interactions and have a more complex financial situation. Banks also often have more diverse financial products, which might be beneficial if you’re looking for a comprehensive financial relationship beyond just a mortgage.

Can I get a mortgage completely online?

Yes, you can obtain a mortgage entirely online with many lenders. Online mortgage lenders are designed to handle the entire process—from application and document submission to approval and closing—digitally. 

This is appealing to those who prefer not to visit a lender in person due to time constraints or personal preference. However, the final closing process might require a notary, which some lenders can accommodate with a mobile notary who will meet you at your convenience.

Are online lenders cheaper?

Online lenders can often offer lower rates and fees than traditional brick-and-mortar banks because they operate with less overhead. Without physical branches, they save on costs and often pass these savings onto the borrower in the form of lower interest rates and reduced fees. 

However, it’s important to shop around. Rates vary based on your credit profile, the loan product you choose, and market conditions.

What credit score do you need to buy a house through an online mortgage lender?

The required credit score to buy a house through an online mortgage lender can vary depending on the lender and the type of mortgage. A score of 620 or higher may be needed to qualify for most conventional loans. 

Some government-backed loans, such as FHA loans, accept scores as low as 580—or lower with a significant down payment. However, higher credit scores tend to secure better interest rates and loan terms, so it’s beneficial to have a score well above the minimum requirement.

How we picked the best online mortgage lenders

Since 2019, LendEDU has evaluated mortgage companies to help readers find the best mortgages. Our latest analysis reviewed 228 data points from 12 lenders and financial institutions, with 19 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of the best online mortgage lenders