As the housing market continues to show strong signs of continuous growth and development, choosing the right mortgage lender has become increasingly important. However, deciding which lender is right for you can be difficult.
The best mortgage lenders offer competitive interest rates, flexible repayment terms and options, and generally make the paperwork-heavy process of borrowing as seamless as possible. Even the highest-rated mortgage companies have pros and cons, though, so it’s critical to cast a wide net as you seek out the best lender for your situation.
- What is a mortgage?
- Best mortgage lenders
- Other lenders to consider
- Tips for comparing lenders
- How to get a home loan
- Frequently asked questions
What is a mortgage?
A mortgage is a type of loan taken out to purchase a home. The borrower (potentially, you) agrees to pay back the loan, plus interest, over a specific period, often 15 or 30 years. The property often secures the debt, meaning if the borrower doesn’t make payments, the lender may repossess the property.
Mortgages typically require a down payment, though this amount may vary by type of loan and lender. Generally, the more money you put down, the lower the interest rate on the loan. Monthly payments are determined by the loan amount, interest rate, and loan term (length of time to repay the loan).
To be eligible for a mortgage, you need a good credit score, a steady source of income, and a certain amount of money saved for closing costs and a down payment. Additionally, if you’re putting down less than 20% of the home’s price, most lenders require you to purchase private mortgage insurance (PMI) to cover the cost of repaying the loan if you were to default.
Best mortgage lenders
Allied
- Best for: Helpful customer service, local loan officers
Allied has been around since 1993, offering local agents who work with you to secure your mortgage promptly. Allied offers a long list of mortgage options and reports an overall customer-satisfaction rating of 98.6%.
Pros
- Get paired with a loan officer who will walk you through the whole process
- A variety of loan options
- Local branches available throughout the U.S.
Cons
- No online-only option
- Rates not available online
- Clunky user experience on their website
NASB
- Best for: Non-traditional borrowers
NASB is a Missouri-based bank that offers many financial products, mortgages included. It offers conventional loans, FHA loans, VA loans, FLEX loans, jumbo loans, and more.
NASB also offers a very helpful rate calculator that can show you potential rate options for multiple products, all with just a few pieces of information.
Pros
- Many loan options
- Options for self-employed borrowers
- Easy to check your potential rate
Cons
- Physical branches only in Missouri
- Company laid off loan-servicing workers in March 2023
- Website poorly designed
LoanDepot
- Best for: Fast closings
LoanDepot is a licensed mortgage lender in all 50 states. The company focuses on a fast mortgage process and offers new loans, refinance, and home equity products.
LoanDepot has funded more than $100 billion in loans since 2010 and became among the nation’s largest VA lenders in 2017.
Pros
- Offers closings that are 50% faster than other lenders
- Lends in all 50 states
Cons
- Rates are difficult to check
- No USDA loans
NBKC Bank
- Best for: Online loans
NBKC is clearly designed with tech-savvy borrowers in mind. Its seamless user experience and easy online application can help you understand the mortgage process and apply for your loan.
Plus, NBKC has all the usual mortgage products: conventional loans, FHA, and VA, etc. (and NBKC also offers refinance and home equity products as well).
Pros
- Easy online application
- Helpful rate calculator
- Many loan options
Cons
- Less in-person help
- No USDA loans
New American Funding
- Best for: A variety of loan options
New American Funding offers traditional loan options like VA and FHA, but it also features self-employed options, a cash-buyer program, a 14-business-day closing option, and other unique initiatives.
Plus, New American Funding has a rate lock-in feature for certain borrowers. If rates shift within five years of you getting your loan, you may qualify for a refinance, and New American covers certain costs.
Pros
- Clear and transparent rate options
- Many unique loan products, programs
- Helpful housing market tools
Cons
- No fully online application
- Difficult to find fee details
Other mortgage lenders to consider
Navy Federal Credit Union
- Loan types: VA loans, Military Choice loans, fixed-rate loans, adjustable-rate mortgages, Homebuyers Choice loans
- Min. credit score: Varies by loan, but Navy Federal provides low-credit options
- Down payment requirement: No down payment options
United Wholesale Mortgage
- Loan types: Conventional, FHA, VA, USDA, jumbo
- Credit score: 620
- Down payment: Contact lender
Stearns
- Loan types: Conventional, FHA, VA, USDA, jumbo
- Credit score: Contact lender
- Down payment: 3%
Tips for comparing mortgage lenders
Whether you’re a first-time home buyer or a veteran, comparing mortgage lenders will help ensure you get the best possible home loan for your situation. Here’s how to do it:
- Make sure to consider all the fees: Fees vary between lenders, so take the time to compare origination fees, closing costs, and any other applicable fees.
- Look for the best interest rate: Find the lowest interest rate you can get and compare it to other lenders. Be sure to consider the annual percentage rate (APR), which combines the interest rate and fees associated with the loan.
- Ask about loan products: Ask each lender about its available loan products so you can compare them and find the best fit for your needs. Some lenders offer more options than others.
- Read the fine print: Before you sign on any dotted line, confirm you understand the terms and conditions of the loan. Your loan officer or mortgage broker can help.
- Consider customer service: Make sure the mortgage lender you choose provides the type of customer service you need. Read reviews and ask friends and family for recommendations.
How to get a mortgage
Getting a mortgage isn’t a short and quick process most of the time. Some lenders do their best to help you move along faster, but the whole process involves submitting a lot of paperwork and meeting many requirements. Generally, here’s the process you’ll follow:
- Set a budget: Before beginning the process, know what you can afford and what kind of monthly payments you’re comfortable with. This will help you decide the type of mortgage and loan amount that works best for you.
- Review your credit: Before applying for a mortgage, review your credit score and report to make sure it’s accurate and up-to-date. This will give you an idea of what interest rates and loan terms you may qualify for. The worse your credit score, the worse your interest rates.
- Get pre-approved: Before shopping for a home, you should get pre-approved for a mortgage with a bank or lender. This will help you understand how much you can afford and demonstrate to potential sellers that you’re serious about buying.
- Shop around: Since there are many different mortgage lenders and loan types available, make sure to shop around and compare the different options. This can help you find the best deal and ensure you’re getting the best rate and terms. Start with our favorite lenders above. Additionally, you’ll also start shopping for your actual home at this point, too, with the help of a real estate agent.
- Gather (lots of) documents: The lender will need certain financial documents to process your loan application, such as pay stubs, tax returns, and bank statements. The lender will let you know what other documents it needs when you apply.
- Submit the application: Once you’ve gathered all the necessary documents, you can apply to the lender. The lender will review your application and credit history and, if approved, will send you a loan offer.
- Finalize the loan: Once approved for the loan, you’ll need to sign the loan documents and provide any additional paperwork requested by the lender. Once the loan is finalized, you close on your new home and begin making monthly payments.
Frequently asked questions
How can I get pre-approved for a mortgage?
Contact a lender and provide various forms of financial information, such as your credit report, income, and other documents. The lender will then review the information to determine if you qualify for a mortgage and how much you can borrow. Getting pre-approved lets you know how much house you can afford and shop for a home within your budget.
How much home can I afford?
The amount of home you can afford largely depends on your income, credit score, current debts, and down payment. You can use a mortgage payment calculator to calculate your payments and get a realistic idea of what will work for your budget.
It’s essential to account for other expenses, such as closing costs, homeowners insurance, and property taxes as well. It’s also recommended to establish an emergency fund for unexpected expenses. A lender or mortgage broker can provide you with a more accurate estimate of how much home you can afford.
How much should I put down for a down payment?
The size of your down payment will be determined by the amount of money you’re able to put toward it and the specific loan you’re applying for. Generally, you should aim for at least a 20% down payment on the purchase price of the home.
However, depending on your circumstances, it may be possible to get a loan with a lower down payment. FHA loans, for example, allow homeowners to purchase a home with just 3.5% down.
Is now a good time to buy a home?
It depends on your individual circumstances and goals. Now may be a great time to buy a home if you have saved enough money for a down payment, are comfortable with the current market conditions, and have a long-term plan in place.
Expert Take: “What I suggest is to assess your current financial situation and decide if it’s the right move for you,” said Utah-based, licensed home loan officer Jason Skinrood. “If you need help with that, I highly recommend finding a trusted financial advisor to help you make the best decision for your situation.”