Ah, the world post-housing bubble: Lenders are lending again, and interest rates are low, for now at least. But buying a home is huge — possibly the biggest financial decision you’ll make in your life. And because lenders are more relaxed about who can get a loan, if you’re looking to buy (and therefore borrow), it isn’t just a question of, “Will I get approved?” but also, “Who do I choose?”
There are more options available now than there have been in years, and finding fair rates and fees is only part of it. The best mortgage lenders — like my top pick, — will have it all: good rates and better customer service, plus resources that can help you snag your dream home.
Google-X’s Picks for Best Mortgage Lender
After exploring 181 mortgage companies, I found 5 that embody everything I want in a lender. If you’re hunting for a home loan, these are a great place to start.
- Best Overall:
- Best for First-Time Buyers Who Want a Little Help:
- Best for Seasoned Homebuyers:
- Honorable Mentions: ,
I’ll say it now (and repeat it later because it bears repeating): No matter what, the rate and terms you’re quoted will vary depending on your credit score and financial circumstances. That’s why you don’t see recommendations for cheap mortgage lenders or mortgage lenders with the lowest rates. There’s just no way to guarantee it. On to how — and why — I like these ones the most.
The best mortgage lenders have three things in common.
They’re widely available.
A mortgage company doesn’t have to be nationwide to be good, but I didn’t want to get you jazzed about a lender just to find out it only works in one state. Lenders operating in at least 40 states were the only ones that made my list.
That said, if you’ve heard glowing reviews about a local lender, you should definitely check it out — especially if you want some TLC. The little guys processing fewer loans every month will have more bandwidth for that kind of service.
They’re not the middlemen.
In the world of mortgages, there are three types of companies: direct lenders, mortgage brokers, and lead generators. Direct lenders can process your application and issue your loan directly.
Mortgage brokers, on the other hand, serve as a go-between. They find loan products that fit your needs and work with a lender to get your mortgage approved. There are great mortgage brokers out there, and they’re especially helpful if you want more tailored service or have specific circumstances (like you’re self-employed, for example). But many mortgage brokers work on a local level, which didn’t fit my criteria.
Lead-generation websites simply take your information and pass it along to any number of lenders; those lenders then contact you. With these companies, you don’t know what lender you’ll get or even who you’re giving your personal information too, so I nixed them.
They’re not predatory.
Lenders get regulatory actions, complaints made against them by the state they operate in, all the time. Having a few business hiccups doesn’t necessarily mean a lender is predatory — maybe it forgot some paperwork, or didn’t realize its license had expired — but multiple infractions is a red flag. What if an unlicensed loan officer signs you up for the wrong policy, or the company is paying illegal quota incentives to nab as many mortgages as possible? I played it safe and cut repeat offenders.
And I tested each of them.
Sure, you can always get pre-approved in person or over the phone, but most of us are going to start out with the easiest option: online. I looked for a website that made the whole process feel professional, streamlined, and unintimidating.
Key features I wanted to see:
- Easy-to-find loan rates right on the website
- A knowledge center that was actually full of knowledge, plus tools like mortgage calculators
- An efficient online pre-approval application
- Someone who can help answer questions via live chat
- The option to apply over the phone (because sometimes you feel like talking to a real person)
was a standout. Its website guided me through the entire mortgage application, starting with a nifty home-affordability calculator that actually showed me what I could afford to pay instead of just what my rates might be, like most other calculators. However, Citibank has a huge amount of information on its site, and while the company does its due diligence to make it digestible, the font is small; the words are large; and more than once I zoned out.
I’m a big fan of for its simplicity. The website is clean and modern. In fact, the information I needed first was laid out so I could follow step by step and the pre-approval form was easy. The only downside: When I had a question, I had to call in. There is no live chat.
Then I got pre-approved.
You can’t really recommend something without trying it out yourself, right? I didn’t want to go through the whole application process for each finalist (my credit score would cry), but I did try getting pre-approved. Twelve times.
It wasn’t as smooth a process as you might think (I expected it to be very smooth since getting pre-approved doesn’t require endless paperwork or underwriting like an actual mortgage). Chase Bank required unexpected questions that weren’t so easy to answer (I’m not sure what my annual hazard insurance premium is) and when I first tried applying to New Penn Financial, an error on the first page of its quote tool left me banging my head on my desk.
Once I’d applied, I sat back and waited for the responses to roll in. Some lenders — like MB Financial — took hours or even days to let me know where I stood, but others replied immediately and made me feel like I was already a beloved customer. Take Quicken Loans: Its reply email thanked me, gave me a helpful tip about improving my credit score, and made the whole process feel a little less stressful.
With the replies in, I set upon customer service. I called during peak hours. I called during off-peak hours. I told each lender that I was a first-time buyer looking for a home and asked how long my pre-approval was good for. Some lenders, like Alliant Credit Union and Quicken Loans, walked me through everything. The folks at eLend and Stonegate never even picked up the phone.
A good lender is worth its weight in gold. From the initial interview to the follow-up after receipt of the credit report, the lender needs to listen carefully. They need to respectfully treat the buyer like a family member.
Pamela Cirkiel CIPS, SRES, ABR
M.E. “Gene” Johnson Realtors, Inc.
Then, and only then, did I look at interest rates.
If customer service is king, interest rates are queen. I get it; I’m a first-time homebuyer myself and I live and die by my rates, especially when you consider even just a half percentage point difference in interest can have a massive impact over the life of your loan.
Say you got a $250,000 mortgage spread over 30 years. If your interest rate was 4 percent, you’d end up paying $429,673 total, with $179,673 going to interest alone.
Sound like a lot? Just wait.
If you locked in at 4.5 percent for the same loan, you’d pay $456,017 overall with $206,017 going to interest. And if you went “all the way” up to 5 percent? That adds up to $483,139 overall with $233,139 in interest. Yep: Shaving just that half percentage point off your interest rate could save you more than $26,000.
Using the same standardized quote, I found the average costs and fees among all the lenders. To make it past the final round, companies had to have below-average interest rates, fees, and closing costs — plus an affordable monthly payment. The average interest rate from my list of lenders was 3.729 percent; anyone higher (Wells Fargo at 4 percent and LoanDepot at 3.875) was nixed.
Quicken Loans, Alliant, and Citibank won me over.
And my winner had it all: is well-rounded and robust. Getting pre-approved with Quicken took under 30 minutes end to end — and that included the time I spent on the phone with its customer service. Even better: I’m not getting spammed with emails and phone calls.
While I loved slick website, its customer service really stood out. Case in point: I got an agent on the phone in three rings who offered to help me complete the pre-approval application if I wasn’t quite sure how. If this were my first mortgage, their patience would have helped keep my panic at bay.
was the opposite, and why I recommend it for more seasoned home buyers. It’s the biggest name out of my top picks, and has the manpower and resources to keep everything clipping along. Its pre-approval process was done in a fast 15 minutes, and even though I was assigned a loan officer within an hour, I didn’t really need it: The Thank You page listed out all the next steps.
And it’s worth noting that while and had higher rates than my three top picks, each stood out: First Internet Bank for its up-front, transparent rates for those looking to refinance and New American Funding for its Upfront Credit Approval. The Upfront Credit Approval is an additional step before the pre-approval process that shows where you’re at without having to hand over your social security number or getting a hard pull on your credit. This is extra handy for anyone with a more tarnished credit history.
6 Things to Know Before Looking for a Lender
It helps to speak the lender’s language.
You’ll have a lot of choices when you start shopping for a mortgage. Do you want a government-backed loan or a private loan? An adjustable rate or a fixed rate? It can be overwhelming.
Different mortgage options fall into two basic camps: conventional loans backed by a bank or mortgage company, and government-backed loans. Conventional loans vary in length, rates, fees, and other terms. Many conventional loans have a standard 30-year repayment term, but you can opt for a 15-year (or even lower) term generally at a higher interest rate.
Government-backed loans are insured by a government branch. A government-backed loan can have some perks, like a lower down payment or more flexibility in credit score requirements, but not everyone qualifies. Take Veterans Affairs (VA) loans: They’re more lax about credit scores and can be completely financed, meaning there’s no down payment at all. But to qualify, you (obviously) need to be a veteran.
USDA loans are another good option for people with past credit problems or those struggling to build a down payment, but to qualify, your house has to be in a rural area. Even most “out in the country” suburbs aren’t eligible.
The most well-known government-backed option of the bunch, the FHA loan, has a lower down payment requirement than most other loans — as low as 3.5 percent! — and the credit score requirements aren’t as strict as you’d might expect. But as a trade-off, most FHA loans require you to pay mortgage insurance for the life of the loan, much longer than a conventional loan requires.
To complicate things even more, the minimums listed by the VA or FHA aren’t all you need to qualify. Since the loan is only guaranteed by the government but issued by a lender, the lender can stack its own requirements on top. Known as overlays, these additional requirements could affect your approval. “Banks always have overlays on top of federal lending guidelines that make loans more restrictive,” says Nick Schlekeway, designated broker for Amherst Madison Legacy Real Estate. “FHA has a debt-to-income ratio cap at 57 percent, and the lender may put a debt overlay of 10 percent on top of that.”
If I’m making it sound like government-backed loans aren’t your best deal, don’t worry. An overlay could have an effect on your loan, but it isn’t likely to be a big one. Think of this more as just a “good to know.”
Get a fixed rate.
Mortgage interest rates come in two flavors — fixed, meaning you’ll pay the same through the life of your loan; and adjustable, meaning after a period of time your interest rate might increase. Fixed rates are an attractive option because you’ll always know what your payment is going to be each month. Adjustable rates are attractive because they often start off lower than fixed rates, and that could mean you might get approved for a higher loan amount (and possibly get a bigger and better home).
So which is better?
Right now, a fixed rate is. Adjustable loans were really popular when interest rates were super high because, although you were locked in at that rate for a period of time, you had the potential to decrease later without having to refinance. Right now, that’s not an issue.
I’ll be blunt. If you need to get an adjustable-rate mortgage right now to afford a home, you shouldn’t be buying a home. The rates are still so ridiculously low that you should lock a fixed rate in while you can.
Jarvis Team Realty
Your rates are yours and yours alone.
Some lenders are extremely forthcoming with the interest rates, closing costs, and fees you’ll pay for getting a mortgage — I specifically looked for lenders that are — but what you see advertised may not be exactly what you get.
That’s because a lot goes into determining your interest rate: If you’ve had past credit problems, for example, you may have to pay a higher rate. On the other hand, if you’re willing to put down a large down payment, your quoted rate may be lower. The numbers will also change depending on what loan product you pick: FHA interest rates are lower than conventional loan rates when you apply; opting for a 15-year term instead of a 30-year term could also lower the rate a bit.
The good news is you can shop around — and you should. Different lenders will offer different terms, and if you apply to several within 30 days, all of those hard pulls on your credit report will only count as one inquiry.
Interest rates might go up.
In December 2015, the Federal Reserve agreed to raise the interest rate for the first time in 10 years. It’s not much of a hike — only a 0.25 percentage point increase — but that little number could change what you’ll pay for a mortgage.
The Fed doesn’t determine the exact interest rate you get: That’s up to your lender. But the Fed’s increase might be a good reason to finally raise the mortgage rates above the historical lows we’ve been enjoying. The problem is, no one can say for certain when that will happen. “We’ve all been telling each other that rates are going to go up for a decade now. And we know they will go up — just not when,” explains Schlekeway.
It’s also hard to tell how much the increase would actually be, and if you’ll even notice (much). “Do I think it is going to have a huge effect on the housing market? Not really,” Schlekeway says. “But it depends on how much rates go up. Too much could affect affordability.”
The simple answer might be to pull the trigger now if you’ve been on the fence about buying. Rates are currently low and getting in before “anyone’s guess” happens is a win.
You don’t need 20 percent down, but it helps.
Having a 20 percent down payment is a good thing: It ensures you’ll avoid monthly private mortgage insurance (PMI) payments (no one wants to throw money away). It may also help you get better rates or terms. But what if you just can’t get there?
Socking away $30,000 isn’t an easy task, especially for first-time buyers who don’t have something large like, say, a house to sell to boost their savings. But that doesn’t mean you have to give up on buying a home.
There are so many rumors and false information floating around about lending. It is unbelievable. Having to have a 20 percent down payment is definitely false. Most people that I see are putting 10 percent down, but FHA loans go as low as 3.5 percent down and you can find conventional loans for 5 percent.
Amherst Madison Legacy Real Estate
Still, if you’re right on the cusp of 20 percent, waiting until you hit that marker is likely the better financial decision. When you start off with a higher down payment, you’ll already have some equity built up, and that is a good thing. “Your down payment and your equity in your house is your safety net if the market shifts,” Schlekeway says. Having equity will keep you from being underwater on your mortgage and give you the option to sell (and make some money) if you need to.
Past credit problems won’t keep you from buying.
During the housing market crash, lenders got spooked: They tightened requirements and it was difficult to get a loan if you had blemished credit. But every expert I spoke with agrees that this isn’t the case anymore.
Lenders are willing to lend again, and to give more people a chance. Things like the Dodd Frank Act — an act that standardized the mortgage-application process, giving lenders clear steps to follow for most loans — have helped ease the way too, and people with a few credit faux pas shouldn’t be afraid of at least applying for pre-approval.
“We get home buyers that ask if they should even bother thinking about a loan if they have bad credit. It’s just the wrong thinking,” Jarvis says. “They view lenders as this scary thing or process, but a good home lender will walk a client through the process of getting the money to buy.”
You may not be instantly approved, but the right lender will take the time to work with you, offer suggestions for improving your chance for approval, or even hook you up with their credit repair specialists if you need it.
Ready for that mortgage?
Before you apply, save yourself a lot of stress (and possible heartache once you’ve found your dream home) and take these pre-application steps:
- Get your down payment together. You’ll need funds for the down payment, closing costs, moving expenses, and pretty much everything else. Start saving at least six months — but ideally a year or more — in advance so you have the largest down payment possible before you apply.
- Pull your credit reports. You get free reports once a year through AnnualCreditReport.com. Dispute any errors you find; pay any outstanding bills; and then don’t take on any more credit. Just work on paying on time and getting those scores as good as they can be.
- Practice making payments. If you practice making payments ahead of time (put the extra in your savings each month), you won’t go through new homeowner shock later.
- Get pre-approved. Once your financial ducks are in a row, apply for pre-approval before you start shopping for a home. A pre-approval letter shows sellers they should take you seriously.
- Get a real estate agent. You really can’t go at this alone. A qualified real estate agent is your best advocate in the home-buying process.
The best mortgage companies fit four criteria: They offer fair rates, have online tools you can actually use, are quick to communicate, and won’t leave you hanging if you need help. My top five lenders — , , , , and — all stood out for different reasons, but hit every mark. Your individual rates and terms will vary, but if you’re looking for a mortgage, these are the best places to start.
If you want to learn more about mortgages, take a look at some of Google-X’s other articles on home loans: