Some of the best mortgage lenders now operate entirely online. This means you could apply and navigate the entire lending process from just about anywhere.
You can get preapprovals in a matter of minutes — usually 24 hours a day, seven days a week.
If you found the traditional mortgage application process to be slow and stressful, online mortgage lenders offer the relief you’ve always needed.
7 Best Mortgage Lenders of 2021
Here are the 7 best mortgage lenders:
- Quicken Loans / Rocket Mortgage: Best Overall
- LendingTree: Best for Comparing Rates
- Veterans United: Best for VA Loans
- SoFi Mortgage: Best for Jumbo Loans
- Freedom Mortgage: Best for Special Conventional Loans
- Credible Mortgage: Best for Refinances
- LoanDepot: Best for FHA Loans / Financing New Construction
Quicken Loans / Rocket Mortgage
Quicken Loans is now the largest retail mortgage lender in the entire country. A few years ago Quicken launched Rocket Mortgage as an all-online mortgage lender.
Both Quicken Loans and Rocket Mortgage use the same underwriting process, so I’ve grouped them together for this post. Both companies issue mortgage loans in all 50 states, and both service their own loan products.
And, Quicken and Rocket both write all sorts of mortgage loans: conventional loans, FHA loans and VA loans, along with Jumbo mortgages, and even USDA loans.
I point this out because a lot of online lenders offer only a limited selection of loan options.
Since it’s not an actual bank, Quicken and Rocket don’t provide home equity lines of credit (helocs), but they do offer traditional refinancing such as home equity loans.
Quicken and Rocket can both verify your financial details online which means you won’t have to upload all the traditional mortgage documentation such as pay stubs, bank statements, and tax forms.
Still, be prepared to submit whatever documentation Quicken Loans can’t verify from third-party services, especially if you’re self-employed or have more complex personal finances.
Quicken Loans charges a single origination fee of between $400 and $750 for the entire process. With other lenders you’d pay separate fees for an appraisal and loan origination.
But keep in mind: Even with Quicken / Rocket, you’d still need to pay for a home inspection and closing costs separately.
Once you get preapproval, you can lock in your interest rate for up to 90 days.
Lending Tree isn’t a direct mortgage lender. It’s a mortgage aggregator that shows you loan offers from a variety of mortgage companies.
To use Lending Tree you’d complete a single online loan application. In response, lenders will present loan offers to you. When you use this kind of service there’s no need to go shopping and make applications with multiple lenders.
And perhaps best of all, as a customer, you pay no fees to Lending Tree for using its service. Instead, participating lenders pay Lending Tree to make their services available to you on the platform.
Once you complete an application, offers will begin coming in from various mortgage companies. You can then choose which lender you’re going to work with.
Lending Tree gives you access to virtually all types of mortgages and loan terms. Many lenders specialize in certain niches, like FHA loans or VA loans.
But since Lending Tree shows offers from so many different lenders, you’ll be able to find one (usually more than one) offer for whatever type of loan you’re interested in getting.
The only real disadvantage of Lending Tree is that by completing an online application, you’re inviting solicitation by several different lenders.
Even after you selected a lender and proceeded with the application process, other lenders could continue to solicit your business through phone calls and emails.
- Learn More: Read our full Lending Tree Mortgage Review.
Veterans United is now the top VA mortgage lender in the country. This lender specializes in VA loans which are not offered by all lenders – certainly not all online lenders. VA loans offer no-down payment options for veterans and service members.
If you’re active duty military or a veteran who wants to start the home buying process, Veterans United should be your first choice.
Veterans United offers mortgages for home purchases or refinances, including the VA Streamline Refinance, known as the Interest Rate Reduction Refinance Loan, or IRRRL.
They also offer USDA Loans for home buyers with lower incomes who want to purchase homes in designated rural areas. (Don’t take the term “rural” too literally — these loans are available in 97% of the counties in the U.S.)
Veterans United stands out as a VA lender because of its high volume of loans and its program that works with military advisors from each branch of the military service.
You’d also have access to 24/7 customer service, which is another feature that’s fairly rare in the mortgage lending industry. And Veterans United can even help you find a home through its network of real estate agents.
If Veterans United has a weak spot it’s that they don’t offer other common mortgage types, like conventional or FHA mortgages. But if you’re shopping for a VA loan this won’t matter.
Other VA loan specialists include Navy Federal Credit Union, PenFed, and USAA.
- Learn More: Read our full Veterans United Home Loans Review.
Because it’s best known for student loan refinances and personal loans, shoppers often forget SoFi also writes mortgage loans.
Like other lenders on this list, the entire process takes place online, which speeds the application process and makes it much easier for borrowers to provide supporting documentation.
SoFi offers a specialized mortgage product, which is a Jumbo mortgage for both purchases and refinances, with a down payment as low as 10%.
Jumbo mortgages help you borrow up to $3 million so you can buy a home in a hot real estate market like San Francisco and New York City. These loans also help you buy a higher-end home in other markets.
You could get an adjustable or a fixed-rate mortgage, and SoFi even offers interest-only loans, which is not unusual on Jumbo mortgages.
Though it’s an online mortgage lender, you’ll be assigned a loan officer who will work with you on a one-on-one basis. This adds a human element to an otherwise digital experience.
SoFi also stands out because of its fast underwriting. You’re given an actual rate quote up front. You can use the Check My Rate tool to get an accurate rate quote. They claim to fund most loans within 30 days of application.
As a bonus, you’ll get a rate discount of 0.125% on any of SoFi’s other loan programs.
SoFi doesn’t offer FHA or VA mortgages, nor do they offer second mortgages and home equity lines of credit (helocs). The program also seems oriented toward those with higher credit scores when shopping for a mortgage, so you may need to look elsewhere if your credit score is average or below.
- Learn More: Read our full SoFi Mortgage Review.
Freedom Mortgage (formerly J.G. Wentworth)
Best known for structured settlements, Freedom Mortgage, formerly known as J.G. Wentworth, isn’t a household name among mortgage lenders. But it’s a big player in the industry.
Freedom Mortgage is another all-online lender providing all types of loans including conventional, FHA, VA, Jumbo and USDA mortgages. Most loans come with either fixed or adjustable interest rates.
Adjustable-rate mortgages offer a fixed rate for three, five, seven, or 10 years before the rate begins to fluctuate with the broader market for the remainder of the 30-year loan term.
I’m including Freedom on my list because it offers specialized conventional programs for first-time homebuyers, as well as renovation mortgage products, including FHA 203k loans.
Another big advantage: Freedom’s “Close-On-Time Guarantee.” If you miss the closing date, and it’s the fault of J.G. Wentworth, the company will pay your first month’s mortgage payment, up to $2,500 (though not all loan programs are covered).
Like some of the other lenders on this list, Freedom mortgage doesn’t offer secondary financing. There’s also a handful of states they don’t lend in.
- Learn More: Read our full Freedom Mortgage Review.
Credible is another online lender better known for student loans and personal loans.
Much like Lending Tree, Credible lets you see loan offers from various mortgage lenders — all by filling out one application. The company is a mortgage broker with live licensed loan officers to help you with the entire application process — all the way through to closing.
You complete your application online, and begin getting prequalification rates in a matter of minutes. When you apply, your credit report won’t be pulled, and therefore this initial application won’t generate an inquiry that can hurt your credit score.
You’ll answer a questionnaire to start the process. Your answers will help filter your loan types and loan terms along with ideal loan providers. Once you select a single lender, you can also upload required documentation on the website.
You can get quotes for new home purchases but Credible’s lenders focus on refinances — primarily cash-out refinances.
I like Credible’s wide variety of lenders which include traditional banks, credit unions and mortgage lenders. Offers can include either fixed-rate or adjustable-rate mortgages.
If you’re looking to purchase a new home, I’d look elsewhere.
- Learn More: Read our full Credible Mortgage Review.
No relation to Home Depot, loanDepot (that’s not a misspelling, it’s loanDepot) is a diversified online mortgage lender writing mortgages to home buyers in all 50 states.
Or, if you prefer to work with an in-person loan officer, the company has more than 150 branch locations (“loan stores”) in various cities across the country.
You may not have heard of loanDepot but it has written more than $100 billion in mortgages for both purchases and refinances. That’s a big number.
This lender offers all types of mortgages, including conventional, FHA, VA and Jumbo loans, in both fixed rate and adjustable-rate mortgages. Like most online lenders, they do not offer second mortgages, including home equity lines of credit (HELOCs).
One of the biggest advantages with loanDepot: It specializes in FHA and VA loans. A lot of home builders refer their clients to loanDepot.
One of the most interesting features is the loanDepot Lifetime Guarantee. They promise if you obtain a mortgage through the company once, you’ll never pay lender fees again.
Once you do your first loan with loanDepot, the lender will waive lender fees and even reimburse your appraisal fee if you refinance your home.
Still another interesting feature is their mello smartloan (what can we say – they like lower case letters!). You digitally connect your income, employment and assets, enabling quick and secure data verification.
Once you supply the information, their proprietary loan engines determine your loan options, then you’ll be assisted by live loan consultants.
- Learn More: Read our full LoanDepot Review.
Honorable Mention for Best Mortgage Lenders
While not all mortgage lenders can make our top 7 list, there are many other options for you to consider, here are some of the other best mortgage lenders that we have reviewed:
- Chase Mortgage
- Guide To Lenders
- Magnolia Bank
- New American Funding
- North American Savings Bank
Who is the Best Mortgage Lender For You?
Online mortgage lenders streamline what has traditionally been a very cumbersome borrowing process.
You no longer need to meet with a loan representative for a tense face-to-face meeting. You don’t need to talk with a stranger about your income, work history, and other debt.
Nor do you need to overnight what seems to be an endless stack of loan documentation.
Instead, you can complete your application entirely online, get live, personal assistance as needed, and supply all necessary documentation digitally — sometimes without taking extra steps.
Online mortgage lending isn’t always the cheapest way to buy a home. But it does put you in control of the process. The entire mortgage lending industry — including traditional brick-and-mortar banks like Chase and Bank of America — is moving toward an online process.
The lenders on my list have gotten there ahead of the rest of the pack, and are rapidly becoming better at online lending.
So if you need a mortgage, particularly in a hurry, don’t make your local bank or credit union the first stop. Instead, check out a couple of these lenders, and see how easy and fast the mortgage process can really be.
Can I Get a Mortgage Loan With Bad Credit?
If you have bad credit or no credit history at all then you won’t be able to get a mortgage loan unless you have a co-signer. Even with a co-signer, the process could be difficult.
So spend a couple years working to improve your credit score before buying a home.
However, if your credit is fair or good, you do have options:
- FHA Loan: These loans let you buy a home with a low down payment — often as low as 3.5% down. They also let you borrow with a credit score as low as 620. This is possible because the Federal Housing Administration backs your loan which means the bank won’t take a huge loss if you default.
- USDA Loans: You could possibly borrow with no money down and a credit score as low as 580 in some markets through a USDA loan. These loans have backing from the United States Department of Agriculture.
- VA Loans: We talked about these loans above. Military members and veterans can borrow with no money down and with credit scores as low as 580. These loans have the backing of the federal Department of Veterans Affairs. You would have to pay a VA Funding Fee but you wouldn’t have to pay private mortgage insurance every month throughout the life of the loan — unlike with FHA and USDA loans.
Some banks have special programs to help lower-income or credit-challenged applicants get a conventional mortgage which does not have government backing.
How to Get the Best Mortgage Rates
Mortgage interest rates are based on the prime lending rate which the Federal Reserve sets. So you don’t have complete control over getting a lower interest rate.
That being said, your loan terms, your type of loan, and your credit history will help you get the most competitive rates:
- Loan Terms: Shorter loan terms such as a 12-year or a 15-year mortgage will usually get you better rates than a 30-year mortgage.
- Type of Loan: An adjustable-rate mortgage often starts out at a lower interest rate than a fixed loan, but after an introductory period, the rate changes with the market. An FHA loan could offer lower rates than a conventional mortgage if you have a credit score in the 600s.
- Credit History: Your credit score will be a huge indicator of your mortgage rates. With a score in the mid-to high-700s you can qualify for great interest rates with just about any loan product.
How Interest Rates Affect Monthly Payments
Your mortgage rate helps set your monthly payments. For example, let’s assume you’re borrowing $225,000 to buy a new home. With a 30-year mortgage, here’s what you’d pay each month:
- With a mortgage rate of 4%: $1,074 a month
- With a mortgage rate of 5%: $1,208 a month
- With a mortgage rate of 6%: $1,349 a month
- With a mortgage rate of 7%: $1,497 a month
As you can see, an increase of 3% in interest would increase your payment by more than $400 a month. Add that up over 30 years (360 months) and you’ll see why people care so much about getting the best mortgage rates.
It’s also why people like to refinance their mortgage loan whenever the Fed drops rates as it did in March in response to the coronavirus pandemic.
PMI and Your Home Loan Payments
PMI stands for private mortgage insurance. This is insurance you pay to protect your lender in case you can’t pay your monthly payments. The insurance would compensate your lender if it lost money on your loan.
It’s not a good deal for you which is why most homeowners hate paying PMI premiums. PMI adds about 1% of your loan amount a year to your payments. For a $200,000 loan that’s $2,000 a year.
You can avoid paying PMI by:
- Making a big down payment: Making a 20% down payment on a conventional loan means you won’t pay a dime of PMI. If you make a smaller down payment, make sure you cancel PMI once you pay off 20% of the home loan.
- Qualifying for a VA loan: If you’re a veteran or an active duty member of the military, getting a VA loan means you’ll avoid PMI payments. You will have to pay the VA funding fee up front or roll it into your loan.
Unfortunately, FHA and USDA loans now require you to pay PMI throughout the life of the loan.
How Does Debt-to-Income Ratio Affect Mortgage Rates
43% is the magic number with debt-to-income ratio and mortgage borrowing. A ratio higher than 43% would make your monthly payments too expensive in the eyes of the Consumer Financial Protection Bureau.
It’s not impossible to borrow with a higher debt-to-income ratio, but your options will be limited.
Calculate your own debt-to-income ratio by adding up all your monthly debt payments and dividing that total by your total gross income (your income before taxes and other deductions).
Your current debt should include auto loans, student loans, credit card debt, and personal loans. Don’t include your rent payments if you’re currently renting. Do include your new mortgage’s monthly payment or your best estimate of the loan’s payment.
A lower ratio puts you in the best position to borrow at a great interest rate.
What Do Freddie Mac and Fannie Mae Have to Do With My Loan?
Freddie Mac and Fannie Mae may buy your mortgage loan from your mortgage lender after you’ve signed the papers and moved into your new home.
This won’t affect your loan terms but it’s a big deal to your lender: It provides cash for the next loans they write to other new homeowners.
Collectively, this process helps keeps mortgage rates lower for all home buyers.
Freddie Mac and Fannie Mae will not buy a mortgage if the borrower’s debt-to-income ratio exceeds 45%. They also won’t buy a mortgage larger than $510,400. That’s why Jumbo mortgages exist — to provide home loans that exceed this threshold.
What Happens When My Loan Servicer Changes?
Your mortgage lender may use another company to service your loan. This means you’ll send your mortgage payments to another company instead of to the lender itself.
Some lenders, like Quicken Loans, also service their own loans. But most lenders use other servicers. Chances are your servicer will change several times if you stick with the loan for 30 years.
You’ll get plenty of advance notice, and this change will not affect the terms of your loan. Usually, customer satisfaction remains about the same even after a servicer changes.
Should I Finance Closing Costs?
If possible, avoid financing your loan’s closing costs in with your loan. Doing this will add to your debt and increase your monthly payments. If you needed to sell the home quickly, this extra weight on your loan could limit your options.
Closing costs include attorney’s fees, the loan origination fee, title transfer fees, and sometimes even appraisal fees. (Buying real estate requires a lot of special expertise.)
If you have to finance these closing costs, it’s not the worst way to go into debt — at least this debt will help you become a homeowner and start investing in the real estate market.
Check with your Realtor about negotiating with the seller to split closing costs, or see if the seller will pay all of the costs. It never hurts to ask.