Rocket Mortgage
Purchase options:Conventional, FHA, VA, jumbo
Refinancing options:Cash-out, rate and term
Min. credit score:580 to 620
Max. loan amount:$2.5 million
AmeriSave Mortgage
Purchase options:Conventional, VA, USDA, FHA
Refinancing options:Cash-out, rate and term
Min. credit score:600 to 620
Max. loan amount:$1.5 million
Purchase options: Commercial, residential, military, seniors
Refinancing options:Cash-out, rate and term
Min. credit score:580 to 620
Max. loan amount:$1.0 million
Purchase options: Commercial, residential, military
Refinancing options:Cash-out, rate and term
Min. credit score:280 to 320
Max. loan amount:$1.0 million
Purchase options: Refinancing options available to lower payments
Refinancing options:change terms or take cash out
Min. credit score:580 to 620
Max. loan amount:$2.0 million
Mortgage lenders buyers guide
The process of buying a new home can feel daunting, but getting your new keys is also incredibly rewarding.
This mortgage lenders buyers guide will help you understand the different types of mortgages, compare lenders and explain what you need to know about getting preapproved and financially ready to make an offer.
What is a mortgage?
A mortgage is a type of loan for purchasing real estate, such as a home. Individuals borrow money from a lender, which is typically a bank, credit union or mortgage company, specifically for financing the purchase of the property.
The property itself serves as collateral — which is an asset the lender can repossess through the foreclosure process if the borrower defaults on the loan. The borrower repays the loan amount plus interest over an agreed-upon period, often spanning several years or decades.
» MORE: Homeownership statistics by state
Different types of mortgage loans
The two main types of mortgage loans are conventional and government-backed mortgages.
A conventional loan is simply a loan through a private lender and is not backed by any government entity. Examples include:
- Conforming: These must meet Fannie Mae and Freddie Mac requirements. In 2024, the maximum conforming loan limit in most of the country is $766,550. Conforming loans are the most popular mortgage type.
- Nonconforming: These loans do not meet the Fannie Mae or Freddie Mac requirements.
- Jumbo: Jumbo loans are nonconforming loans with amounts exceeding the conforming loan limit. You need good credit (often 700-plus) and a large down payment for eligibility.
- Fixed-rate: Fixed-rate loans means your interest rate remains the same throughout the life of the loan.
- Adjustable-rate: Adjustable-rate mortgages (ARMs) start with a fixed interest rate for an initial period, but the interest rate eventually adjusts based on market conditions.
When a government entity backs a loan, it’s less risky for a private lender. This often translates to greater savings and less strict credit requirements for the borrower. Examples of government-backed loans include:
- FHA: The Department of Housing and Urban Development (HUD) Federal Housing Authority backs FHA loans, which offer lower down payment options for borrowers with less-than-perfect credit.
- VA: Partially backed by the U.S. Department of Veterans Affairs, VA loans offer a low- or no-down payment option and less strict credit requirements for U.S. military veterans, service members and their surviving family members.
- USDA: Backed by the U.S. Department of Agriculture’s Rural Development Guaranteed Housing Loan program, a USDA loan offers a low- or no-down payment option for homebuyers purchasing in rural areas.
There are other mortgages available that do not fall under these typical categories, such as a home renovation loan, home equity loan or home equity line of credit (HELOC).
How to compare mortgage lenders
You want to compare lenders and offers to make sure you’re getting the best loan for your needs. To help, you might want to work with a mortgage broker who can help you compare rates and terms from the best mortgage lenders and find the top deal.
But if you prefer to do it on your own, you’ll first need to decide the type of mortgage you prefer (conventional or government-backed) and the type of rate (fixed vs. adjustable). You’ll also need to look at how long of a term you want (e.g., 15- or 30-year) and if the lenders you’re considering offer those terms. Some other factors to consider include:
- Down payment – While it’s considered typical to put a 20% down payment on a house, which helps borrowers avoid PMI, some lenders will allow 5% (or less for government-backed loans).
- Lender fees – In addition to closing costs, look at what fees you’ll need to pay to secure your mortgage. These may include lawyer fees, homeowner association fees, property tax or origination fees.
- Points – Check if the lender offers the option to buy mortgage points, which are a way to buy down the interest rate on your loan.
- Application process – Can you apply completely online or will you have to do it in-person? Depending on where you live, where you’re purchasing a home and other accessibility issues, how you’ll apply for a mortgage can make a difference.
- Approval times – How long will it take for the lender to approve your application? And, once approved, how long will it take to close? If you need a quick approval and closing, you’ll need to make sure the lender can meet that time frame.
Before making your final decision, take the time to read online reviews, such as those published on ConsumersApproach , to get a picture of what working with a company might be like. You might also ask friends, family and real estate agents for recommendations.
» MORE: Mortgage broker vs. lender
Mortgage requirements
Mortgage requirements vary depending on the type of mortgage you apply for, but most lenders require the following:
- A good credit score: This is set by the lender or loan type, but the higher your score, the better mortgage interest rates you will receive.
- Proof of income and employment: You will need to provide proof of steady income and employment, such as pay stubs, tax returns and W-2 forms.
- Low debt-to-income (DTI) ratio: This is the ratio of your total monthly debt payments to your gross monthly income. The best mortgage lenders typically prefer a maximum DTI ratio of 43%.
- Down payment: The minimum down payment amount can vary significantly based on the type of loan and your credit score.
» MORE: Mortgage delinquency rates
What credit score is needed for a mortgage?
Conventional loans require a minimum credit score of 620, but many lenders might require a higher score or a higher down payment if your score is around the 620 range.
USDA and VA loans do not have a minimum credit score, so you will have to check with your lender for what score they require. If you qualify for an FHA loan, you will have more credit score flexibility since you can have a credit score as low as 500 and still qualify for a home.
How much do you need for a down payment?
You can buy a conventional home loan with as little as 3% down and an FHA loan with as little as 3.5% down. USDA and VA loans do not have down payment requirements, so borrowers can put nothing down and still qualify for a home loan.
The good news is that you don’t need 20% for your down payment. In fact, the 20% down payment is only recommended to avoid private mortgage insurance (PMI).
For FHA borrowers with credit scores between 500 and 579, you will be required to put 10% down.
Average rates and costs of getting a mortgage
“Mortgage rates are influenced by a combination of factors, and understanding these factors can help buyers secure the best mortgage rate, even in a high-rate environment,” said Shmuel Shayowitz, president and chief lending officer at Approved Funding.
He said that mortgage rates are affected by the following:
- Buyer’s creditworthiness
- Loan-to-value (LTV) ratio (i.e., the loan cost compared to the appraised value of the property)
- The loan term length
- The size of the down payment
- Market conditions
- Market competition
Even in high-interest rate environments, Shayowitz said that buyers can get the best rate by improving their credit score and increasing their down payment. Additionally, he recommended buying points.
“Buyers can choose to pay points upfront to reduce their mortgage rate,” he said. “Each point is typically equal to 1% of the loan amount. By paying points, buyers can effectively buy down their rate.”
Applying for a mortgage
Applying for a mortgage can seem like a daunting prospect, but if you break it down into one step at a time then it becomes more manageable.
- Evaluate your financial situation: This means understanding your credit score and any potential credit challenges a lender may spot.
- Search for a mortgage lender: Shopping around and comparing the best mortgage lenders helps you find the lowest rates, most manageable repayment terms and a lender you’re comfortable working with.
- Apply online and get pre-qualified: Online applications can speed up the process and nail down a monthly payment range you’re comfortable with. Pre-qualification lets you know how much money you might qualify for without a hard credit check.
- Review your preliminary mortgage options and make a selection: Your lender may offer more than one loan option, which means you can calculate different scenarios for your budget.
- Get preapproved: A preapproval is when a lender shows you the exact interest rate you will receive and the exact amount you can borrow. At this point, the lender will run a credit check.
- Find a property and make an offer: With a pre-qualification or preapproval letter in hand, you can stand out amongst buyers as someone who is serious about purchasing.
- Receive final loan approval: The lender will require an extensive set of documents for final approval. Submitting these documents on time can expedite the closing process.
- Close your loan: It’s time for signing the paperwork and making the down payment (if applicable). Typically you work with both a lender and real estate attorney during this final step.
Most lenders offer an online application option, which can help speed up the process, but if you prefer an in-person experience, you should take this into consideration when selecting a potential mortgage lender.
FAQ
What is the difference between a mortgage lender and broker?
Can I get a mortgage loan to build a house?
Is it better to get a mortgage from a bank or a private lender?
How long does it take to get a mortgage?How much down payment do I need to get a mortgage?
Methodology
To make our picks for top mortgage lenders, the ConsumersApproach research team started with 86 mortgage companies. To narrow it down, we first eliminated those that had minimal transparency regarding annual percentage rates (APRs), fees, etc. In rare cases, we may have kept a pick that lacked this information upfront if it offered something else noteworthy, such as fast closing or a rate guarantee.
We then filtered out any lender that was available in fewer than 40 states and, if it had reviews on ConsumersApproach , if its score was below 4 at the time of publishing.
From this narrowed list, we compared lenders based on a range of factors, including:
- Variety of loans: We gave priority to lenders that had a wide variety of mortgage options to choose from, including a mix of conventional, jumbo and government-backed loans (FHA, VA and USDA).
- Variety of terms: We also prioritized lenders that offered a range of term options beyond the standard 15 or 30 years.
- APRs: We considered the starting APRs for both fixed- and adjustable-rate mortgages and chose those that were under 7% at the time of research. Note that rates are subject to frequent change and starting rates may have increased or decreased since our assessment.
- Guarantees: We prioritized lenders that offered close-on-time guarantees, price guarantees, rate locks and other incentives for borrowers.
- Closing times: We looked at the average closing times quoted by each lender, giving priority to those that had closing times of under six weeks.
- Customer service: We considered whether the lender offered customer service via multiple channels (in-person locations, telephone and live chat) and the number of positive reviews it had from ConsumersApproach readers.
Customer ratings and experience are important to us when we’re choosing companies that are the best fit for our readers. However, for those companies on our list with no ratings or no recent positive ratings on ConsumersApproach , there were other factors that made them good mortgage lender picks.
