Find the Best Mortgage Lenders

A mortgage is a loan that's used to buy real estate, typically residential property. The purchased property also serves as collateral for the loan. Unless you have enough cash on hand to purchase a house outright, a mortgage is a legal document you must sign to buy or refinance a property.

Conventional mortgages require a minimum 620 credit score.

Conventional mortgages require a minimum 620 credit score.

The word “mortgage” comes from the Old French phrase “mort gage,” which means “death pledge.” With a mortgage, the borrower is obligated to pay the full debt amount, or figuratively “kill” the loan. In this sense, “death” refers to the debt and “pledge” is a surety or promise. A mortgage is also sometimes called a lien against property, claim against property or deed of trust in some states.

Of all the different types of mortgage loans, conventional and government-backed mortgages are most frequently used to finance a home. Government-backed mortgage loans — FHA, VA and USDA programs — typically require credit scores higher than 580 and down payments from 0% to 3.5%. Since conventional loans are riskier for lenders, most require credit scores of 620 and 5% to 20% down payments. For more information, learn what a mortgage is and how it works next.

How does a mortgage work?

A mortgage functions as a lien or legal claim against a property. In exchange for immediate funds, the borrower must repay the loan with interest and fees over time. The financed property serves as collateral for the loan — if mortgage debt is not repaid, the bank or creditor has the right to repossess the property.

To get a mortgage, you must sign a legal agreement that gives your home loan lender the right to take the property if you don’t repay your loan. You also must sign a promissory note stating that you agree to repay the mortgage loan in full, with interest and under your lender’s repayment terms. Lenders evaluate your debt-to-income ratio to determine how well you manage your debts — borrowers with debt-to-income ratios above 43% are typically considered risky and may not qualify for a mortgage loan.

Mortgage amortization is the process of paying down home loan debt over time. Homeowners build equity by making payments on their mortgage principal. If you get a second mortgage, you borrow funds with your house as collateral for the loan but don’t have to use the funds to purchase a home. Home equity loans and lines of credit are types of second mortgages.

How does mortgage interest work?

Mortgages come with different loan terms and interest rates. The term refers to the life span of the loan, which is usually between 15 and 30 years. The mortgage rate refers to the amount of interest the lender charges in exchange for the loan.

Mortgage rates can be fixed or adjustable. A fixed-rate mortgage has the same interest rate for the entire term, whereas an adjustable-rate mortgage increases or decreases based on a changing index. The most popular type of adjustable-rate mortgage is the 5/1 ARM, which has a fixed rate for the loan's first five years and then can adjust each year after that.

Mortgage rates and terms have the most impact on how much you’ll pay over the life of the loan.

How does refinancing work?

Mortgage refinancing companies replace your existing mortgage with a new loan. The two most common types of home refinance loans are rate-and-term refinancing and cash-out refinancing.

Through rate-and-term refinancing, you can change your term, get a new rate and pick a new type of loan and lender. Rate-and-term refinancing doesn’t affect your principal balance, and it’s possible to save on interest in the long term if rates have gone down since you first financed your mortgage.

With a cash-out refinance, you access your home equity in exchange for a higher principal. For example, imagine you owe $50,000 on your mortgage and want a $10,000 loan. Through a cash-out refinance or home equity loan, you could accept a $60,000 loan and receive $10,000 in cash after closing.

Many homeowners refinance their mortgage to lower their monthly payments, get a better rate, convert home equity into cash or pay off their loan faster. Some mortgage refinance lenders also specialize in debt consolidation strategies. For more, read about how to refinance a mortgage.

There are many places to find a mortgage — national and regional banks, local credit unions and online mortgage lenders or brokers — so it can be confusing to know the best place to look or where to start.

What is a mortgage broker?

A mortgage broker is the middleman between a borrower and a wholesale mortgage lender. Hiring a mortgage broker to help compare multiple lenders can save time and money, but brokers earn higher commissions on more expensive loans — keep in mind that they might not always have the borrower's best interests in mind. Mortgage broker fees are up to 1.5% to 2% of the total real estate loan.

What is a mortgage lender?

A mortgage lender is the banking institution that finances the home loan for a fee. Mortgage lender origination and closing fees vary by lender and from state to state. Mortgage banks and portfolio lenders are types of direct mortgage lenders. Direct lenders process applications and originate and underwrite loans. A lender is different from a mortgage servicer, which processes loan payments, responds to borrower inquiries and manages escrow accounts.

The average mortgage is $840 to $1,200 per month. Most financial experts suggest keeping your mortgage payment below 30% of your monthly gross income and your total debt-to-income ratio lower than 36%. Use our mortgage calculator to determine how much house you can afford.

Keep in mind that the total cost of a mortgage is more than just the price of your house. As you compare mortgage companies, consider closing costs, mortgage points and prepayment penalties.

• Down payment: A down payment is the percentage of the total sale price that you put down upfront. Down payments can vary by loan type, location and lender. Mortgage insurance is typically required when you make a less substantial down payment.
• Closing costs: Closing costs amount to 2% to 5% of the home loan and include application fees, lender fees, attorney fees, escrow deposits and fees, courier fees, homeowners association transfer fees, inspection fees and title insurance.
• Mortgage points: Sometimes called discount points, mortgage points are optional fees paid to your lender in exchange for a lower interest rate. Each point costs 1% of the mortgage loan amount.
• Prepayment penalties: A prepayment penalty is a fee that some lenders charge when a borrower pays their mortgage loan off early, either through refinancing or overpaying each month. The average prepayment fee is 80% of six months of interest.

What makes up a monthly mortgage payment?

Once you’ve covered all the upfront costs of a home loan, your monthly mortgage payments include principal, interest, taxes and insurance. In some cases, other regular expenses include homeowners association or condo fees.

• Principal: The principal is the balance of the loan amount you borrowed. Each month, your mortgage payment reduces the principal.
• Interest: Interest is the amount you agree to pay your lender in exchange for a mortgage loan. Fixed interest rates stay the same throughout the term of the loan. Adjustable interest rates can vary over the life of the loan.
• Property taxes: Property taxes are often included in mortgage bills. Lenders keep your property tax payments in an escrow account until they're due and then pay them on your behalf.
• Mortgage insurance: Mortgage insurance protects the lender if you stop making payments on your loan. The two types of mortgage insurance are private mortgage insurance (PMI) and mortgage insurance premiums (MIP). For conventional mortgages, you can avoid the need to pay for PMI by making a down payment of 20% or more. For FHA and other government-backed loans, you can avoid MIP after 11 years by putting at least 10% down.
• Homeowners insurance: Homeowners insurance covers damage from fire, storms, theft and other perils. Most lenders require homeowners insurance and charge premiums on your mortgage bills.

How to get the best mortgage rate

The easiest way to get the best interest rate is to compare multiple mortgage lenders and refinancing companies, according to the Consumer Financial Protection Bureau (CFPB). Other tips for getting a great mortgage deal include improving your credit, making a larger down payment, buying mortgage points and selecting an adjustable-rate mortgage loan.

• Compare all mortgage options: As you shop around, get quotes from at least three lenders and be sure to consider all your loan options — for example, USDA loans are ideal for those who live outside of an urban community. Remember that you can also negotiate with lenders to get better deals.
• Improve your credit score: To get the best interest rate on your mortgage, you need to have excellent credit. Take the time now to pay off your credit cards and don’t take out any new loans while you’re getting ready to apply for a home loan.
• Make a larger down payment: A larger down payment often gets you a lower interest rate. Try to save up for a 20% down payment to avoid having to pay private mortgage insurance (PMI). If you can’t put down 20%, aim for at least 5% — that's where you start seeing a decrease in interest rates.
• Consider mortgage points: Mortgage points are optional upfront payments that reduce your interest rate. One point typically costs 1% of the loan. When interest rates are high, buying mortgage points can save you money in the long term.
• Go for the ARM: You can usually get a better upfront mortgage rate by getting an adjustable-rate mortgage (ARM) rather than a fixed-rate mortgage. Keep in mind, though, that your monthly payments may increase after the fixed-rate period ends if you opt for an ARM.

After you’ve checked your credit score, figured out how much house you can afford and researched the best mortgage lenders, it’s time for some paperwork. The application process varies depending on preapproval status and other factors, but everyone who applies for a mortgage generally goes through these five steps:

Mortgage lenders in your city can help you with the ins and outs of the local market. We looked at our favorite companies across the U.S. to help you find a mortgage company near you.

• Austin
• Chicago
• Dallas
• Denver
• Houston
• Las Vegas
• Los Angeles
• Milwaukee
• Pittsburgh
• San Antonio
• Tulsa

Choosing the right mortgage lender is an important decision. Unless you sell your home or refinance with a different lender, the mortgage lender you choose to purchase your home with will be a relationship you have for 15 to 30 years.

Use the list below to jump right to our top mortgage lender picks.

• Network Capital Funding Corporation
• ClearPath Lending
• Vanderbilt Mortgage
• Caliber Home Loans
• Bank of America Mortgage
• Chase Mortgage
• CitiMortgage

Methodology

To choose our top picks, we compared ratings and reviews from more than 40 mortgage lenders. To start, we eliminated any company that received less than a 4-star rating on ConsumerAffairs and any company with fewer than 500 ratings on the site. We wanted to ensure we were only considering companies that received a clear trend of positive feedback from real customers.

With our list narrowed down, we compared our top picks against one another across key areas, including types of mortgage loans offered and credit score requirements. You'll see that information laid out in the reviews below.

Mortgage rates fluctuate based on the overall health and stability of the economy and can change as often as daily, so we didn't use these to inform our top picks. We recommend comparing current rates across lenders at the time of your application to ensure you’re getting the best rates available.

Compare the mortgage lenders below to find the best lender for your next home loan.

Network Capital Funding offers fixed- and adjustable-rate conventional mortgages, VA loans, FHA loans and HomeReady and Home Possible mortgage programs.

The lending company doesn’t require a minimum credit score in most states. We like that its approach to lending opens up homeownership opportunities to those without perfect credit histories, which isn’t always available. However, there are some waiting-time requirements if you have bankruptcies, short sales and foreclosures on your credit history: between two to four years for a bankruptcy and between three to seven years for short sales or foreclosures.

Qualified borrowers are eligible to pay $0 lender fees, including application, origination, processing and underwriting. The Network Capital Funding application process is simple, and loan officers help you gather all the necessary documents. Some applicants can close in as few as 15 business days.

Network Capital Funding also specializes in mortgage refinancing programs for debt consolidation, home improvements and personal use. It's licensed in 25 states.

ClearPath Lending is a direct lender with competitive home loan and refinancing rates. Fixed- and adjustable-rate products are available, including conventional, FHA, FHA Streamline, VA, VA IRRRL and jumbo home loans.

ClearPath Lending offers several mortgage products to lower or switch your interest rate, shorten the length of your term or cash out your home equity. Prospective customers can find out if they pre-qualify online and use the free mortgage refinance calculator tools to help make their decision.

ClearPath Lending loan experts can also help put you in touch with local real estate agents. Unfortunately, the company is not available in every state; it’s licensed in over 30 states across the country.

Vanderbilt Mortgage is a housing lender specializing in manufactured and modular home financing. The company offers a few unique home loan products:

• Portfolio Home Loans: Portfolio loans are nongovernment loans with fewer requirements.
• Land and Home Mortgage Program: This program finances a new home, land and land improvements within a single payment.
• Fresh Start Home Loan Program: The Fresh Start program is specifically designed for individuals and families with less-than-perfect credit.
• Home UpGrade Loan: For those who already own a home, Vanderbilt can finance upgrades or renovations with this loan program.

Conventional mortgages through Caliber Home Loans are available in a variety of term options. There are fixed-rate mortgages in terms ranging from 10 to 30 years (instead of the typical 15 or 30), and adjustable-rate mortgage terms are 3/1, 5/1, 7/1, 10/1 or 5/5. Down payments on conventional loan products from Caliber can be as low as 3%.

Caliber can also approve a number of government-backed loans, including loans from the Federal Housing Administration (FHA, FHA 203(k), FA streamline refinance), USDA, VA and VA Streamline Refinance loans (also known as VA IRRRL).

Caliber Home Loans serves all 50 states.

Banking giant Bank of America has a dedicated home loan program available to members and nonmembers, but Preferred Rewards clients may be able to qualify for a reduction in mortgage fees.

The bank offers mortgage, refinance and home equity loan products, and loans are available with down payments as low as 3% through Bank of America’s Affordable Loan Solution mortgage and the Freddie Mac Home Possible program.

Core home loan offerings from Bank of America include standard fixed- and adjustable-rate conventional mortgages as well as FHA and VA loans for qualifying borrowers. Daily rates are clearly advertised on the lender’s website.

Chase offers conventional and government-backed home loan programs with down payment requirements between 0% to 20%, depending on the type of loan. Most conventional loans from Chase will require a down payment of at least 5%, while programs designed to make homeownership easier may have lower down payment requirements between 0% and 3.5%.

The DreaMaker program is Chase’s mortgage loan program designed for lower-income buyers. The program offers low down payment options, reduced mortgage insurance and the potential for a $2,500 Chase Homebuyer Grant, which can be applied to closing or used to lower your interest rate. You must meet certain income requirements to qualify for the DreaMaker program.

Chase offers an online tool to estimate your rate and payment before you even apply for the loan. You can also complete an online application to get pre-qualified for a loan, which can be helpful during the homebuying process.

You can apply for a home loan online or in person with a home lending advisor if you prefer.

Citi offers conventional, jumbo and government-backed home loan programs. It also has its own Citi HomeRun Mortgage program designed to offer a low down payment option and less strict credit requirements to make homeownership more attainable. Unlike many low down payment or low-income targeted mortgage products, the HomeRun program does not require mortgage insurance, and you can use the loan to purchase a single-family home, condo or duplex.

In addition to the HomeRun program, Citi also has a Lender Paid Assistance program, where qualifying borrowers can receive up to $5,000 in credit toward closing costs. Fixed and adjustable rates and short- and long-term home loans are available through Citi’s many offerings. Citi also offers refinancing and home equity loans.