Flagstar Bank Mortgages Reviews

Flagstar Bank is somewhat transparent about its starting rates, but you’ll need to request a rate quote online to view these — the company doesn’t post the starting rates for its mortgages on its website. The rate quote request includes a few simple questions regarding your desired loan type (purchase or refinance), home purchase price, loan amount requested, down payment amount and ZIP code.

Over the past three years, Flagstar Bank’s average home purchase rate has been about on par with the national average. In 2019, it was 0.15% higher; in 2020 it was 0.1% higher. In 2021, it was right in line with the national average.

Keep in mind that interest rates depend on various factors, like the borrower’s credit score and debt-to-income ratio. Borrowers with high credit and low DTI ratios typically get the best rates available.

Flagstar Bank offers both fixed-rate mortgages and adjustable-rate mortgages (ARMs). Fixed-rate mortgages provide a predictable monthly payment, while ARMs may offer a low interest rate for a short period of time. Most borrowers prefer the stability of a fixed-rate mortgage, but you may consider an ARM in certain circumstances — for instance, if you plan to sell your home in a few years and can get a low introductory rate. Before you decide, you’ll want to consider your short- and long-term financial goals.

Flagstar Bank Mortgages average home purchase rate vs. national average

Flagstar Bank allows you to pre-qualify online without a hard credit check, and you can check rates and speak to a loan officer before you begin your application. You can also move straight to the loan application and complete it online.

If you’re purchasing, you’ll need to provide information about your estimated purchase price, down payment amount and credit score. Be prepared to answer questions about your assets and income — Flagstar Bank uses this information to determine your loan amount.

If you’re refinancing, you’ll provide information about your refinancing goals, the estimated value of your home and your current loan balance.

For both purchasing and refinancing, you’ll also be required to input your contact information so a loan officer can reach out to you. The company may ask that you upload certain financial documentation, including pay stubs and tax returns.

Once your application is complete, you could receive a preapproval decision in as little as one to two days.  Flagstar Bank services its own loans, so you could work with the same company until you decide to sell or refinance.

Flagstar Bank Mortgages application features

Flagstar Bank offers a wide variety of loans, including conventional (with fixed or adjustable rates), FHA, VA, USDA and jumbo loans. The company also offers specialized loan programs for new construction (with a single-close option for construction-to-permanent) and home renovations. Its loan terms range from eight to 30 years.

Flagstar Bank advertises loans for licensed professionals in specific fields of work. The company’s website doesn’t give details about this type of loan, so you’ll need to contact Flagstar Bank to see if your profession qualifies.

In 2021, borrowers initiated 49,780 home purchase applications with Flagstar Bank. Of those applications, no preapprovals were denied. About 17% of these applications were denied, which is a higher denial rate than the industry as a whole sees (about 8%, as of publishing). Ultimately, about 75% (37,316) of these applications closed.

Loan applications for home purchases only by year

Refinancing

Over the past two years, Flagstar Bank has seen an increase in the number of refinance loans it originates. In 2021, about 63% of its loans were for refinances and cash-out refinances combined (compared with just 42% in 2019).

This increase in refinance loans wasn’t unique to Flagstar, though; it was an industry-wide trend. When interest rates dropped to historic lows in 2020 and 2021, many borrowers chose to refinance to get a better rate on their existing loans — even small rate decreases can mean significant interest savings over the life of the loan.

Since 2021, rates have been steadily rising to reach 10-year highs. For this reason, fewer borrowers are expected to refinance in 2022.

Home purchase vs. refinance loans by year

HELOC and home equity loans

Flagstar Bank offers both HELOCs and home equity loans. However, some products are not available in all areas.

The HELOC has a 10-year draw period and a 20-year repayment period. Line of credit limits range from $10,000 to $1 million, depending on your available equity and the loan-to-value ratio. Flagstar Bank lets borrowers choose how they repay their HELOCs, either with interest-only payments or principal and interest payments. With principal and interest payments, you’ll pay off the principal sooner and incur fewer interest charges over the long term.

In most cases, you’ll pay closing costs when you open a HELOC. However, with a Flagstar Bank HELOC, you won’t have to pay a portion of the closing costs if you keep the HELOC open for at least 36 months. The company offers a 0.5% rate discount to borrowers who set up autopay with their Flagstar checking or savings account.

Home equity loans are available in loan amounts ranging from $10,000 to $1 million. Borrowers can choose between 10-, 15- and 20- year loan terms. The company also offers a 0.25% rate discount for borrowers that use autopay from a Flagstar Bank account.

Keep in mind that both HELOCs and home equity loans come with added costs and fees, so you’ll want to consider how and when you would use the funds. A loan officer can help you weigh the pros and cons.

Flagstar Bank doesn’t publish borrower requirements on its site, but typical requirements for a conventional loan include a credit score of at least 620 and a 3% down payment.

Government-backed mortgages, like FHA, VA and USDA loans, typically have lower credit score requirements. Usually, you need a score of at least 500 to qualify for an FHA loan, but you’ll need to offer at least a 10% down payment if your credit score is below 580.

Minimum credit scores for VA and USDA loans are usually set by the lender. You may need a 580 credit score for a VA loan and a score of 640 for a USDA loan. Both options have no down payment requirements.

National mortgage requirements by type

For other loan types, read our jumbo loans guide.

Flagstar Bank doesn’t publish the fees it charges for loan originations. The company does provide a closing cost calculator on its website, where you can plug in your loan amount and receive an estimate for total closing costs.

After you’ve been preapproved for a mortgage, you’ll receive a much more specific Loan Estimate that outlines every line item of your closing costs, including these lender fees. This estimate is more accurate because it takes into account your specific situation.

Flagstar Bank may charge an origination fee, which is typically 0.5% to 1% of the loan amount. Other closing costs may be appraisal fees, real estate taxes, attorney fees and mortgage insurance premiums. In total, closing costs for a home purchase may account for 2% to 5% of the loan amount.

Flagstar Bank offers various closing cost and down payment assistance (DPA) programs. Some of these include Fannie Mae’s HomeReady and Freddie Mac’s Home Possible loans. The company also provides its own programs, like Flagstar Gift, which gives eligible first-time homebuyers up to 3% or $5,000 to use toward a down payment or closing costs.

Some of these programs are only available in Michigan, so you’ll need to contact a Flagstar Bank representative for more information about eligibility requirements.