For many people, looking into home loans is a key step in the homebuying process. Because a house is likely the biggest purchase of your life, you should consider the best mortgage lenders.
Top mortgage lenders not only save you money but also help make homebuying less stressful. This guide can assist you when you are ready to apply for a mortgage.
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Homefinity launched in 2018 as the online lending division of Fairway Independent Mortgage. It offers a variety of mortgage products, including conventional mortgages, Federal Housing Administration and Veterans Affairs mortgages, and mortgage refinancing.
Caliber Home Loans of Coppell, Texas, offers mortgage products nationwide. Options include conventional, adjustable-rate, jumbo, refinancing, Federal Housing Administration, U.S. Department of Agriculture and Department of Veterans Affairs loans. Caliber has been in business since 2008, and is solely focused on home lending products.
Carrington Mortgage Services, founded in 2007, offers an array of mortgage and refinancing options to borrowers seeking conventional or government-backed loans. Its California-based parent company, Carrington Holding Co., was established in 2003 and provides a range of real estate services. Carrington Mortgage Services is based in California and also has offices in Arizona, Connecticut, Florida, Indiana and Maryland.
Pentagon Federal Credit Union, widely known as PenFed, offers borrowers access to many types of mortgages: conventional, adjustable rate, jumbo and Department of Veterans Affairs, plus refinancing loans and home equity lines of credit. The financial institution, which serves 2.5 million members, was established in 1935 and is based in McLean, Virginia.
North American Savings Bank, or NASB, is a Missouri-based bank and lender founded in 1927 that offers home mortgages nationally. NASB provides a variety of mortgage options, including conventional, Federal Housing Administration and Department of Veterans Affairs loans, and products for borrowers who might otherwise have trouble getting a mortgage.
Headquartered in Charlotte, North Carolina, Truist Bank was formed in 2019 after SunTrust and BB&T banks merged. Truist Bank offers a variety of mortgage products, including refinancing and home equity lines of credit.
Chase, one of the world’s largest banks, was founded in 1799 in New York and offers mortgage and refinance loans.
AmeriSave Mortgage Corp. is an online lender that has been in business since 2002. It was one of the first to offer an offsite digital mortgage experience for customers. The company says it has financed more than 664,000 borrowers since it began operating. With headquarters in Atlanta, AmeriSave services loans in 49 states and Washington, D.C.
Simmons Bank was founded in Arkansas in 1903 and can now be found across six states. It offers mortgage products such as conventional and jumbo loans, federal-government-backed loans and state-approved down payment assistance programs.
The 30-year fixed mortgage rate rose to 6.73% during the final week of 2022. However, average interest rates for shorter-term fixed-rate mortgage products decreased across the board. Adjustable mortgage rates also fell slightly.
Mortgage interest rates are twice as high as they were at the beginning of the year, and higher borrowing costs are having a tangible impact on mortgage affordability and consumer housing sentiment. Here are the current mortgage rates, without discount points unless otherwise noted, as of Dec. 29:
- 30-year fixed: 6.73% (up from 6.65% a week ago).
- 20-year fixed: 6.14% (down from 6.31% a week ago).
- 15-year fixed: 5.82% (down from 5.87% a week ago).
- 10-year fixed: 5.79% (down from 5.92% a week ago).
- 5/1 ARM: 5.42% (down from 5.45% a week ago).
- 7/1 ARM: 5.54% (down from 5.58% a week ago).
- 10/1 ARM: 5.97% (down from 5.99% a week ago).
- 30-year jumbo loans: 6.8% (up from 6.7% a week ago).
- 30-year FHA loans: 6.2% with 0.45 point (up from 6.19% a week ago).
- VA purchase loans: 5.98% with 0.07 point (up from 5.91% a week ago).
A mortgage is a loan from a bank or other lender used to buy or refinance a home.
Mortgages are secured loans: The property acts as collateral as you repay the loan in monthly installments, including interest, often over 15 to 30 years. If you fail to pay, the lender can foreclose on your home.
The right mortgage for you will depend on your finances, plans and preferences. Here are common types of mortgages:
Conventional mortgages. These mortgages are not guaranteed by the federal government and are funded by private lenders. You may need a minimum credit score of 620, a maximum debt-to-income ratio of 43% and a down payment of at least 3% to qualify.
Government-backed mortgages. You may have more success getting one of these loans than a conventional loan because a government agency insures it, reducing the lender’s risk. These loans are issued by private lenders and guaranteed by the government:
Jumbo mortgages. Jumbo loans exceed conforming loan limits set by the Federal Housing Finance Agency and have stricter qualification standards because of the risk to lenders.
Balloon mortgages. These home loans feature lower monthly payments paired with a larger lump-sum payment during the loan term.
Your mortgage interest rate is the annual cost of your loan amount, expressed as a percentage of the total loan amount. It does not include fees and other costs. A 5% interest rate on a mortgage means you will pay 5% of your loan’s balance in interest each year. Your mortgage also has an annual percentage rate that reflects your interest rate plus other charges, such as most closing costs, discount points and origination fees.
Mortgage interest rates can be fixed or adjustable. Whether a fixed- or adjustable-rate mortgage is best can depend on market conditions, your finances and how long you plan to keep your mortgage.
Pros:
- Buying a home if you can’t afford to pay cash for it.
- Building equity as your home typically appreciates.
- Improving your credit score with consistent, on-time mortgage payments.
- Claiming money-saving tax breaks.
- Allowing you control over home improvements and upgrades.
Cons:
- Budgeting for property taxes, homeowners association fees and repairs.
- Meeting certain credit score and debt-to-income, or DTI, requirements.
- Having to pay a down payment, closing costs and other upfront expenses.
- Having less flexibility if you want to move for a job or to care for a loved one.
Mortgage lenders want to know the risk of lending you money. A lender will look at not only your credit history but also your income, down payment and other key factors when reviewing your application. Here’s what lenders will consider when determining your eligibility for a mortgage and, ultimately, your interest rate:
Credit score. Your credit score is a major factor, but the minimum credit score to buy a house can vary by lender and loan program.
DTI ratio. Your DTI is the percentage of your monthly income that is spent on repaying debt.
Down payment. Your down payment is the amount you pay upfront for the property, while the mortgage covers the rest. A larger down payment can lead to a lower interest rate on your mortgage.
Loan amount. The larger your mortgage, the greater the risk for your lender. Lenders limit risk by following government loan limits. If you want to buy a property that costs more than these limits, you can apply for a jumbo loan.
Loan term. The term is how long you have to repay the loan. The longer the term, the lower your monthly payments. A longer term typically has a higher interest rate and higher total costs compared with a shorter loan term.
Loan type. Make sure you understand your options to choose the right type of mortgage for your credit profile and your budget.
You will find plenty of mortgage options if a down payment has been a roadblock to homeownership. Note that you will usually need to pay private mortgage insurance with less than 20% down, however.
No-down-payment mortgages: Try certain government-backed loans. You may qualify for a VA loan with no down payment and no PMI, or a USDA loan with nothing down and PMI.
Low down-payment mortgages: Put down 3% for some conventional loans and 3.5% for FHA loans with at least a fair credit score on the FICO scale. FHA loans require you to carry mortgage insurance and conventional loans require it if your down payment is low.
How Do You Get Preapproved for a Mortgage?
Before you begin to browse homes, you should start the mortgage preapproval process. Getting preapproved for a mortgage allows you to compare your estimated mortgage rate across multiple lenders before you formally apply. Some sellers only work with preapproved buyers, plus preapproval allows you to make an offer as soon as you find a place you love.
Here’s how the mortgage preapproval process works:
- Check and improve your credit.
- Apply with a few lenders to allow for comparison shopping.
- Compare offers and choose a mortgage lender.
You can evaluate mortgage companies based on four key factors:
- Interest rates. Because mortgage rates can vary by lender and loan type, you may find a deal by comparison shopping.
- Closing costs. When you factor in closing costs, which can include application, appraisal and loan origination fees, the lender with the lowest rate may not offer the best overall mortgage costs. Compare costs between lenders using the APRs.
- Loan types. Look for a mortgage lender in your state with options that work for you, whether that’s a 30-year fixed-rate loan, a VA loan or something else.
- Customer service reviews. Use customer service feedback to research each lender’s performance. Lenders should not only offer great loan rates but also treat customers well.
The mortgage process looks different depending on whether you are purchasing or refinancing a home. Here are some of the basic steps involved in getting a mortgage to buy a house:
- Apply for the mortgage.
- Review your loan estimate.
- Lock in your mortgage rate.
- Purchase discount points, if any.
- Schedule a home inspection.
- Pay for a home appraisal.
- Purchase homeowners insurance.
- Budget time for mortgage processing.
- Review the closing disclosure.
- Close on the loan.
Ask for a loan from a family member. Make sure the terms of the loan are clear and in writing. Keep in mind that borrowing money from a loved one can strain your relationship, however.
Look into seller financing. The seller acts as the lender in this type of real estate agreement. Seller financing could mean lower closing costs and flexible terms. On the other hand, sellers offer fewer buyer protections and may charge higher interest rates compared with traditional lenders.
Rent to own. A portion of your monthly rent is credited toward the purchase of the home at the end of the lease. If you change your mind, you will lose the extra rent money and any fee that holds your chance to buy the home.
Hold off on buying a home. Wait a few years until you have more in your savings account. Although a 20% down payment is the rule of thumb, you can still qualify with smaller amounts. If you’re young, you will also have a chance to build more credit history and figure out where you want to live.
U.S. News Survey
U.S. News Survey: Despite Rising Interest Rates, Low Inventory and High Prices, 70% of Homebuyers Are Optimistic About Their Prospects
A U.S. News survey in March found that people who are planning to buy a home or refinance their mortgage in the next year are feeling good about their chances. While acknowledging that interest rates are already rising from historic lows and housing inventory remains tight, 70.3% of respondents say they feel generally optimistic about their homebuying or refinancing prospects. Though hopeful, nearly as many respondents, 69.9%, say they regret not starting their homebuying or refinancing process earlier.
When respondents evaluate home affordability or availability, 50.3% say affordability is the bigger concern in today’s housing market. About half as many – 26.8% of respondents – say availability is the bigger issue, while another 22.9% of respondents say the problems are completely intertwined.
Additional Survey Insights
Most respondents are first-time homebuyers: 48.3% of people are shopping to buy their first homes, while 18.9% of people are selling their current homes and buying a new one. Another 22.4% of people are refinancing their existing mortgages.
For respondents who are refinancing, 41.6% are doing it to lower their monthly payments.
Two-thirds of respondents (65.9%) are getting a mortgage that’s $400,000 or less.
There isn’t a clear preferred way that respondents are picking their mortgage lender. While 20.8% of respondents are sticking with their current lender or bank, 30.5% are searching online to find a new lender. A full 11.2% of respondents say they don’t know how they are going to pick.
The conventional, 30-year fixed-rate mortgage is the most popular mortgage type, with 33.8% of respondents saying they plan to get it. The conventional, 15-year fixed-rate mortgage has a strong second-place showing with 30.3% of respondents saying they prefer that option.
Respondents say that to improve their local housing situation, the best things the government could do would be to give first-time homebuyers a tax credit (42.3%) and stop investors from buying homes (37.3%). Only 19.3% of respondents say the government shouldn’t be doing anything.
U.S. News Survey Methodology
- U.S. News ran a nationwide survey of 1,200 respondents through PureSpectrum on March 4, 2022. Only people who are planning to buy a home or refinance their mortgage in the next year answered questions.
- The survey sample drew from the general American population, and the survey was configured to be representative of this sample.
- The survey asked nine questions relating to homebuying and home financing.
Survey Results
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Veterans United Home Loans offers mortgages in all 50 states and Washington, D.C., and specializes in Department of Veterans Affairs loans. Since 2016, Veterans United Home Loans has generated the largest number of VA purchase loans per year in the nation. The lender was founded in 2002 and is based in Columbia, Missouri.
PNC Bank is one of the largest banks in the United States, serving more than 9 million customers in all 50 states. A full-service mortgage lender, PNC offers most mortgage loan product types.
PrimeLending is a Dallas-based mortgage lender in operation since 1986. The company offers several mortgage loan options, including conventional loans, jumbo loans, government-backed loans and refinance loans. The lender is a subsidiary of PlainsCapital Bank.
Real Genius is a division of FirstBank, a publicly traded bank based in Nashville, Tennessee. Real Genius, formerly known as ConsumerDirect Mortgage, offers both home purchase and refinance loans.
New American Funding is a mortgage lender offering a variety of home loan options to homebuyers and homeowners nationwide except for Hawaii. The company, founded in 2003 and based in Tustin, California, has originated $61.9 billion in mortgages to date.
Guild Mortgage is a San Diego-based lender established in 1960 and focused on residential home loans. Guild Mortgage offers buyers in 43 states a full suite of mortgage products, including conventional loans, government-backed mortgages and jumbo loans.
SoFi is an online lender founded in 2011 and headquartered in San Francisco that offers fixed-rate mortgages. Refinance, jumbo and home equity loans are also available.
CMG Financial is a privately held mortgage banking firm operating nationwide with localized support, founded in 1993 and based in San Ramon, California. The lender offers a range of products, including conventional, government and specialty mortgages, like jumbo loans.
Founded in 1990 and headquartered in Mount Laurel, New Jersey, Freedom Mortgage is a full-service mortgage company. It’s the fifth-largest mortgage provider in the country and is licensed to operate in all 50 states. Freedom Mortgage offers a variety of mortgage options, including conventional loans, refinancing and first-time homebuyer friendly programs such as FHA loans.
LoanDepot is a mortgage lender that operates nationally with more than 200 branches and delivers both a digital experience and face-to-face service. The lender offers fixed- and adjustable-rate conventional mortgages, Federal Housing Administration and Department of Veterans Affairs loans, as well as refinance and renovation loans. The company was founded in 2010 and is based in Foothill Ranch, California.
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who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
does not include all loan companies or all loan offers available in the marketplace.
