Summary List PlacementTable of Contents: Masthead StickyUpdated on 4/13/2021: We updated this review with a new section on each lender's BBB rating and reputation as a company. We're currently adding information on trustworthiness to all of Personal Finance Insider's guides.
The best mortgage lenders of April 2021
Min. credit score
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*Minimum credit scores are for conventional loans, or for VA loans from Navy Federal and Veterans United. If you qualify for another type of loan, you might be able to secure a loan with a lower score.
Choosing the right mortgage lender plays a big part in getting the best deal on your mortgage.
We’ve chosen lenders that offer a variety of mortgage types and have received an A- in trustworthiness from the Better Business Bureau, with the exception of Guild Mortgage, whose BBB profile is currently under review. Many of our top picks also thrive in customer satisfaction and accept alternative forms of credit if you don’t have a credit score, making it easier to qualify.
Affordability. We looked at lenders’ minimum credit scores and down payment amounts. We also checked whether they offer government-backed loans, which can be more affordable for borrowers with less-than-perfect financial profiles. Finally, we looked at whether it considers alternative forms of credit, like utility bills and rent payments, for you to qualify.
Ethics. Each of our top picks received an A- from the Better Business Bureau, which measures companies’ trustworthiness. The sole exception is Guild Mortgage, whose BBB profile is currently under review. We also researched and considered any scandals in the past three years.
Are these mortgage lenders trustworthy?
The Better Business Bureau grades companies’ trustworthiness based on responses to customer complaints, honesty in advertising, and transparency about business practices. Here are the BBB grades for our top mortgage lenders:
Navy Federal Credit Union
Fairway Independent Mortgage Co.
New American Funding
Bank of America
Carrington Mortgage Services
Most of our top picks have an A+ from the BBB. The exceptions are Navy Federal and Guild Mortgage, both of which have an NR (“No Rating”). Navy Federal has an NR because it’s in the process of responding to customer complaints that had already been closed. The BBB says it is reviewing information for Guild Mortgage before updating the lender’s score.
Several of these lenders do have recent public controversies, though, even the ones with great BBB grades.
In 2019, the US Justice Department required Rocket Mortgage’s parent company Quicken Loans to pay $32.5 million for alleged mortgage fraud. The Justice Department claimed Quicken Loans approved mortgage applications it shouldn’t have. Although Quicken Loans paid the settlement, the company never admitted to mortgage fraud.
A Navy Federal employee has claimed the lender pressured mortgage underwriters to approve loans even if they didn’t have sufficient reason to believe applicants could repay the loans. Then she filed a lawsuit and said Navy Federal retaliated against her whistleblowing by changing her job duties. She dropped the case in late 2020.
In 2020, the Department of Justice charged Bank of America for unfairly denying home loans to adults with disabilities, even though they qualified for loans. Bank of America paid around $300,000 total to people who were refused loans. In 2019, the Department of Labor required Bank of America to pay $4.2 million to people who claimed the bank discriminated against women, Black, and Hispanic applicants in the hiring process.
PNC Bank was accused in 2019 of aiding a man in carrying out a fake debt relief project, which cost customers a total of $85 million. In 2014, PNC had suspected the man of running a scheme and closed his bank accounts. But nine months later, the bank let him open more accounts.
If any of these scandals worry you, you may decide to go with one of the other lenders on our list.
Frequently asked questions
What makes a mortgage lender good?
A mortgage lender should offer the kind of mortgage that best suits your needs. For example, if you’re in the military, then you could benefit from a VA loan; if you’re buying in a rural area, then a USDA loan could be the best fit.
A lender should be relatively affordable. You shouldn’t need a super high credit score or down payment to get a loan. It should also offer good rates and charge reasonable fees.
You want a lender that’s known for high customer satisfaction, and one that’s trustworthy. That’s why we’ve looked at ratings from JD Power and the Better Business Bureau for each lender on our list.
What banks offer the best mortgage rates?
The answer could change by the day. Take a look at Insider’s daily mortgage rate updates to see the average mortgage rates for various term lengths. If you have a good financial profile but a lender is charging you a higher rate than today’s national average, you may want to look elsewhere.
But a low interest rate isn’t the only expense that matters. Ask lenders for an itemized list of fees. Comparing fees among lenders is another way to see which is offering the best financial deal.
How can I get a good mortgage rate?
To secure a low rate, focus on three factors: credit score, debt-to-income ratio, and down payment.
Your score should be at least 620 to get a conventional loan with most lenders, although some require higher. But the higher your score, the better rate you should get. To improve your credit score, focus on making payments on time, paying down debts, and letting your credit age if you aren’t in a rush to buy.
Your debt-to-income ratio is the amount you pay toward debts each month, divided by your gross monthly income. Lenders typically want to see a debt-to-income ratio of 36% or less. To get a lower ratio, you either need to pay down debts or earn more.
You don’t necessarily need a 20% down payment to get a good rate, but the more you save, the better your rate will likely be. If you don’t have much for a down payment right now, it could be worth saving for a few more months, since rates should stay low throughout 2021.
Is it better to get a mortgage from a bank or a lender?
Mortgage lenders specialize in lending. Banks focus on several areas, including personal banking, lending, and investments. There isn’t a clear better choice — your decision will come down to a few factors.
Some banks offer discounts on closing costs if you’re already a customer. In this case, you may prefer to go with the bank you already use.
Mortgage lenders often have more flexibility, though. Banks are held to stricter lending standards by the federal government, so lenders may be willing to customize your loan to fit your needs.
Ultimately, your choice could come down to which company offers the best rate, lowest fees, and best customer service.
Laura Grace Tarpley is an editor at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.