Best online mortgage lenders in 2024
When you work with an online mortgage lender, the entire application process happens without any face-to-face interaction. Online mortgage lenders don’t have branch locations; instead, they operate exclusively online. To assemble our list of the best online lenders, we’ve reviewed over 80 lenders for affordability, availability and borrower experience. Here are our top picks for 2024.
Bankrate’s picks for best online mortgage lenders
| Online mortgage lender | Bankrate Score | Minimum credit score | Minimum down payment |
|---|---|---|---|
| First Mortgage Direct | 4.8 | 620 for conventional loans, 580 for FHA loans, 580 for VA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans and USDA loans |
| SoFi | 4.6 | 620 for conventional loans, 600 for FHA loans, 600 for VA loans | 3%-5% for conventional loans, 3.5% for FHA loans, none for VA loans |
| Rocket Mortgage | 4.6 | 620 for conventional loans, 680 for jumbo loans, 580 for FHA loans, 580 for VA loans | 3% for conventional loans, 10%-15% for jumbo loans, 3.5% for FHA loans, none for VA loans |
| Mr. Cooper | 4.6 | 620 for conventional loans, 580 for FHA loans, 600 for VA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans |
| Better | 4.6 | 620 for conventional loans, 580 for FHA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans |
| Alliant Credit Union | 4.5 | Undisclosed | 5% for conventional loans |
| Homefinity | 4.5 | 620 for conventional loans, 600 or higher for FHA loans and VA loans (can be lower in some cases) | 3% for conventional loans, 3.5% for FHA loans, none for VA loans or USDA loans |
| Tomo | 4.5 | 620 for conventional loans | 3% for conventional loans, 3.5% for FHA loans, none for VA loans |
First Mortgage Direct
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First Mortgage Direct is a national lender with competitive rates and a variety of loan offerings — and, unlike other lenders, it doesn’t charge an origination fee.
SoFi
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SoFi could be a great option for an online mortgage lender, especially if you’re already a member, which can net you a special discount. The lender also boasts a quick process, issuing prequalifications in just minutes.
Rocket Mortgage
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As the nation’s largest mortgage lender and a pioneer of online lending, Rocket gets high scores for its borrower experience and availability.
Mr. Cooper
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Mr. Cooper offers a slick online experience with rates that consistently fall below Bankrate averages. Plus, it offers a wide range of mortgage products with availability throughout the U.S., Puerto Rico and the U.S. Virgin Islands.
Better
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Better offers conventional, FHA and VA loans nationwide with no origination, application, processing or underwriting fees. The lender is also known for speed with its “One Day Mortgage” process, which promises an underwriting decision in 24 hours.
Alliant Credit Union
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For members, Alliant offers the adjustable-rate Alliant Advantage Mortgage, which requires no down payment or mortgage insurance, and comes with a loan limit of $500,000. The lender charges fewer fees and shares current interest rates on its website, as well.
Homefinity
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Homefinity (a subsidiary of Fairway Independent Mortgage) provides speedy, convenient service across most of the nation. With its online focus, you have access to up-to-the-minute rate information and a bevy of calculators. Plus, the lender offers a wide range of mortgage products, including special financing for medical professionals.
Tomo
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Up-and-coming Tomo is a smaller online lender whose focus on borrower experience has garnered it many positive reviews. While it’s not available everywhere, and it doesn’t offer refinances, borrowers can find plenty of information on its site, including a handy rate estimation tool.
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How we chose the best online mortgage lenders: To determine the best online mortgage lenders, Bankrate evaluated more than 80 lenders for factors relating to affordability, availability and borrower experience, assigning each a Bankrate Score out of five stars. Based on this methodology, the best online mortgage lenders in 2024 generally have a Bankrate Score of 4.3 stars or higher. Note: The Bankrate Score considers a mortgage lender’s products and services only; it is not a reflection of a lender’s internal operations or practices.
How to find the best online mortgage lender for you
Many borrowers gravitate to online mortgage lenders for their convenience, efficiency and speed. These are important factors to consider when looking for the best online mortgage lender, but it’s also crucial to compare costs for your individual situation, and take the time to read mortgage lender reviews to learn what to expect from the online experience. When comparing digital lenders, look for:
- The kinds of loans they offer
- Credit and down payment requirements
- Origination fees
- Rate locks and other perks
- What support options are available
Does an online mortgage lender have lower rates?
Some online lenders might advertise lower rates than their brick-and-mortar competition because they have less overhead. However, that doesn’t necessarily mean you’ll get a lower annual percentage rate (or APR) — the cost of the interest rate plus fees. The rate you’re offered often has more to do with your credit and financial profile and prevailing market trends. It can pay off to shop around with at least three different mortgage lenders, online or otherwise.
Pros and cons of online mortgage lenders
Getting a mortgage is one of the most consequential decisions of your life — in some cases, you might be paying back the same loan for the next 30 years. With that in mind, it’s important to understand the advantages and drawbacks of opting for an all-online mortgage experience.
Pros of online mortgage lenders
- Speed: Many online mortgage lenders use proprietary systems and tools to help expedite the loan approval and underwriting process.
- Often charge fewer fees: Some online mortgage lenders forgo fees, which can save you money at closing.
- Potentially lower rates: Some online mortgage lenders run less expensive operations, which could translate to lower interest rates.
Cons of online mortgage lenders
- Limited loan options: If you’re looking for a USDA loan, to refinance or obtain something other than a conventional mortgage, you might be disappointed — some online mortgage lenders only specialize in just a few types of loans.
- Lack of in-person support: While many online mortgage lenders do offer phone-based customer assistance, applying for a mortgage can be an overwhelming process. If you want to be able to speak to a representative in person, you’re better off with a lender that has branch locations.
- Might not work for unique circumstances: While algorithms can help speed along the process for a borrower with an easy-to-understand financial situation — a standard W-2 employee with a steady paycheck, for example — they aren’t great if your finances are more complicated.
Next steps to apply for an online mortgage
Step 1: Strengthen your credit score – Before applying for a loan, take a hard look at your credit history and work to improve your score by paying down outstanding balances. Also, resist taking on any more debt and/or applying for any other loans or lines of credit.
Step 2: Set a budget – It’s important to understand how much house you can afford before you go shopping. Note that you may be preapproved for more money than what you can comfortably afford.
Step 3: Understand your mortgage options – There are a few different types of mortgages. Know what they are and which one you want.
Step 4: Compare several lenders – Rate-shop with at least three different lenders to get the best deal on rates, fees and terms. It’s not just about the rate, though: Do your research and read customer reviews of those mortgage lenders to see what other borrowers have to say about their experience.
Step 5: Get preapproved for a mortgage – Apply for mortgage preapproval with several lenders to compare offers and get accurate loan pricing for your specific situation. Preapproval shows sellers that you’re a serious shopper and that you have the financial backing to bid on a home.
FAQ
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An online mortgage is a home loan originated by a lender based either entirely on the web, with a digital end-to-end experience from application to closing, or a brick-and-mortar company with in-person locations and online services. While several big banks have built out their capabilities to include a digital mortgage platform, many mortgages are also being originated by non-bank institutions, like LoanDepot and Rocket Mortgage.
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With an online mortgage, all or many of the steps in the lending process can be completed electronically, whether through an app or online portal. These steps might include: preapproval or prequalification; application and document upload; loan processing and underwriting; and closing (sometimes called an e-closing). By streamlining these steps — and, in the case of a digital lender, having no offices and overhead — online mortgages tend to have lower rates and overall costs.
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Generally, yes. You can get an FHA loan through many online lenders with a minimum credit score of 580 and 3.5 percent down, or a credit score as low as 500 if you put 10 percent down. Most conventional loans with online lenders require a minimum credit score of 620. (If your credit situation includes unique challenges such as a past bankruptcy or a recent divorce, be prepared to explain the situation to your loan officer.)
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