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The 9 best online mortgage lenders for 2020

Peter Warden
The Mortgage Reports editor

The 9 best online mortgage lenders 

Online mortgage lenders specialize in end-to-end online applications.

They let you get pre-approved, turn in your loan documents, and sometimes even close the deal, all without having to show up in person.

Thanks to their low overhead costs, some online mortgage lenders can also offer below-average interest rates and fees.

But costs vary for each borrower, so make sure you shop around.

Check your mortgage rates (Oct 31st, 2020)

Lender

Minimum Credit Score

Minimum Down Payment

Average Loan Fees (as % of Loan Amount) 

NBKC

620 3.5% 0.83%

Better Mortgage

580 3% 0%

GuaranteedRate

580 3.5% 1.25%

Supreme Lending 

620 3.5% 1.18%

loanDepot

580 3.5% 1.72%

Rocket Mortgage

580 3.5% 2%

Reali

500 5% Not available

SoFi

660 10% 0.86%

Movement Mortgage

620 3% 1.72%

 

Check your mortgage rates (Oct 31st, 2020)

Editor’s note: The Mortgage Reports may be compensated by some of these lenders if you choose to work with them. However, that does not affect our reviews. See our full editorial disclosures.


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Best online mortgage lender reviews

Below you’ll find out why we chose each of the following companies as the nine best online mortgage lenders.

While you read, keep in mind that average mortgage rates and fees shown are from 2019.

Mortgage rates have fallen steeply since then, so your own rate will be different.

But these numbers can help you compare each lender’s costs apples-to-apples.

The best online mortgage lenders

  1. NBKC
  2. Better Mortgage
  3. Guaranteed Rate
  4. Supreme Lending
  5. loanDepot
  6. Rocket Mortgage
  7. Reali
  8. SoFi
  9. Movement Mortgage

1. NBKC (National Bank of Kansas City)

Although it’s the third-smallest lender on our list, NBKC scored highly across our criteria, including for mortgage rates and fees.

Better Mortgage did have lower fees — it’s hard to beat zero — but, NBKC’s equally low rates and customer reviews nudged it ahead into top place. Here are the key numbers.

NBKC Bank rates and requirements:

  • Median rate for 30-year FRM: 3.86%
  • Average origination charge: 0.20%
  • Median loan costs: 0.83%
  • Minimum FICO credit score: 620
  • Minimum down payment: 3.5% [0% for VA loans]
  • Overall customer reviews score: 4.87 out of 5

This outstanding online mortgage lender is well worth looking into if you want an online application.

And for clarity, don’t let the name “Bank of Kansas City” put you off.

Though NBKC has physical branches only in its home city, this lender offers home loans online and over the phone in all 50 states.

>> Read the full NBKC review

2. Better Mortgage

You could argue that Better Mortgage tops even NBKC, because according to some of our criteria it does.

Better Mortgage has zero lender fees and an easier credit threshold of just 580, for example.

However, Better is knocked down a peg by its customer reviews and its smaller range of loan types.

Only you can decide whether to ignore those and grab its great rates and zero loan origination fees.

Better Mortgage rates and requirements:

  • Median rate for 30-year FRM: 3.86%
  • Average origination charge: 0.00% (not a misprint)
  • Median loan costs: 0.32%
  • Minimum FICO credit score: 580
  • Minimum down payment: 3.0% [0% for VA or USDA loans]
  • Overall customer reviews score: 4.30 out of 5

Overall, Better Mortgage is another excellent — and affordable — lender, worthy of its name for many borrowers.

Check your rate with Better Mortgage today, October 31, 2020

3. Guaranteed Rate

Guaranteed Rate may have slightly higher average interest rates than some others, but it still has plenty going for it.

That includes low fees, excellent customer reviews, and a wide variety of loan products, including those backed by both the VA and the USDA.

Guaranteed Rate rates and requirements:

  • Median rate for 30-year FRM: 4%
  • Average origination charge: 0.49%
  • Median loan costs: 1.25%
  • Minimum FICO credit score: 580
  • Minimum down payment: 3.5% [0% for VA or USDA loans]
  • Overall customer reviews score: 4.83 out of 5

That average mortgage rate is only slightly higher than the best.

And, of course, you personally may qualify for a lower interest rate if you have high credit and an all-around strong application.

>> Read the full Guaranteed Rate review

4. Supreme Lending

Supreme Lending may not always have the lowest rates. But customers give this online lender top ratings.

How come? Well, presumably Supreme Lending has exceptionally good service. Its median loan costs are low. And it offers a wide choice of mortgages, including a special program for teachers.

Supreme Lending rates and requirements:

  • Median rate for 30-year FRM: 4.38%
  • Average origination charge: 1.11%
  • Median loan costs: 1.18%
  • Minimum FICO credit score: 620 (May be lower for FHA loans)
  • Minimum down payment: 3.0% [0% for VA or USDA loans]
  • Overall customer reviews score: 4.93 out of 5

Don’t automatically rule out Supreme Lending just because of its rates. Its other qualities mean it may be worth paying a little more each month.

And, you won’t know the rate you’re going to be offered until you request a quote. Maybe yours will be below average.

5. loanDepot

loanDepot does well for mortgage rates and not badly for origination charges. And its customers are more satisfied than most, which is always a good sign.

loanDepot also offers FHA 203(k) loans, which help you finance a fixer-upper.

loanDepot rates and requirements:

  • Median rate for 30-year FRM: 3.99%
  • Average origination charge: 0.92%
  • Median loan costs: 1.72%
  • Minimum FICO credit score: 580
  • Minimum down payment: 3.5% [0% for VA loans]
  • Overall customer reviews score: 4.47 out of 5

Not to mention, loanDepot is a pioneer in the online mortgage lending space.

loanDepot is well known for its “mello smartloan” product, which it claims can close your loan in as little as 8 days (less than 1/3 of the time it normally takes).

That may not be true for every customer (especially those with “outside the box” mortgage loan applications), but it’s worth a look.

Check your rate with loanDepot today, October 31, 2020

6. Rocket Mortgage 

Rocket Mortgage is the all-online child of the Quicken Loans parent company. So you get all the advantages of working with America’s biggest mortgage lender — but digitally.

And those advantages are very real. Quicken has topped the J.D. Power mortgage originators’ rankings for the last 10 years straight.

Rocket Mortgage rates and requirements:

  • Median rate for 30-year FRM: 4.13%
  • Average origination charge: 1.26%
  • Median loan costs: 2.00%
  • Minimum FICO credit score: 580
  • Minimum down payment: 3.5% [0% for VA loans]
  • Overall customer reviews score: 4.47 out of 5

Rocket Mortgage is strong on its customer service, range of loans, and flexibility over credit and down payment issues.

But those rates, origination charges, and loan costs look a bit steep. So be sure you compare your options to see that Rocket is your best deal.

Check your rate with Rocket Mortgage today, October 31, 2020

7. Reali Loans

Most of the data we use when assessing other companies seems to be unavailable for Reali (formerly Lenda) because the company is too new.

However, a few standout features helped Reali make our best-of list.

Reali Loans rates and requirements:

  • Median rate for 30-year FRM: Unknown
  • Average origination charge: Unknown
  • Median loan costs: Unknown
  • Minimum FICO credit score: 500
  • Minimum down payment: 5%
  • Overall customer reviews score: 4.35 out of 5

Clearly, Reali stands out because it will consider applicants with credit scores as low as 500.

In addition, its fees are reputedly low and its customer service good.

But, Reali has a limited reach compared to other online mortgage lenders. At the time of writing, Reali was licensed to lend only in the following states:

  • Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Oregon, Pennsylvania, Texas, Virginia and Washington

8. SoFi

SoFi is in our top-3 for rates, origination charges, and loan costs, which for many are the most important points when picking a lender.

So what’s it doing down here near the bottom of our rankings?

Three reasons: First, SoFi’s credit score threshold is the highest, at 660 minimum. Second, it requires at least a 10 percent down payment. And third, SoFi’s customer reviews are the second-to-last on this list.

SoFi mortgage rates and requirements:

  • Median rate for 30-year FRM: 3.88%
  • Average origination charge: 0.53%
  • Median loan costs: 0.86%
  • Minimum FICO credit score: 660
  • Minimum down payment: 10%
  • Overall customer reviews score: 3.97 out of 5

If your credit score’s above 660 and a 10 percent down payment is not a problem, you may well decide to overlook SoFi’s somewhat lower customer satisfaction scores and add it to your shortlist.

9. Movement Mortgage

Somebody had to come in at number nine, and it’s Movement Mortgage. But this is a review of the best online mortgage lenders. And nobody makes our list without having some seriously valuable qualities.

Movement Mortgage rates and requirements:

  • Median rate for 30-year FRM: 4.13%
  • Average origination charge: 0.79%
  • Median loan costs: 1.80%
  • Minimum FICO credit score: 620 (though 580 with compensating factors)
  • Minimum down payment: 3% [0% for VA and USDA loans]
  • Overall customer reviews score: 3.00 out of 5

Movement has a great range of loans and lower loan costs than, say, Rocket. We just wish it would work on its customer satisfaction and mortgage rates.

But don’t forget the rates we show are just a median. Ask for a quote to see if you’re in line for something better.

Compare mortgage rates today. Start here (Oct 31st, 2020)

How we chose the best online mortgage lenders

We chose the best online lenders using the following criteria:

  • Rates and fees — Based on 2019 averages submitted to the government by each lender
  • Flexibility — Each lender’s minimum credit score and down payment requirements
  • Loan options — The breadth of each lender’s portfolio of mortgage products
  • Customer service — Using customer reviews and ratings on public, online forums, including Zillow, Bankrate and LendingTree

Of course, shopping for a home loan is personal. And you’re naturally going to care about some criteria more than others.

For example, if you have a stellar credit history, you wouldn’t mind that SoFi’s minimum score is 660.

Or, if you’re shopping for a USDA loan, it might not matter that NBKC has stellar rates because it doesn’t offer the loan program you need.

But everyone’s likely to be concerned about mortgage rates and fees. And most should pay attention to each lender’s customer service scores.

Make sure you shop around and get rate quotes from a few of the best online mortgage lenders to find one that suits you.

Verify your new rate (Oct 31st, 2020)

What is an online lender?

Most mortgage lenders — including traditional banks and credit unions — let you apply online.

But many of these online applications simply feed your information into a traditional mortgage process.

Soon enough you’ll end up dealing with loan officers who work within sometimes frustrating bureaucracies.

True online lenders have automated the entire mortgage process, at least as far it’s visible to the borrower. (There may still be some manual processing on the back end.)

True online lenders have automated the entire mortgage process from application through to closing.

With your permission, an online lender’s IT systems can reach out directly to your bank, the IRS, and other automated systems to verify your loan application.

Unless the computer spits out a query that needs human eyes, nearly everything happens automatically.

With luck, you may never have to field a call or take a meeting. Some online mortgage companies even let you e-sign your closing documents.

That said, some borrowers may still prefer the in-person lending experience. And there are still plenty of mortgage companies who offer it.

For more options, see:

Pros and cons of online mortgage lending

The best online mortgage lenders can deliver real advantages. But, to some, they also bring drawbacks.

Here’s an overview of the pros and cons of online mortgage lending:

Benefits of online mortgage lenders

  • Online lenders often have lower fees. By cutting their human labor costs, they can pass on their savings to you
  • For the same reason, some have below-market interest rates. But not all. Public data reveal a difference of more than 0.50 percent between average rates for popular online lenders. So you still need to shop around for the best deal
  • Stats say online loans close faster on average. A Federal Reserve report probed the efficiency of “Fintech” (finance technology) lenders compared to traditional ones. It says: “We find that FinTech lenders process loans 7.9 days faster than non-FinTech lenders.” And there are ” … even larger effects for refinances. Across specifications, FinTech lenders process mortgages 9.3 to 14.6 days faster than other lenders”
  • And of course, the digital application process is more convenient for you as a borrower

Drawbacks of online mortgage lenders

  • Online lenders tend to be better at “vanilla” mortgages than special loans. If your needs are outside the mainstream, maybe because your credit or income are a bit iffy, you may be better off working with a traditional lender
  • Plenty of people still value the human touch. Building a relationship with your loan officer can help you through the process
  • An e-closing can have its downsides. You might prefer an expert on hand to answer your last-minute queries
  • Online lenders might have a smaller range of mortgage options. Research your shortlist first so you apply only to those that meet your needs and are comfortable working with borrowers like you

For most borrowers, online lenders can offer solid advantages in terms of competitive rates, fees, and closing times.

Is that enough to swing you? Or do you prefer the human touch? Only you can decide.

Verify your new rate (Oct 31st, 2020)

Refinancing with an online lender

Online mortgage lenders can be a great option for refinancing your home.

Refinancing means you replace your current mortgage with a new one — usually with a lower interest rate or a shorter loan term, or both.

Once you’ve built up some equity in your home you can also apply for a cash-out refinance.

Many online lenders offer cash-out refinancing, home equity loans, and home equity lines of credit as well as traditional rate-and-term refinances.

This is a type of loan that pays off your existing mortgage and provides extra cash you can use for remodeling your home, consolidating credit card debt, or for any other purpose.

Most online lenders also offer second mortgages such as home equity loans or a home equity line of credit (HELOC).

A HELOC, cash-out refinance, or home equity loan won’t be an option unless you have home equity.

Equity refers to the part of the home’s value you own. If your house is worth $250,000 and you owe $150,000 on your mortgage loan, your equity would be $100,000.

Verify your refinance eligibility (Oct 31st, 2020)

First-time home buyers’ guide to online mortgage loans

If you’ve gotten a home loan before, you likely already know the lingo and won’t have trouble navigating an online mortgage application.

But one of the cons of the online mortgage process is its difficulty level for first-time homebuyers who may not be sure what kind of mortgage they need.

Getting the wrong type of loan can cost you, both in monthly payment amount and interest paid over the life of the loan.

If you’re considering one of the best online mortgage lenders but you’ve never been a homeowner before, you’ll want to know these basics before applying.

Types of home loans

Home loans generally fall into two categories:

  • Conventional loans — About 3 in 5 home loans are conventional loans. These mortgages tend to be most affordable if you have a bigger down payment and higher credit score
  • Subsidized loans — Backing from the federal government helps lenders offer competitive rates on subsidized loans. These include VA loans, USDA loans, and FHA loans. All three offer special benefits for homebuyers, from lower credit requirements to zero down payment and affordable mortgage insurance

Qualifying for a mortgage loan

Online mortgage lenders will always run a credit check.

Someone with excellent credit and a low debt-to-income ratio can usually qualify for the best mortgage rates.

Contrary to some advice you might see online, you can easily get a mortgage with a low down payment, or possibly no down payment at all.

  • Conventional mortgages normally require at least a 620 credit score and a debt-to-income ratio of 43 percent or less. But different lenders can set their own criteria. Conventional loans require a down payment of at least 3 percent

Subsidized loans have different qualifications.

  • FHA loans have a minimum credit score of 580, and you’d need to put at least 3.5 percent down
  • USDA loans allow no down payment and require a credit score of 640 or higher. The home must also be in an eligible rural or suburban area
  • VA loans also allow no down payment, and technically have no minimum credit score. But most lenders require at least 620. The borrower must qualify for VA backing based on their military service history

You can get pre-approved with an online lender to verify which mortgage loans you’re eligible for and what your rate and loan costs are likely to be.

Verify your home loan eligibility (Oct 31st, 2020)

Adjustable-rate vs. fixed-rate mortgages

A fixed-rate mortgage loan locks in an interest rate and payment that won’t change throughout the life of the loan. 

An adjustable-rate mortgage has a fixed rate for an introductory period, typically five or seven years. After this intro rate expires, the mortgage rate and monthly payment can change each year.

Most online lenders offer both types of home loans — fixed or adjustable-rate mortgages (ARMs).

What is a loan term?

Your loan term refers to the amount of time you’ll owe money on the home loan. A 30-year mortgage spreads your repayment across — you guessed it — 30 years.

Longer loan terms like 30 years offer lower monthly mortgage payments because the balance is spread across more payments.

But you’ll also pay more in interest charges because of the longer term.

15-year fixed mortgages typically offer lower rates than 30-year loans. However, payments are quite a bit higher since the loan must be paid off in half the time.

Calculating a mortgage payment

Your monthly mortgage payment will be determined by several factors:

  • Loan amount — A bigger loan will increase your monthly payments; a bigger down payment can lower your loan amount
  • Loan term — A longer loan term lowers your monthly payments but increases interest paid over time, assuming you stick to the repayment schedule
  • Interest rate — Today’s historically low interest rates translate into lower monthly mortgage payments. Lower interest rates unlock more borrowing power for new homeowners
  • Mortgage insurance — Unless you put at least 20 percent down on a conventional loan (or qualify for a VA loan) you’ll pay mortgage insurance of some type. This coverage insures the lender in case you default on the loan. It typically costs around 1% of the loan amount annually, which is paid monthly with your mortgage payments
  • Taxes, insurance, and HOA — Your mortgage loan servicer will collect your annual homeowners insurance premiums and local property taxes, adding those costs to your mortgage payment each month. If the home or condo requires homeowners association dues, these are often paid with the mortgage as well

Use a mortgage calculator to help find your price range.

Paying closing costs

Buying or refinancing real estate always comes with closing costs. These costs usually range from 2 to 5 percent of your home’s purchase price.

You can negotiate to lower some closing costs such as the lender’s loan origination fee.

Other costs, such as an appraisal or title search, come through third party providers and can’t be avoided.

Some home buyers can get the seller to help pay closing costs; others may qualify for closing cost assistance programs.

If you’re refinancing, it may be possible to roll the closing costs into your loan balance.

What is a mortgage prequalification?

Mortgage prequalification is when the lender takes a first look at your credit and finances and gives you an estimate of how much money you can borrow.

A prequalification isn’t a commitment from the lender. It’s only an estimate of what you’re likely to qualify for. This can help you find your home shopping price range. 

To actually make an offer on a house, you’ll need a pre-approval letter.

Pre-approval means the lender has verified important information on your application, such as your credit score and income.

Pre-approval is a commitment by the mortgage company to lend to you— provided all your info checks out in the final underwriting process.

Best online mortgage companies: Recap

Here’s a recap of our picks for the 9 best online mortgage lenders in 2020:

  1. NBKC
  2. Better Mortgage
  3. Guaranteed Rate
  4. Supreme Lending
  5. loanDepot
  6. Rocket Mortgage
  7. Reali
  8. SoFi
  9. Movement Mortgage

Remember, the best lender for you depends on your loan type, the home you’re buying, and your finances.

To see who can offer you the lowest rate, get estimates from a few different lenders and compare them side by side.

Verify your new rate (Oct 31st, 2020)