Best Mortgage and Refinance Lenders 2018

Sabrina Weiss ·
We maintain strict editorial integrity when we evaluate products and services; however, Top Ten Reviews may earn money when you click on links.

After conducting 80 hours of online research, speaking to financial and real estate experts, filling out forms and challenging customer service reps and chatbots, we have come up with our top 10 national mortgage lenders. Companies made the list based on their reputation for customer service, average rates and fees, ease of application process and availability of clear information, as well as the extent to which they’ve mended their ways since the housing crisis.

Our top 10 might not be your top 10, and we’ve organized our picks based on varying criteria. Use our list as a starting point and then shop around, going to your local lenders, a recommended mortgage broker and the bank where you do your checking. Consider getting the recommendation of a trusted professional, and get personalized quotes – either online or in person – based on where you live, your budget, and your credit score.      

Best for Low Rates and Fees
Lending Tree
Lending Tree isn’t a lender, but a marketplace where you can invite lenders to come to you. It’s an opportunity to get the lowest interest rates available from small companies you might never have heard of that are eager to lend you money.
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@Lending Tree
Best for Low Rates and Fees
Lending Tree
Best Customer Satisfaction
Rocket Mortgage by Quicken Loans
The lender not only is the biggest in the country, ranks highest for customer satisfaction and offers a streamlined online application process, but it also has a number of options for borrowers who need to make lower down payments or want to pay less up front.
View on Rocket Mortgage
Best Value
U.S. Bank
The bank offers some of the lowest rates and annual percentage rates among the big lenders, and it offers a discount for its checking customers.
View on U.S. Bank
Best for Low Rates and Fees
Lending Tree’s online marketplace brings together offers from various lenders – some well-known banks and some smaller lenders vying for your business on nearly any kind of loan, often with lower rates.
You can also find a lot of information on the website, including estimated rates based on your location, loan amount and credit score. In addition, you can preview each lender’s estimated fees. Once you fill in the offer form, lenders will begin calling you with offers. As you compare rates and offers, pay close attention to the annual percentage rates; this will give you a more accurate sense of the loan’s actual cost. Customers note the calls from lenders can get a little overwhelming, and the company has said it is working to make it easier to opt out of those calls. Once you choose an offer, the rest of your mortgage application happens with that lender. Lending Tree’s job is done.
  • Online marketplace lets lenders come to you
  • Finds the lowest possible rates by including smaller lenders
  • Lenders make info available up front
  • Lender call and emails can be intrusive
  • Some lenders are lesser-known names
Lending Tree
Read the full review
Best Customer Satisfaction
Rocket Mortgage by Quicken Loans allows you to apply online and can streamline the process by linking bank accounts directly to your application.
Typical fixed-rate mortgage loans for 15- or 30-year terms are available, but Quicken also gives you the option of choosing a term of eight to 30 years. FHA and VA loans (for purchase or refinance) are also available. Rocket Mortgage doesn’t disclose any rates until you apply for pre-approval, but you can find daily national rates on the Quicken Loans site. Be aware, though, that they assume the purchase of two discount points, making the rates look deceptively low. Rocket Mortgage by Quicken Loans has a reputation for excellent customer service, topping J.D. Power’s customer satisfaction survey for the past few years. Plus, it services almost every loan it writes. Even if your mortgage is sold, odds are Quicken will still manage the customer service end of things.
  • Applying online through Rocket is a breeze
  • Quicken services nearly all the loans it writes
  • Flexible loan products are available
  • You can’t learn much about costs until Rocket pulls your credit report
  • Rocket’s online-only application process can feel impersonal
Rocket Mortgage
Read the full review
Best Value
U.S. Bank has slightly lower interest rates and APRs than other large banks, and your mortgage application can be completed online. Plus, there are more fixed-rate term options than is typical, with 10-, 15-, 20- and 30-year loans available.
In addition to home-equity loans and lines of credit, U.S. Bank offers a Smart Refinance loan with zero closing costs. While such no-cost loans often have higher interest rates, it’s a good option if you don’t plan to stay in your home too long after refinancing. U.S. Bank is the fifth-largest bank in the country, with branches in 29 states. It ranked seventh in J.D. Power’s 2017 customer satisfaction survey, and it has a relatively low incidence of complaints compared to many of its competitors.
  • It offers slightly lower interest rates and APRs than other large banks
  • No-cost refinancing is available
  • You can apply completely online
  • Its rates are higher than some smaller lenders’ rates
  • It services loans nationwide but has branches in only 29 states
U.S. Bank
Read the full review
Best for Millennials
SoFi is relatively new to the mortgage market; it first started offering mortgages in 2016. Its lower rates, slick interface and “member” benefits make it popular lender.
Applications are also less focused on credit scores and more reliant on whether you have a solid income, with the promise of earning more in the future. SoFi offers fixed-rate and adjustable-rate mortgages (up to $3 million), as well as refinance options and programs to use refinancing to pay off student loans. However, loans are only available for owner-occupied residences. Be aware that the rates on SoFi’s site include the purchase of 0.875 of a mortgage point, so they look slightly lower than they are. Still, even adjusting for the points, SoFi’s rates are often lower than many big banks' advertised rates. The company also offers a 0.125 percent discount to “members’ who already have a SoFi account. There are no physical locations with this lender.
  • Prequalification is easy through the slick online interface
  • Rates are lower rates than the big banks’, with no PMI requirement
  • SoFiWealth management fees are waived for mortgage holders
  • You may pay a higher rate if you don’t meet the income standards
  • There are no physical branches
  • Mortgages might be unavailable in your state
Read the full review
Best for High-Value Purchases
PNC offers typical fixed-rate loans with terms of 10 to 30 years as well as adjustable rate mortgages. And its $5 million upper limit on a jumbo mortgage is higher than most other lenders'.
There are also options for home equity lines of credit and refinancing loans. PNC offers tools to educate consumers about budgeting for a home and the process of applying for a mortgage. For example, its Home Insight Planner helps you estimate what you can realistically afford, based on your income, debt and monthly expenses. And you don’t have to upload personal information to get this estimate. Preapproval only requires a simple online form, and a loan officer will contact you within a few days. Much of the application process is automated, but you need to speak with someone in person (over the phone or at a branch) to finish the application process.
  • Its personalized tools and apps help you budget and apply for a loan
  • It offers a jumbo mortgage for up to $5 million
  • You can’t get rate estimates until you go through preapproval
  • You can’t apply online
  • FHA and VA loans are the only options for those with low credit
Read the full review

Why trust us?

We’ve been writing about mortgages for eight years. There are so many lender options, including local banks, credit unions and other financing companies, but we focused on banks and other institutions that serve large audiences and have branches in multiple states. We chose to include Lending Tree because it’s a useful way to get multiple offers.

As part of our research, we consulted with experts on mortgage lending to learn more about the application process, what you need to apply and how you can best position yourself to get approved with a good rate.

In case you already have a mortgage, we also looked at each lender’s refinancing options. Every lender we looked at has options for refinancing loans.

Interest rates and home prices are subject to a lot of external factors beyond the control of even these lenders. With that in mind, we try to compare them on factors that remain stable. These include application requirements, customers service and any legal actions taken against them.

What are the first steps I need to take when looking for a mortgage?

Whether you’re thinking about buying your first home or just planning to move, your first step should be to check your credit score.

“You want to shine your credit up as best you can,” says John Cooper, CFP, a private client adviser at Greenwood Capital in South Carolina. “If you were selling your automobile on the side of the road, you wouldn’t drive it out there with mud all over it and a window busted out."

Next, get a good idea of your income, available assets and existing debt to make a budget. Speak to a financial adviser or use one of the affordability calculators available on several lenders’ websites. You’ll need those numbers to begin your search, both for a home and for the loan you’ll need to pay for it.

Then you’ll be ready to start your search by asking friends, visiting your current bank and, of course, checking trusted websites.

What do you need to apply for a mortgage?

When you are ready to apply for a mortgage, you begin by providing documents and other information to your loan officer. Often, you can be approved quickly, but the loan’s actual underwriting can take more than a month, even longer in some cases.

The lender needs documents to verify your identity and your income. Come prepared with a driver’s license, paystubs and at least two year’s worth of W-2 forms. If you work freelance or on a contract basis, you may need to provide additional documents. In addition, if you receive a monetary gift from a relative to go toward the purchase of your home, they may need to provide a letter for the lender. Further, if you or your partner is a student, you may need to provide school transcripts. 

Your savings and assets come under scrutiny as well. The lender wants to see how much of a down payment you can afford and that your savings comes primarily from income or investments, not from gifts. This assures the lender you can keep up on payments.

Loan officers also check your credit score and report. Generally, 620 is the minimum acceptable score, though there are lending programs you can use if yours is lower. By looking at your credit report, the lender can see what debts you have and your payment history. Lenders also check whether your debts are 36 percent or less of your monthly income.

Which banks are best for mortgages?

As much as we are here to tell you our top 10 picks, the answer for you will depend on several factors, such as location, budget and whether you like to deal with loan officers in person or are comfortable conducting all your transactions online or by phone.

Big banks such as Wells Fargo and CitiMortgage offer many types of loans and are likely to continue servicing your loan rather than sell it off to another company. They’re an option if you like the convenience of having your checking account and mortgage in the same place. Some banks even offer certain discounts or credit card points for customers who take out mortgages with them.

On the other hand, a small local lender could have more familiarity with real estate in the area, and its loan officers might have more flexibility to cut deals on rates and fees. Online-only lenders like SoFi, meanwhile have low overhead costs, which could translate to better rates and lower fees for you.

The bottom line is, you should get a quote from at least three lenders to see which can provide the best loan for your needs.

Who are the top mortgage lenders?

Quicken Loans currently originates the most loans in the United States, followed closely behind by Wells Fargo.

What credit score do I need to have to get a mortgage?

“The lowest acceptable FICO score for a conventional mortgage today is 620,” says Jim Sahnger, a mortgage planner with C2 Financial Corp. in Jupiter, Fla. “With FHA loans, it may be possible to find lenders or a mortgage broker that can go down to a 550 FICO.”

For jumbo mortgages, which are loans for larger amounts than the limit set by the Office of Federal Housing Enterprise Oversight (currently $453,100 in most of the United States), you may need higher than a 700.

In all cases, a higher score will get you a better interest rate.

What is debt-to-income ratio?

Your DTI is the ratio of your monthly income divided by your monthly debt payments (including the mortgage). Most mortgage lenders state they prefer that borrowers have a DTI of 43 percent or lower, but that’s not always the case.

“Conventional loans can be approved with ratios of up to 49 percent in some cases [for buyers] with good credit and a minimum down payment of 5 percent,” Sahnger says. “FHA and VA loans both allow for higher debt-to-income levels. With FHA loans, it’s possible to go to 56.99 percent, and I have seen VA loans with debt-to-income levels in the 60s. Compensating factors for higher DTI can include higher reserves, higher FICO scores and down payment amounts that exceed the minimum typically required.”

What is the best interest rate for a mortgage?

It depends on your credit score, your debt-to-income ratio, how much money you will be able to put down and the size of your loan. You can get a lower interest rate by paying upfront for discount points, which cost 1 percent of your total loan amount and reduce the rate by varying percentages (usually around 0.25 percent per point).

You can look at the week’s average mortgage rates on before visiting rate comparison portals such as Lending Tree or lenders’ sites and entering more specific info to get a better idea of the best rates available to you.

What Is a Rate Lock?

Mortgage interest rates are constantly fluctuating because they are subject to a variety of economic factors. When you’re approved for a mortgage, the lender gives you the option of locking in the interest rate at the time of your application. This ensures that if rates rise between the approval and final underwriting, you still have the same rate as when you applied for the loan. You may have to pay a fee to lock your rate, though this depends on the lender. Often, you pay a percentage of the loan amount, usually around 0.25%.

Most rate locks last for between 30 and 60 days, which is usually long enough to complete the underwriting process and finalize the sale. The average mortgage takes around 46 days to close, according to Ellie Mae, a company that provides information to the mortgage industry. 

If the underwriting takes longer, the lender can extend your rate lock, though in some cases you may have to pay to extend it. Generally, you pay a small percentage, between  0.125% and 0.25%, of the loan amount. So you can expect to pay at least a few hundred dollars to extend your rate lock.

It's possible that the rate might fall below the rate you locked in. Some lenders offer the option to “float down” your locked rate. This is an option you can use once to get a lower rate than the one you locked in. It is most often offered for construction loans and loans with long-term rate locks.

What do I need to get preapproved for a home loan?

While you can get prequalified for a mortgage simply by telling a lender about your income, assets, debt and credit score, to get preapproved you’ll need to give up a lot more information. The lender will need proof of your income (W-2 statements or the equivalent); bank statements that show your assets; and gift letters, if you’re getting help with the down payment from a family member. The lender will then check your credit.

Can I be denied a loan after preapproval?

“If there’s something that comes up after the preapproval that was not disclosed during the initial process, either intentionally or inadvertently, that would be cause for being denied,” says Pat Renn, CFP, of Atlanta-based Renn Wealth Management Group. It’s in your best interest to disclose anything like past bankruptcies, outstanding debt, and any financial litigation during the preapproval process.

Will preapprovals hurt my credit score?

When the bank does what’s called a hard pull of your credit score, which is necessary for preapproval, it does cause your score to dip a few points. The good news is that if you are shopping for a mortgage and more than one lender does an inquiry within a period of about 45 days, the credit reporting agencies recognize that you’re looking for the best rate and will count all of the inquiries as just one.

What are the different types of loans I can get to buy a home?

If you have reasonably good credit (about 620), you can get a conventional conforming mortgage, which is within the limit set by the Office of Federal Housing Enterprise Oversight (currently $453,100 in most of the United States but higher in a few more-expensive markets). These are available with fixed interest rates at terms anywhere from eight to 30 years, or at adjustable interest rates. Most adjustable-rate mortgages (ARMs) have a fixed lower rate for a set number of years, after which the rate becomes adjustable every year.

If you have lower credit and less cash available for a down payment, you may be eligible for the federally backed FHA loans, which generally have higher interest rates. Some banks offer similar mortgages of their own for first-time homebuyers or buyers with low to moderate income.

  • Service members and their spouses can apply for VA mortgages, which let veterans and their families buy a home with no money down.
  • Low- to moderate-income borrowers looking to buy in certain rural areas may be eligible for USDA loans, which also require no money down.
  • Jumbo mortgages are available for those looking to borrow above the conforming limit. They are often the only loan option for certain types of investment properties and for second homes.

Should I get an adjustable- or a fixed-rate mortgage?

“An adjustable-rate mortgage would work well in a declining-interest-rate environment,” Cooper says. “If interest rates were high now, rather than locking it in now [as a fixed rate], you could see it go down.”

That’s not the case in the current market, as interest rates are expected to rise, but an ARM would still be a good choice for those in certain professions, such as a doctor who’s just beginning a practice and has a high probability of a rising income in the future.

Is it better to get a 15-year or a 30-year mortgage term?

There’s no right answer, but the difference between them is that 15-year mortgages generally have lower interest rates and higher monthly payments, and you will begin to pay off your principal faster, while 30-year mortgages have higher interest rates and lower monthly payments.

Can I pay off a mortgage early?

It depends on your lender. Some have no prepayment penalties, while others do, in order to protect themselves and investors from losing all the money you would be paying in interest. Check the fine print and ask your loan officer in advance.

Can I buy a house with no money down?

Since the housing crisis of 2008, the only loans that allow you to put zero down are VA and USDA mortgages. Some lenders offer mortgages with just 3 percent down, and FHA loans require only 3.5 percent down.

What Is an FHA Loan and Who Is Eligible for One?

An FHA loan is one insured by the Federal Housing Administration. It has lower credit and down payment requirements than a standard mortgage, making it a good option for first time homebuyers. FHA loans tend to have lower interest rates than other subprime loans and may have lower closing costs.

A standard mortgage requires a credit score of 620 or higher. FHA mortgages are an option worth exploring if you have a score lower than that. You can get an FHA mortgage with only a 3.5% down payments, though a credit score less than 580 requires up to 10%.

All FHA mortgages require private mortgage insurance. With a conventional mortgage, you don’t pay for mortgage insurance if you make a down payment of 20% or more. Mortgage insurance on an FHA loan tends to be less expensive than on a conventional mortgage. You pay an upfront premium of 1.75% of your loan amount, which can either be paid in full or financed into the cost of the loan. The remaining cost is added to your mortgage payment each month and ranges from 0.45% to 1.15%, depending on how large your mortgage is, how much of a down payment you make and the loan’s term.

Another advantage of FHA mortgages is they are far more generous with how gifts can be used for down payments. With a standard mortgage, only 20% of the down payment can come from a gift, whereas with an FHA mortgage, all the down payment can be a gift. The lender looks at your income and debt-to-income ratio before making a lending decision.

How much would I have to put down as a first-time homebuyer?

Some banks, such as Chase and Bank of America, offer special mortgages that require as little as 3 percent down for first-time homebuyers or people with lower incomes looking to buy in certain areas. Some lenders allow for very small down payments for anyone, regardless of whether they’re first-time buyers, as long as they have good credit and are willing to pay slightly higher rates and private mortgage insurance (PMI) costs.

What is private mortgage insurance?

Lenders require private mortgage insurance for mortgages of more than 80 percent of the home value. In other words, PMI is a premium you pay if you put down less than 20 percent. Some lenders will pay the premium themselves (lender-paid PMI) and simply charge the borrower a higher interest rate. Some special programs don’t require PMI at all. Another way around paying for PMI is to put 10 percent down and take out a second loan to cover the other 10 percent, in an arrangement called an 80-10-10 or piggyback loan.

What are the up-front costs of buying a home?

They vary depending on lender, loan type and location, but here is a general list of costs that may be included. Together, they add up to an average of 2 percent to 5 percent of your total loan cost:

  • Application fee
  • Origination fee
  • Underwriting fee
  • Discount points
  • Appraisal
  • Credit report
  • Title search
  • Title insurance
  • Courier fee
  • Attorney fee
  • Recording fee
  • Flood certification
  • Settlement/escrow fee
  • Tax recording
  • Up-front mortgage insurance payment (private, FHA or USDA)
  • Prepaid interest

Which closing costs are negotiable?

Lenders usually have the most leeway to give you discounts on their own origination, underwriting and application fees (or waive them altogether). You may also be able to talk down the appraisal fee, though that comes from an outside vendor of the lender’s choosing. If you’re in a state that requires you to have an attorney at closing, you can shop around and negotiate the attorney fees directly with the lawyer.

When to Refinance?

The main reason to refinance your mortgage is to get a lower interest rate, which can reduce your monthly payments by hundreds of dollars. It can also lower your term and convert an adjustable rate to a fixed rate, and it may be worth considering if your credit score has improved.

Mortgage rates have risen in 2018, and they are expected to rise above 5% by the end of the 2019, according to Bankrate. If you currently have a high rate, refinancing can secure a lower rate before they climb any higher.

If your credit score has improved since you got your mortgage, refinancing can help you. According to FICO, improving your score can affect your rate by as much as 1.50%. A score of 760 or above will ensure you get the best rate possible.

Converting from an adjustable rate to a fixed rate is another reason to refinance. Especially since rates are predicted to rise, it’s beneficial to have the stability of a fixed rate. It’s also nice to always know what your monthly payment will be. Refinancing to a fixed rate can be especially good if your adjustable-rate loan has moved past the initial fixed-rate period, which usually has a lower rate.

A mortgage refinance calculator can help you estimate how much your monthly payments will change and help you decide if this is the right time to refinance your mortgage.

How Much Does It Cost to Refinance a Mortgage?

Like all loans, there are some costs associated with refinancing a mortgage. In general, you can expect to pay around 2% to 3% in closing costs. These include things like origination fees, application fees, inspections and appraisals. Very rarely will you need a down payment to refinance a mortgage. According to ValuePenguin, the average cost to refinance a mortgage is around $4,300. 

When refinancing a mortgage, consider how long it will take you to recoup the closing costs. It may not be cost-effective to refinance if you plan to sell your house soon because the closing costs will offset what you might save with a lower rate. Many lenders allow you to finance the closing costs, but if you do that, you lose some equity and have to pay interest on them. If you can, just pay the closing costs in cash.

Keep long-term costs in mind when you refinance. Depending on how you refinance, you may have a lower rate but will end up extending the term, meaning you pay more in the long run. Whether that’s worth it depends on if you value having smaller monthly payments with a longer loan or a shorter loan with higher monthly payments.

Lenders often offer no-cost refinancing. With these types of refis, most or all of the closing costs are waived. Watch out, though – more often than not, the lender will either charge a higher rate or add them to the loan total. If you want to refinance but don’t have the cash for the costs, it still might be worth it, but keep in mind that you’ll pay back what you save in fees over the long term.

Can I Refinance My Mortgage With Bad Credit?

One reason to refinance a mortgage is to get a lower rate. Lower rates go along with high credit scores, so refinancing with bad credit may not give you the result you want. Still, most lenders have lower requirements for mortgages than other types of loans, with many giving loans to people with scores around 620. Some will even lend if your score is below that. 

With interest rates rising, refinancing to change your rate may not be in your best interest. However, there are some cases where it may be beneficial to refinance, including to get a new term or to convert from an adjustable rate to a fixed rate. 

If your credit score is your main concern, you can work to improve it. Get a free credit report and examine it for any inconsistencies. You can petition the credit bureaus to remove any of these errors. You can also improve your credit by paying back debt, avoiding late payments and limiting the amount you put on your credit cards.

Another option if you have low credit is to find a co-signer. This increases your likelihood of approval but opens your co-signer to significant risk, especially if you miss payments. The co-signer doesn’t gain any ownership of your property or use of the loan.

There are also government programs you can look into. If you have an FHA mortgage, you can make use of the FHA Streamline refinance, which requires minimal credit documentation. If you got your mortgage before 2009 and meet other requirements, you may be eligible for a HARP refinance.

What Are Mortgage Points, and Should You Pay for Them?

Mortgage points, sometimes called discount points or discount fees, allow you to pay an upfront fee to reduce your interest rate. That means you pay more upfront, but you have lower monthly payments. 

Discount points are different than a down payment. The down payment applies to the principle whereas the points apply to the interest. A down payment builds equity in your home. For example, if you buy a home for $200,000 and make the minimum 20-percent down payment to avoid paying for mortgage insurance, you already own 20 percent of the home. Discount points don’t help build equity, but the lower monthly payments can help you with your monthly expenses.

To buy a point, you pay 1 percent of the home’s total cost. In our example above, to buy one point you pay $2,000. Many lenders let you pay for partial points, so you could buy half a point for $1,000. The rate reduction varies by lender, but 0.25% is considered average. So, if you have an initial interest rate of 5.00% and buy one point, it will drop to 4.75%.

When buying points, use a points calculator to find the break-even point at which you’ll recoup the amount you spent on the points. In our example above, you’ll see a reduction of around $30, so it will take you around 49 months to break even. If you plan on selling before the break-even point, purchasing points is probably not worth the trouble.

You can purchase points on adjustable- and fixed-rate mortgages. With an adjustable rate, the reduction only applies during the initial fixed-rate period, so check to see if the break-even point occurs before that period is over.

What Is a Cash-Out Refinance?

With a cash-out refinance, you convert your existing mortgage into a new one with a greater value than your current loan. You take the excess cash and can use it for other large expenses.

If you’ve built up substantial equity and don’t owe a lot on your home, a cash-out refinance may be a good option, especially if you live in an area where home values have been steadily rising. For example, if you only owe $90,000 on a home that’s now worth $200,000, you can add another $50,000 and refinance for $140,000. That extra $50,000 can be used for other expenses, such as home repairs, college tuition or paying down other debts. 

A cash-out refinance has closing costs typical of a mortgage. If you borrow more than 80 percent of your home’s value, you may have to pay private mortgage insurance. A cash-out refinance can result in a lower rate and longer term than your current mortgage.

Cash-out refinances are similar in spirit to home equity loans and lines of credit – both tap into the equity you’ve accumulated in your home. The primary difference is a home equity loan is a second loan, and you have to make payments on both the primary mortgage and the home equity loan. A cash-out refinance takes the place of your current mortgage.

New FICO Score Announced for 2019

FICO announced a new version of its credit score to be launched in 2019. This score, called UltraFICO, differs from standard FICO scores in that it takes banking activity into account – traditional credit scores only look at debt.

The rationale behind UltraFICO is that by looking at checking and savings activity, lenders can make loans to people who have a short credit history or those recovering from a period of financial distress. This score represents one of the greatest shifts in the FICO model since the early ‘90s. 

UltraFICO will look at your banking activity, including how frequently you pay bills and if you maintain a positive balance of at least $400 and avoid overdrafting. UltraFICO also looks at how long you’ve maintained a bank account. If you have good savings habit, but a thin credit history, resulting in a score that’s too low for lenders to be comfortable with you may be able to use UltraFICO to get approval. According to Consumer Reports, this applies to over 7 million people.

UltraFICO is geared toward people unlikely to be approved using more traditional credit scores. This can increase the likelihood of being approved for a mortgage, personal loan or credit card, though it's unclear if using UltraFICO will affect the rates of the loan.

FICO plans to roll out this new score in 2019 with a select group of lenders. Details are scarce about who these lenders are, but the Pentagon Federal Credit Union, one of the country’s largest credit unions, has expressed interest in using the new score. 

We’ve reached out to FICO to learn more about UltraFICO and will update this when we hear more.

What Is a VA Loan?

If you’re a veteran or are currently serving in the military, you’re likely eligible for a VA mortgage. This is a loan guaranteed by the Department of Veterans Affairs, which means the requirements are lower than for a conventional home loan.

The main difference between a VA loan and a conventional mortgage is there are no down payment requirements on a VA loan. With a conventional mortgage, you need to put 20% down to avoid paying private mortgage insurance (PMI), and even with an FHA loan, you need to put at least 3.5% down. 

Though there’s no PMI, you have to pay a funding fee. This ranges from 1.25% to 3.3% and isn’t charged to veterans with service-connected disabilities. The fee can be paid upfront or rolled into the loan, which increases your monthly payments. Generally, a down payment of 5% or more reduces this fee.

VA loans also have lower credit requirements – you’ll get better rates with a score of 620 than you would for a conventional loan. With a conventional loan, you need a score of at least 740 to get the best rates. Some lenders may approve VA borrowers with a score in the 580 range, though your rates will likely be higher. VA loans are less strict on the amount of debt you can hold and still be approved.

VA loans tend to have lower interest rates than conventional loans. According to Ellie Mae, which tracks interest rates, VA loans averaged rates of 4.73%, while rates for conventional loans were closer to 5%.

Can You Get a Mortgage From Anywhere Besides a Bank?

It may seem like banks are your only option for finding a mortgage, but in 2018, more non-bank lenders are originating mortgages than banks. Non-bank lenders, including Quicken Loans, So-Fi and LoanDepot, account for almost half the mortgages issued in the U.S. This is in part because many banks are scaling back their mortgage lending, and these lenders are filling that void. There are some risks and benefits associated with getting a loan from a non-bank lender.

One of the main draws of these lenders is you can apply and receive a response quicker than through a bank. Also, these lenders often have laxer credit standards than banks, so you may get approved for a mortgage with lower credit or income than you would from a bank. 

If you’re looking for an FHA loan, many of these alternative lenders may be your best option. There’s some risk though. For example, because these lenders aren’t regulated as tightly as banks are, they may not be as diligent when ensuring a borrower’s ability to repay.

Experts are worried about the prevalence of non-bank lenders and what may happen in an economic downturn. Because these loans aren’t funded by customer deposits, rather by credit, economic troubles could lead to some of these institutions collapsing. This is more of a theoretical problem at this point, and federal regulations require lenders to work with borrowers to find affordable solutions to keep them in their homes when possible.