We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
People are doing more online than ever before because of the pandemic — including every step of the home buying process.
Even before the shutdown, 50% of borrowers chose their lender based on whether or not it had an online application. With the need for a more socially distanced loan process, online mortgages are only becoming more essential.
Online mortgages can not only be applied for from the comfort of your home office, but are processed more quickly than traditional home loans. And comparing online offers can be simple, making it easier to find the best deal.
But for all the potential ease and speed of an online mortgage, they have their downsides, too.
Some of the mortgage-approval process can be more art than science, especially when it comes to evaluating your employment history or counting income from a side hustle. And if you want a more complicated loan, like a VA loan or USDA loan, you may find clear answers to nuanced questions are harder to come by when you don’t have a dedicated mortgage professional guiding you through each step of the process.
An online mortgage can be a great option for borrowers with a strong credit history who are looking for a straight-forward home loan. If you’re considering an online mortgage, here are some of the best lenders to start with and what you need to know about how the process can differ from getting a traditional mortgage.
Best Online Mortgage Lenders for May 2021
|Online Mortgage Lender||Highlights|
|Better.com||Earn up to $2,000 in lenders credits with a referred real estate agent|
|Rocket Mortgage||Flexible term YOURgage loan with 8- to 29-year repayment term|
|LoanDepot||Waived lender fees, reimbursed appraisal fees on refinance loans for returning borrowers|
|Guaranteed Rate||Large pool of experienced loan officers, wide range of government-backed mortgages|
|Movement Mortgage||75% of loans processed in seven days or less, fewest complaints filed with CFPB|
Better Mortgage, as known as Better.com, is an entirely online lender founded in 2003 and licensed in 43 states. It offers a sleek, online application process and claims you can be preapproved for a loan in “as little as 3 minutes.”
Better Mortgage charges no origination fees and its employees don’t work on commission. It also has a “Better Price Guarantee” and will match a competitor’s offer and credit you an additional $100.
However, Better Mortgage doesn’t offer government-secured mortgages, such as VA loans or USDA loans. Here are the types of mortgage loans Better.com offers:
You can earn up to $2,000 in lender credits if you use a real estate agent referred by Better Real Estate and get your home loan through Better Mortgage. This offer is available only in the states Better Mortgage currently serves.
Rocket Mortgage by Quicken Loans
Rocket Mortgage is the digital lending site for Quicken Loans, America’s largest mortgage lender and the top lender in J.D. Power’s most recent Mortgage Origination Satisfaction Study. It’s licensed to lend in all 50 states.
Rocket Mortgage offers online prequalification and loan applications. It also offers support to new applicants through an online chat feature or over the phone seven days a week. For help with an existing mortgage application, phone support is available only six days a week with slightly more limited hours.
Rocket Mortgage can simplify your application by importing — with your permission — certain data, such as employment history and financial account or income verification. It offers these types of home loans:
If you’d like a flexible loan term, the Quicken Loans YOURgage offers a loan length of 8 to 29 years with a fixed interest rate. This is a similar loan program to New American Funding’s I CAN Mortgage. With this loan program you can qualify with a down payment of as little as 3% and a credit score of 620 or higher. As a refinance loan, you may be able to refinance up to 97% of your home’s value with the YOURgage program.
LoanDepot is an online lender that also operates over 200 brick-and-mortar locations. It is licensed to operate in all 50 states and has been in business since 2010.
LoanDepot uses the proprietary mello smartloan software to digitally verify your information. It claims this can reduce the length of your closing by up to 17 days. Although that’s a best-case scenario, it’s still going to be better than needing to find physical copies of all of your documentation.
If you’re looking to buy a fixer-upper, make home improvements or build a new home you have options. In addition to offering a standard cash-out refinance loan, it also issues FHA 203(k) loans, which can be used to finance the purchase and renovation of a home. It also provides VA construction loans. These are all of the types of mortgages loanDepot currently offers:
Once you’ve taken out a mortgage with loanDepot, it has special incentives for repeat customers who are looking to refinance. Under its “Lifetime Guarantee,” it will waive the lender fees and reimburse you for the appraisal fees when you refinance with loanDepot. This offer cannot be taken advantage of within the first 12 months of when you closed on your original mortgage.
Guaranteed Rate is another hybrid lender, offering both online mortgages while having a large number of office locations. The Chicago-headquartered lender serves all 50 states and also has more than 400 physical branches located throughout the country.
Guaranteed Rate has a solid customer service track record with roughly 0.52 complaints filed to the Consumer Financial Protection Bureau (CFPB) per 1,000 loans closed. Despite being one of the 10 largest mortgage lenders, it managed to have a complaint ratio that was one fourth what some similarly sized lenders had.
While some online mortgage lenders may still require in-person closing, Guaranteed Rate offers eClosings with its in-house software, FlashClose. You’ll be able to electronically sign all of the closing documents in advance and complete closing remotely via secure webcam in states where eClosings are approved.
Guaranteed Rate has more no-down-payment loan options than most other lenders on this list. It issues VA loans and USDA loans, both of which offer 100% financing. Guaranteed Rate also offers these types of loans:
- Conventional loans
- Fixed-rate mortgages
- Jumbo loans
- Refinance loans
- FHA loans
- USDA loans
- VA loans
Guaranteed Rate employs the third-highest number of loan originators of any lender in the U.S., according to the most recent Scotsman Guide rankings. And when you compare the number of loans closed per loan officer, it has one of the lowest averages on our list at just over 51. With a potentially lighter workload, you should expect a higher level of customer service. Not only that but it also employs many of the nation’s top originators, like No. 1 originator, Shant Banosian.
The South Carolina-headquartered Movement Mortgage was founded in 2008. Since then, it’s grown to include 650 branches in all 50 states, in addition to its online mortgage services.
Movement Mortgage has maintained an excellent track record for customer service. It has an A+ rating with the Better Business Bureau and had only roughly 0.30 of complaints per 1,000 loans filed against it with the CFPB, the lowest number of any lender on this list. It also only had a single regulatory action taken against it in the past 12 years according to the Nationwide Multistate Licensing System (NMLS), which again is the lowest on this list.
Movement Mortgage can also be a good option if you have less-than-perfect credit, and it offers a wide range of government-backed loans. During the early days of the pandemic, many lenders tightened their guidelines amid fears of massive loan defaults. But Movement Mortgage was one of the first to ease its lending standards back to normal levels.
Movement Mortgage offers the following types of loans:
- Conventional loans
- Fixed-rate mortgages
- FHA loans
- Renovation loans
- VA loans
- Refinance loans
- Jumbo loans
- Reverse mortgages
- USDA loans
- Construction loans
Movement Mortgage follows an expedited closing procedure it calls the “6-7-1” process. Its goal is to have a fully verified preapproval done within six hours, approve the loan within seven days, and close in one day. While this isn’t possible in every situation, the company claims it processes over 75% of its loans in seven days or less.
How We Chose the Best Online Mortgage Lenders
To find the best online mortgage lenders for 2021 we looked at 15 of the most popular and notable lenders that offer online mortgage loans. We eliminated any lenders with complicated or confusing online application processes.
We also reviewed the number of complaints filed against each lender with the CFPB. We compared the amount of complaints with the number of loans closed based on the most recent (2019) Home Mortgage Disclosure Act (HMDA) database numbers. And we reviewed the number of regulatory actions taken against each lender since 2012, according to the NMLS Consumer Access database.
All of our best lenders had a complaint ratio below than 0.8 per 1,000 loans closed. And they all have 5 or fewer regulatory actions over the period we reviewed.
Why no comparison of mortgage rates or fees?
The cost of your mortgage comes down to the mortgage rate and the fees you pay. But rates and fees you’ll pay vary from day to day and even from one area of the country to the next. And the size of the mortgage even impacts your rate, smaller loans typically have slightly higher rates.
So looking at the average rates or fees for lenders could end up telling you more about the type of loans it issues or where it does business, than it does about what rate you may qualify for.
What Is an Online Mortgage?
An online mortgage is a home loan where the entire process, from application to approval, is completed online. Online mortgages are offered by lenders that are entirely digital, but may also be issued by lenders with physical locations that offer traditional mortgages as well. So with some online lenders you may have the option of applying online and still working with a local loan officer.
The nuts and bolts of an online mortgage are the same as traditional mortgages. You’ll typically have access to the same array of loan terms, and types of mortgages. So you’ll be able to get everything from an FHA loan to a conventional loan as an online mortgage.
The COVID-19 pandemic has created a surge in remote closings. An online mortgage is ideal in this scenario because the application and mortgage underwriting process are entirely digital as well. However, even with an online mortgage you can still have an in-person or hybrid closing. So if you prefer a socially distanced home closing be sure the title company or attorney offers this option. Although, some states have yet to pass remote notarization laws.
How to Choose an Online Lender
The first step to choosing the best online lender is understanding what type of mortgage is best for your situation. If you can’t afford a large down payment and are eligible for a VA loan or USDA loan, both offer 100% financing. Or you may be able to pay fewer fees if you can afford a bigger down payment with a conventional loan. Once you’ve decided what type of mortgage you want, you can narrow your choices to lenders that offer those loans.
Regardless of what type of mortgage loan you’re applying for, you should shop around. Mortgage rates and lenders fees vary from lender to lender, and shopping around is one of the best ways to secure the lowest rate. By getting quotes from two or three different lenders you can also easily compare the fees by reviewing the Loan Estimates. Pay close attention to discount points and lender origination fees, both of which can greatly increase your annual percentage rate (APR).
Online Mortgage Pros and Cons
Online mortgages can be more streamlined and automated, and therefore less expensive to process than traditional mortgages. But the same automated processes that make online loans easier to process can also create problems. If your situation is outside the norm, and you require the expertise of a mortgage professional, you may have problems navigating an online mortgage underwriting.
|• Quicker loan processing
• Can have lower rates
• Can have lower fees
|• Lack of personal touch
• Harder to get questions answered
• Unique loan programs or personal situations can be more difficult to work through