Online lenders are increasingly popular with homebuyers, who are drawn to their lower rates, wider availability and streamlined applications.
In some cases, digital lenders can even offer hybrid or virtual closings.
Below, we've crowned the best online mortgage lenders, including digital-only nonbank lenders and traditional brick-and-mortar banks with robust web offerings. (See our methodology for more on how we made our selections.)
Best for low down payment: Rocket Mortgage
- Offers a 1% down mortgage, making it a great option for first-time homebuyers who don't have enough saved up for a down payment.
- Above average scores for customer satisfaction from J.D. Power, meaning you'll be in great hands from application to closing day.
- With an average closing time of 22 days — nearly half the industry average — homeowners will be able to get the keys to their home as soon as possible.
- Rocket will give you a rebate of up to $10,000 for buying with Rocket Homes, which pairs homeowners with a real estate agent.
- No USDA mortgages, construction loans or HELOCs
- Hard credit check required for customized rate
- No physical branches
Who's this for? The ONE+ by Rocket Mortgage loan lets eligible homebuyers put as little as 1% down on a conventional loan and Rocket will add another 2%, up to $2,000.
Standout benefits: Buy your house using the Rocket Homes real estate network, and you can get a 1.25% rebate on closing costs, up to $10,000.
Best for bad credit: New American Funding
- Flexible credit requirements
- Helps buyers make all-cash offers
- Programs to increase minority homeownership
- Nationwide availability
- High fees
- Customized rates not available online
Who's this for? New American Funding approves conventional loans for borrowers with credit scores as low as 580, compared to the 620 most lenders require.
Standout benefits: The NAF Cash program enables borrowers to make all-cash offers, a significant advantage in competitive markets. New American Funding will buy the home on your behalf, and then sell it to you at cost (plus a fee of between 1.5% and 3.5%).
Best for discounts: Better Mortgage
- No application fee or underwriting fee
- Preapproval in as little as three minutes
- $100 rate-match guarantee
- 24/7 customer support
- Doesn't offer USDA loans
- HELOC requires draw of at least 75% of your home's value
- No physical branches
Who's this for? Better provides up to $2,000 to put toward closing costs if you buy your home through Better Real Estate.
Standout benefits: Better will match a qualifying competitor's rate or give you a $100 credit. Eligible homebuyers can also earn up to $5,000 toward a down payment or closing costs with a HOPE Grant.
Best for specialty loans: Rate
- Approval in as little as one day, making it easy to start shopping for a home as soon as possible.
- You can fully assess whether Rate is right for you because the lender puts its rates online
- Remote closing available in some states, so you can close on a mortgage from your couch.
- Higher credit score requirements
- No USDA loans
- Does not offer home equity loans
Who's this for? In addition to conventional and government-backed loans, Rate offers specialty loans, like non-qualifying mortgages, physician loans, reverse mortgages, renovation loans and interest-only mortgages.
Standout benefits: Eligible borrowers can get approval within one business day and receive a $250 closing cost credit.
Best for refinancing: LoanDepot
- $1,000 on-time close guarantee
- Existing LoanDepot borrowers can refinance with no lender fees
- More than 200 branches nationwide
- Rates and fees not listed online
- Doesn't offer USDA loans
- 5% down required on conforming mortgages
Who's this for? With LoanDepot's Lifetime Guarantee policy, borrowers who take out a purchase mortgage can refinance with no lender fees and get the cost of their appraisal reimbursed, as well.
Standout benefits: Borrowers may be eligible for a $1,000 credit if LoanDepot does not close by the scheduled date.
Best for first-time homebuyers: Flagstar Bank
- Provides grants of up to $15,000 for first-time homebuyers, making it a great option for those who may not have much saved up for a down payment or closing costs.
- Destination Home Mortgage allows qualified buyers to put 0% down, a rare no-down-payment loan option geared towards first-time homebuyers.
- Possible to close in as few as 15 days, meaning you'll get the keys to your new home in less than half the time it usually takes.
- Rates tend to be higher than industry average
- Home equity loans only available in nine states
Who's this for? Flagstar Bank offers several options designed for first-time homebuyers, including the Flagstar Power-Up program, which provides eligible borrowers with up to $8,000 in grant funds. It also has community loans with down payment assistance and lenient credit requirements for borrowers who meet income requirements.
Standout benefits: Existing Flagstar customers can get a 0.25% rate discount on a home equity loan or HELOC by signing up for autopay.
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What is an online mortgage?
An online mortgage is a home loan applied for and approved on the web, rather than in person. That typically translates to a more streamlined process with lower rates and fewer upfront fees.
Online mortgages are more likely to come from nonbank lenders, institutions that offer home loans but lack the full range of financial services or physical branches. Borrowers can typically obtain personalized rates online and submit their applications through a secure web portal.
It's more likely that you'll be able to close partially or fully remotely, shortening or eliminating the in-person closing experience. On the other hand, online lenders are also more likely to sell your mortgage to a different company for servicing after the origination process is over.
What to look for in an online mortgage lender
The same criteria you'd use for any mortgage lender apply to online mortgages:
- Rates and fees
- Credit score requirements
- Loan and term options
- Down payment requirements and assistance
- Availability
- Customer service
- Closing timelines
Online lenders are generally newer on the scene than traditional brick-and-mortar lenders: Rocket Mortgage launched in 2015, for example, while Chase has been in the banking business since 1877. So, reliability and reputation are going to be harder to determine and, if it is a 100% online institution, access to customer service is going to be more limited.
Look at J.D. Power survey rankings for mortgage origination and servicing, as well as Better Business Bureau scores and other reviews.
Pros and cons of online mortgage lenders
- Can apply from anywhere you can get online
- Faster application and approval processes
- Lend in more states
- Fewer overhead costs mean lower fees
- Can't access in-person assistance
- Can be harder to get approved if you're an atypical borrower
- Often lack banking options beyond mortgages
- Your loan is more likely to be sold to another lender for servicing
Online mortgage FAQs
Do online mortgage lenders have better rates?
Because they have fewer overhead costs, online lenders may have lower rates than brick-and-mortar lenders. But there's no guarantee, so compare offers from a variety of companies to ensure you're getting the best deal.
Are online mortgage lenders legitimate?
Online mortgage lenders are as reputable as other types of licensed mortgage lenders. However, if you prefer an in-person experience, you may want to work with a local lender that operates a physical branch. Online mortgages are best for those with simple finances. Always do your due diligence on any lender you chose to work with: one great way to do so is to check ratings with the Better Business Bureau.
Can I close my mortgage online?
Some mortgage lenders have e-closings, which allow buyers to close on their mortgage virtually where it's allowed by law. Others offer hybrid closings, with some paperwork signed digitally in advance and a shorter in-person interaction with a notary.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Our methodology
To determine the best online mortgage lenders, CNBC Select analyzed dozens of mortgage lenders whose core business is done on the web. When ranking the best online providers, we focused on:
Online features: We analyzed lenders' online applications, website tools, mobile apps and other digital features.
Loan options: We selected lenders who offered conventional mortgages, government mortgages, jumbo mortgages and refinance mortgages.
Fees: The mortgage process includes origination, application and underwriting fees, as well as charges for appraisals, title insurance, attorneys and other closing costs. When possible, we noted if a lender had lower fees, discounts or waived certain fees.
Application process: We considered whether lenders offered an online preapproval and application process.
Credit score: Most lenders require a 620 FICO score to secure a conventional mortgage. We noted if a lender had options for borrowers with poor credit.
Closing times: We gave more weight to lenders with shorter-than-average closing times or that guaranteed an on-time closing.
Customer service: We gave more weight to lenders that scored highly on J.D. Power's mortgage origination and servicing surveys. We also noted if they had robust customer service phone hours.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
We sorted our choices by best for low down payment, best for low credit scores, best for no lender fees, best for specialty loans, best for refinancing and best for first-time homebuyers.
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