Best Mortgage Lenders of April 2024

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10 Best Mortgage Companies of 2024

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What is a Mortgage?

A mortgage is a loan you use to buy real estate. In most cases, that real estate is a home, although you can use a mortgage to buy land you want to build on or even to buy commercial property. 

You can go to banks for mortgages, but in 2024, your options don’t stop there. Today, many of the best mortgage companies don’t even have brick-and-mortar locations and instead handle everything online.

Whether you apply for your mortgage digitally or in person, be ready to navigate some paperwork. Mortgage lenders only offer these loans to people they think will be able to repay them. As a result, getting a mortgage requires you to go through an extensive application process. 

During it, you submit a bunch of information to the lender like your pay stubs and details about any other debt you have. They then look over your documents to decide if they’re willing to extend the mortgage to you. 

If you’re approved, home lenders tailor the amount of interest they charge on your home loan to you. If your financial details make you look risky—if you have a history of missed payments or you’re only putting up a small down payment—they raise your interest rate. But if you look financially trustworthy—have a good credit score, a steady paycheck and minimal other debt, for example—the lender charges less in interest. 

Mortgage Statistics

• Mortgage interest rates declined in January 2024 to their lowest rate since May 2023. Interest rates rose in 2022 in response to the Fed’s increase in the federal funds rate, peaking at 7.79 percent in October 2023. (U.S. Department of Housing and Urban Development)
• The percentage of delinquent mortgages has been on the rise since April 2022. After reaching lows of 0.6% of mortgages, delinquencies (defined as 30 to 89 days overdue) have risen to 1.2% as of June 2023. (Consumer Financial Protection Bureau)
• Mortgage payments in the West are currently double those in the Midwest. The principal and interest payment on the median home price in the Midwest is $1,417 compared with $3,027 in the West. (National Association of Realtors)
• Home affordability is on the rise. According to the NAR’s January 2024 Affordability Index Report, affordability has risen to 105.5, up from a low of 91.4 in October 2023. (National Association of Realtors)
• Mortgage originations for 2024 are forecast to be $1.98 trillion, according to Fannie Mae. This is up from $1.50 trillion in 2023. (Fannie Mae)

Customer satisfaction with mortgage lenders is at an all-time high. According to data from J.D. Powers, overall customer satisfaction with mortgage lenders was at 730 out of 1000 in 2023, up 14 points from the year prior. (J.D. Power)

How Do Mortgages Work?

Once you have the mortgage, it functions as an ongoing agreement with your lender. In exchange for the loan, you agree to pay a monthly sum of money to the lender. 

Each month, the first chunk of what you pay goes toward any interest that’s accrued since your last payment. Whatever’s left over goes toward paying down your loan balance (what mortgage lenders call principal). 

Your monthly payment depends on the kind of mortgage you have: 

• If you have a fixed-rate mortgage, the amount you’ll pay each month never changes. 
• If you have an adjustable-rate mortgage (ARM), your monthly payment can go up or down. This happens at intervals laid out in your loan, usually every six months or annually. Whether your payment goes up or down depends on the index to which your mortgage is tied. A lot of lenders use the Secured Overnight Financing Rate (SOFR), for example. 
• If you have a hybrid ARM, your monthly payment stays fixed for the first part of your loan (usually, 5 to 7 years). Then, it switches to an adjustable-rate mortgage, with your rate adjustments coming as described in your loan terms. 

No matter which kind of mortgage you have, your house serves as collateral. That means that if you stop making your mortgage payments for a while, your lender can seize the house. 

Types of Mortgages

The best mortgage companies usually offer a few different varieties of mortgages. To help you navigate your choices, we’ll give you a quick overview of the most common categories:

Conforming loans

Each year, the Federal Housing Finance Agency (FHFA) lays out a limit for loan amounts. These vary depending on where you live, with higher-priced areas getting higher ceilings. For most of the country, though, the FHFA limit for 2024 is $766,550 for a single-family home. 

If you get a mortgage that isn’t over your area’s FHFA limit, it’s called a conforming loan. Some government-backed loans are conforming loans. But if your loan doesn’t have federal backing, it’s called a conventional conforming loan. 

Nonconforming loans

If you want to go over the FHFA’s limit or want to do something else unconventional, like get an interest-only loan, your mortgage will be non-conforming. Home lenders generally consider these loans higher-risk, so you’ll usually pay more in interest if you go this route. 

Government-backed loans

Certain federal agencies offer to stand behind loans. If the borrower stops paying the lender back, that agency will help them recoup some of the costs. This lowers the risk for mortgage lenders, so government-backed loans come with perks like lower interest rates and more relaxed credit requirements. 

The three main types of loans backed by the federal government are:

• VA loans. The Department of Veterans Affairs (VA) backs these loans for active-duty military personnel and veterans who meet a minimum service requirement. VA loans don’t require any down payment. 
• FHA loans. The Federal Housing Administration (FHA) stands behind these loans to help borrowers who might otherwise be unable to get financing. You can qualify for an FHA loan with a credit score as low as 500 if you’re able to put 10% down. 
• USDA loans. To incentivize purchases in certain rural areas, the United States Department of Agriculture (USDA) backs these loans, which don’t require a down payment. 

How Much Money Do You Need for a Mortgage Down Payment?

Contrary to the 20% down payment myth, first-time homebuyers put down around 8% on their homes in 2023, according to a report by the National Association of Realtors. On the current median home price of $417,700, that equates to $33,416. Down payment rates have hovered between 6% and 7% over the last few years for first-time buyers, so bear that in mind as you plan your savings goal. 

The down payment for repeat buyers was around 19%. But this usually represents equity transferred from a previous home. 

Depending on the type of mortgage you use, you may not need a down payment at all. For instance, neither a USDA nor a VA loan requires a down payment. States, municipalities and other organizations also offer down payment assistance programs to homebuyers who meet certain income or geographic qualifications, which can help reduce or eliminate your need to save for a down payment.

How to Choose the Best Mortgage Lender for You

Each lender weighs factors differently. While most home lenders will consider the price and location of the house you want to buy and your financial history, they all have proprietary processes for deciding who to lend to and how much to charge in interest. 

To help you narrow down the best mortgage companies for you, consider these factors. 

Eligibility Criteria

Some mortgage lenders only look at a person’s credit score, while others will consider on-time payments to determine how you’ve handled your money in the past. Similarly, some lenders will choose to offer FHA loans to borrowers with a credit score as low as 500, while others start at 580 or above. 

If you’re looking for a home loan with a less-than-stellar financial profile, online lenders will often be more willing to work with you. Choosing a government-backed loan program can also help.

Rates and Fees

Start by checking mortgage lenders’ interest rates, but don’t stop there. Some lenders advertise low rates, but they make up for them by charging plenty of lender fees, which you’ll need to pay at the closing table. 

To get a better idea of the full cost of a loan from a lender, look for the annual percentage rate (APR). That’s the annual loan cost including both interest and fees. 

Application Process

If you love to handle things online, you should have no trouble finding home lenders who offer all-digital application processes. With online document uploads all the way through e-signing, you might be able to handle the entire loan from your device. 

On the other hand, if you like working with a live person, check where the lender has branch locations and if any are near you. If this is your preferred route, exploring banks for mortgages can help since many established institutions (like Bank of America or Chase) have offices throughout the country. 

Service

Do some digging into how other people rate the lender’s customer service. Also look to see if the lender has functions you’ll want, like the ability to pay your loan online or 24/7 support centers. 

You should also explore how the lender services your loan. Some lending institutions sell the loan after closing, which would mean you’re stuck with another company’s customer service and online interface. 

Steps to Getting Approved for a Mortgage

When you’re ready to lock down your home loan, these steps can help you navigate the path ahead. 

Step 1: Narrow Down Your List

Don’t dive in with the first lender you see that looks appealing. Do your homework and identify three mortgage lenders who you think could be right for you. The time you put in now can save you thousands of dollars over the life of your loan. 

Step 2: Apply for Prequalification 

Prequalification is the light version of applying for a mortgage. It gives home lenders a cursory glance at your financial details so they can give you a rough idea of the kind of rate and terms they’ll offer you. And it gives you an idea of how much you can qualify for. That gives you a realistic home shopping budget. 

Step 3: Get Your Paperwork in Order

Even with streamlined digital processes and great service from the best mortgage companies, applying for a mortgage isn’t easy. You’ll need a small mountain of paperwork to move the process forward. 

To navigate your mortgage application as smoothly as possible, gather up:

• Proof of income (pay stubs, W-2s, 1099s, etc.)
• Recent bank and credit card statements
• Information about any other debt you have (such as car or student loan statements)
• Proof of any assets you have (such as retirement accounts, investment accounts)

It’s also a good idea to check your credit score before you move forward. If it’s a lot lower than you expected, get a copy of your credit report. Go through it to see if there are any discrepancies. If there’s an error on your report, getting it cleared up gives your score a boost. You can get free copies of your credit report by visiting AnnualCreditReport.com. 

Step 4: Apply for Preapproval

Prequalification should give you the information you need to narrow down which lenders you actually want to apply with. The next step in the process is called preapproval, which gives you a letter you can show to home sellers proving that you have the financing you need to buy their house. 

Preapproval is a lot more rigorous than prequalification, so be ready to submit a lot of the paperwork. During the preapproval process, mortgage lenders perform a hard credit check. As a result, your credit score will take a small temporary hit. It should bounce back just fine, though. 

You can apply for preapproval with more than one lender without it impacting your credit score too much. Credit bureaus group credit inquiries that occur within a short period (usually, 14 to 45 days) together. And because multiple hard inquiries in a short timeframe get counted as one inquiry, whether you apply with one lender or three, the credit score implication should be the same. 

Step 5: Find Your House

In addition to vetting you, lenders evaluate the house in question. Since the house serves as collateral to secure the loan, home lenders want to make sure it’s worth what you’re paying for it. As part of underwriting, they’ll send out an appraiser to value the home. 

Once you find your dream house, make an offer. If the seller accepts (potentially after some negotiation), you’re ready to finally get your mortgage. 

Step 6: Go Through Underwriting 

Once the seller accepts your office, it’s time to go back to your lender. You can now officially apply for your mortgage. If you’re already preapproved, it should minimize the amount of paperwork you need to go through here. 

After you submit your mortgage application, the lender starts the underwriting process. This means their team takes a close look at everything in your application, from your credit and employment history to the valuation of the house you want to buy. 

You might get asked for more information during underwriting. Be ready to provide it promptly. Even without delays, underwriting often takes several weeks. 

Step 7: Close

When the lender approves your loan, it’s time to head to the closing table. At this point, you finalize all of the paperwork about both your mortgage and the purchase agreement for your new house. You’ll also need to pay closing costs, the bulk of which usually come from the lender. Many lenders charge application and loan origination fees, for example. 

You’ll walk away from the closing table with less money in your pocket, but you’ll have the valuable addition of ownership of your new house. 

You won’t own your home outright until you finish paying off your mortgage. Until that point, your mortgage agreement gives your lender a claim to the house in the event you stop paying. Assuming you stay up on your payments, though, you should leave the closing table ready to enjoy life in your new home.

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Alternatives to Getting a Mortgage to Buy a Home

A mortgage may be the most common way to purchase a home, but it isn’t the only way. Here are a few alternative methods to a bank-issued loan.

Cash Sale

If you’re fortunate enough to have the cash (or assets you could sell for cash), there’s no need to involve a bank when buying a house.

Rent-to-Own

Some sellers will allow you to rent a property and devote a portion of the rent payment to the principal balance on the property. If you go this route, make sure to have a real estate attorney look over your contract and other agreements to make sure your interests are protected.

Borrow From Retirement Savings

The IRS rules allow you to take a loan from your 401(k) for the purchase of a home. But you can only borrow up to 50% of your vested balance or $50,000, whichever is less. So you’d likely need to pair this strategy with another one on this list to fund the entirety of a home purchase.

Withdrawals from a Roth IRA are tax- and penalty-free as long as you only withdraw the principal and you’ve had the account for five years or more, so this may also be a source you can draw on to fund your home purchase.

If you elect to withdraw or borrow from your retirement accounts, carefully weigh the opportunity cost of having that money invested versus using it to buy a home. You could be eroding your long-term plans to meet your short-term goals.

Seller Financing

Some sellers may be willing to act as the bank and accept installment payments for their property. Like a bank, they typically charge interest for this arrangement, but they may not be as exacting in their requirements for a down payment, debt-to-income ratio and the like as a bank would be. If you go this route, have a real estate attorney oversee the contract.

Newsweek writer Jenni Sisson contributed to this post.