5 Tips for Finding the Best Mortgage Lender

1. Keep your finances in good shape

A mortgage's minimum credit score varies depending on the lender and type of loan. You'll be eligible for more loan programs and lower interest rates if your score is higher.

Find out your credit score and confirm the accuracy of your credit reports before looking for a lender.

Using TransUnion data, NerdWallet provides a free weekly credit score and news.

You can get free copies of your credit reports from each of the three major credit reporting agencies by visiting the legally required AnnualCreditReport.com website. Please take a close look at the descriptions and talk about any mistakes.

After that, focus on enhancing your credit. Make timely bill payments and strive to settle credit card debt. Lowering your debt will also help your debt-to-income ratio, or DTI, a crucial metric that lenders consider. For a mortgage, a DTI ratio of less than 36% is ideal. You'll have more money to save for a down payment on a house if your loan payments are reduced.

2. Know what type of mortgage is right for you.

There are several types of home loans available to fulfill different needs. For instance:

Veterans and active-duty military personnel can benefit from VA loans, and rural homebuyers can apply for USDA loans. Furthermore, there is no down payment needed.

Compared to other mortgages, FHA loans have lower credit score requirements and only demand a 3.5% down payment.

Suitable credit applicants are typically the target audience for conventional loans, which sometimes only need a 3% down payment.

Jumbo loans are given for properties that are too expensive to be financed by most traditional loans.

The term of the loan, such as 15 or 30 years, and the interest rate structure also affect how different home loans are. For a fixed-rate mortgage, the interest rate remains constant throughout the loan term. Following an initial fixed-rate period, the interest rate on an adjustable-rate mortgage varies regularly.

Some lenders offer a wider variety of mortgages. Others are experts in particular kinds. You can locate lenders who meet your needs once you know your general options.

3. Compare rates from multiple mortgage lenders.

Look online for the best mortgage rates offered by lenders who can grant the loans you need. Please note that the price quote you see is an estimate. To provide you with an accurate rate—which you can lock in if you're satisfied with the product—a lender must obtain your credit information and process your loan application.

Once you've been referred to multiple lenders, shortlist the ones with the lowest interest rates. You will pay a lot of interest overall for the loan; however, you can save thousands of dollars by choosing a lower rate.

4. Get pre-approved.

Before looking for a house, get pre-approved for a mortgage with several lenders. A mortgage preapproval letter demonstrates your seriousness as a buyer to sellers and real estate agents. This indicates that the lender has examined your financial situation and determined your borrowing capacity.

Obtaining preapproval now will help you avoid waiting later. Look online for the best mortgage rates offered by lenders who can grant the loans you need. Please note that the price quote you see is an estimate.

You must submit information about your assets, debts, and income to be pre-approved. Generally, lenders need:

• Your and your co-borrower's Social Security numbers.

• Information on savings, checking, and investment accounts.

• Information about outstanding debt obligations, including credit cards, auto loans, student loans, and other balances.

• Two years of tax returns, W-2 and 1099.

• Salary and employer information.

• Information about the amount of down payment you can make and where the money comes from.

5. Compare loan estimates and choose the best deal.

A lender must give you a loan estimate once you apply for one and supply specific details, such as the property address you wish to purchase. Important information about your loan, such as interest rates, monthly payments, fees, and anticipated closing costs, will be included in the document.

• Compare loan estimates from at least three lenders. Read each line to ensure the details are what you expect, and ask questions about anything you need help understanding. 

• More from NerdWallet

• Compare mortgage refinance lenders online.

• Compare mortgage rates.

• Get pre-approved for your mortgage.

Procedures

The NerdWallet content team used the following criteria in selecting their list of lenders:

Based on our evaluations of each lender's offerings to customers actively seeking the best mortgage, NerdWallet assigns stars to lenders.

The types of loans offered, the simplicity of application, the transparency of mortgage rates, and the rates and fees disclosed by lenders in the most recent Mortgage Disclosure Act data for residential properties were the four main areas we looked at.

This page presents our analysis of the lenders who received the highest ratings overall based on our rubric. Several people from the NerdWallet Mortgages team evaluate our ratings to guarantee consistency.