Flagstar Bank Mortgage Pros and Cons
- Full-service bank with a variety of loan and savings products
- Originates loans in all 50 states
- Offers conventional, government-backed, second, and specialty mortgages
- Participates in several down payment assistance programs
- Online convenience for managing your application and loans
- Home equity loans and local loan officers limited by location
- Limited loan cost and qualifying information online
- Average to below-average customer satisfaction scores
- Only operates physical branches in around two dozen states
Flagstar Bank Mortgage Overview
Flagstar Bank is a hybrid online and brick-and-mortar lender that accommodates a variety of mortgage loans, including purchase, refinance, and home equity products.
With competitive rates and fees, a convenient online experience, and rate transparency on demand, it’s no wonder this online mortgage lender is an up-and-comer in the mortgage space.
Getting started with Flagstar is simple. Merely go online, call customer service, or walk into a branch in over two dozen states.
If you’re curious about interest rates, you can submit a few bits of personal information to get a personalized quote.
Then, you can start the application process by providing your personal and financial information. The lender will check your credit history, review your data, and issue a conditional mortgage approval to give you an idea of what you qualify for. Once you sign a purchase agreement, you’ll receive your Loan Estimate.
At any time, you can use the online portal or reach out to a loan officer to walk you through the underwriting process.
You can upload your documents, schedule your closing online or in person, and verify you’ve met all the lending requirements.
And after your loan closes, you can manage your mortgage payments through Flagstar’s “MyLoans” service center.
What Types of Mortgages Does Flagstar Bank Offer?
Flagstar Bank originates a diverse array of mortgages, including:
- And specialty loans
The lender can tailor loans to meet your needs with fixed- and adjustable-rate terms, jumbo loans, and low- to no-down-payment options.
They also work with first-time and low-income homebuyers to get borrowers into a suitable home at a reasonable price.
Flagstar also offers a few specialty and proprietary mortgage loans. For instance, real estate investors can apply for multi-property loans and acquire up to ten units at once with conventional financing.
And professionals who’ve recently finished school and are early in their careers can get low-down payment loans with no private mortgage insurance (PMI) required.
Moreover, borrowers in select zip codes can apply for home equity lines of credit (HELOCs) and home equity loans to pull cash out of their houses.
Flagstar Mortgage Qualification Requirements
Flagstar offers flexible lending requirements on many of its programs to aid borrowers in unusual or low-income situations.
For its conventional and government home loans, borrowers will need at least a 620-credit score.
Down payment requirements range from 3-3.5% for conventional and FHA loans, while VA and income-based community loans offer 0% down options.
Jumbo loan borrowers will need at least 15-20% down with a minimum credit score ranging from 700-720. Limits on jumbo programs range as high as $3 million per loan.
When it comes to debt-to-income (DTI) ratios, borrowers can qualify in the 43-50% range.
Typically, jumbo borrowers need a lower DTI, while government and conventional borrowers can carry more debt.
Additionally, some loan programs permit borrowers with little-to-no formal credit histories.
Flagstar Bank Mortgage Rates and Fees
Flagstar Bank doesn’t disclose its lender fees upfront. Flagstar also states that it doesn’t charge a named “origination fee” on most mortgages, sans some select state bond programs.
That said, it does note closing costs tend to range from 2-5% of the total loan amount. These fees account for appraisal, underwriting, processing, and closing transaction fees, among others.
Refinancing Mortgages with Flagstar Bank
Flagstar Bank offers rate-and-term, cash-out, and streamline refinancing options. VA borrowers can also qualify for VA refinancing programs.
The mortgage lender’s rates for these loans tend to sit right at or below the national average, though slightly higher than comparable purchase loans.
Flagstar Bank Mortgage Features and Benefits
Various Purchase and Specialty Loans Available
Flagstar originates tons of mortgage products, including conventional, conforming, jumbo, and government-backed loans.
Qualified borrowers can also participate in a number of national and proprietary loan programs to get multi-property, professional, renovation, and construction loans.
Several Home-Buyer Grants
Eligible homebuyers may also qualify for homebuyer grants. These typically cover your down payment, closing costs, and other upfront fees that come with buying a mortgage.
Many of these programs provide anywhere from a few hundred to several thousand dollars based on your location, income, and whether you’re a first-time homebuyer.
Flagstar does offer transparent rates…sort of. To see them, you’ll need to provide some information like your contact details, the range of your credit score and price target, and size of your down payment.
But once you’ve submitted this information, you can play around with different credit scores and down payment sizes to see how new information affects your loan.
Flagstar lets you complete the bulk of the mortgage application and underwriting process online, including comparing home loans, getting a rate quote, and applying.
You can also upload and sign documents, and many borrowers can eClose when it’s time to sign on the dotted line.
Assigned Loan Officer
During the home loan process, every borrower is assigned one loan advisor during the application process and one loan processor during underwriting.
These individuals are there to answer your questions and guide you through the process as smoothly and quickly as possible.
Flagstar Bank Drawbacks
Flagstar Bank ranked near the bottom of the J.D. Power Mortgage Originator Satisfaction Survey. Moreover, its Trustpilot score is rated a poor grade of 2.6 (albeit based on just a handful of reviews).
Some Products Limited by Location
Unfortunately, Flagstar only offers home equity loans and HELOCs in select locations. Other borrowers will have to make do with cash-out refinances.
Limited Online Qualifying Information
Although Flagstar does include a lot of mortgage information online, the bank doesn’t outline its qualification requirements in detail.
To get that information, you’ll need to send in your contact details and proceed through the rate quote process.
How Does Flagstar Bank Compare to Other Mortgage Lenders?
#1. Flagstar Bank vs. Quicken Loans
Quicken Loans is one of the most popular lenders in the United States. They originate a decent-sized menu of conventional, government-backed, and nonconforming loans.
This online lender boasts a top-notch asset retrieval system, excellent customer service, and nationwide availability.
That said, their product lines aren’t particularly geared for lower-income, higher-debt, or poor credit score borrowers.
Moreover, many of its loans carry rates and fees above the national median and many of its competitors, and the website uses higher-than-average discount points to list sample rates.
>> More: Quicken Loans Mortgage Review
#2. Rocket Mortgage vs. Flagstar Bank
Rocket Mortgage, the digital site for Quicken Loans, is the largest mortgage lender in the United States.
This originator is licensed in all 50 states and renowned for their smooth online lending process and high DTI maximums.
You can get preapproved in minutes and take advantage of Rocket Mortgage’s asset retrieval system to speed up the application and underwriting process.
And if you decide to move forward, you can lock your interest rate for 90 days and enjoy perks like e-signing and digital closing. Unfortunately, it may take longer to get through this process than it does with other lenders.
>> More: Rocket Mortgage Review
#3. Flagstar Bank vs. AmeriSave Mortgage
AmeriSave Mortgage is an online lender that primarily focuses on refinance products. Although the lender charges a $500 application fee, they promise to match their competitors’ interest rates on your loan. And if they can’t, they’ll return your $500 if you close with another lender.
AmeriSave also claims to close “in days, not weeks.” Moreover, they had one of the lowest average rates on fixed-rate terms in 2020, and customers can oscillate between a phone- and digital-based lending experience.
However, because AmeriSave doesn’t partake in any first-time homebuyer programs, new homeowning hopefuls may want to opt for another lender.
#4. Better Mortgage vs. Flagstar Bank
Better.com is a 100% online mortgage lender that offers online convenience, steep discounts, and same-day preapprovals.
While the lender has a limited loan menu, it accepts borrowers with a wide range of credit scores and financial situations.
And every application has a dedicated loan officer to walk them through the lending process (which in some cases takes just 14 days!).
But Better isn’t perfect. Because it often services borrowers from less-affluent backgrounds, it can charge higher interest rates.
Moreover, Better isn’t licensed to lend in every state, and it doesn’t offer government-backed or construction loans in every locale.
>> More: Better Mortgage Review
Is Flagstar Bank a Good Choice for Mortgages?
Flagstar is a good mortgage originator if you need:
- A wide range of mortgage product options
- A lender with both online and in-person services
- Rate transparency
- Full-service banking and lending
- A lender that accepts higher DTI ratios
And while it does offer home equity products, only applicants within certain zip codes can qualify.
How Do Flagstar Bank Mortgage Rates Compare to the National Average?
Flagstar offers competitive interest rates that trend in line with or below the national average, including on its refinance loans.
Does Flagstar Bank Offer Mortgage Refinance?
Flagstar offers rate-and-term, cash-out, and streamline refinancing services. Eligible borrowers can also qualify for VA refinancing programs.
What Credit Score Do You Need for a Flagstar Bank Mortgage?
Flagstar requires a credit score of 620 for most conventional and government-backed loans. If you need a jumbo loan, you’ll need a credit score between 700-720.
Does Flagstar Bank Charge a Mortgage Origination Fee?
Flagstar Bank says that it doesn’t charge an “origination fee” except for select mortgages. But it does charge 2-5% in closing costs, depending on the type of loan you get.
Bottom Line: Flagstar Bank Mortgage Review
Flagstar Bank is a great lender if you need a specialty loan, no-down-payment mortgage, or financial assistance programs.
And because this originator also operates banking services, it can afford to give out HELOCs and home equity loans in select zip codes.
That said, its rate transparency comes at a price – namely, handing over your