Ratings Methodology for Mortgage Lenders

NerdWallet’s overall ratings for mortgage lenders are evaluated against four major categories. A raw score is produced for each of the following:

  • Rates and fees.
  • Ease of application.
  • Rate transparency.
  • Variety of loan types.

Data collection and review process

NerdWallet currently reviews more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with at least a 1% market share); lenders with significant online search volume; and those that specialize in serving various audiences across the country. Some of these lenders are NerdWallet partners, but this does not influence the review process.

We collect information from lenders and verify it through interviews and on lender websites. We also use the Home Mortgage Disclosure Act, or HMDA, for origination fee and average interest rate data.

Then, we rate the lenders on a scale of 1 to 5 on the following criteria: rates and fees, ease of application, rate transparency and variety of loan types. Each category constitutes a portion of the lender’s overall score. Lenders’ raw scores may receive bonuses for programs or policies that expand homeownership opportunities. Their raw scores may be penalized in cases of recent regulatory action for violations that harmed mortgage consumers. These scores generate ratings from 1 star (poor) to 5 stars (excellent). An average score of 4.5 to 5 points earns 5 stars; an average score of 4 to 4.49 points earns 4.5 stars; an average score of 3.5 to 3.99 points earns 4 stars; and so on.

Information updates

NerdWallet maintains contact with lenders throughout the year, collecting information on a recurring basis. Lender offerings are updated as needed.

The review team

NerdWallet’s review team consists of a content management specialist, editors and writers who cover all aspects of the homeownership journey — from deciding to buy a home to shopping for one; finding the right mortgage and mortgage lender; owning a home; selling a home and more. Aside from NerdWallet, the review team’s work has been published by outlets including MarketWatch, MSN Money, Newsweek, USA Today, The Washington Post, Yahoo and The Associated Press. Each content management specialist, editor and writer adheres to NerdWallet’s stringent editorial integrity guidelines.

Rates and fees

Rates and fees are the two factors that affect a loan's total cost. NerdWallet reviews the latest available federal data and synthesizes a combined score for average interest rate and origination fee. A high average interest rate score indicates rates that approach the best in the market. A high origination fee score indicates some of the lowest recorded fees.

Variety of loan types

NerdWallet looks for the following home loan types from any given lender:

  • Purchase and refinance.
  • Fixed and adjustable.
  • FHA, VA and/or USDA.
  • Home equity loan (HEL) and/or home equity line of credit (HELOC).
  • Construction-to-permanent and/or renovation mortgages.
The more loan types a lender offers, the better the score, as it means more options for consumers.

Ease of application

We judge ease of application by multiple factors, such as the online application experience and options for phone or chat support. The more intuitive and consumer-friendly the application process, the better a lender will score.

Rate transparency

NerdWallet looks at mortgage rate transparency in terms of how visible and detailed this information is to consumers on a lender’s website. Is it readily available, or do consumers have to contact the lender for customized rates? Scores in this category are low for lenders that do not publish sample mortgage rates. They are higher for lenders that post sample rates on their sites, making it easier for home buyers to comparison shop, and highest for sites with self-serve tools that allow shoppers to see what rates might be like for their particular loan.

Bonuses and penalties

A raw score bonus may be awarded to lenders with programs or policies, such as first-time home buyer assistance or options for borrowers with credit challenges, that expand homeownership opportunities. A raw score penalty may be applied if a recent regulatory action described harm to mortgage borrowers and fines totaled $1 million or more.

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