Editorial Review

Flagstar Bank Mortgage Review 2020

Good for: borrowers who want a wide range of choices — not only among mortgage products, but also in the shopping channel they prefer, whether a branch, online or on the phone.

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Our Take

4.5

NerdWallet rating 

The bottom line: Flagstar Bank excels in most categories, such as its range of mortgage types and products, online capabilities and rate transparency. It currently lacks renovation loans, and home equity products aren’t available everywhere.

Flagstar

Flagstar: NMLS#417490

Min. Credit Score

620

Min. Down Payment

3%

Loan Types and Products

Purchase, Refinance, Home Equity, Jumbo, Fixed, Adjustable, FHA, VA, USDA

Pros & Cons

Pros

  • Offers a wide range of loan types and products, including FHA, VA and USDA.

  • Has a full suite of online conveniences.

  • Does well with rate transparency, and monthly payment estimates add mortgage insurance, when applicable.

Cons

  • Doesn’t offer renovation loans at this time.

  • Home equity lending is geographically limited.

Compare to Other Lenders

BNC National Bank
Better.com
Min. Credit Score

640

Min. Credit Score

620

Min. Down Payment

3%

Min. Down Payment

3%

Loan Types and Products

Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA, USDA

Loan Types and Products

Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA

Full Review

Due to the coronavirus pandemic, getting a mortgage may be a bit of a challenge. Lenders are dealing with high loan demand and staffing issues that may slow down the process. Also, some lenders have increased their fees or temporarily suspended certain loan products. If you can’t pay your current home loan, refer to our mortgage assistance resource. For the latest information on how to cope with financial stress during this pandemic, see NerdWallet’s financial guide to COVID-19.

Flagstar at a glance:

Here's a breakdown of Flagstar's overall score:

  • Variety of loan types: 5 of 5 stars

  • Variety of loan products: 4 of 5 stars

  • Online convenience: 5 of 5 stars

  • Rates and fees: 3 of 5 stars

  • Rate transparency: 5 of 5 stars

Flagstar loan types and products

If you live outside of the north-central U.S., you may never have heard of Flagstar Bank. But the Troy, Michigan-based savings bank originates home loans in all 50 states and has retail locations in more than half while deploying a substantial network of more than 2,000 brokers across the nation.

Perhaps more homeowners are familiar with Flagstar in another way: as the payment address for their loans. Most lenders sell their rights to loan servicing — the collection and processing of payments — to providers like Flagstar Bank, which handles the record keeping for more than 1 million borrowers.

Flagstar says it embraces loans backed by the FHA and the VA. Federal Housing Administration loans are a popular option for first-time home buyers. FHA loans require down payments as low as 3.5% and are forgiving for borrowers with limited credit histories or low credit scores. VA loans, backed by the Department of Veterans Affairs, allow zero down payments.

With community-based loan advisors in many parts of the country, Flagstar says its reps are familiar with low-down-payment state bond programs for first-time home buyers and income-limited households, as well as the areas that qualify for rural development mortgages backed by the Agriculture Department.

Flagstar extolls its expertise in renovation and construction mortgages. It offered a broad range of these types of loans, but suspended them when the COVID-19 pandemic caused widespread stay-at-home orders.

Flagstar's home equity loans and lines of credit are available but only at bank branches in a limited area, mostly in Michigan, the company says. Home equity loans provide a lump sum and your interest rate will never change. A HELOC offers as-you-need-it withdrawal convenience, and you pay interest only on the outstanding balance.

Flagstar online convenience

Selecting the "Apply Now" button on Flagstar’s Home Loans page will bring you to what is essentially a contact request page. Enter basic information: purchase/refinance, type of loan, amount, down payment and so on, along with your contact information, and a mortgage loan advisor will contact you.

You also have the option of entering more detailed information about yourself, the property, your employment, and estimates of your assets and liabilities. If you opt for the online application, a loan advisor will be assigned to help you through the process.

Flagstar also offers online document uploads, electronic signature and online loan process tracking.

The bank's customer service phone line offers extended hours Monday through Friday, and is open five hours on Saturdays. Flagstar says each borrower is assigned one loan advisor to talk to during the application process, and one loan processor during underwriting.

Flagstar mortgage rates and fees

One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. To provide consumers with a general sense of what a lender might charge, NerdWallet scores lenders on two factors regarding fees and mortgage rates:

  • A lender's average origination fee compared with the median of all lenders reporting under the Home Mortgage Disclosure Act. Flagstar earns 3 of 5 stars on this factor.

  • A lender's offered mortgage rates compared with the best available on comparable loans. Flagstar earns 3 of 5 stars on this factor.

Borrowers should consider the balance between lender fees and mortgage rates. While it's not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.

You can decide to buy discount points — a fee paid with your closing costs — to reduce your mortgage rate.

Deciding whether you want to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.

Flagstar rate transparency

Information on mortgage rates is readily available on Flagstar's website by navigating to the mortgage section of the menu and selecting "Get a Mortgage Quote." From there, answer at least four questions about the home's value, the loan purpose and ZIP code, and you're presented with a few loan options, along with rates and APRs.

More from NerdWallet:

NerdWallet's star ratings for mortgage lenders are awarded based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.