Editorial Review

Flagstar Bank Mortgage Review 2019

Ideal for borrowers interested in an FHA, renovation or construction loan.

Hal M. Bundrick, CFPSeptember 16, 2019

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Our Take

4.5

NerdWallet rating 

The Bottom Line: Flagstar Bank embraces government mortgages and makes it easy to see personalized rates online.

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
  • Full online application.

  • Offers renovation and construction mortgages.

  • Carries a full range of government loans: FHA, VA and USDA.

Cons
  • Typically charges $1,295 in underwriting and processing fees.

  • Mobile app has limited loan functionality.

Compare to Other Lenders

Quicken Loans
New American Funding
Min. Credit Score

620

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, Home Equity, Reverse, Jumbo, Fixed, Adjustable, FHA, VA, USDA

Full Review

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 recordkeeping for hundreds of thousands of borrowers.

Here’s how Flagstar works and how it compares with other lenders for new mortgages and mortgage refinancing.

Flagstar mortgage options

Flagstar Bank has about every mortgage product there is, and it claims expertise in renovation and construction mortgages:

  • Conventional and FHA 203(k) loans to finance the purchase and renovation of fixer-uppers, as well as FHA loans to rebuild after disasters.

  • A construction-to-permanent-financing loan with one closing and a single set of closing costs and fees. The loan is interest-only during the construction phase.

  • A draw-funds-as-needed loan with interest-only payments during the construction phase. When construction is complete, borrowers choose the type of permanent mortgage that best suits their needs.

Meanwhile, a professional loan package provides mortgages for people with advanced degrees, including doctors, lawyers, nurse practitioners, airline pilots and certified public accountants.  These mortgages allow flexibility in underwriting borrowers who have student loans, Flagstar says. Professional loans also offer low or no down payment and no mortgage insurance.

With community-based loan officers in so 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 says it embraces loans backed by the FHA, which can be forgiving to borrowers who don't have much credit history and who therefore qualify with rental payments, utility bills and other nontraditional credit sources.

FHA loans and some entry-level conventional loans use a benchmark 620 FICO credit score or higher. Overall, typical Flagstar customers have had an average credit score of just over 720. Average loan-to-value ratios are just over 80%, the company says.

Flagstar home equity lending

Flagstar offers fixed-rate home equity loans as well as variable-rate home equity lines of credit, or HELOCs.

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 offers credit lines from $10,000 to $1 million.

The Flagstar mortgage loan process

Information on mortgage rates is readily available on Flagstar's website by navigating to the mortgage section and selecting "Get a Mortgage Quote." From there, answer 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.

Selecting the “Apply Now” button on Flagstar’s Home Loans page will bring you to what is essentially a contact request page. You enter some basic information: purchase/refinance, type of loan, amount, down payment and so on, along with your contact information, and a mortgage loan officer 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 officer will be assigned to help you through the process.

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

Flagstar mortgage fees

With such a complicated loan process, lenders can find a lot of ways to charge fees. These costs can come with any number of labels. Flagstar says it does not charge an origination fee, but it charges an underwriting fee of $745 and a processing fee of $550, for a total of $1,295.

Flagstar customer satisfaction

Customer satisfaction falls below the industry average, according to J.D. Power, a customer satisfaction research firm.

It gave Flagstar a score of 787 on a 1,000-point satisfaction index, below the 2018 industry average of 836. Out of a five Power Circle Rating, Flagstar garnered two circles. That put the bank in “the rest” of lenders category and placed it in the bottom quartile of the 21 lenders included in the survey.

More on mortgages 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.