How to choose a mortgage lender in 5 steps

Effective November 16, 2025, both Fannie Mae and Freddie Mac are removing the minimum credit score requirement from their conventional loan eligibility guidelines. Loan approval will instead be based on an evaluation of overall credit risk factors.

If you’re looking to buy a home, chances are you’ll need a mortgage. Once you start looking for a mortgage, you’ll find there are many lenders to choose from. Here are 5 steps you can take to find the mortgage lender that’s the right fit for you.

1. Research mortgage lenders 

There’s a lot to understand when learning how to pick a home loan lender. Start by searching for mortgage lenders online. You’ll notice there are several different types of mortgage lenders:

• Mortgage lenders. These are financial institutions that originate and fund mortgages directly, using their own or borrowed money.
• Mortgage brokers. Brokers don’t lend money. Instead, they connect you with lenders to help you find the best mortgage options and charge a loan-based fee.
• Credit unions. These are nonprofit, member-owned financial groups that offer mortgages to their members using funds pooled from their members.
• Online lenders. These lenders have no physical branches and operate entirely online. As a result of those cost savings, they may offer better rates and lower fees.
• Portfolio lenders. These lenders keep the mortgages they issue on their books instead of selling them. A portfolio loan allows for more flexible options and terms, though sometimes at higher interest rates.

2. Explore types of loans 

Choosing a lender also involves choosing the type of mortgage loan that best fits your financial needs and goals. Each type of loan comes with different eligibility requirements, pros, and cons.

• Conventional loan: Most conventional mortgages require a minimum credit score of 620 and a down payment of at least 3%. If you put down less than 20%, you’ll have to pay for private mortgage insurance (PMI). Conventional loans can be cheaper than Federal Housing Administration loans, but they can be more difficult to get. To be considered a conforming conventional loan, the mortgage must meet the loan limits set by the Federal Housing Finance Agency. For 2025, the limit is $806,500 in most areas and $1,209,750 in high-cost areas, Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
• FHA loan: FHA loans help low- to mid-income borrowers with a lower credit score buy a home. The FHA allows borrowers with a credit score of 500-579 to make a 10% down payment, while borrowers with a credit score of 580 or higher are required to make a 3.5% down payment. Individual lenders can set their own standards. Rocket Mortgage®, for example, requires a credit score of at least 580 and a down payment of 3.5%. Borrowers must also pay a mortgage insurance premium (MIP). If you don’t have great credit or a large down payment, an FHA loan can be cheaper than a conventional loan.
• Department of Veterans Affairs loan: VA loans are available only to eligible active-duty military personnel, veterans, and their surviving spouses. VA loans require no down payment or mortgage insurance, but they do have a funding fee. The minimum credit score varies by lender. At Rocket Mortgage, it’s 580.  
• U.S. Department of Agriculture loan: USDA loans are available to low- and moderate-income borrowers purchasing homes in specific rural areas. These loans require no down payment or mortgage insurance, but you must pay a guarantee fee of 1% at closing and an annual fee of 0.35% of the loan. The minimum credit score requirement is typically 620. Rocket Mortgage does not currently offer USDA loans.
• Jumbo loan: Jumbo loans exceed conventional loan limits, so they tend to have stricter qualification criteria. Most require a down payment of at least 10% and a minimum credit score of 680, depending on the lender, loan amount, and term.

Not every lender provides all loan types, and each may set its own terms and eligibility requirements.

3. Apply for preapproval

Once you’re ready to start house hunting, apply for mortgage preapproval. Your lender will review your finances and estimate how much it expects you can borrow to buy a home.

A preapproval letter shows sellers that you’re serious about buying and ready to apply for financing. Some sellers won’t consider an offer unless the bidder has mortgage preapproval. Sellers won’t entertain offers without preapproval because they may fall through. A preapproval letter is a strong signal that yours won’t, giving you a competitive edge.

Most preapproval letters are valid for 30 - 60 days, after which they must be renewed.

4. Compare Loan Estimates

When you’ve found a home that you want to buy and your offer’s been accepted, it’s time to apply for a mortgage. Your lender will provide you with a Loan Estimate within 3 business days of receiving your completed application.

The Loan Estimate is a three-page form that estimates your mortgage terms and costs, including the interest rate, monthly payment, and closing costs. It’s not a loan approval or denial – just an estimate.

All lenders are required to use a standardized Loan Estimate form, making it easy for borrowers to compare offers. To request a Loan Estimate from a lender, all you need to provide is the following information:

• Name
• Income
• Social Security Number
• Address of the home you plan to purchase
• Estimated value of the home
• Desired loan amount.

Sharing additional financial information with the lender can help them deliver a more accurate Loan Estimate.

5. Ask questions and negotiate

Be prepared to ask the lender questions and negotiate terms to get the best mortgage possible. For example, you might ask if there’s a prepayment penalty, how often they’ll update you on the loan’s progress, and who your point of contact will be.

Keep in mind that many loan terms are negotiable to some degree:

• Interest rates
• Monthly payments
• Discount points
• Rate locks
• Closing costs
• Prepayment penalties
• Mortgage insurance premiums
• Escrow requirements

Borrowers are advised to ask lenders questions like:

• What types of mortgages do you offer, and which do you recommend for my situation?
• What interest rates are you offering?
• What fees are associated with the loan, and can you provide a breakdown of the closing costs?
• What are your down payment requirements?
• What would my estimated monthly payment be?
• What documentation do you require for the loan application?
• How long does the approval process typically take?
• Do you offer interest rate locks, and if so, what are the terms and conditions?
• How do you communicate with clients throughout the loan process, and who will be my main point of contact?

Tips for finding a mortgage lender

We’ve rounded up some tips to help you find a lender.

• Set your budget: Determine what you can comfortably afford to pay toward your mortgage each month. Rocket Mortgage has a free mortgage calculator that can help you estimate how much you can afford. Keep in mind that lenders often require that your debt-to-income ratio (DTI) not exceed 50%.
• Have your documents ready: Lenders commonly request personal identification, W-2 forms, tax returns, pay stubs, employment verification, bank and investment account statements, and your Social Security number to obtain a credit report.
• Know your closing costs: Don’t underestimate closing costs, which can run 3% – 6% of your loan amount. These costs include origination fees, application fees, underwriting fees, escrow fees, title search fees, and appraisal fees.
• Beware of mortgage scams: Some scammers steal home buyers’ money by impersonating escrow officers, lenders, or real estate agents and asking buyers to transfer funds to illegitimate accounts. Be cautious of suspicious up-front fees or offers that seem too good to be true. Remember to review loan terms closely, verify lenders’ credentials, be wary of unsolicited offers, and watch for red flags.

The bottom line: Finding a mortgage lender requires research 

There are plenty of lenders to choose from, so you shouldn’t settle for one that doesn’t meet your needs. It’s good to talk with different lenders and gather loan estimates so you can compare their systems, rates, and terms. Be sure to thoroughly vet any financial institution before borrowing money from it.

At the end of the day, your house will likely be the most significant financial investment of your life, so you want to get it right. Ready to take the next step? Start the loan approval process with Rocket Mortgage today.