As you go through the home-buying process for the first time, you're bound to encounter different interest rates when looking for loans online or working with mortgage lenders. However, there is a difference between the interest rate and the APR when shopping for a mortgage — and understanding the difference is crucial.

APR is an acronym for "annual percentage rate," which reflects the total borrowing costs of your mortgage. Essentially, it’s what you pay on top of the principal balance you borrow.

Your mortgage interest rate is one component that gets factored into your mortgage APR, but since your APR is the full borrowing cost of your home loan on an annualized basis, it includes other expenses. Therefore, your APR will likely be higher than your interest rate.

Learn more: What is mortgage interest, and how does it work?

The other expenses that could get factored into your mortgage APR, besides your interest rate, include mortgage points, underwriting or origination fees, or select closing costs.

The mortgage points (if applicable), fees, and closing cost elements of your APR impact the amount of money you’ll need when closing on a house. You’ll pay for those expenses in cash to finalize your home loan.

The interest rate aspect of your mortgage APR influences your ongoing monthly payment amount. The higher your interest rate, the higher your housing bill (and overall home loan cost).

You may choose to pay mortgage points to lower your interest rate.

Yahoo Finance tip: The APR calculation processes can vary from lender to lender, so it’s wise to ask your financial institution what costs are reflected in the figures they provide. If you’re looking to do a little research on your own, a good APR calculator can provide you with some estimates.

"I think mortgage APR is generally the best way to compare rates because APR includes the origination fees and closing costs," said Ted Erhart, certified financial planner and founder of Norris Lake Retirement Planning, via email interview.

"In other words," said Erhart, "it’s an all-in 'price' for the loan. If you shop for mortgages online, you’ll often see advertisements for what appear to be low rates. But if you look closely, the rate being offered comes with two, three, or even more origination points. Hence, the face rate is misleading because it doesn’t include thousands of dollars of origination and closing costs."

You can find the mortgage APR on page three of the lender-provided Loan Estimate form. Your mortgage lender must give you a copy of this document within three days of receiving your mortgage application.

Yahoo Finance tip: Make sure you compare apples to apples when reviewing your mortgage options. Request that lenders provide Loan Estimates with no mortgage points included.

Read more: 6 tips for choosing the right mortgage lender

Since the interest rate is one of the main factors that influences your mortgage APR, here are some strategies that may reduce your cost to borrow:

Improving your credit score and reducing debt.

Always compare mortgage offers from several lenders. You may find a lender that charges fewer (or less expensive) fees than another.

The length and type of your mortgage can impact the APR you pay, too.

Dig deeper: Where and how to find the lowest mortgage rates right now

While it may seem counterintuitive, there are times when a higher mortgage APR may work in your favor.

"For instance, if the borrower plans to stay in the home for a short period, they might opt for a loan with higher fees (and thus a higher APR) in exchange for a lower interest rate. This strategy can be cost-effective if the lower interest payments outweigh the upfront fees over the time the borrower holds the loan," said Bryan Jordan, certified financial planner and managing partner of Censifi, via email.

Erhart said, "A higher APR could make sense for someone who is more concerned about monthly cash flow as opposed to the interest expense. For example, 15-year terms generally have lower rates and APRs than 30-year mortgages. But many home buyers are willing to pay a higher rate for a lower monthly payment."

Learn more: 15-year vs. 30-year mortgages

Home buyers and potential loan refinancers have been pinning their hopes on a return to mortgage rates in the 3% range. However, with home loan rates remaining close to 7% for nearly three years, perhaps 5% is becoming a more reasonable possibility for 30-year fixed mortgages.

Most housing experts aren't expecting rates to move much lower through the end of this year. However, a major economic setback could trigger much lower mortgage rates.

So, expect rates to be mostly unchanged. But prepare for 5% mortgage rates.

Learn more: How to buy a house in 13 steps

What would trigger lower mortgage rates? Realtor.com chief economist Danielle Hale said it's a matter of time.

"The most likely catalyst is time. As time goes by, as you get closer to that 2% inflation anchor that the Fed is targeting, it would normalize the (Federal Funds rate) and it would normalize longer-term interest rates," Hale told Yahoo Finance. "The federal rate would probably get back into the 2-1/2% range or so, which is probably enough to bring long-term yields back around 4%, and that would probably put mortgage rates in the 5-1/2 to 6% range."

She noted that Federal Reserve rate cuts and lower mortgage rates are not a one-for-one proposition. Hale said that from last September through January, the Fed cut its benchmark rate by a percentage point, and mortgage rates rose by almost the same amount.

The Federal Reserve has delayed rate cuts this year. With no Fed meeting scheduled in August, Wall Street has high expectations for a quarter-point interest rate cut in September.

Learn more: How the Fed rate decision impacts mortgage rates

"You could get [to 5% mortgage rates] faster if you were to have a recession," Hale added. "That could cause the Fed to cut rates, and you could see 5 1/2% — maybe even slightly below 5 1/2%, in a really bad recession."

Even though the latest GDP report indicated that the U.S. is not in a recession, the most recent employment data is fanning the flames of recession fears.

Realtor.com research conducted in the first quarter of 2025 found that roughly three in 10 (29.8%) of potential home buyers surveyed said a recession would make them at least "somewhat more likely" to buy a home.

"It seems that some shoppers are anticipating either lower mortgage rates or lower home prices, or both, in a recession to potentially create some sort of opportunity for them to buy," Hale said.

Of course, a recession could bring many complications into the affordability equation: job and income insecurity among the most likely.

Dive deeper: Do mortgage rates decrease in a recession?

If mortgage rates fall into the 5% range, Hale believes it would bring buyers and sellers back into the market. But would a resurging market introduce more competition for buyers?

Hale said that while home buyers are looking for lower mortgage rates, home sellers are too. Listings may increase as sellers see an opportunity to move into their next house at a reasonable interest rate.

"When rates drop, normally that would increase competitiveness in the market because it creates opportunities for home buyers. But I think, interestingly, this will also create some opportunities for home sellers, so we might not see competitiveness pick up quite as much."

Read more: You locked in a low mortgage rate — now you want to move. What should you do?

The window for lower mortgage rates may open quickly — and perhaps close just as fast. As a borrower and home buyer, you'll want to be prepared.

Have your down payment in the bank. When an opportunity to buy presents itself, you'll have the funds ready to take action. Have enough for closing costs too.

Check your credit score and get your personal finances in shape.

Nail down your home price range and target monthly payment. Knowing how much house you can afford and narrowing down the appropriate neighborhoods can set you up for early success when the time is right.

Explore a prequalification. Talk to a few mortgage lenders and have your home loan options lined up. You can have the lenders in your pocket for when it's time for an official loan preapproval.

Learn more: Mortgage rate projections for the next five years

It's not a common prediction among industry observers, but one expert believes so. Chris Whalen, an investment banker in New York, told Yahoo Finance in a phone interview that 5% is likely the next move for mortgage rates. "If you really wanted to put me on the spot [and ask me] 'how low do you think mortgage rates will go in the next cycle?' I'd say 5%."

It’s unlikely that mortgage rates will fall to 4% anytime soon. Unusually low mortgage rates only became possible following the 2008 housing crisis and the ensuing recession. Then, the COVID pandemic tamped them down even further. It was a rare set of circumstances that pushed mortgage rates to historic lows. It would likely take equally unusual events to cause such low rates to happen again.

The average 30-year mortgage interest rate dipped into the lower 5% range for about six weeks in the summer of 2003. Then again briefly in March 2004. A longer stretch of mortgage rates near and well below 5% began during the housing crisis and recession of 2008 and lasted 14 years, ending in October 2022.

Probably not, on the Fed's current schedule. It would likely take an economic reversal, spurring further federal funds rate cuts, to get mortgage loan rates close to 5%.

Buy a home when you can afford to. A mortgage rate is not a lifetime commitment. It's likely you'll own more than one house, and even if you buy at a higher rate now, you can always refinance when rates come down.

When you use a mortgage lender to take out a loan on a home — whether it be a primary residence, second home, or investment property — you’ll usually pay closing costs. A portion of those closing costs are mortgage lender fees for services charged directly by the financial institution loaning you the money. These are separate from third-party fees, such as home appraisal and inspection charges, that pay companies other than your lender.

Between third-party and lender fees, you can expect to pay around 2% to 5% of the loan amount for your total mortgage closing costs. The exact amount will depend on your location and loan details, though.

Read more: Closing on a house — What to expect and how to prepare

In this article:

What are lender fees?

Are mortgage lender fees the same as discount points?

How much are mortgage lender fees?

Who pays for lender fees?

Can lender fees be financed into a mortgage?

Can you negotiate mortgage lender fees?

FAQs

When you apply for a mortgage, your lender will provide you with a Loan Estimate that details the costs to close the loan, including mortgage lender fees. The fees charged by your lender are found under the sections labeled “loan costs” and “other costs” on page 2 of the Loan Estimate.

Typically, mortgage lender fees are labeled:

Application fee

Origination fee

Processing fee

Credit report fee

Underwriting fee

Reviewing these fees with each lender when you shop for a mortgage is important. Sometimes, your lender will itemize the fees early in the process so you can see exactly what the charges include. In other cases, your lender will provide an all-inclusive fee or combine a couple of fees under one umbrella, such as credit report and underwriting costs under an origination fee. But when you receive your Loan Estimate a few days after submitting your official mortgage application, these fees will be broken down so you see how much each one costs.

In addition to lender charges, other typical closing costs may include an appraisal fee, home inspection fee, recording fee, title insurance, prepaid interest, homeowners insurance, property taxes, and private mortgage insurance (PMI).

Yes and no. A discount point is one example of a lender fee (because any money paid goes to the mortgage lender and not a third party), but it’s an optional charge. You do not have to pay for discount points if you choose not to. This contrasts with other lender fees, such as an origination or credit report fee, which may just be part of a lender’s payment structure.

Here’s how discount points work: Lenders offer borrowers the option to pay additional money to lower their interest rate — these may be referred to as discount points, mortgage points, or just points. Generally, one discount point costs 1% of your loan amount, lowering your mortgage rate by 0.25%. For example, if you have a $400,000 mortgage loan with a 6.5% interest rate and decide to pay for one discount point, you’ll pay $4,000 at closing to lower your rate to 6.25%.

Mortgage lender fees typically cost 1% to 2% of the total loan amount, though that number could be a little higher or lower depending on various factors. Costs vary from one lender to another regarding how much they charge and which services are included in the fee.

For example, the loan origination fee is usually 0.5% to 1%, which may or may not encompass other charges, such as application and credit report fees. Some lenders charge as much as $500 just for the application fee, while other lenders waive that cost.

Mortgage lenders may offer a “no-cost” loan, but that often means the company wraps closing costs into your mortgage loan balance, you pay a slightly higher interest rate, or both.

Dig deeper: What if you can't afford closing costs? 6 ways you can still buy a home.

Buyers usually cover the mortgage lender fees since they are the ones financing the home, but closing costs are negotiable between the buyer and the seller. Depending on the loan program and whether the purchase is for a primary residence or an investment, sellers can contribute a maximum of 3% to 9% of the purchase price in mortgage closing costs.

You can also ask your mortgage lender to waive or lower some of their fees. If you have a high credit score, you’re more likely to succeed in reducing some lender fees since a lender may be less concerned about a potential default.

If there’s limited mortgage activity, which means lenders are competing for borrowers, they may be more likely to offer to pay for some of the costs of the loan to get your business. However, you should compare mortgage rate offers because sometimes a lender will charge a slightly higher rate to get compensated for loan costs.

Read more: Questions to ask a home loan lender

Yes, your lender may allow you to wrap your closing costs — including lender fees — into your loan. However, it may be better financially to pay closing costs upfront (if you can afford to do so) or to negotiate for the seller to pay some of your expenses, depending on how long you plan to keep the house.

If you wrap your closing costs into your mortgage, you will add that amount to your loan balance and often pay a slightly higher interest rate. This means you will pay interest on the closing costs since they’ll become part of your principal, which would not be necessary if you paid cash on closing day.

Yes, borrowers can negotiate to reduce certain closing costs, including lender fees. Your mortgage lender will give you a Loan Estimate within three business days of receiving your official loan application. This document will show an itemized list of all of your closing costs.

Some charges, such as the home appraisal fee and property taxes, cannot be negotiated. But the lender may be willing to reduce some lender fees, such as application, underwriting, or origination fees. When you receive the Loan Estimate, walk through each charge with your lender to see if they will decrease or waive any of these charges. If the company agrees to lower any fees, double-check those charges are excluded from the Closing Disclosure you’ll receive before closing day.

While most mortgage lenders charge lender fees, some — such as Better Mortgage — do not.

Typically, mortgage lender fees range from 1% to 2% of the loan amount. You should shop around with other lenders if you are quoted a higher fee.

You may be able to avoid lender fees in one of two ways: Either you can find a mortgage lender that doesn’t charge lender fees, or you can negotiate with the seller or lender to pay the fees for you.

Yes, most lenders charge fees for a refinance like they do when you buy a house. However, some lenders offer mortgage loans without lender fees. Others may reduce lender fees for a refinance, particularly for a borrower with good credit who is refinancing with the same lender that holds their current home loan.

This article was edited by Laura Grace Tarpley.

It's overwhelming to be a first-time home buyer. Buying a house in 2025 takes a series of savvy financial moves, and you'll need a mortgage lender who can be a true partner in the process. Not a knock-it-out, "Who's next in line?" provider, but a lender with deep resources and loan options that can make your homeownership dream come true.

Yahoo Finance has analyzed leading mortgage lenders, considering important aspects of the loan process, such as average mortgage rates and total costs, and used this data to create the ultimate "best of" list for August 2025 — without conflicts of interest or compromise.

The Yahoo view: Truist distinguishes itself with down payment assistance and lender credits, among other first-time home buyer advantages. However, it has a below-average score for customer satisfaction.

Read our full Truist mortgage review

Key benefits

A Community Homeownership Incentive Program offers low or no down payments, lender credits, and no mortgage insurance to eligible borrowers in qualifying areas.

Medical professionals may qualify for lower down payments, waived mortgage insurance, and the exclusion of student loans from debt-to-income requirements with Truist mortgages.

Need to know

Published mortgage rates default to one discount point to show a more favorable interest rate but can be adjusted to zero points.

Scores below the average for customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: NFCU offers several distinctive benefits, including interest rate protection on VA-backed mortgages for active and former military members. Although it has our highest star rating, it is specifically best for military-affiliated first-time home buyers.

Read our full Navy Federal Credit Union mortgage review

Key benefits

The Special Freedom Lock allows an interest rate reduction of up to 0.50% if mortgage rates move lower before your loan closing — just one reason why NFCU is on Yahoo Finance's list of the best VA lenders.

The No-Refi Rate Drop allows you to tap a lower interest rate six months or later after closing — for a $250 fee but without changing your loan terms or taking on additional closing costs as you would with a refinance.

A rate guarantee states that Navy Federal will match a better mortgage rate offered by a competing lender or pay you $1,000.

Military Choice loans allow benefits similar to VA mortgages to current and former service members without further entitlements.

Buy your home through a Navy Federal real estate agent partner and receive $400 or more cash back.

Need to know

Navy Federal Credit Union home loans are available to members only. Eligibility includes active duty or former members of the armed forces, Department of Defense or National Guard and family or household members.

Ranks above the average of all the lenders considered in the latest J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: TD Bank excels in home loan selection with the broad selection of products typical of a depository institution. However, its services are only available in just over a dozen states.

Read our full TD Bank mortgage review

Key benefits

TD Bank mortgage punches above its weight. Only a short list of mortgage loans is unavailable.

Offers a comprehensive selection of educational resources for borrowers, including calculators.

Fee discounts are available to existing TD customers.

Need to know

Individualized rates are available by filling out a simple online form.

Serves 15 states (CT, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT) plus Washington, D.C.

Dig deeper: How to choose a mortgage lender

The Yahoo view: Chase Bank offers a wide assortment of home-buying tools, including nearly a dozen calculators, plus videos, checklists, FAQs, and more.

Read our full Chase mortgage review

Key benefits

Chase has an abundance of online learning resources, which are perfect for guiding a first-time home buyer through a complicated process.

Chase offers a $5,000 guarantee to close a home loan as quickly as in three weeks under specific guidelines.

VA loans may be eligible for a credit of up to $2,000, which you can apply to closing costs.

Need to know

Chase has an above-average rating for customer satisfaction, according to the 2024 J.D. Power study.

The conventional loan interest rates on the Chase website are enhanced with strict credit standards, including 20% to 25% down payments, one discount point, and borrowers with "excellent" credit. In other words, the rate you earn could be much different.

The Yahoo view: Better offers several home-buying services, including rapid loan approval, insurance, real estate attorneys, settlement services, and more, as part of a consolidated digital experience — making it our top online mortgage lender.

Read our full Better Mortgage review

Key benefits

A "One Day Mortgage" offer promises a loan commitment within 24 hours of submitting paperwork and a rate lock.

Better Mortgage claims to close loans "17 days faster than the industry average."

A full-service digital experience includes loans, insurance, real estate attorneys, and settlement services.

Need to know

Published interest rates are shown for borrowers with a 20% down payment, who pay closing costs with cash, have a DTI below 35%, and a credit score of 760 or higher.

Mortgage rates are also lowered with two or more discount points.

The Yahoo view: Best-in-class for customer satisfaction, Bank of America also offers a full suite of loan products.

Read our full Bank of America mortgage review

Key benefits

Bank of America is near the top of customer satisfaction rankings in the latest J.D. Power survey.

Offers grants up to $7,500 in closing costs and down payment assistance up to $10,000 for qualified buyers in many, but not all, states.

Existing customers may qualify for an origination fee or interest rate deduction. You'll likely have to sign up to draft your mortgage payments from an account to qualify.

A home buyer program for medical professionals allows borrowers to make lower down payments and exclude student loans from debt limits. Residents and fellows can also close on a loan 90 days before starting a new position.

Need to know

Bank of America's Real Estate Center features home listings, including existing and new construction properties — as well as bank-owned houses.

The Yahoo view: Pennymac is a major lender for loans insured by the FHA (Federal Housing Administration) and is well-equipped to guide first-time homebuyers through the government loan process.

Read our full Pennymac mortgage review

Key benefits

Pennymac is the second-largest FHA lender by loan volume in the nation — and is rated by Yahoo Finance as the best overall FHA lender.

Offers a rate buydown that lowers your interest rate by 1% for one year.

Show sellers you are a serious and qualified buyer with Pennymac's BuyerReady Certification. You will also receive a $1,000 credit to apply to your closing costs.

Use a real estate agent endorsed by Pennymac and get from $350 to $9,500 cash after closing.

Need to know

Pennymac has a well-below-average rating for customer satisfaction, according to the 2024 J.D. Power Mortgage Origination Satisfaction Study.

The Yahoo view: Citibank is a legacy mortgage loan lender with grants up to $7,500 to apply to closing costs.

Read our full Citibank mortgage review

Key benefits

Citi offers a 3% down payment program with no private mortgage insurance (PMI) requirement to borrowers in specified U.S. cities.

Citi’s Lender Paid Assistance Program can cover up to $7,500 in closing costs to qualified buyers.

Need to know

Advertised mortgage rates include substantial discount points and undisclosed credit score requirements.

A Yahoo Finance analysis of HMDA data revealed that Citi charged well-below-median mortgage interest rates in 2023 with average loan costs.

The Yahoo view: An early-mover in digital mortgages, Rate (previously Guaranteed Rate) offers face-to-face service in many markets but is rated well below J.D. Power’s average in customer satisfaction.

Read our full Rate (Guaranteed Rate) mortgage review

Key benefits

For a personal service option, Rate has hundreds of branch locations across the nation.

A "Same Day Mortgage" promises loan approval — but not loan funding — within 24 hours of locking an interest rate and submitting financial documents.

Offers non-qualified mortgages for self-employed borrowers or those who want to qualify using alternative credit standards.

Need to know

Advertised rates factor in more than one discount point, are based on a 20% down payment, and a FICO score well above the national average.

Rate scores well below average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

Read more: How to get a mortgage when you're self-employed

The Yahoo view: Has made a commitment to offer down payment assistance and closing costs credits to advance homeownership for minorities.

Read our full U.S. Bank mortgage review

Key benefits

Has committed $100 million over five years to offer up to $12,500 in down payment assistance and up to an additional $5,000 in a lender fee credit to advance homeownership for minority families.

Existing U.S. Bank customers may be eligible for a credit against closing costs up to $1,000.

A prequalification process is free, "takes five minutes," and does not impact on your credit.

Need to know

A loan application can be made in a loan officer's office, by phone or online.

U.S. Bank's mortgage rates, as published on its website, look appealing. However, the conventional loan rates shown require a down payment of 25% and a FICO score of 740 or better. That's well above the national average credit score of 715.

Many mortgage lenders offer conventional loans backed by Fannie Mae. With the HomeReady program, you only need a 3% down payment and 620 credit score. You also might qualify with a debt-to-income ratio as high as 50%.

You must finish a home-buyer education course to qualify for this program, which is often useful for first-time buyers.

Conventional loans backed by Freddie Mac also require a 3% down payment and an online home-buyer education course. The main differences from the HomeReady program are that Home Possible loans require a 660 credit score and a 45% DTI ratio for buying a house.

FHA loans can be great for first-time home buyers because you can qualify with a 580 credit score and 3.5% down payment. (You can even get an FHA loan with a score as low as 500, but you'll need 10% down in this case.)

VA loans are for eligible active military personnel, veterans, and their families. They're great mortgages for getting your foot in the door of homeownership because you don't need a down payment. The U.S. Department of Veterans Affairs also doesn't set a minimum credit score, so you can shop for lenders that accept low scores if that's an issue.

You also don't need a down payment for USDA loans. These mortgages are for low-to-moderate-income borrowers buying in rural and suburban areas. As with VA loans, the U.S. Department of Agriculture doesn't set a minimum credit score, so the credit score needed will depend on the lender.

We seriously considered the following mortgage lenders with first-time home buyer loans for our best-of list, but they weren’t quite as strong as our top picks:

American Pacific Mortgage

AmeriHome Mortgage

AmeriSave Mortgage

BMO mortgage

Cardinal Financial mortgage

Carrington Mortgage Services

Citizens Bank mortgage

CMG Financial mortgage

CrossCountry Mortgage

Embrace Home Loans

Fairway Independent Mortgage

Fifth Third Bank mortgage

Flagstar Bank mortgage

Freedom Mortgage

Guild Mortgage

Huntington mortgage

loanDepot

Movement Mortgage

Mr. Cooper mortgage

New American Funding

Newrez mortgage

PenFed Credit Union mortgage

PHH Mortgage

Planet Home Lending

PNC Bank mortgage

Prosperity Home Mortgage

Regions Bank mortgage

Rocket Mortgage

SoFi mortgage

Third Federal Savings & Loan mortgage

USAA mortgage

Veterans United

Wells Fargo mortgage

An FHA loan is often the best type of loan for first-time home buyers because you only need a 580 credit score and a 3.5% down payment (or a 500 credit score with 10% down). It also allows borrowers with more debt to buy a home than many other types of mortgages. These features are great for first-time buyers who may not have much money saved or haven't had time to build up their credit yet. However, a conventional loan could be good if you're a first-time buyer with a strong credit score and lower debt levels, because many lenders only require 3% down.

First-time home buyers should look into three government-backed home loans: FHA, VA, and USDA loans. FHA loans are geared toward people with higher debt levels and lower credit scores. VA loans are for military-affiliated buyers who don't have any money for a down payment. USDA loans are for lower-income homeowners buying in rural areas and also don't have any money for a down payment. But conventional loans are still great mortgage options for first-time buyers with 620 credit scores and 3% down.

The best bank (or mortgage lender) will depend on your situation, but we chose Truist Bank as the best lender for first-time home buyers overall. It offers benefits for first-time buyers such as down payment assistance and lender credits.

You can put down as little as 0% as a first-time buyer getting a VA loan or USDA loan. You can also put down 3.5% for an FHA loan. Depending on the lender and how strong your finances are, you may be able to put down as little as 3% with conventional mortgages.

A 30-year mortgage term is usually best for first-time buyers. All common types of mortgage loans offer a 30-year option, and it has lower monthly payments than, say, a 15-year mortgage.

As a first-time home buyer, a 620 credit score is preferable. You can qualify for a conventional mortgage with most lenders with a 620 score. However, FHA loans are often good deals for first-time buyers who might not have had time to build strong credit yet — FHA loans only require a 580 score.

An FHA mortgage is usually the easiest type of loan to get approved for because it has relatively lenient credit score requirements. But if you're affiliated with the military and are eligible for a VA loan, you'll likely be approved because the VA doesn't set a minimum credit score — the requirement varies by mortgage lender.

Methodology:

Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

This article was edited by Laura Grace Tarpley.