Best Mortgage Lenders of April 2025

How does a mortgage work?

A mortgage is a loan to buy a home. You repay it monthly with interest over a number of years (often 15, 20 or 30). If you can’t repay, the lender may take the home through a process known as foreclosure.

• Who offers mortgages? Banks, credit unions and lenders.

• How do you apply? Fill out an application and share your financial details. 

• What do lenders check? Your income, debt, and credit score determine if you qualify and the terms offered.

» MORE: What is a mortgage?

Types of mortgages

There are different types of mortgages. Here is a simple breakdown of your options.

Fixed vs. adjustable rates

✅ Fixed-rate mortgage: the interest rate stays the same for the entire loan.

✅ Adjustable-rate mortgage (ARM): the interest rate stays the same for a certain period (up to 10 years), then adjusts at a specific interval (usually every six months).

15-, 20- and 30-year mortgages

✅ 30-year mortgages are the most common.

✅ 15- and 20-year loans are also available.

✅ Payments are spread over the loan term. Once fully paid, you own the home free and clear.

» MORE: Pros and cons of a 30-year fixed-rate mortgage

Government-backed mortgages

These loans are insured by the federal government:

🏠 FHA loans: Backed by the Federal Housing Administration

• 3.5% down payment required

• Lower credit score requirement than other loans 

• Mortgage insurance required 

🏠 USDA loans: Backed by the U.S. Department of Agriculture

• For rural home buyers

• No down payment required

• Upfront and annual guarantee fees apply (similar to mortgage insurance)

🏠 VA loans: Backed by the Department of Veterans Affairs

• For veterans and active military 

• No down payment required 

• One-time VA funding fee (can be added to the loan)

» MORE: Best mortgage lenders for first-time home buyers

Conventional loans

Conventional loans are mortgages that are not backed by the federal government. Some require as little as 3% down, but private mortgage insurance (PMI) is needed if the down payment is under 20%.

There are two types of conventional loans:

🏠 Conforming loans: Must stay within loan limits set by the Federal Housing Finance Agency (FHFA). They follow rules from Fannie Mae and Freddie Mac, which buy these loans.

🏠 Nonconforming loans: Do not follow these limits or guidelines.

• Jumbo loans are a type of nonconforming loan that exceed loan limits. They often require higher credit scores and stricter approval criteria.

» MORE: Conforming loan vs. nonconforming loan

What’s the credit score needed for a home loan?

The credit score needed to buy a home depends on the type of loan and the lender. Most borrowers have scores in the high 600s to 700s. FHA loans generally have the most lenient credit score requirements.

How to compare mortgage rates

1. Check current mortgage rates to see the average offers. 

2. Get online quotes from lenders based on: 

• Your location

• Loan term

• Purchase price

• Down payment

• Other factors

To get a more personalized quote, apply for preapproval. During preapproval, the lender will check your credit score and verify your financial information, such as income, assets and debts.

» MORE: How to get preapproved for a mortgage

How to shop for a mortgage lender

The best time to shop for a mortgage lender is before you start house hunting.

• Get preapproved: This shows real estate agents and sellers that you’re a serious buyer.

• Compare Loan Estimates: Request estimates from multiple lenders.

• Review key details: Look at loan terms, monthly payments, and estimated closing costs.

By comparing lenders, you can find the best deal and save money over time.

Home equity loans and lines of credit

Homeowners can access their home equity without refinancing or selling by taking out a second mortgage.

🏠 Home Equity Loan

• Provides a lump sum based on home value

• Best for home upgrades or repairs that add value

• Repaid over a fixed time period

🏠 HELOC (Home Equity Line of Credit)

• Works like a credit card with a borrowing limit

• Allows multiple withdrawals over a set period

• Payments are made over time

Important: Both options use your home as collateral. If you miss payments, you could lose your home.

» MORE: HELOC vs. home equity loans: pros and cons

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