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Better Mortgage is an entirely online lender that has funded nearly $31 billion in home loans since it was established in 2016. Based in New York City, Better.com offers mortgages across 46 states and Washington, D.C.
Better Mortgage was recently named one of the best online mortgage lenders by NextAdvisor because it offers unique borrower incentives and a streamlined online platform where borrowers can get a mortgage pre-approval letter within minutes. A few disadvantages are that this lender isn’t available in every state and lacks some major mortgage options. Here’s what to know before applying with Better Mortgage.
Pros and Cons of Better Mortgage
No origination fees
Quick mortgage pre-qualification letter
Borrowers receive $100 if Better can’t match or beat another lender’s loan estimate
Offers incentives up to $2,000 if applicants use a Better Real Estate agent and mortgage lender
Customers receive $2,000 if Better doesn’t close their purchase loan on time
Not available in Hawaii, Massachusetts, Nevada, and New Hampshire
Does not offer VA loans, USDA loans, second mortgages, and other niche products
No in-person branches
Better Mortgage: Loan Types and Products
Better Mortgage has several loan options suitable for homebuyers looking to make a purchase or homeowners looking to refinance an existing mortgage. Here are the specific types of loans on the menu with Better Mortgage right now:
- Conventional loans
- Federal Housing Administration (FHA) loans
- Jumbo loans
- Refinance loans
- Fixed-rate loans
- Adjustable-rate loans
Borrowers will have to look elsewhere if they’re seeking more niche products such as construction loans, renovation loans, home equity lines of credit, and mortgages backed by the U.S. Department of Agriculture (USDA loans) or the Department of Veterans Affairs (VA loans). Better also doesn’t provide mortgages for manufactured homes, multi-family homes with five or more units, co-ops, and mixed-use properties.
But if you are able to find a home loan that fits your needs, you may qualify for one of the lender’s customer incentives. Borrowers are eligible for lender credits worth up to $2,000 if they use a Better Real Estate agent and mortgage lender. According to its Price Guarantee, Better will also match any valid competitor’s offer and credit you an extra $100 if you find a better deal. Plus, in a relatively new development, Better now guarantees that purchase loans will be closed on time — and if they don’t close on time, Better will pay the customer $2,000. These incentives might be appealing if you’re considering your options.
Borrowers also have a choice between fixed-rate and adjustable-rate mortgage (ARM) loans on conventional and jumbo mortgages. When you take out an ARM with Better Mortgage, the rate is fixed for the first five, seven, or 10 years. After the fixed period ends, the rate may go up or down every six months or one year, depending on the terms of the loan.
Qualified homebuyers who are looking to borrow a large amount of money can take out a loan of up to $4 million, which is a higher maximum loan limit than some of the lender’s competitors.
Better Mortgage Transparency
Better Mortgage’s website is easy to navigate and offers an entirely online experience, from finding an agent and securing a mortgage to shopping for insurance. Prospective borrowers can apply for and receive a customized rate quote and pre-approval letter within minutes as well. If borrowers have questions or need assistance, loan officers are available via phone call, although Better doesn’t maintain in-person branches as some of its competitors do, so talking face-to-face is not an option.
The website also includes a blog with homebuying topics, a FAQs page, and calculators to help borrowers figure out how much home they can afford. It lacks in-depth information on the minimum credit score and debt-to-income ratio requirements for its loans, likely because requirements vary widely according to the borrower, location, and current marketplace.
Better Mortgage: Rates and Fees
Better Mortgage advertises refinance and purchase rates for 15-, 20-, and 30-year loans. These rates can change every day and may include discount points, which is an optional fee you can pay to lower your rate. Unlike other lenders, Better Mortgage does not charge an origination fee.
To qualify for a mortgage, you’ll need a credit score of at least 620 for conforming loans (including conventional mortgages and FHA loans) and 700 for jumbo loans. However, a higher score may help you get even more favorable mortgage rates.
You can lock in your interest rate online at any time, for a fee, and extend the rate lock for an additional cost. Borrowers won’t pay origination fees, application fees, processing fees, underwriting fees, or prepayment penalties. But they will likely pay out of pocket for:
- Appraisal fee
- Title search and title insurance
- Recording fees
- Escrow deposit
- Prepaid interest
- Optional mortgage points
Refinancing With Better Mortgage
Homeowners with existing mortgages who are looking to refinance can swap out their home loans to better fit their financial needs.
One refinancing option offered by Better Mortgage is a cash-out refinance. This type of refinance allows you to take out a mortgage for more than you owe, pay down your current mortgage, and keep the extra cash. You then repay the new, larger loan over time and can use the money for any type of expense.
But if you’re just looking to save money or accelerate your payoff timeline, a rate-and-term refinance can help you achieve that goal. You would work with your Better Mortgage lender to change your interest rate, your loan term, or both.
Better has several rate-and-term options, including Fannie Mae’s RefiNow and Freddie Mac’s RefiPossible. These programs are designed to help low-income homeowners across the U.S. refinance their mortgages. Eligible homeowners could save an estimated $100 to $250 per month, according to the Federal Housing Finance Agency.
Better Mortgage Compared to Other Mortgage Lenders
|Better Mortgage||Fairway Independent Mortgage Corp.||Guild Mortgage|
|Minimum credit score||620 for conforming loans, 700 for jumbo loans||620 for conventional loans, 660 for jumbo loans, 600 for FHA loans, 600 for VA loans||620 for conventional loans, 600 for FHA, VA, and USDA loans, 680 for jumbo loans|
|Minimum down payment||3%||0% to 5%||0% to 3.5% on most loans and 15% on jumbo loans|
|Where does the lender operate?||46 states and Washington, D.C.||All 50 states and Washington, D.C.||48 states and Washington, D.C.|
|Major loan types||Conventional, jumbo, FHA, adjustable-rate, fixed-rate, refinance, cash-out refinance||Conventional, jumbo, VA, FHA, USDA, various renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, reverse mortgages, home equity loans, home equity lines of credit||Conventional, jumbo, VA, FHA, USDA, various renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, energy-efficient mortgages, manufactured-home loans, bridge loans, reverse mortgages|
How to Shop Around to Get the Best Mortgage Rate
Mortgage rates are always in flux. They can change every day and even by the hour, and they vary with each lender. So when you’re looking for the best deal, it’s important to shop around and see what everyone is offering.
You can use an online mortgage calculator to estimate your mortgage payment when you factor in the principal and interest, property taxes, homeowners insurance, private mortgage insurance, and homeowners association fees. This can also help you calculate how a small difference in rate quotes may save you hundreds or thousands of dollars over the life of the loan.
Start by comparing mortgage lenders, submitting mortgage applications, and asking for a Loan Estimate with at least five lenders. According to a Freddie Mac survey, borrowers save an average of $3,000 over the life of the loan when they gather at least five quotes. You might save even more by negotiating, too. You can send the best offer to another lender, and ask them to beat the interest rate or lower the closing costs — or both. They may be willing to compete for your business, especially if you have good credit.
Better Mortgage might be a good option for you if you’re looking for a standard mortgage and qualify for some of the lender’s money-saving incentives. If you choose Better as your lender, you will be able to get a prequalification letter online in minutes, which can help you kick-start the home-shopping process. But as with any financial product, it’s always a smart idea to compare offers to make sure you’re getting the best deal.