What Flagstar Bank Offers

Flagstar Bank offers mortgage loans in all 50 states with retail home lending offices in many states. Its wide variety of loan products is likely to meet almost any borrower’s needs.

Though the variance will change based on mortgage rate fluctuations, Flagstar’s interest rates on 30-year, fixed-rate conventional loans are competitive compared to the average national rate provided by the Freddie Mac Primary Mortgage Market Survey.

You can visit Flagstar’s website to get rates on its most common mortgage types, but the best way to know what rate Flagstar can offer you is to apply. By comparing offers from some of the best mortgage lenders, you’ll be able to find a great deal on your home financing.

Loan Types

Flagstar Bank offers the following types of mortgages:

In addition to fixed-rate mortgages, Flagstar Bank offers 5/6, 7/6 and 10/6 SOFR-indexed adjustable-rate mortgages (ARMs) on some conforming and super-conforming loan products. After the initial fixed-rate period of five, seven or 10 years, the rate adjusts every six months for the rest of the loan’s 30-year term (meaning a 5/6 ARM would adjust twice a year for 25 years).

Flagstar Bank also offers several specialty and Community Reinvestment Act (CRA) loans with flexible qualifications, lower down payments (or no down payment) and down payment assistance. In addition, Flagstar accepts conventional loan applications from non-U.S. citizens with a valid taxpayer ID number and legal presence in the U.S.

Loan Minimum

There’s no minimum loan amount with Flagstar Bank for conventional and government products. This is helpful for borrowers since not all lenders offer small mortgage loans, which can make it more difficult for consumers to buy or refinance less-expensive homes.

For those who select an Advantage loan product, Flagstar requires a loan minimum of $100,000 to $150,000.

Loan Maximum

Loan maximums depend on the type of mortgage you’re applying for as well as your qualifications. Flagstar offers jumbo loans up to $3 million, jumbo cash-out refinancing up to $2.5 million and VA loans up to $4 million. These are relatively high limits, but some lenders offer even larger loans.

Loan Servicing

Flagstar Bank services nearly all of the loans it originates, unlike many other lenders. That means if your loan is from Flagstar, there’s a good chance you’ll also make your payments to Flagstar. It services loans from other originators as well. If your loan is from a different company, you might end up making payments to Flagstar.

Related: Mortgage Servicer Vs. Mortgage Lender: Key Differences

Minimum Borrower Requirements

Here are the basic criteria Flagstar Bank requires borrowers to meet.

Minimum Credit Score

The minimum credit score requirements for a Flagstar Bank mortgage are:

  • 620 for a first-time homebuyer loan (this can vary by product)
  • 620 for a conventional loan (follows agency guidelines)
  • 580 for an FHA loan
  • 580 for a VA loan
  • 680 for a jumbo loan
  • 600 for Advantage non-QM products

Minimum Down Payment

Flagstar Bank has minimal down payment requirements, with exceptions on certain loan products. It also provides flexible down payment options for doctors and certain professionals. Here are the minimum down payments Flagstar requires from its borrowers:

  • 0% for professional loans
  • 0% for VA loans
  • 3% for certain conventional loans
  • 3% for doctor loans
  • 3.5% for FHA loans
  • 10% for Advantage products
  • 10% for a jumbo loan

One borrower advantage worth noting is that while Flagstar typically requires borrowers to have a minimum credit score, it also accepts alternative credit not usually reflected in traditional credit reports on certain products designed for borrowers in designated low- to moderate-census tracts.

Some examples of alternative credit Flagstar may consider in their evaluation include rent verification, telephone services, utility bills, payment to child care providers, monthly insurance premiums, rent to own, payments on medical bills not covered by insurance, regular savings deposits and personal loan repayments.

Maximum Debt-to-Income Ratio

The maximum debt-to-income (DTI) that Flagstar Bank allows depends on the type of loan you’re applying for and other aspects of your finances. For most loans, automated underwriting software makes this decision.

Maximums usually range from 36% to 50%, regardless of which lender you select. Flagstar may approve a jumbo loan application with a DTI as high as 45% and Advantage loans as high as 55%.

What Fees Will You Pay?

Most lenders charge fees, yet some charge higher fees than others. Lenders with no origination fee often make up for it by charging borrowers other fees or a higher interest rate. Here’s what Flagstar Bank charges.

Origination Fees

Flagstar Bank doesn’t typically charge a loan origination fee except for certain state bond loan programs which require origination fees. However, Flagstar may charge mortgage processing and underwriting fees, which can range between $995 and $1,695, depending on branch location.

In addition, you may be required to pay third-party service charges such as appraisal, recording, title insurance and notary/closing fees. These fees will vary based on property location.

Most lenders also charge for appraisals and other services that are part of your closing costs on a mortgage. With any lender, you’ll be able to evaluate the fees for your specific loan on your loan estimate before you commit, and there will be certain mortgage services you can shop for to look for lower fees.

Rate Lock Fees

For no additional fee, Flagstar Bank will lock your rate for 30 to 90 days, with some restrictions. A company representative said Flagstar also offers the option to lock in your interest rate while shopping for your home (with some restrictions) and will extend rate locks whenever possible. Although, you can’t lock your rate online.

Flagstar does offer a float-down option with an adjustment to current market pricing that may entail an additional fee. This option means that if interest rates drop after you lock, you may be able to secure a lower rate.

Prepayment Penalties

Flagstar Bank does not charge prepayment penalties or monthly payment fees.

How To Apply With Flagstar Bank

You can start a mortgage application online with Flagstar Bank, but you must work directly with a loan officer to choose your loan type and pricing and complete the rest of the application.

However, you can upload your supporting documents, such as bank statements and pay stubs, to expedite the application process. Submitting this information before you shop for a home allows you to get a verified approval letter from an underwriter who has reviewed your finances. Plus, it demonstrates that you’re a serious buyer.

You can also close online via Flagstar Bank’s hybrid eClose solution. This free service saves you time on closing day, allowing you to do most of the closing in advance on your mobile device or computer by downloading and reading through your entire closing package on your own schedule.

Approval, Underwriting and Closing Timelines

Flagstar lets you start a preapproval online or via an interview with a Flagstar loan officer. However, borrowers will need to fill out an application and submit supporting documentation for review by a Flagstar underwriter.

Once you apply, the company can underwrite your loan in as little as 24 hours if you provide the required documentation when requested, but it may take longer depending on home appraisal turnaround times.

Flagstar Bank says the typical time to close a conventional loan is about 30 days. Of course, that timeframe can vary based on loan complexity, and a faster timeline may be possible if you promptly supply all the documents required for underwriting.

What To Do If You Get Turned Down

Flagstar provides a variety of mortgage options, more than many other lenders offer. Choosing a different loan product or applying for down payment assistance (if it’s available in your area) might help you get approved.

Still, it’s possible you’ll need to work on improving your credit score, eliminating debt or raising your income to qualify if your mortgage application is denied. Taking these steps can boost your approval odds and help you secure a better rate. If you’re turned down, Flagstar can also provide contact information for homeownership counseling programs. These programs can help you address any credit issues, identify down payment assistance programs and improve your financial literacy.

That said, an alternative lender may be a better option if you need to get approved for a loan sooner rather than later and you don’t qualify for Flagstar’s non-QM products. Another lender might have different requirements that allow you to get a non-QM loan, but you may have to accept a higher rate.

Another idea is to ask someone to co-sign your loan or co-borrow with you, but that might be a big ask and not so easy to accomplish. If you want to find out how much you can afford on your own, use our mortgage calculator.

While you’re deciding what to do next, consider applying with several mortgage lenders at once. You don’t need to worry about harming your credit score because multiple applications submitted within 45 days will have the same effect on your score as a single application, according to the Consumer Financial Protection Bureau (CFPB).

What People Are Saying About Flagstar Bank

Flagstar Bank’s Better Business Bureau (BBB) rating is 1.04 out of 5 stars based on 256 reviews as of April 2023. The BBB had closed 166 complaints about the company in the last 12 months, and 404 complaints in the last three years.

Flagstar Bank isn’t BBB accredited but does have an A+ rating. This rating isn’t based on customer reviews but on how the company responds to complaints, its time in business, size and other factors.

The CFPB’s Consumer Complaint Database shows 786 mortgage complaints about Flagstar Bank from April 7, 2020 through April 7, 2023.

Most complaints were about conventional mortgages or FHA mortgages and administrative issues that negatively impacted borrower credit ratings. The company provided a timely response to nearly all complaints. The CFPB does not verify the accuracy of consumers’ complaints.

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Methodology

We graded Flagstar Bank based on features that have a meaningful impact on the cost of a mortgage and a borrower’s experience, including interest rates, loan options, accessibility, closing time and customer service.

We award bonus points if a lender offers a specialty rate discount or mortgage product, a home equity product or maintains a fully online mortgage application process.

Our scoring method is broken down as follows:

  • Interest rate. 20%
  • Loan options. 20%
  • Time to close. 20%
  • Accessibility. 20%
  • Customer service experience. 20%
  • Bonus points. Up to 25 points

We chose to focus on these core elements to bring forward lenders that offer the most competitive rates while also providing a satisfactory customer experience accessible to borrowers of all financial backgrounds. We believe this scoring system best reflects consumers’ top priorities when comparison shopping for mortgage lenders.

To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.