Texas is truly a place like no other. It’s the 2nd largest state in the U.S. in terms of area and each region has its own vibe and personality. Whether you like urban living, lounging on the beach or prefer a country lifestyle, you can find a home in the Lone Star State. Here’s your guide to the best mortgage lenders in Texas so you get a home just where you want it.
The Best Mortgage Lenders in Texas:
- Rocket Mortgage: Best Overall in Texas
- Chase: Best for First Time Home Buyers
- Alterra Home Loans: Best for Poor Credit
- guaranteed Rate: Best for Online Loans
- Veterans United: Best for VA Loans in Texas
- Luxury Mortgage: Best for Self-Employed
You’ll be able to see several options when you purchase or refinance quotes. You’ll see different mortgage types and mortgage terms. A mortgage type refers to whether or not a government agency insures your mortgage. Your mortgage term is the maximum amount of time your mortgage will last. Here are some common mortgage types and terms:
- Conventional: A conventional mortgage is a mortgage that isn’t backed by the federal government. Conventional mortgages usually require higher credit scores than a government-backed mortgage. Planning to make a down payment of less than 20%? You may need to pay for mortgage insurance as well. Mortgage insurance is insurance that protects a lender if a borrower stops paying on a mortgage.
- FHA: Private lenders offer FHA mortgages. The Federal Housing Administration sets the rules for these mortgages and helps insure them. These mortgages have relatively low credit score requirements and you may be able to make a down payment as low as 3.5% if you qualify. You must pay for mortgage insurance if you get an FHA loan.
- VA: VA mortgages help current service members, veterans and certain spouses purchase homes. The Department of Veterans Affairs oversees these mortgages and backs them, but private lenders offer these loans. VA mortgages typically have no down payment requirement and no mortgage insurance requirement.
- 30-year fixed: A 30-year fixed-rate mortgage lasts for 30 years. You can speed up the process if you make extra payments. The fixed rate refers to your mortgage rate, which stays the same for the life of your mortgage. Your monthly payment stays the same, too.
- 15-year fixed: A 15-year fixed-rate mortgage lasts for 15 years. This means that your monthly payments are higher than they would be for a 30-year fixed-rate mortgage. You pay less in interest over the life of the mortgage.
- 5/1 ARM: An ARM is an adjustable-rate mortgage. As the name indicates, ARMs have an interest rate that changes. Lenders change the rate in response to economic conditions. These mortgages usually start at a fixed rate. A 5/1 ARM has a 5-year period with a fixed rate. After that, lenders can change your interest rate once per year. This means that your monthly payment may go up or down as well.
Everyone’s situation is different. The mortgage that’s right for one borrower might not be right for another. Get multiple quotes, review them carefully and go with the mortgage that’s right for you.
Which Mortgage Lender is Best for You?
As you decide on the right type of mortgage, you also need to decide on a lender. Here are a few things to consider as you evaluate potential lenders:
- Reputation: Is this a lender your family or friends have worked with? What kind of experiences have they had? What kind of reviews does the lender have? Does it have complaints with the Better Business Bureau? How were those complaints addressed? Look for a lender with a solid reputation.
- Service: How does the lender respond to your quote request? Did the lender ask questions to get to know you and what you were looking for? Do you feel valued, or do you feel like just another customer? Your mortgage is one of the most significant financial transactions you will ever make. You deserve to feel valued during every step of the process.
- Options: Does the lender offer the type of mortgage you’re interested in? If you’re a first-time home buyer, does it have options that are geared toward you? If you’re refinancing, what options does it have? Take a look at the options the lender has and see whether it will be able to meet your needs.
- Technology: Do you want to complete the application process online? Do you want to stay connected with a mobile app? Look for lenders who have the technology options that can fit your lifestyle.
Keep looking if you get a sense that a lender isn’t right for you. There are plenty of lenders out there and it’s worth it to find the perfect fit for you.
Lender Credit Score Minimums in Texas
Lenders consider how you’ve handled credit in the past when they approve you for a mortgage. Your credit history also impacts your interest rate. One measurement lenders look at is your credit score. A computer model generates your credit score. The model takes into account:
- Your debt payment history
- How long you’ve had your accounts
- Whether you’ve had accounts in collections
- The percentage of credit you’re using
- Whether you’ve filed for bankruptcy
The computer model generates a 3-digit number between 300-850. The higher your credit score, the better. Here are several Texas lender minimum credit scores:
|Lender||Minimum Credit Score Required|
|Bank of America||620|
Current Mortgage Rates in Texas
Several factors impact your mortgage rate. These include your credit history, the size of your down payment and your mortgage amount. Rates change daily and lenders adjust rates up or down to reflect changes in the economy and in the housing market. We update mortgage rates frequently to reflect the most relevant information.
|7/1 ARM (adjustable rate)||4.138%||4.2%|
|5/1 ARM (adjustable rate)||3.816%||4.09%|
Average Days to Close on a Loan
Closing signals the end of your mortgage journey. Your lender has approved you for your mortgage, and all that’s left is your final paperwork. You, your real estate agent and your lender decide on a closing date. Your closing paperwork must be ready at least 3 days before that date. Look for any changes from your original loan estimate. If anything is unexpected or confusing, contact your lender.
At your closing meeting, you’ll sign all the documents and pay your closing costs and down payment. Lenders take time to review your documents and make a decision about your mortgage. Here are the average closing times for several Texas lenders:
|Lender||Average Days to Close|
|Bank of America||45|
|Homebridge Financial Services||30|
The 6 Best Mortgage Companies in Texas
Ready to find a mortgage? You have lots of options in the Lone Star State. Here are the 6 best mortgage companies in Texas, based on our extensive research:
1. Rocket Mortgage: Best Overall
Rocket Mortgage keeps things simple. The website is easy to navigate. It outlines the mortgage process clearly and you can complete the whole process online.
It offers an extensive library of educational materials, and it has won several awards for its customer service. Rocket Mortgage offers mortgages for refinancing, conventional and proprietary mortgages and FHA, VA and USDA mortgages.
2. Chase: Best for First Time Home Buyers
Chase ranks as one of the best lenders for first time home buyers due to its many branches throughout Texas. Many first-time buyers like to work with a loan officer in person because it helps to have someone who can explain the mortgage process.
You can do an online prequalification on Chase’s website and review rates online. Chase offers FHA, VA, jumbo and conventional mortgages.
3. Alterra Home Loans: Best for Poor Credit
If you’ve experienced credit challenges in the past, you need a lender that understands. Alterra will work with borrowers who have credit scores as low as 550.
It also has portfolio products for those with nontraditional or business income. Alterra offers proprietary, conventional, FHA, VA and USDA mortgages and a mobile app so you can get on-the-go updates.
4. guaranteed Rate: Best for Online
guaranteed Rate offers a straightforward online mortgage experience. You can complete the whole process without speaking to a single person if that’s your preference.
guaranteed Rate boasts high customer ratings. Its rates are posted online so you can compare it with other Texas lenders. guaranteed Rate offers extensive educational resources and conventional mortgages, jumbo loans, FHA loans and VA loans.
5. Veterans United: Best for Service Members
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
6. Luxury Mortgage: Best for Self-Employed
Luxury Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
Buying Your Texas Home
Are you worried about coming up with a down payment? Consider one of Texas’ home buyer programs. The Home for Texas Heroes loan program offers low interest rates and down payment assistance for teachers, firefighters, police officers and veterans. The Home Sweet Texas Home program offers assistance to home buyers with low or moderate incomes.
The Texas Department of Housing and Community Affairs offers a first-time home buyer program. These are just a few of the programs Texas offers to help you buy a home. Look for both state and local programs to help you purchase or refinance your home.
Frequently Asked Questions
1) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
2) Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first-time buyers. Check out the lenders that specialize in making the home buying experience a breeze.