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Flagstar Bank mortgage review 2024

Updated 6 min read

The Yahoo view: Flagstar Bank is a standout FHA lender with a full roster of FHA purchase and refinance mortgage products. In addition, Flagstar offers several assistance programs and other appealing loan options for first-time home buyers.

Flagstar Bank is a solid choice when it comes to mortgage lending. It has a large shelf of loan products, a years-long track record of FHA lending, and a helpful and information-packed website. Those are some of the reasons Flagstar is on our list of the best lenders for first-time homebuyers.

One of the best features we found is an interest rate tool that provides a realistic estimate of a mortgage rate without hiding mortgage discount points in a pile of small print.

Flagstar star rating

Dig deeper: Best types of home loans for first-time home buyers

Key benefits

  • A helpful mortgage rate tool lets you enter your credit score and the number of discount points you want to include in the interest rate estimate.

  • Borrowers without Social Security numbers will appreciate Flagstar's fixed-rate home loan program, which allows them to qualify for a mortgage with an Individual Tax Identification Number (ITIN).

  • Flagstar assistance programs offer eligible first-time buyers in specific areas grants of up to $7,500, $10,000, or even $15,000 for down payment and closing costs assistance. Some limitations apply.

  • There are several helpful calculators help you run the numbers on various homebuying, refinancing, and payoff scenarios.

Need to know

  • Bank branches are available only in nine states; Flagstar offers purchase and refinance loans in all 50 states, though.

  • Flagstar offers multiple types of mortgage loans, but FHA loans are where it shines. It's important to note, though, that conventional loans can actually be more affordable if you have a decent down payment and fair credit.

Learn more: What are physician mortgage loans, and who qualifies?

Flagstar Bank offers the following types of home loans:

  • Purchase loans

  • Conventional loans

  • Jumbo loans

  • FHA loans

  • VA loans

  • USDA loans

  • Fixed-rate mortgages

  • Adjustable-rate mortgages

  • Construction loans

  • Refinance loans

  • Cash-out refinancing

  • Investment property loans

  • Second home loans

  • Home renovation loans

  • ITIN mortgages

  • Medical professional loans

  • HELOCs

  • Home equity loans

Flagstar Bank does not offer the following types of home loans:

  • Interest-only loans

  • Land loans

  • Guest house loans

  • Non-QM loans

  • Energy-efficient loans

  • 1% down mortgages

  • Buydown loans

  • Bridge loans

  • Manufactured home loans

  • Piggyback loans

Dig deeper: How do investment property loans work?

Flagstar Bank is a major FHA mortgage lender, offering purchase loans and the FHA 203(k) mortgage that lets you buy a home and cover renovation costs at the same time.

First-time home buyers with limited savings and lower credit scores often find FHA loans a welcome boost to homeownership.

FHA loans with fixed or adjustable interest rates are available with terms of up to 30 years. They allow down payments as low as 3.5% and have no income limit. The Flagstar website says borrowers can "qualify with little to no formal credit history," but proof of steady employment is required.

Flagstar Bank welcomes first-time home buyers with a "Home Loan Basics" section on its website. It explains the mortgage process and includes some fresh material such as "3 mistakes first-time homebuyers make" and "How to pick the perfect neighborhood."

A section also explains four common types of loans: fixed-rate mortgages, adjustable-rate mortgages, government loans, and down payment assistance programs.

As noted above, Flagstar offers generous grants and gifts to eligible first-timers who lack sufficient savings for down payments and closing costs.

Dig deeper: FHA vs. conventional loan — Which should you choose?

Banks have deposits that allow home equity lending, and Flagstar is no exception. Its draw-cash-as-you-need-it home equity line of credit (HELOC) has a variable interest rate and is available for $10,000 to $1 million.

The lump sum option, a home equity loan, is available in the same amounts but with a fixed interest rate.

Flagstar also has cash-out refinancing for those looking for a lower mortgage rate while tapping their home's equity.

Dig deeper: The differences between HELOCs and home equity loans

If you want a sense of what Flagstar will charge on a particular home loan, you must complete a short form detailing the purchase price, down payment, and the property's ZIP code. It's easy enough, and no personal information is requested.

You'll get a quick result showing a conventional loan rate, as well as a VA-backed mortgage and an FHA loan rate.

Flagstar also gives you an even better sense of the interest rate you'll qualify for when you click “Advanced Search” on the mortgage rates page.

Here, you enter the type of home (single-family, condo, or multifamily), the use (primary residence, second/vacation home, or investment), your credit score range, and how many discount points you prefer to include.

The result will be an even more detailed interest rate.

We wish more lenders would provide such a helpful mortgage rate tool.

Read more: How to get the lowest mortgage rates

On practically every page you visit, you'll see three call-to-action buttons:

  • Apply now: You can jump into a loan application.

  • Call us: Speak with a loan adviser.

  • Connect with us: Get in front of a loan adviser at a branch or remotely.

The loan application workflow starts with a contact form to connect you with a loan adviser. You can also complete a full application after providing that info.

Learn more: Best mortgage lenders for first-time buyers

A stable of 10 calculators provides answers to a wide range of home-buying questions:

There really doesn't seem to be anything missing, does there? The calculators are easy to use, mobile-device friendly, and results are displayed in simple charts and tables.

An extensive FAQ page answers over 35 common questions and includes a home loan glossary.

If that's not enough, a chat function will linger on the screen for anything else you may need to know. However, the chat function wasn't available when we tried it one weekday mid-morning.

Read more: Best VA loan lenders

Flagstar Bank helps borrowers without the savings for large down payments by offering FHA loans with 3.5% down. That can make the difference between being able to buy a home — or just keep on renting.

Rocket Mortgage offers the same 3.5% down FHA loans but also has a conventional loan for eligible borrowers that allows a 1% down payment. Rocket provides a 2% grant, so you still enter the loan with 3% equity.

Flagstar Bank offers down payment and closing costs assistance programs of up to $15,000 for eligible first-time buyers in specific areas.

Guild Mortgage gives income-qualified first-time home buyers a $2,000 gift card to The Home Depot, and $500 to $1,500 to apply to closing costs on a 3% down payment loan. However, Guild also has a 1% down program.

There is a lot to consider when choosing the best mortgage lender. But when they compete for your business, you win.