With Better, prospective homebuyers can qualify for a conventional loan with as low as a 3% down payment and a credit score of 620 or higher. MoneyGeek’s Better mortgage review breaks down what you need to know about this lender to determine if it’s the best option to finance your home.
MoneyGeek’s Take
Better Mortgage Review
Updated: November 6, 2024
Advertising & Editorial Disclosure
At a Glance: Better Mortgages
- Better
- Conventional loan: 3–5% Jumbo loan: 10.01% FHA loan: 3.5%; 25% if there is a co-applicant not residing in the property Minimum Down Payment
- Conventional, jumbo, FHA, refinancing, fixed rate and adjustable rateLoan Products Offered
- 49 states (excluding Nevada) and Washington, D.C.States of Operation
- Yes Online Application
Launched in 2016, Better aims to redefine the homeownership process from the ground up, making it faster, simpler and friendlier for homebuyers. To date, the company has done over $46.9 billion in home loans and helped thousands of people with their home buying journey.
Better has several borrower options, including conventional, jumbo and FHA loans, plus loan refinancing, as well as fixed rate and adjustable rate mortgages. These products are available in 49 states and Washington, D.C. If you’re in Nevada, you need to look for a different lender.
Depending on the mortgage loan, your down payment can be as low as 3%. Better doesn’t charge any application, origination or underwriting fees. To qualify for a conventional or FHA loan, you need a minimum credit score of 620. On the other hand, you need at least 700 if you’re applying for a jumbo loan.
With Better, you can lock in your interest rate anytime during the loan process. That way, you can complete your application with peace of mind, knowing that it won't change by the time you close on your home.
Better also features a Price Guarantee, where it offers to match any valid competitor offer and credit you an extra $100. If it can’t beat the pricing, the $100 is yours to keep. In addition, the lender has a Cash Offer program. With this, Better Real Estate buys the home on your behalf so you can move in right away while finalizing your mortgage.
Pros
- No origination fee
- No application or underwriting fee
- Pre-approval in minutes
- Instant loan estimates
- “Better Price Guarantee” offers to beat any valid competitor offer
Cons
- No VA or USDA loans
- No home equity lines of credit (HELOCs) or second mortgages
- Not available in all states
Launched in 2016, Better aims to redefine the homeownership process from the ground up, making it faster, simpler and friendlier for homebuyers. To date, the company has done over $46.9 billion in home loans and helped thousands of people with their home buying journey.
Better has several borrower options, including conventional, jumbo and FHA loans, plus loan refinancing, as well as fixed rate and adjustable rate mortgages. These products are available in 49 states and Washington, D.C. If you’re in Nevada, you need to look for a different lender.
Depending on the mortgage loan, your down payment can be as low as 3%. Better doesn’t charge any application, origination or underwriting fees. To qualify for a conventional or FHA loan, you need a minimum credit score of 620. On the other hand, you need at least 700 if you’re applying for a jumbo loan.
With Better, you can lock in your interest rate anytime during the loan process. That way, you can complete your application with peace of mind, knowing that it won't change by the time you close on your home.
Better also features a Price Guarantee, where it offers to match any valid competitor offer and credit you an extra $100. If it can’t beat the pricing, the $100 is yours to keep. In addition, the lender has a Cash Offer program. With this, Better Real Estate buys the home on your behalf so you can move in right away while finalizing your mortgage.
Better Mortgage Loan Types, Details and Requirements
MoneyGeek’s Better mortgage review details its mortgage products, rates, application requirements and additional fees you might incur.
Mortgage Types Offered
Better offers the following mortgages:
- Conventional loans
- Jumbo loans
- Federal Housing Administration (FHA) loans
- Refinance loans
- Fixed-rate mortgages
- Adjustable rate mortgages
Currently, it doesn’t offer VA or USDA loans.
Mortgage Rates
Better displays mortgage rates on its website, updating them several times a day. However, your actual rate may differ depending on market conditions, your credit history and property characteristics. You can use Better’s online rate tool to get a personalized quote.
Additional Fees
Better doesn’t charge lender fees, which means no application, origination, processing or underwriting fees. But you are responsible for third-party fees at closing. These may include the following:
- Appraisal fee. Before you can obtain a mortgage, Better requires a third-party appraiser to appraise the house you’re looking to purchase or refinance to make sure you’re not borrowing more than its fair market value. The appraisal fee typically costs $550, but it’s refundable if you withdraw before the appraisal inspection occurs.
- Rate lock extension fee. With Better, you can lock your interest rate for up to 30 days during the loan process. If your loan doesn’t close within this period, you may extend your rate lock at an additional cost.
- Credit report fee. When you apply for a pre-approval from Better, it conducts a soft credit pull to check your credit. Once you apply for a mortgage, it obtains a hard credit check that can affect your credit score. Usually, you have to pay a fee for this service.
- Title fee. This fee refers to the costs associated with issuing title insurance policies for you, the seller and your lender. You can expect your closing costs to include this fee.
Minimum Borrowing Requirements
Better’s minimum borrower requirements vary depending on the loan. To qualify for a conventional loan, you need a minimum credit score of 620 and a 3–5% down payment. The same credit score applies to an FHA loan, but your minimum down payment must be 3.5%. If you have a co-applicant or co-borrower not residing in the property, the minimum down payment is 25%.
For a jumbo loan, you need a credit score of at least 700 and a DTI no higher than 43%. You also require a minimum down payment of 10.01%.
When it comes to refinancing loans, you need a credit score of at least 620 for a conventional loan refinance and 700 for a jumbo loan refinance. You need a DTI of at least 50% for a conforming loan refinance and 43% for a jumbo loan refinance.
Better Mortgage Application Requirements
If you want to apply for a Better mortgage loan, you need to provide the following:
- 1
Social Security number
- 2
Most recent pay stub
- 3
W2 statement for the past year
- 4
Most recent personal tax return
- 5
Credit report
- 6
Two months of bank statements
Some borrowers may require additional documents. These include:
- 1
1099s
- 2
K-1 statements
- 3
Business tax returns
- 4
Year-to-date profit and loss statements
- 5
Divorce settlement
- 6
Documents on bankruptcies, foreclosures, and short sales
- 7
Documents for property-related expenses
Is Better Right for You?
Finding the right mortgage lender is important to the homebuying process. MoneyGeek’s Better mortgage review can help you determine if this lender is best suited for your particular needs and situation.
Who Better Is Perfect For
Better may be the best option for homebuyers looking to save on fees. The company doesn’t charge lender fees, so you won’t have to worry about application, origination, processing or underwriting fees. It’s also great for those who prefer a low-cost down payment since Better offers down payments as low as 3% to 5%.
Furthermore, Better is ideal for individuals who don’t like visiting brick-and-mortar offices. Since it’s an online-only lender, pre-approvals and applications occur through its website. With its automated technology, you can get your pre-approval letter within minutes.
Who Should Not Choose Better
For those looking for VA or USDA loans, you must find a different lender since Better currently doesn’t offer them. It also doesn’t give home equity lines of credit (HELOCs) or second mortgages.
To qualify for a Better loan, you need a minimum credit score of 620 for conventional and FHA loans and 700 for jumbo loans. A score lower than either of those means this lender is not ideal for you.
Moreover, Better’s loan products are only available in 49 states and Washington, D.C. If you live in Nevada, you need to look for another lender.
How to Apply for a Better Mortgage Loan
Every lender has a different application process. Below, MoneyGeek outlines the necessary steps you take when applying for a loan from Better.
- 1
Prequalify
Better allows you to check if you qualify for a pre-approval. You can do so by completing a form on its website. Once submitted, you receive a pre-approval letter in as little as three minutes.
- 2
Fill Out Application Form
When you find a property and make an offer, you can proceed with the application and upload your financial documents. You also need to provide a home insurance quote.
- 3
Wait for Approval
You’ll be assigned a processing expert for follow-ups and property-related tasks. During this time, you can also log in at any time to see what information is still needed from you.
- 4
Pay for Homeowners Insurance
Once you submit everything, Better’s underwriting team reviews your application. Before finalizing the underwriting process, it requires you to pay for homeowners insurance.
- 5
Schedule a Loan Closing
After finalizing your loan, Better sends over the closing disclosures for you to review. These typically include the loan terms, projected monthly payment, fees and other closing costs. During this time, you can work with Better to schedule the closing and get all the necessary documents signed.
- 6
Make Payments
After your loan closes, you receive an email from Better with your new loan number, along with instructions on how to set up your account and where to direct your first payment.
What to Do if You Are Rejected by Better
Getting your home loan denied can be disheartening, but it doesn’t mean your home buying journey is over. There are many reasons why Better could reject your application, including having a low credit score or not enough of a down payment.
Usually, Better sends you a letter explaining why it couldn’t approve your loan, detailing the specific reasons that led to this decision. If you’re unsatisfied with the letter, you have the right to request more explanation from Better if you ask within 60 days.
You can explore other options, like adding a co-borrower to your home loan. You can also choose to apply with a different lender. However, it’s best to improve the factors that caused your loan application to get denied before applying again. That way, you can prevent another rejection.
Frequently Asked Questions About Mortgages From Better
As part of MoneyGeek’s Better mortgage review, we answered some frequently asked questions to help you determine if this lender is the right option for you.
What types of properties are eligible for Better mortgage loans?
Better provides financing for single-family homes, multi-family homes (up to four units), townhouses, condominiums, planned unit developments (PUD) and manufactured homes.
Who can apply for a Better mortgage?
Prospective homebuyers must have a minimum credit score of 620 for conventional and FHA loans and 700 for jumbo loans.
What types of mortgage loans does Better offer?
Better offers conventional, jumbo, FHA and refinancing loans. It has fixed rate and adjustable rate mortgages.
Is there a borrowing limit for Better mortgages?
Better’s limit for conventional loans is $647,200 for a single-family home. In high-cost areas, the limit can be as high as $970,800. For jumbo loans, the limit is $3 million.
What is the minimum down payment Better will accept?
For conventional loans, the minimum down payment can be as low as 3% to 5%. Meanwhile, for FHA loans and jumbo loans, the minimum down payment is 3.5% and 10.01%, respectively.
Does Better require private mortgage insurance (PMI)?
Yes, you need private mortgage insurance if the down payment on your home is less than 20% of the purchase price.
Does Better require a property appraisal?
Yes, Better requires an appraisal to determine the value of your home.
About Christopher Boston
Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.
Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.
sources
- Better. "The right mortgage could save you thousands." Accessed November 6, 2024.
- Better. "Mortgages that don’t feel so complicated." Accessed November 6, 2024.
- Better. "Our mission." Accessed November 6, 2024.
- Better. "We’re here to help." Accessed November 6, 2024.