MoneyGeek’s Take

Flagstar Bank Mortgage Review

Flagstar Bank, founded in 1987 as a federal savings bank, provides personal mortgage loans, business lending opportunities and mortgage refinancing solutions. This subsidiary of Flagstar Bancorp is the country's sixth-largest mortgage originator, with $23.2 billion in assets. It offers conventional, FHA, VA and jumbo loans at fixed and adjustable rates.

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Last Updated: 10/24/2022
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Borrowers can consider several mortgage products from Flagstar Bank. For conventional purchases, VA, FHA and USDA loans, a credit score of 620 is required. The mortgage amount compared to the home’s real value determines a borrower's minimum down payment. If you're considering a loan from Flagstar, MoneyGeek's Flagstar mortgage review can help you make an informed decision.

At a Glance: Flagstar Bank Mortgages


  • Flagstar Bank

    • Varies based on the type of mortgageMinimum Down Payment
    • Conventional, jumbo, FHA, VA, USDA, state housing finance agency loans, specialty loans, construction and renovation loans, home equity loans and refinanceLoan Products Offered
    • Offices in Michigan, Indiana, California, Wisconsin and Ohio; originates loans in all 50 states.States of Operation
    • Yes Online Application

    on Flagstar Bank Website

Flagstar Bank Mortgage Loan Types, Details and Requirements

MoneyGeek's Flagstar Mortgage loan review can help you understand the company's mortgage products, eligibility requirements, application process and rates.

Mortgage Types Offered

Flagstar Bank offers the following loan products:

  • Conventional loans
  • Jumbo loans
  • FHA loans
  • VA loans
  • USDA loans
  • State housing finance agency loans
  • Specialty loans
  • Construction and renovation loans

Flagstar also offers refinancing solutions, including cash-out refinancing and home equity loans. Its Community Lending and Home Loan Programs offer loans to people with low-to-moderate income at low down payments and flexible standards.

Mortgage Rates

Flagstar Bank's loans are available with either fixed or variable interest rates. The rates, however, vary by loan type, location, loan term, credit score and other factors. Flagstar does not guarantee the mortgage interest rates, which are tied to market changes.

When applying for a mortgage, you must decide between a fixed and adjustable interest rate. You can call (866) 488-0399 and speak to one of their loan specialists to learn more about interest rates.

Additional Fees

MoneyGeek's research indicates that Flagstar Bank applies the following costs, which may include a lender fee or an origination fee. Their website offers additional information on the matter.

  • Closing Costs: Closing costs are generally 2% to 5% of the home's purchase price and may include the following charges:
    • Appraisal
    • Title insurance
    • Closing transaction fee
    • Loan origination fee
    • Discount points
    • Recording fee
    • Underwriting fee
    • Processing fee
  • Prepaids: Prepayment of homeownership expenditures is another significant aspect of closing a mortgage loan. Homeowners insurance premium, association dues (if applicable), property taxes and pro-rated interest are included.

Minimum Borrowing Requirements

For the majority of mortgage products, Flagstar Bank requires a credit score of at least 620. Credit requirements for jumbo loans are typically significantly higher. However, individuals without social security numbers may only need a credit score of 580 to apply. For its Community Comeback Program, designed for homes in Pontiac, Michigan, the minimum credit score requirement is set to 660. However, the lender may have different credit requirements for each mortgage product it offers. You should contact them for further details.

Your home loan criteria may vary based on your chosen type of mortgage. The lender does not indicate its required down payment for each type of mortgage — minimum down payments are determined by the mortgage amount and the home's actual worth.

Flagstar Bank will prequalify your application for conditional approval. This is a creditworthiness assessment based on your income, debts, assets and credit history. To qualify for a mortgage, you must have a good credit score and a debt-to-income ratio that passes the lender's standards.

Flagstar Bank Mortgage Application Requirements

For a seamless and hassle-free application processing, Flagstar Bank mortgage loan applicants should provide the following documents:

1

Personal particulars of the borrower, like name, date of birth, contact information and social security number

2

Details of the property

3

W-2s for all employment in the last two years

4

1099 forms (for the self-employed)

5

Pay stubs for the last three months

6

Bank statements for the last two months

7

The last two years of tax returns

8

Statements for other sources of income, such as dividends, stock earnings, bonuses, pensions

9

Social Security or disability income

10

Securities documents, such as stocks, bonds, and life insurance policies

11

Proof of homeowners insurance

Is Flagstar Bank Right for You?

Purchasing a house is a significant financial commitment. With many available lenders, you must consider your alternatives carefully before selecting a mortgage provider. Our analysis considers the various prospective homeowners who may or may not be a good fit for the mortgage Flagstar Bank offers.

Who Flagstar Bank Is Perfect for

Flagstar Bank has mortgage options for many different types of borrowers. For example, individuals with 7-10 financed properties can pursue Flagstar Bank’s multiple property loan for assistance.

Borrowers with no social security number can consider conventional loans, which are available at fixed rates. They only need a credit score of 580 for eligibility. Prospective borrowers with low-to-moderate income should consider Flagstar's Community Lending and Home Loan Programs, which feature better rates and reduced monthly payments. They may also receive down payment assistance or a $500 lender credit for home appraisal.

Flagstar Bank also offers loans for construction and renovation. Individuals seeking loans who plan to build or improve their homes can seek this funding to help realize their vision.

Who Should Not Choose Flagstar Bank

Even though Flagstar Bank maintains physical offices, most of the application procedure occurs online. The lender is not suitable for homebuyers who may first prefer physical sites. Prospective borrowers with credit scores below 600 also do not qualify for the lender's mortgages.

How to Apply for a Flagstar Bank Mortgage Loan

Each mortgage lender has its own unique application process. This section details how to apply for a mortgage loan from Flagstar Bank.

1

Prequalify

Flagstar Bank's prequalification determines your ability to repay the loan. This process evaluates your income, assets, debts and previous credit use. You must provide identification information, including your Social Security number, employment verification documents (a month's worth of pay stubs, W-2s, or 1099 forms from the last two years) and bank statements from the previous two months.

2

Choosing a Mortgage and Down Payment

Once you are prequalified, a Flagstar loan officer will work with you to decide your ideal type of mortgage, interest rate and down payment. The amount you need to borrow in relation to the real value of the home determines the typical minimum down payment for a mortgage.

3

Submitting the Mortgage Application

It is possible to begin the application procedure online, over the phone, via mail and even in person. You must provide the lender with verification of your tax returns, investment accounts, social security or disability income and homeowners insurance. Borrowers may be asked to give additional information depending on their situation. You will also be asked to lock in the mortgage rates.

4

Home Inspection

You may be asked to conduct a home inspection by a professional to ensure your new home is problem free. It details the home’s structural condition and the condition of the major systems like electrical and plumbing.

5

Conditional Approval

Following the home inspection, your home’s underwriting may begin. In some cases, it will occur after you find the property. Before receiving final approval, the lender issues a conditional approval outlining certain conditions the borrower must satisfy.

6

Final Approval

At this point in the mortgage approval process, Flagstar sends your loan file to underwriters to obtain approval to close. After an underwriter evaluates and accepts all paperwork and information, you can close the mortgage. You may also need title insurance and homeowners insurance in order to get approved.

7

Loan Closing

The lender's loan officer will coordinate a closing date and time that works for you. The closing is at the title firm, attorney's office or escrow office. The total amount of closing costs you need to pay will be disclosed at least three days before the given date in a Closing Disclosure. You must bring a valid identification card and make the necessary payments before closing. After signing all the relevant paperwork, your loan will be closed.

8

Make Payments

The final phase is making payments. You can log in to your Flagstar mortgage account to make a payment online. You have the option of making manual monthly payments or setting up automatic payments through your checking account.

What to Do if You Are Rejected by Flagstar Bank

Flagstar can reject your mortgage application at any time, even if you have been prequalified or conditionally approved. Understanding what went wrong, as discouraging as it may be, can help you prepare for your next mortgage application. If your application was declined due to insufficient documents, a loan counselor from Flagstar may reach out to you.

In addition, Flagstar may make this decision for other reasons. Your credit history may be unsatisfactory or your debt-to-income ratio is above the acceptable limit. It's recommended to get in touch with the lender and request the reason for denial.

You can also look for a lender with less strict terms than Flagstar. However, if you do not know why you were rejected the first time, your second application may also be denied. Find out why you were first rejected and take the necessary actions to increase your chances of acceptance in the future.

Frequently Asked Questions About Mortgages From Flagstar Bank

In the following section, MoneyGeek offers information that can help you make an informed choice about a mortgage loan from Flagstar Bank. The most commonly asked questions about Flagstar Bank's mortgage products are provided below.

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