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Flagstar Bank home equity review

Get a loan or line of credit with no closing costs from this regional bank.

Flagstar Bank offers a pretty standard set of home equity products with discount options and no closing costs, as long as you keep the account open for three years. But you have to live near a physical bank branch to apply for the home equity loan and home equity line of credit (HELOC), and the home equity loan isn’t available in California.

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Details

Loan products offeredHome equity loan, HELOC
Minimum credit scoreHELOC: 720
APR rangeHELOC: 4.74% - 21%;
Loan: 7.79% (no maximum limit given)
Repayment termsHELOC: 10-year draw, 20-year repayment;
Loan: 10, 15 or 20 years
Loan limits$10,000 - $1 million
State availabilityOnly available in: CA, IN, MI, OH, WI

Our take on Flagstar Bank

Flagstar offers most of its services and products nationwide, and if you have an account with the bank and sign up for autopay, you can get a decent discount on your interest rate.

But the home equity loan isn’t available in California, and its home equity products are only available through the bank’s physical branches. So if you live outside the five states where Flagstar has locations or too far away from a local branch, you’ll need to shop around for another lender.

Special discounts and standout benefits

Get a .50% interest rate discount on your HELOC or a .25% discount on your home equity loan, if you elect to pay on your balance using automatic payments from your Flagstar deposit account.

What kind of home equity products does Flagstar Bank offer?

Flagstar offers two options to let you access your home’s equity:

  • Home equity loans. This option offers a lump sum amount with a fixed interest rate and allows you to choose between 10-, 15- and 20-year repayment terms.
  • Home equity line of credit (HELOC). This variable-rate credit line allows you to draw money out as you need it for ten years, then repay the amount over twenty years.

Pros and cons of Flagstar Bank

Pros

  • No closing costs. This bank doesn’t charge closing costs or application fees.
  • Auto-pay discount. Save 0.25% on your loan’s interest rate and 0.50% on your HELOC interest rate if you sign up for automatic payments from your Flagstar deposit account when you apply.
  • No prepayment penalty. You won’t be charged a prepayment penalty on this lender’s home equity loan.

Cons

  • Limited availability. Mortgages are available nationwide, but home equity products are only available through Flagstar retail branches, which are only located in select states.
  • No online applications. If you want to apply for a home equity product, you have to do it through a loan officer either in person at a bank branch or over the phone.
  • High maximum APR on HELOC. At 21%, the cap on your HELOC’s variable rate is a lot higher than many other lenders.

Flagstar Bank requirements aren’t listed on the website

No requirements are listed on Flagstar’s website, but bank decisions are typically made based on the following criteria:

  • Credit score
  • Loan-to-value ratio
  • Debt-to-income ratio
  • The size of your loan or line of credit
  • The amount of time you need to pay it back

Fees are lower than many of its competitors

Flagstar doesn’t charge application fees or bank closing costs as long as the credit line or loan account is open for at least three years. If you close your accounts before that, you are required to pay back all closing costs and fees that Flagstar paid for you. You are also responsible for any government-imposed taxes and fees.

If you choose to pay points on your loan, you are responsible for prepaid interest as well as any state or other government taxes and fees. And the bank charges a $75 annual fee on your HELOC after the first year.

Flagstar Bank reviews and complaints

BBB rating A+
Trustpilot rating Poor
Customer reviews verified as of 11 May 2022

Flagstar Bank isn’t accredited by the Better Business Bureau (BBB), but as of May 2022, it has an A+ rating for answering 302 complaints in the last three years. The bank also has 221 customer reviews, averaging 1.04 out of 5 stars. The bank only has 13 reviews on Trustpilot, where it has a 1.9-star TrustScore.

Customers complain of loan servicing issues after their loans were transferred to Flagstar from other loan originators, while positive reviews appreciate the long customer service hours.

How to get a home equity loan with Flagstar Bank

Flagstar doesn’t offer online applications. Either go to your local bank branch or fill out the online form with your contact information to get a call from a Flagstar loan officer. If you live in California, Flagstar will refer you to another bank that offers home equity loans.

Documentation

Flagstar doesn’t provide a list of required documents online, but typically you’ll need to have the following ready before you apply:

  • Recent pay stubs
  • Statements for bank, retirement and investment accounts
  • Tax returns and W-2 forms
  • Homeowners insurance information
  • Information about your home’s market value

Other home loan products Flagstar Bank offers

This lender offers the following full suite of mortgage products that we’ve evaluated in the Flagstar Bank mortgages review:

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
  • Mortgage refinance
  • Multiple property
  • High balance loans
  • Construction draw loan
  • One-close loan (construction-to-permanent)
  • Renovation loan

Calculate and compare home equity product interest rates

Use our handy tool to compare estimated rates you might qualify for among top partners in your quest for the strongest home equity product. Select between the Purchase or Refinance options, then enter your ZIP, financial details, property type and other specifics to get personalized rates.

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