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Flagstar Mortgage review

This lender stands out for its construction loans, but closing costs can be hefty.

finder.com’s rating: 3.7 / 5.0

★★★★★

Thanks to its flexibility, Flagstar is one of the highest-volume lenders in the US. Weigh its pros and cons to find out if it’s the right fit for your purchase or renovation.

Details

Loan products offeredConventional, Jumbo, FHA, VA, USDA, Home Equity/HELOC, Refinance
Minimum credit score620
Minimum down payment (Conventional)3%
State availabilityAvailable in all states
NMLS #417490

Our take on Flagstar Bank

Flagstar may be a great option for anyone looking for a construction or renovation loan and for those who want more flexibility in their loan terms. In addition to its 30-year and 15-year fixed-rate mortgages, Flagstar offers homebuyers the option to create a custom fixed-rate mortgage plan with terms available from 8 years to 30 years.

Flagstar’s rates are also competitive and the bank publishes them on its website, which makes things much easier for homebuyers shopping around and comparing lenders. But what you won’t find is any mention of its fees. We had to call and speak with a loan officer to get this information.

Flagstar has also been hit with a couple lawsuits in recent years, one of which was directly related to its mortgage practices. The other involved a recent data breach that exposed millions of customers’ sensitive information.

All considered, if you’re interested in a specialty mortgage of some kind or are looking for flexible loan terms, Flagstar is an option worth considering. But we recommend you continue to shop around before deciding, as several other lenders offer fewer fees and have stronger reputations.

Flagstar requirements

Requirements to qualify vary based on the type of loan you’re applying for. Generally, you’ll need:

  • Minimum credit score of 580 for FHA loans, 620 for conventional and VA loans and 640 for USDA loans.
  • Maximum debt-to-income ratio of 43%.
  • Loan-to-value ratio of 80%.

Documentation

Flagstar may request:

  • Recent pay stubs.
  • Statements for bank, retirement and investment accounts.
  • Tax returns and W-2 forms.
  • Homeowner’s insurance information.
  • List of credit cards, plus car, student or home loans.

Costs and fees

Flagstar doesn’t disclose all its mortgage fees online, so we called to speak directly with a loan officer. The bank charges a flat $1,395 origination fee. At $1,395, it isn’t the most expensive lender fee we’ve come across, but it’s creeping into the higher end of the spectrum for lenders that charge a flat fee instead of a percentage of the total mortgage amount.

Homebuyers are also responsible for any additional third-party fees associated with securing a mortgage, so talk with your loan officer about fees before signing any paperwork. Common mortgage fees include:

  • Appraisal fee.
  • Title insurance fee.
  • Origination fee.
  • Recording fee.
  • Underwriting fee.
  • Processing fee.

Pros and cons of Flagstar

Pros

  • Mortgage quote tool. Flagstar offers a rate-quote tool that displays its current rates on the website based on the criteria you enter, including your credit score range and zip code.
  • Create your own term. If you’re not sold on the traditional 15- or 30-year terms, work with a Flagstar loan officer to create your own term.
  • Considers alternative credit data. The lender accepts rent and utility payments as credit data for FHA borrowers.
  • Building loan products. Flagstar is known for offering three types of construction loans, plus a renovation loan.

Cons

  • Limited availability for home equity products. While mortgages are available in all 50 states, home equity products are only available through their retail bank branches, which are located in California, Indiana, Michigan, Ohio and Wisconsin.
  • Questionable business practices. Flagstar was sued in 2012 for fraudulent mortgage lending practices and in 2021 for its failure to detect security vulnerabilities and properly secure customer information.

How to apply for a mortgage with Flagstar

Fill out the online form to kickstart the process. Once you’ve done that, you have the option of completing the application digitally or waiting for a callback from a loan officer.

  1. Go to the Flagstar website. On the homepage, hover over Loans and select Mortgage > Types of Mortgages.
  2. Select Apply Now.
  3. Enter your information about the loan you’re looking for and the property you want to buy, as well as personal information like your down payment amount, contact information and credit score. Choose Submit.
  4. Wait for a message indicating your application has been received. If you want to keep going, choose Continue to Full Application.
  5. Work your way through the form, answering questions about your property, employment history, assets and liabilities.
  6. Make any necessary declarations.
  7. Upload supporting documents and Submit Your Application.

What types of mortgages can I get through Flagstar?

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
This company accepts mortgage refinance applications.

Other mortgage products offered by Flagstar

Flagstar offers the following specialty mortgage loans:

  • Multiple properties. Flagstar offers both fixed and adjustable-rate mortgages for borrowers who already have between seven and 10 financed properties.
  • High-balance loans. If the home you want to finance is in a high-cost area, this loan is available in amounts that exceed the $510,400 loan limit for most conforming loans.
  • Construction draw loan. With this loan, you can draw construction funds while only making interest payments, then refinance with one of Flagstar’s mortgage products when construction is complete.
  • One-close loan. Sometimes called construction-to-permanent loan, this allows you to finance the construction of your new home and your mortgage all at once with one set of closing costs.
  • Renovation loan. This loan allows you to finance your mortgage and any renovations your house needs all in one loan. Renovation funds are put in an escrow account, which is used to pay down the principal of your mortgage when the job is complete.
  • Home equity line of credit (HELOC). Use your home’s equity to open a revolving credit line, so you only take out the money you need when you need it.
  • Home equity loan. If you need a lump sum of money, you can take out a loan against the equity of your home.

Flagstar reviews and complaints

Flagstar Bank holds an A+ rating with the Better Business Bureau (BBB) as of August 2022, but it isn’t accredited. Reviewers have rated the bank 1.04 out of 5 stars based on a total of 238 customer reviews. Dissatisfied customers largely complain about overall mismanagement and poor customer service.

Across other online forums, customers praise the personalized service from loan officers, and many name the officer who made their complicated process easier. For example, customer reviews on Zillow give Flagstar Bank 4.97 out of 5 stars based on more than 2,700 customer reviews. Customers also appreciate the construction and agricultural loans and the ability to lock in rates.

In 2012, Flagstar was sued for improperly approving home mortgages to get government insurance. Flagstar admitted to submitting false certifications to the US Department of Housing and Urban Development (HUD) and, as a result, agreed to reform its business practices and pay $132.8 million in damages and penalties under the False Claims Act.

In 2021, the company was hit with a class-action lawsuit for using an obsolete file transfer product that was breached, exposing the customer names, phone numbers, addresses, Social Security numbers, tax records and other banking information of over 1.47 million Flagstar customers. Flagstar agreed to pay $5.9 million to settle the lawsuit.

Alternatives to Flagstar

Flagstar offers all the traditional conventional and government-backed mortgages you’d expect to find at a bank its size, including home equity and jumbo mortgage products. But this lender won’t be right for everyone.

For starters, if Flagstar’s $1,395 origination fee is too steep, consider a digital bank like Axos Bank. It offers a similar range of mortgage products and will waive its $995 origination fee if you meet specific requirements.

If reputation matters most and you want to avoid paying lender fees altogether, consider Better or Beeline. These digital lenders consistently rank highly across the different review sites, and they don’t charge any lender fees. You just won’t find as comprehensive a list of mortgage products, and they’re not available nationwide.

Alternatively, compare top brands by home loan type, state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.

1 - 6 of 6
Name Product Loan products offered State availability Min. credit score
Zero Mortgage
(NMLS #7872)
Zero Mortgage
Conventional, Jumbo, Refinance
Not available in: AK, ID, KY, MA, NV, NJ, NY, NC, VT, WA
620
Conventional purchase and refinance mortgages with zero application, underwriting and processing fees, and zero points.
Rocket Mortgage
(NMLS #3030)
Rocket Mortgage
Conventional, Jumbo, FHA, VA, Refinance
Available in all states
620
Streamline your mortgage from quote to final payment — all from your computer or phone.
Morty
(NMLS #1429243)
Morty
Conventional, Jumbo
Not available in: AZ, HI, MA, MO, NV, UT
620
Preapproval in minutes and closing in as little as 3 weeks with no origination fees.
LendingTree
(NMLS #1136)
LendingTree
HELOC, Home Equity loans
Available in all states
620
Connect with vetted lenders quickly through this free online marketplace.
Veterans United
(NMLS #1907)
Veterans United
Conventional, FHA, VA, USDA, Jumbo, Refinance
Available in all states
620
Veterans United stands out from other lenders for its focus on serving the military community.
Freedom Mortgage
(NMLS #2767)
Freedom Mortgage
Conventional, Jumbo, FHA, VA, USDA, Refinance
Available in all states
620
A lender that excels in FHA and VA loans, offering low down payment options to borrowers.
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