Flagstar Mortgage Review 2024: Flexible Credit Requirements and Down Payment Assistance

Flagstar Bank offers mortgage options for first-time homebuyers and low-income applicants, including down payment assistance programs and low-down payment loans without mortgage insurance.

Flagstar offers fixed-rate terms for up to 40 years and a flexible approval process that accommodates borrowers without a Social Security number or those who rely on nontraditional credit sources.

Despite low customer satisfaction ratings from J.D. Power, Flagstar Bank may outsource your loan servicing to a third party.

Pros and cons of Flagstar Bank mortgages

Flagstar Bank mortgage types

Flagstar provides conventional, government-guaranteed, and jumbo loans in all 50 states and Washington, D.C.

Flagstar provides fixed-rate loan terms ranging from 8 to 40 years.
Flagstar offers adjustable-rate mortgages (ARMs) that start with a fixed rate for the first five, seven, or ten years.
FHA loans are supported by the Federal Housing Administration (FHA) and require a minimal down payment of 3.5% for borrowers with a 580 FICO score or 10% for borrowers with a 500.
Veterans and service members are eligible for a lower-rate mortgage through VA loans, which do not require a down payment or private mortgage insurance.
Zero-down-payment mortgages in rural areas are available to eligible homebuyers through USDA loans, which are backed by the U.S. Department of Agriculture.
Jumbo loans are loans that exceed the conforming limits set by the Federal Housing Finance Agency. Flagstar offers jumbo loans up to $3 million, according to its website, but a spokesperson states that the bank does not have an official maximum loan amount.
This mortgage, backed by Fannie Mae and Freddie Mac, requires only a 3% down payment and has lower financing and PMI costs. To qualify, you must earn at least 80% of the area median income, have a credit score of 620, and a debt-to-income ratio of 50%.
Medical professionals, attorneys, and CPAs can access low-down-payment loans with no private mortgage insurance (PMI) from Flagstar, with a maximum loan amount of $1.5 million.
Flagstar is one of our top picks for construction loans, offering a range of options including construction-only and construction-to-permanent loans, Fannie Mae Homestyle Renovation Loans, and FHA 203(k) standard and limited loans.
Homebuyers who don't meet typical credit or income requirements can still obtain non-QM loans.
Unlike many competitors, Flagstar offers financing for both manufactured homes and mobile homes.

How do I qualify for a Flagstar Bank mortgage?

Conventional loans require a minimum credit score of 620, while jumbo loans require a score of 620 to 680. FHA and VA loans have a minimum credit score of 580. Nontraditional credit can be used for some conventional and government-backed mortgages.
The minimum down payment for VA loans is 0%, while conventional loans require a 3% down payment, FHA loans require a 3.5% down payment, and jumbo loans require a 10% down payment.
Debt-to-income ratio (DTI): 45% to 55%

Flagstar Bank loan fees

Origination fee: Flagstar does not disclose its origination fee
Prepayment penalty: Flagstar does not disclose its prepayment penalty fee
Rate lock fees: Flagstar does not disclose any rate lock fees.

Flagstar Bank benefits and discounts

Flagstar offers a variety of unique programs for homebuyers.

Relationship discount

Customers who sign up for autopay using a Flagstar deposit account can receive a 0.25% discount on a home equity loan or HELOC.

Destination Home Mortgage

In select U.S. Census tracts, homebuyers can qualify for a 0% down payment mortgage with a fixed rate, without needing private mortgage insurance, and with a credit score as low as 600.

Power Up Program

Homebuyers who meet certain criteria can receive up to $8,000 in financial assistance for their home purchase.

Flagstar Gift Program

First-time homebuyers in certain states can receive up to $10,000 towards their down payment.

Detroit Land Bank Program

A loan with a low down payment for purchasing and renovating a primary residence in specific areas of Michigan, without private mortgage insurance and lenient qualifications.

Individual Tax Identification Number (ITIN) mortgages

Individuals without a Social Security number can still be approved for a conventional mortgage by using their individual tax identification number, as long as they have a credit score of at least 620.

Flagstar Bank mortgage refinancing

Flagstar offers cash-out refinancing, HELOCs, home equity loans, Fannie Mae RefiNow, and Freddie Mac Refi Possible in all 50 U.S. states and Washington, D.C.

Credit score: 620 for rate-and-term and cash-out refinancing
Debt-to-income ratio: 45%
Conventional: 5%, FHA: 2.25%, VA and USDA: 0%, Jumbo: 10% for home equity.
Home appraisal: Yes, though it may be waived

Flagstar Bank customer service

J.D. Powers' 2024 Mortgage Servicer Satisfaction Study revealed that Flagstar Bank performed poorly compared to the average in terms of customer satisfaction with trust, ease of doing business, keeping borrowers informed and educated, staff, problem resolution, and digital channels.

The Better Business Bureau gave it an A+ rating due to its transparency, truthful advertising, and effective handling of consumer complaints.

You can obtain rate quotes for government-backed fixed-rate loans by applying for a mortgage online and entering a loan amount and ZIP code on the Flagstar website. However, rates for conventional loans are not available online.

Flagstar has physical branches in select states, but customer service representatives are available by phone, online chat, and in-person at certain locations.

How Flagstar Bank compares to other mortgage lenders

We put Flagstar up against two leading mortgage providers.

Flagstar Bank vs. Rocket Mortgage

While both Flagstar and Rocket Mortgage operate in all 50 states, Flagstar has 400 branches across nine states, whereas Rocket Mortgage is an online-only lender.

Flagstar lagged behind in J.D. Power's 2024 mortgage servicing survey and was not included in its mortgage origination study, while Rocket excelled in customer service with remote closings, phone assistance on Sundays, and top ratings for customer satisfaction.

Although both lenders showcase sample rates online, Flagstar specifically provides details on FHA, VA, and other fixed-rate government-backed mortgages.

First-time homebuyers or borrowers seeking specialized mortgages may prefer Flagstar due to its range of grant programs for first-time buyers worth up to $10,000, as well as professional loans for doctors, lawyers, and ITIN mortgages for borrowers without Social Security numbers. On the other hand, Rocket offers a Purchase Plus program that provides up to $7,500 to first-time buyers in select cities, and the 1% down Rocket ONE+ loan for those looking for a low- or no-down payment mortgage option.

Flagstar Bank vs. CrossCountry Mortgage

While both Flagstar and CrossCountry have both online and physical locations, CrossCountry has significantly more branches and is found in a greater number of states.

While both lenders provide FHA, USDA, and VA mortgages, as well as professional and non-qualifying loans that accept nontraditional credit sources, only Cross Country offers home equity loans, including HELOCs and reverse mortgages.

J.D. Power's Mortgage Servicers Satisfaction Survey ranks CrossCountry above average for customer service, and it boasts quick closings in just 10 days.

How do I apply for a mortgage with Flagstar Bank?

You can apply for a Flagstar Bank mortgage through various methods, including online, over the phone at 866-809-4582, or in person at one of their 400 branches.

To apply for a loan online, you must create a MyLoan account, submit identification documents, income documents, and bank statements, and undergo a credit check. Preapproval is valid for 90 days during the underwriting process.

Is Flagstar Bank right for me?

Flagstar Bank is a suitable option for first-time homebuyers and borrowers seeking low-down-payment alternatives. Additionally, it provides a range of specialized mortgages, including construction loans, professional loans, ITIN loans, and financing for manufactured houses.

If you prioritize dealing with the same lender from start to finish, you may want to consider other options as the lender has a history of lower customer satisfaction with mortgage servicing and sold its servicing business to Mr. Cooper in 2024.

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Our mission at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to help our readers make informed decisions with their money. Each mortgage review is the result of thorough reporting by our team of expert writers and editors who possess extensive knowledge of home loan products. At CNBC Select, we earn a commission from affiliate partners on many offers and links, but we create all our content independently, without any input from our commercial team or external third parties. We uphold the highest journalistic standards and ethics. For more information on how we select the best mortgage refinance lenders, please refer to our methodology.