loanDepot Review: A Leading FHA Lender, and More

loanDepot is a nationwide mortgage company with physical branches, but you need never leave your home to get a mortgage here. The entire loan process can be handled digitally. loanDepot is also one of the largest VA mortgage lenders by volume, and borrowers who qualify for this low down payment mortgage program should find themselves in good hands here.

This mortgage lender is a good fit for: Qualified borrowers who are also current loanDepot customers. loanDepot can also be a great fit for veterans, as well as borrowers who need to make a low down payment.

Top perks

All digital application process

The mello smartloan™ is loanDepot's proprietary end-to-end digital home loan platform. The software digitally verifies income, assets, and employment. Then it identifies the loan options that save the most money, time, or both.

The platform doesn't just consider interest rates and closing costs. You'll get other opportunities to save money, too, including some that are immediate.

For example, loanDepot will waive the appraisal on properties where there are enough recent comparable sales to automate the valuation. loanDepot says that for some properties, title clearance and home value approval can be ready in minutes. Borrowers can close on their loans up to 17 days faster than with a comparable loan made without the benefit of the mello smartloan™ technology.

"No steering" policy

loanDepot's loan officers are not mortgage brokers earning commissions. The lender has a strict "no steering" policy to ensure that borrowers are put in the right loan, not the loan that will earn the broker the most money. Employees are not incentivized to push one loan program over another. This offers some comfort to consumers who don't trust financial institutions to look out for their best interests.

Robust online calculators

A nice selection of mortgage calculators can be found on the loanDepot website. Without revealing any information about yourself, you can play around with the numbers.

The financial calculators are well-built and responsive. One helps you determine whether it's more cost-effective to rent or buy in your area. Another helps you evaluate the potential savings you could gain from refinancing. A special VA loan calculator has the funding fee built into the calculated payment. Links to the online calculators can be found in the footer on loanDepot's website.

Relationship perk

loanDepot makes a standing offer to permanently waive future lender fees after your first loanDepot refinance. This lifetime guarantee is limited to subsequent refinances on the same property. Typical lender fees can easily be in the $1,250-$1,500 range and higher, so this offer can lead to significant potential savings.

HELOC

If you want to borrow against your home equity but you don't want to trade in your existing mortgage, you could consider a home equity line of credit from loanDepot. A HELOC is sometimes preferable to a cash out refinance loan, which replaces your current mortgage.

What could be improved

USDA loans

With such a large variety already, it would be nice if loanDepot offered a fuller menu of government-backed loans, much like many of the best mortgage lenders. Some borrowers will qualify for multiple programs and may want to compare advantages. For example, the USDA loan does not require a down payment and has lower mortgage insurance premiums than the FHA loan. It could be preferable for borrowers who meet eligibility criteria for both programs.

Transparency

loanDepot does not publish its mortgage rates. This is disappointing, especially since some of the links on the website are worded in a way that could lead you to believe you're about to discover loanDepot's actual current rates. Unfortunately, no real rates are listed. You have to complete a lengthy application to get any details. That's a big drawback, because revealing personal information puts you on loanDepot's call and email list.

In the same vein, other areas of the website can be frustratingly unhelpful, with lots of pages that provide little or no information about what loanDepot actually offers.

You can start the loan process right on loanDepot's website.

The required down payment for a mortgage from loanDepot will depend on the loan program you qualify for. If you are a first-time home buyer (or have not owned a home in the past three years), you might qualify for $4,500 cash back, which could help you get over the initial financial hurdles of homeownership.

For most loanDepot conventional loans, you'll need a 5% down payment. However, the FHA loan requires only 3.5% down, and the VA loan requires no down payment at all.

Jumbo borrowers may need to make a larger down payment.

loanDepot doesn't publish its minimum credit score requirements. If you're applying for an FHA loan, your FICO® Score must be at least 580 with a 3.5% down payment. If you can make a down payment of at least 10%, the FHA allows for credit scores as low as 500 -- however, it's up to the lender to decide on the minimum credit scores for all of the loans it offers. For conventional loans, expect loanDepot to require a score of at least 620.

You'll be in the best position to qualify if your debt-to-income (DTI) ratio does not exceed 45%. However, like most major lenders, loanDepot offers loan products that have higher and lower DTI limits. Generally speaking, the higher your down payment, the more flexible lenders can be with your DTI.

Finally, if you're planning to buy a fixer-upper on a renovation loan, you'll need to satisfy a few additional requirements. Your renovations cannot exceed 75% of the projected value of the home after the renovations are complete, and your plans must be approved in advance. Your down payment will be based on the projected finished value, and you'll need to work with a lender-approved contractor if the renovations account for more than 10% of the completed appraised value (otherwise, you can do the work yourself).

Due to loanDepot's size, you can expect refinance rates to be competitive. Unfortunately, it is very difficult to find out what the rates are. You won't know without applying, or at least giving up a lot of personal information over the phone.

loanDepot's mortgage rates are undisclosed, but have historically trended about the same as the national average. You won't know what they are without initiating a conversation with this lender.

You're a veteran. VA loans are one of loanDepot's top specialties. Consider applying, if only to compare offers.

You're in a hurry to close. Home buyers on a strict timeline may also be great candidates for loanDepot. Its high-tech digital application, which automates many parts of the process, could shave days, or even weeks, off the time it takes for the loan to close. According to loanDepot, some borrowers close in as few as eight days.