Churchill Mortgage Review: Partners in a Debt-Free Life

Churchill Mortgage is an almost-nationwide mortgage lender (49 states plus Washington, D.C.) that offers competitive mortgage rates and a broad selection of loan options when compared to competitors. If the name sounds familiar, Churchill is the lender Dave Ramsey partners with and recommends. Churchill is a great choice for borrowers who are aspiring to live debt free. Read our full Churchill Mortgage review to find out if this is the best mortgage lender for you.

This mortgage lender is a good fit for: A borrower who lives a debt-free lifestyle and who may not have a credit score. This lender is also a great option for self-employed borrowers, medical professionals, and people buying a new home that hasn't been built yet.

Top perks

A lender who helps you strategize your debt payoff

Churchill Mortgage is different from other lenders in a way you might find very appealing.

Its mission is to do what's right for you. Churchill says, "We want to set you up for financial success and ultimately set you free."

Churchill's unusual approach to mortgages involves focusing on your financial well-being, not on getting you the most house for your money. Rather than encourage you to buy the most house for your money (a common lending strategy), Churchill suggests loan options that get you out of debt fastest and at a lower cost. To accomplish a faster payoff, you usually have to buy a home in a lower price bracket, so that you can afford the payment on a 15-year mortgage. If that doesn't suit you, Churchill offers traditional 30-year mortgages.

No-score mortgage

Churchill Mortgage offers a home loan for borrowers with no credit score. That's because Churchill caters to people who have worked hard to pay off their debt. Some of these hopeful home buyers shut down all of their credit accounts and spent years paying them down to zero. Others are in the cash lifestyle tribe, and eschew credit in general because of the cost and the potential for financial pain. In either case, the absence of recently reported credit data can leave a person with no credit score. That doesn't mean you aren't creditworthy.

The no-score mortgage might be a great option for you if you don't have or want credit accounts. It could also be a great choice if you plan to establish credit but haven't gotten your credit score started.

Specialty home loan options

Besides the usual choices, Churchill also offers a few home loan options you can't find everywhere:

• USDA loan: The USDA loan is a zero down payment loan for low- and moderate-income borrowers buying an eligible home, usually in a rural area
• Construction loan: A construction loan is for borrowers buying a home that hasn't been built yet
• Family opportunity loan: A joint home loan program home loan program designed for adult children helping their parents buy a home.
• Home Possible, Home Possible Advantage, HomeReady: Low down payment home loan programs to help first-time home buyers, and low- to moderate-income borrowers.

Low down payment mortgage

Churchill offers a number of home loan options that have a very low down payment requirement. You can get a conventional mortgage at Churchill with 3% down. If you qualify for a VA loan or a USDA loan, the down payment requirement is zero.

Free rate cap

Churchill offers a free rate cap. (Some mortgage lenders call this a rate lock.) Once your rate is approved, Churchill holds it there for you for free for 90 days. If mortgage rates go down before you close your loan, Churchill lowers your rate. If mortgage rates go up, yours stays the same. You can extend your rate cap for another 90 days if you need to.

Note that the rate cap is not available on all loans.

There is a related service called Rate Relief. The seller or builder can prepay some interest, so the borrower can have lower payments for the first two years. But this program has no effect on your loan's interest rate.

Refinance rate watch

If you want to keep an eye on interest rates and refinance your mortgage as soon as it makes good financial sense, you can sign up for Churchill's Rate Watch. You're automatically notified when interest rates hit your target.

What could be improved

No home equity loan

Churchill does not currently offer a home equity loan, although they told us by email that a home equity line of credit is available. The downside to most HELOCs is that the interest rate is variable, which means it can change periodically while you still have the debt. That can make payments and the final cost of the debt somewhat unpredictable.

Lack of transparency

Churchill does not disclose its rates, fees, or specific qualification criteria. When we called, they shared with us that there's a $40 credit report fee per borrower, plus closing costs that include a $1,600 processing and underwriting fee.

To apply, you need to be in a state that Churchill serves. Currently, that includes every state (plus Washington D.C.) except New York.

For a conventional loan, Churchill follows Fannie Mae and Freddie Mac underwriting guidelines. The minimum credit score is 600 for conventional and may be higher for other kinds of loans. Churchill also has a mortgage program specially designed for borrowers who have a credit score of 0.

The maximum debt-to-income (DTI) ratio is between 28% and 50% for most borrowers, depending on the loan. DTI is how much of your monthly income goes to debt payments, including your proposed new housing payment.

You might want to calculate your DTI based on a loan term shorter than 30 years (the monthly payment will be higher). If you're not sure whether a shorter-term mortgage is right for you (versus getting more house for your money), use a mortgage calculator to see the total amount of interest you will pay. The numbers might help you decide.

For one thing, 15-year mortgage rates are usually lower than 30-year rates. Here's an example that shows a 30-year fixed-rate mortgage, that same mortgage paid off on an accelerated schedule, and a 15-year mortgage for the same amount:

How to get a no-score loan

Churchill offers three versions of the no-score mortgage, and can help you discover which one applies to your situation. They are all fixed-rate mortgages.

For any no-score loan, you must show evidence of tradelines (bills that you are responsible for paying) with a 12–month payment history. The first should be your housing payments. If you don't currently have a mortgage, show your rent payments. If you own your home, show your property taxes and homeowners insurance premiums. You also need to show three other accounts. Those could be utility bills, cellphone bills, medical insurance premiums, auto insurance premiums, or another financial obligation, even a child's tuition. But not bills that are automatically deducted from your paychecks.

The down payment requirement for a no-score loan is 5%-10%. If you make a down payment smaller than 20%, you'll also have to pay for private mortgage insurance (PMI). PMI protects the lender and it's required on conventional mortgages when the down payment is smaller than 20%. The other requirements are similar to those that apply to other borrowers.

Churchill does not disclose its mortgage refinance rates until you apply. That makes it hard to shop based on price. But you could track Churchill's rates by signing up for the Rate Watch service. Enter a target rate above today's average mortgage rate, and you should get a notification within a day or so.

Churchill Mortgage does not disclose its mortgage rates until you apply. As noted above, use the Rate Watch tool if you want to research Churchill's rates.

Churchill Mortgage is a fantastic choice for anyone who doesn't have a credit score, as well as borrowers who have a debt-free mindset.