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As a prospective homeowner, you want to find the right mortgage for your needs. The best mortgage lenders are trustworthy and fast, with great customer service to boot.
Better sets itself apart with its online application process, 24/7 service, and by not charging lender fees.
In this Better.com mortgage review, we'll give an overview of the lender and its products. We’ll also look at what its customers say so you have the insights you need to make an informed decision about whether it’s a good choice for your home purchase or refinance.
In this article
- An overview of Better.com
- Which loan products does Better offer?
- Conventional mortgage at Better.com
- FHA mortgage at Better.com
- Rate and term refinance at Better.com
- Cash-out refinance at Better.com
- What Better.com customers are saying
- FAQs about Better.com
- The final word on Better.com
An overview of Better.com
Better Mortgage offers a digital application process that starts with a fast rate quote (under 5 seconds, according to Better.com) and potential preapproval in minutes. Its loan officers don’t get paid a commission, and Better doesn’t charge origination fees.
It also offers an on-demand rate lock, which allows you to lock in your interest rate with Better whenever you prefer from your online account. Customers who feel comfortable uploading and electronically signing documents and completing the majority of the mortgage process online might appreciate Better.
Better.com was founded in 2014 by Vishal Garg. It’s a direct lender and offers a variety of loan types for both home purchases and refinances. It’s also expanded its services beyond lending. It has real estate agent partners through its Better Real Estate program and offers title insurance and homeowners insurance
Which loan products does Better offer?
Better offers conventional mortgages, Federal Housing Administration (FHA) loans, rate-and-term refinances, and cash-out refinances.
Note that Better.com does not offer Department of Agriculture (USDA) or Veterans Affairs (VA) loans, two popular types of government-backed loans.
Conventional mortgage at Better.com
A conventional loan, the most common type of home loan, is a type of mortgage loan not backed by the federal government. This means that the federal government doesn't provide insurance in case borrowers stop making payments on their loans. Therefore, conventional loans are riskier for lenders than government-backed loans.
If you apply for a conventional loan with Better and make less than a 20% down payment, you will have to pay for private mortgage insurance (PMI). Many lenders have this requirement. PMI is a type of insurance you pay to remove some of the risk Better experiences for providing your home loan.
However, this doesn't mean you must have a 20% down payment to get a conventional loan — you can put down less, but you'll pay for PMI as part of your regular monthly mortgage payment.
Conventional mortgages at Better make the most sense for individuals who have at least a 620 credit score and who can make a down payment for their home purchase. Buyers also need to purchase a single-family home, a multi-family home (up to four units), a townhouse, or a condominium.
| Loan amount | Up to $726,200, ($1,089,300 in more expensive housing markets) for conforming conventional loans in 2023 |
| Loan term | 15 to 30 years |
| APR | 7.630%-7.886% (as of May 31, 2023) for a borrower with excellent credit |
| Credit needed | 620 |
FHA mortgage at Better.com
Better offers FHA loans for homebuyers in 47 states, but what is an FHA loan?
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration (FHA). The FHA is a department under the jurisdiction of the Department of Housing and Urban Development (HUD). Under FHA guidelines, you'll need a down payment of at least 3.5% if you have a credit score of 580 or higher. If your score is 500-579, you have to put down 10% to qualify.
Those are the minimum requirements of the FHA, however, and lenders can have higher minimums in place. In Better’s case, it accepts only scores of 620 or higher for FHA loans.
You also need to show Better the following:
- Proof of residence
- Two years of W2s and tax forms
- Social Security number
Better also expects a debt-to-income ratio of 50% or less. This means your mortgage amount plus all of your recurring debt payments during the month must be no more than 50% of your gross (pre-tax) monthly income.
An FHA loan at Better can be used to buy or refinance single-family homes, multi-family homes (up to four units), townhouses, and condominiums. You must plan to use the home as your primary residence and your property must be appraised by an FHA-approved appraiser that meets HUD guidelines. You also must pay FHA mortgage insurance.
Because of their affordable down payment structure and lower credit score standards, FHA loans may appeal to you if you're a first-time homebuyer or if you have less money set aside for your down payment and closing costs.
| Loan amount | Up to $472,030 (1,089,300 in in more expensive housing markets) in 2023 |
| Loan term | 30 years |
| APR | Varies |
| Credit needed | 620 |
Rate and term refinance at Better.com
A rate and term refinance allows you to change the terms of your current mortgage by replacing it with a new one. There are a variety of reasons to refinance a mortgage, including wanting to change the amount of time to pay off your loan, get a lower interest rate, or lower your monthly payment.
For example, you may consider refinancing to lower your interest rates because your current interest rate is higher than Better's interest rates. Let's say you started out with a 15-year mortgage. You want to give yourself some breathing room to meet all your monthly expenses, so you switch to a 30-year mortgage with a lower monthly payment instead.
In this case, you'll pay more interest over time because you've lengthened your mortgage. You can also do the opposite. If you want to pay off your mortgage faster, you could refinance from a 30-year mortgage to a 15-year mortgage. You'll increase your monthly payment but you'll pay less in interest over the loan term.
You can also change the loan type. Let's say you start out with an adjustable-rate mortgage (ARM), which means that your interest rate changes periodically. You can switch to a fixed-rate mortgage instead, which means that your interest rate doesn't change and stays the same for the life of the loan. Choosing this option gives you more predictable monthly payments.
| Loan amount | Varies |
| Loan term | 15-year, 20-year, or 30-year fixed |
| APR | 7.558%-7.813% (as of May 31, 2023) for a borrower with excellent credit |
| Credit needed | Varies |
Cash-out refinance at Better.com
A cash-out refinance allows you to take cash out of the equity in your home. The amount you can get depends on how much equity you have in your home.
Let's say your house is worth $200,000, and you have $100,000 left to pay on your mortgage. This means you have $100,000 in equity in your home.
Let's say you wanted to borrow $20,000 from your home equity. With a cash-out refinance, you would get a new loan worth at least $120,000 — the sum of your original balance and the amount you wanted to borrow. You may want to borrow more to cover the closing costs of the loan as well.
Who should get a cash-out refinance? It depends on:
- Refinance rates
- How long you’ve had your current mortgage
- How long you plan to stay in the home
- Whether there’s a prepayment penalty on your current mortgage
- Your willingness to pay closing costs
You can use the money from a cash-out refinance for anything from paying for college tuition to consolidating debt to putting an addition on your house. There are no rules for how you use your money with a cash-out refinance.
Better.com has garnered a Better Business Bureau rating of 4.1 out of 5 stars, and of 1,187 TrustPilot reviews, Better received 3.9 stars. Some of the bad ratings focus on Garg's firing of 900 employees over Zoom right before the 2021 winter holidays and are unrelated to the quality of the company's actual services.
FAQs about Better.com
How long does it take to get a mortgage through Better.com?
It takes Better an average of 32 days to close a mortgage. The average mortgage lender takes 42 days.
What are some of the benefits of a Better.com mortgage?
Some of the benefits include the speed of preapproval and application processes and being able to view personalized mortgage rates quickly and easily. Better.com also offers several loan types, including conforming loans, jumbo loans, and FHA mortgages.
Does Better.com have FHA loans?
Yes, Better offers FHA loans, which might appeal to first-time homebuyers or homebuyers who have lower credit scores. The credit score requirement for an FHA loan with Better is 620. An FHA loan also only generally requires a down payment of 3.5%.
The final word on Better.com
When you’re considering how to get a loan, one factor might be whether the lender offers in-person or online service. When you want an online option to get a mortgage, Better.com might be a good fit for you. Better.com's no-lender-fees policy will also appeal to just about anyone.
Better also offers a competitor price-match program. If you find a lender that offers a better deal on closing costs, you can show the competitor's loan estimate to Better, and it’ll either beat it by $100 or send you $100 if it can’t. On the downside, it doesn’t offer USDA or VA loans, and you're out of luck if you live in Hawaii, Nevada, or New Hampshire — Better doesn't offer its services in those states as of February 2023.
If you’re curious about how Better stacks up to other lenders, check out our list of the best mortgage lenders.
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