Flagstar Bank Mortgage Lender Review

Flagstar Bank is a mortgage lender with a presence primarily in the Midwest and Northeast. It offers a wide variety of home loan products nationwide for people with most credit types, down payment amounts and financial situations. Flagstar was a lender we considered for our best mortgage lenders ranking.

Continue reading to learn about Flagstar Bank’s pros and cons, mortgage products, financial stability and more.

Flagstar Bank mortgage lender pros and cons

Pros explained

Wide variety of home loan products

Flagstar offers many types of mortgages, including conventional, FHA, VA, USDA and jumbo loans as well as mortgage refinance options. Borrowers can choose from a 15- or 30-year loan with fixed or adjustable interest rates. Flagstar also offers various specialty loans, including loans for people with multiple properties, new home construction or renovation loans, professional mortgage loans and more. Professional mortgage loans are open to lawyers, doctors and other professionals who may have high student loan balances.

The lender also offers home equity loans and home equity lines of credit (HELOC) in some states. Beyond home loans, Flagstar provides other banking services, including savings accounts, investment services and credit cards.

Has down payment assistance programs

A downpayment assistance program can help eligible homebuyers with down payment and closing costs. Flagstar Bank offers the following four programs:

• Flagstar Gift Program: First-time homebuyers can receive 3% of their home’s purchase price (up to $7,500 in most states and $15,000 in New York, New Jersey and California).

• Flagstar Power-Up Program: First-time homebuyers within a designated area can receive a grant of up to $5,000.

• Flagstar Grant Program: Eligible homebuyers can receive up to $2,500 (or $7,500 if they purchase their home through the Detroit Land Bank).

• MSHDA Down Payment Assistance Program: Michigan homebuyers with loans through the Michigan State Housing Development Authority may be eligible for closing cost savings and no-interest down payment assistance up to $7,500.

Offers online and in-person loans

Flagstar allows you to apply for some mortgages online. You can also request a phone call to speak to a mortgage expert throughout the application process. If you prefer to apply in person, you can visit a local Flagstar Bank branch if there is one nearby, though locations are relatively scarce.

Cons explained

Limited in-person locations

Flagstar only has loan centers in the following nine states: Arizona, California, Connecticut, Florida, Indiana, Michigan, New Jersey, New York and Wisconsin. Most people may need to complete their mortgage loan applications online or over the phone.

Can't complete the closing process online

In most cases, you can initiate a mortgage loan application online but can't close the loan virtually. Instead, Flagstar sends your closing documents to a title company, escrow office or attorney's office. You must schedule your closing appointment with the office handling it and attend the closing in person.

Customer service isn’t available on Sundays

You can reach loan officers and customer service agents on Monday through Saturday during business hours. Unfortunately, Flagstar doesn't offer customer support hours on Sundays.

Flagstar Bank mortgage offerings

As you learn how to buy a house, you'll discover that finding a loan is one of the first steps. However, loans come in multiple forms and types, and you must narrow down the right type for your situation. Below are Flagstar’s offerings.

15-year fixed-rate mortgage

A 15-year loan with a fixed rate is a popular option for people who want to accelerate their loan. The loan payments are spread over 15 years, resulting in higher monthly payments and a faster payoff. The fixed interest rate won't change, allowing you to have predictable costs for the loan’s entire duration.

30-year fixed-rate mortgage

Flagstar's most common mortgage option is its 30-year fixed-rate loan, which offers the same interest rate for 30 years. This type of loan comes in several forms, including conventional loans. You can get one without putting 20% down, but you’ll be required to pay private mortgage insurance (PMI) if you borrow more than 80% of the home's value. Flagstar also offers 30-year fixed-rate USDA home loans for rural property owners, which don't require a down payment or PMI.

FHA 30-year fixed mortgage

Flagstar offers FHA loans for first-time homebuyers who can't afford large down payments. This program lets you buy a house with as little as 3.5% down. The FHA program is more lenient toward borrowers with little or no credit history, making the loan approval requirements easier to meet.

VA 30-year fixed mortgage

VA loans are backed by The Department of Veterans Affairs and are available to active and former military members. You must confirm your eligibility to qualify for a Flagstar VA loan, but you can buy a house with no money down. The loan duration is 30 years, with an interest rate that never changes. VA loans don't require PMI, but you must pay a one-time funding fee between 1.5% and 3.3% of the home's purchase price. The percentage you pay depends on your down payment amount and if you’ve had a VA loan before.

Jumbo fixed-rate mortgage

If you need a large mortgage that costs more than the conforming loan limit of $726,200, you can apply for Flagstar's jumbo mortgage. A jumbo fixed-rate mortgage gives you stability with a rate that never changes. You can apply for a jumbo loan of up to $3.5 million for your primary residence and up to $3 million for a second home.

Adjustable-rate mortgage

Your Flagstar Bank mortgage payments will change after a set number of years if you choose an adjustable-rate mortgage (ARM). Your initial rate remains the same for 5, 7 or 10 years. After that, it's subject to change every six months. Initial mortgage rates are generally slightly lower for ARMs than fixed-rate loans. However, your rate will change when it adjusts, making your yearly costs unpredictable.

Flagstar Bank mortgage pricing

Flagstar Bank mortgage rates vary based on numerous factors, including:

• Loan type
• Loan duration
• Current mortgage rates
• Credit score
• Down payment

Your interest rate affects your total loan cost and payment amount. Mortgage originators also charge other lender fees for their loans, including a loan origination fee, processing fee, appraisal and more. Flagstar estimates that closing costs generally equal 2% to 5% of the total loan amount. For example, you can expect to pay between $6,000 and $15,000 in closing costs for a $300,000 loan.

Flagstar Bank financial stability

At the end of 2022, Flagstar Bank had $90 billion in assets and 7,500 employees. Additionally, it closed $24.2 billion in mortgage loans in 2022. Moody’s assigned Flagstar Bank with a Baa2 Long Term Counterparty Risk Rating, and Fitch labeled it “Stable.”

Flagstar is currently involved in a pending class action lawsuit filed in Michigan in June 2022 that alleged damage to customers from a data breach.

Flagstar Bank mortgage accessibility

Availability

Flagstar offers loans online in every state but only has physical home loan centers in Arizona, California, Connecticut, Florida, Indiana, Michigan, New Jersey, New York and Wisconsin.

Contact information

You can contact Flagstar by phone, email or online chat. Here is the contact information:

Phone: You can call Flagstar Bank customer service at 800-945-7700. To speak with the Flagstar mortgage lending customer service department, you can call 888-549-5896. The mortgage lending department is available from 8 a.m. to 9 p.m. ET Monday through Thursday, 8 a.m. to 7 p.m. on Friday and 10 a.m. to 4 p.m. on Saturday. Flagstar customer service is closed on Sundays.

Online chat: Flagstar offers live chat services through its customer support page. Just click the "Chat Now" button to begin a conversation.

Email: If you prefer contacting Flagstar by email, you can fill out the form on the customer support page.

User experience

Flagstar Bank allows customers to access their loans online. After getting a Flagstar mortgage, you can set up a MyLoans account, which you can use to view your balance, pay your bill and access your tax statements.

Flagstar’s online chat makes it easy to reach customer service. Representatives are generally quick to respond to chat queries, though they may have to transfer you to other departments for more help.

Flagstar Bank mortgage customer satisfaction

J.D. Power rated Flagstar 591 out of 1,000 points on its 2023 U.S. Mortgage Servicer Satisfaction Study. Flagstar’s score is slightly below the study average of 601. The company has received mixed reviews on customer rating websites. Some of the negative reviews complain of poor communication and payment issues, while many positive reviews discuss a good experience with the application and closing processes.

How we evaluated Flagstar Bank’s mortgages

We considered the following factors when reviewing Flagstar Bank's mortgage lending:

• Loan offerings: We explored the variety of loans available.

• Pricing: We looked into Flagstar’s rates and fees.

• Financial stability: We analyzed third-party ratings to determine if customers should feel comfortable using Flagstar.

• Accessibility: We considered availability, contact hours and user-friendliness.

• Customer satisfaction: We explored several third-party review sites to understand customer satisfaction.

Summary of Money's Flagstar Bank mortgage review

Flagstar Bank is a nationwide mortgage lender offering many home loan options and refinancing. It also provides loan services for most credit scores and offers down payment assistance programs. As a result, many homeowners can find a mortgage loan through Flagstar that works for them. Unfortunately, Flagstar doesn't have loan centers in all states, making applying for or receiving service in person challenging for many people.

While Flagstar Bank's customer service appears easy to reach, it's unavailable on Sundays. However, its online portal allows borrowers 24-hour access to their loans. Besides mortgage loans, Flagstar Bank also offers bank accounts, personal loans and many other banking products.