Flagstar Bank is a solid choice for homebuyers who may have a lower credit score or a higher debt-to-income ratio.
By Jennifer Sisson
Jenni is a personal finance editor and writer. Her favorite topics are investing, mortgages, real estate, budgeting, and entrepreneurship. She also hosts the Mama's Money Map podcast, which helps stay-at-home moms earn more, spend less, and invest the rest. Jenni started her professional career as an in-house editor for KLAS Research, a healthcare IT company.
Edited by Reina Marszalek
Reina is a senior mortgage editor at Credible and Fox Money.
Updated August 1, 2024, 10:53 PM EDT
Fox Money is a personal finance hub featuring content generated by Credible Operations, Inc. (Credible), which is majority-owned indirectly by Fox Corporation. The Fox Money content is created and reviewed independent of Fox News Media. Credible is solely responsible for this content and the services it provides.
Some lenders require a minimum credit score of 650 or above for a mortgage loan, but Flagstar has more relaxed credit requirements. FHA borrowers can qualify with scores as low as 580; most other Flagstar Bank mortgages require a minimum credit score of 620.
Flagstar’s debt-to-income ratio (DTI) limit is also higher than most — as high as 55% for some loans. These unique attributes make Flagstar Bank a good choice for borrowers whose credit and debt levels may be less than optimal but are otherwise prepared to handle a mortgage.
Best for wide array of loan types
4.5
Fox Money rating
on Credible’s website
Min. Credit Score
Makes rates easy to compare
Offers loans for renovations and construction
Online rate quotes available
Only has branch locations in a handful of states
Can't submit full application online
No live-chat feature
Flagstar Bank has home loan service centers in nine states in addition to providing online assistance to customers. It offers conventional, FHA, VA, USDA, and jumbo loans, and some of its mortgage programs allow for a down payment as low as 3.5%.
Live chat, email, phone
Online review score
1.5/5 Trustpilot score
Min. down payment
ConventionalTo determine the best mortgage companies, Fox Money evaluated lenders based on several different categories: rates and fees, reputation, eligibility, efficiency, customer experience, and discounts and perks. We also looked at the types of loans offered by each lender for research purposes only, they did not factor into the overall score. We assigned a score out of five stars to each lender based on our findings.
Learn more about how Fox Money rates lenders by checking out Mortgage Lender Rating Methodology.
Like all lenders, Flagstar Bank mortgage loans come with advantages and disadvantages. Here is what you should factor in when making your decision:
In addition, the company recently underwent a rocky merger. The stability ratings of Flagstar and its new parent company New York Community Bank are in the B range according to Moody’s Ratings — not awful, but not optimal either.
When you get pre-approved for a mortgage, Flagstaff Bank will do a hard pull on your credit, which could cause your credit score to take a small dip. If you're shopping around for multiple lenders in a short time frame, all of the lenders’ credit pulls should only count as one.
When comparing rates, note that most lenders quote home loan interest rates that include a rate buydown. When shopping, make sure to get the annual percentage rate without the buydown so you get an apples-to-apples comparison between lenders.
To apply for a mortgage with Flagstar Bank, you'll need to do the following:
The qualification criteria for a Flagstar mortgage will vary based on your loan type. For example, FHA loans require borrowers to have at least a 3.5% down payment, whereas conventional loans require a minimum of 3% or 5%, depending on the borrower’s income. Jumbo loans require 10% or more down. VA and USDA loans do not require a down payment.
The minimum credit score set by the government for an FHA loan is 500, but Flagstar Bank requires FHA borrowers to have a minimum score of 580; borrowers with borderline scores can apply for an exception on a case-by-case basis. VA borrowers typically need a score of 620 or above, but Flagstar Bank only requires 600 for a VA loan. Similarly, many lenders require a score of 640 for USDA loans, but Flagstar’s minimum is 620. Conventional and other types of loans all require a score of 620 or higher.
Your debt-to-income (DTI) ratio also determines whether you qualify for a Flagstar mortgage and at what rate. FHA loans have the most liberal DTI requirement at 56%. Conventional loans require 45% or lower. Flagstar Bank offers more flexible requirements for USDA and VA loans, though the DTI for these loans rarely exceeds 55%.
Many homeowners opt to refinance their mortgages to reduce their interest rates, move from a variable rate to a fixed one, eliminate the need for private mortgage insurance (PMI), lower their monthly payments, or cash out equity for other financial needs. Refinancing is essentially rewriting a loan on the same property but with potentially different rates and terms. An appraisal is usually required to determine the current value of the property.
Refinancing a mortgage with Flagstar requires an 80% loan-to-value ratio (LTV). This means if you cash out any of your equity in the refinance, the loan must represent no more than 80% of the property’s value once the loan closes. If you recently took out a mortgage with a low down payment, you may not be eligible to refinance until your equity reaches at least 20%. However, if you have a VA loan, Flagstar Bank allows refinancing of up to 100% of the property’s value.
To refinance a mortgage with Flagstar, you’ll need at least a 620 credit score and a DTI no higher than 45%. You can apply online or speak to a loan officer on the phone to start the process.
Flagstar Bank could be a good choice if you’re looking for more lenient DTI limits and lower credit score requirements for specific loan types. The website doesn’t provide rate estimates, so if you’re looking for a rate quote, you’ll need to speak to a loan officer first. Here’s how Flagstar Bank compares to other lenders.
Meet the contributor: Jennifer SissonJenni is a personal finance editor and writer. Her favorite topics are investing, mortgages, real estate, budgeting, and entrepreneurship. She also hosts the Mama's Money Map podcast, which helps stay-at-home moms earn more, spend less, and invest the rest. Jenni started her professional career as an in-house editor for KLAS Research, a healthcare IT company.
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Fox Money is a property of Credible Operations, Inc., which is majority-owned indirectly by Fox Corporation. This material may not be published, broadcast, rewritten, or redistributed. All rights reserved. Use of this website (including any and all parts and components) constitutes your acceptance of Fox's Terms of Use and Updated Privacy Policy | Your Privacy Choices.
*Credible Operations, Inc. We arrange but do not make loans. All loans are subject to underwriting and approval. Registered Mortgage Broker - NYS Department of Financial Services. Advertised rates are subject to change and may not be available at closing, unless locked with a lender
