Flagstar Bank loans
Courtesy of Flagstar Bank

Flagstar Bank, founded in 1987 and headquartered in Troy, Michigan, offers home equity loans and HELOCs to borrowers in 49 states. The lender provides competitive interest rates, high loan amounts and savings in the form of no lender closing fees and interest rate discounts.

If you’re looking for a home equity loan or HELOC, or home equity line of credit, here’s what to know about Flagstar Bank and its products.

Lender snapshot

There are hundreds, if not thousands, of banks and credit unions that offer home equity products. If Flagstar Bank is on your shortlist, here are some highlights to consider:

  • Offers loans and HELOCs between $10,000 and $1 million
  • Minimum credit score to qualify is 660
  • Loans and HELOCs are available in 49 states, excluding Texas
  • Maximum combined loan-to-value (CLTV) ratio of 89.99 percent
  • Repayment terms range up to 20 years on home equity loans and 30 years on HELOCs

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Tap into the value you have in your home to get the funds you need.

Pros and cons

No lender is perfect, so it’s important to know both the benefits and drawbacks of each option before committing. Here are some things to think about before you submit an application with Flagstar Bank.

Pros

  • Competitive interest rates: The lender’s home equity loan rates start at 5.30 percent APR. With the HELOC, you’ll get an introductory fixed 3.49 percent APR for six months, after which you’ll have a variable APR between 5.74 percent and 21 percent. According to Bankrate, the average home equity loan and HELOC rates are 6.94 percent and 7.37 percent, respectively, as of early July 2019.
  • High CLTV limit: You can borrow up to 89.99 percent of your home’s value between your primary mortgage loan and a home equity loan or line of credit. One thing to note, however, is that if your CLTV is above 80 percent, you can only borrow up to $500,000.
  • No closing costs: There are no lender closing costs on the bank’s home equity loan product, as well as no prepayment penalty. The lender also doesn’t charge closing costs on HELOCs, but you may be on the hook if you pay off the loan early.

Cons

  • No online application: You can start the application process online by providing your contact information. But to complete the process, you’ll need to speak with a loan specialist over the phone or visit a local branch.
  • Limited geographical presence: Flagstar Bank only has branches in four states: Indiana, Michigan, Ohio and Wisconsin. There are home loan centers in other states, but if you want in-person service, your options may be limited.
  • Good credit needed to qualify: You need a credit score of at least 660 to get a home equity loan or HELOC through Flagstar. A good credit score starts at 670, and if yours is lower, your chances of getting approved may be slim to none.

Mortgage products

Flagstar Bank offers various mortgage loans and refinance loans, as well as home equity loans and HELOCs.

If you’re interested in a fixed interest rate and a lump-sum payment, a home equity loan may be right for you. Flagstar Bank offers loans from $10,000 to $1 million, with a CLTV limit of 89.99 percent.

If you’re borrowing more than a CLTV of 80 percent, however, you will be limited to a loan of $500,000 or less. Repayment terms include five, 10, 15 and 20 years, giving you flexibility with your monthly payments.

If you’d rather have a revolving line of credit that you can access whenever you need it, a HELOC may be a better choice. With Flagstar Bank’s HELOC, you can borrow between $10,000 and $1 million, with a 10-year draw period and a 20-year repayment term.

The lender offers interest-only payments during the draw period, but there is a minimum monthly payment of $100.

Lender fees

There are no closing costs on HELOCs of $500,000 or less other than government taxes and fees, but you will need to pay lender closing fees if you close the account within 36 months. If you borrow more than $500,000 on either product, you’ll need to pay for lender’s title insurance. All HELOCs come with a $75 annual fee.

If you’re getting a HELOC, you can qualify for a 1 percent interest rate discount, which kicks in after the initial promotional period. You can get the maximum discount if you take an initial draw of $25,000 or more at closing and set up automatic monthly payments during the application process from a Flagstar Bank deposit account.

Borrowing requirements

Flagstar Bank requires that you have a credit score of 660 or above to qualify for a home equity loan or HELOC.

Also, the property must be your residential home, which can include 1-4 unit owner occupied properties, modular homes and owner-occupied secondary homes. To maintain the loan or HELOC, homeowner’s insurance and, in some cases, flood insurance are required.

While the lender has limited banking locations, residents of all states, excluding Texas, can qualify for a home equity product.

How to apply

To apply, you can visit a local Flagstar bank branch, call or share some information through the bank’s website and get a follow-up call from a loan specialist, who will walk you through the remainder of the process.

During this process, you may need to provide some documentation verifying your income and information about the property.

View home equity rates

Tap into the value you have in your home to get the funds you need.

Get started

If you’re interested in a home equity loan or HELOC from Flagstar Bank, visit the lender’s website to learn more and start the application process. If you have any questions along the way, you can call 888-445-9147 to reach the bank’s home lending division. Alternatively, you can send a message through the bank’s website.

Before you accept a loan or line of credit from Flagstar Bank, however, be sure to compare its terms with other home equity lenders. This process can take time, but it will help you ensure that you get the right product for your needs.

How Bankrate Rates Flagstar Bank

Overall Score 4.1
Availability 4.0
Affordability 4.4
Customer Experience 3.8

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.