Our writers and editors used an in-house natural language generation platform to assist with portions of this article, allowing them to focus on adding information that is uniquely helpful. The article was reviewed, fact-checked and edited by our editorial staff prior to publication.

Key takeaways

  • Mortgage lenders provide financing to buy, build or renovate a property. They also refinance mortgages, and some offer second mortgages.
  • There are many types of lenders, including banks, that offer mortgages through various channels, such as correspondent, direct or wholesale.
  • Some of the biggest names in mortgages — Fairway and Rocket Mortgage, for example — are direct lenders. They specialize in mortgages and work with borrowers from origination through funding.

What is a mortgage lender?

A mortgage lender provides financing related to real estate, whether that’s to buy a property, construct one or fix one up. Some types of lenders, like a bank, also offer other types of loans and services, while others deal exclusively in home loans.

When you apply for a mortgage, the lender assesses your ability to repay it based on your credit and financial picture. The lender then determines whether you’re qualified to borrow the funds and, if so, how much and at what interest rate.

Your relationship with your lender doesn’t necessarily stop after you get your mortgage. The lender either manages the repayment process (including helping you navigate relief options, if it comes to that) or outsources this work to a servicer.

Types of mortgage lenders

There are various types of mortgage lenders, from local and regional lenders to brand-name financial institutions. Here’s an overview:

Retail lenders

When you picture a mortgage lender, you’re probably thinking of a retail lender. Credit unions and banks fall under this category. They’re called retail lenders because, like retail stores, they deal directly with consumers. These lenders almost always adhere to the mortgage qualifying standards laid out by the government — more on that here — such as a minimum credit score and maximum debt-to-income (DTI) ratio. This is so the lender can sell your mortgage to investors, thereby bringing in more capital to make more loans.

Direct lenders

Direct lenders function a lot like retail lenders, except that while the latter might offer a variety of other products, a direct lender specializes in mortgages.

Portfolio lenders

Portfolio lenders offer mortgages that they retain in their portfolio, rather than sell to investors. As a result, they aren’t subject to much of the underwriting criteria that guide direct or retail lenders.

Wholesale lenders

If you get a home loan through a mortgage broker, a wholesale lender is likely behind it. These lenders offer the loans they originate through third-party brokers who interface with borrowers; they don’t deal with consumers directly. After closing, many wholesale lenders sell the mortgage to investors and let a different financial institution service the loan.

Online lenders

Some mortgage lenders only operate online. You might apply for the loan using an online form rather than by meeting with a loan officer, for example. Because they have less overhead, these digital enterprises might be able to offer lower rates and fewer fees.

Warehouse lenders

Just like a wholesale lender, warehouse lenders don’t interact with consumers. Instead, they offer the funding other borrower-facing institutions need to originate the loan. Warehouse lenders typically offer this financing within a tight timeline, with the expectation that the loan will be sold right after closing, at which point the lender gets repaid.

Correspondent lenders

Correspondent lenders originate their own loans, but not with the goal of servicing them. Instead, they generally work with larger lenders who buy the loan after closing. That assumes, of course, that they can sell the loan. If they can’t, the correspondent lender will be the one to service your loan.

Hard money lenders

Hard money lenders can usually close quickly with fairly flexible underwriting criteria, but they come with two big downsides. First, you might need to pay a hefty origination fee. Second, hard money loans generally need to be repaid quickly. They can be an appealing option for a house-flipper, but generally aren’t the go-to option for your average borrower.

Bank vs. non-bank mortgage lenders

A non-bank mortgage lender is simply a lender that doesn’t deal with consumer deposits. It might be an independent mortgage company, an online lender or both. The other key differences include:


Green circle with a checkmark inside


  • Ability to bank and pay mortgage all in one place
  • Branch locations for in-person service
  • Local, regional and national options
  • Possible discounts for banking customers
Red circle with an X inside


  • Can offer more competitive rates, sometimes without fees
  • Experienced in qualifying many kinds of borrowers and credit situations
  • Focus on customer service, with a range of hours
  • Offer specialized and standard loan options


Green circle with a checkmark inside


  • Strict underwriting
  • Typically only offer standard loan options
Red circle with an X inside


  • Often less transparency around rates and fees; need to provide financial info first
  • Some only operate online

How to choose the right mortgage lender for you

The best way to find the right mortgage lender is to compare offers. Consider the following:

  • APR and interest rate – The lower the interest rate, the less you’ll have to pay over time. The interest rate is just one piece of the annual percentage rate, or APR, however. The APR also includes the lender’s fees, points and other costs. Compare both of these figures to get a sense of which lender might be more affordable.
  • Convenience – When you have questions or need help, how easy is it to get in touch with the lender? Do you need to be able to visit a branch? Do you have access to an online portal to set up auto-payments or view statements? Can you make payments over the phone or through an app? Consider what’s important to you in terms of access to your lender.
  • Reputation – Some lenders are renowned for customer service, while others have garnered complaints. Check out third-party reviews and testimonials to see what past customers have to say.


  • A mortgage lender originates and funds the home loan, while a servicer takes care of the loan after closing, ensuring that the borrower repays the loan. The institution you applied to and acquired the mortgage from might or might not be the same company that services your mortgage, and your mortgage can be serviced by more than one company over the loan term.
  • According to 2022 Home Mortgage Disclosure Act data, the top five biggest mortgage lenders are Rocket Mortgage, United Wholesale Mortgage, LoanDepot.com, Wells Fargo and Fairway Independent.