Your home is likely to be the largest purchase of your life, and almost nobody makes it with cash. The real question is where to borrow — and the answer has changed more in the past decade than most homebuying advice lets on. The typical American mortgage no longer comes from a bank at all.

Online and nonbank mortgage lenders

Independent mortgage companies — lenders that originate home loans but do not take deposits or run branch networks — wrote about 65.6% of the residential mortgages made in 2025. That is almost two-thirds of the market, which makes the nonbank lender the default place Americans get a mortgage now, not the alternative.

These companies do one thing, at volume. Applications run digital from the first click to closing, underwriting tends to move fast, and because they compete almost entirely on rate and speed, pricing is often sharp. Applying online is not a novelty anymore; it is simply how mortgages are done, at nonbanks and traditional banks alike.

Two things to know. First, a nonbank lender is still a licensed, regulated mortgage lender — the disclosures and consumer protections are the same ones a bank owes you. Second, whoever originates your loan may later sell it or transfer its servicing. That is routine across the whole industry and does not change your rate or terms.

Banks and credit unions

The traditional options still matter, and they differ from each other.

Banks are for-profit businesses, and their draw is usually the relationship: the bank where you already keep accounts may offer pricing discounts to existing customers, and holding your mortgage where you bank is convenient.

Credit unions are member-owned nonprofits. With no shareholders to satisfy, many price mortgages competitively and keep fees low, and service tends to be personal. You must be a member to borrow — joining is usually easy — but smaller credit unions can offer a narrower menu of loan programs than a big lender.

Mortgage brokers

A broker does not lend money. A broker takes your single application and shops it across the wholesale side of many lenders, bringing back quotes you could not easily gather yourself. Broker compensation must be disclosed, and the steering practices that gave the industry a black eye before the financial crisis are restricted by federal rules and licensing requirements.

Brokers earn their keep most clearly when your file is not cookie-cutter — self-employment income, a recent credit event, an unusual property — because they know which lenders will actually say yes.

Government-backed programs

Whichever lender type you choose, ask about government-backed programs. The government usually is not lending the money; it guarantees the loan, which lets the lender accept less money down or a lower credit score:

  • FHA: 3.5% down with a credit score of 580 or higher, and 10% down for scores of 500–579 — though individual lenders can set stricter standards.
  • VA: no down payment for eligible veterans, service members, and some surviving spouses.
  • USDA: no down payment on homes in eligible rural and suburban areas — the full rules are in our guide to USDA home loans.

Conventional loans have low-down-payment paths too. Fannie Mae's HomeReady and Freddie Mac's Home Possible take 3% down for borrowers earning up to 80% of their area's median income, and Conventional 97 offers 3% down to first-time buyers with no income cap. Many state and local housing agencies layer their own assistance on top. If this is your first purchase, start with the best mortgages for a first-time home buyer.

How to compare offers: the Loan Estimate

Shopping across lender types only works if the offers are comparable — and by law, they are. Within three business days of receiving your application, every lender must send you a Loan Estimate: the same standardized form no matter who you applied with, laying out the rate, the monthly payment, and the closing costs the same way. It exists precisely so a bank's offer, a credit union's, and an online lender's can be read side by side.

Collect two or three Loan Estimates dated the same day — pricing moves daily — and compare the rate, the points, and the lender fees line by line. The payoff is real: on any given morning, the gap between the cheapest and priciest lender posting the same loan is regularly wider than anything the market itself does that week. For where rates stand and where forecasters see them heading, see our 2026 mortgage rate outlook.

One caution survives from the branch era: work with lenders you can verify, and be wary of anyone who contacts you unsolicited. Beyond that, cast a wide net. Your best deal might come from a bank, a credit union, a broker's wholesale partner, or a company you will only ever meet through a screen.