The Tool Desk
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Start with your budget and priorities
Before contacting lenders, decide what monthly payment and cash to close you can manage. Think about how long you expect to keep the home or mortgage, and whether you value a stable payment more than the possibility of a lower initial payment that may change later.
Note circumstances that could affect the loan options worth discussing, such as military service, a rural property, your down payment, income or first-time-buyer status. These factors may point to programs with different eligibility rules; they do not establish that you qualify.
Contact several kinds of lenders
Compare offers from multiple providers when practical. Banks, credit unions, mortgage brokers and online lenders may differ in available products, costs and process. The Consumer Financial Protection Bureau (CFPB) recommends making it a goal to compare at least three offers and suggests contacting banks, credit unions and organizations that specialize in particular borrower situations: CFPB guidance on shopping for a mortgage.
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Ask each provider what loan types it offers, what information it needs to give you a useful estimate, how long the estimate is valid, and whether the quoted rate is locked. A preapproval can help you understand what you might be able to borrow, but it is not a final loan offer or a guarantee of approval.
Request comparable Loan Estimates
Once you have a specific home in mind, request a Loan Estimate from each lender. Give each the same scenario: loan amount, loan type, term, down payment, property and timing. If your circumstances are unusual—for example, you are self-employed or the property has atypical features—tell each lender so the estimates reflect the same facts.
Under CFPB guidance, a lender must provide a Loan Estimate within three business days after receiving six pieces of information: your name, income, Social Security number, property address, estimated property value and requested loan amount. See the CFPB explanation of when you receive a Loan Estimate.
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A Loan Estimate describes terms the lender expects to offer; it is not final approval. The CFPB says that multiple mortgage credit checks within a 45-day window are recorded on your credit report as a single inquiry. Keep your applications within a focused shopping period and ask each lender how it will handle the credit check. Details are in the CFPB’s guidance on requesting and reviewing multiple Loan Estimates.
Compare the same items on each estimate
Use the standardized Loan Estimate rather than a verbal quote or an advertised rate. Check that the loan scenarios match before deciding which offer is cheaper. The CFPB’s guide to comparing and negotiating loan offers highlights these factors:
- Loan structure: Loan amount, term, loan type, and whether the interest rate is fixed or adjustable.
- Monthly cost: Interest rate, principal-and-interest payment, mortgage insurance and total estimated payment. Review any estimated property taxes and homeowners insurance shown, including whether those costs are escrowed.
- Upfront cost: Origination charges, lender-required services, services you may shop for, discount points, lender credits and total closing costs.
- Cash to close: The estimated amount you will need at closing, not just the lender’s charges.
- Rate lock: Whether the rate is locked, how long the lock lasts and what happens if closing is delayed.
- Adjustable-rate exposure: When the rate and payment may change, how often adjustments can occur and what caps limit them.
Taxes, insurance, prepaid costs and escrow estimates can vary for reasons outside a lender’s control. Ask about a large difference rather than assuming the lower estimate means the lender is offering a better loan.
Look at total cost, not just the rate
A lower rate may come with discount points paid upfront. A lender credit can reduce upfront expenses but may affect the rate or total cost of borrowing. Ask lenders to show these tradeoffs in writing, then consider which option fits how long you expect to keep the mortgage.
The CFPB suggests using the five-year cost of borrowing as one comparison aid. It also says borrowers keep a mortgage for about five years on average before moving or refinancing; that is a general average, not a forecast for your situation. A “no closing cost” offer is not necessarily free: the CFPB warns that it can come with higher monthly payments. Ask which costs are covered, whether costs are added to the loan or offset through the rate, and how each option compares over your expected holding period. See the CFPB comparison guidance.
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An adjustable-rate mortgage can change after its initial period, so the starting payment alone does not show the full risk. Ask when the first adjustment can happen, how frequently later adjustments occur, and what limits apply to each adjustment and to the rate overall. Consider whether the payment would remain manageable if the rate rose. Compare those terms with a fixed-rate offer on the same loan amount and term.
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Ask questions and negotiate in writing
Before choosing, make sure you understand the offer and how the lender will handle the transaction. Useful questions include:
- What is the APR, and which fees and points are included?
- What does the monthly payment include? Are property taxes and homeowners insurance escrowed?
- Which figures in the estimate could change, and what is the expected cash to close?
- Is there a prepayment penalty?
- What is the rate-lock period, and what happens if closing is delayed?
- Can you explain any difference between the Loan Estimate and what we discussed?
- Can you match or improve a competing offer without increasing another fee?
The CFPB says you can ask lenders to improve an offer. Check revised estimates for a fee that falls while another rises, or a lower rate paired with more points. Compare the updated written estimate—not a verbal promise—to the other offers. See the CFPB’s advice on comparing and negotiating offers.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Compare fit and closing execution
A low-cost offer is useful only if the loan suits your needs and the lender can carry the transaction through. Compare each lender on these dimensions:
Best Value
| Comparison axis | What to compare | Why it matters |
|---|---|---|
| Loan structure | Fixed or adjustable rate, term and loan program | These shape payment stability, duration and applicable program terms. |
| Ongoing affordability | Principal and interest, mortgage insurance, escrow and possible future payment changes | The advertised rate alone does not show your total monthly housing cost or adjustment risk. |
| Upfront cost | Origination and other lender-controlled charges, points, lender credits and cash to close | These can change the cost of an offer with a low rate. |
| Fit and execution | Program eligibility, responsiveness, document process and confidence in meeting the closing deadline | An offer may be inexpensive but unsuitable for your circumstances or transaction timeline. |
Notice whether the loan officer answers questions clearly and gives consistent explanations. Ask directly whether the lender expects to meet the closing date in your purchase contract, and what could jeopardize that schedule.
Ask whether a loan program may fit
Depending on your circumstances, ask participating lenders about conventional loans, FHA-insured loans, VA-guaranteed loans, USDA-sponsored loans or state housing finance agency offerings. Some state programs serve first-time buyers with low or moderate incomes. Eligibility, property requirements, lender participation and availability depend on the specific program and current rules, so verify the details with the lender and the official program source. The CFPB’s mortgage shopping guidance describes these as options to explore, not a determination that a particular buyer qualifies.
Get help reviewing offers if you need it
If loan terms or fees are difficult to compare, a HUD-certified housing counselor can help you review Loan Estimates. The CFPB provides a housing counselor locator and information for contacting a counselor.
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