Zillow is well known for being a real estate marketplace where you can hunt for a new pad and admire real estate you can’t afford. In 2019, Zillow announced Zillow Home Loans, which is the direct lending arm of the company that originates loans.
Here, we’ll run through what loan options are available through Zillow Home Loans and what you need to know before borrowing.
- An overview of Zillow Home Loans
- Which loan products does Zillow Home Loans offer?
- Conventional loans at Zillow Home Loans
- FHA loans at Zillow Home Loans
- VA loans at Zillow Home Loans
- Refinance loans at Zillow Home Loans
- What Zillow Home Loans customers are saying
- FAQs about Zillow Home Loans
- The final word on Zillow Home Loans
An overview of Zillow Home Loans
Zillow Home Loans is based in Overland Park, Kansas, and was launched after Zillow Group’s acquisition of Mortgage Lenders of America in 2018. After the purchase, the company was renamed and now offers government-backed and conventional loans under the new name, Zillow Home Loans.
According to Zillow, securing a mortgage is one of the most complicated parts of buying a home, and Zillow Home Loans aims to streamline homebuying by simplifying the process of rate shopping and getting financing. Zillow Home Loans also offers tools and resources that explain how to get a loan and calculators that help you estimate your potential monthly payment.
Zillow Home Loans, LLC, isn’t licensed in Hawaii, New Jersey, New York, Vermont, or West Virginia.
Which loan products does Zillow Home Loans offer?
Zillow Home Loans offers a few loan options for homebuyers, including conventional loans and government-backed loans for new home purchases. If you want to refinance your mortgage to lower your payment or cash out some equity, refinancing is available to qualifying homebuyers as well.
Conventional loans at Zillow Home Loans
Conventional loans are mortgages that aren’t backed by a government entity. Traditionally, lenders have preferred a 20% down payment for conventional loans. But Zillow Home Loans may accept less than 20% (and as little as 3% down), as long as you sign up for private mortgage insurance (PMI). PMI insurance protects the lender if you default and is often required when you make a down payment of less than 20%.
Zillow Home Loans doesn’t clearly outline specific eligibility requirements for its mortgage loans, but in general, you need a FICO score of at least 620 to qualify for a conventional loan. That said, the higher your score, the lower the rate you might be able to qualify for.
Another factor that lenders typically consider for home loans is your debt-to-income (DTI) ratio. This percentage expresses how much of your monthly income goes toward debt and your housing costs. Although DTI requirements vary, lenders like to see that your debt payments take up no more than 43% of your income.
|Loan term||15-, 20-, and 30-year terms|
FHA loans at Zillow Home Loans
FHA loans are home loans backed by the Federal Housing Administration and offered by private mortgage companies. They let you put down as little as 3.5%. Upfront and monthly mortgage insurance premiums (MIP) are also FHA loan requirements. If you put down 10% or more, this insurance will be removed after 11 years. Putting down less than 10% means the mortgage insurance will stay on the loan for the entire loan term.
FHA loans have traditionally been a popular option for first-time homebuyers and borrowers with less-than-perfect credit because you don’t have to save up a bunch of money to qualify, and the credit requirements are flexible. For example, a score of 580 or above could qualify you for a mortgage with 3.5% down. With a credit score of 580 or below, you might still be able to qualify but with 10% down.
|Loan term||Up to 30 years|
VA loans at Zillow Home Loans
VA loans are loans insured by the Department of Veterans Affairs and may offer 100% financing to service members, veterans, and qualifying spouses, which means you may not need to make a down payment.
VA loans don’t require mortgage insurance, but there is a funding fee that can range from 1.4% to 3.6%. The fee amount depends on your down payment and how many times you’ve used a VA loan. Instead of paying it upfront, the funding fee is something you may be able to finance with the rest of your loan.
The VA doesn’t set minimum credit requirements and leaves it up to individual lenders to determine credit criteria. So if you don’t qualify for a VA loan with Zillow Home Loans, you may be able to shop around and find another lender willing to work with you. When applying for a VA loan, you need to provide a certificate of eligibility to confirm you’re able to use the benefit. You can do this online or by mail.
|Loan term||Up to 30 years|
|Credit needed||No minimums|
Refinance loans at Zillow Home Loans
Zillow Home Loans has an option on its website for homeowners to explore refinancing options but doesn’t share many details about the rates, terms, and eligibility criteria.
Refinancing is taking out a new loan to pay off an old one and could be worth considering if you want to try to lower your rate, change your loan term, or move from an adjustable-rate mortgage to a fixed-rate one. Refinancing could also help you get rid of FHA loan mortgage insurance once you build up 20% equity in your home.
In some cases, you may also qualify to withdraw cash out of your home equity when refinancing through a cash-out refinance. This is done by borrowing more than what you owe and then taking out the difference between the original loan amount and the new loan in cash. To do this, you usually need to have at least 20% equity in your home and decent credit.
What Zillow Home Loans customers are saying
Zillow Home Loans is a Better Business Bureau accredited company and gets an A+ rating from the Bureau’s propriety rating system. However, customers on the Bureau’s website gave the company a cumulative 3.57 out of 5 stars as of May 10, 2022.
A few issues customers said they experienced with the company include discrepancies in documents, confusion during payment processing, and a lack of communication. But others report having had good experiences with the company and its loan officers and cite the ease of the process and competitiveness of rates as reasons they recommend Zillow Home Loans.
FAQs about Zillow Home Loans
What are the benefits of getting a home loan through Zillow?
The top benefit of borrowing from Zillow Home Loans is the convenience. If you find a home you love on Zillow, you may be able to apply for a loan directly from the loan origination side of its business. Essentially, Zillow could be used as a one-stop-shop for your home search needs.
Even so, it’s a good idea to compare offers from multiple lenders before borrowing. Shopping around to compare closing costs, terms, and interest rates could help you find the best possible deal.
How much does a Zillow home loan cost?
How much a Zillow home loan will cost depends on several factors. The first is your interest rate, which is a percentage tacked onto your loan and is one of the ways lenders make money. The interest rate you may qualify for varies depending on your credit, down payment, and where you’re buying. The higher your credit score, the lower your interest rate might be.
The second factor is the closing costs. Closing costs may include title insurance, appraisal fees, taxes, and escrow fees charged to process the real estate transaction. Zillow Home Loans doesn’t share the fees it charges for loans. But in general, closing costs are about 3-5% of your loan amount.
What is the interest rate for Zillow loans?
The Zillow Home Loans site doesn’t outline specific interest rate ranges for its loans. But the primary Zillow site shares current market mortgage rates, which could give you an idea of the rate you might qualify for depending on your credit rating, down payment, and location.
The final word on Zillow Home Loans
Online lenders are making it easier for borrowers to shop around and get preapproved for financing from the couch. Zillow Home Loans could be a good one to consider because it's affiliated with Zillow, which is already a trusted and reputable real estate resource.
But the company has stiff competition — many other lenders offer online preapprovals, and applying could be just as convenient elsewhere. Reviewing our list of best mortgage lenders could help you explore other options so you can find the most competitive deal.
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