Should I Get a Mortgage from a Bank or a Non-Bank Lender?

Get a quote from at least one bank or credit union and at least one non-bank mortgage company, because your price depends on the individual lender's offer, and offers for the same borrower vary widely between lenders. Non-bank mortgage companies make most home purchase loans in the United States and a far larger share of loans backed by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Department of Agriculture (USDA). Banks and credit unions keep more of the loans they make and originate nearly all home equity lines of credit (HELOCs).

How much of the mortgage market do non-bank lenders have?

A non-bank lender is a mortgage company that does not take deposits. The Consumer Financial Protection Bureau (CFPB) summary of 2023 Home Mortgage Disclosure Act (HMDA) data, which counts standard mortgages repaid on a schedule and leaves out credit lines and reverse mortgages, shows:

• Overall share. Independent mortgage companies made 56.1% of mortgages, banks and savings associations 27.9%, credit unions 11.4%, and mortgage companies affiliated with a bank or credit union, which are also non-banks, 4.5%.
• Home purchase loans. Independent mortgage companies made 61.9% of first-lien purchase loans (the main mortgage, not a second loan) on single-family primary homes, about 1.7 million loans, and 64.3% of comparable refinances.
• Largest lenders. Of the 25 highest-volume lenders, 17 were independent mortgage companies, 5 were large banks, 2 were bank-affiliated mortgage companies, and 1 was a credit union. Rocket Mortgage ranked first, with about 6.2% of loans.

Their share has grown since the 2008 financial crisis. The Financial Stability Oversight Council (FSOC), a federal panel of financial regulators, reported that non-bank mortgage companies originated 39% of purchase mortgages on owner-occupied homes in 2008 and about two-thirds in 2022. FSOC also notes that these companies offer only mortgage-related products, so their profits rise and fall with mortgage demand and defaults more than a diversified bank's do.

Either type can be the direct lender that approves and funds your loan. Private lenders are a separate source outside this comparison; the disadvantages of taking out a loan from private lenders covers their costs.

Who regulates banks and non-bank lenders?

Both types give you the same Loan Estimate form, but the company and its loan officers answer to different regulators:

The loan officer rules come from the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), which treats loan officers employed by banks, credit unions, and certain bank subsidiaries as registered loan originators and requires a state license for loan officers at all other companies. You can look up either kind on NMLS Consumer Access (nmlsconsumeraccess.org) with the NMLS ID printed on page 3 of the Loan Estimate.

Which borrowers does each type fit?

Both types offer conventional loans, meaning loans not insured or guaranteed by a federal agency, as well as government-backed loans, but HMDA data show where each concentrates. The first and third points below cover first-lien purchase loans on single-family primary homes:

• FHA, VA, or USDA borrowers should include a non-bank. Government-backed loans made up 39.2% of independent mortgage companies' 2023 purchase loans, compared with 17.6% at small banks, 15.6% at larger banks, and 13.5% at credit unions. (The CFPB counts a bank as small when its banking organization held less than $1 billion in combined assets at the end of 2022.) FSOC reported that independent non-banks issued 84% of the mortgages in 2022 securities guaranteed by Ginnie Mae, the government corporation that guarantees securities backed by FHA, VA, and USDA loans. Add a bank or credit union quote for comparison.
• HELOC borrowers should start with banks and credit unions. Banks and credit unions made 95.1% of the HELOCs reported for 2023.
• Borrowers who want the lender to keep the loan should ask a credit union or bank. Of the purchase loans made in the first three quarters of 2023, credit unions sold 38.7% by year-end, small banks 58.2%, large banks 61.3%, and independent mortgage companies 94.9%. FSOC explains the non-bank pattern: loan sales are a significant source of their income, and they lack affordable long-term funding, so they sell loans quickly.

Is a bank or a non-bank cheaper?

Compare offers, not lender types. Your price depends on the individual lender's offer on the day you lock your rate, meaning the day the lender commits to hold it for a set period, and the CFPB toolkit says loan costs can vary widely from lender to lender. Intercontinental Exchange (ICE), a mortgage data company, reported in August 2026 that among borrowers with nearly identical credit profiles in 2026, locked rates differed by an average of 0.38 percentage point on conforming purchase loans (conventional loans eligible for sale to Fannie Mae or Freddie Mac), 0.47 point on FHA loans, and 0.48 point on VA loans. ICE estimated the conforming gap at about $76 a month on a $300,000 mortgage.

To compare a bank's offer with a non-bank's, request both Loan Estimates on the same day for the same loan amount, type, term, and lock period, since the CFPB notes that a rate difference between estimates issued on different days can come from market changes. Then line up the interest rate, the lender's charges in Sections A and B, any lender credits in Section J, and the "In 5 Years" figures on page 3, where the total paid minus the principal paid off equals five years of interest and fees. How to choose the best lender for your mortgage walks through each line and includes a worked example of paying points for a lower rate. If you are weighing specific banks, see which banks give you the best mortgage rates.

Does it matter who services the loan?

Your servicer is the company that collects your payments (what loan servicing is covers its other duties), and the CFPB toolkit notes that only your servicer can evaluate you for a loan modification, a change to the loan's terms to make payments manageable, if you fall behind. A loan made by a bank can still end up with a non-bank servicer. FSOC reported that non-bank companies held the servicing rights, the right to collect payments on a loan for a fee, on 54% of U.S. mortgage balances in late 2022, based on the 50 largest servicers, up from 4% in 2008, and handled 66% of servicing for Fannie Mae, Freddie Mac, and Ginnie Mae loans in January 2024, up from 35% in January 2014.

FSOC's concern is what happens under stress: non-bank servicers rely on debt that their lenders can reprice, reduce, or cancel, and federal tools for keeping a failed company's servicing running are more limited for non-banks than for banks. Two protections apply whichever company services your loan:

1. The Loan Estimate states the plan. Page 3 says whether the lender intends to service your loan or transfer servicing to another company. That line records the lender's intent when it issued the form.
2. Transfers come with notice and a grace period. Under Regulation X, the federal mortgage servicing rule, the old servicer must notify you at least 15 days before a transfer and the new servicer within 15 days after it, or both can send one notice at least 15 days before. For 60 days after the transfer, a payment the old servicer receives by the due date, including any grace period in your loan documents, cannot be treated as late.