Can you apply for a mortgage with more than one lender?

Your home is one of the biggest financial investments you will ever have. As a homeowner, you could have a mortgage loan for many years to come, possibly even decades.

But while it makes sense to shop around for the best possible deal, is it okay to apply for a mortgage with more than one lender at the same time?

The short answer is yes. You can apply with as many lenders as you want; there’s no penalty for applying more than once. And comparison shopping is proven to reduce homeowners mortgage costs by hundreds — even thousands — of dollars. 

In this article (Skip to…)

• Advantages of multiple lenders
• Informing your current lender
• How many different lenders
• How much you can save
• How to get multiple quotes
• Comparing different lenders
• Multiple FHA loan lenders
• Disadvantages of multiple lenders
• Get quotes from multiple lenders today

Fact: Nearly one in ten home purchase applications are denied. And 13% of all refinance applications are denied. 

If so many mortgage applications are turned down, a little “insurance” could translate into a lot of peace of mind. This is especially true if you have less-than-perfect credit.

Another reason to shop around is that mortgage programs, closing costs, interest rates and service can vary significantly from one lender to the next. Obtaining more than one loan approval allows you to test the waters with lenders and compare Loan Estimates.

And that’s not empty advice. This strategy is proven to work. 

The Consumer Financial Protection Bureau (CFPB) says that if just 20% of homebuyers would get an extra quote, they would collectively save $4 billion a year due to increased competition between mortgage lenders.

While the number of different lenders that borrowers should apply with depends on an individual’s home buying process, research conducted by Freddie Mac provides borrowers with some guidance.

Freddie Mac shows that homebuyers who submitted loan applications multiple times reduced their chances of unfavorably high mortgage rates by nearly 5%. While homebuyers who only conducted one search, routinely paid higher mortgage rates than other borrowers.

Furthermore, homebuyers who searched at least five times got lower mortgage rates than borrowers who compared only three quotes.

So aim to apply with at least three mortgage lenders. But if you can, get quotes from five or more. The more lenders you apply with, the better your chances of finding an ultra-low rate. 

These savings are confirmed by a CFPB study that found, “failing to comparison shop for a mortgage costs the average homebuyer approximately $300 per year and many thousands of dollars over the life of the loan.”

The savings may differ from one borrower to the next, but the findings are clear: Buyers can get a lower interest rate on their home loan by working with multiple lenders.

Getting preapproved, on the other hand, is a more rigorous process that examines your finances and evaluates your creditworthiness based on bank statements, pay stubs, credit report, and other considerations.

Once you get mortgage preapproval, the lender will issue you a preapproval letter that confirms how much they are willing to lend. Preapproval letters are usually valid for 90 days.

After you feel comfortable that you’ve found your lender, bank, credit union or mortgage broker, pull the trigger on the appraisal and lock in the rate.

Having your primary lender in place, you now have more concrete terms, rates, fees and service to which you can now compare with other lenders.

Again, don’t be shy about telling lenders that you’re working with other institutions.

Not only can it be helpful to provide full disclosure to the lenders with whom you’re shopping, it is more than likely to come up regardless.

For example, credit inquiries from other lenders will come up when a lender pulls your credit report. Not only will the inquiries show up, you may need to explain them.

Multiple inquiries would be potentially harmful to homebuyers due to the impact on credit scores. This concern kept consumers from shopping around to more than one lender.

Today, you can apply with as many lenders as you’d like over a 2-week period. All those inquiries only count as one credit pull.

This rule went into effect so that consumers could perform due diligence when making major purchases, thus ensuring they were getting a good deal.

Don’t let multiple lenders lead to multiple application fees

When you apply for a mortgage, working with two or more lenders at once can help you find the best deal.

However, what you don’t want is to end up paying multiple fees for multiple applications.

For example, if you get far enough into the process of a mortgage application, you will need to pay for an appraisal.

While having one appraisal is necessary, paying for multiple appraisals isn’t the best use of your money.

Instead, find one lender with whom you feel confident. Vet them by the things that are most important to you.

For some homeowners, it’s all about the closing costs and the interest rate. For others, closing costs and interest rates may be important, but paying a $100/day penalty to the builder because your lender couldn’t close on time can end up being much costlier than an additional 0.125% on the interest rate.

In other words, service and being able to close on time, can prove to be just as important if not more than a slightly higher interest rate.

Know what’s important to you so that you can shop and compare accordingly.

You may get flooded with solicitations from mortgage companies

Mortgage brokers, lenders, and online fintech platforms may sell your personal information to other financial institutions, which can result in an overwhelming amount of unsolicited phone calls and emails after submitting a single loan application.

While there is not much borrowers can do once they agree to a lender’s terms and conditions, limiting the number of inquiries may also limit the amount of subsequent spam.

Verify your new rate (Nov 5th, 2021)