When you’re ready to apply for a mortgage, it’s best to compare several lenders to get the best rate. If you’re looking to save on lender fees and want to close quickly, Ally Bank could be one to consider. Ally Bank is a full-service online financial institution that offers the following mortgage loan types: conventional, jumbo, fixed-rate, adjustable rate, first-time homebuyer, and refinance.
Best for affordability and fast closings
Affordability: Ally Bank doesn’t charge lender fees, which could make this loan more affordable for consumers short on cash. The term “lender fees” typically refers to the origination fee, which includes processing the application, underwriting the loan, funding the loan, and administration services. Lender fees usually equal between 0.5% and 1% of the loan.
Note
When lenders offer a loan with no fees, borrowers typically pay for lender services in other ways, usually in the form of higher interest rates or having the lender fees added to the loan.
Fast closings: Ally Bank advertises that it typically closes 10 days faster than the industry average, which is four to six weeks. The faster the loan closes, the sooner you get your money to buy a home.
Best for pre-approval time
Ally Bank
Fox Money rating
Min. Credit Score
620
Days to Close
30
Pros and cons
Easy to get personalized mortgage rates
Fast online application process
Offers loan products with down payment as low as 3%
Doesn't offer FHA, VA, or USDA loans
No branch locations for in-person help
Doesn't provide land loans
More details
Overview
Ally Bank offers conventional and jumbo loans with low down payment requirements. The company is best known for its extensive online offerings, including rate quotes, customer support, and convenient pre-approval in under an hour.
Shows rates
Origination fee
Availability
All 50 states
Customer service
Live chat, email, phone
Mobile app
Online review score
1.6/5 Trustpilot score
Online prequalification
Min. down payment
Loan Type
Conventional
Yes
FHA
No
VA
No
USDA
No
Jumbo
Yes
ARM
No
Pros
- No lender fees: Ally Bank advertises that it has no lender fees, which can save you between 0.5% and 1% of the loan amount. This means on a $350,000 loan, for example, you can save up to $3,500, making the no-fee feature attractive.
- Fast closing: Ally Bank advertises that it closes up to 10 days sooner than the industry average of four to six weeks.
- Low down payment options: Ally Bank offers loans with a down payment as low as 3% — including conventional loans and first-time homebuyer loans through Fannie Mae’s HomeReady Mortgage Program and Freddie Mac’s HomeOne Mortgage Program.
- Offers jumbo loans: A jumbo loan exceeds the limits for a conforming loan, which is typically $766,550 to $1,149,825 depending on location. Ally Bank offers loans up to $4 million. You need a down payment of at least 10.01% to qualify.
Cons
- Doesn’t offer government-backed loans: If you want to get an FHA, VA, or USDA loan, you won’t be able to use Ally Bank, as this financial institution doesn’t offer those loan types.
- Doesn’t offer second loans: Ally Bank doesn’t offer home equity loans or home equity lines of credit (HELOC).
- Online-only help: You won’t be able to meet with someone face-to-face. While online lenders offer customer service support, usually by phone, text, or email, if you want to sit down with a loan officer in person, you won’t get that at Ally Bank.
Before applying for a mortgage, you’ll want to make sure you are financially stable in the eyes of the lender. Lenders usually focus on your credit score, debt-to-income ratio (DTI), and down payment.
Your credit score: You typically need a credit score of 620 or higher to get a conventional loan with Ally Bank. You’ll get the best interest rate, however, if your credit score is in the mid- to high-700s and above. If your credit score is between 620 and the mid-700s, you might be quoted a higher interest rate. If your credit score is below 620, you might not qualify for a mortgage until you raise your score.
Tip:
If you need help raising your credit score, the Consumer Financial Protection Bureau warns against paying a company that claims it can quickly fix your credit score for a fee. Instead, find a credit counseling agency that works with you to manage debt.
Your debt-to-income ratio: This represents how much of your pre-tax monthly income is used for debt payments, such as a car loan, credit card, or mortgage. Your DTI typically needs to be 43% or less to qualify for a loan with Ally Bank. You can determine your DTI by adding up all your monthly debt payments, such as credit cards, auto loans, student loans, and the mortgage payment, and dividing that number by your gross monthly income.
Tip:
If your DTI is higher than 43%, you’ll probably need to make more money or spend less to be approved for a mortgage loan at Ally Bank. Government-backed loans, such as FHA loans, allow a DTI as high as 57%, but Ally Bank does not offer FHA loans.
Your down payment: Putting down 20% of the price of the house is the gold standard. But you can qualify for a mortgage with as little as 3% down with Ally Bank. If you put down less than 20%, however, you’ll need to pay private mortgage insurance.
- Apply online: You need to go to Ally Bank’s website and apply online for a mortgage loan. This screening step determines whether you’ll get a pre-approval. If so, you'll receive a pre-approval letter and can proceed. This process can take as little as three minutes.
- Shop and offer: With your pre-approval letter, you can start shopping for a home. Once you've found one you like, you can make an offer.
- Lock in your rate: Once your offer is accepted, return to your Ally application, upload the purchase agreement, and lock in your interest rate. Be prepared to pay $750 during this step, and Ally will then schedule a home appraisal.
- Underwriting begins: Ally Bank will likely ask for copies of your most recent pay stubs, employment records, bank statements, and tax returns.
- Close: Once your loan is approved, you'll receive a closing disclosure. Ally Bank will tell you where to meet for the closing.
Ally Bank determines whether you qualify for a loan in the following ways:
- Credit score: You typically need a credit score of at least 620 to qualify for a mortgage. Ally considers your payment history and credit utilization to be the most important factors of your credit report.
- DTI: Ally Bank requires a DTI of 43% or less to qualify for a loan. Find your DTI by adding up your monthly expenses, including the potential mortgage payment, and dividing that number by your gross income.
- Down payment: This is the amount you contribute upfront — a higher down payment means you have more at stake in the home, and you’ll need to borrow less money. Ally offers conventional loans with a minimum down payment as low as 3% for qualified borrowers. If you put down less than 20%, you might be required to pay for mortgage insurance.
- Employment history: Ally Bank will review your employment history and income to determine whether you can afford the mortgage.
You need to go to Ally Bank’s website and apply online for a refinance loan. Here are the steps you’ll take:
- Find out the value of your home: Search online to find out what similar homes in your neighborhood have recently sold for or contact a local real estate agent.
- Put your home’s value into Ally Bank’s calculator: Ally Bank will suggest a loan that works for you based on the information you submit.
- Provide information about yourself and your current loan: Ally Bank will review your current mortgage and financial profile and give you a quote. Completing this process won’t affect your credit score.
- Complete your application: Ally Bank will ask you to upload and manage required documents. Home loan experts are available if you have any questions. You can call, text, or email for help if you need it.
- Close on the loan: Though you apply online, you’ll need to close in person. Ally Bank will arrange a time and place for you to sign documents, usually at an attorney's office.
If you’re looking for a home loan, take time to compare lenders. While Ally Bank offers a fast closing and no lender fees, it doesn’t offer as many mortgage loan types as some other lenders do, and you might find better rates and terms elsewhere.
Ally Bank offers the following mortgage loan types: conventional, jumbo, fixed-rate, adjustable rate, first-time homebuyer, and refinance. Ally Bank doesn’t offer government-backed mortgages, such as USDA, FHA, or VA loans.
Ally Bank has 1.2 out of 5 stars from Trustpilot, a 1.3/5 rating from ConsumerAffairs, and a 1.1/5 from the Better Business Bureau, along with an “A” rating. The ratings were for all manner of services the bank offers, not just for customer service or mortgages.
Ally Bank has no hidden fees since it doesn’t charge lender fees, which have to do with originating and servicing the loan. Lender fees usually equal between 0.5% and 1% of the loan and can be as high as 2%. You will, however, still be responsible for closing costs, which are typically between 2% and 5% of the home’s price, and the down payment.
It’s easy to apply for a mortgage with Ally Bank. You can apply for pre-approval online. Once you’ve had an offer on a home accepted, you can lock in an interest rate from Ally Bank and upload whatever documents are requested. If you have any questions, you can communicate with a loan expert via phone, chat, or email.
Meet the contributor:Laura Agadoni
Laura Agadoni, author of “New Home Journal: Record All the Repairs, Upgrades and Home Improvements During Your Years at…,” is a real estate writer, landlord, and REALTOR®.
ncG1vNJzZmivp6x7p7vXm6ysoZ6awLR6wqikaJ6frXquu82esGiln6fBqK3GnmaapJyueqOtzaRkpqeiqbSis8RmqZ6umZrE