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The Loan Store Review: A Rapidly Growing Wholesale Lender

Review Updated
Dana George
By: Dana George
Dana George
Dana George
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Dana George has a BA in Management and Organization Development from Spring Arbor University. For more than 25 years, she has written and reported on business and finance, and she's still passionate about her work. Dana and her husband recently moved to Champaign, Illinois, home of the Fighting Illini. And though she finds the color orange unflattering on most people, she thinks they'll enjoy Champaign tremendously.

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Our Mortgage Expert

Nathan Alderman
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Nathan Alderman has worked with The Motley Fool since 2005, making errors his arch-enemies in a variety of roles including a six-year stint as the dedicated fact-checker for The Motley Fool's premium newsletter services. As The Ascent's Compliance Lead, he makes sure that all the site's information is accurate and up to date, which ensures we always steer readers right and keeps various financial partners happy. A graduate of Northwestern University's Medill School of Journalism, Nathan spends his spare time volunteering for civic causes, writing and podcasting for fun, adoring his wife, and wrangling his two very large young children.

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The Loan Store is best described as "the lender behind mortgage lenders." As a mortgage wholesaler, The Loan Store funds the mortgages approved by third parties, such as banks, credit unions, independent mortgage companies, and mortgage brokers. Read our full review of The Loan Store to determine if it's the best mortgage lender for you.

Ratings Methodology
The Loan Store

The Loan Store

Bottom Line

As a wholesale lender, The Loan Store does not work directly with borrowers. However, its innovative approach to lending does ultimately make its way to the consumer.

Min. Credit Score

Varies by third-party lender

Min. Down Payment

Beginning at 0%, but varies by lender and loan type

Key Features

  • Offers third-party lenders a wide variety of loan options
  • Works to keep interest rates low so lenders can pass low rates on to new borrowers
  • History of coming up with innovative loan products
  • Recent acquisition leads to rapid growth

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

10, 15, 20, 25, and 30 years

Adjustable Rate Terms

5, 7, and 10 years

Top Mortgage Lender

It's important to consider multiple mortgage lenders to find a good fit for you. We've listed one of our favorite lenders below so you can compare your options:

Lender Min. Down Payment Credit Score Next Steps
  • 0% - 3.5%
  • 580
Circle with letter I in it. 580 FHA 620 Conventional and VA 700 Jumbo
Apply Now for Better

The Loan Store: Full review

The purpose of this mortgage lender is to: Provide funding for the loans offered by third-party lenders.

Pros

  • Ensures third-party lenders have the funds they need to provide new mortgage loans
  • Emphasizes consumer-friendly loans
  • Expanding its reach through rapid growth

Cons

  • Currently only available in 43 states and the District of Columbia

Top perks

Makes funds available for new mortgages

The Loan Store loans money to third-party lenders at an attractive rate so those lenders can, in turn, offer their customers competitive mortgage interest rates.

Emphasizes consumer-friendly loans

The Loan Store has become known for its innovative loan programs, designed to provide loans to those who may not otherwise qualify for a mortgage. For example, The Loan Store offers two programs, HomeReady and HomePossible, for first-time home buyers and low- to moderate-income borrowers.

The Loan Store also gives third-party mortgage lenders the option of offering a "2-1 Buydown" to potential borrowers. With the 2-1 Buydown, the interest rate is lowered for the first two years. The rate the first year is typically 2% below the current mortgage rate, and the second year it is 1% below. It's only in the third year that the buyer must begin to pay the standard rate.

In addition to conventional mortgages, The Loan Store also makes FHA, VA, non-qualified (non-QM), HELOC, and jumbo mortgages available.

Rapidly expanding

The Loan Store has only been in business since 2019, and until recently, worked with approximately 900 approved third-party lenders, also referred to as "mortgage partners." However, earlier in 2023, The Loan Store purchased part of Homepoint's wholesale business. With that purchase, it now has more than 9,000 approved mortgage partners.

What could be improved

Not yet nationwide

While the situation may soon change, The Loan Store currently lends in only the following states: Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin, and Wyoming. 

How The Loan Store works

The Loan Store does not deal directly with borrowers. Instead, it works with lending institutions, like banks, credit unions, mortgage brokers, and independent mortgage lenders. Lending institutions must apply to become a partner. Once a partnership is established, here's how the process works:

  • A borrower applies for a mortgage loan with a lending institution or mortgage broker.
  • The lending institution or broker looks at the loan options available from various wholesale lenders, like The Loan Store.
  • If The Loan Store appears to be the best fit, the lending institution or broker gathers the necessary documentation and submits the borrower's loan application to The Loan Store.
  • If the application is approved, The Loan Store moves forward with funding.
  • Once the loan closes and is funded, The Loan Store pays the lending institution or broker a fee.

In essence, the lending institution or broker acts as the middleman between the funding source (The Loan Store) and the borrower.

How to qualify for a mortgage loan

Whether a borrower applies for a fixed-rate mortgage or adjustable-rate mortgage (ARM), these five factors determine the outcome:

Credit score

Lenders want to know that they can count on a borrower to make the monthly mortgage payments as promised and use their credit score to get an idea of how well they've managed debt in the past. The higher the credit score, the more confident a lender is that the borrower will carry through with their end of the bargain.

Each lender has its own minimum credit score requirement. However, government-backed loans like VA, FHA, and USDA mortgages tend to be more relaxed regarding the minimum score they will accept.

Debt-to-income ratio

Lenders also look at an applicant's debt-to-income ratio (DTI). DTI measures how much money someone owes in relation to how much they earn. Let's say a person's monthly income is $5,000, and their monthly housing, car, and loan payments add up to $1,500. By dividing $1,500 by $5,000, the lender can see that the applicant has a DTI of 30%.

Lenders each set a different "acceptable" DTI, but typically, it's capped at around 36% to 43%.

Down payment

The more money a borrower can put down on a property, the more comfortable a lender will be. Not only does a larger down payment mean a lower monthly payment, but it also means that the buyer is invested in the property and, therefore, is more likely to keep up with payments.

Work history

All lenders want to know the source of a borrower's income. Ideally, the borrower will have worked for the same company (or in the same field) for at least two years, although it's not a hard-and-fast rule. If they're no longer employed, a borrower will need to supply the lender with other sources of income, like investments, Social Security, or a pension.

Value of the home

No financial institution wants to lend someone $300,000 to buy a home that's worth $200,000. A home appraisal is routinely required, with the property in question compared to other similar properties. The largest loan amount a lender will approve is the appraisal value minus the down payment.

FAQs

  • No, The Loan Store does not deal directly with borrowers. Instead, it works with "middlemen" like banks, credit unions, mortgage brokers, and mortgage lenders.

  • These five factors determine loan eligibility:

    • Credit score
    • Debt-to-income ratio
    • Down payment
    • Work history
    • Value of the property you hope to buy

    You can improve your odds of loan approval by keeping your credit score high, debt low, saving for a sufficient down payment, maintaining steady employment, and choosing a properly-priced home.