Freedom Mortgage: How Does it Work?

FT Contributor
An insurance agent hands a smiling couple the keys to their new house.

Freedom Mortgage was established in 1990 and now has 75 offices throughout the country. It’s served over 1.1 million homeowners and offers several types of home loans. Review the information in this article to learn more about what Freedom Mortgage offers and the application process for a home loan.

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Freedom Mortgage Process

While the Freedom Mortgage website is useful for finding out more information about the mortgage application process, you can’t complete an online application through the site. To start the mortgage process, you must fill out an online form that’s sent to a local Freedom Mortgage representative in your area. The representative contacts you and helps you to get pre-approved for a mortgage.

Alternatively, you can call Freedom Mortgage to begin the mortgage process. When you speak with a representative, you’ll be asked to provide your:

  • Contact information.
  • Bank account balances, assets, and other financial information.
  • Income and expenses.
  • Spouse’s information, if applicable, including income and expenses.

You must provide proof of income, bank account information, asset valuation, and information about your expenses to continue through the mortgage application process. By analyzing your financial situation, your mortgage representative can help you determine how big of a mortgage you can afford.

Freedom Mortgage Rates

Freedom Mortgage doesn’t provide mortgage rates on their website but the loan provider is competitive with other lenders. The interest rate that applies to your home loan is determined by several factors, including:

  • Your credit score and report.
  • The current market’s interest rates.
  • The type of loan you apply for.
  • Your income and other personal financial factors.
  • The loan term.
  • The loan amount.
  • Your down payment.

If you’re trying to buy a house with a low credit score and you’re offered an unsatisfactory interest rate, you can “buy” points to improve your rate. Each point is equal to 1% of the loan so buying these points lowers your monthly mortgage payment.

Freedom Mortgage Loan Services

Your interest rate and mortgage payment are also determined by the type of loan you qualify for. While FHA, VA, and USDA loans are provided through private lenders, they’re financially backed by the federal government and conventional loans don’t have government backing.

VA Loans

VA loans are financially backed by the Department of Veterans Affairs and only veterans, active duty military personnel, and their eligible family members qualify for these loans. You may be able to successfully apply for a VA home loan without a minimum credit score. This type of loan offers several benefits, including:

  • No private mortgage insurance.
  • No down payment.
  • Competitive interest rates.
  • No prepayment penalties.

Keep in mind, VA loans include a funding fee that’s determined by your down payment and may be rolled into your closing costs.

Conventional Loans

To qualify for a conventional loan, you need a satisfactory credit score and in most cases, your debt cannot exceed 43% of your income. If your down payment is less than 20% of the home’s purchase price, you’re responsible for private mortgage insurance. If you’re eligible for a conventional loan, you’ll experience several benefits, including:

  • Flexible loan terms, such as a 15- or 30-year loan.
  • The ability to purchase a second home or investment home.
  • Your mortgage insurance premium isn’t due upfront.

If you’re ready to buy a house and have a large down payment, consider looking into a conventional loan.

FHA Loans

FHA loans are insured by the federal government but administered by private lenders. To qualify, you must:

  • Plan to live in the home you’re purchasing as your primary residence.
  • Buy a home that meets the FHA’s standards, determined by inspection and appraisal.
  • Have a debt-to-income ratio that’s 43% or less.
  • Prove you earn a steady income.
  • Have a satisfactory credit score of 540 or higher.

The terms you’re offered depend on your financial situation and the home you’re buying. Generally, FHA loans offer competitive interest rates, flexible loan terms, and a down-payment requirement as low as 3.5%.

USDA Loans

A USDA loan is guaranteed by the U.S. Department of Agriculture but you only qualify for this loan if you purchase a home in a USDA-eligible area. This generally includes homes in towns with populations of 35,000 or less. You must also meet the loan’s income and debt requirements and use the loan to purchase a home you plan to live in as your primary residence.

A USDA loan is associated with several benefits, including the following:

  • You may not be required to provide a down payment.
  • Interest rates are competitive and always fixed.
  • In most cases, there’s no minimum credit score requirement for a USDA loan, but this may vary by lender.
  • There are no requirements for a home appraisal or inspection.

If you’re planning to purchase a primary home in a rural area, it could be beneficial to apply for a USDA loan since you may not need a minimum credit score or down payment.

How to Apply for a Loan From Freedom Mortgage

The mortgage application process is more extensive than when you apply for a personal loan or car loan. Be prepared to provide your financial information, including proof of income and bank account balances.

You can’t complete the mortgage application process online. However, if you visit the Freedom Mortgage website and provide your contact information, a local representative will contact you to begin the application process. You can also call Freedom Mortgage at 855-343-9403 to speak with a representative or use the website’s “Find a Loan Officer” function to locate a lender in your area.

After taking your information, pulling your credit, and verifying your financial situation, the representative will provide you with information on the loans you qualify for. When you know the loan amount you can afford, you can begin shopping for your home.

Before agreeing to loan terms, it’s important to understand your financial responsibilities, including closing costs and your estimated monthly mortgage payment. With many loan options, a Freedom Mortgage representative should be able to find a home loan you qualify for that works with your budget.

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