Mortgage Broker vs. Bank vs. Credit Union: Reddit's Verdict, From a Broker Who'll Tell You When a Bank Wins

The most honest answer on Reddit to "broker, bank or credit union?" is "it depends." Threads on r/Mortgages tend to land there after a long argument. I agree with it. I run a brokerage, and I'll still tell you there are cases where a bank or credit union is the better call.

Here's what it depends on.

How each one works

• A bank or credit union lends its own money, or funds and sells the loan. You get that one institution's pricing and guidelines.
• A mortgage broker doesn't lend. We take your file to multiple wholesale lenders and pick the one with the best pricing or the guideline that fits your situation.
• A credit union is member-owned. Some run excellent mortgage specials, especially for members with deposits there.

Your loan will probably be serviced by someone else either way. Who services it matters less than the rate, costs and terms you lock.

Where brokers usually win

• Standard conforming loans. Wholesale pricing is competitive, and a broker can compare several lenders on the same day.
• Files that don't fit one bank's box. Self-employed borrowers, visa holders, investors using rental income, physicians with student debt. A broker can find the lender whose guidelines actually fit. See our non-QM explainer.
• Speed. At ABS we have direct access to underwriting, and our average purchase close is 21 days. Timelines vary by file, and no timeline is guaranteed.

Where a bank or credit union can win

• Jumbo loans with relationship pricing. Some banks discount a jumbo rate if you move significant assets to them. If you have that kind of relationship and fit their guidelines, get their quote. We do jumbo loans too, and it's worth comparing.
• Credit union specials. A promotional rate for members can beat wholesale pricing on a given day.
• Portfolio products. A bank that keeps loans on its own books sometimes offers terms nobody else will.

The catch with bank jumbo pricing

A relationship rate only helps if you qualify for it. Banks that keep jumbo loans on their own books tend to underwrite conservatively: tighter debt-to-income limits, larger reserve requirements, and little room for income that doesn't come from a W-2.

As a broker, we can take the same file to lenders with wider guidelines. Depending on the program, your credit and your reserves, some of our lenders allow a debt-to-income ratio up to 50%. When documenting income is the problem, there are other paths:

• Asset depletion, which qualifies you on liquid assets instead of a paycheck.
• Bank statement loans for self-employed borrowers, using deposits instead of tax returns.
• DSCR loans for investment properties, qualified on the property's rent.

If a program exists that fits your file, our job is to find it. See our non-QM page for the full range.

Speed matters on jumbo purchases too. We once closed a $1.4 million jumbo in Chicago in 12 days, and this post walks through how. That took a borrower who returned documents within hours and a clean appraisal and title. Our average is 21 days; timelines vary by file, and no timeline is guaranteed. Details of that loan are generalized to protect the client's privacy.

The part that matters most

Compare Loan Estimates, not labels. Ask two or three lenders, including at least one broker and one bank or credit union, for a Loan Estimate on the same day. Compare the rate and the costs in Section A together.

Our post on shopping lenders without hurting your credit explains how to keep those credit pulls inside the right window.

FAQ

Is a mortgage broker cheaper than a bank?

Often for conforming loans, because a broker can compare several wholesale lenders. Not always. Some banks price jumbo loans aggressively for clients with large deposits.

How do mortgage brokers get paid?

By the lender or by the borrower, not both. The amount is disclosed on your Loan Estimate.

Are credit unions better for mortgages?

Sometimes. Member specials can be very competitive. Product range is often narrower, so harder-to-qualify files may not fit.

Is it harder to qualify for a jumbo loan at a bank?

Often, yes. Banks that hold jumbo loans themselves tend to set tighter debt-to-income and reserve limits. A broker can compare lenders with wider guidelines, including asset depletion and bank statement programs.

Should I get quotes from both a broker and a bank?

Yes. That comparison is the best way to know you're getting a fair deal.