Mortgage Lender vs Bank
North Carolina. · Member since 2026 · 4 posts · 5 votes
Mortgage Lender vs Bank
Most Popular Reply
Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votesQuote from @Brandon Watts:
Hey there,
I wanted to get everyone’s opinion on using a mortgage lender/broker versus a traditional local bank.
I currently have a mortgage lender I’ve used for three deals, one mortgage and two HELOCs, and we’ve developed a pretty good working relationship.
My uncle is a little more old-school and suggested that I find a loan officer/loan administrator at a local bank and build a relationship with them. His thought is that having that relationship could make it easier to get future investment property loans approved.
For those of you who invest in real estate, which approach have you found to be better: working with a mortgage lender/broker or building a relationship with a traditional local bank?
I’d especially be interested in hearing about your experiences with investment properties and getting multiple loans over time.
Outside of the personal connection / relationship bit - I would generally say the rule of thumb is hit when someone hits the 4 or 5 property mark, they are usually "capped out" from continuing on the conventional or bank route, whether thats limits by the bank, excess qualification hurdles or just overall red tape and bureaucracy. Banks these days are under soo so much regulation and rules that they really can't be flexible or move fast, thats why you see more and more private lenders and brokers taking share in the space
Harpoon Capital514 Reviews
14 Replies
- 2moStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 514 votes
It depends on what kind of loan you're trying to get. Based on client feedback, credit unions and traditional banks can work for conventional owner occupy financing. For DSCR investment property loans, local banks are often more conservative in favor of the bank such as the bank programs having lower LTVs and requiring higher DSCR ratios such as a DSCR ratio 1.2 ratio versus a DSCR 1 ratio for best program terms. Sometimes banks will only offer shorter loan terms than a 30 year fixed loan term. Most loans will be refinanced but it's helpful to have the most favorable terms for more breathing room for when you need to refinance.
Different banks and mortgage lenders will have different program guidelines and working with a mortgage broker or a lender who specializes in the type of program you need such as DSCR or fix and flip can be helpful. Experienced brokers in this area will have access to more programs and options since not all program guidelines are equal.
Mortgage brokers who specialize in DSCR loans can help an investor as they often will work with wholesale lenders who specialize in DSCR loans so they can get the investor more favorable terms. Wholesale lenders work with mortgage brokers and don't work directly with the public. The loan terms are often more favorable because the lending guidelines and terms have already been agreed to by the investor pool who will buy the loans at the end of the process. If the borrower fulfills the underwriting guidelines during the underwriting process then the loans have a guaranteed path to be bought by the investor pool at the end of the process which will replenish the cash for new loans to keep the lending cycle going.
Besides having better guidelines in favor of the investor, wholesale lender loans often have better fees as there's less overhead compared to a traditional bank. A traditional bank is often paying more expenses so the bank needs to make more money per loan. If a bank has a large team to pay out or high rent that will go into the cost of the loan. Brokers and wholesale lenders can also have large teams but many work remote and have a more streamlined business model so that can help the investor. This will vary by mortgage broker and lender.
The best option is to identify the types of programs you are looking for and select the best mortgage professional for that. Mortgage professionals who specialize in whatever you are looking for such as VA loans or DSCR loans is a good way to go as the lending process differs based on the loan type. Mortgage brokers who can be great at let's say VA loans may not be the best for DSCR loans and vice versa. Working with someone who does a lot of a certain type of loan can be helpful as they will understand the nuances of the program and process better and be better equipped to use their experience and expertise to solve any problems that may come up.
Since DSCR and fix and flip loans are business purpose loans and they are not regulated the same way as owner occupy conventional loans, the rates and terms can change at any point up until closing. Because of that, it's important to work with a mortgage professional that's researched and has a good reputation. Happy to connect to discuss further.
Bright Skyline518 Reviews - 2moRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Brandon Watts:
Hey there,
I wanted to get everyone’s opinion on using a mortgage lender/broker versus a traditional local bank.
I currently have a mortgage lender I’ve used for three deals, one mortgage and two HELOCs, and we’ve developed a pretty good working relationship.
My uncle is a little more old-school and suggested that I find a loan officer/loan administrator at a local bank and build a relationship with them. His thought is that having that relationship could make it easier to get future investment property loans approved.
For those of you who invest in real estate, which approach have you found to be better: working with a mortgage lender/broker or building a relationship with a traditional local bank?
I’d especially be interested in hearing about your experiences with investment properties and getting multiple loans over time.
Outside of the personal connection / relationship bit - I would generally say the rule of thumb is hit when someone hits the 4 or 5 property mark, they are usually "capped out" from continuing on the conventional or bank route, whether thats limits by the bank, excess qualification hurdles or just overall red tape and bureaucracy. Banks these days are under soo so much regulation and rules that they really can't be flexible or move fast, thats why you see more and more private lenders and brokers taking share in the space
Harpoon Capital514 Reviews - 2moErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Brandon Watts:
Hey there,
I wanted to get everyone’s opinion on using a mortgage lender/broker versus a traditional local bank.
I currently have a mortgage lender I’ve used for three deals, one mortgage and two HELOCs, and we’ve developed a pretty good working relationship.
My uncle is a little more old-school and suggested that I find a loan officer/loan administrator at a local bank and build a relationship with them. His thought is that having that relationship could make it easier to get future investment property loans approved.
For those of you who invest in real estate, which approach have you found to be better: working with a mortgage lender/broker or building a relationship with a traditional local bank?
I’d especially be interested in hearing about your experiences with investment properties and getting multiple loans over time.
There is a lot of truth to your uncle's suggestion, but I think you should apply that same rule to your current lender relationship.
They don't necessarily need to be local to have a good working-relationship. I have worked with many out of state lenders/banks and have developed a good relationship by being reliable, forthcoming, and not wasting time. By doing this consistently, I am able to close loans for my clients very quickly and am able to get pricing exceptions when we need it.
It is very important to adopt a relationship-based mindset. Alternatively if you find yourself consistently referring business and not getting A+ service, then I think it is time to change and build another fruitful relationship.
LuxePrivate Investments LLC 572 Reviews - Lender · Pickerington, OH · Member since 2026 · 49 posts · 39 votes2mo
I’m a little biased since I’m a broker 😊 but I actually think there’s value in having both relationships.
A good local bank can be great for portfolio loans, commercial deals, and situations where they’re willing to look at the bigger picture because they know you and your business.
Where I think a broker really helps is having access to multiple lenders and programs instead of trying to make every deal fit one bank’s box. That becomes especially valuable as you start adding more investment properties, because what works for deal #2 may not be the best option for deal #6.
If you already have a lender you trust and who has successfully gotten three deals done for you, I definitely wouldn’t walk away from that relationship just because someone says a bank is “better.” I’d keep that relationship and also get to know a good local bank. More financing options is rarely a bad thing as an investor.
- 2moMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
Consider developing a relationship with a local credit union.
- Banker · MA · Member since 2026 · 120 posts · 35 votes2mo
The local bank relationship your uncle is describing has real value once you start pushing past the conventional limit of ten financed properties, because community and regional banks can portfolio loans in-house and underwrite to their own guidelines. But the tradeoff is narrower product selection and often tighter reserve requirements on investment deals. Most investors I've seen scale successfully end up using both: a broker relationship for the conventional and DSCR deals where rate and program selection matter, and a local bank relationship for the stuff that doesn't fit in a box. Given that you already have three deals and a working relationship on the lending side, I wouldn't abandon that, but adding a local banker who does commercial or portfolio lending is a reasonable move as your portfolio grows.
James Driscoll
- 2moGregory AcsPro MemberLender · MD · Member since 2025 · 226 posts · 87 votes
I don’t think one is universally better than the other. It really depends on the type of financing you expect to use as your portfolio grows. Mortgage brokers can often provide access to a wider range of loan programs, while local banks may have portfolio products or relationship-based lending that can be valuable for certain investors.
I’d focus less on the institution itself and more on finding someone who understands investment properties, communicates well, and can continue to support your long-term goals. The right lending partner is usually the one who can consistently provide solutions as your needs evolve, not just the best rate on your next loan.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1mo
Quote from @Brandon Watts:
Hey there,
I wanted to get everyone’s opinion on using a mortgage lender/broker versus a traditional local bank.
I currently have a mortgage lender I’ve used for three deals, one mortgage and two HELOCs, and we’ve developed a pretty good working relationship.
My uncle is a little more old-school and suggested that I find a loan officer/loan administrator at a local bank and build a relationship with them. His thought is that having that relationship could make it easier to get future investment property loans approved.
For those of you who invest in real estate, which approach have you found to be better: working with a mortgage lender/broker or building a relationship with a traditional local bank?
I’d especially be interested in hearing about your experiences with investment properties and getting multiple loans over time.
I got my start by being a mortgage lender and we had access to over 300 different companies who all had different programs. Big banks are limited to what the bank allows. Our underwriting was a little easier to understand and qualify for. I don't currently use either mortgage lenders or banks, I simply take over the existing loan so I don't need either. But the way I'd approach it is look at each choice, compare needed amount down, interest rate, closing costs and amortization (how much it costs after the full length of the loan, typically 30 years) and make a comparison.
To get an idea
a $400,000 loan at 5.0% for 30 years is $2,147.29 per month for a total of $773,023
and
a $400,000 loan at 5.5% for 30 years is $2,271.16 per month for a total of $817,616
for a difference of $44,593 then you compare fees and closing costs.
Sometimes the fees on the cheaper loan make it more expensive than the higher interest rate.
One of my early real estate borrowers was looking for a source where he could cut 0.125% (1/8 of a %) off of his loan costs. It woke me up to the reality of long term loans. - 1moRay WilliamsBusiness MemberLender · Denver, CO · Member since 2017 · 162 posts · 73 votes
Brandon, the way I'd think about this is less either/or and more sequencing based on what each option is actually built for. A mortgage broker has access to the wholesale side of the market, meaning dozens of different lenders and program guidelines behind one relationship, which is valuable right now while you're still doing conventional or DSCR deals and want the best combination of rate, program fit, and speed. A local bank or credit union earns its value once you start hitting structural limits on the conventional side, or when a deal doesn't fit any standard box, like a portfolio blanket loan or a construction to perm structure the bank can hold in house rather than sell on the secondary market. Those in house portfolio loans get underwritten to the bank's own guidelines instead of Fannie or Freddie rules, which is exactly the flexibility your uncle is describing, it just tends to matter more a few deals down the road than it does today. Given you already have a working three deal relationship with your broker, I wouldn't swap that out. I'd add a local bank or credit union relationship in parallel so both tools are ready when you need them.
- Lender · Phoenix, AZ · Member since 2026 · 55 posts · 17 votes1mo
Great breakdown above. I'd add a third lane worth keeping in your back pocket: what happens when a deal doesn't fit either the broker's wholesale grid or the bank's portfolio guidelines. That's usually where a private commercial lender comes in, underwriting on the property's cash flow rather than a borrower's tax returns or a bank's internal box. It doesn't replace either relationship, it's more of a release valve for the file that would otherwise stall out. Worth having that third contact once you're a few deals in and start hitting edge cases.
I find these remarks to be complete baloney.
"Outside of the personal connection / relationship bit - I would generally say the rule of thumb is hit when someone hits the 4 or 5 property mark, they are usually "capped out" from continuing on the conventional or bank route, whether thats limits by the bank, excess qualification hurdles or just overall red tape and bureaucracy."
I have had plenty of success working with and borrowing from local community banks, credit unions and smaller, regional banks. The trick is to find the people in your market borrowing right now from those same banks. Some banks really want real estate loans and price them competitively. Some don't want them that bad and price them poorly.
Let me be extremely clear - I speak on behalf of no one in this thread.
By my estimates, 90% or more of the people are here to self promote - and do NOTHING more. When self promoting, truth is often blurry and answers are shaped in ways that people hope will generate business and sales for themselves. These remarks will anger the countless dscr lenders on the board, but it's the truth. This is not to say other lenders are all bad and their loans don't have a place in the RE world.
DSCR loans have heavy up front fees, tough prepayment penalties and other less desirable terms. Local banks consistently have beaten any dscr offer by great margins in my experience. The DSCR window was when rates were in the 3's and that ship has sailed away and sunk.
Additionally, when you have established relationships at banks and a proven track record, this is worth a lot more than a dscr lender. A bank and banker that knows you as a borrower will do a lot more for you than a dscr lender - they know your business and you as a person. To a dscr, you're just another app.
Additionally, there's countless stories of people jumping thru many dscr hoops and the loans not closing. This can happen in a local bank, but is a lot less likely. A dscr lender will likely never meet you. A local banker is probably going to meet you and see you in the community and has more concern about their reputation and name.
- 1moDan HandfordPro MemberInvestor · Lexington, SC · Member since 2018 · 779 posts · 501 votes
I would treat this as building a financing bench rather than choosing one permanent winner. A broker can give you broader program access and help compare conventional options. A local bank can become valuable for portfolio loans, cross-collateralization, or deals that need judgment instead of a standardized box. Before the next acquisition, ask both parties to outline loan limits, seasoning rules, reserve requirements, recourse, and how they treat existing properties. The best relationship is the one that remains dependable as your portfolio changes. What type of property are you targeting next?
- Investor · Pacific Northwest · Member since 2026 · 538 posts · 309 votes1mo
I wouldn’t choose between a broker and a local bank. I’d build both relationships, because they solve different problems.
A good broker is useful when the deal fits a relatively standardized lending box and you want access to multiple programs, lenders, and pricing without shopping every institution yourself. A good local bank becomes more interesting when the deal starts requiring judgment: portfolio loans, odd collateral, multiple properties, construction, unusual income, or simply a borrower with enough history that the bank is comfortable looking at the whole relationship instead of one isolated file.
The part your uncle is right about is that relationships can become more valuable as your portfolio gets more complicated. But I wouldn’t interpret that as “the bank will approve me because they like me.” I’d interpret it as the bank already understands your balance sheet, liquidity, operating history, properties, and how you behave when something goes sideways. That reduces uncertainty for them, which can matter when you eventually bring them something that doesn’t fit perfectly into a commodity loan product.
I’d also be careful about assuming you eventually “graduate” from one source to another. The better model is a financing bench. You may use conventional financing on one property, a community bank on the next, a broker for another, and something entirely different for a short-term acquisition. The financing should fit the asset and your current capital position rather than your loyalty to one institution.
Since you’ve already closed three transactions successfully with your current lender, I definitely wouldn’t throw that relationship away. Someone who already knows how you communicate, how quickly you produce documents, and what your files look like has real value.
I'd just start talking to a couple of local banks now, before you need them. Ask what they actually like lending on, maximum LTV, amortization, recourse, reserve requirements, how they underwrite global cash flow, whether they retain loans in portfolio, and what kinds of borrowers they want to grow with.
That last question is probably more useful than asking who has the lowest rate today.
The best lender for deal #4 may not be the best lender for deal #12. The goal is to have enough good relationships that you’re never forced to make the property fit the only financing source you happen to know.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.