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Watermark Home Loans Review: A Flexible and Low-Cost Lender

Review Updated
Kimberly Rotter, AFC®
By: Kimberly Rotter, AFC®
Kimberly Rotter, AFC®
Kimberly Rotter, AFC®
Accredited Financial Counselor®

Kimberly is a career writer and editor with more than 30 years' experience. She's a bankruptcy survivor, small business owner, and homeschool parent. In addition to writing for The Motley Fool, she offers content strategy to financial technology startups, owns and manages a 350-writer content agency, and offers pro-bono financial counseling.

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Our Mortgage Expert

Eric McWhinnie
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Eric McWhinnie
Eric McWhinnie

Eric McWhinnie has been writing and editing digital content since 2010. He specializes in personal finance and investing. He also holds a bachelor’s degree in Finance.

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Watermark Home Loans is a large mortgage lender offering home loans in most of the U.S. What stands out about Watermark is the breadth of its loan offerings and its ability to approve more applicants than many other lenders. But you wouldn't know about Watermark's flexibility at a glance, because it doesn't publish information about its loans online. Take a look at our full Watermark Home Loans review to learn if this might be the best mortgage lender for you.

Ratings Methodology
Watermark Home Loans

Watermark Home Loans

Rating image, 3.5 out of 5 stars.
3.5/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor

Bottom Line

While Watermark Home Loans offers loans in many states and has a great reputation online, the lack of much information online drags on our rating, even though it has some good loan programs.

Min. Credit Score 550 for FHA 580 for USDA 620 for Conventional Loans

  • 550 - 620

Min. Down Payment 0% USDA & VA 3.5% FHA 3% Conventional

  • 0% - 3.5%

Key Features

  • Large selection of loan products
  • Automatic rate watch tool

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
  • Interest Only

Fixed Rate Terms

  • 30y, 25y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/1, 7/1, 5/1, 3/1

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
  • 3%
  • 580
Circle with letter I in it. 580 FHA 620 Conventional 680 Jumbo
Apply Now for Better

Full Watermark Home Loans review

This mortgage lender is a good fit for: Any borrower who needs something other than a traditional conventional loan. You can get that at Watermark Home Loans, but they also have a wide selection of loans with flexible underwriting standards for borrowers under other circumstances.

Pros

  • Wide selection of home loans
  • Flexible underwriting
  • Competitive rates
  • Fully remote closing

Cons

  • Lack of transparency
  • Not nationwide
  • Does not service all of its loans

Top perks

Large selection of mortgage products

Watermark Home Loans is a flexible lender offering a large variety of home loans to suit the needs of most residential property borrowers.

To that end, Watermark Home Loans offers conventional loans, FHA loans, VA loans, and jumbo loans, as well as the harder-to-find USDA loan. Here are some of the other options you can find at Watermark Home Loans:

  • Bank-statement loan: for self-employed borrowers who want to use cash flow instead of tax returns to qualify
  • Piggyback loan: to help you make a larger down payment and avoid mortgage insurance

Flexible underwriting

Watermark Home Loans offers several ways to get a home with a low down payment, a lower credit score, or a higher DTI.

If you qualify for a VA loan or a USDA loan, your down payment can be zero. If not, you could opt for a 3% down payment conventional mortgage. Some conventional 97 loans are for first-time home buyers, and some are for borrowers who meet income guidelines. You can also look at an FHA loan, which requires 3.5% down.

All of these loans have flexible credit scores and debt-to-income guidelines.

Competitive rates

Watermark Home Loans offers very competitive mortgage interest rates. When we checked, the rate was below the national average. Watermark's automatic rate watch tool can be set up to notify you when rates drop.

To get the lender's lowest interest rate, you would need to buy mortgage discount points. Points are prepaid interest. In exchange for a fee, the lender permanently lowers your interest rate. Each point costs 1% of the loan amount and typically gets a one-eighth to one-quarter percent discount. If you prefer to lower your out-of-pocket costs, Watermark Home Loans offers a loan with no closing cost.

Fully remote closing

For loans that allow it (and in locations where it's legal), Watermark Home Loans can provide a fully digital experience, up to and including your loan closing. You can apply, provide documentation, track your loan, and close from the location of your choice.

What could be improved

Hard to find information

You can find rate estimates online if you submit your email address, but if you want detailed information about Watermark's rates or mortgage products, you will need to contact a loan officer. If you're sensitive about sharing your contact information, this could be an obstacle.

Not nationwide

Watermark Home Loans is not available everywhere. According to its website, Watermark Home Loans is not licensed in Alaska, Missouri, New York, Rhode Island, or Vermont.

Does not service all of its loans

Watermark Home Loans services some of its mortgages, but not all. If you've experienced an involuntary change in mortgage servicer, you know the disruption can cause hiccups. At the very least, you have to learn new processes for payment, and deal with the customer support of an entity not of your choosing. If it's important to you to find a lender that won't sell your mortgage, talk to Watermark before you apply to find out if the loan you want is one they will keep on the books.

How to qualify

First, you need to reside in a place where Watermark Home Loans lends. Watermark Home Loans currently serves 45 states plus the District of Columbia.

The underwriter looks at the three main legs of your mortgage application -- credit score, debt-to-income ratio, and equity.

You'll need a credit score of at least 550, and possibly higher, depending on the loan you want.

If you think you're ready to get a mortgage, double-check your credit standing. There may be quick steps you can take to increase your credit score, like correcting errors. Then you can give Watermark a call to discuss the specifics of your situation.

Likewise, an optimum debt-to-income ratio is 36%. That means you spend no more than 36% of your pre-tax income on required debt payments each month (including your proposed new housing payment). A DTI at or below 36% helps you sail through the application process, but a higher DTI won't necessarily disqualify you. There are several mortgage loans at Watermark that allow for a DTI of 45%-50% and even higher.

Last, unless you're eligible for a VA loan or a USDA loan, you need a down payment (or equity if you're applying for a refinance loan). Also, for some VA loans, the borrower must contribute some of their own money to closing costs.

If your loan requires a down payment, the amount of cash you need is at least 3% of the purchase price. That can be a hurdle, especially in high-cost markets. If you're short on cash, check out our guide to down payment assistance options.

Some 3%-down mortgage options have restrictions, such as first-time home buyers only, or limits on household income. The FHA loan does not have those restrictions, but the down payment requirement is a little higher, at 3.5%.

How are Watermark Home Loans' refinance rates?

Watermark Home Loans does not publish its mortgage refinance rates. When we checked, the refinance interest rate was right around the national average, but you'll have to have excellent credit and buy points to get that advertised rate. Note that Watermark Home Loans has low fees compared to many other lenders, which could bring the total loan cost down.

How are Watermark Home Loans' rates compared to the national average?

Watermark's mortgage interest rates trend lower than the national average. But the rates change depending on your down payment, credit score, and other factors.

Watermark Home Loans is right for you if:

Check out Watermark Home Loans if you have any doubts about getting approved for a mortgage. Watermark can offer flexible underwriting in many ways. That could mean anything from a bank statement loan for the self-employed to a mortgage that works for a borrower with a higher DTI.

FAQs

  • Watermark Home Loans typically offers mortgage interest rates a little lower than the national average. The lowest rates are reserved for the best-qualified applicants. If you have a lower credit score and don't plan to sell your home for a while, consider talking to a loan officer about buying the rate down with mortgage discount points. It could be worth it to buy points if you'll own the home long enough to cover the cost of the points.

  • Yes. Watermark Home Loans can approve a huge variety of applicants, because it offers flexible underwriting and a very wide selection of mortgages.

  • Yes. Watermark's low fees and low rates make it a great choice for a refinance mortgage.

  • You need to live (or be moving to) an area where Watermark Home Loans offers mortgages. And you need to satisfy the down payment requirement for the loan you qualify for. That's going to be anywhere from zero to 3.5%.

    Beyond that, it's best if your credit score is at least 620. Don't skip applying if it isn't, though. Watermark has several loan options that allow lower scores. Also, you'll have an easier time getting approved if your DTI is under 36%, but Watermark offers some loans that are known to allow a 45%-50% DTI or higher.

  • Watermark Home Loans offers a large variety of loans with the intention of being able to serve as many different kinds of borrowers as possible. You'll find these loans types at Watermark:

    • Conventional mortgage
    • Conventional 97
    • FHA loan
    • VA loan
    • USDA loan
    • Non-QM loan
    • Jumbo loan
    • Bank-statement loan
    • Piggyback loan
    • Interest-only mortgage
    • Adjustable-rate mortgage
    • Fixed-rate mortgage