Mortgage Broker vs Bank 2026: Which Is Better?
Brokers shop 50+ lenders for you. Banks offer relationship discounts. Here's how to choose—with a side-by-side comparison and real rate examples.
⚡ Quick Answer
Use a BROKER if:
- ✅ You want to compare many lenders at once
- ✅ You're self-employed or have complex finances
- ✅ You have less-than-perfect credit
- ✅ You want someone to negotiate for you
Use a BANK if:
- ✅ You have accounts there (rate discounts)
- ✅ You want one point of contact
- ✅ You prefer a big-name institution
- ✅ You have excellent credit (750+)
Side-by-Side Comparison
| Feature | 🏢 Mortgage Broker | 🏦 Bank/Direct Lender |
|---|---|---|
| Lender Options | 50+ lenders | 1 lender only |
| Rate Shopping | ✅ Done for you | ⚠️ You do it yourself |
| Typical Rates (Feb 2026) | 6.25% - 6.50% | 6.35% - 6.65% |
| Relationship Discounts | ❌ No | ✅ 0.125-0.25% off |
| Best for Bad Credit | ✅ More options | ❌ Stricter standards |
| Self-Employed Friendly | ✅ Excellent | ⚠️ Varies |
| Closing Speed | 25-35 days | 30-45 days |
| Who Pays Them | Lender (1-2.75%) | Built into rate |
| Negotiation Power | ✅ High | ⚠️ Limited |
💰 Real Example: $400,000 Loan
Via Broker: 6.25%
$2,462/month
Total interest: $486,320
Via Bank: 6.50%
$2,528/month
Total interest: $510,080
Broker Savings: $66/month | $23,760 over 30 years
What Is a Mortgage Broker?
A mortgage broker is an independent professional who shops your loan application to multiple lenders (often 50+) to find you the best rate and terms. They don't lend their own money—they act as a middleman between you and lenders.
How they get paid: Lenders pay brokers a commission (1-2.75% of loan amount) when a loan closes. By law, brokers cannot charge you directly AND receive lender compensation.
What Is a Bank/Direct Lender?
A bank or direct lender (like Wells Fargo, Chase, or Rocket Mortgage) lends their own money. You apply directly with them, and they underwrite and fund your loan in-house.
How they make money: Through the interest rate spread and origination fees. They may offer discounts if you have other accounts with them.
When to Use a Mortgage Broker
- You're self-employed: Brokers know which lenders are flexible with bank statements and tax returns
- Your credit is below 700: Brokers can find lenders who specialize in lower credit scores
- You want the lowest rate: They shop 50+ lenders so you don't have to
- You have a unique situation: Non-QM loans, investment properties, jumbo loans
- You don't have time: They handle the comparison shopping for you
When to Use a Bank
- You have accounts there: Many banks offer 0.125-0.25% rate discounts for existing customers
- You want simplicity: One application, one point of contact, one institution
- You have excellent credit (750+): Banks compete aggressively for prime borrowers
- You want a big name: Some people prefer the security of a major institution
- You're refinancing with your current lender: They may waive fees to keep you
The Hybrid Approach (Best of Both)
Here's what smart borrowers do: Get quotes from BOTH a broker AND your bank, then compare. This takes 30 minutes and could save you thousands.
- Get a quote from your bank (especially if you have accounts there)
- Get a quote from a mortgage broker
- Compare the Loan Estimates side-by-side
- Ask each to match or beat the other's offer
- Choose the best deal
🔍 Compare Rates from Multiple Lenders
See personalized rates from banks AND brokers in 2 minutes. No SSN required.
Compare Rates Now →Frequently Asked Questions
Is it better to use a mortgage broker or go directly to a bank?
It depends. Use a broker if you want to compare many lenders, have complex finances, or less-than-perfect credit. Use a bank if you have accounts there (rate discounts) or prefer a simple process with one institution.
Do mortgage brokers get better rates than banks?
Often yes. Brokers access wholesale rates from 50+ lenders. On average, they save borrowers 0.1-0.3% on rates, which equals $5,000-$15,000 over 30 years on a $400K loan.
How do mortgage brokers get paid?
Lenders pay brokers a commission of 1-2.75% of the loan amount. This is built into the rate. By law, brokers cannot charge you AND receive lender compensation.
Related Comparisons
David Rodriguez
Refinance & Rate Specialist
Refinance expert with 10+ years in rate analysis and market trend forecasting.