Common Types of Mortgage Lenders

When you apply for a mortgage, there are a few different types of lenders you might get the mortgage from. Here are some of the most common mortgage lenders, and what types of customers they serve.

Retail Mortgage Lenders

Retail mortgage lenders are the lenders that most homebuyers interact with when purchasing a residence. These lenders provide mortgages directly to individual customers, although the loans they provide might be theirs or another institution's.

Retail lenders typically offer great convenience, as they're easy to access and used to answering questions that homebuyers frequently have. Like most lenders, they charge fees for their service -- but the fees tend to be reasonable.

Commercial Mortgage Lenders

Commercial mortgage lenders specialize in commercial, industrial and multi-unit residential building loans. These lenders usually work only with businesses, although some institutions have commercial lending and a retail lending department.

Direct Mortgage Lenders

Direct lenders underwrite their own mortgages and offer those mortgages directly to customers. Cutting out any other lender helps keep service fees low, as direct lenders make money on the mortgage itself and not just set it up.

Lenders may work with any customers directly. Retail mortgage and commercial lenders can both be direct lenders. Many retail lenders have an in-house direct lending program, even if it's not the main program they use.

Wholesale Mortgage Lenders

Wholesale lenders don't work directly with either individual or business customers before a mortgage is signed, and many never interact with customers. These lenders instead focus on originating and funding loans, allowing other lenders to present the loans to customers. 

In some cases, wholesale lenders may service mortgages after a loan is signed. They might interact with customers for certain servicing issues.

Warehouse Mortgage Lenders

Warehouse mortgage lenders don't provide actual mortgages, but they give other lenders the funds necessary to offer mortgages. Warehouse lenders offer short-term loans to retail and commercial mortgage lenders, who use the funds to underwrite the loans they sign with customers.

Warehouse lenders don't interact with retail or business customers.

Hard Money Lenders

Hard money lenders don't underwrite traditional mortgages, but instead, provide short-term loans for residential properties. These are most often homes that get flipped, and buyers only need the loans for a short time while they work on and then list houses.

Lenders that offer hard money loans frequently have substantial cash reserves. Their reserves give them the flexibility necessary to prove non-standard home loans.

If you have any questions about custom loan programs, be sure to contact a local mortgage lender.