Ally Bank mortgage review

When you’re ready to apply for a mortgage, it’s best to compare several lenders to get the best rate. If you’re looking to save on lender fees and want to close quickly, Ally Bank could be one to consider. Ally Bank is a full-service online financial institution that offers the following mortgage loan types: conventional, jumbo, fixed-rate, adjustable rate, first-time homebuyer, and refinance.

Best for affordability and fast closings

Affordability: Ally Bank doesn’t charge lender fees, which could make this loan more affordable for consumers short on cash. The term “lender fees” typically refers to the origination fee, which includes processing the application, underwriting the loan, funding the loan, and administration services. Lender fees usually equal between 0.5% and 1% of the loan. 

Fast closings: Ally Bank advertises that it typically closes 10 days faster than the industry average, which is four to six weeks. The faster the loan closes, the sooner you get your money to buy a home.

What to consider before applying

Before applying for a mortgage, you’ll want to make sure you are financially stable in the eyes of the lender. Lenders usually focus on your credit score, debt-to-income ratio (DTI), and down payment.

Your credit score: You typically need a credit score of 620 or higher to get a conventional loan with Ally Bank. You’ll get the best interest rate, however, if your credit score is in the mid- to high-700s and above. If your credit score is between 620 and the mid-700s, you might be quoted a higher interest rate. If your credit score is below 620, you might not qualify for a mortgage until you raise your score.

Your debt-to-income ratio: This represents how much of your pre-tax monthly income is used for debt payments, such as a car loan, credit card, or mortgage. Your DTI typically needs to be 43% or less to qualify for a loan with Ally Bank. You can determine your DTI by adding up all your monthly debt payments, such as credit cards, auto loans, student loans, and the mortgage payment, and dividing that number by your gross monthly income.

Your down payment: Putting down 20% of the price of the house is the gold standard. But you can qualify for a mortgage with as little as 3% down with Ally Bank. If you put down less than 20%, however, you’ll need to pay private mortgage insurance.

How to apply for a loan with Ally

• Apply online: You need to go to Ally Bank’s website and apply online for a mortgage loan. This screening step determines whether you’ll get a pre-approval. If so, you'll receive a pre-approval letter and can proceed. This process can take as little as three minutes.
• Shop and offer: With your pre-approval letter, you can start shopping for a home. Once you've found one you like, you can make an offer.
• Lock in your rate: Once your offer is accepted, return to your Ally application, upload the purchase agreement, and lock in your interest rate. Be prepared to pay $750 during this step, and Ally will then schedule a home appraisal.
• Underwriting begins: Ally Bank will likely ask for copies of your most recent pay stubs, employment records, bank statements, and tax returns.
• Close: Once your loan is approved, you'll receive a closing disclosure. Ally Bank will tell you where to meet for the closing.

How to qualify for a loan with Ally

Ally Bank determines whether you qualify for a loan in the following ways:

• Credit score: You typically need a credit score of at least 620 to qualify for a mortgage. Ally considers your payment history and credit utilization to be the most important factors of your credit report.
• DTI: Ally Bank requires a DTI of 43% or less to qualify for a loan. Find your DTI by adding up your monthly expenses, including the potential mortgage payment, and dividing that number by your gross income.
• Down payment: This is the amount you contribute upfront — a higher down payment means you have more at stake in the home, and you’ll need to borrow less money. Ally offers conventional loans with a minimum down payment as low as 3% for qualified borrowers. If you put down less than 20%, you might be required to pay for mortgage insurance.
• Employment history: Ally Bank will review your employment history and income to determine whether you can afford the mortgage.

How to refinance with Ally

You need to go to Ally Bank’s website and apply online for a refinance loan. Here are the steps you’ll take:

• Find out the value of your home: Search online to find out what similar homes in your neighborhood have recently sold for or contact a local real estate agent.
• Put your home’s value into Ally Bank’s calculator: Ally Bank will suggest a loan that works for you based on the information you submit.
• Provide information about yourself and your current loan: Ally Bank will review your current mortgage and financial profile and give you a quote. Completing this process won’t affect your credit score.
• Complete your application: Ally Bank will ask you to upload and manage required documents. Home loan experts are available if you have any questions. You can call, text, or email for help if you need it.
• Close on the loan: Though you apply online, you’ll need to close in person. Ally Bank will arrange a time and place for you to sign documents, usually at an attorney's office.

How Ally compares

If you’re looking for a home loan, take time to compare lenders. While Ally Bank offers a fast closing and no lender fees, it doesn’t offer as many mortgage loan types as some other lenders do, and you might find better rates and terms elsewhere.

Ally Bank mortgage FAQ

What types of loans does Ally Bank offer?

Ally Bank offers the following mortgage loan types: conventional, jumbo, fixed-rate, adjustable rate, first-time homebuyer, and refinance. Ally Bank doesn’t offer government-backed mortgages, such as USDA, FHA, or VA loans.

How is Ally Bank’s customer service rated?

Ally Bank has 1.2 out of 5 stars from Trustpilot, a 1.3/5 rating from ConsumerAffairs, and a 1.1/5 from the Better Business Bureau, along with an “A” rating. The ratings were for all manner of services the bank offers, not just for customer service or mortgages. 

Are there any hidden fees with Ally Bank mortgages?

Ally Bank has no hidden fees since it doesn’t charge lender fees, which have to do with originating and servicing the loan. Lender fees usually equal between 0.5% and 1% of the loan and can be as high as 2%. You will, however, still be responsible for closing costs, which are typically between 2% and 5% of the home’s price, and the down payment.

How easy is it to apply for a mortgage with Ally Bank?

It’s easy to apply for a mortgage with Ally Bank. You can apply for pre-approval online. Once you’ve had an offer on a home accepted, you can lock in an interest rate from Ally Bank and upload whatever documents are requested. If you have any questions, you can communicate with a loan expert via phone, chat, or email.