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Pennymac Mortgage Review: A Streamlined Web Option With Few Fees

Review Updated
Matt Frankel, CFP®
Author: Matt Frankel, CFP®
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Pennymac has served more than 4 million mortgage customers, and is the second-largest lender in the United States. Pennymac is an online-based mortgage lender that offers a variety of loan types and terms, as well as tons of excellent resources to help guide buyers through the process. In this review, we'll dig into Pennymac's lending operation, its pros and cons, and other information to help decide if it could be a good fit for you.

Ratings Methodology
Pennymac

Best for: Online experience and flexible terms

Pennymac

Rating image, 4.5 out of 5 stars.
4.5/5 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

Pennymac specializes in government mortgages like VA and FHA loans. Pennymac offers rate transparency, help via phone or online, flexible loan terms, and a rate guaranteed to beat competitors. Pennymac is a great place for people to start looking for a mortgage.

Min. Credit Score 580 FHA and VA loans 620 Conventional loan 700 Jumbo loan

  • 580-620

Min. Down Payment

  • 0% - 3%

Key Features

  • 100% online application
  • Instant rate estimates
  • Flexible terms
  • Top VA lender
  • Money-saving perks

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo

Fixed Rate Terms

  • Customizable between 15y and 30y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6

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
  • 0% - 3.5%
  • 580
Circle with letter I in it. 580 FHA 620 Conventional and VA 700 Jumbo
Apply Now for Better

Our mortgage rating methodology

At Motley Fool Money, mortgages are rated on a scale of one to five stars, with five stars meaning "best." We primarily focus on rates and fees, customer service, and loan versatility. This includes factors like application process, customer service channels available, and a variety of loan products.

See our full methodology here: Ratings Methodology

Full Pennymac mortgage review

This lender is a good fit for: A variety of borrowers, including those looking for a low-cost conventional loan; FHA, USDA, or VA loans; and people who want the mortgage lender to remain on board as the mortgage servicer.

Pros

  • Rate transparency
  • Up to 90-day rate lock
  • Flexible terms
  • Home equity borrowing option
  • VA loan experts

Cons

  • Limited low down payment options
  • Limited physical presence

Top perks

Rate transparency

With a few clicks of the mouse, borrowers can see Pennymac's current loan rates for several loan terms. The tool also shows how paying mortgage discount points could affect their rate. Of course, rates can change after Pennymac actually checks the borrower's credit, but this is a level of mortgage rate transparency many competitors don't offer.

Lock & Shop Program

Pennymac's Lock & Shop program allows borrowers to lock their rate before they start shopping, and also allows them to get a lower rate if interest rates fall before they close on a home. This comes with a $595 fee, but if you're worried about rates rising further, it could be a good shopping tool.

Flex-term loans

Pennymac offers Flex-Term Mortgages, which can have any term length the borrower wants. This can be great for refinancing without extending the term of your loan. It can also be a good fit for borrowers who want to pay off their loan at a specific future date (such as retirement).

Transparent origination fee

Not only is Pennymac transparent about its pricing (the standard origination fee is $1,495), but it is currently offering a $1,000 discount for borrowers who complete the pre-approval process prior to locking their rate.

Educational tools

Pennymac has a ton of valuable educational resources on its website. They're easy to navigate and useful to many borrowers. For example, Pennymac's Home Value Estimator tool can instantly give borrowers an estimate of their home's value.

In-house servicing

Pennymac is one of the nation's largest mortgage servicers. It's also one of the few that specifically tells borrowers it services of all of its mortgages. Having a mortgage that is sold and transferred to another servicer is a common consumer pain point. Pennymac borrowers don't have to worry about that.

Customer service

For an online-based mortgage lender, Pennymac offers pretty flexible customer service, with its sales center open for phone calls 5 a.m. to 6 p.m. PST on weekdays, 7 a.m. to 1 p.m. PST on Saturdays, and 6 a.m. to 12 p.m. on Sundays.

Home equity loan

Pennymac offers a fixed-rate home equity loan with a 10, 15, 20, or 30-year term. A home equity loan is a second mortgage if you're still paying off your first mortgage.

But the process for getting a home equity loan is more streamlined compared to the process for getting a primary mortgage. Pennymac says most of its home equity loan borrowers are eligible for an automated home valuation instead of a full property appraisal. Automated valuations are done by software.

A home equity loan could be a good option to consider if you are happy with your primary mortgage and you don't want to change it.

VA loan experts

Pennymac was the Top VA Lender in 2024 according to the Scotsman Guide, a leading mortgage industry data aggregator. The ranking is based on loan volume. The very high volume of VA loans it closed last year shows that Pennymac has deep experience with VA loans, and plenty of trained staff to usher you through the process.

Money-saving perks

Pennymac wants to help buyers afford their loans, and to feel more confident buying when interest rates are less than desirable. It offers two ways to lower costs:

Temporary rate buy-down: Pennymac will pay 1% of your mortgage rate for the first 12 payments on the loan. This effectively reduces your interest rate by 1% for that year. After the year is over, you'll be responsible for the full payment.

Credit when you refinance: Pennymac will give you a $2,000 credit if you refinance your Pennymac loan within three years. This credit seems designed to offset the cost to refi to a lower interest rate if rates drop after you buy the home.

What could be improved

Few physical locations

Pennymac has some sales offices, but for most home buyers there isn't going to be a Pennymac location near you. The company has nine sales offices in cities including Tampa, Phoenix, and Las Vegas. The best ways to apply for a mortgage through Pennymac are online or over the phone.

Fewer proprietary loans

Some of Pennymac's competitors offer boutique loan products, particularly geared toward borrowers who don't check standard boxes. For example:

  • Some self-employed borrowers need to show their bank statements or 1099s as proof of income rather than pay stubs and tax returns
  • Foreign nationals who don't have a Social Security number need to apply using their ITIN instead, which not all lenders allow
  • Buyers who need to borrow enough to build a new home on an empty lot need a construction loan, which not all lenders offer

Pennymac is light on outside-the-box options. To be sure, Pennymac offers a wide variety of standard mortgage types (FHA, USDA, etc.). And it offers a 3% down payment loan with reduced private mortgage insurance rates for low- to mid-income borrowers. But unique loans are not its strong suit.

How to qualify

Pennymac makes it easy to qualify for a mortgage through its user-friendly online portal. First, borrowers can check the company's current mortgage rates without having to input any personal information.

Once a borrower decides they want to proceed, they fill out an application through the My Home by Pennymac account center. Borrowers can apply, upload documentation, and check the status of their loan 24/7 through the m.a.c. portal. The platform lets borrowers directly upload W-2 forms from their employer, import bank statements, and more to make the process as easy as possible.

To qualify for a mortgage loan through Pennymac, you'll need a credit score of 620 and a down payment of at least 3.5%, assuming you aren't using a VA or USDA loan, which don't require down payments. It's best if your debt-to-income ratio is no higher than 43%, but many borrowers qualify with a DTI of 50% or higher. Because it offers a variety of loans, the best course of action could be to apply. Pennymac will look at your financial situation and let you know what loan program is appropriate.

How are Pennymac's refinance rates?

Pennymac's refinance rates are competitive and on par with national averages. Also, Pennymac may charge less than other lenders to get the lowest advertised rate. For a conventional loan, Pennymac's low rates come at the cost of less than one point where other lenders sometimes charge two (one point is equal to 1% of your loan amount). You can pay less upfront and take a higher rate, which can be a good idea if you want to minimize your upfront cost.

How are Pennymac's rates compared to the national average?

Pennymac's mortgage interest rates trend a little lower than the national average and they're easy to find on the website. The cost of a loan here is still competitive, even if you choose to pay a higher rate and avoid paying for points. When you compare Pennymac with other lenders, be sure to compare the APR, not the interest rate, for a true apples-to-apples comparison.

Pennymac is right for you if:

  • You want a streamlined online process and don't really care about in-person help.
  • You want to save money. Pennymac guarantees it will beat any competitor's rate offer.
  • You want a mortgage term that isn't a standard option. In other words, if you want, say, a 26-year mortgage, Pennymac could work for you.

FAQs

  • Pennymac's interest rates trend lower than the national average. Also, the lowest advertised rate is available for a lower cost compared to many other lenders.

  • Yes. Pennymac offers very good pricing and has a reputation for great customer service. Also, some people like that Pennymac services the loans it makes. After your loan closes, you won't be dealing with a different company when you make your payments.

    If, however, you are looking for a low down payment conventional loan with no private mortgage insurance (PMI), you will have to keep shopping. Pennymac doesn't currently offer those programs.

  • Yes. Pennymac offers very competitive refinance loans and can help you lower the interest rate on your conventional, FHA, VA, or USDA loan.

  • You'll need a credit score of 620 and a down payment of at least 3.5%. (If you qualify for a VA loan or USDA loan, you won't need a down payment.) It's best if your debt-to-income ratio is no higher than 43%, but many borrowers qualify with a DTI of 50% or higher. Pennymac will evaluate your financial situation and let you know what loan program is appropriate.

  • Pennymac offers these types of mortgage loans:

    • Conventional loan
    • FHA loan
    • VA loan
    • USDA loan
    • Jumbo loan
    • Investment property loan
    • Fixed-rate mortgage
    • Adjustable-rate mortgage
    • Refinance loan
    • Cash-out refinance
    • Home equity loans