Editor’s note: In November 2022, the Consumer Financial Protection Bureau (CFPB) took enforcement action against Carrington Mortgage for unlawful and deceptive practices. Carrington Mortgage was ordered to refund improperly charged late fees, retrain its staff on CARES Act and government-backed loan guidelines and pay a penalty. Because of this, we can’t currently recommend Carrington Mortgage as a lender.
Carrington Mortgage offers a variety of purchase and refinance products catered to first-time homebuyers and borrowers with lower credit scores. These include conventional loans as well as loans backed by the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) and Department of Veterans Affairs (VA).
If you’re considering a loan from Carrington Mortgage, here’s what you should know.
Carrington Mortgage overview
Carrington Mortgage Services LLC is a California-based company founded in 2007 and is a subsidiary of Carrington Holding Company LLC, which operates a portfolio of businesses in the real estate realm. Its products include the following options for both purchase and refinance loans:
- Conventional loans.
- Jumbo loans.
- FHA loans.
- USDA loans.
- VA loans.
- Carrington Flexible Advantage.
- Adjustable-rate mortgages (ARMs).
As of Aug. 21, 2023, the lender has received generally negative complaints on the Better Business Bureau (BBB) website. Over 1,200 complaints regarding the lender’s mortgage products are also shown in the Consumer Financial Protection Bureau (CFPB) database from the past year.
Additionally, on Nov. 17, 2022, the CFPB took action against the lender for violating the Consumer Financial Protection Act of 2010. Carrington Mortgage was ordered to refund improperly charged late fees and to retrain its staff on CARES Act benefits and guidelines of government-backed loans. The lender also had to pay a civil penalty of $5.25 million.
How to qualify for a Carrington Mortgage home loan
- Minimum credit score: To qualify for a conventional loan, you’ll need a credit score of at least 620. However, you might get approved for an FHA or VA loan with a score as low as 500 or for a Carrington Flexible Advantage loan with a score of 550.
- Minimum down payment: If you qualify for a VA or USDA loan, you won’t have to provide a down payment. For an FHA loan, you’ll typically need a down payment of at least 3.5% of the home price. If you opt for a conventional loan, you might qualify with a down payment as low as 3%, though your down payment must be at least 20% to avoid private mortgage insurance (PMI).
- Maximum debt-to-income ratio: Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments compared to your income. Carrington Mortgage recommends having a DTI ratio no higher than 43% to qualify for a home loan, though exact requirements can vary by mortgage type.
Additional requirements could also apply depending on the type of loan you choose. For example, you must meet income guidelines and purchase a home in an eligible rural area to qualify for a USDA loan.
How to apply for a Carrington Mortgage home loan
If you’d like to apply for a home loan from Carrington Mortgage, follow these steps:
- Review your budget. Before you apply for a home loan, take a look at your budget to see what you can reasonably afford. Lenders often use the 28/36 rule when calculating how much debt a borrower can manage. This generally means your mortgage payments shouldn’t be more than 28% of your gross income and more than 36% of your total debt payments each month.
- Check your credit. When you apply for a mortgage, the lender will review your credit to determine your creditworthiness as well as your interest rate — so it’s a good idea to check your credit beforehand. You can use a site like AnnualCreditReport.com to review your credit reports for free. Report any errors to the appropriate credit bureau to potentially boost your credit score.
- Compare lenders. Before applying for a loan, make sure to shop around and compare your options not only with Carrington Mortgage but as many mortgage lenders as possible. This can help you find a loan best suited to your needs. Be sure to consider interest rates as well as repayment terms, fees and eligibility requirements. Many lenders allow you to prequalify with only a soft credit check that won’t impact your credit score.
- Pick a loan option and get preapproved. After you’ve compared lenders, choose the loan option that works best for you. You can also opt to get preapproved, which will require more financial documentation than prequalification so the lender can give you a more accurate loan estimate. Note that preapproval generally requires a hard credit check, which can cause a slight but temporary drop in your credit score.
- Submit an application. Once you’ve chosen a lender, you’ll need to complete a full application. Also be prepared to provide required documentation, such as identification documents and current debt statements as well as income and asset statements.
- Close on the loan. If you’re approved, you’ll then close on the loan. On average, closing on a home takes 30 to 45 days, depending on the lender and loan type. Closing will involve signing for the loan and paying for closing costs (if you opted to pay them upfront), which are typically 3% to 5% of your loan amount.
Pros of a Carrington Mortgage home loan
- Variety of purchase and refinance options, including options for first-time homebuyers.
- Accessible to borrowers with poor credit and those with recent credit events like bankruptcy, short sale, foreclosure or late payments.
- Could qualify with little to no down payment, depending on the loan type.
Cons of a Carrington Mortgage home loan
Carrington Mortgage perks and special features
Savings and discounts
Carrington Mortgage doesn’t offer any specific discounts on its loans. However, it does run occasional promotions and pricing specials that could save you money on your overall borrowing costs. Past offers, for example, have included reducing interest rates by 25 to 50 basis points (or 0.25% to 0.5%) on certain FHA and VA loans.
Wide variety of mortgage options
Carrington Mortgage provides many types of loan options to borrowers looking to purchase or refinance a home. These include not only conventional mortgages and ARMs but also government-backed FHA, USDA and VA loans.
The lender also offers the following loans geared toward borrowers who might otherwise struggle to qualify:
Accessible to borrowers with bad credit or negative credit events
While you typically need good to excellent credit to get approved for a home loan, you could qualify with Carrington Mortgage even if you have less-than-perfect credit. For example, you could be eligible for an FHA or VA loan with a credit score as low as 500.
The lender’s Flexible Advantage, Flexible Advantage Plus and Prime Advantage loans are also geared toward borrowers who might not otherwise qualify for a mortgage. For instance, a Carrington Flexible Advantage loan might be ideal if you have a credit score of at least 550, a high DTI ratio or have experienced a recent negative credit event, such as bankruptcy.
Might qualify without a down payment
Depending on the type of loan you choose, you might qualify with a small or even no down payment. For example, while you’ll typically need a down payment of at least 3% for a conventional loan (20% to avoid PMI), USDA and VA loans generally don’t require a down payment, and FHA loan down payments can be as low as 3.5%.
How Carrington Mortgage could improve
Offer HELOCs
Unlike a home equity loan that provides a lump sum, a HELOC gives you access to a revolving line of credit that you can repeatedly draw on and pay off. However, while Carrington Mortgage offers home equity loans, you’ll have to consider another lender if you’re interested in a HELOC.
Provide an online application process
Unlike several other online lenders, Carrington Mortgage doesn’t provide a fully online application. While you can fill out a form to see what purchase loan options might work for you, you’ll need to work with one of the lender’s loan specialists to proceed with an application.
Expand customer support hours
Carrington Mortgage customers can reach the lender by phone, mail or email. However, its customer support team is only available Monday through Friday from 8 a.m. to 9 p.m. Eastern Standard Time (EST).
Its loan officers have somewhat fewer available hours Monday to Friday from 10 a.m. to 9 p.m. EST, which might not be ideal if you need help with a loan application outside of these hours.
Carrington Mortgage customer service and reviews
As of Aug. 21, 2023, Carrington Mortgage isn’t accredited by the Better Business Bureau (BBB). It has no letter grade on the BBB website and has a star rating of 1.12 out of 5.00. While the reasons for these poor customer reviews varied, many mentioned the lender’s failure to allocate payments correctly and on time, lack of explanation around fees or an unwillingness to help borrowers facing financial hardship.
The CFPB database shows 1,275 customer complaints regarding the lender’s mortgage products from Aug. 21, 2020, to Aug. 21, 2023. Many of the complaints were about problems during the payment process, struggling to make payments or application difficulties. Carrington Mortgage provided a timely response to all but one of these.
CFPB action
On Nov. 17, 2022, the CFPB issued an order against Carrington Mortgage for failing to implement federal protections for borrowers with government-backed loans who were facing financial hardship due to the COVID-19 pandemic. The CFPB specifically found that the lender had:
- Charged late fees that weren’t owed while accounts were in forbearance.
- Given false information about pandemic protections and threatened homeowners with foreclosure when payments weren’t required.
- Illegally given inaccurate information to credit bureaus that showed current accounts in forbearance as being delinquent and failed to notify the bureaus about these errors.
As a result, Carrington Mortgage was found to have violated the Consumer Financial Protection Act of 2010. The lender was ordered to address improperly charged late fees, retrain its staff on CARES Act and government-backed loan guidelines and pay a $5.25 million fine.
Class action lawsuit
In November 2022, Carrington Mortgage Services settled a class action lawsuit filed by plaintiffs in California, Florida, Maryland, New York and Texas. The action claimed that the lender had wrongfully charged fees when mortgage payments were made online or by phone and had in turn violated consumer protection laws in several states.
After an initial dismissal of these claims in California and Maryland, the Fourth Court of Appeals permitted the case to continue. The case had not yet been ruled on by the Ninth Circuit Court of Appeals (where a supporting amicus brief was filed by the CFPB) when it was ultimately settled for nearly $18.2 million. The Court noted that Carrington Mortgage had earned almost $8 million per year from the fees settlement class members were wrongfully charged.
Carrington Mortgage alternatives: Carrington Mortgage vs. Freedom Mortgage vs. Rocket Mortgage
Before you take out a mortgage, it’s important to shop around and compare your options with as many lenders as possible. This can help you find a good deal on a loan that works for your needs.
Like Carrington Mortgage, Freedom Mortgage and Rocket Mortgage both offer a wide variety of home loans to suit a range of borrowers — including first-time homebuyers and those with bad credit. However, neither of these lenders provides the range of options that Carrington Mortgage does for borrowers with negative credit events like bankruptcy or foreclosure.
Additionally, on Aug. 17, 2023, the CFPB took action against Freedom Mortgage for violating the Real Estate Settlement Procedures Act. The lender was found to have given illegal incentives to real estate brokers and agents in return for mortgage referrals. The CFPB ordered Freedom Mortgage to cease these activities and pay a $1.75 million civil penalty.
Here’s how the three lenders compare:
Frequently asked questions (FAQs)
Yes, Carrington Mortgage Services is a legitimate mortgage lender and servicer that was founded in 2007. It’s licensed to lend in 48 states as well as licensed to service home loans in 50 states and Puerto Rico.
The credit score you’ll need to qualify with Carrington Mortgage will depend on the type of home loan you apply for. For example, you could qualify for an FHA or VA loan with a credit score as low as 500 or a Carrington Flexible Advantage loan with a score of at least 550. However, to get approved for a conventional loan, you’ll need a score of 620 or higher.
Carrington Mortgage Services LLC is owned by Carrington Holding Company LLC. Carrington Holding Company owns multiple businesses that work together in the residential real estate realm. These include not only Carrington Mortgage but also companies offering real estate (Vylla Home), title (Vylla Title) and escrow services (Vylla Escrow).
The CFPB took action against Carrington Mortgage in November 2022. The lender was found to have violated the Consumer Financial Protection Act by deceiving borrowers regarding protections for government-backed loans during the COVID-29 pandemic.
In response, the lender was fined $5.25 million. It was also ordered to refund wrongly charged consumers as well as repair faulty business practices and retrain its staff on proper guidelines.
A class action lawsuit was brought against Carrington Mortgage by plaintiffs in California, Florida, Maryland, New York and Texas, who claimed that the lender had wrongfully charged fees for mortgage payments made online and by phone. This in turn violated the consumer protection laws in these states.
The case was settled out of court in November 2022 for nearly $18.2 million.
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