A bank or retail lender offers only its own loan programs and pricing. A mortgage broker compares programs from many wholesale lenders and places your loan with the one whose guidelines and pricing fit. Brokers are paid either by the borrower or by the lender on a given loan, never both, and compensation is disclosed on the Loan Estimate.
Side-by-side
| Bank / retail lender | Mortgage broker | |
|---|---|---|
| Loan options | One lender's programs | Many wholesale lenders' programs |
| If a guideline says no | Usually the end of the file | Move the file to a lender whose guidelines fit |
| Pricing | One rate sheet | Compare wholesale pricing across lenders |
| Niche loans (DSCR, bank statement, non-warrantable condo) | Often unavailable | Available through specialty lenders |
Why overlays matter
FHA, VA and conventional programs have published minimums, but individual lenders add stricter "overlays." A denial is often one lender's overlay, not the program's rule. Brokers can route your file around it.
How brokers are paid
Federal rules (Regulation Z) prohibit a broker from being paid by both the borrower and the lender on the same loan, and from being paid based on the loan's interest rate. Compensation appears on your Loan Estimate and Closing Disclosure.
Common questions
Is a mortgage broker more expensive than a bank?
Not inherently. Compensation is disclosed and regulated, and wholesale pricing comparisons often lower total cost. Compare Loan Estimates to see the real numbers.