Wealthfront mortgage review: New home loan products from the robo-advisor offer lower rates and jumbo options

Wealthfront, founded in 2008 by venture capitalist Andy Rachleff, is known for its robo-advising financial services, which offer customers automated investing options.

Its services span from retirement funds to 529 education accounts, and the company claims that its proprietary algorithmic technology, called Path, allows it to optimize customer portfolios more than traditional financial advising. Last year, it announced it would also offer mortgage products, allowing customers to include property assets in their portfolio. It touts itself as a low-rate lender, with rates that are half a point lower than the average.

For now, Wealthfront's mortgage options are more limited than other products. For example, it's only available in California, Colorado, Texas and Washington, and only to those with an existing Wealthfront account. In the future, Wealthfront plans to expand geographically and to those who don't have an existing account, but don't have a timeline yet, a spokesperson told CNBC Select.

At CNBC Select, we like that its rates are lower than average. But if you're not planning to invest with Wealthfront or you want a government-backed FHA, VA or USDA loan, you'll have to go elsewhere.

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Wealthfront mortgage review

• Who is eligible for a Wealthfront mortgage?
• Pros and cons of a Wealthfront mortgage
• What types of mortgage does Wealthfront offer?
• Customer service
• How does Wealthfront compare to other mortgage lenders?
• How do I apply for a mortgage with Wealthfront?
• Is a Wealthfront mortgageright for me?

Who is eligible for a Wealthfront mortgage?

To get a Wealthfront mortgage, you'll need to be an existing customer. But it's not hard to open a cash account — there is a $1 deposit minimum, per Wealthfront's website.

Investment advisory services provided by Wealthfront Advisers LLC, an SEC-registered investment adviser. Securities investments: not bank deposits, bank-guaranteed or FDIC-insured, and may lose value.

• Minimum deposit and balanceMinimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts.

Minimum deposit and balance

Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts.

• FeesFees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance

Fees

Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance

• BonusNone

Bonus

None

• Investment vehicles

Investment vehicles

• Investment optionsStocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks

Investment options

Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks

• Educational resourcesOffers free financial advice for college planning, retirement and homebuying

Educational resources

Offers free financial advice for college planning, retirement and homebuying

Terms apply.

Pros

• No trade or transfer fees
• Highly automated investing with portfolios built around your risk tolerance and timeline
• Daily tax-loss harvesting available to all accounts to help reduce your tax bill
• High-yield Cash Account earns 3.30% APY base rate (up to 4.20% promotional APY for new clients with direct deposit) with no account fees or minimum balance
• Offers a cash management account with a debit card and access to 19,000+ fee-free ATMs
• Path financial planning tool gives personalized projections for retirement, home purchases and college savings
• Refer a friend and both parties receive $5,000 managed fee-free

Cons

• $500 minimum deposit for investment accounts
• 0.25% annual management fee
• No access to human financial advisors
• Tax optimization features (stock-level tax-loss harvesting, smart beta) only available at higher account balances

Right now, only homebuyers in eligible states can apply. There's a waitlist for people in other states who want to get a Wealthfront mortgage if the availability expands.

Wealthfront does not disclose its minimum credit score or maximum debt-to-income ratio for mortgages. Traditionally, mortgage lenders require a 620 credit score or higher for conventional loans and 680 to over 700 for jumbo loans, as well as a debt-to-income ratio of 43% or lower for both.

Pros and cons of a Wealthfront mortgage

Pros

• Lower-than-average rates
• Offers large jumbo loans up to $5 million, compared to most banks, which offer jumbo loans of up to $3 million.

Cons

• Only available in four states
• You need to have an existing Wealthfront account to apply
• Does not offer FHA, VA or USDA loans
• Poor customer service ratings

What types of mortgages does Wealthfront offer?

Wealthfront offers conventional and jumbo loans to existing Wealthfront customers.

• Fixed-rate: With a fixed-rate mortgage, borrowers have the same rate for the duration of the loan term.
• Adjustable-rate: Adjustable-rate mortgages (ARMs) start with a fixed interest rate for a set period and then adjust at regular intervals.
• Refinancing: With a mortgage refinance, you fully replace your current mortgage with a new one that typically has a different rate or terms.

Wealthfront customer service

While not specific to its mortgage business, Wealthfront has a poor customer service record. It has an F from the Better Business Bureau for 29 complaints against the company and its failure to respond to those complaints, according to the BBB. Additionally, it has an average of 1.9 out of 5 stars — with 28 reviews — on Trustpilot, a poor score.

Wealthfront's website states that customers will be connected with a loan officer when they begin the intake and pre-approval process; it doesn't share a phone number online for those who are applying, which other mortgage lenders often do.

Wealthfront offers email and phone support for specific inquiries Monday through Friday from 7 a.m. to 5 p.m. PST. It does not offer evening and weekend hours.

How does Wealthfront compare to other mortgage lenders?

Here's how Wealthfront compares to two top lenders:

Wealthfront vs. SoFi

SoFi and Wealthfront both offer investment products and mortgage services — but SoFi's mortgages beat Wealthfront in almost every category.

SoFi offers more robust loan offerings in all 50 states and in Washington, D.C. It also has an A+ from the BBB and an excellent rating on TrustPilot, with 4.3 stars out of 5 across 14,000 reviews. SoFi also doesn't require borrowers to be an existing customer. You can get a SoFi home loan without opening a SoFi account.

However, Wealthfront offers rates that are significantly lower than SoFi's and the national average.

• Annual Percentage Rate (APR)Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

• Types of loansVA loan, FHA loan, conventional loan, fixed-rate loan, adjustable-rate loan, jumbo loan, HELOCS & Closed End Second Mortgages

Types of loans

VA loan, FHA loan, conventional loan, fixed-rate loan, adjustable-rate loan, jumbo loan, HELOCS & Closed End Second Mortgages

• Terms10 – 30 years

Terms

10 – 30 years

• Credit needed600

Credit needed

600

• Minimum down payment3%

Minimum down payment

Terms apply.

Wealthfront vs. Rocket Mortgage

Rocket Mortgage is a digital-first platform, like Wealthfront, and is laser-focused on mortgages, the heart of its business.

Rocket has been among the top lenders on J.D. Power's mortgage servicing and origination surveys for years, has an A+ from the BBB and is available in all 50 states and Washington, D.C.

Rocket also beats Wealthfront on loan selection: Rocket offers a variety of government-backed mortgages, conventional mortgages and several proprietary mortgages.

Wealthfront, though, offers lower rates than Rocket.

How do I apply for a mortgage with Wealthfront?

To apply for a Wealthfront mortgage, you must have an existing account valued at $1 or more. You'll also need to live in or be purchasing a home in California, Colorado and Texas. If you meet these requirements, you can start your application online.

Here are the documents and information you typically need for a mortgage application:

• Date of birth
• Social Security number
• Photo ID
• Paystubs
• W2s
• Banking statements
• Other financial documents
• Gift letters (if applicable)

Once you're preapproved, you'll be connected with a loan officer who will walk you through the rest of the process. Next, Wealthfront will underwrite the loan and likely complete an appraisal and title search.

Within three to five weeks, you'll close on your loan, according to Wealthfront's website.

Is a Wealthfront mortgage right for me?

Wealthfront is worth considering if you live in one of the four states where it offers mortgages and you're looking for the lowest rate possible on a jumbo or conventional mortgage.

If you live outside of those states, need a government-backed mortgage or haven't worked with Wealthfront before, you may be better off looking at other lenders first. That's especially true if customer service is your main priority.

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Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Methodology

CNBC Select reviews mortgage products using a variety of criteria, including the types of loans offered, average rates, terms, availability, fees, down payment options, online options and customer satisfaction.

Additionally, we incorporate findings from independent sources, including lender scores from the J.D. Power U.S. Mortgage Origination Satisfaction Study and ratings from the Better Business Bureau.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.