How Does Better Mortgage Make Money? (Business Model)

How Does Better Mortgage Make Money

As one of the leading mortgage lenders in the country, Better Mortgage has provided thousands of people with commission-free home loans. Winning customers is all about product differentiation, and Better Mortgage knows how to beat the competition. Their brand promise of better rates, quicker approvals, and simpler applications have successfully led them to become one of the best mortgage companies in the US.

Have you ever wondered how does Better Mortgage make money? What is their business model? Is it profitable? These are just some of the questions we will try to answer in this article.

Better Mortgage operates on a platform business model. It offers fully-digitized, commission-free mortgage lending services to borrowers but makes money from end-investors in the secondary lender market, who buy the mortgage loans from Better Mortgage.

Examples of end-investors in the secondary lender market include Chase Fannie Mae, Wells Fargo, and Bank of America.

About Better Mortgage

Better Mortgage is a fully digitized, commission-free mortgage lender. In real addition to mortgages, services offered include real estate, title insurance, and home insurance.

What sets Better Mortgage apart from its competition is that most lenders overcharge their customers and use a cumbersome, outdated process.

Rather than make its money off the backs of homebuyers, Better Mortgage uses a creative business model to make money and next-gen technology to make the process less painful for everyone.


Business Model of Better Mortgage

Better Mortgage is an innovative commission-free mortgage lender that connects investors and a wide selection of potential borrowers. All borrowers are directly connected to investors through the company’s platform.

Better Mortgage is a direct-to-consumer mortgage lender. It acts as a middleman between investors and borrowers.

Better Mortgage provides mortgages to homebuyers without charging commissions and fees. Other bundled services include real estate brokerage, title insurance, and homeowners insurance.

Most other mortgage brokers have the following shortfalls:

  • They are not fully-digitized
  • They bombard homebuyers with hidden fees and expensive fees

Unlike most mortgage brokers and mortgage lenders, Better Mortgage does not seek to make a profit directly from homebuyers.

Better Mortgage has been, is currently, and will continue to be marketing its services through a two-pronged approach:

  1. digital marketing to homebuyers
  2. word-of-mouth to end-investors

Because Better Mortgage has had reasonably favorable media coverage and good revenues and valuations, Better Mortgage has little trouble attracting new buyers.

End-investors, are, of course, a smaller audience and require a different approach.

Due to Better Mortgage’s growing valuations and strong backers, word-of-mouth should be sufficient for attracting end-investors because the brand has already been built.

Even though Better Mortgage has the ability to operate as a direct lender, they are not a bank and do not have to maintain a strong brick-and-mortar presence.

As a matter of fact, because being more digitized than their competitors is part of their model, they are not expected to have lots of offices and hard-copy paperwork. Therefore, the expenses of a digitized business are kept to a minimum.

They do, however, have the expenses of most fully digitized businesses: webmasters, content writers, digital marketers, etc.

They also outsource a lot of their brick-and-mortar work to their affiliates:

  • real estate brokers
  • title insurance providers
  • home insurance providers

Due to their unique business model, Better Mortgage seeks not to turn a profit from homebuyers, but from end-investors in the secondary lenders market.

Better Mortgage is able to attract all of the end-investors it needs because it has such a large pool of attractive loans with plenty of reputable buyers due to its high-quality, low-cost service:

  • no commission or fees for mortgages
  • competitive rates for mortgage loans
  • rate quotes within seconds
  • competitive purchase prices for homes
  • streamlined, fully-digitized, bundled services

Furthermore, end-investor confidence is increased due to the fact that Better Mortgage acts as the guarantor for the borrowers and has the backing of some major players:

  • Goldman Sachs
  • Citibank
  • American Express
  • Ally
  • SoftBank


How Does Better Mortgage Make Money?

Better Mortgage has four primary services, as we will discuss shortly, but its most important source of money is through acquiring loans to homebuyers and selling those loans in the secondary market to end-investors.

Selling Loans

Because Better Mortgage provides a high level of service at an affordable price, they can make a lot of loans to homebuyers.

Even though they are a direct lender, they only hold onto these loans for a short period, about thirty days. Then, they sell the loan to a secondary lender for a profit, a margin that is not paid for by the consumer, meaning the homebuyer, but by the secondary lender (meaning the end-investor).

Better Mortgage is one of the only truly digitized, major mortgage brokers out there. Because their digitization creates a high level of service and verification, Better Mortgage can attract a growing number of qualified borrowers, meaning reliable homebuyers.

Despite the fact that these loans are sold, Better Mortgage still acts as the guarantor. Therefore, some of the best end-investors in the business find loans very attractive. They are more than happy to purchase those loans at price that is still profitable for



As stated above, the mortgage service is not a direct source of revenue because they do not charge any fees and they sell their loans before they make any interest on those loans.

Regardless, their mortgage services are an indirect revenue stream because their high-quality, low-cost mortgage service attracts the loans in the first place. Without attracting loans, they cannot sell their loans.

While their competitors charge a commission price on the loans and lender fees, Better Mortgage removes this cost from borrowers. This gives them a great competitive advantage in finding loans that end-investors would find attractive.

These lender fees include:

  • application fees
  • processing fees
  • origination fees
  • underwriting fees


Real Estate

If homebuyers wish to use their own real estate agents or wish to use no real estate agents at all, they can still use mortgage financing and other services offered by Better Mortgage.

Likewise, if they wish to use a real estate agent brokered by Better but they do not wish to use any financing provided by Better, that is also an option.

Better Mortgage does not charge the homebuyer for this real estate agent referral service, but the agent is allowed to charge commissions and fees.

Better does, however, assert that they only work with real estate agents that charge low commissions and fees while still maintaining quality service, claiming that they can save homebuyers up to 1% on the purchase price of the home.

Even though Better Mortgage does not directly make money from homebuyers by charging fees and commissions for real estate transactions, they do not claim that they do not receive any fees or commissions from the real estate agents themselves.

Real estate transactions can be very complicated, so there is actually a high margin for profit for real estate agents. That becomes a little thinner because Better insists that their fees need to be low.

But there is still enough margin for Better to take fees and commissions from the real estate agents and still provide incentives for them to be partners in these deals.

Therefore, Better can make money by being a broker between home buyers and real estate agents.


Title Insurance

For the purchase or refinancing of a home to be legally recognized, a title is required. A title is official recognition of the legal ownership rights to a property. Any outstanding liens or debts can hinder a clear title.

A title company does the necessary research on a property to make sure that there are no problems that can hinder the company. If there are such problems, the title company can assist in settling any claims or debts that hinder the process and do so before the actual transaction takes place.

Unlike most insurance policies that prepare against problems related to incidents that may happen in the future, title insurance prepares the insured for problems that may arise in the future that may result from incidents that had happened in the past, that the insured did not know about before the purchase or refinancing.

Such is insurance is required in all home purchase and refinancing transactions.

Better Mortgage has an affiliate company that handles title services. While the fees to the homebuyer are reasonable, title fees are charged and Better does not claim that it does not receive a percentage of these fees from its affiliate company.


Homeowners Insurance

All mortgages require homeowners insurance. Better acts as a broker between homebuyers and homeowners insurance providers. Furthermore, unlike their slower, less-digitized competitors, they can often provide quotes for customers within seconds.

Better does not charge homebuyers for this service. The insurance provider does, of course, have a rate for the insurance premiums and Better does not say that it does not receive a broker fee from the insurance provider.


Better Mortgage Funding, Valuation, and Revenue

So far,’s valuation has practically doubled within less than a year. Because the company is in partnership with a SPAC, they will have access to a lot more funding in the near future.

May 2021$7.7 B
Apr 2021$6.0 B
Nov 2020$4.0 B
Aug 2019$600 M
2020$850 million
2019$115 million
2018$24 million
2017$600 M


Is Better Mortgage Profitable?

Better Mortgage is growing rapidly and becoming more profitable every year. In 2020, the company made $850 million in revenue and $250 million in profits.

Thanks to lockdowns resulting from the COVID-19 pandemic, Better Mortgage’s fully-digitized business model has allowed it to destroy its brick-and-mortar competitors while serving the stampede of homebuyers that were taking advantage of the low-interest rates.

In 2020, Better Mortgage funded $25 billion in loans, nearly double what it had done the previous year. In 2021, it nearly passed its 2019 total in the first quarter alone.

Even before the pandemic, Better Mortgage had increased its revenue 5x to $115 million for 2019. According to Wall Street Journal, the company has claimed that it would “generate $1 billion of annual profit on $5.1 billion of revenue by 2023“. That is nearly 50x in revenue from 2019!

Wall Street Journal also states that when SoftBank invested $1/2 billion in Better Mortgage earlier this year, it “agreed to give all of its voting rights to CEO and founder Vishal Gar”.

This implies that they have full confidence in the company’s leadership.


Conclusion: How Does Better Mortgage Make Money?

Well, that’s it for now, folks.

We hope you’ve enjoyed reading this and feel we’ve delivered on our promise of showing you how makes money. We covered all possible revenue streams and monetization methods that contribute to the company’s net income. 

In building a better home loan process, Better Mortgage created a multi-faceted mortgage lender model that has allowed them to collect fees from multiple product areas.

They have done their due diligence in laying out their strategy and creating a strong foundation to launch successful campaigns. Their success will depend on how much time they put into their marketing efforts and their passion for helping others succeed with real estate investment.

We have now reached the end of the article do hope you found it helpful and that all your questions are answered. If you like it, then please share it with your friends.

Have a great day!

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