Zillow loans are more expensive than many traditional lenders, according to a recent study that found Zillow Home Loans charged higher interest rates and fees on average. This is important for Colorado Springs buyers, where median home prices hover around $441,000–$480,000 in 2026, and every dollar in closing costs or rate impacts affordability.
For the full study details, read the National Mortgage Professional article.
Why Zillow Loans Cost More. The study compared Zillow Home Loans to other lenders and found higher rates (often 0.25–0.5% above market) and origination fees. Zillow’s model integrates with their platform for convenience, but it comes at a premium—lenders pay Zillow for leads, which can inflate costs passed to borrowers. In Colorado Springs, where many buyers are first-timers or military families near Peterson AFB, these extra costs can add thousands over the loan term.
Local Impact for Colorado Springs. In our market, with low inventory (1.8 months) and steady demand, buyers often rush decisions. Zillow’s ease of use tempts many, but higher rates mean more expensive monthly payments—e.g., a $400,000 loan at 6.5% vs. 6.0% adds ~$100/month. Local lenders or credit unions often offer better rates and personalized service, especially for VA loans common here.
Alternatives to Save on Loans. In the end, when Zillow loans are more expensive, it is important to shop multiple lenders: Compare rates via tools like Bankrate or LendingTree. Work with a local mortgage broker for Colorado Springs-specific options. I keep a list of fantastic lenders that you can talk to at any time. Pre-approval from a competitive lender strengthens offers in competitive neighborhoods like Briargate or out in Peyton.
Ready to find the best loan options for your Colorado Springs home? Call, text, or visit thebaconpartners.com/contact for guidance.
Want to understand closing costs in detail? Check out my article here: What Are the Closing Costs When Buying a Home in Colorado Springs?
I’m Andrew Bacon, a Top Colorado Springs Real Estate Broker in Colorado Springs. I take care of my clients as family and aim to provide them with the necessary information and tools to navigate the complex markets in Colorado and around the US.
As a member of the Pikes Peak & Denver Metro Association of Realtors, I enjoy staying aware of current cultural trends and economic drivers.Check back regularly for new articles on all things real estate along Colorado’s Front Range.
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