Navy Federal Credit Union offers many home purchase, mortgage refinance and home equity options. This lender specializes in U.S. Department of Veterans Affairs (VA) loans but offers several other programs that may require no down payment or private mortgage insurance premiums. You may also prefer this lender if you want the ability to apply online or at a nearby branch location.
While there are many home loan options, you must immediately be affiliated with the military or Department of Defense to become a credit union member before applying.
Navy Federal Credit Union overview
Navy Federal Credit Union is a not-for-profit credit union with over 12 million member-owners. The institution launched in 1933 and offers membership to military service members, Department of Defense (DoD) employees and their families, allowing them to open checking and savings accounts, and apply for consumer and home loans.
The credit union has favorable customer reviews as many members praise their customer service quality and transparent loan application process as you can preview the potential lender fees and rates before applying.
It’s possible to apply for a home purchase, mortgage refinance and home equity loan. The lender is one of the best VA mortgage lenders and offers several homebuyer programs that require little or no down payment.
Your Navy Federal mortgage options include:
Home loans are available for primary residences, second homes and investment properties. Most mortgage applications require from 30 to 45 days to close.
Unfortunately, the credit union doesn’t issue new construction, FHA or USDA loans.
How to qualify for a Navy Federal mortgage
First, you must be eligible for a Navy Federal Credit Union membership. This can be the biggest challenge as you must have a military or Department of Defense affiliation. Immediate family members and household members of existing members are also eligible to join.
The borrower requirements are similar to the best mortgage lenders. As a result, applicants with good credit, at least two years of consistent employment and cash reserves can have the best approval odds.
Navy Federal doesn’t disclose the credit score or debt-to-income (DTI) standards for any mortgage program. However, the lender considers your banking relationship among other factors to determine your eligibility for a particular loan program.
Additionally, the lender mentions they will help applicants with less-than-perfect credit try to qualify for financing.
Satisfying Fannie Mae’s underwriting guidelines for conventional mortgages is a good baseline. These guidelines can include:
- Minimum 620 credit score.
- Down payment of at least 5%.
- Debt-to-income ratio (DTI) not exceeding 45%.
How to apply for a Navy Federal mortgage
You can apply for a Navy Federal mortgage online or at a local branch. The first step is getting mortgage preapproval to compare your loan options, rates and fees. Your initial preapproval is valid for up to 90 days.
Next, your home loan advisor will guide you through the application process when you’re ready to buy or refinance.
At this time, you will need to provide additional documentation such as:
- Pay stubs from the last one to three months.
- W-2 forms and employment history from the last two years.
- Tax returns from the past two years.
- Monthly debt and living expenses.
- Proof of cash reserves.
Most home loan types require a home appraisal to determine the property value and the loan-to-value (LTV) ratio to estimate your minimum down payment.
You will sign the closing documents once the underwriting process finishes.
Here’s your step-by-step guide: How to apply for a mortgage
Pros of a Navy Federal mortgage
- Offers purchase, refinance and home equity loans.
- 0% down payment loans.
- Transparent fees and rates.
- Online and local branch access.
Cons of a Navy Federal mortgage
- No FHA or USDA loans.
- Doesn’t disclose borrower requirements.
- Strict membership requirements.
Navy Federal perks and special features
Here are the best reasons to consider applying for a Navy Federal mortgage.
Savings and discounts
It’s possible to get from $400 and up to $9,000 cash back when you buy your house through the Navy Federal RealtyPlus homebuying service. You will work with a dedicated real estate agent to find a home at no additional cost.
Borrowers can also receive a $1,000 rate match guarantee when a competing lender offers a similar yet better loan.
One additional incentive for purchase loans and refinances is a free 60-day rate lock with a maximum deduction of 0.50%. It’s not uncommon for lenders to charge a fee for an extension as the standard period is typically 30 days.
0% down payment loans
Navy Federal offers several home purchase loans that can require no down payment which may be a blessing for first-time homebuyers.
The best option can be a VA loan as they tend to have the lowest interest rates and may not require a down payment.
Borrowers not qualifying for a VA loan can be eligible for a Military Choice or Homebuyers Choice loan. While your interest rate is higher, these alternative programs don’t require a down payment and may not require private mortgage insurance (PMI).
Home equity loans
A cash-out refinance may not help your financial situation if your new interest rate is higher than your existing mortgage APR.
Instead, Navy Federal lets you tap your equity through a home equity loan or a HELOC which is a second mortgage. Therefore, it leaves your original mortgage rate and term intact along with paying fewer lender fees and a quicker application process for your new loan.
See more options: Best home equity loan lenders
Transparent rates and fees
Many mortgage lenders keep their rates and fees private and won’t disclose these details until you pre-qualify. While this safeguard prevents advertising teaser rates that the average borrower won’t qualify for, it makes comparing lenders more challenging.
You can view the lender’s rates and fees without providing your contact details. For example, you won’t pay any application fees but all loans incur a 1% origination fee which can be waived with a 0.25% rate increase. The Choice and VA loan programs also incur a one-time funding fee.
Local branch access
Applying online can be the most convenient option but you can also visit one of the 53 physical Navy Federal branches.
How Navy Federal could improve
No FHA loans
While there are several home loan options that require a 5% down payment or less, an FHA loan is a desirable option for certain borrowers that don’t qualify for VA loans.
Navy Federal isn’t an FHA lender so you will need to consider a conventional, Homebuyers Choice or Military Choice loan instead.
Doesn’t disclose borrower requirements
Navy Federal has flexible borrower requirements but doesn’t disclose the credit score and DTI thresholds. As a result, potential customers must contact a loan officer and potentially request mortgage preapproval to see if they qualify.
Strict membership guidelines
Navy Federal membership isn’t open to the general public like most banks and credit unions. You must have an affiliation with the military, Department of Defense or a current credit union member to join.
Navy Federal customer service and reviews
Phone support for mortgage applications is available from 7 a.m. to 12 a.m. ET Monday to Saturday. On Sundays, you can call from 9 a.m. to 12 a.m. ET.
It’s also possible to visit a physical branch or tap the live chat icon on the Navy Federal website. You can manage your account through the Android or iOS mobile app.
Overall, Navy Federal has favorable customer ratings although most reviews focus on its banking services. It has an excellent rating from Trustpilot with a score of 4.6 out of 5 from over 19,800 reviews.
Its Better Business Bureau (BBB) customer review score is 1.46 out of 5 with an average of 144 customer reviews. Most of the complaints are about its banking services.
The most comprehensive look at mortgages is from the Consumer Financial Protection Bureau (CFPB). As of July 2023, Navy Federal has a total of 596 mortgage-related complaints from. Most of the complaints are from applicants that were initially preapproved but couldn’t complete the closing process.
Navy Federal mortgage alternatives: Navy Federal vs. USAA vs. PenFed
Military borrowers and their families can also find competitive rates and loan options at USAA and PenFed. It can also be easier to join these two alternatives if you don’t qualify for Navy Federal membership.
USAA has relatively strict membership guidelines similar to USAA. You can apply for a conventional or VA home loan. The lender offers banking and insurance products too.
PenFed offers membership to the general public and they also issue FHA loans. First-time homebuyers can also be eligible for conventional loans with a minimum 3% down payment.
Frequently asked questions (FAQs)
Navy Federal doesn’t disclose its minimum credit score requirements but borrowers should anticipate having a score above 620 for conventional and VA loans. The credit union considers several factors to determine a borrower’s eligibility and it’s possible to qualify with less-than-perfect credit.
There are many positive customer reviews for the Navy Federal mortgage experience, including responsive customer service and many loan options. They also offer several no-money-down mortgages that can benefit eligible borrowers and first-time homebuyers.
Unfortunately, FHA and USDA loans are not available through Navy Federal. However, the lender offers a Homebuyers Choice and Military Choice loan which can require no money down or private mortgage insurance and are a good alternative to FHA loans.
The credit union’s membership requirements can be the greatest challenge to qualifying for a Navy Federal home loan. Additionally, borrowers should have good or excellent credit and an acceptable debt-to-income ratio. Credit union members can see if they qualify by requesting mortgage preapproval.
