Navy Federal Credit Union Review 2021: Low-Cost Mortgages for Military Families

A photo to accompany a review of Navy Federal Credit Union mortgages Illustration/NextAdvisor

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

Headquartered in Vienna, Virginia, Navy Federal Credit Union was founded in 1933 and now serves more than 10 million members with 344 branches worldwide. It received an above-average rating in J.D. Power’s 2020 U.S. Primary Mortgage Origination Satisfaction Study and offers a full suite of banking services for its members, including mortgages, auto loans, checking and savings accounts, student loans, and more. 

Some of Navy Federal’s home loans come with zero down payment, no private mortgage insurance, and benefits for service members and their families. But you’ll need to join the credit union before applying for a mortgage. To become a member, you or a family member will need to be associated with the armed forces, national guard, or the Department of Defense. If you’re eligible, here’s what to know about the lender.

Pros and Cons of Navy Federal Credit Union

Pros

  • Specializes in providing services and advice to the military community

  • Offers no-down-payment mortgages

  • Has flexible credit requirements

  • Doesn’t charge private mortgage insurance

  • Received top scores for customer service

  • You can lock in your interest rate and relock it twice if rates improve

Cons

  • Membership is limited to service members, veterans, and certain government contractors

  • The credit union doesn’t offer FHA loans and USDA loans

  • You’ll have to request a customized rate quote

Navy Federal Credit Union: Loan Types and Products

Navy Federal Credit Union’s loans are geared toward service members, veterans, and certain government employees. In fact, Navy Federal originated more than $11.6 billion in Department of Veterans Affairs mortgages (VA loans) in 2020 alone, making it the sixth-largest lender by volume for this type of mortgage. But it also offers other types of home loans, including: 

Navy doesn’t offer Federal Housing Administration mortgages (FHA loans), U.S. Department of Agriculture mortgages (USDA loans), renovations loans, reverse mortgages, and other niche products. 

One of Navy Federal’s specialized loans is the Homebuyers Choice program, which is geared toward first-time homebuyers. The loan requires no down payment or private mortgage insurance, and borrowers may be able to wrap the funding fee into the mortgage or get it waived in exchange for a higher interest rate.

Another product, the Military Choice program, offers special pricing on mortgage interest rates and no down payment for active-duty and veteran borrowers. The standard 1% loan origination fee and 1.75% funding fee can be rolled into the loan or waived in exchange for a higher interest rate.

Navy Federal also offers a free service called RealtyPlus, which matches members with real estate agents and provides cash back at closing when the property is bought or sold through the referred agent. Depending on the home’s purchase price, the cash-back amount can range from $400 to $8,000. The program isn’t available in Iowa, and residents of certain states may receive a MasterCard gift card or commission reduction at closing in lieu of direct cash back. Borrowers in Arkansas, Louisiana, and Oklahoma aren’t eligible for cash back, but may still benefit from getting personalized service from a RealtyPlus coordinator and being matched with an agent. 

If you choose to get an adjustable-rate mortgage (ARM), you can choose from terms of 5/5 and 3/5. With an ARM, your interest rate stays fixed for a certain number of years — in this case, five or three years — then, it may go up or down for the rest of the loan term.   

Navy Federal Credit Union Transparency

Navy Federal’s website is easy to use and offers an array of guides that explain the homebuying process and different types of mortgage loans, calculators to help you figure out how much home you can afford, and a blog dedicated to other home-related topics.

The lender lists out the types of mortgages it offers, but doesn’t advertise minimum credit score and debt-to-income ratio requirements. It does flag minimum down payments, which vary from 0% to 15% depending on the type of home loan you get. Keep in mind: You still may have to pay a funding fee and an origination fee. 

To get a mortgage, you can apply online, over the phone, or in person at one of 344 branches worldwide, including 26 international locations and 184 branches on or near military installations. 

Pro Tip

Before you start touring homes, consider getting a mortgage preapproval. This letter shows you how much you can borrow, based on details like your income, credit history, and monthly debt payments. The preapproval can help you shop for homes within your budget—and it shows sellers you’re serious about your offer because you’ve been vetted by a lender.

Navy Federal has also streamlined the online process with a digital application platform called HomeSquad. Applicants can set up a personalized portal where they can get preapproved, upload documents, connect their bank accounts to verify assets, receive notifications when they reach milestones, work with a personal home loan adviser, and check the status of their loan. 

Navy Federal Credit Union: Rates and Fees 

Navy Federal Credit Union advertises daily refinance and purchase rates for each type of loan it offers in 15-year and 30-year terms, though you won’t find customized rates based on credit score or other factors before you apply. These rates can change every day and may include discount points, which is an optional fee you can pay in exchange for a lower interest rate. 

And while the website doesn’t list a minimum credit score for borrowers, a representative said the lender reviews the applicant’s entire financial profile when underwriting the loan.

Navy Federal doesn’t charge prepayment penalties, and borrowers may be able to skip paying a down payment and private mortgage insurance. But the lender may charge origination fees and funding fees that can be wrapped into the loan principal. Be careful here. While rolling fees into the mortgage can minimize your upfront costs, it could be more expensive over the long term since you’ll wind up paying interest on these fees.

According to a representative, borrowers will pay closing costs that vary by location and typically amount to 2% to 4% of the home’s purchase price. Some of these may include appraisal fees, property taxes, mortgage insurance, and title fees. 

Borrowers can lock in an interest rate for free, then relock twice if rates improve—as long as your loan closes within 60 days of the initial lock.

Refinancing With Navy Federal Credit Union

Homeowners with existing mortgages can refinance into a new loan, and Navy Federal offers the following options:

  • Rate-and-term refinance, in which you’ll take out a new mortgage with a new interest rate, a different loan term, or both.
  • Cash-out refinance, which allows you to get a mortgage for more than you currently owe and use the extra cash for whatever you need.  
  • VA Interest Rate Reduction Refinance Loan (IRRRL), which allows VA loan borrowers to lower their interest rate or switch from an adjustable rate to a fixed rate.

Navy Federal Credit Union Compared to Other Mortgage Lenders

Navy Federal Credit UnionFairway Independent Mortgage Corp.New American Funding
Minimum credit scoreNot provided620 for conventional loans; 660 for jumbo loans; 600 for FHA loans; 600 for VA loans580
Minimum down payment0%0% to 5%0% to 5%, depending on the mortgage program
Where does the lender operate?All 50 states and the District of ColumbiaAll 50 states and the District of ColumbiaWashington, D.C., and all states except New York and Hawaii
Major loan typesConventional, jumbo, VA, adjustable-rate, fixed-rate, refinance, cash-out refinance, second-home financing, investment property loansConventional, jumbo, VA, FHA, USDA, various renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, reverse mortgages, home equity loans, home equity lines of creditConventional, jumbo, VA, FHA, USDA, renovation loans, adjustable-rate, fixed-rate, refinance, cash-out refinance, reverse mortgages, home equity lines of credit

How to Shop Around to Get the Best Mortgage Rate

Gathering multiple mortgage quotes is the best way to compare offers and find the best home loan with the cheapest costs. 

Start by comparing the best mortgage lenders, submitting mortgage applications to at least three companies, and requesting a Loan Estimate. These applications may create hard inquiries, but credit-scoring companies know consumers like to shop around. FICO says its credit scores will treat all mortgage applications as just one inquiry if they’re submitted within 15 to 45 days. So generally, shopping for mortgages within a short window can minimize the impact to your credit.

Once you have your Loan Estimates, compare closing costs, interest rate, and any fees you’ll need to pay. 

Choosing a loan with a lower rate—even if it’s a small difference—could save you hundreds or thousands of dollars over the life of the loan. For instance, on a 30-year $200,000 mortgage, dropping the interest rate by just 0.25% saves the borrower $7,920 over the life of the loan. An online mortgage calculator can help you figure out your monthly savings.

Bottom Line

With an excellent customer service record, expertise in the military community, and low-cost mortgage options, Navy Federal Credit Union is a good option for eligible borrowers. To apply for a home loan with this lender, you (or a family member) will need to be associated with the armed forces, the Department of Defense, or the National Guard. If you’re ineligible for membership or you’re looking for an FHA loan, USDA loan, or home equity product, your best bet is to look elsewhere. As with any financial product, it’s always a good idea to compare offers when you’re looking to take out a home loan.