PenFed Credit Union mortgage review
A federal credit union with low down-payment options.
PenFed Credit Union specializes in home loans for those in the military and US government employees. It offers a variety of loan options for first-time homebuyers — but it’ll be hard to find a branch in most states.
|Loan products offered||Conventional, Jumbo, VA, HELOC, Refinance|
|Minimum credit score||Conventional - 620|
|Minimum down payment (Conventional)||3%|
|State availability||Available in all states|
Our take on PenFed Credit Union mortgage
Available in all states, PenFed offers competitive rates on conventional and VA loans, as well as jumbo loans and mortgage refinances — especially for good to excellent credit borrowers. It also offers home equity lines of credit (HELOCs), with rates about average to other lenders.
PenFed may be a good option if you prefer to work with a credit union as your lender. And unlike some credit unions, membership is available to anyone who opens a savings account with a $5 initial deposit. In addition to member discounts on things like rental cars and insurance, it offers a free 60-day mortgage rate lock and a lender credit to put money back in your pocket at closing.
But even though home loans are available in all states, in-person branches are not. If you prefer face-to-face customer service for your loan, check if PenFed has a branch in your area.
PenFed Credit Union Requirements
You need to be a PenFed Credit Union member to apply for a home loan. Loan-to-value requirements vary depending on which loan you apply for:
- Conventional: 97% LTV
- Home Ready program: 97% LTV
- Jumbo loans: 90% LTV and combined loan-to-value (CLTV) ratio
- HELOC: 90% CLTV
You’ll want to have the following information ready before you apply:
- Last two to three years of W-2 forms and income tax returns
- Last few months of pay stubs or proof of at least one year of income if self-employed
- List of debts and assets, like credit card statements, loans, checking and savings accounts
- Mortgage balance statement if you own a home
- Canceled checks and bank statements that show punctual rent payments
- Photo ID
Costs and fees
According to PenFed Credit Union, the borrower is responsible for the following fees due at closing:
- Appraisal fee
- Application fee or computerized loan origination (CLO) access fee, if applicable
- Tax service fee
- Title fees
- Transfer tax fees
- Credit report fees
- Flood certification fee
- Recording fee
- Work verification fee
- Survey fee for some loans
- VA funding fee for VA loans
How to apply for a mortgage with PenFed Credit Union
Start your application online.
- Go to PenFed Credit Union’s website, hover over the Mortgage & Home Equity tab and select Mortgage Center.
- Choose Start Online and either fill out a form to get a call from a PenFed loan officer or select Pre-Approval to start your application.
- Hit Start Request and enter information to create an account.
- Answer basic questions about you and the property you want to purchase.
- Accept or deny the Credit Authorization Agreement to pull your credit report.
- Detail your employment, income and expenses, then answer the declaration questions.
- Review your application and select Submit. PenFed should contact you with a Loan Estimate within three business days.
What types of mortgages can I get through PenFed Credit Union?
Other mortgage products offered by PenFed Credit Union
PenFed also offers a few specialized loans.
- Refinance. This lender offers rate-and-term refinance loans, cash-out refinancing and the VA Interest Rate Reduction Refinancing Loan (IRRRL).
- HELOC. A home equity line of credit (HELOC) lets you borrow up to $500,000 against the equity in your home. PenFed pays most closing costs on a HELOC.
- First Time Home Buyer Advantage. Buyers can pay as low as 3% for a down payment, with an optional job loss protection benefit called MortgageAssure. This program has no origination fee.
- HomeReady. This Fannie Mae initiative offers flexible underwriting for unique situations and is for borrowers with a credit score of at least 620. Its low 3.3% down payments aren’t limited to first-time home buyers.
PenFed Credit Union reviews and complaints
Reviews on Trustpilot for PenFed Credit Union are excellent. As of October 2021, the lender has 400 reviews and a TrustScore of 4.7 stars out of 5.
It holds an A+ rating with the Better Business Bureau (BBB) for closing 354 complaints over the past three years, although it’s not accredited. PenFed scores 1.16 stars out of 5 with 131 BBB customer reviews.
Most complaints surround hiccups in the loan process — such as inefficient online access and issues with fixing application errors. But PenFed makes an effort to respond to complaints, trying to work with customers on a solution. And some customers praise PenFed for its competitive rates.
Pros and cons of PenFed Credit Union
- Available nationwide. PenFed serves all 50 states, plus Washington DC, Guam, Puerto Rico and Okinawa, Japan.
- Free 60-day rate lock. For most loans, PenFed locks your interest rate for 60 days. That means you’re locked in regardless if the rates go up or down.
- First-time home buyer options. Although PenFed doesn’t offer FHA loans, its First Time Buyer Advantage and HomeReady programs offer low down payments.
- Open membership. Where previously PenFed membership was limited to members of the military and affiliate organization, the lender has opened its membership to anyone willing to open a $5 share account.
- No FHA or USDA loans. Look elsewhere for these government-backed loans.
- Branches are scattered. PenFed Credit Union doesn’t have branches in every state. It may be difficult to find in-person customer support, depending on where you live.
What is PenFed Credit Union?
PenFed, also known as Pentagon Federal Credit Union, was established in 1935. Today it boasts 2 million members worldwide, with $25 billion in assets. PenFed is federally insured by the National Credit Union Administration (NCUA) and offers banking services, auto loans, credit cards and retirement accounts.
Alternatives to PenFed Credit Union
PenFed offers a standard range of competitively priced home loan options, plus HELOCs. But if you’re a first-time homebuyer looking for a government-backed FHA or a 0% down USDA loan, you’ll need to look elsewhere.
For a greater array of mortgage options, including FHA, USDA, construction, renovation, condo loans and more — lenders like Guaranteed Rate, North American Savings Bank and Stearns Lending have a wider loans selection and great customer reviews, too.
If you want to save money on origination fees, consider a 100% digital lender like Better or Beeline. Both have no lender origination fee loans, and 24/7 online application access makes for a quick preapproval decision — to get you house-hunting sooner.
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