Navy Federal Credit Union Mortgage Review 2024 (2024)

Navy Fed members across the U.S. can apply for conventional and VA home loans to buy a home or refinance an existing mortgage. The credit union also offers mortgages for second homes and investment properties plus home equity loans.

Unfortunately, Navy Federal doesn’t provide new construction loans. But once your construction is completed, you can refinance your loan with Navy Federal.

Most Navy Federal home loans have fixed mortgage rates and repayment terms up to 30 years. Adjustable-rate mortgages (ARM) with a lower initial interest rate are also available and have a term from 10 to 30 years. The lender offers 3/5 ARMs and 5/5 ARMs with down payment requirements ranging from 0% to 10%, depending on the details of the loan.

You can view the lowest rates on the Navy Federal website, but you must start the preapproval process to see a personalized rate.

Navy Federal also offers a couple of benefits to help you potentially save money.

• Special Freedom Lock: You can adjust your rate up two times (up to 0.50%) between your initial application and closing if market rates fall. This feature is for purchase and refinance loans only and must be done at least 7 days prior to closing.
• Rate match guarantee: Receive $1,000 if you close with another lender when Navy Federal cannot match the competing rate. You must lock in your rate with Navy Federal first to qualify.
• RealtyPlus: Using a participating real estate agent lets you receive from $400 to $9,000 in the form of cash, a gift card or commission reduction after closing in qualifying states.

Purchase Loan Options

Navy Federal offers a variety of home purchase loans and several have flexible down payment requirements.

• VA loans: Purchase loans for borrowers with a VA loan entitlement. No down payment or PMI is required but a VA funding fee applies.
• Military Choice: Servicemembers and families without a VA loan benefit can qualify and not be required to make a down payment or pay PMI. This loan type has higher interest rates than its VA counterpart or a conventional loan.
• Conventional fixed-rate mortgage: A traditional mortgage with fixed monthly payments. Your down payment can be as low as 5% and PMI can also be optional.
• Homebuyers Choice: No down payment is required and sellers can contribute up to 6% of the value of the home toward closing costs. However, the interest rate is higher than the conventional fixed-rate product.
• Adjustable-rate mortgage: This loan is designed for buyers that don’t anticipate owning their home for more than five years. Your initial rate can be lower than a fixed-rate loan and last up to five years. However, your future interest rate changes can be higher.
• Jumbo loans: Homebuyers can be eligible for jumbo loans when the loan amount exceeds $647,200 in most states. The borrowing limit can be over $970,800 in Alaska and Hawaii.

Related: Best VA Mortgage Lenders

Mortgage Refinance Options

The Navy Federal mortgage refinancing options are similar to the purchase loan offerings, including the Military Choice and Homebuyers Choice options.

You can have a fixed interest rate for a conventional or VA loan for a potentially lower rate or monthly payment.

Additionally, you can apply for a cash-out refinance to tap your home equity. VA Streamline (IRRRL) mortgages and ARMs are also available to potentially minimize borrowing costs.

To be eligible, you must be in the armed forces, Department of Defense, a veteran or a family/household member. In addition to VA loans, Navy Federal offers several loans with low or no down payment requirements, such as its Military Choice and Homebuyers Choice loans. The lender doesn’t publicly disclose its credit score thresholds.

If you’re looking to qualify for a mortgage with Navy Federal and receive a favorable rate, aim to satisfy Fannie Mae’s underwriting guidelines for conventional mortgages which can include:

• Minimum credit score of 620
• Down payment of at least 5%
• Debt-to-income ratio (DTI) not exceeding 43%

Here are some of the more common lender fees.

• Origination fee: A 1% fee applies to all mortgages. Navy Federal will waive it with a 0.25% increase to your loan interest rate.
• Homebuyers Choice and Military Choice funding fee: 1.75% of the loan amount. You can also waive this fee with a 0.375% interest rate increase.
• VA funding fee: VA-insured loans have a one-time fee from 0.50% to 3.60% of the loan amount. The precise amount depends on your down payment size.

*The amount of the funding fee will vary depending on the loan type, the veteran’s military category and whether the borrower is a first-time or repeat home buyer.

The standard Special Freedom Lock feature is free for the first 60 days on qualifying loans but must be done at least 7 days prior to closing. However, extending the rate lock window can require purchasing discount points or increasing the loan APR. Discount points are optional and cost 1% of your loan amount to reduce the lifetime loan costs.

Your loan estimate will include additional estimated closing costs that can total from 2% to 4% of your loan amount.

Some of the additional fees with a Navy Federal home loan can include:

• Credit bureau report: $19.73 per borrower
• Flood certification: $5.15
• Home appraisal: At least $505 (varies by location)
• Tax service fee: $55 to $215

The first step is getting mortgage preapproval to secure your initial rate and estimated closing costs. You can compare rates for each loan type with a different down payment and term.

Start by compiling the required income and financial documents such as your recent federal tax returns, pay stubs and W-2s. Then, you can apply online or at a local branch.

You can easily upload required documents through Navy Federal’s HomeSquad online dashboard. Phone-based support and in-branch assistance are available as well.

It usually takes two to three days to get preapproval and 30 days to close on a new mortgage. Refinance applications currently take 45 to 60 days to finalize, according to Navy Federal.

You have to become a Navy Federal member before you apply for a mortgage. If there’s more than one borrower on an application, at least one borrower needs to obtain membership for initial loan approval. The other borrower(s) must then become a member for full approval.

What to Do If You Get Turned Down

First, speak with your Navy Federal loan officer to compare your alternatives. You can consider adding a co-signer or improving your credit before you apply again.

You might also consider using another mortgage lender that caters to military members and their families.

As of January 2023, Navy Federal Credit Union has a 4.6 out of 5 Trustpilot score and 14,942 reviews. Many of the customer reviews praise the customer service and banking options. There are some complaints about the mortgage application process being confusing.

Navy Federal has a 1.45 out of 5 customer review score on the Better Business Bureau (BBB). This includes 150 reviews and 577 complaints closed in the last 12 months. Many complaints were about issues with banking services and making deposits.

Finally, the Consumer Financial Protection Bureau (CFPB) reports 629 mortgage-related complaints for the three years between January 2020 and January 2023. Most of the complaints revolve around applying for or refinancing a conventional mortgage.

If you want to work with a credit union—or a lender that specializes in VA home loans—there are alternatives to Navy Federal.

USAA Mortgage

Like Navy Federal, USAA offers banking, investing and insurance services to members of the military, veterans and their families. That said, its mortgage product lineup is limited in comparison to Navy Federal’s offerings. USAA only provides conventional mortgages and VA loans.

PenFed Mortgage

PenFed Credit Union is one of the largest credit unions in the U.S. and offers a wide range of mortgage loan products to its members, including VA loans. Unlike Navy Federal, PenFed offers FHA home loans, and membership is open to everyone.

We graded Navy Federal Credit Union based on features that have a meaningful impact on the cost of a mortgage and a borrower’s experience, including interest rates, loan options, accessibility, closing time and customer service.

We award bonus points if a lender offers a specialty rate discount or mortgage product, a home equity product or maintains a fully online mortgage application process.

Our scoring method is broken down as follows:

• Interest rate. 20%
• Loan options. 20%
• Time to close. 20%
• Accessibility. 20%
• Customer service experience. 20%
• Bonus points. Up to 25 points

We chose to focus on these core elements to bring forward lenders that offer the most competitive rates while also providing a satisfactory customer experience accessible to borrowers of all financial backgrounds. We believe this scoring system best reflects consumers’ top priorities when comparison shopping for mortgage lenders.

To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.

Forbes Advisor Contributor Brai Odion-Esene contributed to this article.