Navy Federal Credit Union Mortgage Review 2021

Good for: <p>military members and their families looking for low-down-payment mortgages.</p>
Hal M. Bundrick, CFP Jan 4, 2021
Our Take
5.0
TalkFinance rating
The bottom line: <p>Navy Federal has a military focus with an online application and easy-to-find rates, but the website does not offer customized rates based on credit score or other factors before you apply.</p>
Jump to: Full Review

at Rocket Mortgage by Quicken Loans

MIN. CREDIT SCORE

620

MIN. DOWN PAYMENT

3%

LOAN TYPES AND PRODUCTS

Purchase, Refinance, Jumbo, Fixed, Adjustable, VA

Pros & Cons

Pros

  • Offers a wide range of affordable mortgage products designed for military members.

  • Has an online application for preapproval.

  • Offers low rates compared with most lenders.

Cons

  • Website does not provide customized mortgage rates based on credit score or other factors before you apply.

  • Credit union membership is limited to veterans and current military members, their families, and certain federal employees, retirees and contractors.

Compare to Other Lenders

Navy Federal: NMLS#399807

TalkFinance rating

Better: NMLS#330511

TalkFinance rating

Rocket Mortgage: NMLS#3030

TalkFinance rating
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MIN. CREDIT SCORE

620

MIN. CREDIT SCORE

620

MIN. CREDIT SCORE

620

MIN. DOWN PAYMENT

3%

MIN. DOWN PAYMENT

3%

MIN. DOWN PAYMENT

3%

LOAN TYPES AND PRODUCTS

Purchase, Refinance, Jumbo, Fixed, Adjustable, VA

LOAN TYPES AND PRODUCTS

Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA

LOAN TYPES AND PRODUCTS

Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA

Full Review

Navy Federal Credit Union at a glance

Navy Federal Credit Union offers a broad menu of mortgages, including no-down-payment home loans tailored to its members.

Founded in 1933, the credit union's mission is to serve the military community. Veterans, active-duty military and their families are eligible for membership. U.S. Department of Defense civilian employees, retirees and some contractors can also join, as well as federal employees assigned to Defense Department installations.

The Vienna, Virginia-based credit union is the largest in the world, with more than 9 million members. It has more than $125 billion in assets, according to internal data.

Here’s a breakdown of Navy Federal’s overall score:

  • Variety of loan types: 4 of 5 stars

  • Variety of loan products: 3 of 5 stars

  • Online convenience: 5 of 5 stars

  • Rates and fees: 4 of 5 stars

  • Rate transparency: 4 of 5 stars

Navy Federal mortgage loan types and products

Members can choose from a wide variety of purchase and refinance loans, including mortgages with no- and low-down-payment requirements. Navy Federal offers the following:

The adjustable-rate loan option can be especially useful to families who must relocate every few years. The credit union also offers mortgages for second homes and investment properties.

Navy Federal has two cornerstone loans geared to military members and their families: the HomeBuyers Choice Mortgage and the Military Choice Mortgage.

The HomeBuyers Choice program is for first-time home buyers. It offers fixed-rate loans of 30 years with up to 100% financing and no mortgage insurance premiums. The 1.75% funding fee can be waived in favor of a higher interest rate, which minimizes the amount of cash you need at closing.

The Military Choice program has the same benefits as the HomeBuyers Choice, but with special pricing on mortgage interest rates and origination fees for active-duty and veteran borrowers, according to the lender. Also, Navy Federal’s standard 1% loan origination fee can be rolled into the loan or waived in exchange for paying a higher mortgage rate, further reducing the amount of cash you need to close.

Navy Federal’s loan officers also have deep experience with the needs of military families, such as navigating the mortgage process in the midst of a relocation or deployment, or meeting the stringent documentation requirements for a VA loan, the lender says. The credit union was one of the top five VA mortgage lenders in the country by volume in 2019, according to the Department of Veterans Affairs.

Navy Federal online convenience

Navy Federal has a digital application platform called HomeSquad, which lets you get preapproved for a mortgage online. In some cases, you can get preapproved instantly, the lender says. With the technology, you can upload documents, connect to your bank accounts to verify assets, get notified when you reach milestones, receive personalized help from credit union representatives and check the status of the loan.

You can also start an application over the phone or in person at a Navy Federal branch. No matter how you apply, a home loan advisor can help you choose the right mortgage for your situation.

The underwriting model for Navy Federal lets loan officers evaluate a borrower’s situation using alternative credit data in some cases instead of adhering strictly to traditional credit scores. Navy Federal can evaluate a buyer’s borrowing risk, taking the full financial picture into consideration.

Loan officers can look at whether a borrower pays rent and utility bills on time, keeps an existing Navy Federal banking account in good standing and makes timely payments on other credit accounts.

Navy Federal also offers a free service that matches the member with a real estate agent and gives cash back at closing when the property is bought or sold through the referred agent. The cash back amount can range from $400 to $8,000, depending on the home’s purchase price. The program is not available in Iowa and does not offer cash back in Arkansas, Louisiana or Oklahoma.

Navy Federal mortgage rates and fees

One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. In order to provide consumers with a general sense of what a lender might charge, TalkFinance scores lenders on two factors regarding fees and mortgage rates:

  • A lender's average origination fee compared with the median of all lenders reporting under the Home Mortgage Disclosure Act. Navy Federal earns 3 of 5 stars on this factor.

  • A lender's offered mortgage rates compared with the best available on comparable loans. Navy Federal earns 5 of 5 stars on this factor.

Borrowers should consider the balance between lender fees and mortgage rates. While it's not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.

You can decide to buy discount points — a fee paid with your closing costs — to reduce your mortgage rate.

Deciding whether to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.

Navy Federal mortgage rate transparency

Navy Federal’s website displays sample interest rates for most of the mortgages it offers, along with annual percentage rates. You can also see monthly payment examples for certain products. The website does not offer personalized rate information based on location or credit score.

You can lock in rates on purchase loans for up to 60 days after preapproval. If you find a better rate with another lender, Navy Federal says it will match that rate or give you $1,000 at closing.