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The Yahoo View: PenFed offers a variety of home loans, but its VA-backed loans are where it really shines. Those looking for VA loans can find eBooks and a wealth of educational resources to ease the mortgage process. Plus, PenFed caps its VA loan processing fee at $995, which is lower than what many mortgage lenders charge. And even though it’s a credit union, anyone can join and get a mortgage from PenFed.
Pentagon Federal Credit Union — typically referred to as PenFed — is the second-largest credit union in the United States. With assets approaching the $35 billion mark and 2.9 million members, it’s definitely not a fly-by-night financial institution; PenFed has proudly served members since 1935.
While members enjoy access to everyday financial products like checking and savings accounts, personal loans, and credit cards, mortgages are where PenFed really shines. With a wide variety of mortgage types — including VA loans, conventional loans, and its signature Power Buyer option — and HELOC options to leverage home equity, members have plenty of lending options for their home purchase and refinance goals.
In this article:
Key benefits
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Open membership with no qualification criteria, which is unique among credit unions
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24/7 customer service with the ability to schedule a specific call time — a plus for international members like active military
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Power Buyer mortgage option goes beyond preapproval and gives qualified buyers the chance to better compete with cash offers in tight markets
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VA loans are available for both purchase and refinancing, potentially with considerably lower costs than conventional loans
Need to know
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VA loans come with a flat $995 mortgage origination fee
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VA home loans are not available for second or investment properties
Learn more: How to buy a second home
*Note: According to the U.S. Department of Veteran Affairs, you can use a regular VA loan to make home improvements, buy a manufactured home or lot, or make energy-efficient changes to your home — but PenFed doesn’t offer loans for these specific purposes.
PenFed puts together a helpful landing pad for anyone looking for a VA loan. Honestly, it’s a job well done. From the jump, you’ll have a wide range of resources — exclusive to VA loans — a click away.
Need info on who qualifies for a VA loan? It’s right there on the page, including helpful links that walk you through VA loan benefits and obtaining a Certificate of Eligibility (COE). There’s also a handy eBook called “Everything You Need to Know About VA Loans” that can demystify the loan process.
While on the VA loan page, you have two options: check your interest rate or start the application process. We’ll get into both of these options in a minute when we talk about rates and applying for a mortgage with PenFed. Hang tight.
Read more: Best VA loan lenders
For homeowners looking for a lower-cost lending option than a personal loan to pay for home improvements or other major expenses, PenFed offers a home equity line of credit (HELOC). You’ll need a minimum credit score of at least 680 to qualify, and they boast closing in as few as 15 days — providing you meet their scheduled delivery timelines for submitting required documents.
So, how much could you be approved for with a HELOC through PenFed? Lines of credit range from $25,000 to $500,000, and you can switch from a variable to a fixed rate on your interest payments. If approved, you can draw on your HELOC for up to 10 years and enjoy a 20-year repayment term, including interest-only payments during the draw period.
As for terms, the HELOC page gets into “disclosure soup” with a ton of fine print at the bottom of the page. There’s something about a closing cost estimate, but then there’s a potential closing cost credit from PenFed. Needless to say, the details are murky at best. To play it safe, those considering a HELOC here should visit a branch or place a call to get the facts from a real, live human being.
A point to note: HELOCs have a $99 annual fee (which isn’t uncommon) if you want to keep the line of credit open.
Learn more: HELOC vs. home equity loan
Luckily, you won’t have to dig through the small print to find PedFed’s mortgage rates. From the moment you land on their mortgage product landing page, you’ll find the lowest rate they offer without even having to scroll. To get to the mortgages, click “Mortgage & Home Equity” in the main navigation, giving you a drop-down menu. There, click on “Buy a Home,” and you’ll have rates at your fingertips in a flash.
On the day we visited the website, VA loan rates advertised assumed buyers pay 1.125 discount points, which equals 1.125% of the total mortgage loan. Quoted rates are also for 30-year fixed-rate VA loans on a $450,000 home with a 95% loan-to-value (LTV) ratio, 18% debt-to-income (DTI) ratio, and a 760 credit score. However, disclosures don’t comment on whether the VA funding fee is included in their cost estimates — a thumbs-down oversight.
Your full entitlement must be available to be eligible for the zero-down-payment option on VA loans. If you’ve previously taken out a VA loan or defaulted on one, you may be required to make a down payment.
As with all mortgage products, your interest rate will depend on your creditworthiness when you apply and may be higher or lower depending on the loan term and other lender criteria.
Dig deeper: VA funding fee exemption — how it works and who qualifies
The PenFed website makes it easy for members and non-members to start the mortgage application process. Simply click the green “apply now” button on any of their mortgage product pages to start. Members must log in, but guests can get going and deal with membership later.
Here’s the catch: If you’re not a member, you’ll complete a basic screening questionnaire that isn’t an application. You’ll provide details about your goals, where you are in the home-buying or refinance process, veteran status, and contact information. Once you hit “submit,” you grant PedFed permission to contact you.
Since PenFed only offers mortgage products to members, it makes sense that non-members can’t apply online. While the member mortgage application process isn’t clear, the login requirement could mean that members can fully apply online, including uploading required VA loan documentation like a DD-214 and Certificate of Eligibility (COE).
One of the niftiest tools at PenFed is their quick quote tool, which is easy to access if you click “get my rate” on most of their mortgage product pages. Here, you can enter details about a property — hypothetical or actual — and run the numbers based on your finances. But for all the ease, there is one catch: Use of the form gives PenFed permission to contact you. For the human contact-averse, replying “stop” to any text message will instantly get you unsubscribed.
PenFed also offers a host of educational and financial tools to boost your home-buying savvy. From eBooks, including mortgage refinance and first-time home-buyer guides, to affordability and mortgage payment calculators, those considering a mortgage from PenFed won’t lack resources. Plus, there’s a healthy mortgage-related article library that you can search by topic, product type, and home-buying stage. Knowledge is power, and PenFed walks the talk.
Read more: How much house can I afford? Use Yahoo Finance’s house affordability calculator.
If you’re looking at a home purchase above $99,500, other leading VA lenders will likely have higher loan origination fees than PenFed. For instance, your origination fee would be the same on a $99,500 VA mortgage with PenFed’s flat-rate $995 origination fee and Navy Federal’s 1% origination fee. On a $250,000 VA loan, however, PenFed’s flat $995 fee comes out ahead of Navy Federal’s 1% fee — $2,500. So why look further than PenFed for cost savings? It’s simple: Despite origination fees, you may save more with a VA loan through Navy Federal.
Navy Federal offers VA loan borrowers benefits that PenFed doesn’t, including more cash back for buying through an approved real estate agent (up to $9,000 versus PenFed’s $1,500) and a rate match guarantee that pays $1,000 if you close with another VA lender on the same loan. However, the biggest perk that the Navy Federal offers is rate protection. If rates drop after holding your loan for six months (or longer), you can pay a one-time $250 fee and snag that lower rate: no application fee, no closing costs, no hassle.
Navy Federal Credit Union mortgage review
Veterans United closes more VA loans than any other lender in the U.S., but could you score a better deal with PenFed? It really depends on what you’re looking for. Let’s clarify.
PenFed offers fixed-rate VA loans and the popular VA IRRRL loan for refinancing. If those two loan types fit your needs, keep PenFed on your shortlist. However, Veterans United offers more VA loan options than PenFed, including VA loans for energy-efficient home updates.
If both mortgage lenders offer the VA loan you want, we recommend getting quotes from both lenders with line-by-line costs so you can make an informed choice. Veterans United quotes a 1% loan origination fee, which could tip you toward PenFed when all the cards are on the table.
Veterans United mortgage review
PenFed Credit Union could be a top mortgage loan choice for those considering a VA loan. They offer fixed-rate VA loans with down payments as low as $0 to qualified borrowers. Plus, their loan origination fee is a flat $995. This is lower than other leading VA lenders like Navy Federal and Veterans United, which both charge a 1% origination fee in addition to the VA funding fee.
Anyone qualifies for PenFed membership as it’s one of the only open membership credit unions in the United States. No matter where you live or work, you can easily become a member online by completing a membership application and opening a savings account with a $5 deposit.
You can contact Pentagon Federal’s mortgage team in person at a branch, by phone, via chat, by logging into your account, or through a contact form. The credit union’s mortgage department phone number for first and second mortgages is 800-970-7766, 9 a.m. to 9 p.m. ET, Monday through Friday. To contact mortgage loan servicing, call 800-585-9055, 8 a.m. to 8 p.m. ET, Monday through Friday.
This article was edited by Laura Grace Tarpley