Navy Federal Mortgage: Is It the Right Mortgage Option for You?

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Quick Take: Navy Federal Credit Union is the nation's fifth-largest VA lender, so it's no wonder that it specializes in VA mortgage loans. It also has loans for active-duty military and veterans already using their VA benefit as well as loans for borrowers with no military affiliation. And because it's a credit union, Navy Federal's fees are low, and it offers several ways for borrowers to reduce their rates.

Navy Federal Credit Union (NFCU) is a full-service financial institution that specializes in serving the needs of veterans and active-duty members of the military. In addition to offering VA mortgage loans, Navy Federal has loans especially for service members, veterans and their eligible family members.

Established in 1933, Navy Federal Credit Union has over 12 million members and has earned a 4.5 out of 5 rating on Trustpilot. 

Its key standout features include Homesquad, a digital mortgage platform that allows members to apply for mortgages, upload documents and track their loan statuses online. They offer flexible closing options, including in-person signing of documents, a hybrid e-closing option when some documents are signed electronically and others are signed at the bank, or the choice of signing all documents remotely with an e-notary.

How the Navy Federal Mortgage Process Works

Before you can apply for a Navy Federal mortgage loan, you’ll have to join the credit union. You’re eligible if you, an immediate family member or a household member have ties to the armed forces, Department of Defense or National Guard. 

It’s easy to apply for a Navy Federal Mortgage. Here’s a guide on how it works: 

Complete the application process

You can apply online via the digital platform HomeSquad, in-person or adopt a hybrid approach. 

• Online via HomeSquad. NFCU’s digital mortgage platform, HomeSquad, allows members to apply for pre-approval, upload documents and track loan status 24/7.
• In-person. You can come into a NFCU branch and apply in-person. 
• Hybrid. You can start the application online and complete it in-person. 

Speed of pre-approval 

Here is the timeline of the approval process: 

• Instant. Some members can receive pre-approval instantly online.
• 1-2 business days. For others, it may take one to two business days because NFCU representatives are awaiting documents. 
• Up to 10 business days. It may take up to 10 business days if a more complete review is required. 

Level of customer support 

Customer service is one of Navy Federal Credit Union’s strong points because it’s focused on the needs of service members. 

Stateside members can contact customer service by phone 24/7. Members stationed overseas in any of a dozen countries can call the number for their specific location or reach a representative via Skype or another Voice over Internet Protocol app via phone or computer.

Other customer support options include 24/7 virtual assistant chat and chat with a stateside rep from 9 a.m. to 6 p.m. ET Monday through Friday. Secure messaging and in-branch assistance are also available.

Pros and Cons of Navy Federal 

Here are the pros and cons of Navy Federal: 

Pros:

• Multiple no-down-payment options. 
• Mortgage rates are highly competitive. 
• Does not require private mortgage insurance. 
• Borrowers with a military affiliation can get most of the benefits of a VA loan even if they’re currently using their entire benefit.

Cons:

• Only people with a connection to the military, National Guard or Department of Defense can join Navy Federal Credit Union.
• Does not offer FHA loans or USDA loans.
• Credit requirements are not transparent on the website. 

Navy Federal Loan Options

What loan options are available at Navy Federal? Navy Federal offers the following loan options — conventional loans, VA loans, purchase mortgages, refinance loans, cash-out refinance loans, fixed-rate mortgages, adjustable-rate mortgages, jumbo loans, second home loans, investment property loans, renovation loans, HELOCs and home equity loans.

Here are details on a few of the loans: 

Conventional Loans 

Conventional loan terms range from 10 to 30 years. While the interest rate is about the same as for a VA loan, the annual percentage rate, which reflects the total annual loan costs, is about half a point lower than the APR for a VA loan because of VA loan fees. However, conventional loans have a minimum down payment requirement of 5%. The jumbo version allows one no-refi rate drop for a $250 fee.

VA Loans

The VA loans allow eligible active-duty service members and veterans to buy homes with no money down, at highly competitive mortgage rates. No mortgage insurance is required for a VA loan, and the seller can contribute up to 4% of the home price toward closing costs. VA loans are available in terms ranging from 10 to 30 years.

Military Choice

The Military Choice loan is a proprietary fixed-rate mortgage loan for active-duty service members and veterans who are currently using their VA loan benefit. You can buy with no money down, and private mortgage insurance isn’t required. The loan allows borrowers a no-refinance rate drop, for which there’s a $250 fee per decrease, if rates change during the loan term and other eligibility criteria are met. Military Choice terms vary from 16 to 30 years.

Jumbo Loans

Navy Federal offers jumbo loans for a Conventional Fixed Mortgage Loan Homebuyer’s Choice Loan, ARM Mortgage Loan, and Military Choice Loan. The terms are for either15 or 30 years. The eligibility requirements include strong credit and stable income and must be Navy Federal member. Some loans are only available for first-time homebuyers and military members/veterans. The Homebuyer’s Choice Loan doesn’t require a down payment.

Adjustable-Rate Mortgage

Navy Federal’s adjustable-rate mortgage loans start with a low initial rate that’s fixed for the first three or five years. After that, the rate adjusts every five years for the remainder of the loan term. 

A Navy Federal ARM can finance 90 to 100% of a home purchase, and most borrowers do not need mortgage insurance.

Refinance options 

All of Navy Federal’s purchase-loan types can also be used to refinance your current mortgage. VA borrowers have an additional option — the streamlined Interest Rate Reduction and Refinance Loan (IRRRL). While standard VA and VA IRRRL refinance loans both allow eligible borrowers to finance 100% of the value of their homes, other loan types have loan-to-value limits.

• Military Choice: 97% LTV
• Homebuyers Choice: 97% LTV
• Conventional: 95% LTV
• Adjustable rate: 95% LTV

Homebuyers Choice

The Homebuyers Choice loan is another fixed-rate VA loan alternative that allows 0% down payments and requires no mortgage insurance. At least one borrower must be an active-duty service member, reservist or veteran to qualify. As with the Military Choice loan, you can get no-refi rate drops for a $250 fee per drop if rates decline during the loan term and eligibility criteria are met. Available terms are 16 to 30 years.

Navy Federal Mortgage Rates 

Here is a snapshot of some of Navy Federal’s mortgage rates and discount points: 

Navy Federal Fees and Discounts

Navy Federal, like every mortgage lender, has lending fees. But you can reduce the impact of your loan rate by taking advantage of the credit union’s discounts.

Fees

Here are the fees you can expect to pay for your Navy Federal mortgage loan.

• VA funding fee: All VA loans come with a funding fee. The amount varies by loan type, your service type, whether you make a down payment and whether you’ve used your VA loan benefit before. 
• Origination fee: Navy Federal charges a 1% origination fee on all its loans. You can waive the fee in exchange for a 0.25% increase in your interest rate.
• Funding fee: Military Choice and Homebuyers Choice loans have a 1.75% funding fee. You can roll the cost into your loan, up to your maximum loan amount. Navy Federal will waive this fee in exchange for a 0.375% increase in your interest rate.

Discounts

Navy Federal gives borrowers several ways to reduce their rates.

• Discount points: Discount points are prepaid interest, with one point equaling 1% of your loan amount. You can pay these at closing in exchange for a lower interest rate on your loan.
• RealtyPlus: Have a partner Realtor represent you in your sale, and you’ll get $400 to $9,000 cash back after closing.
• Special Freedom Lock: You can lock in your rate with just about any mortgage purchase or refinance loan, but Navy Federal’s Special Freedom Lock lets you “relock” twice within 60 days for a maximum 0.50% rate reduction. 
• Rate match guarantee: Navy Federal will match the same loan rate with another lender or pay you $1,000 after you close with the other lender. You’ll have to be locked in with Navy Federal and meet several conditions to qualify, so it’s a good idea to discuss this guarantee with a Navy Federal loan officer if you think you’re eligible.

Navy Federal vs. Other Mortgage Lenders

Here’s how Navy Federal stacks up against other mortgage lenders: 

Who Should Consider Navy Federal?

Best for

• Military members and their families
• Those who want a variety of loan options
• Those who prefer online, in-person and hybrid options to apply for mortgages 

 Not ideal for:

• Those who don’t belong to the military
• Those who want FHA or USDA loans
• Individuals who want access to in-person branches (limited branches)

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