Navy Federal Mortgage Review

| About Navy Federal

Navy Federal is a nonprofit military credit union headquartered in Vienna, Va. The lender launched in 1933 with only seven members, and its membership has since grown to more than 8 million.

In 2017, Navy Federal made $14.5 billion in mortgage loans to more than 54,000 members, up more than 14% from the previous year. More than half of these loans were made to first-time homebuyers.

In order to join Navy Federal, you must fall into one of these categories: active-duty member, reservist or retiree of the U.S. Armed Forces; veteran; Department of Defense civilian or  contractor, or U.S. government employee assigned to a DoD installation; Delayed Entry Program personnel or immediate family member of someone who is eligible to join. Immediate family members include spouses, children, stepchildren, grandchildren, grandparents, parents and siblings.

Working with Navy Federal

Navy Federal is a licensed mortgage lender in all 50 states, and it has  328 branches and 110 loan officers. Of these branches, 76 are located on a military base and 27 are outside the United States.

Navy Federal issues mortgage loans for a variety of property types, including single-family homes, two-family homes, condominiums and manufactured homes. Navy Federal also issues loans on investment properties. Loans on properties other than single-family homes may require a larger down payment or have additional costs. For example, Navy Federal requires a minimum of 20% down for a two-unit property. Also, buyers may have to pay one or more discount points — money paid at closing to get a lower interest rate — when buying a condominium, two-unit property or manufactured home.

Navy Federal offers manual underwriting and does not have an established minimum credit score for mortgages.

Navy Federal products

Navy Federal offers a variety of mortgages, refinance loans and home equity loans, many of which are targeted to military members and veterans.


Navy Federal offers several types of mortgage loans for purchasing a home and jumbo loans for amounts larger than $484,350.

Military Choice: The Military Choice mortgage for active-duty military members and veterans offers financing up to 100%, a fixed rate, terms of 16 to 30 years and no private mortgage insurance (PMI). The 1.75% funding fee may be financed into the loan, and sellers can contribute up to 6% toward various closing costs and fees. This mortgage is a good option for veterans who have exhausted their VA benefit.

VA: Backed by the U.S. Department of Veterans Affairs, the VA loan offers a fixed rate, terms of 10 to 30 years, financing up to 100% and no PMI. It’s available for eligible active-duty military members, veterans and reservists with a valid Certificate of Eligibility (COE). Sellers may contribute up to 4% toward various closing costs and fees.

Conventional fixed rate: Conventional mortgages offer a fixed rate, 10- to 30-year terms and no PMI or upfront mortgage insurance premium (UMIP). They require a down payment of at least 5%.

100% Financing HomeBuyers Choice: The HomeBuyers Choice mortgage offers no down payment options, terms of 16 to 30 years and no PMI or UMIP. The seller may contribute up to 6% toward various closing costs and fees. These loans may require an additional funding fee, which can be rolled into the loan.

FHA: Federal Housing Administration (FHA) loans require only a 3.5% down payment and are offered in terms of 10 to 30 years for fixed-rate mortgages. Buyer must pay a UMIP of 1.75% of the loan amount and possibly a monthly mortgage insurance premium. The seller may contribute up to 6% toward closing costs and fees.

Adjustable-rate mortgages (ARMs): Navy Federal offers ARMs — mortgages that start with a fixed interest rate for a set time period and then switch to an adjustable rate. Some ARM terms do not require a UMIP or PMI.

Interest-only: Interest-only mortgages require a minimum of 20% down and allow you to pay only interest for the first 10 years; after that, payments increase to include principal.


Navy Federal offers eight types of mortgage refinance loans.

VA: VA refinance loans offer 100% financing options, fixed rates, terms of 10 to 30 years, no mortgage insurance and are backed by the U.S. Department of Veterans Affairs.

VA Streamline (IRRRL): This program allows you to refinance an existing VA loan to a better interest rate and lower monthly payments with few out-of-pocket costs. It offers terms of 10 to 30 years with a fixed rate and no mortgage insurance.

Military Choice: Eligible servicemembers get easier qualification and a special interest rate. This program offers terms of 16 to 30 years, a fixed rate and no PMI. Max loan-to-value (LTV) ration is 97%.

Conventional fixed rate: Conventional refinance loans offer terms of 10 to 30 years, a fixed rate and no PMI. Max LTV ratio is 95%.

HomeBuyers Choice: Terms of 16 to 30 years, a fixed rate and no PMI are offered with this loan. Max LTV ratio is 97%.

FHA: An FHA refinance offers terms of 10 to 30 years and is insured by the FHA. Max LTV ratio is 97.75%.

Adjustable-rate mortgages (ARMs): These loans offer terms of 10 to 30 years and are available as conforming, jumbo or interest-only loans. Max LTV ratio is up to 95% depending on the loan.

Interest-only: These options are offered for both primary and second homes. Max LTV ratio is 80%.

Home equity

Navy Federal offers two types of home equity loans that allow homeowners to tap the equity in their home for remodeling and other needs. Navy Federal will pay most of the closing costs on both types of loans.

Fixed-rate equity loan: A fixed-rate equity loan allows you to borrow 100% of your equity between $10,000 and $500,000. This loan requires no application or origination fee, and you get the entire amount at closing.

Home equity line of credit (HELOC): The HELOC allows you to borrow up to 95% of your home equity between $10,000 and $500,000. The interest rate is variable and is based on the prime rate. There are no application, origination, annual or inactivity fees. There is a 20-year draw period followed by a 20-year repayment period. An interest-only option is available.

Navy Federal special mortgage programs

Navy Federal offers several special perks or programs that may sweeten the deal for homebuyers.

$1,000 mortgage rate match: If you find a better interest rate on an identical loan for a mortgage or refinance, Navy Federal will match the rate. If it can’t, it will give you $1,000 after you close on the loan with the original competing lender.

Cash back on your purchase or sale: When you use a real estate agent matched with you by RealtyPlus, a free service from Navy Federal, you can get between $400 and $5,050 cash back, depending on the sale price of the home.

Combined savings for first-time homebuyers: Navy Federal offers a bundle of savings options for first-time homebuyers, which include the above offers plus additional help, such as 100% financing options and the ability to get a lower interest rate if rates drop after you lock in your rate.

Extra savings for military homebuyers: Navy Federal offers a package of savings for military members, including the above offers plus the chance to get a loan with no mortgage insurance and the ability to get a lower interest rate if rates fall after you lock in your rate.

Buying a home for the first time or want to brush up on your knowledge? Navy Federal presents free homebuying seminars that take place in person in select locations.

Navy Federal also offers several proprietary rate-lock options for homebuyers.

Standard price lock: Available for purchases; no additional cost; locks rate for 60 days.

Long-term/extended-price lock: Available for purchases with conventional, FHA and VA loans; allows you to lock in a rate for 90, 120 or 180 days at an added cost or bump in rate that varies by length of lock.

Float to lock: This option is available for purchases and allows your rate to float with the market. You must lock in the rate 14 days before closing.

Freedom lock: A limited time offer that has been available for purchases since 2011, this option allows you to re-lock your rate one time if rates go lower. You must re-lock within 14 days of closing.

The mortgage application process

  • Apply for a Navy Federal mortgage. Once you’ve gathered all the necessary documents, you can go to a Navy Federal branch or call 1-888-842-NFCU (6328) to begin the application process.
  • Get preapproval. You may get preapproval before you find the house you want to buy. Preapproval lasts for 90 days and shows that Navy Federal has approved you for a loan up to a certain amount. To get preapproved, you need two years of W2s and tax returns, one to three months of pay stubs, a Social Security number, and monthly debt and living expense figures.
  • Finalize your loan. After you make an offer on a home and the seller accepts, your Navy Federal loan officer will submit and work to finalize your loan. As soon as you have a ratified sales contract, you may call, email or speak to the loan officer in person in order to lock in the rate.
  • Closing. Your Navy Federal loan officer will provide you with a closing disclosure that gives you all the details and costs of closing. Before you close, you will do a walk-through of the home to make sure all needed repairs are done and that everything works. You will then attend a meeting known as a settlement, where you will sign the documents and pay closing costs. Once that process is complete, you are a new homeowner.

Communication during the process

You will work with a Navy Federal loan officer who will guide you through the process. The loan officer is your first point of contact and will help you through closing.

Pros and cons of a Navy Federal mortgage


  • Focus on the military. Navy Federal has a variety of loan programs and perks tailored to the military community it serves. These include military-focused mortgages and discounts.
  • Special offers. The interest-rate match and cash-back offers can put extra money in homebuyers’ pockets.
  • Wide variety of choices. Navy Federal offers many types of mortgages, with an array of options that allow homebuyers to customize the loan to their situation.
  • Service for life. Unlike many lenders, Navy Federal will service your mortgage for the life of the loan.


  • Restricted to members. Because membership is open only to military members and their families, many consumers will be unable to qualify for a Navy Federal mortgage.
  • Fewer locations. Navy Federal has fewer than 500 branches, while some large banks have more than 5,000.

Editorial Note: Parts of this article were reviewed by a lender to ensure accuracy prior to publication. The overall conclusions, recommendations and opinions are the author’s alone.

The information in this article is accurate as of the date of publishing.