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PenFed Mortgage Review 2021

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Pentagon Federal Credit Union (PenFed) is the nation’s second-largest federal credit union. It has 2 million members and offers a variety of mortgage products and refinancing options, as well as auto loans, credit cards, checking and savings accounts, and several other financial services. In 2019, PenFed originated almost $2 billion in mortgages.

Founded in 1935, the company opened its new headquarters in Tysons, Va., in 2016, after relocating from Alexandria, Va.

Originally known as the War Department Federal Credit Union, PenFed has a long history of affiliation with and outreach to the military community. However, no military service is required to become a member, or to qualify for a mortgage. Applicants must, however, be a member of the credit union in order to get a mortgage through PenFed.

Pros and cons of a PenFed mortgage

  • Variety of loan programs for different types of borrowers
  • No lender fees on mortgage loans
  • Special programs offer savings and assistance

Working with PenFed

PenFed serves members in all 50 states, the District of Columbia, as well as in Guam, Puerto Rico and Okinawa, Japan. Most of the credit union’s mortgage loan officers have their own independent offices, but nine PenFed branches have loan officers on site. Borrowers can also apply for a mortgage online or on the phone.

PenFed has also partnered with Berkshire Hathaway HomeServices to provide services for buying or selling a home, as well as getting a mortgage, through a subsidiary, Berkshire Hathaway HomeServices PenFed Realty. It’s active in Virginia, Maryland, the District of Columbia, Delaware, West Virginia, Pennsylvania, Florida, Kansas, Texas and Tennessee.

You may be able to easily join PenFed if you are:

  • Currently employed or retired from any branch of the U.S. military, the Department of Defense, or the Department of Homeland Security
  • Employed, retired, or work as a volunteer for the American Red Cross
  • A member of a military association like the U.S. Coast Guard Auxiliary or the American Society of Military Comptrollers

As a member of PenFed, you’ll be required to open a savings account with a minimum $5 deposit.

PenFed borrowing requirements

PenFed requires borrowers to have a credit score of 620 or higher for conforming and VA loans. If you’re applying for a jumbo, super jumbo or investment mortgage, you’ll need a score of at least 700. This lender does not do manual underwriting, so borrowers must meet the criteria used by the desktop underwriting system in order to qualify.

PenFed doesn’t list specific borrowing criteria on its website. However, it does use a number of factors to make loan decisions and set individual mortgage terms. These include looking at measures like the price of the home and the size of a potential down payment, the borrower’s credit score, the type of loan and type of property, the loan-to-value ratio (LTV) and whether the home will be a primary or secondary residence.

You can use a PenFed mortgage to buy the following property types:

  • Single-family homes
  • Townhomes
  • Condos
  • Two-unit properties

PenFed also lets borrowers take on a home equity line of credit (HELOC) on properties that have up to four units.

PenFed mortgage products


All PenFed purchase loans have options for 15- or 30-year fixed-rate mortgages. PenFed also offers adjustable-rate mortgages (ARMs), which can help you pay less during your initial borrowing period. If you’re taking out a jumbo loan — which means you’re borrowing more money than the government will guarantee — you may qualify for a 15/15 ARM. This type of mortgage typically offers lower monthly payments during the first 15 years of homeownership than a 30-year, fixed-rate jumbo loan.

Fixed-rate loans:

  • Conforming mortgages (10-, 15-, 20- and 30-year terms)
  • High-balance mortgages (15- and 30-year terms)
  • Jumbo mortgages (15- and 30-year terms)
  • VA conforming mortgages (15- and 30-year terms)

Adjustable-rate loans:

  • 3/1, 5/1, 7/1, 10/1 conforming mortgages
  • 3/1, 5/1, 5/5, 7/1, 10/1, 15/15 jumbo mortgages


PenFed’s most popular refinancing loans offer loan terms of 15 or 30 years.

Home equity products

Home equity line of credit

PenFed’s 10/20 home equity line of credit (HELOC) lets borrowers access funds as needed and only make payments on the amount used. These loans have variable rates subject to change after the loan is finalized. Loan amounts range from $25,000 to $500,000 for owner-occupied properties and $25,000-$400,000 for non-owner-occupied homes. There is no origination fee. PenFed HELOCs have an interest-only payment option for the 10-year draw period, and you then have 20 years to repay the funds.

For this type of loan, PenFed has a maximum combined loan-to-value ratio (CLTV) of 90% in all states but Texas for owner-occupied properties, and 80% for non-owner-occupied properties. In Texas, those numbers are 80% and 75%, respectively. For condominiums, the maximum CLTV is 80% in all states. Rates vary depending on owner occupancy and CLTV. PenFed pays most closing costs on interest-only HELOCs. An appraisal is required for loans with a CLTV above 80% or for more than $250,000, and this must be paid for by the borrower.

PenFed special mortgage programs

PenFed’s First-Time Home Buyer Advantage program is a special program that lets qualified borrowers take out a loan with a 3% down payment, with no income limits or origination fees.

PenFed also offers borrowers a lender credit between $500 and $2,500, depending on the size of their loans.

The mortgage application process

If you’re thinking of applying for a mortgage from PenFed, you can apply for both membership and the loan at PenFed’s website, in person or over the phone. If you’d like to know how much you might be able to borrow before looking at homes, it’s possible to get preapproval through PenFed’s website as well. To set up a call with a PenFed loan officer, you’ll need to provide your contact information, the state in which you plan to buy and the type of product you need (mortgage, refinance or home equity).

During the loan process, you will be assigned a loan processor, who will be your main point of contact in addition to your loan officer. That person will provide assistance with necessary documentation. Documents are securely uploaded through PenFed’s customer portal. Once the loan is ready to close, you get to choose the time and location for the closing, as coordinated with both your title company and attorney.

PenFed offers free rate locks on all mortgages and refinance loans. If you’re taking out a new mortgage, you’ll have 45 days to lock in your interest rate. Refinance borrowers have 90 days to lock.

After your loan closes, it will stay with PenFed. This lender services its own mortgages, rather than selling them on the secondary market.


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