PenFed Credit Union mortgage review

Best for good credit

PenFed Credit Union offers a variety of mortgage products, including FHA, VA, conventional, and jumbo loans. Because PenFed’s credit requirements are a little stricter than some competitors, they’re a good fit for people with good credit — especially veterans and service members, who will find competitive rates and bonus perks on products from PenFed.

Methodology

To determine the best mortgage companies, Fox Money evaluated lenders based on several different categories: rates and fees, reputation, eligibility, efficiency, customer experience, and discounts and perks. We also looked at the types of loans offered by each lender for research purposes only, they did not factor into the overall score. We assigned a score out of five stars to each lender based on our findings. 

Learn more about how Fox Money rates lenders by checking out Mortgage Lender Rating Methodology. 

PenFed Credit Union: Pros and cons

Here are some of the advantages and disadvantages of getting your mortgage or refinance through PenFed Credit Union.

What to consider before applying

If you’re considering a PenFed Credit Union mortgage, here’s what to know before you apply:

Become a member first

Remember that PenFed is a credit union, so you’ll need to become a member if you want to use its mortgage programs. To join, you’ll just need to apply, open a savings account, and deposit $5. Anyone can apply to be a PenFed member, and your money is federally insured by the National Credit Union Administration (NCUA).

Check your credit report

Next, make sure your credit is in good shape. PenFed Credit Union typically requires at least a 650 credit score for a conventional mortgage and a 620 score for an FHA loan. For refinancing, you’ll also want a credit score of at least 620 for an FHA streamline refinance and 650 for a conventional mortgage refinance.

Read the fine print

Before you start counting on a $1,500 closing cost credit, make sure you read the fine print. You’ll need to use one of PenFed Credit Union’s preferred real estate agents to use the PenFed Homes Program, and the full $1,500 is only for homes priced above $700,000. For homes priced below that amount, the credit is $1,000. The credit isn’t available in Alaska, Iowa, Kansas, Louisiana, Missouri, Mississippi, Oklahoma, Oregon, or Tennessee.

Check out the Power Buyer program

PenFed’s Power Buyer program is a mortgage pre-approval designed to help you compete against other buyers by providing an upfront, full approval, complete underwriting review, and a locked interest rate for 60 days (with a 30-day extension available for a fee if you need it). 

How to apply for a loan with PenFed Credit Union

To apply for a purchase loan with PenFed, follow the steps below:

1. Check your credit report: This helps you understand what lenders will see when they check your credit. It also gives you an idea of your mortgage options and lets you know if there are any corrections or errors that need to be addressed before you apply.
2. Start your membership: If you’re not a member already, now’s a good time to apply for credit union membership. Make sure you make your savings deposit, too.
3. Hire a real estate agent: If you need an agent, PenFed provides access to its trusted network of agents. They can help you shop for a home and you’ll be eligible for the closing cost credits, too.
4. Fill out the form online: This will provide your information to PenFed Credit Union and let them know you’re interested in speaking with a loan officer. You can access this form by clicking “Apply Now” on the PenFed website. You’ll need to fill this out if you want to manage your application online.
5. Call a loan officer: If you prefer, you can call (888) 909-4013 to speak with a loan officer and begin the application process over the phone.

How to qualify for a loan with PenFed Credit Union 

Qualifying for a home loan with PenFed will depend on the type of loan you choose. PenFed Credit Union requires slightly higher credit scores than some other lenders, so check out a few options below to see what requirements you’ll need to meet.

Conventional

Conventional fixed-rate mortgages are available for loans up to $766,550 and down payments as low as 3%. You’ll need a “satisfactory” credit score, which PenFed says is typically at least 650. You’ll also need a year of W-2s and two months’ worth of pay stubs. If you’re self-employed, you may need to provide additional income verification, too.

Jumbo

For loans between $766,550 and $3 million, go with the PenFed jumbo loan. These loans typically require a credit score of 700 or higher, plus two years of employment history, one year of W-2s, and up to two months of pay stubs. You’ll also need a minimum of six months of cash reserves to qualify.

FHA

FHA loans tend to have more lenient credit requirements; you’ll want to have a credit score of at least 620, plus 3.5% to put down, one year of W-2s, one to two months of pay stubs, current debt information, and an FHA-approved property appraisal.

VA

For VA loans, you’ll need to be a military member, veteran, or spouse. There are no down payment requirements, but PenFed will need you to supply your (or your spouse’s) certificate of eligibility (COE). If you’re a veteran, you’ll provide your discharge paperwork. Enlisted service members can also apply for a VA loan with PenFed; you’ll just need to provide a signed statement of service.

How to refinance with PenFed Credit Union

PenFed Credit Union offers multiple types of refinancing options:

• Rate-and-term refinance: This option pays off your old mortgage and replaces it with a mortgage with a new rate and/or term.
• Cash-out refinance: Your new mortgage will replace your existing mortgage and include an additional cash portion that you can receive at closing. You can use the money from a cash-out refinance for bills and expenses such as home renovations or college tuition. 
• VA refinance: You can refinance construction loans, non-VA loans, and existing VA loans into a VA cash-out loan.
• VA Interest Rate Reduction Loan (IRRRL): Also known as a VA Streamline refinance, an IRRRL may let you lower your interest rate, even on a home that’s no longer your primary residence. Even better: your closing costs are covered with PenFed.

If you don’t want to refinance your home, you can still tap your equity by using a home equity line of credit (HELOC) from PenFed. The mortgage company offers HELOCs up to $500,000 to help you pay for major expenses.

To get started with a PenFed refinance, have at least one year of W-2s and one or two months of pay stubs ready to prove your income. You’ll need to join the credit union as a member, if you haven’t already, before you apply for the refinance. You can call PenFed at (888) 909-4013 or fill out an online form to give your information to a loan officer.

How PenFed Credit Union compares 

PenFed Credit Union offers an array of home loan options, but you’ll typically need higher credit scores to qualify for a mortgage — and you’ll need to be a member. Compare PenFed Credit Union to other lenders to decide which servicer will be the best fit.