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 surpassing the $31 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.
Learn more: The different types of mortgage loans
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
Visit PenFed’s mortgage site to get started.
PenFed Credit Union offers these loan types:
PenFed does not offer:
*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 mortgage 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 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.
Learn more: What is a home equity line of credit, and how does a HELOC work?
At PenFed, HELOCs have a $99 annual fee (which isn’t uncommon) if you want to keep the line of credit open.
Dig deeper: HELOC draw period — How long it lasts and how payments work
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 1.25 discount points, which equals 1.25% 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
Yahoo Finance uses 2023 Home Mortgage Disclosure Act data of 10 million home loan applications to score mortgage lenders on issued interest rates and total loan costs. We score each lender on a scale of 1 (lowest) to 5 (highest).
For instance, regarding mortgage rates, a lender with a lower score charged a higher-than-median mortgage interest rate for loans issued in 2023. A higher score indicates that a lender granted borrowers lower-than-median home loan interest rates in 2023.
With total home loan costs, a lower score would indicate that a lender charged higher-than-median total home loan costs in 2023. A high rating would mean that a mortgage lender offered lower-than-median all-in home loan costs in 2023.
What this means: Pentagon Federal Credit Union offered a low mortgage rate of 5.875% and a lower-than-median total loan cost of $5,945.73 to borrowers in 2023.
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).
Read more: How to get a VA Certificate of Eligibility (COE)
Unfortunately, there’s not a lot of information available on PenFed’s mortgage preapproval process.
On the day we visited the site, both the “Apply Now” and “Get Pre-Approved” buttons on the “Buy a Home” page went to the same experience. First, there’s a landing page that lets you choose if you’re already a member or a guest (we went the “guest” route). From there, you fill out a basic form with information about your home purchase and personal financial details, and a PenFed mortgage pro reaches out to you.
For more information, you can call the credit union directly and speak with a loan officer.
Learn more: How to get mortgage preapproval
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.
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PenFed has 5 out of 5 stars in our Interest Rates category for offering customers low mortgage rates, according to government data.
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PenFed earns high marks (4 out of 5) for Affordability with its wide array of lending options, including government-backed and conventional purchase and refi options plus home equity lending solutions.
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This credit union earns close to our top score (4 out of 5) for Loan Costs, with lower-than-average fees.
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PenFed’s online features are tops as well (5 out of 5), with plenty of calculators, home-buyer guides, and online articles available.
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PenFed doesn’t offer financing for manufactured homes despite being a VA and FHA lender.
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The company earns only 2 stars in our Rate Transparency category. PenFed posts current rates and the discount points used in its calculations, but you can’t adjust the discount points to see more options. Its criteria for displayed rates are also pretty steep — for example, rates are based on a 760 credit score.
Dig deeper: What are mortgage discount points, and should you pay for them?
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.
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.
Yes, Pentagon Federal Credit Union — also known as PenFed — is a legitimate credit union. Founded in 1935, it serves more than 2.9 million members and manages around $31 billion in assets. It offers a variety of services, including credit cards, mortgages, and banking products like checking and savings accounts.
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.
Are PenFed and Navy Federal the same?
No, PenFed and Navy Federal are two different financial institutions. While both are credit unions, PenFed membership is open to anyone, but membership eligibility for Navy Federal has several restrictions. For example, you must be affiliated with the military to join Navy Federal.
Methodology:
Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.
Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.
Advertisers or sponsorships do not influence ratings.
Editorial disclosure for mortgages:
The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender’s website for the most current information. This site doesn’t include all currently available offers.
This article was edited by Laura Grace Tarpley.
