Navy Federal Credit Union has a diverse mortgage program for any member of the Department of Defense and Coast Guard. You don’t just have to be in the Navy, you can be in any branch and be active-duty members, civilians, and even contractors.
The mortgage lending arm of Navy Federal both originates and services your loan, so you can trust their reputation for every step of the home loan process. They’re also committed to helping first time home buyers with plenty of resources.
Mortgage Application Requirements
Navy Federal has a national scope, so you can be house hunting in any state and apply for a home loan. Like any lender with a broad offering of mortgages, the qualifications vary for each one.
With Navy Federal as your mortgage provider, having nontraditional credit is OK, including cell phone and rental payments. So even if you don’t have a substantial credit history or some negative items, you could still potentially qualify. They also typically allow you to qualify for a lower loan amount than most other lenders.
Types of Home Loans Available
Navy Federal breaks down its mortgage offerings into seven distinct categories, although there are even variations within each one.
For Navy Federal members who are military service members, the VA loan offers a 0% down payment option and low interest rates. The interest rates are fixed and there’s no mortgage insurance. Plus, you can access terms ranging between 10 years and 30 years.
With slightly higher rates than a VA loan, the Military Choice option offer easier qualifications. Similarly, it provides 100% financing so you don’t have to worry about a down payment, and there’s also no private mortgage insurance (PMI). With a fixed rate, you can also select loan terms between 16 years and 30 years.
Conventional Fixed Rate
Navy Federal Credit Union offers conventional fixed-rate mortgages for all credit union members. There’s a minimum down payment of 5% and you don’t have to add PMI to your monthly payment. The loan terms are flexible, starting as quick as 10 years and as long as 30 years. This helps you pick the length that works best for your monthly budget.
100% Financing HomeBuyers Choice
Another fixed rate option, this program for first time home buyers helps you get a mortgage with no down payment. You can even qualify for a jumbo loan up to $1 million. This option also allows you to waive the 1.75% funding fee if you increase your interest rate by 0.375%.
Navy Federal offers both fixed and adjustable-rate FHA loans. This loan program is backed by the federal government and is great for first-time home buyers. The minimum down payment is just 3.5% so there’s more flexibility in how much cash you need to bring to the table. You will, however, need to pay mortgage insurance.
Adjustable Rate Mortgages
An adjustable-rate mortgage starts you off with a low, fixed-rate for the first portion of the loan and then adjusts each year, which can go either up or down depending on where rates are at the time. The down payment amount can be anywhere between 0% and 10%. There’s no PMI, and they also offer options for conforming, interest-only ARMs, and jumbo loans.
An interest-only loan can be used for both primary and second homes. It does, however, come with a hefty 20% down payment requirement. If you can manage that, the term is for 30 years and you can choose between fixed and adjustable rates.
Home Equity Loans
Navy Federal offers fixed-rate home equity loans with 5-, 10-, 15- and 20-year terms. They also offer a home equity line of credit (HELOC) with a variable interest rate. You can borrow up to 95% of your home’s equity. There’s no application or origination fee for either product.
Fees and Rates
Both fees and rates vary greatly depending on what kind of mortgage you select. These variations can help you when selecting which home loan is right for you. Once you start the application process, you’ll get a personalized estimated cost document so you know exactly what to expect at closing. You can also see live mortgage rates on their website for up to date information on each type of home loan.
Navy Federal has a standard 1% loan origination fee. It can be rolled into the loan or waived in exchange for paying a higher interest rate.
Navy Federal’s Mortgage Process
Before submitting a formal application, you can get prequalified in order to find out what kind of home loan and rates you would likely get approved for. This also helps to minimize the application process once you find a home and are under contract, not to mention strengthen your offer when you find a house you love.
Here’s what the pre-qualification process entails.
First, you’ll provide personal information such as your date of birth, social security number, and your addresses for the last two years. Also, be prepared to submit the following documents:
- Paycheck stubs
- Tax forms from the last two years, such as W-2s or I-9s
- Documentation for other sources of income, like bonuses or overtime
- Signed federal tax returns from the last two years
- Asset statements for accounts outside of Navy Federal, including retirement accounts
You should also have an idea of where you’re planning on buying property, such as a county or zip code.
When you’re under contract on a home, it’s time to officially complete your mortgage application. You may need to submit extra documentation if requested by your loan officer. They’ll also need a few other pieces of information about your property purchase, including:
- Type of property, such as single family home or condo
- Purchase price and down payment amount
- Source of funds for down payment and closing costs
- Any estimated HOA fees or condo dues
- A copy of the ratified contract plus addendums
You’ll also need to pay for your appraisal and credit report (if you didn’t already do so during the prequalification process). This is pretty typical among mortgage lenders.
Because Navy Federal is a popular option among DoD employees and families, you may experience longer-than-average closing times. The best thing you can do is ask for an estimate early on in the process so you know what to expect. Also, make sure you’re not slowing things down by neglecting to submit outstanding documentation requests.
Navy Federal Credit Union stands behind its mortgages so much that it offers a rate match program. If you find a better interest rate from any other lender, then they’ll match it. If they can’t for some reason, they’ll give you $1,000 after closing on your home loan with them. It’s a pretty good incentive to keep customers happy and saving money.
If you’re one of Navy Federal Credit Union’s 7 million customers — or eligible to become one — then their mortgage program could be a strong fit. There are plenty of options available for people of all income brackets and with just about any type of savings.
The downside is that you may have to be prepared to wait a longer time to close. Whatever your financial priorities are, Navy Federal takes those into consideration when helping find the best way to finance your next home purchase.