Having diverse and flexible home loan options is important to many borrowers, and Navy Federal Credit Union offers those choices in spades. The credit union also stands out because of the customers it serves: military members and their families.
Navy Federal was founded in 1933, and its membership encompasses Department of Defense and Coast Guard active-duty, civilian and contractor personnel and their families. The Vienna, Virginia-based credit union is the largest in the world, with more than 6 million members. It has more than $78.6 billion in assets, according to internal data.
The credit union has found its sweet spot in serving first-time homebuyers, who comprise 55% of its mortgage business. That’s only going to grow as more members enter the housing market after their active-duty service is up, says Katie Miller, vice president of mortgage lending.
AT A GLANCE
- Offers a $1,000 mortgage rate match program.
- Loan origination fee: 1% of the sales price, which you can roll into your loan by paying a higher interest rate.
- Operates in all 50 states.
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Members can choose from a wide variety of purchase and refinance loans that Miller says were created with affordability in mind, especially for those who might be strapped for cash for a down payment.
When you apply for a Navy Federal mortgage, you can choose from the following loans, with up to 100% financing and no mortgage insurance available in some cases:
- 30-year and 15-year fixed-rate loans.
- Federal Housing Administration loans.
- Department of Veterans Affairs loans.
- Interest-only loans.
- Adjustable-rate mortgages with 1/1, 3/1, 5/1, 7/1, 10/1 and 2/2 terms.
- 3/5 and 5/5 ARMs.
The various adjustable-rate loans that Navy Federal offers target military families, who often must relocate every few years. The credit union also offers mortgage options for second homes and investment properties.
The HomeBuyers Choice program is for first-time homebuyers. It offers fixed-rate loans of 15 or 30 years with up to 100% financing and no mortgage insurance premiums. You can get the 1.75% funding fee waived for an interest rate increase of 0.375. That minimizes the amount of cash you need at closing.
The Military Choice program has the same benefits as the HomeBuyers Choice, but with special pricing on mortgage rates and origination fees for active-duty and veteran borrowers, Miller says. Also, Navy Federal’s standard 1% loan origination fee can be rolled into the loan or waived in exchange for paying a higher mortgage rate, further reducing the amount of cash you need to close.
The underwriting model for Navy Federal lets loan officers evaluate a borrower’s situation using alternative credit scoring instead of adhering to strict credit overlays or traditional FICO scores, Miller says. In other words, Navy Federal can evaluate your borrowing risk beyond numbers on a piece of paper; it takes your entire financial picture into consideration.
Loan officers can look at whether you pay your rent and utility bills on time, keep an existing Navy Federal checking or savings account in good standing and make timely payments on other credit accounts, as well as evaluate your military service, Miller says.
“That’s the unique component of being a credit union, particularly since many of our members have been with us for decades throughout their military service,” Miller says. “A lot of them join up when they turn 18, so even if they have a thin credit profile, we can see their financial profile from the beginning. That’s a benefit for them when they apply for a mortgage with us.”
With one in four of its members obtaining a mortgage — many of them first-time homebuyers — Navy Federal is focusing more attention on this growing share of its business, Miller says. It already has a full online mortgage application, while some of its competitors are just now building one out.
Once you apply online for a Navy Federal mortgage, a loan officer calls within 24 hours to review the application and possibly provide conditional approval. That means the loan is approved upfront but requires additional documentation to close, unlike many conventional loans.
VA loans have stringent eligibility and documentation requirements. Having someone guide you step by step through the process, especially in the midst of a relocation or deployment, is a big part of Navy Federal’s customer service appeal, Miller says.
“Our members really prefer the human interaction we offer as a credit union, especially since half of our business comprises VA loans,” she says. “Our loan officers will take customers and even [real estate agents] by the hand and explain how the process works.”
- It offers a wide range of mortgage products with affordability in mind for its military members.
- Navy Federal evaluates rent, utility and cell phone payments as part of its underwriting standards.
- Its minimum loan amounts are $10,000 for purchases and $19,000 for refinances, which is lower than many lenders in the industry.
- You can apply online via a web browser but not through Navy Federal’s mobile app.
- Its online platform doesn’t let borrowers track their loan’s progress or upload non-Navy Federal Credit Union documents.
- It reports longer-than-usual closing times due to high loan volume, which could be a problem if you’re on a tight timeline.