The bottom line:
PenFed Credit Union has a digital mortgage application and offers a wide selection of mortgages, including low-down-payment home loans. But it doesn't offer FHA mortgages.
Pros & Cons
- Offers a broad selection of home loan products, including low-down-payment options for first-time home buyers and home buyers of limited means.
- Offers a lender credit, based on loan amount, for purchase mortgages.
- Mortgage rates and fees are low compared with other lenders, according to the latest data.
- The lender credit isn't available for refinance mortgages.
- Doesn't offer FHA or home improvement loans.
Compare to Other Lenders
Min. credit score
Min. credit score
Min. down payment
Min. down payment
Loan types and products
Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA
Loan types and products
Purchase, Refinance, Jumbo, Fixed, Adjustable, FHA, VA, USDA
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PenFed at a glance
The Pentagon Federal Credit Union, known as PenFed, rose from modest beginnings. Established by 10 investors as the War Department Federal Credit Union in 1935, the credit union now has over $25 billion in assets and 2 million members worldwide.
You must be a member to get a mortgage from PenFed, but gaining membership is easy. PenFed now has an open national membership charter, which means anyone is eligible to join.
Here's a breakdown of PenFed's overall rating:
Variety of loan types: 5 of 5 stars
Ease of application: 5 of 5 stars
Rates and fees: 5 of 5 stars
Rate transparency: 1 of 5 stars
PenFed mortgage loan types
PenFed offers a wide array of home purchase and refinance mortgages in a variety of terms, including 15- and 30-year fixed loans and adjustable-rate mortgages.
There are also jumbo loans, which are high-balance mortgages for borrowers with an original loan amount that exceeds the conforming loan limit, and VA loans, backed by the Department of Veterans Affairs.
PenFed doesn’t offer FHA loans, which are insured by the Federal Housing Administration, but does offer conventional mortgages with down payment requirements as low as 3%. These include programs geared to first-time home buyers and home buyers with limited means. The HomeReady program, which has income limits, accepts a wide range of income sources for qualification and allows down payment and closing costs from multiple sources, including gifts and grants. Repeat buyers can also apply.
PenFed also offers a lender credit to home buyers when their mortgages close. The credit, which is available only for purchase mortgages, not refinance mortgages, is $500 for a loan up to $199,999, $1,000 for a loan of $200,000 to $699,999 and $2,500 for a loan of $700,000 or more.
PenFed Credit Union HELOC: The lender also offers a home equity line of credit, or HELOC. These second mortgages are one way for homeowners to access existing home equity without refinancing or selling their home. Funds obtained with a second mortgage can be used for expenses such as home improvements, education costs or debt consolidation. PenFed’s HELOC offers a 10-year draw period and a 20-year repayment period, with interest-only payments allowed during the draw period. The maximum line is $1 million for homeowners who live in the home and $500,000 for those who don't live in the home. The HELOC allows borrowers to switch between fixed and adjustable rates for interest payments.
PenFed ease of application
To apply for a PenFed mortgage, you can call a toll-free number and fill out a form online to have a loan officer call you, or you can fill out an application for mortgage preapproval online. PenFed's digital capabilities allow for e-signature, online document upload and online mortgage status updates.
A loan officer will serve as a single point of contact and work with you through the mortgage process.
While PenFed offers mortgage loans nationwide, actual brick-and-mortar locations are limited to about a dozen states, with the most branches in the Washington, D.C., area and in Texas. There is at least one branch per state in California, Florida, Georgia, Hawaii, Maryland, Nebraska, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Virginia and Wisconsin. There are also branches in Guam, Japan and Puerto Rico.
PenFed mortgage rates and fees
One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. In order to provide consumers with a general sense of what a lender might charge, NerdWallet scores lenders on two factors regarding fees and mortgage rates, according to the most recently available Home Mortgage Disclosure Act data:
PenFed earns 4 of 5 stars for average origination fee.
PenFed earns 5 of 5 stars for offered mortgage rates compared with the best available rates on comparable loans.
Borrowers should consider the balance between lender fees and mortgage rates. While it's not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.
You can decide to buy discount points — a fee paid with your closing costs — to reduce your mortgage rate.
Deciding whether you want to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.
PenFed mortgage rate transparency
PenFed does not publish sample mortgage rates on its website for the various types of loans it offers. Online personalized rates based on location, credit score or other factors are available only once you provide contact information.
NerdWallet’s overall ratings for mortgage lenders are evaluated based on four major categories: variety of loan types (purchase, refinance, fixed and adjustable, for example), ease of application, rates and fees and rate transparency. Among the factors we consider when scoring these categories are options to apply for and track loans online, the level of detail about mortgage rates on lender websites and our analysis of the rates and fees lenders reported in the latest available Home Mortgage Disclosure Act data. These scores generate ratings from 1 star (poor) to 5 stars (excellent).