Navy Federal Credit Union is a military-focused lender that offers several loan products, such as Navy Federal personal loans, auto loans, and home loans. If you’re a credit union member, you may qualify for some Navy Federal home loans and refinancing options with no down payment.

As of Q4 2023, Navy Federal Credit Union was ranked as the third-largest lender of VA loans by volume (with just over 1,500 loans funded) and by total loan amount (with just over $557 million in total loaned funds). Besides VA loans, Navy Federal also offers conventional, Homebuyers Choice, and Military Choice loans. These alternative loan options can be a good choice for those who’ve exhausted their VA loan benefits.  

Navy Federal members can apply for VA home loans and conventional mortgages to purchase a home or refinance their existing mortgages. The credit union also offers home equity loans and loans for investment properties and second homes.

The credit union offers several benefits that can help you save money:

  • Many home loan options they offer require no down payment or Private Mortgage Insurance (PMI).
  • Loan options are available even for borrowers who’ve exhausted their VA loan benefits.
  • You can receive up to $9,000 in cash back when you choose a real estate agent through RealtyPlus.
  • The rate match guarantee can provide you $1,000 if Navy Federal can’t match the rate of another lender.
  • You may have up to two opportunities to adjust your mortgage’s interest rate lower, by as much as 0.50% , between the date of your application and the date of your closing, if general mortgage rates on a similar-term mortgage loan fall during that time.

Members can choose from five different Navy Federal home loans if they’re eligible. The rates and eligibility criteria differ for each type of home loan.

Rates and Terms

Navy Federal offers adjustable and fixed rate options, as well as home loans that don’t require any down payment. However, there may be other costs involved, such as origination fees and the like. Here’s a detailed look at the rates and loan terms you can expect for each loan type.

Interest Rate (as of Q4, 2023)Down PaymentTerm
VA LoansStarting at 5.625%0%10 to 30 years
Military ChoiceStarting at 7.500%0%16 to 30 years
Conventional Fixed RateStarting at 5.75%5%10 to 30 years
Homebuyers ChoiceStarting at 7.625%0%16 to 30 years
Adjustable-Rate MortgageStarting at 5.250%0-10%10 to 30 years

As of Q4, 2023, the current average interest rate for 30-year fixed mortgages is 7.45%. The average 5/1 adjustable-rate mortgage APR is 7.85%.

Eligibility Criteria

While there are many loans for veterans and current military members available, it’s important to check which option you may qualify for.

To qualify for any Navy Federal home loan, you must be a member of the credit union before you may apply. Membership is available exclusively to those who are current or retired members of the U.S. armed forces, U.S. Military veterans, Department of Defense personnel, as well as their immediate family members.

Navy Federal doesn’t disclose the financial or credit score requirements of its home loans on its website. However, based on the underwriting guidelines for conventional loans outlined by Fannie Mae, most lenders have these standard minimum qualification requirements:

  • Debt-to income (DTI) ratio of under 43%
  • At least 5% down payment
  • Minimum credit score of 620  

Navy Federal offers a variety of home loans with flexible down payment requirements. We recommend visiting your nearest branch to speak to a mortgage specialist and learn which option may be best for you. Navy Federal also offers jumbo loans for larger loan amounts.

VA Loans

If you have a VA loan entitlement, you may qualify for this option. VA loans have no PMI or down payment, but you’ll need to pay a funding fee which is oftentimes the only significant cost of securing a VA mortgage loan. Typically, this is the best mortgage option for those who qualify. A VA loan pre-approval is a good way to check the rates and terms you qualify for, before you go about finding your new home.

Military Choice

If you don’t have VA loan benefits, you may be able to get the same perks as a VA loan with a Military Choice home loan. You won’t have to pay PMI or a down payment, but the loan comes with a higher average interest rate compared to conventional or VA loans.

Conventional Fixed-Rate Mortgage

A conventional fixed-rate mortgage is a traditional home loan with fixed monthly installments. PMI may be optional, and you can get a loan with as little as a 5% down payment. If you prefer stability for your budget, this may be a good option.

Homebuyers Choice

The Homebuyers Choice loan offers 100% financing, so you won’t need to put any amount down. Sellers may contribute up to 6% of the home’s value towards the closing costs. The interest rate is fixed, so your monthly payments will remain the same. The loan also doesn’t require PMI, so it’s a good option for first-time homebuyers.

Adjustable-Rate Mortgage

Adjustable-rate mortgages start with a fixed rate and then adjust to the current market adjustable interest rate, after the initial term. This adjustable rate can then change every year, on the loan’s anniversary date, based on some common index like the LIBOR rate or the current market yield on the one-year U.S. Treasury Bill.  

ARMs are a better option for borrowers who don’t anticipate owning the home for the long term and want to keep their installments lower. However, interest rates in the future may be higher on adjustable-rate mortgages than fixed-rate mortgages.  

You can use the HomeSquad tool to apply for a Navy Federal home loan online. The tool allows you to submit your application and track its status online.  And once you’re approved, it will be an online mortgage hub where you can view your payment history and pay bills.

Here’s what you can expect from the process:

  • Start by determining the type of loan you’d like to apply for or speak to a loan officer for guidance.
  • Check your credit score and determine the monthly mortgage payments that you can afford.
  • Get preapproved for the loan through the HomeSquad or by visiting your nearest branch. The pre-approval letter will be good for 30 to 90 days.
  • Gather the key information and documents you’ll need for your mortgage.
  • Once you find the right home, upload a signed purchase agreement.
  • Upload the necessary documents for verification.
  • Your loan application will move to underwriting for final approval.
  • Once the underwriting provides you with final approval, you’ll move to closing.

Before you take out a loan, it’s important to consider how much of your monthly income will go toward your mortgage payments. 

“Most lenders and financial advisors recommend that you keep your total housing payment each month (including your principal, interest, property taxes, and insurance) to 28% of your gross monthly income, or less,” Brad Reichert, a financial expert and the founder and managing director of Reichert Asset Management LLC shares. 

“Another way to calculate this is to limit your total housing payment to no more than 45% of your net, after-tax ‘take home’ pay,” Reichert adds. “This means that if your take-home pay is $5,000 per month, your total housing payment, including your mortgage loan, property tax, and home insurance, should ideally be no more than $2,250 per month to ensure your chances of maintaining on-time payments on your mortgage loan over the long-term,” he explains.

Navy Federal home loans are a very good option for former or current military members and their family members, due to their many flexible money-saving membership benefits. If you’re looking for a loan option with no down payment, Military Choice and VA loans are both good options to consider.

You can enjoy the same perks with the Homebuyers Choice loan if you don’t qualify for either of those options. However, we recommend that you evaluate your budget and compare loan options and mortgage rates from other lenders before you make a decision. 

Buying a home is a major financial decision, and it’s important to pick the right mortgage, so it’s best to do some research before you apply.