Navy Federal VA Loan: What Are the Interest Rates?
7 MIN READ
Published December 22, 2023 | Updated January 24, 2024
Navy Federal Credit Union offers several home loan products for military members and their families. If you’ve earned any VA loan benefits, you can take advantage of it to make homeownership a reality.
VA loans from Navy Federal are a great option for borrowers who want competitive rates, 0% down payment, and no private mortgage insurance (PMI). However, it’s important to know the current Navy Federal VA loan rates and the rates offered by other lenders to make an informed decision.
In this guide, we’ll give you an overview of the rates offered by Navy Federal for VA loans and its other mortgage products and how these rates compare to other lenders.
What Are VA Loans?
A VA loan is a home loan available through the U.S. Department of Veterans Affairs for veterans, service members, and surviving spouses. When you choose a VA loan, you get access to the 0% down payment option, no private mortgage insurance (PMI), flexible lending requirements, and lower interest rates compared to conventional mortgages. However, there’s a funding fee you’ll have to pay, which adds to the loan’s overall cost.
For military members and their families, these loans can be a better fit because of the benefits they offer. While it can be a great way to save money and get lower mortgage payments, finding a lender with the best loan rates can be challenging. Navy Federal offers VA loans at competitive rates and consistently ranks as one of the top VA lenders in the country, so it may be a good choice if you’re a member of the credit union.
VA loans can only be used to purchase a primary residence. If you’re interested in buying investment properties or a second home, you may want to consider other loan types from Navy Federal.
Navy Federal home loans and mortgage refinance loans are only available for existing members of the credit union. You may qualify for membership if you’re in the armed forces, a retired service member, a veteran, Department of Defense personnel, or an eligible family member.
- 90 consecutive days of active service during wartime
- 181 days of active duty during peacetime
- Over six years with the National Guard or Reserves
If you meet at least one of the eligibility requirements listed above, you may qualify. If you don’t, you must be a surviving spouse of a military member who lost their life in the line of duty or due to a service-related disability. You’ll need to provide a certificate of eligibility to the loan officer to demonstrate service eligibility.
Navy Federal doesn’t list minimum credit scores or income requirements on its website for its loan options, and the VA does not set a minimum credit score for VA loans at their program level, either.
For these kinds of loans, the VA instead relies on the actual lenders (i.e., private banks and mortgage companies) to make sure that each VA loan borrower has adequate income and is considered to have a sufficient credit history and profile to meet the payments on the loan each month. Usually, that means a FICO score of about 580 or above to purchase a new home with a VA loan.
You’ll most likely need a score of about 620 (or higher) to do a VA-backed cash-out refinance loan or purchase a home worth $1 million or more. While many lenders will approve you with a lower score, you will want to make sure your credit profile is as healthy as possible when you go to apply.
|Starting at 5.25%
|Starting at 7.25%
|Conventional Fixed Rate
|Starting at 5.25%
|Starting at 7.375%
|Starting at 5.250%
Current Navy Federal VA loan rates are as low as 5.929% APR on a 30-year loan, while the current average loan rate for 30-year VA loans from all lenders is 6.38% APR. You may find that Navy Federal VA loan rates are oftentimes comparatively lower than most other lenders and can help you save a considerable amount of money over the life of the loan.
If you don’t qualify for VA home loans, you may be able to get the same perks with Military Choice loans, such as no down payment or private mortgage insurance (PMI). However, the interest rates are higher, at about 7.586% APR, when compared to VA loans.
Conventional Fixed-Rate Mortgage
Another option is to get a conventional fixed-rate loan. You’ll need at least 5% up-front as a down payment, but with a fixed interest rate, you’ll have stability and peace of mind knowing your installment will remain the same. The interest rate for conventional fixed-rate mortgages at Navy Federal starts at 6.12% APR.
For first-time homebuyers, Navy Federal offers 100% through the Homebuyers Choice loan. The interest rates are higher at 7.375% APR, but you may be able to save money since the loan doesn’t require a down payment or PMI, and the seller can contribute up to 6% of the closing costs.
With an adjustable-rate mortgage, your loan will initially have a fixed rate and then adjust after the end of the initial loan term. If you only plan to live in the home you purchase for less than five years, ARMs may be a better choice to keep the installments lower. Navy Federal offers interest rates starting at 5.913% APR for adjustable-rate mortgages.
Before you choose a lender for your loan, it’s important to compare Navy Federal VA loan rates with other lenders to see how they stack up.
|Navy Federal Credit Union
|5.25% (5.941% APR)
|PenFed Credit Union
|5.625% (5.897% APR)
|5.875% (6.318% APR)
|6.25% (6.778% APR)
We’ve compared Navy Federal VA loan rates against three other lenders here. Two of these are credit unions, and they typically offer lower rates compared to traditional lenders. The only other lender that offers an annual percentage rate (APR) competitive to Navy Federal is PenFed Credit Union.
The rate you qualify for will depend on a number of factors, like your credit history, income, employment, debt-to-income ratio, and more. We recommend getting pre-approval with a few lenders to find the lowest interest rate you qualify for.
Steps To Take Before Applying for a VA Loan
Brad Reichert, a financial expert, and the founder and managing director of Reichert Asset Management LLC, recommends the following steps for consumers ready to pursue a VA home loan:
- Make sure you qualify by obtaining your Certificate of Eligibility (COE).
- Know your credit score, and take steps to improve it as best you can before you look to get pre-qualified.
- Make sure you have enough money saved to pay any costs, fees, or last-minute expenses that come up after closing, in addition to any money you’ll need to upgrade or furnish your new home.
- Although most of your VA loan’s one-time funding fee (3.3% of your loan amount) can be rolled into the loan balance, it’s best to pay it upfront in cash to keep your mortgage payment as low as possible.
- Shop for a VA lender, like Navy Federal, and get pre-approved.
- Find and use a realtor who’s experienced with closing on VA loans and is an expert in VA loans in general.
- Shop for and settle on a property that’s VA-approved (meaning it’s safe, sanitary, and structurally sound).
- Set a closing date that’s ideally no more than 60-90 days before you plan to move into your new home.
With competitive Navy Federal VA loan rates and other benefits like the Freedom Lock Program that allows you to lock in your rates, Rate Match Guarantee, and cash back when you use RealtyPlus to hire a real estate agent, Navy Federal offers a lot of benefits to borrowers and homeowners who want to refinance their current mortgage. It also has a high customer satisfaction ranking on Trustpilot.
In addition to their VA loans, Navy Federal also offers other mortgage options for borrowers with different needs and allows members to save $3,500 on average. To save the most money, compare the rates and loan amounts you qualify for through other mortgage lenders and ensure the monthly payment is affordable before you make a final decision.