Penfed Credit Union
- HELOC, fixed-rate HELOC
- From 8.625%
- 680
- 844-998-3723
Pentagon Federal Credit Union, better known as PenFed, is the second-largest federal credit union in the country. It serves more than 2.3 million members in all 50 states, as well as the District of Columbia, Guam, Puerto Rico and Okinawa.
PenFed mainly serves the armed forces community and government employees. But unlike many not-for-profit credit unions, which have membership requirements, PenFed has no membership restrictions. Anyone can join as long as you open a PenFed savings account and fund it with at least $5.
PenFed offers a variety of financial products and services, including checking and savings accounts, credit cards, personal loans, mortgages and VA loans. With only one type of home equity product (a HELOC), PenFed may be a good option for borrowers in US territories without many other alternatives for home equity lenders.
PenFed made our list of the best HELOC lenders for its accessibility, price transparency and range of HELOC features.
PenFed Credit Union: At a glance
| Types of loans offered | HELOC, fixed-rate HELOC |
|---|---|
| APR | Starting at 8.625% |
| Loan amount range | $25,000 to $500,000 |
| Credit score minimum | 680 |
| Repayment terms | 10-year draw period, 20-year repayment period |
| Average time to close | 15 days |
Pros
Fixed-rate lock option: You can lock in up to three fixed rates in a calendar year during the draw period on some, or all, of your HELOC balance. Each fixed-rate advance must be at least $10,000.
Flexible borrowing limit: You can borrow anywhere between $25,000 and $500,000 with a PenFed HELOC.
Most HELOC closing costs are covered: If your HELOC amount is less than $500,000, PenFed will cover all, or most, of your closing costs.
Cons
Not all property types are eligible: PenFed’s HELOC is available only on primary, owner-occupied homes. Mobile homes, properties with more than four units, undeveloped land and timeshares aren’t eligible.
Early repayment penalty: Most closing costs are covered by PenFed, but if you close your account within three years of opening it, you’ll have to reimburse the lender for the closing costs it paid on your behalf.
Members in seven states must pay all taxes: PenFed members with property in either Florida, Louisiana, Maryland, Minnesota, New York, Tennessee or Virginia are responsible for city, county and/or state taxes.
Home equity loan options
PenFed’s HELOC consists of a 10-year draw period and a 20-year repayment period. During the draw period, you’re required to make payments only on the interest. You’ll also have the ability to switch between a variable interest rate and a fixed interest rate on qualifying interest payments.
For an owner-occupied property, the minimum loan amount is $25,000 and the maximum amount is $500,000, with a combined loan-to-value ratio of 85% (80% for properties in Texas).
Fees
PenFed will cover your closing costs if your line of credit is less than $500,000. If you take out the maximum loan amount, you can expect to pay anywhere between $5,000 and $8,500 in closing costs.
Appraisals are required for loan amounts greater than $400,000. Appraisal fees average between $550 and $850.
HELOC borrowers may also be required to pay a $99 annual fee. This fee is charged only if you paid less than $99 in interest in the 12-month period before your account anniversary.
Members whose primary property is in Florida, Louisiana, Maryland, Minnesota, New York, Tennessee or Virginia are responsible for paying any city, county and/or state taxes.
How to qualify
PenFed’s home equity team will evaluate your HELOC application on a variety of factors. To qualify, you must have a credit score of at least 680 and a “favorable” debt-to-income ratio. PenFed doesn’t specify its exact DTI requirement, but most lenders like to see a DTI of 40% or less.
You must provide proof of income and evidence that you’ve been paying your mortgage on the property. You’ll also have to verify bank activity and show other debts you have.
Your property needs to meet certain requirements: It can’t be under major construction and it must be livable. Certain types of properties don’t qualify, including mobile homes, timeshares, properties currently for sale, multifamily properties with more than four units and undeveloped land.
Applying for a HELOC with PenFed
Take some time to prepare your paperwork before you apply for a PenFed HELOC as you’ll need them handy before starting the process. Gather these documents before you apply:
- Your basic information and contact details
- One to two months’ worth of paystubs
- At least one year of your Form W-2
- At least two months’ worth of recent bank account statements
- Mortgage statements for all of the properties you own
- Proof of any self-employment income
Once you’ve gathered everything you need, start the application process. Applications can be made online at PenFed’s website here. If you have any questions about the application, you can also call 844-998-3723.
Customer service
PenFed customer service reps can be reached by email, phone or chat. A form is available on its website where you can fill out your contact information and submit your questions. You can choose to have a representative get back to you by phone or email. Alternatively, you can chat with a representative on its Contact Us page.
If you prefer to reach out by phone, you can call PenFed toll-free at 844-998-3723. Customer service representatives are available Monday through Friday from 4 a.m. to 8 p.m. PT, Saturday from 5 a.m. to 8 p.m. PT and Sunday from 6 a.m. to 2:30 p.m. PT.
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