Navy Federal Bad Credit Mortgage Reviews

A non-profit organization that was initially launched in 1933, Navy Federal mortgage lending started with seven members and has grown to over 8 million as of 2019. Headquartered in Vienna, Virginia, Navy Federal operates as a military credit union with a presence in all 50 states and is the largest credit union in the US that offers enormous benefits for military personnel.

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    About Navy Federal

    This credit union has some stringent policies. Only military members (retired or working), their families, and qualifying civilian workers are eligible. There is no minimum FICO score or debt-to-income capping set for members. One of the standout features of Navy Federal mortgage with bad credit score loans is that eligible borrowers in certain cases do not even need to pay any down payment or private insurance.

    Most of the mortgage with bad credit loans are tailored to meet the requirements of in-service members who might need to constantly relocate due to their service.

    Overall, Navy Federal is the best choice for military members and their families. With low rates and zero to minimal down payments along with other discounts, we highly recommend this non-profit lending organization for current and former military service members.

    Navy Federal Financial Terms in a Glimpse

    Minimum Credit Score
    No established minimum score
    BBB Rating:
    Loan Duration:
    10-30 years
    Loan Amount Range:
    $50,000 - $726,525+
    APR Rates:
    Starting from 3.003%
    Minimum Down Payment:

    What Navy Federal Offers

    As a lending service dedicated to servicemembers, Navy Federal offers a wide collection of mortgage loan options to meet the dynamic needs of veterans and military members currently serving the country. From conventional fixed and adjustable-rate mortgages to custom-tailored plans, Navy Federal has something for everyone.

    Though they haven’t mentioned the minimum credit score required, sources say that the minimum is 640, however, there is no set minimum score for members. Down payments go as low as 0.00% or may stretch higher than 20% depending on your prospective property, credit score, and other personal details. Advantageously, Navy Federal offers flexible repayment terms to accompany its array of different mortgage loan options.

    Apply Online

    If you want to apply for a mortgage, you have to be a member of the Navy Federal Credit Union (NFCU). To be eligible for membership, you must meet one or more of the following criteria:

    • Active-duty member 
    • Retiree/Veteran 
    • Department of Defense (DoD) contractor/civilian 
    • US Government employee assigned to the DoD 
    • An immediate family member of a military service member

    Once you’re accepted, you can visit the official website, select the preferred mortgage, and submit the application.

    Home Loans

    Navy Federal offers traditional and niche home loan options customized for members of the US Armed Forces. The official website lists everything from rates and eligibility criteria to hosting calculators and FAQs that can help borrowers easily understand the differences between the available home loans. You can also receive pre-approval quickly on their website to uncover better real-estate deals.

    Fixed-Rate Mortgage

    This is a more conventional 10 to 30-year mortgage at fixed interest rates. In some cases, borrowers are eligible for loans without needing private mortgage insurance. Down payments for this option start as low as 5.00%.

    Adjustable-Rate Mortgage

    Aside from conventional fixed-interest rate loans, Navy Federal also offers ARMs that start with a fixed interest rate for a certain time, then switch to adjusted rates based on market rates. Borrowers can choose from 1/1, 2/1, 3/1, 5/1, 7/1 ARM plans.

    Veterans Affairs (VA) Loan

    NFCU offers 100% financing options for eligible members. As an eligible serviceman or servicewomen, you can enjoy fixed rates, flexible repayment terms, zero mortgage insurance, and more. This loan is backed by the Federal Government.

    FHA Loan

    This loan type requires a minimum down payment of 3.50% and allows borrowers to choose from 10 to 30-year repayment terms. You will also need to pay for private mortgage insurance (PMI). However, the seller also contributes a percentage of the closing fees and costs.

    Interest-Only Mortgage

    This mortgage requires a minimum down payment of 20.00%. You are charged interest for the first ten years of your repayment plan, then it increases as the principal amount also gets added to payments.

    Military Choice

    With zero down payment, this loan type represents one of the best choices for military members. It has special pricing on origination fees and mortgage interest rates. Borrowers can also avoid the funding fee by agreeing to a bit higher mortgage rate.

    Home-Buyers Choice

    Similar to the Military choice loan, but with an added incentive of zero PMI. This is a fixed-rate mortgage with repayment terms ranging from 10 to 30 years.

    How Navy Federal Works

    As we already mentioned, to be able to apply for a mortgage, you must be approved as a member of the credit union first (see criteria above). Once approved, you can apply online, via phone, live chat, or in-person. Moreover, they also host an online platform called HomeSquad which allows you to receive pre-approval almost instantly.

    Borrowers can read through the detailed descriptions, FAQs, and use calculators and other tools before starting an application online. Once ready, start by filling in the required information. The entire process is broken down into multiple parts.

    Depending on the mortgage type, you will need to submit a lot of documentation. After validation, a loan officer will be in touch to help you gather the next set of requirements. You can always track the status of your application from the official website.

    Documentation – You’ll be asked to upload key documents on the website. Arrange them beforehand for a faster approval process. Upon successful validation, you might need to get a real estate appraisal.

    Appraisal, Title Search & Insurance – A licensed real estate appraiser will share the net value of the property based on location, features, and more. Once the appraisal is set, you might need to pay a fee before the lender starts the final process. In selective cases, the lender may also recommend the borrower get owner’s title insurance or they will issue a lender’s title insurance.

    Closing – After everything has been processed and approved, you will need to meet the underwriter, pay the upfront fee involved, sign the HUD-1 Settlement Statement, and close on the mortgage.

    Navy Federal Fees & Terms

    Navy Federal features very flexible fees and repayment terms. In certain VA Loan cases, borrowers may be entitled to finance 100% of the purchase (no down payment). Interest rates start as low as 2.750% for 15-year fixed-rate loans and 3.125% for 30-year jumbo loans.

    VA and FHA loans, too, have interest rates starting as low as 2.875% and 4.000% respectively. Please note however that these rates may differ as Navy Central follows a reward-based calculation. Before committing to a rate, please consult with a loan officer.

    Here’s a list of documents that you should have prepared to access quick approval:

    • NFCU Membership Number
    • Social Security Number (SSN)
    • Proof of Address (2 years)
    • Work History (2 years) 
    • Gross Monthly Income 
    • Additional Income 
    • Assets and Deposit Account Details (if relevant) 
    • Current Tax Declaration 
    • Certificate of Eligibility (for VA Loans) 
    • Property Details

    Navy Federal Customer Service

    Overall, we were very impressed with the Navy Federal customer experience and this is echoed by a good customer satisfaction score. It is easy to connect with the customer service team or a loan officer. For first-time applicants, a designated loan officer is assigned so the entire process from pre approval to loan underwriting and issuance goes smoothly.

    In addition, Navy Federal has a resourceful website. It features mortgage calculators, step-by-step process guides, and a live chat feature. Other than offices throughout the US, it also has offices in many other parts of the world to cater to armed forces members serving abroad.

    Navy Federal Pros and Cons


    • Customized Loans – Navy Federal offers tailored loans for military personnel and their families.
    • Special Offers – Access discounts, reward points, 100% financing, and other great offers for members
    • Lower Fees – Benefit from extremely low origination and processing fees
    • Competitive Interest Rates – Interest rates for mortgages start as low as 2.75%
    • No PMI – Eligible borrowers aren’t required to buy private mortgage insurance for many of the loan types
    • Quick Pre Approval – The online application process is designed for rapid pre approval
    • Dedicated Customer Service – Connect with Navy Federal representatives using multiple channels including phone, chat, and email or even meet in-person
    • Nationwide Presence – Navy Federal is available to eligible borrowers in all 50 US states


    • Restricted Options– Mortgage loans are only available to military or family members and civilians who are not working for the Department of Defense cannot apply
    • Lengthy Approval Process – Closing mortgage applications typically takes 30-60 days
    • Rates Can Vary – The Navy Federal website doesn’t display interest rates based on credit score or other related factors
    • Limited Transparency – Important details such as a minimum credit score aren’t mentioned on the website

    Final Verdict About Navy Federal

    Although Navy Federal’s mortgage options are only available for past and present military members and their families, if you fit either of these eligible criteria, we can assure you that there are few better choices for mortgage loans. Not only will you be able to access many special offers, but you will also likely be the recipient of highly competitive loan terms when it comes to interest and fees./

    Between flexible repayment terms, negligible down payment rates, and many loans absent a requirement to purchase private mortgage insurance (PMI), there are many advantages of belonging to the Navy Federal Credit Union. Given the numerous advantages for current and former servicemembers and their families, explore the rates and user reviews to determine if a mortgage loan from Navy Federal is suitable for financing your home purchase.