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Editor: and
Published: Sep 19, 2023 10 min read

Backed by the U.S. Department of Veterans Affairs (VA), VA loans offer low interest rates and flexible lending requirements, including no money down and fewer closing costs. These benefits can make it easier for active-duty military and veterans to become homeowners.

The Pentagon Federal (PenFed) Credit Union is a reputable VA loan lender through which borrowers may be eligible for a no-down-payment VA loan. Additionally, the credit union offers good terms if you want to refinance an existing VA loan.

Read on to learn more about PenFed's VA loan products, including fees, loan terms, mortgage rates, application process and customer reviews.

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PenFed VA Loans pros and cons

  • Multiple loan options
  • Low, flat-rate origination fee
  • Low mortgage rates and fees
  • PenFed Credit Union membership required
  • Little transparency around additional VA loan fees

Pros explained

Multiple loan options

PenFed offers multiple loan options, including conventional fixed-rate VA loans and Jumbo VA loans, at competitive rates. You can also purchase discount points to further reduce your interest rate. The credit union also offers VA Interest Rate Reduction Refinance Loans (IRRRLs) and VA cash-out refinance loans.

Other mortgage products from PenFed include Federal Housing Administration (FHA) loans, conventional fixed-rate mortgages, jumbo loans, adjustable-rate mortgages (ARMs) and power buyer loans for cash buyer financing.

Low, flat-rate origination fee

Origination fees on traditional PenFed home loans are typically up to 1% of the loan amount. However, for its VA home loans, PenFed charges a flat rate of $995 in origination fees. The cost reduction is significant: A $400,000 conventional home loan, for example, would carry an origination fee of up to $4,000. PenFed’s VA loan origination fee rate would save a borrower just over $3,000 in this scenario.

Low mortgage rates and fees

PenFed offers competitive rates on its VA loans and loan terms that often don't require a down payment or private mortgage insurance (PMI). You get to keep your savings, and your monthly payments have a higher chance of being less than they would be with other lenders.

Cons explained

PenFed Credit Union membership required

You'll need to become a member of the PenFed Credit Union before you can apply for any of its loan products. However, joining the credit union is easy: open a savings account with a $5 deposit.

Little transparency around additional VA loan fees

While PenFed charges a competitive flat-rate origination fee for its VA loans, there are still some fees the borrower is responsible for paying. These fees include, but are not limited to, title fees, the cost of a credit report, flood certification fees and appraisal fees. There is no documentation on the PenFed website regarding the cost of any of these fees.

PenFed VA Loans plans/offerings

PenFed offers some of the best VA loans, with competitive interest rates, low fees and excellent customer service to help guide your financial decisions. In addition to VA purchase loans, the credit union offers two types of VA loan refinance options: a more traditional option to refinance your existing mortgage and another that lets you refinance and take out a home equity loan at the same time. To qualify for PenFed's VA purchase loan or loan refinancing options, you'll need a credit score of 620 or higher.

VA loan

PenFed's VA loan rates for its 15-year and 30-year fixed-rate VA loans are considerably lower than the national average for mortgage rates. They require low-to-no down payments, no private mortgage insurance (PMI), and no prepayment penalties.

Loan amounts start at $50,000 and go up to $726,200, which is the current conforming loan limit set by the Federal Housing Finance Agency. You can also apply for a VA jumbo loan for loans ranging from $726,201 to $3,000,000. However, VA jumbo loans carry higher rates and stricter eligibility requirements.

VA streamline refinance

PenFed offers two of the best mortgage refinance options for eligible military service members and veterans looking to refinance existing loans. With its VA Interest Rate Reduction Refinance Loan (IRRRL), you can refinance your mortgage to get a lower interest rate or better terms to lower your monthly payments.

With PenFed's second option, the VA cash-out refinance, you can take a home equity loan out while refinancing. This is a great option for turning your non-VA or construction loan into a VA loan while giving you cash for home projects or consolidating debt, and often with better terms than even the best personal loan.

PenFed VA Loans pricing

PenFed VA loan pricing is competitive, with below-market interest rates and little to no money down required.

PenFed charges a flat-rate origination fee of $995 for its VA purchase loans, which can equate to big savings compared to a conventional loan origination fee that’s usually 1% to 2% of the total loan amount. Also, per VA-backed home loan program standards, you won’t pay for private mortgage insurance (PMI) and you won’t be charged a prepayment penalty if you pay off your mortgage before the loan term ends.

Keep in mind, however, that you’re required to pay the VA loan funding fee. If you don't put money down on your purchase loan, you will likely pay a 2.15% funding fee, according to VA requirements. This funding fee decreases if you put down 5% or more. The funding fee for VA cash-out refinance loans is 2.15% for first-time refinancing and 3.3% after that.

PenFed VA Loans financial stability

Founded in 1935, PenFed is now the second-largest credit union in the United States. It had 2.8 million members around the world and $36.6 million in assets as of June 30, 2022. In 2021, PenFed brought in $1.1 billion in revenue, grew its mortgage lending by 128% and donated $5.5 million to charity, all while maintaining a strong balance sheet and positive financial outlook.

PenFed's financial products are insured by the National Credit Union Administration, so you can be assured your investments are safe.

PenFed VA Loans accessibility

You can apply for a VA loan and receive guidance from a PenFed representative via PenFed’s website or by phone. PenFed also has 46 branch locations in 13 states, the District of Columbia, Guam and Puerto Rico.

Requirements for VA loans through PenFed generally follow the standards set by the U.S. Department of Veterans Affairs. Note that all VA loans, regardless of the lender, require a certificate of eligibility (COE) from the VA.


PenFed VA loans are available everywhere in the U.S., including territories such as Puerto Rico. However, you must be a credit union member to be eligible. Membership can be established during the loan application process by opening a PenFed savings account with a minimum deposit of $5.

Contact information

PenFed offers 24/7 customer service through its online portal. You can also reach a customer service representative by phone Monday through Friday from 7 a.m. to 11 p.m. EST, Saturday from 8 a.m. to 11 p.m. EST and Sunday from 9 a.m. to 5:30 p.m. EST.

User experience

You can apply for prequalification for a VA loan through the PenFed Credit Union website. Once your information has been received, a representative will contact you to discuss your options. If you prefer to apply over the phone, you can request a call-back to speak with a loan officer.

Note that a certificate of eligibility (COE) from the U.S. Department of Veterans Affairs is required for all VA loans, as well as a home appraisal conducted by a VA-approved appraiser. Additionally, PenFed will work with you to choose a title company to prepare the closing documents and transfer ownership of the house to you. From start to finish, applying for a PenFed VA loan and closing on the loan typically takes four to six weeks.

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PenFed VA Loans customer satisfaction

PenFed has an A+ rating with the Better Business Bureau, but is not accredited. Additionally, the credit union has a rating of 1.18 out of five stars based on 242 customer reviews. Many of these reviews mention issues with making payments online, unexpected price increases on home appraisals and unsatisfactory customer service. However, only a few of these complaints reference VA loans; most are centered on other PenFed products, such as credit cards, auto loans and bank accounts.

PenFed VA Loans FAQ

Is it hard to get a loan from PenFed?

It isn't hard to get a loan from PenFed in terms of the loan approval process. However, PenFed sets eligibility requirements for borrowers, and these requirements can vary by product. For VA loans, lenders typically require a minimum FICO score of 620. PenFed doesn't state its minimum credit score requirement, but notes that it considers the borrower's complete financial profile, which includes additional factors, such as debt-to-income (DTI) and annual income.

Is PenFed reputable?

PenFed is a reputable credit union with a long history of serving military personnel and government employees.

Is PenFed Credit Union for the military?

While PenFed's financial products are geared toward the military, you do not have to be a member of the military to join PenFed or take advantage of its services.

How we evaluated PenFed VA Loans

When evaluating PenFed, we looked at several factors, including:

  • VA loan offerings
  • Annual percentage rate (APR) of various VA loan products
  • VA loan fees
  • Customer service reviews via third-party sites
  • Company history and financial stability

Summary of Money's PenFed VA Loans Review

PenFed is among the best mortgage lenders offering VA purchase loans and VA refinance loans: starting rates are competitive, and the credit union’s flat-rate origination fee can save borrowers hundreds or even thousands of dollars, depending on the loan amount.

PenFed Credit Union may be an ideal lender for many active-duty military personnel, military spouses and veterans. You can apply for prequalification on the PenFed Credit Union website, after which a representative will contact you to discuss your VA loan options.

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