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PenFed Credit Union: 2022 Home Equity Review

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At a glance

Rating: 3.9 stars out of 5
Bankrate Score
  • Availability
    Rating: 3.2 stars out of 5
  • Affordability
    Rating: 4 stars out of 5
  • Customer Experience
    Rating: 4.5 stars out of 5

About PenFed Credit Union

  • Moneybag

    Loan amount

    $25,000 to $1 million

  • Credit Good

    Min. credit score


  • Rates

    APR from

    3.75% to 18%

  • Funds available in

    Not specified

PenFed Credit Union features

Here's a breakdown of some of the benefits and drawbacks of PenFed Credit Union home equity loans.


  • Checkmark

    Competitive interest rates

  • Checkmark

    Fixed-rate option

  • Checkmark

    Flexible borrowing limits


  • Close X

    Lack of transparency

  • Close X

    You have to be a member to apply

  • Close X

    Early termination penalty

Pentagon Federal Credit Union, or PenFed for short, was established in 1935 and currently serves more than 2 million members. The financial institution operates in all 50 states and the District of Columbia and primarily serves members of the military community and government employees.
However, it’s possible to join even if those don’t apply to you, and membership can give you access to several perks, including competitive home equity lines of credit, or HELOCs. PenFed offers a 0.99 percent introductory APR for its HELOCs, and a low 3.75 percent minimum APR after the first six months. If you have a credit score of at least 660 and are interested in becoming a PenFed Credit Union member, you should consider PenFed for your home equity borrowing needs.

PenFed snapshot

Loan types offered HELOC
APR range 3.75% to 18%
Loan amount range $25,000 to $1 million
Minimum credit score required 660
Repayment terms 10-year draw period and 20-year repayment period
Average time to approval Not specified


If you’re a PenFed member or are considering joining, here are a few of the many lender benefits to consider before applying:

  • Competitive interest rates: HELOC rates go as low as 3.75 percent. The average HELOC rate among all lenders typically hovers between 4 and 5 percent. PenFed also offers an introductory APR of 0.99% for the first six months.
  • Fixed-rate option: With PenFed, you can lock in a fixed APR on some or all of your HELOC balance (with a minimum of $10,000) during the draw period. This is a great option if rates are low and you want a more predictable payment schedule for your draws.
  • Flexible borrowing limits: The maximum loan amount and combined loan-to-value ratio can vary by loan. But you’ll have the flexibility to borrow as little as $25,000 or as much as $1 million with CLTVs as high as 70 percent. For CLTVs of 85.01 percent to 90 percent, the maximum is $500,000.


PenFed’s home equity products do come with some drawbacks, including:

  • Lack of transparency: While details about rates, repayment terms and some eligibility requirements are available on PenFed’s website, you may need to contact a PenFed agent or apply for a home equity product to find out more specific eligibility requirements and details about the approval process.
  • You have to be a member to apply: Unlike banks and other traditional lenders, credit unions require you to join as a member before receiving a loan. While it’s possible for anyone to join PenFed, it’s an extra complication that could be a deal-breaker for some.
  • Early termination penalty: PenFed covers most of the closing costs on its HELOCs. But if you close your account within 36 months, you’ll be required to reimburse the lender for the closing costs it paid on your behalf.

Types of fees charged

PenFed doesn’t charge any lender fees at closing for its HELOCs. However, you may be on the hook for taxes, notary fees and an appraisal fee if required, and you’ll have to reimburse closing costs if you pay off or close your loan within 36 months of closing. You’ll also be charged a $99 annual fee that can be waived if you pay $99 in interest within the preceding 12-month period.

Other regular fees to be aware of are a returned check fee of $20, a late fee of 5 percent and an over credit limit fee of $10.

Loan products offered

PenFed’s home equity lines of credit range from $25,000 to $1 million and include a 10-year draw period followed by a 20-year repayment period. There are, however, some limitations. For example, if your CLTV is greater than 70 percent and you occupy the home, the maximum loan amount is $500,000. If you don’t occupy the home, you can borrow between $25,000 and $500,000 with a CLTV limit of 80 percent.

PenFed’s HELOCs can be converted to a fixed-rate option, which is a unique option that may appeal to borrowers who have seen a recent rate drop. With this feature, you can freeze some or all of your HELOC balance at a fixed interest rate, with a minimum of $10,000 per fixed-rate advance. You may have three separate fixed-rate advances open at a time, with a maximum of two new advances per year. The repayment terms for these advances is 240 months.

How to qualify for a home equity loan with PenFed

PenFed requires a minimum credit score of 660. They specify a need for a “favorable” debt-to-income ratio requirement on their website. When we reached out, we were informed that the maximum debt-to-income ratio is 50 percent. PenFed also requires proof of income, at least one year of W2s, at least two months of your most recent bank account statements and a mortgage statement for all properties owned. You may also need to provide documentation for current debts and self-employment income. Also, remember that you do need to be a member of the credit union to receive funds.

How to get started

If you’re thinking about getting a HELOC, take some time to compare what PenFed has to offer with other home equity lenders. You can start the application process with PenFed online, including applying for a PenFed membership. Alternatively, you can submit some information about yourself and request a call from a loan officer.

In order to obtain a HELOC from PenFed, you must become a member, which requires that you maintain a $5 savings account with the company.

For any questions during the membership or application process, you can call the credit union’s customer service team at 800-970-7766 or send a secure message online.

If you do call, agents are available Monday through Friday toll-free from 7 a.m. to 11 p.m. ET, on Saturday from 8 a.m. to 11 p.m. ET and on Sunday from 9 a.m. to 5:30 p.m. ET.

How Bankrate rates PenFed

Bankrate Score 3.9 Scoring factors
Availability 4.3 Fast funding and approval but higher minimum draw requirement
Affordability 4.0 Fees caused this score to go down
Customer experience 4.5 Online access, apps and 7-day customer support


To create our Bankrate Scores, we evaluated lenders based on availability, affordability and customer experience. Availability was assessed based on the minimum loan amount required, time to approval, days to close, minimum draw requirements, minimum credit score requirements and loan types offered. Affordability was assessed based on minimum APR, discounts and promotions offered and associated fees. Customer experience was assessed based on online application and account availability, customer support, auto payment availability and mobile app availability and ratings.