PenFed Credit Union: 2020 Home Equity Review

PenFed Credit Union

Pentagon Federal Credit Union, or PenFed for short, was established in 1935 and currently serves more than 1.7 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.

Lender snapshot

If you’re a PenFed member or thinking about joining to get a HELOC, here are a few lender highlights to consider:

  • Offers one type of HELOC.
  • You can borrow up to a loan-to-value ratio (LTV) of 90 percent on your primary residence or 80 percent on a non-owner occupied home.
  • HELOC amounts range from $25,000 to $500,000.
  • Details can be found on PenFed’s website.

Pros and cons

To make a good decision regarding a home equity product, it’s important to know both the benefits and drawbacks of the lender and its offerings. Here’s what you need to know about PenFed:


  • Interest rates are competitive: HELOC rates go as low as 4.5 percent. According to Bankrate, the average HELOC rate is 6.04 percent, as of mid-March 2020.
  • Discounted rate for initial advance: PenFed is currently offering an initial advance taken at the time of closing at 3.49 percent until March 31, 2021.
  • Fixed rate option: PenFed offers the ability to switch from a variable rate to a fixed rate on all or some of your line of credit.
  • Flexible borrowing limits: The maximum loan amount and LTV can vary by loan. But you’ll have the flexibility to borrow as little as $25,000 or as much as $500,000 with LTVs as high as 85 percent. For LTVs of 85.01 percent to 90 percent, the maximum is $250,000.
  • Relatively low cost: PenFed pays most of the closing costs associated with its home equity products. However, you may be on the hook for taxes in certain states and appraisal fees if a full appraisal is required.


  • Lacks transparency: While details about rates and repayment terms are available on PenFed’s website, you may need to contact a PenFed agent or apply for a home equity product to find out eligibility requirements.
  • 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 can be 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.

Mortgage products

PenFed Credit Union provides several mortgage products, including conventional, jumbo and VA loans, and it also offers HELOCs.

Home equity lines of credit range from $25,000 to $500,000 and include a 10-year draw period followed by a 20-year repayment period. There are, however, some limitations. For example, if your LTV is greater than 85 percent and you occupy the home, the maximum loan amount is $250,000. If you don’t occupy the home, you can borrow between $25,000 and $400,000 with an LTV limit of 80 percent.

Repayment during the 10-year draw period is interest only, subject to $100 minimum payment. Repayment during the 20-year repayment period is structured to pay off the line in 20 years.

Lender costs

PenFed doesn’t charge any lender fees at closing on any of its home equity products, although you may be on the hook for taxes, notary fees and an appraisal fee if required. That said, if you pay off or close your loan within 36 months from closing, you’ll be required to reimburse PenFed for all the closing costs it paid on your behalf. The loan comes with a $99 annual fee that is waived if you pay $99 in interest during the preceding 12-month period.

As for the interest rate, PenFed’s HELOCs start at 4.5 percent. The APR you qualify for is based on your creditworthiness, combined loan to value (CLTV) and occupancy status.

Borrower requirements

PenFed doesn’t list a minimum credit score or maximum debt-to-income ratio requirement on its website. However, when we reached out, we were informed that the minimum credit score is 620 and the maximum debt-to-income ratio 50 percent.

Also, remember that you need to be a member of the credit union to receive funds.

How to apply

You can start the application process with PenFed online. Alternatively, you can submit some information about yourself and request a call from a loan officer.

View home equity rates

Tap into the value you have in your home to get the funds you need.

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. For any questions during the membership or application process, you can call the credit union’s customer service team at 800-247-5626, send an email to or send a secure message online.

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

How Bankrate Rates PenFed

Overall Score 3.9
Availability 3.2
Affordability 4.1
Customer Experience 4.3

Editorial disclosure: All reviews are prepared by staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.