Mortgage FAQs

How do I show that I’m eligible for a VA loan?

To show eligibility for a VA loan, you’ll need to provide a valid Certificate of Eligibility (COE). Your Navy Federal home loan advisor can obtain the COE for you through the Department of Veterans Affairs.

What's the difference between a fixed-rate and an adjustable-rate mortgage?

With a fixed-rate mortgage, your interest rate stays the same for the life of your loan. With an adjustable rate, your loan begins with a fixed rate for a specified period of time and then adjusts higher or lower based on an index.

Does Navy Federal offer construction loans?

No, Navy Federal doesn't offer funding for new construction. However, once construction is complete, you can refinance your funding into a mortgage loan with Navy Federal.

Can Navy Federal match my builder incentives? 

Yes. In order for Navy Federal to consider matching builder incentives, the incentive must be a monetary amount listed within the agreement, typically an amount toward the buyer's closing cost. Physical items such as washers/dryers cannot be matched.

You’ll need to provide copies of the competitor's Loan Estimate and the purchase agreement that shows the incentive being offered when using a particular lender.

Does Navy Federal  have a first-time buyer program? 

No, Navy Federal doesn't have a first-time homebuyer program. We do offer loan products with no-down-payment options and no PMI that could make buying a home more affordable for first-time homebuyers.^{Footnote 2} Check out our Mortgage Match video to see which loan could be best for you.

What’s the difference between an interest rate and an annual percentage rate (APR)?

An interest rate is the cost you pay annually to borrow money, expressed as a percentage of your total loan. In contrast, APR includes the interest rate plus other costs, such as mortgage insurance, discount points and some closing costs and loan origination fees. ^{Footnote 3}

How is my mortgage interest rate determined?

Navy Federal takes many factors into account to determine your mortgage interest rate, including, but not limited to, the following:

• Your credit score
  
• Your debt-to-income ratio
• The type of loan you're applying for
• The loan amount
• The loan term
• The property location
• The property type
• Market conditions based on the U.S. economy

What’s the difference between a mortgage rate lock, a float and a rate lock float down?

After you complete your application and find the home you wish to buy, you’ll be asked to choose your rate lock option—to lock, float or lock float down. 

• Lock: A rate lock protects you from the risk of increasing rates during the weeks before closing. When you choose to lock, the interest rate on your loan won't change as long as you close within the lock period.
  
• Float: If the market suggests rates will decrease, you may choose to float your rate. This gives you the opportunity to lock at a lower rate, but you assume more risk in the instance rates actually increase.
• Rate Lock Float Down: There’s also the option for a mortgage rate lock float down, which is a rate lock with the option to reduce the locked interest rate if market rates fall during the lock period.

We offer a special lock float-down option called Special Freedom Lock, allowing you to float down twice, as long as the total rate reduction doesn't exceed 0.500%. Your loan must close within 60 days of the initial lock. Most lenders charge a fee to lock float down, but we offer it at no charge.

To take advantage of Special Freedom Lock, you must contact your home loan officer at least 7 calendar days prior to settlement to relock at the lower rate. Special Freedom Lock can be extended past the 60-day promotional period for an additional fee. Ask your home loan advisor for more information.^{Footnote 4}

What fees should I expect as part of my mortgage?

Common types of mortgage fees include origination, application, credit report, appraisal, processing and underwriting. Navy Federal doesn’t require an application fee. Applicable fees will be listed on your Loan Estimate form, which you'll receive after applying for a mortgage.

Do I need a down payment?

Not always. Many of our mortgage loans are available to qualified applicants with no down payment or little down payment required.^{Footnote 5}

What if I find a lower rate with another lender?

Navy Federal offers a rate match guarantee,^{Footnote 6} which means that if you find a better rate with another lender, we’ll match it. If we aren’t able to match it, we’ll give you $1,000 after you close with the competing lender.

To qualify for our rate match guarantee, you’ll need to lock in your rate with us before you submit your rate match request. A  Loan Estimate and the rate lock disclosure from the competing lender must be received within 3 calendar days of locking with Navy Federal. The rate must be locked with the competing lender. The date of the Loan Estimate and the lock effective date with the competing lender must be within 3 calendar days of the rate lock with Navy Federal. Loan terms on the competing loan must be identical to the terms of your Navy Federal loan.

If we can’t match the competing rate and you qualify to receive $1,000, you must provide a signed executed copy of the final Closing Disclosure from the competing lender and a copy of your final mortgage note within 30 calendar days of your loan closing. Once approved, $1,000 will be automatically deposited into your Navy Federal account within 30 days of receiving the necessary documentation.

What's private mortgage insurance (PMI)?

PMI is insurance that a buyer pays to protect the lender in case your loan ends up in foreclosure. Though most lenders require PMI for home purchases with down payments of less than 20%, Navy Federal offers many loan products that don’t require PMI. This can keep your monthly payment lower.

What are discount points?

Discount points are optional fees you can pay directly to Navy Federal at closing in exchange for a reduced interest rate. One point is equal to 1% of the total loan amount. Depending on how long you plan to be in your home, it might make sense to pay these points and obtain a lower rate.

When does a hard inquiry occur on my credit when I apply for mortgage? 

A hard inquiry occurs once you provide your consent during the application process.

What's a mortgage preapproval?

A preapproval shows how much you'll be eligible to borrow when you decide to make an offer on a home. Your preapproval is based on information you provide, including your credit score, income, assets, debts, employment history and other financial information. The preapproval isn’t a commitment to lend yet—your information will still need to be verified with supporting documentation.

How do I get a preapproval letter?

After you submit an application for a loan, you may be instantly preapproved. When this happens, you’ll be able to access your preapproval letter in the Documents section of HomeSquad. However, we often need additional information after you submit your application. In that case, a home loan advisor will contact you in 1 business day to discuss next steps.

What steps should I take before I apply for a preapproval?

Before you apply for a preapproval, you’ll want to check your current credit report to verify that all information is correct, and to see if there are any improvements you want to make to your credit to boost your chances of qualifying for a better rate.

What's the maximum I can get approved for? 

Several factors are involved in determining how much you can borrow for a home loan, including your income and debt, savings, credit score and interest rate. Check out our Mortgage Qualification Calculator to get an idea of how much you may qualify to borrow.

What should I do once I receive my preapproval letter?

After you receive your preapproval letter, start collecting the following documents and information for all borrowers so you'll have them ready for the verification process.

• W-2 forms for the last 2 years
  
• Pay stubs for the last 1-3 months
• Personal tax returns for the last 2 years
• Social Security number
• Monthly debt and living expenses
• Deposit account and asset information held by financial institutions other than Navy Federal

Once you've found your home, upload your purchase agreement in HomeSquad using the Purchase Agreement task. Your request for preapproval will then convert to a mortgage application.

How do I know if I've been preapproved for a mortgage? 

You should receive an email letting you know that you’ve been preapproved. If you haven’t received one yet, please contact us at 1-888-842-6328 for further assistance.

Can I be approved for a higher loan amount? 

Your credit score, income and existing debts directly affect how much you qualify to borrow. If you’d like to try to qualify for a higher amount, contact your home loan advisor or call us at  1-888-842-6328 to discuss your situation.

Can I get a revised preapproval letter for my offer? 

In order to change the amount of your preapproval letter, please contact your home loan advisor or call us at 1-888-842-6328.

How long is my preapproval letter good for? 

Your preapproval letter is good for 90 days. If you are not able to find a home within that timeframe, we encourage you to reapply.

How do I check the status of my mortgage application?

To check the status of your mortgage application, visit HomeSquad by signing in to your online account and selecting Loans & Credit. You can always contact your home loan advisor for additional information or call 1-888-842-6328.

What's a Loan Estimate (LE)?

A Loan Estimate is an industry-standard form we'll give you after you apply for a mortgage. It provides you with important information about your loan, including the interest rate, monthly payment and estimated closing costs. Since these line items are estimates, certain costs may change between the original Loan Estimate and your closing date.

What documents and information are needed to verify self-employed income?

The mortgage process is a little different when you’re self-employed and usually involves more documentation to prove the existence and stability of your business and income.^{Footnote 7}

Start collecting the following information as soon as you get your preapproval letter, so you’ll be ready to upload documents during the verification process:

• 2 most recent years of personal 1040 tax return with all pages, schedules and worksheets.
• 2 most recent years of business tax returns:
  • Partnership—Schedule K-1 (Form 1041), Partnership Income Tax Return (Form 1065)
  • Sole Proprietorship—Schedule C of personal tax return
  • C-Corp—Form 1120: Most recent 2 years with all schedules
  • S-Corp—Form 1120S: Most recent 2 years with all schedules, Schedule K-1 (Form 1041)
• Copy of business license or a written statement from a CPA confirming at least 2 years in business.

How has the pandemic affected self-employed borrowers?

Due to the economic instability caused by the COVID-19 pandemic, we'll ask you to submit these additional documents to verify that your income is stable: 

• Audited Year-to-Date P&L statement as of the most recent month preceding application, or
• Self-Prepared Year-to-Date P&L statement as of the most recent month preceding application AND 3 months of the most recent Business Bank Statements that coincide with the last 3 months on the P&L statement
• Verification of business within 10 days of closing

We'll also ask you to complete a self-employed borrower income assessment to answer questions about how the pandemic has affected your business, such as:

• Are temporary restrictions in place that impact the business?
• Are there any impacts due to business supply chain, production costs or customer demand?
• Have you incurred any new expenses or debts since the beginning of the pandemic?
• Have you received the Paycheck Protection Program (PPP) or other loans/grants as a result of COVID-19?

What do I do once my offer is accepted? 

When your offer is accepted, you’ll have a signed purchase agreement. You’ll then need to upload it to HomeSquad under the appropriate task. After that, a home loan advisor will touch base with you to discuss the next steps.

I saw that the prime rate/another lender's rate just changed. Did my rate also change? 

Every lender dictates their own rate policy as the market fluctuates. And while we always strive to be competitive, our rates remain independent from other lenders. You can always check our website for our current rates or call us at 1-888-842-6328 to inquire.

Please be advised that you don't have the option to lock your rate until you have submitted the purchase agreement. Additionally, depending on the market environment, the rate(s) could be different from when you initially applied. If you opted for the Special Freedom Lock, you’ll need to monitor the rates on our website and contact your home loan advisor to take advantage of the rate lock float down.

What if I decide to buy a different property type than the one I applied for? 

Depending on the kind of property you’re looking to purchase, the requirements could be different. Please contact us at 1-888-842-6328 to discuss.

How are closing costs calculated?

Closing costs comprise various fees, which vary by lender, location and loan type. They typically amount to 2% to 4% of the loan amount. Common fees include appraisal, which are identified on your Loan Estimate form. Because these fees are estimates, certain costs may change between the original Loan Estimate and your closing date.

Can closing costs be rolled into the mortgage loan?

Typically, closing costs on purchase loans can’t be rolled into your mortgage. However, the funding fee for certain loans may be included, as long as the total mortgage amount doesn’t exceed the loan-to-value ratio.

If you’re refinancing a mortgage and have enough equity in your home, closing costs can be included in the loan amount. Check with your home loan advisor for more information.

How do I pay my closing costs?

To pay closing costs, you’ll need to provide the funds through a wire transfer or cashier’s check, or have the funds transferred directly from your Navy Federal account. For closing costs under $1,000, a personal check may be accepted. Be prepared to have closing costs available up to 2 days before your closing date.

What do I need to bring to closing?

Typically, the only thing you’ll need to bring is a photo ID, but you’ll want to confirm the details with your home loan advisor before you go to closing. By this point, your closing funds should already be transferred to the settlement agent.

What does a settlement agent do?

The settlement agent handles the transfer of funds and property ownership through an escrow or trust account.

Can I close my loan using Hybrid eClose and still meet the settlement agent in-person?

Yes. If you choose to Hybrid eClose, you can sign most of the documents electronically on closing day prior to the in-person meeting with the settlement agent. There, you’ll sign the documents that require notarization.

What if my co-borrower doesn’t have internet access. Can they still participate in the Hybrid eClosing?

They’ll need internet access to be able to participate in the Hybrid eClosing if they’re a borrower on the loan. 

However, if they won't have internet access on closing day, then the closing should proceed with a traditional in-person signing for all documents. 

What if, on closing day, I lose internet access while signing documents electronically?

If you've chosen a Hybrid eClosing and you lose internet access while signing electronically, then we can convert the closing package to completely paper, and you’ll be able to sign all documents during your signing appointment. 

If you've chosen a RON eClosing and you lose internet access while signing electronically, then we can reschedule your RON appointment for later in the day when you recover your internet access.

But, if recovering your internet access isn’t possible, we can convert the closing package to completely paper, and you’ll be able to schedule an appointment to finish closing with your settlement agent. 

How can I get copies of my Hybrid eClosing documents? 

You can download your electronically signed closing documents prior to ending the Hybrid eClosing session. The settlement agent will also provide you with copies of the ink-signed docs after signing in person.

Do I need to create a new or separate account to participate in the Hybrid eClosing?

No, there’s no need to create a different account. You’ll still be able to use your existing HomeSquad account to review and execute the Hybrid eClosing. 

Can I close my loan using RON eClose and still meet the settlement agent in person? 

No, if you choose a RON eClosing, you’ll sign all the documents electronically on closing day with the virtual notary. However, you can certainly schedule a meeting with your settlement agent in person for a separate reason—for example, to pick up keys after you close!

What if my co-borrower doesn’t have internet access. Can they still participate in the RON eClosing?

They’ll need internet access to be able to participate in the RON eClosing if they’re a borrower on the loan.

However, if they won't have internet access on closing day, then they'd need to advise the loan officer or processor that the closing should process as a traditional in-person signing for all documents. 

How can I get copies of my RON eClosing documents?

You can download your electronically signed closing documents from HomeSquad after your closing is completed.

Do I need to create a new or separate account to participate in the RON eClosing?

Yes! You’ll need to create an account with Notarize when you receive the scheduling confirmation email. You’ll sign in and meet with the virtual notary to execute the documents that require notarization during your appointed time.

But, you’ll still be able to use your existing HomeSquad account to review and execute the non-notarized documents for your RON eClosing.

Can I use my cell phone to eSign my closing documents?  

Yes, but you may need to copy the link from the email you receive and paste the link into a web browser tab on your phone. Simply clicking on the link within the email may take you to our website, instead of HomeSquad, where your documents are located. The preferred digital method is through a laptop or desktop. 

Do I need to use a specific web browser for eClosing on my loan? 

No, you shouldn’t need to use a specific browser. If you're having issues with eClosing on Microsoft Edge, we recommend switching to Google Chrome.

I’m trying to login to my RON appointment but keep receiving a failed testing connection.  Why am I not able to login? 

Occasionally, if you're using a Virtual Private Network (VPN) or ad-blocking software, or have firewall protection, you may encounter difficulties with Notarize. Issues typically arise in the form of a failed connection test before reaching the session with the notary. If you're experiencing a failed connection test before reaching the notary session, please temporarily disable your VPN.

My spouse can login and eSign the closing documents, but I can’t. What should I do? 

• Are you using the same email address? 

If so, please provide a separate email address to your processor or loan officer. The closer will then resend the documents to you, and you'll receive an email with a new link for you to access. 

• Are you using the same device as your spouse? 

If so, please try accessing the link emailed to you from a separate device. 

• Have you confirmed that the above 2 issues don't apply to you? 

If so, please reach out to your processor or loan officer if you're completing a purchase or refinance. If you're completing an equity loan, please reach out to your closer. They will help troubleshoot and confirm if there is a technical issue to be resolved.

Can I pay extra toward the principal on my loan?

Yes, you can pay extra toward the principal on your loan as long as your mortgage or fixed-equity loan payments are up-to-date. When making your payment online, select the “Additional Principal and Escrow” option and enter the amount you’d like to pay.

You can also pay extra toward the principal of your Home Equity Line of Credit. Your additional principal payment must be submitted after the current month’s payment is satisfied and before the next month’s bill is generated, which usually occurs on the 5^th of each month. If the 5^th falls on a weekend or holiday, your bill might generate earlier.

I accidentally made 2 payments from my Navy Federal account. What should I do?

To get a refund for your duplicate payment, call us  at 1-888-842-6328 or send us an eMessage through online banking.  

I accidentally made 2 payments from my external bank account. What should I do?

To get a refund for your duplicate payment, you can send us an eMessage through online banking, fax us at 703-206-3650 or send us a written request via mail at P.O. Box 3300, Merrifield, VA 22119. Your request will be processed after 7 business days to ensure the funds have cleared your external account.

If you’re looking to get your refund faster, you may include proof of the payments with your written request. The proof of payment may be a screenshot of your account activity or your most recent statement. It must show that both payments have cleared your external account and are no longer pending, along with a running account balance.

I made a payment, but my balance only decreased a fraction of the amount. Why is that?

Your monthly payment is divided and applied to both your principal balance and your interest. As your loan matures, the amount of each payment applied toward the principal balance will increase, and the amount of each payment applied to interest will decrease. For payment breakdowns specific to your loan, you can view your amortization schedule through Navy Federal  online banking. The Amortization Schedule option is located in the My Loan drop-down menu after you click on your mortgage account.

How do I pay off my mortgage?

To pay off your mortgage, simply request a payoff quote. A payoff quote will capture the full balance due to pay off your loan. It’s important to get a payoff quote, as the principal balance of your account is different than your full payoff amount due to interest calculations, any outstanding fees and the recording fee collected to record the release of the lien.

To receive a payoff quote for your loan, you may sign in to online banking and click on your mortgage account. Then, select Payoff Statement under the Statements and Documents tab and fill in the required information. After obtaining your payoff quote, you can submit the funds required to pay your loan in full. Keep in mind that a payoff may take longer to post than a regular payment.

What does it mean to refinance a mortgage?

Refinancing means replacing your existing mortgage with a new mortgage that could have better terms or features.

Can I refinance my mortgage if my original loan isn’t with Navy Federal?

Yes. You can refinance your exernal loan with Navy Federal whether your original loan is with us or another financial institution.

How long does it take to refinance a mortgage?

It typically takes 30 days to refinance your home from application to closing. Currently, refinance loans are averaging 30-45 days. This timeframe varies depending on how quickly we obtain all required documentation to approve your loan request.

Do I need any cash on hand to refinance my mortgage?

Refinancing your home loan typically doesn't require you to pay for closing costs out of pocket because the closing costs can be included in the total loan amount.

What is the Servicemembers Civil Relief Act (SCRA)?

The Servicemembers Civil Relief Act (SCRA) provides legal and financial protection to eligible Active Duty servicemembers. It includes benefits such as a 6% interest rate cap. However, effective April 1, 2022, Navy Federal is offering a lower maximum interest rate of 4% to eligible member accounts.

Is my mortgage loan eligible for these benefits?

Your Navy Federal loan may be eligible for SCRA benefits if it was opened before you started Active Duty. Visit our SCRA page for more information on eligibility and to request benefits.