Mortgage Basics

What are the steps to get a mortgage?

  1. Preapproval
    Even before you start looking at homes, the first step in the mortgage process is getting a preapproval letter from a lender, which provides documentation of how much money you’ve been initially approved to borrow for your home purchase.
  2. Home Search
    Once you have your preapproval letter, work with your real estate agent to find the right home for you based on your specific needs. Once you’ve found your new home, provide the address or purchase contract to your loan officer along with your application.
  3. Processing
    Your processor will then prepare and submit your mortgage application for final review and approval. You may be asked to provide additional supporting information. During this time, your appraisal will be ordered for the home you're hoping to buy.
  4. Closing
    The last step in the mortgage process is closing. This is where you assume ownership, your loan is funded and you get the keys to your new home.

How long does it take to get a mortgage?

It typically takes 30 days to close on your mortgage once you’ve submitted all required paperwork and documents. However, closing times vary based on many factors, so check with your home loan advisor early in the process to better understand when you can expect to close.

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 expected closing costs. Since these line items are estimates, certain costs may change between the original Loan Estimate and your closing date.

Can I buy a home if I have less-than-perfect credit?

Yes, you can buy a home even if you have less-than-perfect credit. We can help you find the best option for your situation— for more information, call us at 1-888-842-6328.

Do I need a real estate agent?

It’s a good idea to use a real estate agent when you’re buying a home. Navy Federal can match you with a top-performing agent with expertise in your area through our RealtyPlus® program. You can also get rewarded cash back when you use this program to buy or sell your home.1

Mortgage Loans, Rates and Features

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 percent. In contrast, APR includes the interest rate plus other costs, such as mortgage insurance, discount points and some closing costs and loan origination fees.

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

To demonstrate eligibility, you’ll need to provide a valid Certificate of Eligibility (COE). You can apply for your COE through the Department of Veterans Affairs, or your loan officer can help obtain it for you.

How is my mortgage interest rate determined?

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

  • Your credit score
  • Debt-to-income ratio
  • Type of loan you're applying for
  • Loan amount
  • Loan term
  • Property location
  • 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 locl, 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.
  • 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 Freedom Lock, allowing you to choose to lock, float or lock float down. Most lenders charge a fee to lock float down, but we offer it at no charge.

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

What if I find a lower rate with another lender?

Navy Federal offers a rate match guarantee,2 which means that if you find a better rate at another lender, we’ll match it. If we aren’t able, 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. We’ll need a Loan Estimate from the competing lender that is dated and received within 3 calendar days of locking in your interest rate with us. 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 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.

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.

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.

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, which can keep your monthly payment lower.

Does Navy Federal offer construction loans?

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.

Do I need a down payment?

Not always. Several of our mortgage loans are available to qualified applicants with little or no down payment.3

Applying for a Mortgage

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 until your information is verified with supporting documentation.

How do I get a preapproval letter?

After you submit an application for a loan, a loan officer will contact you within 6-10 days with next steps. If you’re preapproved, the loan officer will typically email you the preapproval letter. Depending on your eligibility, your preapproval letter could be available in minutes. In some cases, you may get preapproved instantly.

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 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 handy for the verification process.

  • W2 forms for the last 2 years
  • Pay stubs for the last 1 to 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, call your home loan advisor and provide the property address. Your request for preapproval will then convert to a mortgage application.

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.

Closing on Your Mortgage

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 your home’s purchase price. Common fees include appraisal fees, property taxes, mortgage insurance and title fees. They're identified on your Loan Estimate. 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 cannot 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?

You’ll want to confirm the details with your loan officer before you go to closing, but typically, the only thing you’ll need to bring is a photo ID. 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.

Managing Your Mortgage

Can I pay extra toward the principal on my loan?

As long as your mortgage or Fixed Equity Loan payments are up to date, you can pay extra toward the principal of your loan. When making your payment online,select the “Additional Principal and Escrow” option and enter the amount you wish 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 fifth of each month. The bills can generate earlier if the fifth falls on a weekend or holiday.

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

To have the duplicate payment refunded to you, you’re welcome to call us at 1-888-842-6328 or send us an eMessage through online banking. Click here to sign in and send us a message.

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

To have the duplicate payment refunded to you, please submit a written request via mail at P.O. Box 3300, Merrifield, VA 22119, eMessage, or fax at 703-206-3650. Your request will be processed after 7 business days to ensure the funds have cleared your external account. If you’re looking for an expedited refund, 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?

A portion of each monthly payment is applied toward the principal balance, and a portion is applied toward 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.

Refinancing Your Mortgage

What does it mean to refinance a mortgage?

Refinancing means replacing your existing mortgage for a new mortgage with better terms or features.

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

Yes. You can refinance your 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 45 days to refinance your home from application to closing. This time frame 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.


1 The cash-back bonus is offered in most states and is available for individual sales and purchases of property; offer limited to one cash-back bonus per property with no limit on the amount of times you may use the program. In some states, a gift card or commission credit at closing may be provided in lieu of the cash-back bonus. The program is not available in IA or outside the U.S. Cash-back bonus is not available in AK, LA or OK. In KS and TN, a gift card with preloaded points that are ready for spending at specified retail establishments after closing will be issued. State regulations in KS limit the dollar amounts and the type of incentive. In MS, NJ, and OR, a commission reduction may be available at closing. Please check with the program coordinator for details. This is not a solicitation if you are already represented by a real estate broker. The cash-back bonus is only available with the purchase or sale of your home through the use of a program-referred and -approved real estate agent. The size of your cash-back award depends on the value of the property you are buying or selling. Obtaining the full $8,000 cash-back award requires transacting in a property valued at $1.75 million or greater. To calculate the size of your potential cash back, please visit All real estate transactions are negotiable. Contact RealtyPlus for terms and conditions. Standard listing fees apply.

2 Guarantee to receive rate match only applicable if all conditions are met. Available for purchase and refinance first mortgages. Certain product exclusions may apply. You must lock your rate with Navy Federal prior to submitting rate match request to qualify. Loan Estimate from competing lender must be dated and received within 3 calendar days of locking your interest rate at Navy Federal. Please note that no other documentation may be used to show competitors' terms. The terms of the competing loan must be identical to Navy Federal's loan; for example, a 30-year, fixed-rate product with mortgage insurance is not identical to a Navy Federal 30-year, fixed-rate product that does not have mortgage insurance. If the loan does not close within the commitment period, the rate match may be voided. NOTE: The initial Loan Estimate from a wholesale lender/broker is not an acceptable document for a rate match submission unless the Lender Information section on the Loan Estimate is completed. To receive $1,000, you must provide a signed, executed copy of the final Closing Disclosure and a copy of the final mortgage note within 30 calendar days of your loan closing with the original competing lender. Not valid if original loan terms or conditions change prior to closing. Once approved, $1,000 will be automatically deposited into your Navy Federal account within 30 calendar days of receiving the necessary documentation. Recipient is solely responsible for any personal tax liability arising out of this incentive.

3 Product features subject to approval. Available for purchase loans only. Loans are subject to an additional funding fee, which may be financed up to the max loan amount.