Interest-Only Mortgage Loans

Details

Navy Federal Credit Union's interest-only loans are available as both fixed- and adjustable-rate mortgages and can be used for primary residences and second homes, though the rates and terms differ. These loans are ideal for borrowers with fluctuating or rising income, allowing them to make the interest-only payments when funds are tight and make substantial payments to the principal when their income rises.

  • Fixed Rate: At the end of the initial 10 years, loans amortize for the remaining term to include principal and interest. As a result, payments will increase.
  • Adjustable Rate: Rates may adjust after the initial fixed-rate period, which could lead to higher monthly payments in the future; however, principal payments won't be required until the eleventh year.
  • Refinance options available

Rates1 Rates as of: December 17, 2018

Interest-only mortgages are available as both fixed and adjustable rate. Interest-only fixed-rate loan payments remain the same for the first 10 years, and then adjust to include principle. Adjustable rates start with a low, fixed rate, and then adjust upward or downward after the initial fixed term according to an index.

We offer both conforming and jumbo interest-only mortgages. The maximum loan limit for conforming loans is typically $453,100, though the loan limit can vary by state and county. Jumbo loans are for amounts greater than $453,100.

To get rates for our interest-only mortgages, call 1-888-842-6328 today.

Visit MakingCents for clear, step-by-step information on the home-buying process.

Get started and explore your rate options now. Call us at 1-888-842-6328. Or sign in to your account to apply now.

SMART FINANCIAL DECISION MAKING STARTS HERE

Get the information you need on the home-buying process.

Enter table description here.
Fixed Rate 6.76% APR 5/1 ARM Fixed for first 5 years Initial Interest Rate 6.5% (7.923% APR) Max rate 11.5% 5/1 Interest-Only ARM Fixed for first 5 years Interest only for first 10 years Initial Interest Rate 6.625% (8.005% APR) Max rate 11.625%
Minimum Monthly Payment Year 1-5 $1,167 $1,138 $994
Monthly Payment Year 6 No change in rates $1,167 $1,138 $994
Monthly Payment Year 6 2% rise in rates $1,167 $1,357 $1,294
Monthly Payment Year 10 5% rise in rates $1,167 $1,702 $1,832
How much will you owe after 10 years? $153,238 $168,500 $180,000
How much interest will you pay over the initial term (5 years) of the loan? $59,025 $56,763 $59,625

*Taxes & insurance not included, therefore the actual payment obligation will be greater.

Mortgage Application Checklist

Mortgage Application Checklist* Print

To apply for a mortgage, gather the following information and documents:

  • Date of birth
  • Social Security Number
  • Navy Federal Share Savings account number/Access Number
  • Two-year address history
  • Two-year work history
  • Gross monthly income to be used for qualifying
  • Payment instructions for appraisal fee
  • Any other income to be considered for qualifying
  • Deposit account and asset information held by financial institutions other than Navy Federal Credit Union to be considered for qualifying
  • Current tax, homeowners/condo dues, insurance and lien information (balances, monthly payment and mortgage company/lien holder name) for all real estate owned.

You'll also need to provide the following about the residence you're purchasing:

  • Purchase price
  • Loan amount
  • Estimated homeowners/condo association dues on property
  • Type of property
  • Ratified sales contract signed by all parties, with all applicable addendums
  • Source of down payment

*Additional information may be needed based on the the type of mortgage you're applying for.

Get started and explore your rate options now. Call us at 1-888-842-6328. Or sign in to your account to apply now.

SMART FINANCIAL DECISION MAKING STARTS HERE

Get the information you need on the home-buying process.

Terms & Conditions

Terms & Conditions

Information Applicable to All Mortgage Loans

Rates, discount points and terms are based on an evaluation of each member's credit history, loan-to-value (LTV), occupancy, payment type, loan amount and loan purpose, so your rate and terms may differ. All loans are subject to credit approval. Questions? Please contact Navy Federal at 1-888-842-NFCU (6328).

Navy Federal also offers home loans for investment properties. When reviewing quotes from other lenders, make certain you obtain the discount points and any origination fees for comparison with Navy Federal's rates. APRs reflect down payment/equity unless otherwise noted.

Conforming Loans

Loan amounts up to $453,100. In Alaska and Hawaii, the conforming loan limit is $679,650. Loan limits vary by county.

Jumbo Loans

Loan amounts greater than $453,100. The jumbo rates quoted above are for loan amounts above $453,100 up to $2,000,000. The loan limit for Jumbo HomeBuyers Choice loans is $1,000,000.

Two-Unit Properties

Minimum down payment between 20% and 25% for a two-family property. Conforming loan limit for two-family properties is $580,150. In Alaska and Hawaii, the conforming loan limit for two-family properties is $870,225.

Any refinance mortgage where the proceeds will be used to pay any debt other than debt used in the purchase of the home is considered a Cash-Out Refinance. Additional discount points will apply to cash-out loans, which are based on credit history and LTV. Cash-Out Refinance is not allowed on Interest-Only Conforming, HomeBuyers Choice, Future Principal Residence, and Investment Products.

Loans with subordinate financing and loans secured by condominium properties may require additional discount points. Conforming loans secured by two (2) unit properties or manufactured homes are subject to an additional 1.00% discount point.

Rate Lock Policy

Purchase Loans

  1. The Standard Price Lock Commitment for Purchase Loans is 60 days at no additional cost.
  2. The Extended Price Lock Commitment options below are available for Purchase Loans only and must be agreed upon at the time of rate lock-in.
    • 90 days - additional 1/8 discount point or 1/8% in rate
    • 120 days - additional 1/4 discount point or 1/8% in rate
    • 180 days - additional 1 discount point or 1/4% in rate
  3. The Float-to-Lock Option for Purchase Loans - If you select the Float-to-Lock Commitment, it means that you want to allow the interest rate and discount points to float with the market. You must lock in your interest rate and discount points at least fourteen (14) calendar days prior to settlement/closing.
  4. The Freedom Lock Option for Purchase Loans - A special lock option is being offered at no cost with a maximum rate reduction up to 0.25%. This special lock option is only available for sixty (60)-day pricing commitments. You will have the opportunity to re-lock one time if rates improve up to fourteen (14) calendar days prior to settlement/closing. This special lock option applies to all loan types.

Refinance Loans

The Standard Price Lock Commitment for refinance loans is sixty (60) days from the lock date. On VA and FHA loans, the Standard Lock commitment is sixty (60) days from the lock date. The Freedom Lock option is available on refinance loans for a non-refundable 0.250% fee added to the origination. The fee must be collected upfront. The Freedom Lock option is not available on VA and FHA refinance loans.

Mortgage Loans

A sample principal and interest payment on a thirty (30)-year $250,000 fixed rate loan with a 4.375% interest rate is $1,248.21. Taxes and insurance are not included; therefore, the actual payment obligation will be greater.

Visit MakingCents for clear, step-by-step information on the home-buying process.


Get started and explore your rate options now. Call us at 1-888-842-6328. Or sign in to your account to apply now.

SMART FINANCIAL DECISION MAKING STARTS HERE

Get the information you need on the home-buying process.

Included with All Navy Federal Mortgages

  • Nationwide availability
  • Personal guidance from first call to closing
  • Navy Federal servicing for the life of your loan

For questions, call us at 1-888-842-6328.

1Rates are based on evaluation of credit history, loan-to-value, and loan term, so your rate may differ. ARM rate adjustments are determined by an index and margin, the index of which is variable and therefore unknown for future payments.