Founded in 1935, PenFed—short for Pentagon Federal Credit Union—is the second-largest credit union in the United States. It offers a variety of banking, credit, and loan products to its members, and membership is open and available to anyone in all 50 states.
For homeowners looking to tap into their property’s current equity, PenFed offers a home equity line of credit (HELOC) of up to $500,000. Here’s a look at who can qualify for one of these lines of credit, how much you can borrow from your own home, and what it would cost you.
What we like:
Available in all 50 states.
| Rates (APR) | Starting at 9.00% |
| Loan amounts | $25,000 to $500,000 |
| Repayment terms | 10-year draw and 20-year repayment |
| Minimum credit score | 700 |
In this review:
- How does PenFed help me access my home equity?
- Pros and cons of a PenFed HELOC
- What do PenFed’s customers say about the company?
- Do I qualify for a HELOC from PenFed?
- How do I apply with PenFed?
- How does PenFed determine how much I can borrow?
- What does the appraisal process look like?
- Does PenFed charge any fees?
- Does PenFed have a customer service team?
How does PenFed help me access my home equity?
As a homeowner, you can expect to build equity in your home as you pay down your mortgage balance and market home values increase. This equity—the difference between your home’s market value and how much you still owe on the property—can be a valuable asset if you sell your home or need to borrow cash.
A PenFed home equity line of credit (HELOC) gives homeowners access to an open-ended line of credit secured by the equity in their primary home. They can pull cash from this line of credit to pay off other high-interest debt, cover home renovations, make large purchases, and more.
PenFed HELOC
With the help of a PenFed HELOC, eligible homeowners can borrow between $25,000 and $500,000 of their home’s equity. These lines of credit offer a 10-year draw period during which borrowers can withdraw cash as needed. Once you withdraw funds, you must make interest-only payments on the debt based on how much you borrowed.
If you never wind up needing this money, you may be subject to a $99 annual fee on the HELOC, but you won’t incur any other charges. As long as you’ve paid a minimum of $99 in interest in a given year, PenFed waives the annual fee.
A 20-year repayment term follows your HELOC’s draw period. During this phase, you won’t be able to borrow additional money from the line of credit (without renewing your HELOC). You’ll begin paying down the debt with payments of principal plus interest.
Borrowers can switch from a variable interest rate to a fixed rate during repayment.
| PenFed HELOC terms | |
| Rates (APR) | As low as 9.00% |
| Rate discounts | None advertised |
| Loan amounts | $25,000 to $500,000 |
| Draw period | 10 years |
| Repayment period | 20 years |
| Maximum LTV | 80% combined LTV |
| Minimum credit score | 700 |
| Minimum income | Not disclosed |
| Fees | Annual fee: $99. Closing costs: $500 to $8,500 (PenFed will pay most of this for many borrowers.) Appraisal: $500-plus. |
Pros and cons of a PenFed HELOC
Pros
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Borrow up to $500,000 against your home’s equity
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Available in all 50 states
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Can switch variable rates to fixed on interest payments
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Can take out more than one PenFed equity loan and/or HELOC at the same time for a total limit of $1 million
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PenFed will pay most of the HELOC closing costs for many borrowers
Cons
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Only available on primary, owner-occupied homes
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Minimum credit score of 700 required
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Maximum combined loan-to-value limit (CLTV) of 80%
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Must be a member to qualify for products
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Cannot complete an application online
If you’re unsure whether PenFed is the right fit for your home equity needs, consider other institutions. Check out our guide to the best HELOC rates and lenders for more recommendations.
What do PenFed’s customers say about the company?
| Source | Rating | Number of reviews |
| Trustpilot | 4.6 out of 5 stars | 1,056 |
| Better Business Bureau | 1.2 out of 5 stars | 200 |
Sometimes, the best way to see how a company operates is to hear from its customers. Consumer ratings are a valuable tool to give you an idea of how PedFed measures up in the eyes of its current and previous borrowers.
On Trustpilot, PenFed earns a rating of 4.6 out of 5 stars, with more than 1,050 reviews. Many customers mention the ease of the application process and great customer service.
PenFed also holds an A+ accreditation through the Better Business Bureau (BBB). However, the credit union has a low rating of 1.2 out of 5 stars over the last 200 customer reviews. According to these reviews, previous HELOC customers had trouble with PenFed’s underwriting process as well as qualifying for a home equity loan with self-employed income.
Do I qualify for a HELOC from PenFed?
PenFed offers HELOCs in all 50 states to borrowers who qualify. To take out an equity loan, you must be a PenFed credit union member. Joining is simple, though, and takes just a few minutes online … and anyone in the U.S. is eligible!
To qualify for a PenFed HELOC, borrowers must:
- Have a credit score of 700 or higher,
- Meet income requirements on income.
- Meet debt-to-income (DTI) requirements. This ratio compares a borrower’s current debt obligations to their monthly income and helps gauge how much they can afford to borrow from a new lender. While PenFed doesn’t disclose its exact DTI limit, it states borrowers need a “favorable” ratio.
HELOCs through PenFed give borrowers access to as little as $25,000 or as much as $500,000 of their home’s equity. You can’t borrow all your property’s equity; according to PenFed, borrowers in almost every state are limited to a maximum CLTV of 80%.
To take out a HELOC from PenFed, your property must:
- Be your primary residence, and you must occupy it.
- Have four total units or fewer.
- Not be a mobile home, co-op, or timeshare.
- Not be a commercial property or undeveloped land.
- Not be for sale or under major renovation.
You can submit an inquiry online, but PenFed does not allow you to apply or get a credit decision online. You’ll need to wait for a representative to reach out to you, or you can call and speak with a mortgage expert at 855-943-5695.
How do I apply with PenFed?
PenFed has an online mortgage loan application, though you’ll find the process isn’t complete. After providing your name, ZIP code, email address, phone number, current lien amount, and desired loan amount, you’ll need to wait to be contacted. A PenFed representative will contact you for more information and finalize your application.
If you want to contact PenFed, you can also reach out via phone.
Once PenFed confirms your eligibility and a representative determines you’re ready to move to the next steps in your HELOC application process, you’ll need to provide the lender with documentation. This may vary based on your location, loan amount, and specific situation, but it often includes:
- Recent pay stubs (one to two months)
- One year of W-2s
- At least two months of recent bank statements
- Mortgage statements for all properties owned
- Statements for current debts (such as auto loans, personal loans, student loans, credit cards, and more)
- At least two years of tax returns for self-employed borrowers
It may require proof of identity, proof of address, and more.
How does PenFed determine how much I can borrow?
The smallest amount you can borrow with a PenFed HELOC is $25,000. The most you can borrow with a single HELOC is $500,000, though PenFed allows more than one equity loan product at a time for a maximum debt of $1 million.
That said, a HELOC is secured with your home’s equity as collateral. This means your property’s current equity—or how much your home is worth minus how much you still owe on the property—sets the initial limit to how much you can borrow. However, your HELOC limit will be lower than that amount because you can’t take out all the equity in your home.
Instead, you’re limited to a certain LTV. For most PenFed borrowers, the limit is 80%. If your home is worth $500,000 and you owe $150,000, your top-end HELOC maximum would be $250,000. This would put your combined debt against the property at $400,000, or 80% of the home’s current value.
Other factors that may affect your HELOC limit include your credit score, income, debt-to-income ratio, and other factors. In some cases, you might not be able to borrow up to 80% of your home’s value.
What does the appraisal process look like?
Since your home’s equity limits your HELOC—and its equity is determined, in part, by its current market value—understanding how much your home is worth right now is key.
In most cases, PenFed will attempt to value your home through “independent methods,” though the lender doesn’t specify what the process entails. If PenFed can’t verify your home’s current value or the home doesn’t appraise for as much as you need, you might need an independent appraisal report.
Borrowers are responsible for paying the fees involved with a home appraisal, which can vary from $500 to $850 or more with PenFed. The lender orders the appraisal report and will then contact you for payment.
A new home appraisal is required for all PenFed HELOCs with a loan amount over $400,000.
Does PenFed charge any fees?
There are several fees to note if you’re considering a HELOC from PenFed.
Even if you choose never to withdraw funds from your line of credit, you might be subject to a $99 annual fee to hold the account. If you incur $99 or more in interest charges over the preceding 12-month period, PenFed will waive the fee.
If a new home appraisal is required, you will be responsible for paying the report fee of $500 or more, depending on your location and factors such as the size and layout of your home.
Closing costs include fees for:
- Flood certificates
- Credit reports
- Property searches
- Title recording
- Settlement
These combined fees range from $500 to $8,500, but PenFed will pay the costs for many borrowers.
The caveat? If you pay off your HELOC in full within 36 months of closing the loan, you will likely need to reimburse PenFed for any closing costs it paid on your behalf.
| Fee | Amount |
| Closing costs | $500 to $8,500 (may be covered by lender) |
| Appraisal fee | $500-plus |
| Annual fee | $99 (may be waived if you pay $99 in interest in the preceding 12 months) |
Does PenFed have a customer service team?
You have several options to reach a PenFed customer service representative:
- By phone: 800-970-7766, available Monday through Friday from 9:00 a.m. to 9:00 p.m. Eastern (closed Saturdays and Sundays).
- By web chat: A chatbot is available to answer questions 24/7.
- By web form: Reach out to PenFed through its online contact request form to get support from an agent.
- By fax: 703-633-7091