Navy Federal Credit Union (NFCU) offers some quality mortgage options for military members and veterans. It’s not only one of the top credit unions in the country but also a competitive provider of U.S. Department of Veterans Affairs (VA) loans with attractive rates and no-down payment options.
If you’re looking for Navy Federal construction loans, you’re in for disappointment as, at the time of writing this article, the credit union does not specifically offer construction financing. That doesn’t mean you have to give up, though.
Many borrowers are unaware that certain NFCU programs can work for you in case you have low-grade construction work. If you have ground-up or new construction plans, the credit union recommends getting a separate construction loan before refinancing with a convenient NFCU home loan. We have prepared this guide to help you figure out both these options and provide some alternatives.
Minor Construction Loans at Navy Federal Credit Union—Viable Solutions
If you have an existing property with equity in it, you can consider the equity-based programs Navy Federal Credit Union offers. These products are usually taken for renovating an existing home or meeting other investment or personal goals.
Home equity, in plain terms, is the value of the property minus the outstanding mortgage debt. For example, your existing home is worth $500,000 and has a $200,000 mortgage balance—the equity in your home would be $300,000. Equity-based NFCU products can help you extract that $300,000 and put it towards a desired outlet, including construction projects.
There are two Navy Federal Credit Union equity programs that may work for you:
- Navy Federal home equity loan
- Navy Federal home equity line of credit (HELOC)
Unlike regular construction loans, these products don’t require the borrower to present detailed drawings, budgets, and draw schedules, primarily because they have versatile uses. Let’s take a glance at these products.
Source: Laurie Shaw
Navy Federal Home Equity Loan
Home equity loans are popular products offered by almost every major bank, credit union, and mortgage company. While most vendors lend you up to 80% of the equity you have accumulated in your property, NFCU can offer you 100% of the equity component. Check out the essential features of NFCU home equity loans:
|Feature||Navy Federal Home Equity Loan|
|Interest rate/Annual percentage rate (APR)||6.640% (minimum)|
|Draw schedule||Not required|
|Term||5, 10, 15, or 20 years|
|Application or origination fee||Not required|
Although it’s not a construction-specific product, a home equity loan can be suitable when you need a lump sum for renovation, repairs, and other building work equivalent to the equity you leveraged.
Navy Federal Home Equity Line of Credit (HELOC)
HELOCs are conceptually the same as home equity loans—you leverage the equity in your home for a loan. The only difference is that HELOCs work like credit card financing. The equity-based loan is assigned to a drawing account, allowing you to withdraw money within the set limit as you please. You pay interest only on the outstanding balance.
NFCU offers HELOC loans for up to 95% of your home equity. Here are the prominent features of the product:
|Feature||Navy Federal HELOC|
|Interest rate/Annual percentage rate (APR)||6.500% (minimum)|
|Rate type||Variable (based on prime U.S. rates)|
|Draw schedule||Not required, but you must draw the amount within 20 years|
|Term||20-year draw + 20-year repayment period|
|Application, origination, or inactivity fee||Not required|
|Installments||Amortized or interest-only|
NFCU’s HELOC plan is far less expensive when compared to similar products offered by other mortgage lenders. It’s suitable for carrying out long-drawn-out construction work, but you usually have to pay higher interest rates as time progresses.
Source: Daniel McCullough
Can Navy Federal Help With a New Construction Loan?
Navy Federal currently offers no service related to new construction. If you want to take advantage of their low-cost home mortgage plans, a smart strategy would be to get a construction-only loan from another lender. Once the structure is ready, apply to NFCU for a conventional or VA mortgage (with interest rates starting from 5.375%). If you’re approved, you can use the proceeds to settle the construction loan.
While moving from a construction-only to a regular mortgage may seem complicated on paper, it is actually pretty easy when you find an appropriate construction lender.
What Is the Easiest Route To Get a Construction-Only Loan?
Borrowers should also consider other aspects like customer satisfaction, down payment flexibility, and geographical availability while choosing financiers for construction. Here are some of the top lenders you can look into:
|Lender||Credit Requirements||Service Area|
|TD Bank||720||Mainly East Coast (15 states and Washington, D.C.)|
|Flagstar Bank||720||All 50 states and Washington, D.C.|
|Nationwide Home Loans Group||620||47 states and Washington, D.C.|
|Go Mortgage||640||35 states and Washington, D.C.|
|Homebridge Financial Services||640||19 states and Washington, D.C.|
The problem with many traditional lenders is that they prefer servicing construction-to-permanent loans over construction-only loans because the former rakes in more in terms of profits and closing fees. The screening can also take 2–3 months, making these options rather slow-moving.
Should You Go for a Non-Traditional Construction Loan?
Because of the red tape-heavy processing of conventional loans, many borrowers are now choosing alternative solutions for construction financing. If you need construction funds fast with easy qualification criteria, getting a hard money loan is one of the best routes to take.
Professional hard money lenders operate within relatively relaxed state guidelines, offering commercial, business, and consumer loans based on the value of the collateral rather than credit scores or debt status. They thrive because traditional lending is paperwork-heavy and time-consuming. These lenders barely take three weeks to service loans, so they work well in the high-risk construction scenario where variables like materials and labor costs fluctuate every day.
Over the years, hard money loans have become tools of convenience that allow borrowers to access short-term financing with minimum documentation and personal screening. The interest rates on these products are around 8%–22%, depending on your borrowing purpose and the state you live in.
If you can qualify for a Navy Federal home loan, mention that to the lender while shopping for hard money loans. Most lenders take your repayment strategy (in this case, refinancing) into account while processing.
Set Your Plans in Motion With a Hard Money Loan Solutions’ Construction Loan
The veteran lenders at Hard Money Loan Solutions (HMLS) understand the excitement and fear that comes with starting construction work and are driven to help anyone looking to step into the project. At HMLS, you can secure:
- All-purpose consultancy around hard money financing, real estate, and construction
- Hard money loans for different goals, including:
- Rehab or renovation
- Cash-out refinance
- Land or home purchase
- Rental investment
- Foreclosure auction
- Commercial real estate
- Bridge financing
You can access an HMLS construction loan for a primary or secondary residence, investment property, or business unit. Apply today to get a free consultancy on your funding situation.
Source: Kampus Production
At HMLS, your application is evaluated on factors like the location of construction, the future value of the property, and your repayment strategy. Your credit score, income source, and existing debt won’t influence the decision-making process. HMLS lenders don’t micro-analyze construction documentation but rather focus on whether the borrower is motivated to see the project through.
HMLS has been rated 5/5 stars on Google Reviews by past and existing borrowers for the features like:
- Time-sensitive processing
- Flexible loan packages
- Light paperwork load
- Tolerance for poor credit
- Innovative solutions for difficult lending scenarios
- Support throughout the loan tenure
- Full transparency around costs and fees
How Fast Can You Get an HMLS Construction Loan?
Qualifying applicants can secure HMLS financing within 3–14 days. For construction projects, the lenders usually release the loan as a lump sum to help the borrower budget without constantly having to worry about fund availability.
You have to pay interest-only installments for HMLS loans, so your costs throughout the construction phase are minimal. Clear off the principal sum once you secure the long-term mortgage (or sell the structure in case you’re doing a fix-and-flip deal).
All products at HMLS are tailor-made to fit the borrower—your package is designed after careful discussions with you and risk analysts. The table below summarizes the features of a typical HMLS loan:
|Interest rates||9.99%–12% (lower LTVs get lower rates)|
|Loan-to-value (LTV)||Up to 70% of the current purchase price or appraised asset value, whichever is lower|
|Interest rate type||Fixed|
|Origination fee||2 points or 2%|
|Closing time||Within 2 weeks|
|Prepayment penalty||No penalty if repaid after 6 months|
|Down payment||Not required|
|Draw schedule||Not required|
You can get started by dropping an online loan application—you’ll be able to talk to a lender directly and get handy suggestions fit for your situation!
How Are Loans Closed at HMLS?
HMLS has a fast-track due diligence process that enables quick and legally compliant funding. An applicant usually goes through three stages before closing:
- Direct discussions—You fill out a brief online application form stating your loan intent and property details. A lender will call you shortly to discuss the transaction and confirm your interest. All discussions are confidential
- Deal appraisal—If you give the green flag, the lender evaluates the project and offers you a construction package with a customized LTV and interest rate
- Legal setup—Communicate your approval to the team, and they will begin the legal work required to solidify the funding
The HMLS group has client-friendly policies. If there are delays in your repayment plan, let the lenders know beforehand. They can tweak your package to serve you for an extended period or help you navigate other financing packages.
Source: Ketut Subiyanto
Can You Get a Navy Federal Rental Property Loan?
Rental properties are typically considered part of your investment portfolio. You can consider NFCU’s investment property loans if you’re looking to finance a rental structure. These products require:
- At least 15% down
- An excellent credit score
- Low debt (DTI ratio not specified)
- Large cash reserves (to cover 6–12 months of mortgage payments)
You can also opt for hard money investment property loans—they’re a favorite among investors because the value of the property being purchased acts as issueless collateral, allowing them to qualify regardless of their credit health. Contact Hard Money Loan Solutions if you want hassle-free financing for attractive investments.
Featured image source: RODNAE Productions