PenFed HELOC Review 2025: A Flexible Option for Investment Properties
HELOC
- Primary residences, secondary homes, and investment properties are eligible
- Fixed-rate conversions
- PenFed covers most closing costs
- Available in all 50 states
- Long draw period
- Automated appraisals speed up the application process
- Knowledgeable, responsive customer service (based on my personal experience)
- High $25,000 minimum
- Annual $99 fee
- Restrictions apply to Texas homeowners
- Must be a credit union member to borrow
- Can’t check rates without affecting your credit
| Rates (APR) | As low as 7.38% |
| Loan amounts | $25,000 – $500,000 |
| Repayment terms | 10-year draw period; 20-year repayment period |
| Min. credit score | 680 |
A PenFed home equity line of credit (HELOC) can help homeowners upgrade or pay off high-rate debt. Formally known as the Pentagon Federal Credit Union, it’s one of the largest federal credit unions in the U.S., offering several other financial products and knowledgeable, responsive customer service.
It may not be the first choice for borrowers with fair credit, inexpensive projects, or plans to repay the loan quickly, but PenFed’s HELOC is accessible to creditworthy homeowners in any state with a primary residence, second home, or investment property who need to borrow at least $25,000.
How does a PenFed Credit Union HELOC work?
A HELOC acts as a second mortgage, so your home becomes collateral. In general, interest rates tend to be lower than many alternatives, such as fixed-rate home equity loans, personal loans, and credit cards. To take out a PenFed HELOC, you must have at least 15% equity in your home.
Not sure whether you qualify? See our guide to calculating your current home equity.
PenFed applicants might be eligible to borrow up to 85% of their home equity. During the first 10 years, aka the draw period, borrow what you need and make interest-only payments—or principal payments, too, if you request it.
You’ll repay the loan over the following 20 years. However, because your payment during the draw period only covers the interest, by making a payment above this amount and requesting it to go toward the principal, you can lower the principal balance during the draw period, allowing you to potentially repay sooner.
| Terms | Details |
| Rates (APR) | As low as 7.38% |
| Rate discounts | None |
| Loan amounts | $25,000–$500,000 |
| Draw period | 10 years |
| Repayment period | 20 years |
| Fees | $99 annual HELOC fee; Appraisal fee |
| Unique features | Potential closing cost credits; Option to switch to fixed rates on interest payments; Free HELOC e-book |
Does PenFed offer a fixed-rate HELOC?
Not technically. PenFed’s HELOC rates are variable.
However, once you’re approved for a PenFed variable-rate HELOC, you have the option to switch to a fixed rate on a withdrawal if you draw at least $10,000. PenFed will allow you to do this up to three times but no more than twice a year.
As an example, if you borrow at a fixed rate twice in the same year—$10,000 in February at 5% and $15,000 in April at 6%—you’ll repay both draws at those respective rates.
Then if you want to borrow and lock in a fixed rate for a third and final time, you can do so, but you’d have to wait until at least the following year.
Costs and fees
Once approved for a PenFed HELOC, your only closing costs include potential taxes and the appraisal.
According to PenFed, you can expect to pay $550 to $850 for an appraisal, on average. You may owe city, county, or state taxes in just a handful of states:
- Florida
- Louisiana
- Maryland
- Minnesota
- New York
- Tennessee
- Virginia
PenFed covers the other closing costs, such as property search, credit report, flood certification, settlement, and recording. As long as you’re approved, there are no other criteria for getting this credit.
Closing costs are often 2% to 5% of the loan amount, on average. For a $90,000 HELOC, you could save between $1,800 and $4,500. Before you go all in on PenFed, though, consider other HELOCs—including Bethpage, the best credit union for HELOCs according to our editorial ratings, and our best-rated HELOCs, several of which also offer closing cost discounts.
PenFed HELOCs come with a few fees, including:
- An annual $99 HELOC fee
- A $20 fee for a check stop payment, exceeding the monthly credit limit, and lien release processing
- A $30 fee for consecutive check-stop payments and returned checks or ACH payments
- A late fee, which will vary based on the terms of the agreement
Repayment
PenFed’s repayment period is 20 years, starting at the end of the 10-year draw period. At the end of this draw period, you won’t be able to borrow more money.
At this point, you’ll enter the repayment period and make monthly payments toward interest and the principal. If you make only the minimum monthly payments, you’ll finish repaying the HELOC in 20 years.
PenFed HELOC credit score and eligibility requirements
PenFed HELOCs are available across the country for various types of properties. With a good credit score and at least 15% equity in the home or property, you won’t need to jump through many hoops to apply for a PenFed HELOC.
More details below:
| Requirement | Details |
| Eligible properties | Primary residences, second homes, or investment properties; Single-family houses, condos, townhomes, multi-family homes (4 units or fewer) |
| State of residence | All 50 states and Washington, D.C. |
| Max. CLTV | 85% (80% for condos and Texas residents) |
| Max. DTI | 50% |
| Min. credit score | 680 |
PenFed HELOC LTV requirements
PenFed approves HELOCs based on the combined loan-to-value ratio (CLTV). CLTV is the combined amount you borrow from all loans—first mortgage and second mortgages—compared to the value of your home. LTV, on the other hand, is the amount you borrow from one loan.
PenFed will take your first mortgage into consideration—and any other second mortgages you have—when reviewing your HELOC application. The CLTV affects:
- How much you can borrow. If you want to borrow $200,000, but your home is worth $210,000, with an 85% CLTV, you may only be able to borrow $178,500 ($210,000 x 0.85 = $178.500).
- The more you borrow, the higher the interest: The closer your borrowed amount gets to the maximum CLTV, the riskier the loan is. In the event of a market downturn, your home may be worth less than what you owe.
To determine your home’s value, PenFed will conduct an appraisal. According to a PenFed representative, the credit union primarily uses an automated valuation model (AVM), which is a mathematical model to determine the value of your home by collecting:
- Recent property data
- Historical home pricing averages
- Median home sales data.
If you disagree with the AVM, PenFed advised that you may request a drive-by hybrid appraisal.
This method combines some aspects of AVM—relying on recent and historical data, along with median home sales data—with a traditional appraisal. However, instead of going inside your property, an appraiser will:
- Take pictures of the exterior
- Evaluate the exterior’s condition
- Assess the condition of the surrounding neighborhood
For example, imagine you own a home appraised at $400,000:
$400,000 (appraised value) x 0.85 CLTV = $340,000
$340,000 is the maximum total combined loan allowed—combining your original mortgage and the PenFed HELOC, assuming you have no second mortgage.
Now, if your current mortgage is $250,000, the maximum equity you can tap into through the HELOC is $90,000:
$340,000 max CLTV – $250,000 (mortgage balance) = $90,000
See how much you may qualify for by using the PenFed HELOC calculator.
Can you use a PenFed HELOC on an investment property?
Yes, you can use a PenFed HELOC on an investment property if it’s:
- Not on the market for sale
- In livable condition—no unsafe conditions, such as missing stair railings
- A dwelling—as opposed to only land
Investment property HELOCs aren’t as easy to find. Because their primary source of income is renting or leasing, most lenders consider them riskier than a HELOC on a primary residence.
If you lose that income, you’re more likely to pay your mortgage on your primary residence than you are on the investment property.
PenFed HELOC customer reviews
Out of the most recent customer reviews we collected from Trustpilot, Google, and the Better Business Bureau (BBB), only one directly referred to HELOCs. Nevertheless, here’s what users have said about PenFed over the last several months:
The reviews are mixed on customer satisfaction. Reviewers mention poor customer service and technical issues but also speedy application processing and competitive loan rates.
Pros
-
“Wonderful experience financing … the loan application was very straightforward. All of the representatives … were very patient and friendly.”
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“The process of applying for a loan is quick and easy! … They offer a variety of options and have very competitive rates.”
Cons
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“Paid off a vehicle I sold … They lost my title … I will never get an auto loan from them again.”
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“A check was written against my home equity line of credit … PenFed has washed their hands of all responsibility for allowing the fraudulent transaction to occur.”
Although many of the most recent reviews we’ve read don’t involve PenFed HELOCs, we recommend speaking at length with a representative and reviewing the credit union’s documentation on its HELOC before signing an agreement.
| Source | Customer rating | Number of reviews |
| Trustpilot | 3.9/5 | 1,503 |
| 4.7/5 | 8,361 | |
| BBB | 1.18/5 | 249 |
Overall, we believe PenFed has a solid reputation. We think its product pages should provide greater detail, but we were able to get the answers we needed by calling customer service. The staff was knowledgeable, and contact information online was easy to find.
With more than 1,500 reviews on Trustpilot and more than 8,000 on Google, this credit union has an above-average rating and an “A+” rating on BBB.
The bottom line is to get all the information you need to be clear about what to expect once you’re approved for a HELOC.
Pros and cons of getting a HELOC from PenFed
If you’re considering a PenFed HELOC, weigh the advantages and disadvantages and how they may affect you.
Pros
-
Available on second homes
Some HELOCs, especially those through small credit unions, are only available for primary residences.
-
Option to switch from a variable rate to a fixed rate
Switching to a fixed interest rate may result in a higher rate, but at least you’ll have a predictable monthly payment.
-
The only closing cost you’ll pay is the appraisal fee
Cons
-
The minimum borrowing amount is $25,000.
Our three highest-rated lenders (listed below) allow lower minimums.
-
Must confirm terms over the phone
For example, we had to contact PenFed to find out that the maximum allowed debt-to-income (DTI) ratio is 50%—above the common 43%.
-
Annual $99 fee
Our alternatives don’t have annual fees
Alternatives to a PenFed HELOC
Bethpage FCU, Figure, and Aven are top-rated alternatives to a PenFed HELOC.
Skip the origination, appraisal, and annual fees with a Bethpage FCU HELOC. With good credit, you could qualify for fixed rates for year one. This HELOC also offers flexible repayment options—five, 10, or 20 years.
We also recommend considering these 100% fixed-rate HELOCs:
- Figure: Not only can your Figure HELOC approval come in less than a week, but the minimum borrowing amount is $15,000.
- Aven: With AvenCash, you can open a fixed-rate HELOC and access funds in as little as three days after signing.
Here’s how they compare:
| PenFed | Bethpage FCU | Figure | Aven |
| 7.38% – 18.00% variable APR | Fixed 6.99% APR for intro period, then starting at 7.50% variable | Fixed 7.20% – 15.60% APR | Fixed 6.99% – 15.49% APR |
| Borrow $25,000* – $500,000 | $10,000 – $1 million | $15,000** – $400,000 | $5,000 – $400,000 |
| Appraisal fees and taxes in certain states | No fees for credit lines up to $500,000 | Notary, recording, and appraisal fees (for non-AVMs) | 4.90% origination fee |
| Fixed-rate conversion available | Fixed-rate conversion available | 100% fixed rate | 100% fixed rate |
| 680 min. credit score | 720 min. for intro rate | 640 min. | 640 min. |
| Funding in as little as 15 days | Funding takes 6 – 10 weeks | Funding in as little as 5 days | Get funds within 3 days of signing |
| All 50 states and D.C. eligible | Available in 49 states (Texas excluded) | Not available in Hawaii, New York, or West Virginia | Available in 32 states |
PenFed HELOC process: How to apply
You can apply in around 30 minutes through the PenFed HELOC webpage. Just follow the steps below.
- Click “Apply Now” on the PenFed HELOC page.
- Log in, or click “Continue” below “As a Guest” on the next webpage if you’re not already a member.
- Fill out the brief questionnaire with your estimated home value, mortgage balance, credit score, name, and contact information.
- Click “Continue” to create an application login account online.
- Once you fill in the fields, including your email and password, you’ll be automatically taken to the application.
- Answer each question on the screen.
- You’ll then review the application in five sections: Application info, Property, eConsent, Income, Declarations (demographic information).
- Submit the application once you’ve reviewed the information you entered.
After you submit your application, you should get a decision within four weeks. Some applicants are approved within two weeks, but processing times vary by person.
Here are the final points to consider before applying for a HELOC:
- Planning matters: Before opening a HELOC, determine what you want to achieve with it and how much you may need. Never accumulate debt without a plan to pay it off. Use your remaining budget to set a practical timeline.
- Beware of fluctuating payments: With variable interest rates, monthly payments change with the market. Prepare for fluctuating monthly payments by budgeting with extra margin.
- Discipline is key: Using a HELOC to pay off higher-interest debt can be smart. But you may pay more in the long run if you continue to borrow more without paying down the principal.
How we rated PenFed’s HELOC
We designed LendEDU’s editorial rating system to help readers find companies that offer the best student loans. Our system awards higher ratings to companies with affordable solutions, positive customer reviews, and online transparency of benefits and terms.
We compared PenFed to several home equity lenders, using hundreds of data points from company websites, public disclosures, customer reviews, and direct communication with company representatives. We weighted, scored, and combined each factor to produce a final editorial rating. This rating is expressed on a scale from 1 to 5, with 5 being the highest possible score. Our take is represented in our rating, recapped below.
| Company/product | Rating |
| PenFed HELOC | 3.8/5 |
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