PenFed HELOC review: An option to switch to a fixed rate

A couple lean against a freshly tiled bathroom wall contemplating the additional work that will be done using their PenFed HELOC.Image: A couple lean against a freshly tiled bathroom wall contemplating the additional work that will be done using their PenFed HELOC.
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PenFed HELOC at a glance

  • Fixed or variable rate: Variable with the option to convert part or all to a fixed rate
  • How to withdraw funds: Doesn’t specify
  • Origination fee: No
  • Loan-to-value ratio: Maximum combined loan-to-value ratio of your HELOC and primary mortgage is 80%
  • Time to fund: Doesn’t specify

PenFed Credit Union is a large national credit union that offers HELOCs as well as mortgages and other types of loans. You’ll have to become a member to take out a HELOC.

Here are some other things to keep in mind.


  • Ability to switch from a variable to a fixed rate
  • Large credit line limit range
  • Option to make interest-only payments during draw period


  • High credit score requirements
  • Penalties for closing the account early
  • Website lacks specific information

4 things to know about a PenFed HELOC

Here are a few important things to know about PenFed Credit Union’s HELOCs.

1. High credit line limits available

PenFed offers HELOCs ranging from $25,000 to $1 million. That’s good news since if you have enough home equity available, you may be able to fund a home improvement project or pay for another major expense.

The maximum loan amount available at PenFed is higher than some other lenders, which can be a significant plus for borrowers looking for a larger line of credit.

2. Flexible repayment terms

PenFed’s HELOC offers a few options for repayment. Though a HELOC will initially be at a variable rate that changes with the prime rate, you can opt to convert all or part of your HELOC to a fixed rate for more predictable payments.

PenFed calls these “Fixed Rate Advances,” but there are limits you’ll face. For instance, the advances must be at least $10,000, and you can’t have more than three at any given time (or more than two in a calendar year). You’ll also only have one term option: 240 months.

You also have the option to make interest-only payments during the draw period, which can help to keep payments low early on. But keep in mind that this will result in higher payments later on.

3. Strict credit requirements and early close penalties

Though there are benefits to working with PenFed, it may not be the best fit for everyone. PenFed requires strong credit — you must have a credit score of at least 700 — which may deter some borrowers from applying.

Plus, the early account close penalties can make PenFed a less ideal choice for some borrowers. If you plan to close your HELOC within three years, you’ll have to pay back all of PenFed’s prepaid closing costs.

4. Rates and equity limits aren’t the most competitive

PenFed’s loan terms and rates are not the best on the market. Some lenders offer rates lower than PenFed’s lowest rate, and you can also find HELOCs that let you borrow as much as 90% or 95% of your home’s value.

What credit score is needed for a HELOC?

Different lenders have different credit score requirements for HELOCs. The stronger your credit, the more likely you are to qualify and get access to better rates. PenFed requires a score of at least 700 for its HELOCs.

Who is a PenFed Credit Union HELOC good for?

A PenFed Credit Union HELOC may be a good option for people with strong credit who want flexible loan amounts and repayment terms.

PenFed offers the option to convert your variable-rate HELOC to a fixed rate. This can be helpful for people who want to know exactly how much they’ll need to repay each month.

A PenFed HELOC also works well for nearly any kind of project, big or small. With credit lines ranging from $25,000 to $1 million, you may be able to fund small home repairs or major renovations depending on how much equity you have available.

How to apply for a PenFed HELOC

The application process for a PenFed HELOC is relatively straightforward. You can start online, and PenFed includes all the basic requirements on its website.

Keep in mind that to apply, you must be a member of the credit union. Additionally, PenFed requires minimum credit scores of 700 and will check to make sure your debt-to-income ratio is within acceptable limits (generally 36% or less, though some lenders may accept higher DTI).

You’ll need to provide the following information:

  • Proof of income with at least one year of W2s,
  • Two months of your most recent bank statements
  • Documentation for any properties you own

Depending on your income streams and other debts, you may also need to provide self-employment income verification and additional details about your current debts.

Not sure if PenFed Credit Union is right for you? Consider these alternatives.

  • Citizens Bank: This bank offers HELOCs with no appraisal, application or closing fees.
  • Lower: This lender may be worth considering if you want a HELOC that gives you access to more of your home equity.

About the author: Justin Estes is a financial content strategist who is a recognized small business accountant, consultant and financial content expert. His background in accounting and finance led to a passion for helping people make … Read more.