ElitePersonalFinance found the Best Mortgage Rates from Credit Unions of November 2025

If you’re all about community-based financial counseling and people over profits, your next best mortgage rate could come from a credit union. Unlike traditional banks, credit union members focus on lower interest rates, flexible terms, and personalized guidance from dedicated loan officers with an intimate touch.

Whether you’re a first-time buyer or seasoned veteran, choosing the right credit union for your next mortgage can make a big difference in achieving your homeownership dreams.

Why Should You Trust ElitePersonalFinance?

For the past decade, ElitePersonalFinance has helped hundreds of thousands of readers make more intelligent choices about selecting the right credit union for auto loans, mortgages, secured lines of credit, and virtually every loan product under the sun.

Now we’re tapping into the best mortgage rates for credit unions, clearly articulating why credit unions stand out over banks in several ways, including transparency, flexibility, and their commitment as member-first institutions.

Let ElitePersonalFinance walk you through the top national and local credit unions with the most competitive mortgage rates you can find out there. Plus, you’ll receive helpful insights on how to qualify for membership, increase your odds of getting a mortgage, improve your credit score to secure the lowest interest rates, and much more.

Navy Federal Credit Union

One of the most popular credit unions in the United States, Navy Federal Credit Union works with borrowers with so-so credit, accepting credit scores as low as 620 for specific mortgage programs for active military personnel or retirees. 100% financing is offered through its Homebuyers Choice and Military Choice programs, which means no down payment and access to personalized guidance from loan advisors.

Plus, no private mortgage insurance is required on many mortgage products. Just know that some loans come with origination or funding fees, and that branch availability is limited outside military installations.

What We Like:

• Minimum credit score of 620
• Easy-to-use online application and pre-approval tools
• 100% financing options with no down payment
• No private mortgage insurance (PMI) required, depending on the loan
• Personalized assistance from dedicated loan officers

What We Don’t Like:

• Membership in Navy Federal Credit Union is required
• Origination or funding fees possible
• Limited branch access in certain regions

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Navy Federal Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Navy Federal Credit Union portal

Terms: Navy Federal Credit Union is a member-owned lender offering mortgage and refinance options, including VA and conventional loans, for members with varying credit histories, including bad credit. Approval and rates depend on verified credit, income, debt levels, and property value. Membership is limited to active-duty service members, veterans, and their families. Programs, rates, and benefits may change without notice. Borrowers should review eligibility requirements and associated fees carefully. Always read your official loan estimate before signing the contract.

FourLeaf Federal Credit Union

Formerly known as Bethpage Federal Credit Union, New York-based FourLeaf Federal Credit Union offers excellent mortgage loan programs for its members. In addition to fixed-rate and adjustable-rate mortgages, 3% down payment options are available for qualifying first-time homebuyers, with service in all regions of the country except Texas.

All the loans available to FourLeaf Federal Credit Union members include FHA, VA, and jumbo loans, allowing for greater flexibility across different housing types. Plus, mortgage rates often fall slightly below the national average, allowing members to save thousands of dollars throughout the life of the loan. Personalized guidance and support from dedicated loan officers highlight the community-based approach, which is excellent for people who prefer non-digital options over fast automation.

Lastly, FourLeaf Federal Credit Union has achieved an average rating of 4.93 out of 5 stars on Zillow, one of the leading real estate listing sites. It was also named a top pick for Home Equity Line of Credit in 2025 by LendEDU.

All in all, if you’re looking for a winning credit union, FourLeaf Federal Credit Union is worth considering.

What We Like:

• Excellent all-around support
• Different types of mortgages offered, e.g., FHA, VA, and jumbo loans
• Nationwide availability (excluding Texas)
• Average 4.93 rating out of five stars from Zillow
• A top pick for 2025 for Home Equity Line of Credit from LendEDU
• Minimum required credit score of 620

What We Don’t Like:

• Nationwide availability
• USDA/renovation loans are not available
• No online pre-approval program
• $5 deposit to become a member
• Customer service quality varies by region

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Bethpage Federal Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Bethpage Federal Credit Union portal

Terms: FourLeaf Federal Credit Union provides mortgage programs tailored to members, including those with lower credit scores. Loan approval depends on verified credit, income, and debt-to-income ratio. Rates and loan types may vary by location and membership status. Borrowers with bad credit may face higher rates or stricter documentation requirements. Membership eligibility must be met before applying. Always read your official loan estimate before signing the contract.

Eastman Credit Union

Based in Tennessee, Eastman Credit Union is a well-rounded performer with unique features for first-time home buyers or those building credit, such as up to 97% financing and 100% financing through its ECU 100 Mortgage program.

The First Time Home Buyers Program allows borrowers to finance 100% of the purchase price, including closing costs, without requiring private mortgage insurance, which can add hundreds of dollars to monthly payments. Plus, there are no prepayment penalties. It also offers separate adjustable-rate mortgage programs that can be financed up to 100%.

On top of that, we’re big fans of its Lock & Shop program, which allows borrowers to lock in rates for up to 75 days, unlike traditional methods that take 30 to 60 days.

All in all, the combination of up to 100% financing through ECU 100 Mortgage, no private mortgage insurance required for first-time homebuyer programs, and its innovative Lock & Shop rate lock program makes Eastman Credit Union an excellent choice for Tennessee home buyers.

What We Like:

• Variety of loan types, e.g., fixed and adjustable
• Up to 100% financing
• No PMI requirement for select programs
• Lock & Shop program locks rates for up to 75 days
• ECU’s 100% financing for first-time home buyers

What We Don’t Like:

• Limitations or restrictions exist based on the program
• Minimum credit score thresholds not published
• Not as widely recognized as Chase and Wells Fargo
• Not the most robust digital tools
• Fewer promotional discounts than competitors

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Eastman Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Eastman Credit Union portal

Terms: Eastman Credit Union is a member-based lender offering home loans for borrowers with various credit profiles, including those rebuilding credit. Approval depends on verified income, debt, and property type. Interest rates and terms may vary by membership status and loan program. Additional costs, such as closing fees or mortgage insurance, may apply. Borrowers are encouraged to confirm current rate details directly with Eastman Credit Union. Always read your official loan estimate before signing the contract.

Members Choice Credit Union

Based in Houston, Members Choice Credit Union is a tough choice, offering a variety of mortgage products, including fixed- and adjustable-rate mortgages, as well as 100% financing programs through FlexChoice Convertible Mortgage and the Choice100 Mortgage. Its mortgage rates also fall as low as 5.25% for up to 10-year programs versus 5.90% for 11–22 years and 6.40% for 23–30 years, slightly beating the national averages (as of this writing).

Plus, all Members Choice Credit Union residential purchase mortgage types qualify for the Homebuyer Rate Reward, which offers a 0.25% discount. There’s also Wiley, known for its advocacy assisting first responders and teachers with special conditions through the Helping HEROES program.

What We Like:

• Homebuyer Rate Reward for a 0.25% rate discount
• Variety of mortgage products, including fixed-rate, adjustable-rate, and FlexChoice Convertible
• Mortgage rates start at 5.25%
• Excellent customer support through dedicated loan officers

What We Don’t Like:

• No online pre-approval process
• Limited availability in Houston, Texas
• Credit score requirements are not published on the website
• Savings account with a $5 deposit required
• Homebuyer Rate Reward is not available to all borrowers

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Members Choice Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Members Choice Credit Union portal

Terms: Members Choice Credit Union offers mortgage loans for qualified members, including those with bad credit or non-traditional credit histories. Final loan approval is based on verified financial data, including income, credit score, and debt-to-income ratio. Rates and programs can vary depending on membership level and market conditions. Additional fees or insurance requirements may apply. Always read your official loan estimate before signing the contract.

Alternatives Federal Credit Union

Based in Ithaca, New York, Alternatives Federal Credit Union offers a variety of mortgage options, including fixed-rate, adjustable-rate, FHA, and VA loans. One of our favorite offerings is the FAIR Mortgage program, which allows low-income, first-generation home buyers to qualify with no minimum credit score and no down payment, along with no PMI, making it one of the most user-friendly options we’ve come across.

Plus, AFCU mortgage rates beat the national average: 6% for a 30-year fixed rate and 6% for an FHA 30-year fixed rate.

All in all, if you have had difficulty qualifying for mortgages through traditional banks and want the expert guidance of dedicated loan officers, then Alternatives Federal Credit Union is a good place to start.

What We Like:

• 30-year fixed rate at 6.0%
• FHA fixed rate at 6.0%
• No minimum credit score, no down payment, and no PMI required through the FAIR Mortgage program
• All types of mortgages are available, e.g., FHA, VA, and adjustable-rate mortgages

What We Don’t Like:

• For New York State residents only
• No online pre-approval
• Additional documentation/eligibility criteria required for specialized mortgage programs
• Savings account with a $5 deposit required

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Alternatives Federal Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Alternatives Federal Credit Union portal

Terms: Alternatives Federal Credit Union provides community-based mortgage programs designed to help members with limited or bad credit histories. Eligibility and loan terms depend on verified credit, income, and property value. Rates and fees may vary based on creditworthiness and membership qualifications. Borrowers may need to complete homebuyer education before final approval. Always read your official loan estimate before signing the contract.

Truliant Federal Credit Union

With branches in North Carolina, South Carolina, and Virginia, Truliant Federal Credit Union is popular throughout the region for its Limited/No Credit Mortgages and ITIN (Individual Taxpayer Identification Number) loans, which are designed for people who have difficulty qualifying for mortgages through traditional banks.

Under the Limited/No Credit Mortgage program, Truliant members can borrow up to 80% of a home’s purchase price (capped at $300K) for those with a limited or no credit history. Plus, first-time home buyers can take advantage of HomePath100, a 100% financing program, although it takes a credit score of over 700 to qualify.

One reason Truliant Federal Credit Union has eligibility requirements is that it considers non-credit factors, such as utility bill payment history or employment consistency. Plus, all members receive personalized guidance and competitive mortgage rates compared to major players like Chase and Wells Fargo.

All in all, we highly recommend Truliant Federal Credit Union for NC, SC, and VA residents.

What We Like:

• Up to 80% financing through the Limited/No Credit Mortgage program
• ITIN loans available for non-US citizens
• Non-traditional credit factors used to assess eligibility
• Flexible down payment option
• Excellent personalized member support

What We Don’t Like:

• Limited to residents of NC, SC, and VA
• Higher credit scores for HomePath100 are required
• Not all loan programs require membership
• Non-members are not eligible for our programs
• Processing times are longer than big banks

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Truliant Federal Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Truliant Federal Credit Union portal

Terms: Truliant Federal Credit Union offers mortgage and refinance programs with flexible underwriting for members, including those with bad credit. Approval depends on verified income, debt, and property appraisal. Rates, fees, and terms can change depending on market conditions and the borrower’s profile. Borrowers may be required to pay mortgage insurance or closing costs. Always read your official loan estimate before signing the contract.

Bank Fund Federal Credit Union

For first-time buyers, Bank Fund Federal Credit Union is a clear winner with its First-Time Home Buyer Program, which allows you to purchase a home with only a 3% down payment. Both fixed-rate and adjustable-rate mortgages are available.

Plus, we highly appreciate the Mortgage Cash Rewards program, which offers rebates of up to $1,000 at closing for eligible applications. Plus, processing times are super quick: up to 2 days for pre-approval and 2 weeks to close. When buying or selling through their preferred agents, borrowers can also take advantage of the Real Estate Rewards program for cash rewards.

What We Like:

• Low down payment requirement (3%)
• Up to $1,000 at closing through cash back incentives
• Pre-approval in as little as 2 days
• Up to two weeks for closing times
• Cash incentives through the Real Estate Rewards program

What We Don’t Like:

• Must be a Bank Fund Federal Credit Union member
• Minimum credit score requirement not published
• Incentive program end dates need to be changed
• Must use preferred agents to obtain “Global Rewards” membership levels
• Limited availability outside employer groups

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Bank Fund Federal Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Bank Fund Federal Credit Union portal

Terms: Bank Fund Federal Credit Union provides a range of mortgage programs available to members, including options for borrowers with bad credit. Approval is based on verified credit, income, and loan-to-value ratio. Interest rates and loan terms may differ by state and membership eligibility. Borrowers should review all applicable fees and program details before applying. Always read your official loan estimate before signing the contract.

PenFed Credit Union

One of the largest credit unions in the United States, PenFed Credit Union serves military members and veterans with competitive mortgage rates and a Homebuyer Advantage Program that allows borrowers with credit scores as low as 620 to make a down payment as low as 3%. For VA borrowers, one can be eligible for no down payment and waived private mortgage insurance on specific loans.

Plus, if you use one of the PenFed Credit Union’s preferred real estate partners, you may be eligible for closing cost credits of up to $1,500 — a nice incentive. As with almost all credit unions, note that branch access is limited but easily accessible for anyone in the United States.

All in all, PenFed Credit Union is an excellent choice if you’re looking for flexible mortgage options for first-time home buyers and military personnel. Along with its competitive rates and closing cost incentives, it’s clearly one to beat.

What We Like:

• Strong military-focused programs
• No down payment and no PMI
• Low credit score requirement for FHA loans
• Up to $1,500 in closing costs for agents
• Fully digital application process

What We Don’t Like:

• Limited branch availability
• USDA loans are not available nationwide
• Origination and funding fees apply to select loans
• Customer service quality depends on the region

Eligibility & Next Steps:

• US citizen or permanent resident
• Active PenFed Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the PenFed Credit Union portal

Terms: PenFed Credit Union offers mortgage programs for members with varying credit profiles, including government-backed FHA and VA loans suitable for borrowers with bad credit. Approval and rates depend on verified income, credit score, and property type. Membership eligibility is required prior to applying. Additional costs such as funding fees or insurance premiums may apply. Always read your official loan estimate before signing the contract.

Alliant Credit Union

One of our favorite digital credit unions, Alliant Credit Union, is an excellent choice for first-time home buyers and borrowers with fair credit, with minimum credit score requirements starting from 620 for traditional loans and 580 for FHA loans. It offers several mortgage programs, including fixed-rate, adjustable-rate, and jumbo loans, with rates below the national average.

Apart from that, Alliant Credit Union is known for its Zero Origination Fee Mortgage, which allows for significant savings at closing — potentially thousands of dollars. Plus, it offers an easy-to-use digital dashboard with dedicated loan officers providing guidance every step of the way.

With competitive mortgage rates below those of legacy banks and a fully digital closing process, it offers a diverse mix of mortgage options — the cherry on top.

What We Like:

• Variety of mortgage options, e.g., fixed, adjustable, jumbo, FHA
• Min 580 credit score is required for FHA loans
• Excellent Zero Origination Fee Mortgage program
• Competitively below average rates
• Entirely digital process

What We Don’t Like:

• No in-person support
• Appraisal time varies by market
• No USDA or VA loans available
• Membership eligibility depends on affiliation

Eligibility & Next Steps:

• US citizen or permanent resident
• Active Alliant Credit Union membership
• Valid Social Security number
• Proof of income and employment history
• Pre-approval documents, e.g., credit score and bank statement
• Apply online through the Alliant Credit Union portal

Terms: Alliant Credit Union is an online-based lender offering mortgage and refinance programs for qualified members, including those with lower credit scores. Loan approval depends on verified financials, including income, credit, and home equity. Interest rates and terms vary by program and may change without notice. Borrowers may need to pay mortgage insurance or other fees. Always read your official loan estimate before signing the contract.

What Mortgage Rates Can I Expect From Credit Unions?

When it comes to credit unions, they’re known for greater competitiveness than traditional banks, thanks to their nonprofit, member-owned status. They can offer any number of benefits, such as lower interest rates and lower fees.

Expect credit union mortgage rates to be up to 0.5% lower than those of Chase, Bank of America, and Wells Fargo, potentially saving tens of thousands of dollars on a 30-year mortgage. For example, if banks are offering 7.25%, you can expect your credit union to offer 6.75% to the same person.

However, keep in mind that mortgage rates at credit unions depend on several factors, such as your debt-to-income ratio, credit score, loan type, and whether it’s a purchase or a refinance. However, these less-than-ideal profiles could be offset by several member loyalty perks, such as first-time homebuyer programs and limited-time APR promotions.

What are the Pros and Cons of Getting a Mortgage from a Credit Union?

Here are the pros and cons of getting a mortgage from a credit union:

Pros

Lower Interest Rates and Fees

Arguably, the number one advantage of credit unions over traditional banks is that, thanks to their nonprofit, member-owned status, they return profits to members through lower loan costs rather than benefiting shareholders. Expect rates to be 0.25% to 0.5% lower than traditional banks on a 30-year loan.

Plus, our top recommended credit unions reduce extra fees like origination and closing costs, offering additional incentives to members or first-time home buyers. When it comes to total affordability, credit unions are clearly the ones to beat.

Personalized Lending

Another benefit of credit unions is their personalized lending experience. Whereas large banks are known for automated underwriting systems, credit unions have dedicated loan officers reviewing every mortgage application with a fine-tooth comb, allowing them to understand your whole financial situation. If you have lower credit scores and untraditional income, then personalized lending via credit unions could be a viable option to establish long-term trust.

Plus, highly reputable credit unions do not offer loan products outside of mortgages or mortgage refinances. They provide long-term education on how to improve your credit, resources on other loan products, and much more, offering a nice reprieve from the more structured approach of big bank lending.

Community Focus

Credit unions are all about community. It’s not uncommon to find special mortgage programs for dedicated trades such as teachers and veterans, as well as low-credit first-time home buyers. For example, City & County Credit Union offers the “Heroes & Experts Mortgage Program” for teachers, firefighters, and paramedics, versus Sun East Federal Credit Union’s “Community Heroes Mortgage Program” for first responders, military, and similar trades.

All of these programs offer several benefits, such as down payments as low as 1% and 0.25% rate discounts.

Cons

Membership Limitations

Often, membership eligibility comes into play. Unlike big banks like Chase and Wells Fargo, credit unions usually serve specific groups such as first responders, military members, or professional association members. Before any mortgage, a small $5 deposit must be paid into a savings account, or a low membership fee is required.

Anyone who does not meet the affiliation criteria will not be accepted. The good news is that many credit unions offer open membership, while others stay exclusive.

Limited Product Variety

Compared to major banks, credit unions do not always have the most diversified mix of loan products. Although fixed-rate, adjustable-rate, FHA, and VA loans are the most popular mortgage products, you might not find many jumbo loans or unique refinance programs, which could be disadvantageous for non-traditional buyers, such as the self-employed or those purchasing properties over $900,000.

Likewise, expect regional focus among many credit unions, as many are not licensed to operate in all states, which can be restrictive if you’re moving to a new state.

Slower Processing

People-first models often slow down approval and underwriting processes, in stark contrast to traditional banks that use automated processes. When looking to lock in a favorable rate or close a deal, the lack of real-time updates on digital document uploads could be a strain.

However, credit unions do offer more personalized service and dedicated loan officers, providing a nice trade-off for many borrowers.

How to Get a Mortgage from a Credit Union with Bad Credit

Here is a step-by-step guide on how to get a credit union mortgage with bad credit

Qualify as a Member

With all credit unions, you must first become a member. Sometimes you’ll be required to be part of a professional association, an employer, or a specific type of job. For example, Navy Federal Credit Union requires that you be a retired or active-duty military member or a family member of such a member. In turn, Alliant Credit Union accepts anyone.

To join a credit union, you will need to put down a $5 to $25 deposit into a savings account.

At this point, you should be choosing Credit Unions that focus on portfolio mortgages, which are managed in-house. This allows the Credit Union to evaluate you separately rather than adhere to strict Fannie Mae or Freddie Mac score requirements. Note that they’re more likely to approve you based on your reliability (including non-traditional scoring) rather than just your credit score.

Looking into First-Time Homebuyer Programs

One of the key strengths of credit unions is that you can look into specialized programs and focus on first-time home buyers. For example, Navy Federal’s HomeBuyers Choice program offers 100% financing without private mortgage insurance for eligible members. Plus, Alliant Credit Union wants to provide concessions to borrowers with steady income but a less-than-ideal credit score.

In short, Navy Federal’s HomeBuyers Choice and Alliant’s overlay-free FHA options are two programs you can start looking into right away for rebuilding Borrowers and low credit flexibility.

Gather Your Documentation

Understanding that credit unions rely more on manual underwriting than automated systems, big banks’ employees must gather all your supporting documentation, such as 2 years of W-2s, tax returns, the past 2 months of bank statements, and 30 days of pay stubs. Plus, non-traditional scoring criteria will require that you have a Verification of Rent (VOR) from your landlord, which proves to the bank that you can meet your monthly housing payments, but the credit screen doesn’t show it.

If you’ve had any credit issues and you want to present a Letter of Explanation (LOE), which goes into context what caused the problem and how you resolved it.

Focus on a Larger Down Payment

Although some credit unions, like Navy Federal Credit Union, do not require a down payment on select programs, we recommend increasing your loan-to-value by putting down 10% to 20%. At the same time, you should cover at least six months’ worth of total mortgage payments in cash Reserves, also known as a rainy-day fund.

Plus, a larger down payment will help reduce your long-term costs. If you need grants for secondary financing to help you cover a down payment, then PenFed Federal Credit Union and Alliant could help you through Regional programs, which we encourage you to ask about.

Regardless of whether you have assistance, it’s always essential to put down as much as you can. The larger the down payment, the greater the reliability you show to lenders.

Get Rewards

There are many ways to earn rewards on your credit union mortgage, by taking advantage of rate discounts or fee waivers. For example, you can cut your mortgage rate by up to 0.25% with Navy Federal Credit Union if you use automatic payments.

Even if you take out smaller products like an auto loan or use an unsecured credit card, you can earn dividends via long-term savings.

Compare Offers

We highly recommend that you obtain Loan Estimates from at least three credit unions so you can compare all terms, including the annual percentage rate and closing costs. I expect transparency to be better than at Banks, with credit union-specific perks like Alliant’s lower origination fees and PenFed’s closing costs credits.

Once you’ve identified the rate you’re comfortable with, it’s time to lock it for 30, 45, or 60 days. Only a few Credit Unions offer one-time flow-down options, which let you take advantage of lower rates if rates fall before closing. Be sure to ask your dedicated loan officer about all of your options to avoid overpaying.

Finalize Your Loan

After underwriting begins, you want to do everything you can to protect your credit, such as avoiding new credit inquiries and job changes. Expect employment and assets to be verified before funding, as any significant gaps may delay your application. Always maintain close contact with your loan officer throughout the process and provide any required supporting documentation.

During this time, you also want to review your closing disclosure to ensure your initial agreement matches all rights fees and loan terms. After signing on the dotted line, start setting up automatic payments immediately to ensure the membership discount.

Stay Engaged

Once you join a credit union, you can expect to take advantage of other resources, such as Financial counseling and homeownership education. Plus, if you stay with one credit union, you can take advantage of member perks down the line, including additional specialized loan programs once your credit score and overall financial situation improve.

How to Improve Your Chances of Getting Approved for a Mortgage from a Credit Union with Bad Credit

Here’s how to improve your chances of getting approved for a credit union mortgage with bad credit:

Rebuild Your Score Before Applying

One of the smartest things you can do before applying for a credit union mortgage is to rebuild your credit before starting your application. Even earning a few points can cut your interest rate by 5. Start by getting your free credit report from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion.

From there, focus on identifying what’s hurting your scores—such as missed payments or a high utilization ratio—and work towards a resolution, starting with reducing revolving debt and keeping your credit card balances below 30% of your available limit. Plus, you should also focus on setting up automatic payments across all your lines of credit, as your FICO score factors 35% towards payment history.

Sometimes, Credit Unions can even offer credit-building programs. Alliant can issue a Credit Union Secured Visa, which reports to all three bureaus, strengthening your financial profile if on-time payments are made.

Engage with Your Credit Union

Since Credit Unions are all about relationship-based lending, it’s essential to engage with other Financial products on offer, such as checking accounts with direct deposit. You could also take advantage of personal loans or credit cards.

One of the best practices is to keep your account active for at least 6 months before taking on a mortgage. Try to do everything you can to maintain balances and visit your loan officer regularly to build a relationship if branches are located in the region. Always remember that credit unions prefer you provide a story rather than just an application, as is the attitude of larger Banks.

Show Alternative Credit History

Many credit unions are willing to forego your FICO score and go with alternative credit documentation that can prove that you’ve been on time with other obligations, such as rent and utilities. Two of our recommended credit unions, Alliant and DCU, are very strong with this. Be sure to have a landlord who is showing at least 24 months of straight on-time payments, and you’ll be on the right foot.

Remember, Alternative credit history shows you’re reliable—not just your FICO score—so it’s essential to stay on top of it.

Manage Your Debt-to-Income Ratio

If you have less than ideal credit score then you can counter it by keeping a respectable debt-to-income ratio under 43% ways to do this include paying down your revolving debt, taking out a 0% APR balance transfer card to focus only on principal, and focus on paying them, credit cards with the highest interest first, among many other strategies we’ve covered in past guides.

We also recommend taking advantage of a free financial counseling program, such as Navy Federal’s Financial Wellness Hub, to learn how to manage your debt.

How Much It Is Expected to Pay for a Mortgage from a Credit Union with Bad Credit?

Before taking on your credit union mortgage, it’s important to understand how they assess risk.

First, the starter is expecting a 30-year fixed mortgage for Prime borrowers to be around 6.25% versus 7.25%–7.75% for us, resulting in up to $225 a month difference on a $250,000 mortgage. To determine your rate, Credit Union Supply considers several grading criteria, such as your credit score, debt-to-income ratio, and loan-to-value ratio (LTV).

Thanks to their non-profit Cooperative status, Credit Unions can return profits to members by slightly lowering rates. For example, Credit Unions like Alliant Credit Union and DCU can help you beat the national average by up to 0.25%, even if your credit score is not the best. Out of these minor differences, a slight difference can make a tremendous impact and help you save thousands of dollars over the life of your loan.

How to Improve Your Credit Score

If you want to enjoy the lowest credit union rates possible, then you have to get your credit score in order. It’s easy to save tens of thousands of dollars over the life of your mortgage if you bump your 620 score to a 700 score.

Keep Your Payment History Strong

Since your payment history is 35% of your FICO score, you have to show credit unions that you have a history of on-time payments, even if only for the past few months.

Some ways to do it include using small recurring charges like streaming subscriptions, setting up automatic payments, and adding alternative data to your qualification using services like Experian Boost, which allow you to report your on-time rent, phone, and utility payments.

You can also ask someone with excellent credit, like a friend or family member, to become an authorized user on your account. This underutilized tactic can add years to your credit age and improve your credit diversification ratio.

With 6 to 12 months of consistent payments, you should start seeing better mortgage rates.

Pay Down Revolving Balances Smart

Understanding that your credit score is based on utilization, it’s essential to keep each card balance below 30% of your available credit. Ideally, it should be under 10%. Even with a slight balance reduction, you can increase your credit score by as much as 20 points within one billing cycle, helping you achieve better rate tiers for credit union mortgages.

Avoid “Hard Inquiries”

Another way to improve your credit score before applying for any credit union mortgages is to avoid opening new credit accounts for at least 6 months. Be sure to make all proper comparisons within a 45-day window and avoid taking on any new installment loans. Plus, it’s always smart to avoid closing all your credit cards to maintain your total available credit.

Remember, credit unions are all about seeing stability, not necessarily activity.

Work with a Professional Credit Repair Service

If you have too many errors or collection activity on your report, then it may be wise to use a credit repair service. Staffed by experienced professionals, legit firms will help you do everything from negotiate with creditors to file disputes for you. They can also remove outdated or unsubstantiated negative remarks within 6 months or less.

One of the best ways to find these services is to check for Credit Repair Organizations Act (CROA) accreditation and avoid firms that promise instant results, as improving your credit score takes time.

In short, keeping your payment history strong, paying down revolving balances smartly, avoiding hard inquiries, and working with a professional credit repair service are tactics you can use to improve your credit score and achieve the best credit union mortgage rates.

Consider Secured Cards or Credit Builder Loans

One often overlooked strategy for improving your credit score is to use secured credit cards and credit builder loans. Secured credit cards require a refundable cash deposit that serves as your credit limit. For example, if you put down $200 on a secured credit card, then your limit is $200.

In turn, credit builder loans allow you to add a small loan amount up to $1,000 until you lock the account, at which point you make fixed monthly payments. As you pay it off, you get the funds back at the end of the term, which helps build a positive payment history on your file. If you’re looking to work through lenders like PenFed Federal Credit Union or Navy Federal Credit Union, then it’s a nice way to bump up your score quickly.

How We Picked These Lenders

In selecting the best mortgage rates for credit unions, we based our criteria on several factors, including loan affordability (interest rates), borrower flexibility with credit scores, a variety of mortgage loan programs, and all aspects related to incentives and closing costs.

Here’s a breakdown of each, explained in greater detail:

Interest Rates

All of our top recommendations offer rates near or below the national average across several loan types, including traditional, FHA, VA, and adjustable-rate options. For example, Navy Federal Credit Union offers Homebuyers Choice and Military Choice programs, which provide up to 100% financing for first-time homeowners.

At the same time, FourLeaf Federal Credit Union offers highly competitive fixed- and adjustable-rate mortgages, beating the national average. It can save you $1,000 over a 15-year or 30-year term. Let’s not forget Alternatives Federal Credit Union’s FAIR Mortgage, which offers no down payment and no minimum credit score requirement.

Remember, even a few percentage points off can help you cut monthly payments big time, which is a must for bad-credit borrowers.

Variety of Loan Options

We’re big fans of credit unions that offer diversified mortgage types, including conventional, FHA, and VA, in adjustable-rate programs. Plus, they’re highly specialized, with Navy Federal Credit Union’s Homebuyers Choice and Military Choice programs offering ultra-competitive rates that beat the national average for both fixed- and adjustable-rate loans.

Flexibility

Another area we highly emphasize with credit unions is the variety of programs. They offer conventional, FHA, VA, USDA, jumbo, fixed-rate, and adjustable-rate loans. There should be set financing programs that assist first-time home buyers, such as Eastman Credit Union’s ECU 100 Mortgage program and Members Choice Credit Union’s FlexChoice Convertible Mortgage and Choice100.

Let’s not forget about down payment assistance and rate lock. The extension period exceeds the national average of 30 to 60 days, with some cases reaching 75 days (Eastman Credit Union’s Lock & Shop program). The cashing center is still on the table. For example, Bank Fund Federal Credit Union offers up to $1,000 in Mortgage Cash Rewards at closing — a sweet reward to save a few bucks.

Member Support

All of our recommended credit unions are local and regionally focused, while others like PenFed Credit Union offer digital-only platforms for nationwide coverage. Fully digital platforms allow you to do everything from pre-qualification to obtaining real-time mortgage updates, providing a nice hybrid of digital and in-person support with a dedicated loan officer.

Reputation

Each of our recommended credit unions has an A-level reputation. For example, FourLeaf Federal Credit Union consistently ranks high in customer service, with a 4.93 rating on Zillow (as of this writing), and was recognized in 2025 as a top pick for Home Equity Lines of Credit by LendEDU.

Whether it’s Federal, FourLeaf Federal, Eastman, Members Choice, Alternatives Federal, Truliant, Bank Fund Federal, or any of our other recommendations, expect a variety of programs, flexible fees/closing cost options, exceptional customer service, and a reputation that stands by its word.

Frequently Asked Questions

What makes credit union mortgages different from banks?

Thanks to the credit union’s nonprofit status, which allows members to receive profits (e.g., lower fees), credit union mortgages may have less strict underwriting criteria and consider non-traditional scoring factors, such as your on-time rent and utility payments. Plus, they offer more personalized service, although with far fewer loan products than larger banks like Chase or Wells Fargo.

Do credit unions offer lower mortgage rates?

Expect lower mortgage interest rates than banks, especially for first-time home buyers. First-time home buyers can also take advantage of waived application or origination fees, although your actual rate will depend on your credit score, type of loan, and amount of down payment. That’s why we recommend comparing quotes from at least three credit unions.

Can anyone apply for a credit union mortgage?

All credit unions have eligibility requirements. For example, you may be required to live in a particular region or belong to a trade organization. PenFed Credit Union, for instance, works with retired or active military duty personnel. However, many have open memberships, which you can join for a small fee. Be sure to check with your credit union’s membership rules.

Does membership help you get better rates?

Yes, being a member of a credit union can help you access benefits such as reduced fees and specialized loan programs. Plus, credit union mortgages tend to offer more flexible loan terms, discounted closing costs, and additional benefits for first-time home buyers.

Are credit union mortgage rates fixed or variable?

Both fixed-rate and adjustable-rate mortgage (ARM) options are available. Remember that fixed-rate mortgages maintain the same interest rate throughout the entire loan term, unlike adjustable-rate mortgages, which initially provide lower interest rates before reverting to a variable rate based on market conditions.

Do credit unions offer refinance or home equity loans?

Yes, many credit unions offer refinancing or home equity loans. Refinancing allows you to shorten your loan term or lower your interest rate, and it also provides cash-out opportunities by converting your home’s equity. There are also HELOCs, which work more like a line of credit.

Do credit unions have first-time buyer programs?

Yes, many credit unions cater directly to first-time home buyers with perks like lower down payments, lower fees, and a ton of educational resources. You may even receive a grant for closing costs or have mortgage insurance waived altogether. For those with limited savings, first-time buyer programs are a godsend, so we encourage you to take advantage of them.

Is it easier to get approved at a credit union than at a bank?

Writing standards and additional scoring criteria should be considered, such as on-time rent and utility payments. Plus, you can receive better, more personalized guidance and assistance than you would from larger banks.

What credit score do you need for the best credit union mortgage rates?

The most competitive credit union mortgage rates are typically reserved for borrowers with credit scores of 700 or higher, though there’s a shortage of programs for scores in the 600–650 range. Plus, lower-income borrowers can take advantage of FHA-backed loans, but you may expect to pay higher interest rates. Always check with your credit union for the exact requirements to find the right mortgage program for your financial situation.

Conclusion

If you’re all about people-first service, one of the best decisions you can make is to take out a mortgage through a credit union. Expect lower rates and fees, more flexible underwriting, and hands-on guidance from dedicated loan officers who know the ins and outs of your application. We recommend using our guide to narrow down your options to two or three credit unions and comparison shop, so you can lay out a clear plan for the mortgage that’s right for you.