Credit unions are member-owned financial institutions that often offer lower mortgage rates and fees than traditional banks. But are they always the best choice? This guide compares credit union mortgage rates with banks and online lenders in 2025.
Quick answer
Credit unions typically offer rates 0.10-0.25% lower than banks and charge fewer fees. However, you must qualify for membership (employment, location or association). Best for borrowers who value personalized service and lower costs over digital convenience.
Credit union vs bank mortgage rates (2025)
6.10%
Credit union avg
6.25%
Bank avg
6.15%
Online lender avg
30-year fixed rates as of November 2025
Why credit union rates are lower
- Non-profit structure: Credit unions return profits to members via lower rates and fees
- Lower overhead: Fewer branches and marketing costs than big banks
- Member focus: Prioritize member benefit over shareholder profit
- Portfolio lending: Many keep loans in-house, reducing costs
Best credit unions for mortgages (2025)
Navy Federal Credit Union
Best for: Military members and families
Rates: 5.90-6.10% · Down payment: 0% VA loans · Membership: Military, DoD, veterans
Pentagon Federal (PenFed)
Best for: Easy membership, competitive rates
Rates: 6.00-6.20% · Down payment: 3% · Membership: Open to all (5 dollar donation)
Alliant Credit Union
Best for: Digital experience, nationwide
Rates: 6.05-6.25% · Down payment: 3% · Membership: Open to all (10 dollar fee)
Compare credit unions with all lenders
Get quotes from credit unions, banks and online lenders to find your best rate.
Compare lendersHow to qualify for credit union membership
Credit unions have membership requirements based on:
- Employment: Work for specific companies or industries
- Location: Live, work or worship in certain areas
- Association: Belong to partner organizations
- Family: Immediate family of existing members
- Open membership: Some credit unions (like PenFed, Alliant) accept anyone with small fee
Credit union pros and cons
Pros
- ✓ Lower rates (0.10-0.25% avg)
- ✓ Lower fees
- ✓ Personalized service
- ✓ Flexible underwriting
- ✓ Member-focused
Cons
- ✗ Membership required
- ✗ Fewer branches
- ✗ Less advanced technology
- ✗ Slower processing sometimes
- ✗ Limited loan products
Full lender comparison: Best Mortgage Lenders 2025
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Meet Sarah
Senior Mortgage Advisor & VA Loan Specialist
Sarah Mitchell brings over 12 years of mortgage industry expertise, specializing in VA loans and first-time homebuyer programs. As a certified NMLS professional, she has helped thousands of veterans and military families achieve homeownership through specialized loan programs. Her deep understanding of VA benefits and down payment assistance programs makes her a trusted advisor for service members transitioning to civilian life.
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Helped 2,500+ veterans secure home loans