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Checking accounts generally aren’t known for their high interest rates. But the days of earning nothing (or practically nothing) on the money sitting in checking may be coming to an end. While the average annual percentage yield (APY) on checking is still a scant 0.07%, many banks and credit unions now offer significantly higher rates for their checking accounts. These high-yield checking accounts often pay more than many savings accounts, and some even rival high-yield savings accounts.

However, you may need to follow certain strict rules to earn the high rate. If you don’t, you may earn little or no interest for the month. Are high-yield checking accounts worth it? Here’s what you need to know.

What Are High-Yield Checking Accounts?

High-yield checking accounts (also known as high-interest checking accounts) are checking accounts that offer higher interest rates than standard checking accounts. Like any other checking account, you can use it for everyday transactions, such as paying bills online, receiving your paycheck, writing checks, and making purchases with a debit card.

The key difference between a traditional checking account and a high-yield checking account is that the latter offers a higher interest rate. Although rates vary, you can currently find high-yield checking accounts from banks with APYs of approximately 0.25%-2.00%, as well as others that range from about 3%-5%, though these tend to come with strict requirements. The current national average rate for checking account APYs, however, is 0.07% APY.

Some high-yield checking accounts offer the same APY on all balances, while others offer a tiered rate with higher APYs for higher balances. You may also have to meet certain requirements to access the advertised rate, such as making a certain number of transactions each month, signing up for direct deposit of your paycheck, maintaining a higher balance, and enrolling in electronic statements.

How High-Yield Checking Accounts Work

You can use a high-yield checking account as you would a standard checking account. That means you can deposit and withdraw funds, pay bills, transfer money to and from linked bank accounts, use a debit card for purchases and cash withdrawals at ATMs, and more.

At the same time, your checking account balance earns interest each statement period. To earn the highest APY or waive a monthly account maintenance fee, however, you may need to meet certain requirements. For example, you may have to:

•   Use your debit card for a certain number of transactions each month

•   Maintain a minimum balance for the statement period

•   Have a minimum amount in direct deposits each month

•   Use bill pay a minimum number of times each month

•   Enroll in online banking and electronic statements

•   Have other accounts at the same financial institution, such as a savings account or investment account

If you can’t meet your financial institution’s requirements, you likely won’t be able to earn a competitive interest rate, or you might get hit with a fee that can outweigh the benefits of a high interest rate.

Advantages of High-Yield Checking Accounts

Deciding whether high-yield checking accounts are worth it means considering both the benefits and drawbacks of these accounts. Here’s a look at two key advantages.

Extra Interest

A high-yield checking account allows you to earn significantly more interest than you could in a regular checking account. The best high-yield checking account rates may be competitive with high-yield savings accounts or certificate of deposit (CD) rates (though, again, these tend to be more restrictive).

While you likely have money moving in and out of your checking account, it may be worth earning as much as you can on the money that sits in the account. This is especially true if you tend to keep a large balance in checking and can easily meet the bank’s requirements to earn the higher rate.

Liquidity

High-yield checking accounts offer the interest often associated with savings accounts combined with the accessibility of a checking account. Though the Federal Reserve no longer requires banks to limit savings account transactions to six per month, many banks have continued to impose the rule and will charge you a fee if you exceed the limit. Checking accounts don’t impose these limitations, however. You can write checks, use a debit card, and make withdrawals as needed.

Recommended: Checking vs Savings Accounts: A Detailed Comparison

Potential Disadvantages of High-Yield Checking Accounts

Although you may earn a competitive interest rate with a high-yield checking account, these types of accounts also come with a few drawbacks.

Transactional Requirements

To earn the high interest rate, high-yield checking accounts typically require you to meet specific transactional requirements. These may include making a certain number of debit card purchases per month, having direct deposits, or logging into online banking regularly. The requirements may be complex, and if you’re unable to meet them at any time, you may risk not earning any interest or earning a much lower rate than you anticipated.

Rate Caps

Many high-yield checking accounts cap the balance eligible for the high interest rate. For example, the high rate might only apply to balances up to $10,000, with any amount above that earning a significantly lower rate or no interest at all. This can limit the overall interest you can earn in the account, especially if you maintain a higher balance.

Who Benefits Most From These Accounts?

Those who can easily meet the requirements to earn the highest interest rate may stand to benefit the most from a high-yield checking account.

For example, if you frequently make debit card purchases or get your paycheck from your employer through direct deposit, you may already meet the requirements for the top rate without putting in any extra effort. In this case, a high-yield checking account earns interest on money that would otherwise sit there earning little to nothing.

However, a high-yield checking account probably doesn’t make sense if you’ll struggle to meet the bank’s criteria to earn a high rate or avoid fees. In that case, you might be better off with a regular checking account and a high-yield savings account, which can pay as much as and typically more than high-yield checking accounts but with less hassle.

Comparing High-Yield vs Regular Checking

High-yield checking accounts serve the same basic purpose as regular checking accounts, but they have different benefits and requirements. Here’s a look at how they compare.

Interest Earnings Examples

•   High-yield checking: If you have a $10,000 balance earning a 0.50% APY in a high-yield checking account, you could earn $50 in one year.

•   Regular checking: If you have a $10,000 balance earning the national average rate for checking accounts, which is about 0.07% APY, you could earn $7 in one year.

•   Total difference: The high-yield checking account would provide $220 more in interest over the course of a year.

Other Considerations

•   Fees: Regular checking accounts may have fewer or lower bank fees compared to high-yield accounts.

•   Accessibility: Both types of accounts offer similar access to funds through checks, debit cards, and ATMs.

•   Requirements: High-yield checking accounts often have stricter usage requirements to qualify for the higher interest rate.

Alternatives to Consider

High-yield checking accounts are a useful financial tool, but they aren’t for everyone. If you’re interested in a bank account that pays a higher-than-average APY, here are some alternatives to consider.

•   High-yield savings accounts: The interest rate you can earn in a high-yield savings account can be the same or higher than a high-yield checking account, but without the stringent requirements. While you generally can’t pay bills and make purchases directly from a savings account, you can easily transfer the funds to your checking account when you need to make payments.

•   Money market accounts (MMAs): MMAs typically offer higher APYs than traditional savings accounts while providing some of the conveniences of a checking account, like a debit card and checks. These hybrid accounts may have certain requirements, however. For example, some institutions require high minimum balances to open an account or avoid fees. MMAs can also be subject to transaction limits, so they aren’t a perfect substitute for a checking account.

•   Certificates of deposit (CD): Certificates of deposit offer a fixed APY that’s usually higher than regular savings accounts. In exchange, you agree to leave the money untouched for a set term, which can range from a few months to several years. If you have a large chunk of cash you won’t need for several months or more but want a guaranteed rate of return, a CD may be worth considering.

The Takeaway

If you want the features of a checking account, such as a debit card and frequent access, while growing your money, a high-yield checking account may be worth looking into. However, you’ll want to make sure that you can meet the requirements of the account. If you can’t, you could end up earning little or no interest and/or getting hit with fees. In that case, you may be better off with a regular checking account and a savings account that pays a competitive APY.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What is a good high-yield checking rate?

A good high-yield checking account rate is typically 0.25%-2% APY or higher. This is significantly higher than the current average APY for checking accounts, which is 0.07%.

Keep in mind, though, that in order to earn the advertised rate on a high-yield checking account, you may need to meet certain conditions, such as a minimum number of debit card transactions, a minimum amount in monthly direct deposits, or maintaining a certain balance.

Do these types of checking accounts have debit cards?

Yes, high-yield checking accounts typically come with debit cards, just like regular checking accounts, allowing you to make purchases, withdraw cash from ATMs, and manage your daily transactions.

In fact, using the debit card is often a requirement to qualify for the high interest rates offered by these accounts. A bank or credit union may specify a minimum number of debit card transactions per month as part of the account’s conditions to earn the advertised high yield.

What are the disadvantages of using a high-yield checking account?

High-yield checking accounts may have some disadvantages, including stringent requirements to earn the high interest rates. For example, you may need to maintain a high balance or make a minimum number of debit card transactions and direct deposits per month. If you don’t meet the requirements, you may earn very low (or no) interest for that month or get charged a fee.

Some of these accounts also have rate caps, which means that the high interest rate only applies to a specific balance limit, with amounts above that earning lower or no interest.

Photo credit: iStock/Dilok Klaisataporn

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 3/31/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

SOBNK-Q126-026

It’s often, but not always, possible to deposit cash at an ATM. Whether you can feed bills into the machine depends on your bank, the specific ATM you’re using, and other factors. If you’re able to make the deposit, you might be charged fees.

It’s important to understand the rules for depositing cash at an ATM so you can get your money where you want it to go, with minimum hassle.

How to Deposit Cash at an ATM

Here are the usual steps for depositing cash at an ATM, once you have your bills counted and ready.

Locate an ATM

In order to avoid wasting time at an ATM that won’t accept cash, it’s a good idea to do a bit of research beforehand. Log onto your financial institution’s website or app and look for an ATM locator, which will show you all nearby machines and may also specifically mention which services those ATMs can perform.

It’s worth noting that those convenient ATMs that you may see at your local grocery store or at a concert venue may not accept cash. They are primarily there to provide people with spending money.

Insert Your Bank Card

When you arrive at an ATM that accepts cash deposits, you’ll most likely use your debit card, or another bank card, and your PIN to confirm your identity. This gives you access to the ATM’s service options. Some banks may offer access to ATMs using cardless withdrawal technology, which lets you use your phone instead of your bank card to complete transactions.

Follow the On-Screen Instructions

Next, you’ll follow the instructions on the ATM screen to make a cash deposit. If you have multiple accounts, such as a checking and a savings account, you’ll typically be asked to select which one you want the money to be deposited into.

Feed Your Money Into the ATM

Ready for the main event? It’s now time to feed your bills into the machine. Depending on the bank and the machine, the ATM may have limits on how many bills it will accept per deposit (often around 30 to 50 notes). Some older ATMs still require you to put bills into the provided envelope before making your deposit. Most ATMs typically don’t take coin deposits.

When inserting the bills, you can usually confirm the deposit amount, giving you the chance to double-check the transaction details.

As with any cash-accepting machine, a bill may be rejected if it appears damaged or potentially counterfeit. And, of course, any time you are handling cash, it’s important to remain aware of your surroundings and make sure you feel safe.

Sign Out

Once you’ve made your deposit, you’ll usually be offered the option of a printed or an emailed receipt (either of which can help with record-keeping). Finally, always make sure you’re signed out of the ATM and have collected your debit card before you leave.

Can You Deposit Cash at Any ATM?

You can’t necessarily deposit cash at any ATM. If you are a customer of the bank that operates its own ATMs, you can likely utilize those machines if they accept deposits. You may not be able to deposit bills at an out-of-network machine at all, even if it can accept deposits.

For this reason, it’s important to check which ATMs are part of your bank’s network and accept cash. This can save you a wasted trip to an ATM that doesn’t accept deposits for your financial institution or doesn’t accept bills at all.

If you are permitted to deposit cash in an out-of-network ATM, you may have to pay a fee. Currently, out-of-network fees are on average close to $5.00 per transaction, according to a recent study. In addition, you may have to wait longer for the funds to become available in your account.

Can You Deposit Cash at an ATM for an Online Bank?

If you’re a customer at an online-only bank, you may be wondering whether you can deposit cash at an ATM. Some of the leading online-only banks partner with ATM networks to offer their customers access to tens of thousands of machines around the world. However, it is important to note that cash deposits are usually restricted to specific, deposit-enabled machines within those networks, and oftentimes deposits at ATM machines are not an option.

Recommended: 12 Top Mobile and Online Banking Features

Will My ATM Cash Deposit Be Available Immediately?

Some banks will make cash deposits immediately available when you use their own branded ATMs. Others offer same-day availability if you make a deposit before the bank’s daily cutoff time. If you use an out-of-network ATM or make a large deposit, you may experience longer processing times before the funds become available.

The Federal Deposit Insurance Company requires banks to make cash deposits available within a certain amount of time. If you use an in-network ATM, your funds must be available on the second business day after the deposit. When using an out-of-network ATM, however, funds don’t have to be made available until the fifth business day. Take this into account if you’re making a cash deposit and need the funds within a shorter time frame.

It’s a good idea to contact your bank or visit its website for more information about its specific policies.

Things to Consider When Depositing Cash at an ATM

Most of the time, depositing cash into an ATM goes smoothly and often without added service fees if you use your own bank’s network. But there are a couple of scenarios to be aware of and potential hiccups to be prepared for.

Depositing Cash at an ATM That Isn’t Your Bank

As mentioned above, you may or may not be able to deposit cash at an out-of-network ATM. This means that, if you have a bank account with one bank, you may not be able to deposit bills into an ATM operated by a different financial institution.

What’s more, if you can make a deposit at an out-of-network ATM, there may be fees involved. The funds will also likely take longer to process before becoming available than if you stay within your bank’s network.

If you use an online-only bank, you will need to determine what deposit services are available. You can usually locate in-network machines or other options for making cash deposits by checking your bank’s app or website or by calling their customer service number. Another option may be to transfer money into the online account from a separate bank account that accepts cash deposits.

Potential Problems

Technology offers many benefits, such as speed and convenience, but it isn’t perfect. When depositing cash at an ATM, you may very occasionally encounter an issue. Perhaps the machine retains your card, or miscounts the amount deposited.

If this happens, make sure to note the details, including the date, time, location, and what occurred. You can then report the issue to your bank or the ATM owner for help resolving the matter. If you lose money as a result, you may want to contact the Consumer Financial Protection Bureau to file a complaint.

Fees

You’re unlikely to encounter a fee if you make a deposit at your bank’s own ATM machines (if they have them). However, you may need to deposit cash when an in-network device isn’t anywhere nearby. In that case, you’re likely to incur an out-of-network ATM fee from the bank. As noted above, these are currently averaging about $5.00 per transaction, so this can really add up.

Check with your bank ahead of time to get a better grasp of their specific ATM fee policies and avoid these unnecessary costs when possible.

Limits

There may be limits on how much you can deposit at a given time at an ATM. You’re typically limited to inserting 30 to 50 bills per transaction. If you need to deposit more bills, you can make multiple transactions, but there may be a daily transaction limit. Dollar limits are less common but do exist at some financial institutions.

Recommended: How to Avoid ATM Fees

The Takeaway

You can usually insert bills into an ATM in a few simple steps, and this can be a convenient way to get money into your checking or savings account. Depending on whether you deposit your cash at an out-of-network or an in-network machine, the transaction may involve fees and a potential delay in the funds becoming available. Researching your options and understanding the deposit services your bank provides can help you make financially sound cash deposits.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How do you deposit cash at an ATM?

To deposit cash at an ATM, you’ll need an ATM that accepts cash, your bank card, and your PIN (or, if the machine allows cardless transactions, you’ll need your mobile device). Then you simply follow the instructions on the machine’s screen. Before going to a machine, it’s a good idea to locate your nearest in-network ATM or find out about the fees you’ll be charged to deposit cash at an out-of-network ATM.

Can you deposit checks at an ATM?

Yes, but financial institutions almost always require you to use their own ATMs for check deposits. Independent ATMs found in convenience stores, gas stations, and hotels generally lack the technology needed to process checks.

Are there ATM deposit fees?

If you use an ATM that belongs to your bank or the network of ATMs it partners with, you won’t typically be charged a fee for making a deposit. However, if you use an out-of-network machine for any transaction, whether withdrawal or deposit, you’ll likely be charged a fee.

How much cash can be deposited in an ATM?

The limit on the number of bills you can insert in one cash deposit transaction is usually 30 to 50. If you need to insert more bills than this, you can complete multiple transactions. Some ATMs may have a dollar limit, but this is less common.

How can I deposit money without going to the bank?

You can often deposit cash at an ATM that’s owned by your bank or is part of your bank’s network. In addition, an easy way to deposit money into your bank account without leaving your home is to make a mobile check deposit through your bank’s app. Mobile check deposits may take one or more days to clear, however.

Photo credit: iStock/RgStudio

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 3/31/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOBNK-Q126-046

Despite what the name might suggest, a homestead exemption isn’t some kind of dusty old prospector or settler law. Many states have these statutes on the books, which are designed to protect a primary residence from creditors in a bankruptcy filing.

For example, if a family files a Chapter 7 bankruptcy, the amount of equity they can protect with an exemption will be a determining factor in whether they’ll be able to keep their home.

In a Chapter 13 bankruptcy, the family won’t lose their home, but they’ll have to pay creditors an amount equal to the value of the property they can’t protect with an exemption or their disposable income, whichever is more.

Before declaring bankruptcy, it’s advisable to consider the alternatives.

Read more to find out how homestead exemptions relate to bankruptcy, state by state.

What Is a Homestead Exemption?

If you’re wondering what a homestead exemption is, it’s a provision in a state’s law that can legally protect a home from creditors in situations such as declaring bankruptcy or the death of a homeowner’s spouse.

A homestead exemption can both literally provide you with shelter (a roof over your head) and financial protection to help you avoid losing your home. That said, this exemption won’t prevent foreclosure if you default on your mortgage.

You may be curious about the Homestead Act and whether it’s the same thing as a homestead exemption. They’re not: The Homestead Act was an 1862 law that granted 160 acres of Western land in the U.S. to anyone who promised to farm it. It was designed to encourage settlement in the West and drive economic growth.

What States Have a Homestead Exemption?

It’s easier to name the states that don’t have a homestead exemption than those that do, since the vast majority offer this protection.

Currently, the only states without specific homestead exemptions are New Jersey and Pennsylvania. If you live in one of these states, you likely have an idea of where you stand on potential protection with homestead exemptions — although other state and even federal homestead exemption provisions may potentially assist anyone, in any state.

If you live in any of the other 48 states, there are often more nuances to consider, depending on your situation and financial plans.

Even if you live in a state that offers homestead exemptions, instead of considering them, you may want to find ways to save money on your mortgage. Strategies such as refinancing a home loan or requesting a new tax assessment can help you weather financial storms by reducing your monthly payments.

Recommended: Understanding Bankruptcy: Is It Ever the Right Option?

Which State Has the Best Homestead Exemption?

It’s true that some states are more favorable than others for seeking this exemption. However, no state is the “best” for this. Many individual factors are worth weighing to assess what — and where — is advantageous.

Because homestead exemptions are protections for primary residences, you cannot claim an exemption on an investment property or vacation home.

Some states allow bankruptcy filers to use federal bankruptcy exemptions instead of the state exemptions.

The federal homestead exemption amount is calculated every three years. For the period from April 1, 2025, to March 31, 2028, it allows you to protect up to $31,575 of the equity in your home. In cases where you and your spouse file taxes separately, don’t live together, maintain separate homesteads, or (according to at least one court) don’t have a direct financial connection with each other, each of you can claim a separate homestead, up to the amount allowed per individual.

Also, most states allow a “wildcard” exemption, which allows you to protect any kind of property from bankruptcy proceedings. This can be of particular help if one or more of a debtor’s other exemptions falls short of protecting their equity. A wildcard exemption amount can be divided among multiple items.

As of April 1, 2025, the federal wildcard exemption is $1,675, plus up to $15,800 of any part of the federal homestead exemption that hasn’t been used.

Since there’s so much variability in local, regional, and state codes and how they define the homestead exemption, it’s wise to consult local authorities or websites detailing the law’s specifics when you’re in a situation that may trigger these laws.

Here’s a rundown of what are sometimes referred to as “homestead states,” those that offer some of the highest exemptions or greater flexibilities in the law. Other factors, such as cost of living, should also be a consideration:

1.    California: California has two systems for the homestead exemption, one in which homeowners can exempt up to $743,681 of their home equity, and one in which they can exempt up to $36,750. Determining what you can access requires research and/or legal counsel.

2.    Florida: Under the Florida exemption system, homeowners may exempt an unlimited amount of value in their home or other property covered by the homestead exemption. However, the property cannot be larger than half an acre in a municipality or 160 acres elsewhere. The exemption can also be claimed by the spouse or children of a deceased owner.

3.    Iowa: An unlimited value in one home or a one-unit apartment can be sought in protection. The property must be in a city or town and is limited to one-half acre or 40 acres elsewhere.

4.    Kansas: An unlimited value amount can be sought in protection, but the amount of land that homeowners can protect is limited. They can protect up to 1 acre of property if they live within city limits or up to 160 acres of farmland.

5.    Minnesota: You can protect up to $510,000 of equity in your home and land or up to $1,275,000 of equity if your land (up to 160 acres) is used for agricultural purposes.

6.    Oklahoma: Residents can exempt the entire value of their homes up to a half acre if it’s in a city, town, or village, or up to 160 acres if it’s elsewhere. (If you use more than 25% of the total square footage of your property for business, your exemption is limited to $5,000.)

7.    Rhode Island: The exemption applies for up to $500,000 of equity.

8.    South Dakota: If your home is less than one acre in a town or 160 acres in any other type of area, all of your equity is exempt.

9.    Texas: For residences on 10 acres or less in a city, town, or village or up to 200 acres in the country, the state offers an unlimited homestead exemption for families.

10.    Washington: This state’s generous homestead exemption varies depending on the county the homeowner lives in.

Recommended: Getting Approved for a Personal Loan After Bankruptcy

Homestead Exemptions in Other States

Here are the homestead exemptions that the remaining states offer:

1.    Alabama: The Alabama Department of Revenue indicates that at the state level, homestead exemptions have a maximum value of $18,800. It only applies on land area that’s not more than 160 acres.

2.    Alaska: Homeowners may exempt up to $54,000 of their home or other property covered by the homestead exemption.

3.    Arizona: Homeowners can exempt up to $437,600 for a house and the land it’s on, a cooperative or condominium, or a mobile home and the land it’s on, provided the homeowner lives in the dwelling.

4.    Arkansas: You can seek an unlimited amount of equity in 80 rural acres or one-quarter of an urban acre.

5.    Colorado: Up to $250,000 of equity in a home or other property, such as a mobile home, is protected. The amount increases to $350,000 if the homeowner, spouse, or dependent is disabled or 60 or older.

6.    Connecticut: The state protects up to $250,000 of equity in real property, a co-op, or a manufactured home occupied at the time of filing bankruptcy.

7.    Delaware: The state offers exemptions up to $200,000 in real property or a manufactured home that was used as a principal residence.

8.    Georgia: Homeowners may exempt up to $21,500 of their home or other property covered by the exemption (the amount increases to $43,000 for married filers). They can also apply $10,000 of any unused portion of the exemption to another property they own — a “wildcard” exemption.

9.    Hawaii: If you’re the head of a household or over 65, you can exempt up to $90,000 of equity. If you’re not the head, you may protect up to $90,000 of equity in your home.

10.    Idaho: A filer can protect up to $175,000 in equity in a home or mobile home.

11.    Illinois: You can protect up to $50,000 in equity in your home, which can be a farm, mobile home, lot with buildings, condominium, or cooperative.

Recommended: How Often Can You Refinance Your Home?

12.    Indiana: A debtor can exempt up to $22,750 in real estate or personal property used as a residence. In addition, if you’re married and filing jointly, that figure rises to $45,500.

13.    Kentucky: Up to $5,000 of equity can be claimed.

14.    Louisiana: Homeowners are allowed to exempt up to $35,000 of home equity and more if their debts were due to a catastrophic or terminal illness or injury.

15.    Maine: Up to $80,000 of equity in property used as a residence can be claimed. The amount can be increased to $160,000 in equity if you have a minor dependent residing with you or if you’re 60 or older or disabled.

16.    Maryland: The state exempts residential property value up to $31,575 (the husband and wife may not double).

17.    Massachusetts: The state automatically protects up to $125,000 in home equity and up to $1,000,000 for those who file and receive the increased exemption (this amount also applies to the elderly or disabled).

18.    Michigan: Each homeowner and their dependents can exempt up to $46,125 in a property covered by the homestead exemption. If the homeowner is 65 or older or disabled, the exemption amount increases to $69,200.

19.    Mississippi: You can claim an exemption of up to $75,000 of equity in the property you live in, as long as it’s less than 160 acres.

20.    Missouri: You can exempt up to $15,000 of equity in the real estate in which you live or will live, and spouses who file a joint bankruptcy can double the exemption.

21.    Montana: Up to $425,828 in equity can be protected for up to 320 farm acres, a quarter of a city acre, or one residential acre outside a municipality.

22.    Nebraska: Up to $120,000 can be protected on a home, provided the owner is either a head of household, married, or over age 65 and the property doesn’t exceed 160 acres.

Recommended: How Much Does It Cost to Refinance a Mortgage?

23.    Nevada: Up to $605,000 in equity in a home can be claimed.

24.    New Hampshire: You can protect up to $400,000 in equity.

25.    New Mexico: Up to $150,000 of equity in your home can be protected; this amount is double for spouses who co-own property.

26.    New York: The homestead exemption amount varies greatly depending on the county. If the property is in the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, or Putnam, the exemption is $204,825. If the property is in Dutchess, Albany, Columbia, Orange, Saratoga, or Ulster, the exemption amount is $170,700. For any other county in the state, the exemption amount is $102,400.

27.    North Carolina: Homeowners may exempt up to $35,000 of their home or other personal property. Homeowners 65 or older whose spouse is deceased may exempt up to $60,000, provided the property was previously owned by the debtor as a tenant by the entirety or as a joint tenant with rights of survivorship.

28.    North Dakota: Homeowners can protect up to $150,000 of equity in their home when declaring bankruptcy.

29.    Ohio: The state allows for the protection of up to $182,625 of equity as part of the homestead exemption. Spouses who file a joint bankruptcy may double that amount.

30.    Oregon: A property owner may be exempt up to $150,000. Married couples, however, may be exempt up to $300,000.

31.    South Carolina: The state’s law protects up to $76,125 in equity in a home or real estate used as a residence, with spouses who file a joint bankruptcy being able to double the exemption.

32.    Tennessee: Homeowners can exempt up to $35,000 of equity — and that amount goes up to $52,500 for joint owners.

33.    Utah: Homeowners may exempt up to $53,700 to protect their home, provided it’s their primary personal residence.

34.    Vermont: An exemption of up to $125,000 of the equity in a home, condo, or mobile home can be claimed; it can’t be doubled, however, in cases of joint bankruptcy filing.

35.    Virginia: This state allows for protection of $5,000 of real estate or personal property. That amount doubles if the individual is age 65 or older.

36.    West Virginia: Homeowners may exempt up to $35,000 of their home or other property. That figure increases to $70,000 if you’re married, you and your spouse both own the property, and you file for bankruptcy together.

37.    Wisconsin: A single person can protect up to $75,000 of equity in a home; spouses can double that amount to $150,000.

38.    Wyoming: Homeowners can protect up to $100,000 of equity from bankruptcy. This can double for married couples who jointly own the property and file for bankruptcy jointly.

If you don’t see a state listed above, that means it’s one of the two (New Jersey or Pennsylvania) that doesn’t offer any homestead exemptions for use in a bankruptcy filing.

The Takeaway

Homestead exemption rules can help protect your home in instances of a bankruptcy filing and can be useful during a difficult financial time. The rules vary significantly by state but are worth investigating, as they may allow you to keep your home.

Refinancing a mortgage may also provide some relief if you’re a struggling homeowner. In addition to offering an array of mortgage loans, SoFi can also help you refinance at competitive rates and with a hassle-free process.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What is a homestead exemption in bankruptcy?

A homestead exemption lets you protect a certain amount of equity in your primary residence from creditors when filing for bankruptcy. The amount and rules vary by state. For example, West Virginia allows up to $35,000 per person, while New Jersey doesn’t offer a homestead exemption.

Can married couples double the homestead exemption?

Some states allow married couples to increase the exemption. In Mississippi, a couple can each claim the $75,000 homestead exemption for a total of $150,000, while in Virginia, married couples filing jointly can combine the base and homestead exemptions to protect more of their equity. Other states, such as Vermont, don’t allow doubling for joint filers.

What states have the best homestead exemptions?

Florida, Texas, Kansas, and Iowa are the most generous states because they allow unlimited homestead exemptions. Depending on where you live, homestead exemptions can greatly affect bankruptcy outcomes.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOHL-Q126-135

For both buyers and sellers, real estate inventory is a key factor to note. When inventory is abundant, buyers may have the upper hand. If there’s a limited number of available properties on the market, sellers may be able to command higher prices. This means that the state of housing inventory can impact your strategy if you’re hunting for a home or trying to sell your own property.

It pays to keep your eye on the market, as inventory can sometimes change swiftly. In recent memory, we’ve seen a pandemic-fueled buying frenzy that led to bidding wars. As mortgage rates rose, some markets evolved into low-demand, high-availability scenarios.

Here’s a closer look at how to gauge the local real estate market and navigate high and low housing inventory as a buyer vs. seller.

What Is Housing Inventory?

You can think of an area’s real estate inventory as the current supply of properties for sale. The housing inventory will increase or decrease according to the difference between the rate of new listings on the market and the number of closed sales or houses taken off the market for other reasons.

Although this calculation can be done at any time, it’s common practice to assess the balance at the end of the month. Comparing monthly figures can show if housing inventory is trending up or down or staying relatively stable.

If there appears to be a rapid trend in either direction, it may signal the need to take quick action on a purchase or sale (seeking preapproval for a home loan, for example) or take a wait-and-see position and hold off for a while.

Even within a town or city, real estate inventory can vary significantly. To better understand your local housing market trends, you can dig deeper into important indicators such as average time on the market and average price of homes nearby or in your desired neighborhood.

High Housing Inventory

An area with a high housing inventory has more properties on the market than there are people looking to buy. This can also be referred to as a buyer’s market, since the larger selection of homes usually favors prospective buyers more than sellers.

These conditions may cause house prices to stagnate or, in more extreme cases, fall. Typically, the average property will also take longer to sell in this environment.

Still, there’s a huge variety of financial situations and unique property characteristics. Each case will be different, but here are some considerations if you’re buying or selling during a period of high housing inventory.

If You’re a Buyer Amid High Housing Inventory

In many cases, shopping for a new home during high housing inventory can be a blessing.

•   Take it slow (or at least slower): You may have time to look at multiple properties and size up which home best suits you before making an offer. High housing inventory means there are fewer buyers to compete with, so there’s less of a risk that other buyers will quickly make offers on homes.

•   Shop around: Knowledge is power when it comes to making an offer. Viewing comparable houses in the area firsthand could help when it’s time to negotiate.

•   Do your research: Other property details, such as price reductions and total days on the market, are potential indicators that sellers might be ready to accept an offer below the asking price.

Although buyers can have a comparative edge when housing inventory is high, there’s still a chance of multiple offers and bidding wars for well-priced homes. There are likely to be others who want to take advantage of what may be called a soft market in real estate terms.

Recommended: A Guide to Real Estate Counter Offers

If You’re a Seller Amid High Housing Inventory

Putting a property on the market in a location with high housing inventory may require investing more time to find the right buyer. After all, you’re not the only seller in town. However, there are several strategies to offload a house without financial loss.

•   Fix it: To stand out in a crowded field, it can help to address any persisting issues and accentuate your home’s best assets. Parts of the property in need of common home repairs — the foundation, the electrical system, the heating, ventilation, and air conditioning system, and so on — could discourage potential buyers. Instead of accepting lower offers or other concessions, you may save more money by handling repairs before putting your house on the market.

•   Improve it: Making improvements can be helpful, too. A kitchen renovation may be out of reach in terms of time and money, but thoroughly cleaning your property and tidying up landscaping are easy fixes that could make a better impression on prospective buyers.

•   Declutter: This is another way to enhance your house for showings and listing photos. It could also indicate a shorter turnaround for buyers eager to move in quickly.

•   Price it right: When all is said and done, setting an asking price that’s not too far above similar properties may be necessary to keep your property on buyers’ radars.

Low Housing Inventory

Also known as a seller’s market or a hot housing market, an area with low housing inventory has a surplus of interested homebuyers and a shortage of available listings.

Usually, sellers in an area with low housing inventory can get a higher price for their property. Thanks to the abundance of buyers, it’s not uncommon to see multiple offers and bidding wars.

Let’s take a closer look at how to make the most of low housing inventory for either side of the deal.

If You’re a Buyer Amid Low Housing Inventory

Although the odds may not favor buyers in a low housing inventory environment, you still have some options to increase your chances of finding your dream home.

•   Think beyond price: In a multiple-offer situation, the highest price may not be the most advantageous deal for the seller. Being flexible on the closing date and limiting contingencies can increase your offer’s competitiveness.

•   Get prequalified or preapproved: Doing the legwork, researching the different kinds of mortgages in advance, and getting prequalified can show that you’re ready and financially eligible. Typically, lenders provide potential borrowers with a letter stating how much they can borrow, given some conditions.

◦   Preapproval, which involves analysis of at least two years of tax returns, months’ worth of income history and bank statements, and documents showing any additional sources of income, can carry more weight and speed up the mortgage application process.

•   Consider cash: If you can swing it, a cash offer is often seen as advantageous because there’s no risk of the deal falling through from a denied mortgage loan.

•   Opt for an escalation clause: This is a method for beating out competing bids. The clause means you’ll automatically increase your initial bid up to a specified dollar amount. For example, a buyer with an escalation clause could offer $250,000 with an option to bump up to $255,000 if another offer exceeds theirs.

•   Know what a place is worth: Even in a seller’s market, house hunters would do best to keep appraised values in mind. If you pay thousands more than the appraised value of a house, your home equity could take a hit.

If You’re a Seller Amid Low Housing Inventory

When the forces of supply and demand favor sellers, they have a better chance of getting multiple offers on a property. Still, getting a great deal is not a sure thing, as many factors affect property value. Here’s some advice to help you take advantage of this scenario.

•   Spruce up your home: Cleaning and touching up your home can get you more foot traffic at showings or open houses.

•   Set a reasonable asking price just below the market value: This figure, based in part on comps, or comparables, reveals what similar homes in the same area have sold for recently. This can be a good way to capture buyer interest. In a multiple-offer situation, this gives buyers room to outbid each other, potentially increasing the purchase price above asking.

•   Look past price alone: If faced with more than one offer, it may be tempting to go for the highest bidder. It can be beneficial to review each buyer’s finances and contingencies to lower the risk of a deal falling through.

•   Recognize that cash is king: Cash offers are generally the most secure. According to a Redfin report, cash offers made up 29% of sales in December 2025.

•   Check contingencies: Offers with contingencies, such as the house passing an inspection, could allow a buyer to back out of a deal; an offer that waives such contingencies is likely preferable.

Recommended: What Is a Mortgage Contingency? How It Works Explained

Other Considerations When Buying a Home

Housing inventory can be an important factor when looking for a new home and may impact your experience in a positive or negative way. Knowing how to negotiate can help you get the best deal with the least amount of stress.

You’ll also have other considerations to keep in mind as you shop for your home. These may include:

•   How much you can put down

•   What type of mortgage works best for you

•   How much your mortgage will cost

•   What your closing costs will be

•   How much you’ll need for any necessary renovations

•   What the property taxes are

The Takeaway

For both buyers and sellers, the amount of available housing inventory can have an impact on the home purchase process. Keeping tabs on the market you’re shopping or selling in and looking carefully at competing properties (buyers) or competing offers (sellers) can help you get the most from your real estate deal.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What does inventory mean in real estate?

Inventory is the number of properties available for sale in a particular real estate market. It’s often recorded once a month so that trends can be observed.

Why is housing inventory so low?

Several factors have contributed to low housing inventory: During the Great Recession that began in late 2007, construction of new homes declined and took many years to recover. More recently, mortgage rates have trended upward, causing many people who might have sold a starter home to stay put rather than sell. Finally, investors have been buying up available properties and renting them out, taking them out of the sale market.

When is the best time to sell a house?

The best time to sell is typically when housing inventory is low. This is because the limited number of available properties drives competition.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q126-136

If you’re a new dentist, you have plenty of reasons to smile about your profession. You can start practicing soon after completing dental school, and you stand to earn a healthy salary right off the bat. The average entry-level dentist in the U.S. earns $222,669 a year, according to ZipRecruiter.

At the same time, you also need to figure out how to pay off your student loans. According to the American Dental Association (ADA), the average dental school graduate leaves school with nearly $300,000 in education debt. By comparison, medical school graduates owe an average of $246,659 in total educational debt, according to the Education Data Initiative. That’s where budgeting for dentists comes into the equation.

How Budgeting Helps

Starting a career with a six-figure loan debt may feel overwhelming, but budgeting can help. In fact, now is an ideal time to establish your saving and investing strategies, says Brian Walsh, CFP®, Head of Advice and Planning for SoFi. “When you’re right out of school and your lifestyle is already lean, you can more easily build a pay-yourself-first mentality without making any drastic adjustments,” he explains. “It’s significantly easier to do it at this point instead of when you have a house, a car, and a family and then need to start making cuts.”

Here are some strategies to help you create your budget and plan for the future.

Protect Your Income

With its repetitive motions and constrained work area, dentistry can be physically taxing work, especially on the back and joints. According to the ADA, dentists have a one in four chance of becoming disabled. To mitigate your risk, you may want to consider disability insurance, which covers a percentage of your income if you become unable to work due to an illness or injury.

If you purchased a policy during dental school, you have the option to increase your coverage now that you’re making more. If you don’t have a policy, you can buy one as part of a group plan or as an individual. Find out if your employer offers it as part of your benefits package. Monthly premium amounts vary, but in general, the younger and healthier you are, the cheaper the policy.

Recommended: Budgeting as a New Doctor

Don’t Overspend

Dropping a bundle on meals out? Clicking “add to cart” more frequently? Enjoy your hard-earned income, but don’t go overboard on splurges.

To help you focus on where you put your money, consider prioritizing your financial goals — saving for a home, for example, or paying off your debt. This is an important strategy in budgeting for dentists. Walsh also recommends that early-career professionals use cash or debit cards for purchases to build up good spending habits and automate their finances whenever possible. For example, pre-schedule your bill payments, and set up automatic contributions to your retirement account.

Kick-Start a Savings Plan

Tackling student loans is likely a top priority for you right now, but just as important is creating a savings plan.

Walsh recommends early-career dentists set aside 30% of their income for savings. Of that, 25% should be for retirement and 5% for other savings, such as building an emergency fund that can tide you over for three to six months. The remaining 70% of your income should go toward expenses, including monthly dental school loan payments.

The sooner you start saving and investing, the sooner you can enjoy compound growth, which is when your money grows faster over time. That’s because the interest you earn on what you save or invest increases your principal, which earns you even more interest.

You may even want to consider buying a dental practice at some point, so that’s another reason budgeting makes sense.

Explore Different Ways to Invest

As a high earner, you may need to do more with your money than max out your 401(k) or 403(b), though you should do that, too. Walsh suggests new dentists leverage a combination of different investments. This strategy, called diversification, can help shield you from risk. Here are some types of investments to consider:

•   A health savings account (HSA), which provides a triple tax benefit. Contributions reduce taxable income, earnings are tax-free, and money used for qualified medical expenses is also tax-free.

•   An individual retirement account (IRA), such as a traditional IRA or a Roth IRA, can offer tax advantages. Contributions made to a traditional IRA are tax deductible, and no taxes are due until you withdraw the money. Contributions to a Roth IRA are made with after-tax dollars, and your money grows tax-free. You don’t pay taxes when you withdraw the funds, provided certain requirements are met. However, there are limits on how much you can contribute to an IRA each year.

•   A Simplified Employee Pension IRA (SEP IRA) can be a good option if you’re a solo practitioner. “Total contributions can be just like those with an employer-sponsored plan, but you control how much to contribute, up to a limit,” Walsh says. Contributions are tax-deductible, and you don’t pay taxes on growth until you withdraw the money when you retire.

•   After-tax brokerage accounts offer no tax benefits but give you the flexibility to withdraw money at any time without being taxed or penalized.

Two investments to consider bypassing are variable annuities and whole life insurance. Neither is a suitable way to build wealth, Walsh says.

Whatever your strategy, keep in mind that there may be fees associated with investing in certain funds. Those can add up over time, Walsh points out.

Determine a Student Loan Repayment Strategy

Since new dentists tend to start earning money more quickly than other health care professionals, they are often better positioned to tackle loan repayments more aggressively.

But your repayment strategy will depend on a number of factors. To start, consider the types of student loans you have. Federal loans have safety nets you can explore, such as loan forgiveness and income-driven repayment (IDR) plans, which can lower monthly payments for eligible borrowers based on their income and household size.

Once you’ve assessed the programs and plans you’re eligible for, figure out your goals for your loans. Do you need to keep monthly payments low, even if that means paying more in interest over time? Or are you able to make higher monthly payments now so that you pay less in the long run?

If you have multiple loans and/or other debts, there are two approaches you might consider for paying them down. With the avalanche approach, you prioritize debt repayment based on interest rate, from highest to lowest. With the snowball method approach, you pay off the smallest balance first and work your way up to the highest balance.

While both have their benefits, Walsh often sees greater success with the snowball approach. “Most people should start with paying off the smallest balance first because then they’ll see progress, and progress leads to persistence,” he says. But as he points out, the right approach is the one you’ll stick with.

Consider Your Refinancing Options

Paying down debt has long-term benefits, such as lowering your debt-to-income ratio and building your credit. In order to help do this, you may want to include refinancing your student loans in your student loan repayment strategy.

When you refinance, a private lender pays off your existing loans and issues you a new loan. This can give you a chance to lock in a lower interest rate than you’re currently paying and combine all of your loans into a single monthly bill, which can be easier to manage. Some lenders, including SoFi, also provide benefits for new dentists.

The refinancing process is straightforward, yet some common misconceptions persist, Walsh says. “People overestimate the amount of work it takes to refinance and underestimate the benefits,” he says. A quarter of a percentage point difference in an interest rate may seem inconsequential, for instance, but if you have a big loan balance, it could save you thousands of dollars.

That said, refinancing may not be right for everyone. If you refinance federal student loans with a private lender, for instance, you lose access to federal benefits and protections, such as forgiveness programs and forbearance. You may also pay more interest over the life of the loan if you refinance with an extended term. Consider all your options and decide what makes sense for you and your financial goals.

The Takeaway

Dentistry can be a rewarding career with the potential to earn a healthy salary right from the start. However, you’re likely to have a significant loan debt when you graduate from dental school. Fortunately, balancing your goals with some smart saving, investing, and loan repayment strategies can help you get your finances on firm footing.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

How does budgeting benefit dentists?

Budgeting helps dentists track income and expenses, plan for irregular earnings, avoid overspending, and make informed financial decisions. It can also help save for retirement.

What’s the best way for dentists to create a savings plan?

Start by setting short- and long-term goals. Allocate a portion of income each month to emergency funds, retirement accounts, and other savings, and review progress regularly.

How can refinancing student loans support a dentist’s financial plan?

Refinancing can lower interest rates, reduce monthly payments, or shorten loan terms. This can free up cash for savings, investments, or other financial priorities.

Photo credit: iStock/5second

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.