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Dress? Check! Rings? Check! Masks? It’s no secret that the Covid-19 pandemic has totally upended the wedding industry. Both state- and federal-level mandates have imposed restrictions that would rightfully make any wedding planner throw in the towel. But with 93% of couples originally set to wed in 2020 still intent on holding their nuptials, most couples are taking on this extra stressor in stride.

But what does that mean for cost? The 2020 wedding season introduced a slew of new wedding trends such as sanitizing stations, virtual streaming, and secondary celebrations. The question is, how does that impact your already complex planning, and what does that mean for your bottom line in 2023?

Wedding planning is a tall order, especially with the aftermath of a pandemic, but it’s not impossible. Here’s a look at what you can expect from venues, vendors, and other costs as you plan this happy day.

What Is the Average Cost of a Wedding?

According to The Knot, the average cost of a wedding ceremony and reception in 2020 was $19,000. This is nearly one-third less of the costs from 2019, which averaged $28,000 for both events.

The drop in spending can be directly attributed to Covid-19, although one-third of couples who kept their 2020 wedding dates opted to hold mini ceremonies that averaged fewer than 20 guests. This tactic allowed them to keep their special days, conform to any covid gathering restrictions, and significantly cut costs in the process. But what do these trends mean for 2023 planning?

As brides and grooms rush to reclaim the large celebrations they were denied in 2020, they’ve budgeted approximately $22,500 for 2021 receptions, similar to the $23,000 spent on receptions in 2019. With the worst of the pandemic seemingly behind us, these couples are planning ahead with no inhibitions. It’s important to note however, that true wedding costs will vary based on how elaborate the event and the unique vendor and venue costs of the region.

What Goes Into the Cost of a Wedding?

Planning a wedding is a huge undertaking. From the dress to the decor, there are so many details involved that many couples choose to pay the $1500, on average, for a professional wedding planner to handle them all.

Also, because 2020 was such an anomaly for the wedding industry with most couples choosing to scale down their events, reviewing average wedding spending from 2019 will provide a better look at what to expect. These 2019 numbers are courtesy of The Knot’s Real Wedding Survey.

Pre-Wedding Costs

The purchase of engagement rings is generally what kicks off the entire wedding planning process. While the tradition of spending three month’s salary on a ring may be old and outdated, couples are known to spend $5,500 on rings on average.

The cost of wedding invitations can vary widely depending on many factors. Handmade paper will cost more than cardstock. Letterpress printing will cost more than digital printing. More guests means more invitations, which means a higher cost. The average cost of invitations is $590.

Then comes the dress, which can take months to find. Assuming you’re not bent on purchasing an elaborate couture gown, but definitely want to secure something nicer than what might be found on a bargain rack, a dress can average $1,600.

It would be a mistake not to hold a rehearsal with your full wedding party, and taking the opportunity to treat them to dinner, thanking them for being a part of your celebration, is tradition. Rehearsal dinners can cost around $1900.

Recommended: The Cost of Being in Someone’s Wedding

Vendor Costs

What is your big day if no one is there to capture it? Photographer costs can be as high as $2400 for a wedding. Should you choose to film it as well, you can expect to pay around $1800 for a videographer.

Wedding photos are lifetime memorabilia and people want to look good in them. Average costs for professional services are $110 for hair and another $100 for makeup.

If you need transportation to the wedding, from the wedding to the reception venue, or for a guest shuttle, it can cost around $800 on average.

Wedding decor is a must, and flowers are one of the most common choices. From the choice of your bouquet to the centerpiece arrangements on your guest tables, a proper florist can average $2000.

The star of the show—after the bride—is the cake. Whether traditional white or unconventionally colored, tiered or cupcakes, a wedding cake can cost around $500.

Reception Costs

The reception venue will likely be your largest expense. It is where you will feed and entertain your guests for the longest portion of your celebration and, depending on the type of venue you book, it may or may not come with decor. This can cost around $10,500.

You can’t let your guests go hungry. Catering your reception, accounting for any special dietary restrictions, and toasting with champagne, you’ll pay around $70 per person. If you want to offer top-shelf liquor, that cost can increase.

Now let’s dance! The music is what will set the tone for your celebration, and it’s likely what your guests will remember most after your “I dos.” A DJ can cost around $1200 for a wedding. A live band on the other hand will cost significantly more at $3700.

Some couples choose to give their guests wedding favors, a gift that says ‘thank you for coming.’ Purchasing favors for your guests that remind them of the great time they had on your big day will cost around $400.

A few ways that can help you cut spending costs include trimming the guest list, opting for a cash bar, and enlisting family and friends to help you DIY a few things. Make a shortlist of the planning details that are most important to you and you don’t want to skimp on, and consider spending less on the unlisted details that aren’t as meaningful. Also, be sure to leave a buffer in your budget. You never know if you’ll have to cover an unexpected wedding expense or even a last-minute guest, and having extra room in your budget will allow you to cover those costs without overspending.

Recommended: Affordable Wedding Venue Ideas

Smart Ways to Finance a Wedding

Knowing how much you can expect to spend is only one half of the wedding planning puzzle. The other half is actually funding the spending. With average wedding costs in the tens of thousands of dollars, it’s important to plan ahead so you can enjoy your special day with minimal stress.

Gifts and Contributions

A bride and groom seldom pay for their wedding alone. As a matter of fact, in 2019, couples only contributed 41% toward their total wedding costs with their parents taking on the brunt of expenses. Immediate family members can be a resource to help cover costs and are often happy to do so. Whether it’s the groom’s family that agrees to cover rings and clothes, or the bride’s family that takes care of the flowers and food, having a family discussion about who is able and willing to cover what on your big day can help relieve some of the spending stress.

Also, contributing cash isn’t the only way to help. Any time your family, friends, or even your wedding party can offer with planning, creating, or decorating anything that you might have otherwise paid someone else to do can help keep your budget in the black.

Recommended: Wedding Gift Etiquette

Savings

Being able to cover costs with funds from a saving account is one of the more ideal ways of covering large wedding costs. Couples that plan long engagements might be able to take advantage of this method more so than those with short engagements, simultaneously saving for and planning their big day over several months or years.

Retaining a comfortable amount of savings separate from wedding funds to have on hand for an emergency is always a smart money move that can help prevent financial roadblocks in the future. As much as you may want to fund your big day with savings, if doing so will put you in a financially precarious position or prevent you from reaching other financial goals, it may be better to err on the side of caution. Having those funds post marriage may be more important than spending them now.

Credit Cards

Credit cards provide quick and immediate access to cash that can be used to cover wedding costs. If you have particularly high credit limits, and not much cash on hand, it may be possible for you to cover the entire cost of your wedding on a credit card.

Though this may be one option among many, using your credit card might also come with a few drawbacks, such as high interest rates and an increase in your credit utilization ratio. Charging wedding purchases to your credit cards means you’ll be subject to paying interest on those charges until you pay off those credit cards. Also, using large amounts of credit will increase your credit utilization ratio and could, in turn, trigger a drop in your credit score. If that scenario will keep you from reaching future financial goals, you may want to think twice about using this method.

Personal Loan

Applying for a personal loan is another method for securing wedding funds. Personal loans tend to offer qualified applicants lower interest rates than traditional credit cards. A personal loan may also have a fixed interest rate that can help you manage and maintain steady payments over the life of the loan.

Another benefit of a personal loan is that it can help you build your credit. Diversifying the types of credit you have helps the three credit bureaus view you as a responsible borrower, and in turn may raise your credit score.

The Takeaway

Average costs are just that: average costs. Planning a wedding doesn’t have to be a budget breaker, but an event with this significance does come with some costs that probably don’t easily fit into most budgets. Using a personal loan to pay for wedding costs is reasonable if you are financially able to repay it.

SoFi wedding loans have no fees required, low fixed rates, and can save thousands of dollars in interest compared to using a credit card. Getting prequalified takes just a few minutes, and loans can be funded in as little as three days.

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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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Making monthly mortgage payments can feel like chipping away at an iceberg, especially in the beginning. Savvy homeowners take heart that each payment earns them a little more ownership in their property. But do you know exactly how much ownership, commonly called “equity,” you currently have?

Simply put, home equity is the difference between the value of a property and the outstanding balance of all mortgages, liens, and other debt on the property. Read on to determine how much of your home you really own, what you can do to increase your equity, and how you can leverage that equity to make it work harder for you.

How To Calculate Your Home Equity

As noted above, home equity is the difference between your home’s current value and the outstanding balance of your mortgage and other debt on the property. It’s a simple equation:

Home Equity = Home Value – Home Debt

You can find your mortgage payoff amount (which is different from your balance) on your lender’s online portal. Add to that the outstanding balances of any second mortgages, liens (for unpaid taxes or child support, for example), home equity lines of credit, and any other loans that use your home for collateral. The sum of these items is your home debt, the last figure in the equity equation.

To estimate your home value, you can use the list price of your home, but that doesn’t account for any appreciation in value. For a precise calculation of your home equity, you’ll need to know your home’s current value with appreciation:

How Do You Find the Value of Your Home

Your home’s current value is what you paid plus appreciation. You can get an estimate of your home’s value with an online property tracking tool. These calculators approximate the appreciation on your home by comparing it with similar properties in the area. While helpful, these tools can’t provide an exact measure.

To determine your real-time home value, you’ll need to contact your mortgage lender and request an official appraisal. Your lender will conduct an inspection and evaluation of what your home is worth in the current market. The appraiser may ask you for documentation of any work you’ve done on your home to come to a more exact figure.

Using the Loan-to-Value Ratio To Represent Home Equity

The loan-to-value ratio (LTV) is the percentage of your home’s value that is borrowed — it’s like the opposite of equity. Lenders set maximum LTVs, typically 80%, for home equity loans. This means homeowners cannot borrow more than 80% of their home’s value.

You can calculate your LTV by dividing your outstanding home debt, discussed above, by your home’s appraised value:

LTV = Home Debt ÷ Home Value

For example, if your home is worth $375K, and you still owe $200K. Your LTV is 53%. Your available equity is then 27%, or $101,250.

Examples of Home Equity After 1, 3, 5, 10 Years

The table below shows how much equity a fictional homeowner accumulates over the first 10 years of their mortgage. This assumes an initial home value of $300K, with annual appreciation of 10%*, a mortgage APR of 7.5%, and a monthly payment of $1678.11. The LTV is rounded to the nearest whole percentage.

*Actual annual appreciation for American homes over the last 10 years on average was 7.4%.

Year	Home Value	Loan Balance	Home Equity	LTV
0	$300,000	$240,000	$60,000	80%
1	$330,000	$237,596	$92,404	72%
2	$363,000	$235,196	$127,803	65%
3	$399,300	$232,611	$166,689	58%
4	$439,230	$229,825	$209,405	52%
5	$483,150	$226,822	$256,327	47%
6	$531,470	$223,587	$307,882	42%
7	$584,620	$220,101	$364,519	38%
8	$643,080	$216,343	$426,736	34%
9	$707,380	$212,294	$494,085	30%
10	$778,120	$207,931	$570,188	27%

Recommended: How Much Will a $300,000 Mortgage Cost You?

What Is a Good Amount of Home Equity?

Common wisdom says that it’s smart to keep at least 20% equity in your home. This is why many lenders limit your LTV to 80%. To borrow against your home, however, you’ll need more than 20% equity.

Fortunately, that’s not a problem for most homeowners. Research firm Black Knight recently estimated that Americans have $185,000 of “accessible” home equity on average, over and above the recommended 20%. This is mostly due to rising home values.

Recommended: How Home Ownership Can Help Build Generational Wealth

How Much Home Equity Can You Take Out?

The amount of equity you can take out depends on the lender and the type of loan. However, most lenders will allow you to borrow 80%-85% of your home’s appraised value. The other 15%-20% remains as a kind of financial cushion.

Tips on Increasing Home Equity

Your initial home equity is determined by your down payment. The larger the down payment, the more equity a homeowner has right off the bat. The average down payment among American homebuyers is currently 13%. But a down payment of 20% or more can qualify borrowers for more favorable mortgage rates.

After the down payment, home equity typically accumulates in three ways: monthly mortgage payments, appreciation, and home improvements. Beyond waiting for their home to appreciate, homeowners can increase their equity in several ways:

Pay more than your minimum mortgage payment each month. The extra money will go toward your principal, increasing your equity more quickly. Learn how to pay off a 30-year mortgage in 15 years.

Make biweekly payments instead of monthly. Your mid-month payment will incrementally lower your interest due. And by the end of the year, you’ll have made an extra mortgage payment.

Make strategic home improvements. Certain updates increase your home’s value more than others. Learn which home improvements have the best ROI.

Refinance to a shorter-term loan. By refinancing to a 10- or 15-year mortgage instead of a standard 30-year, each mortgage payment will increase your equity at a faster rate.

The Takeaway

Home equity is calculated by subtracting your mortgage payoff balance (found on your lender’s website) from your home’s current value. To get an accurate idea of your home’s market value, you’ll need an appraisal by your mortgage lender, which can cost $300-$450. Homeowners typically can’t borrow more than 80%-85% of their home equity.

If a homeowner doesn’t want to take out a home equity loan but needs cash, they might consider a Home Equity Line of Credit (HELOC). A HELOC allows owners to pull from their property’s equity continually over time. Borrowers can take only what they need at the moment. HELOCs use the home as collateral, which might not appeal to all borrowers.

A HELOC brokered by SoFi allows homeowners to access up to 95% of their home’s equity, or $500,000, and offers lower interest rates than personal loans. Borrow what you need to finance home improvements or consolidate debt.

Learn more about turning your home equity into cash with a HELOC brokered by SoFi.

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility 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.
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.
SOHL1222003

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Better to buy or rent? The price-to-rent ratio is a reference point that can help gauge affordability in any city — especially for people on the move. More specifically, the price-to-rent ratio can be helpful when looking at a certain area and deciding whether to sink your life savings into a home, or pay a landlord and wait to buy.

Read on to see the home price-to-rent ratio in some of the biggest U.S. cities.

First, What Is the Price-to-Rent Ratio?

The price-to-rent ratio compares the median home price and the median annual rent in a given area. (You’ll remember that the median is the midpoint, where half the numbers are lower and half are higher.) To make sense of a city’s price-to-rent ratio, here’s a general idea of what the number suggests:

•   A ratio of 1 to 15 typically indicates that it’s more favorable to buy than rent in a given community.

•   A ratio of 16 to 20 indicates that it’s typically better to rent than buy.

•  A ratio of 21 or more indicates that it’s much better to rent than buy.

As you can see, the ratios could be useful when considering whether to rent or buy. Investors also often look at the ratios before purchasing a rental property.

The number also may be used as an indicator of an impending housing bubble. A substantial increase in the ratio could mean that renting is becoming a much more attractive option in that specific housing market.

If you’re exploring different areas, it can also be a good idea to estimate mortgage payments based on median home prices. That way, you can determine if it’s a cost you can reasonably afford to add to your budget on a monthly basis.

Recommended: Cost of Living Index by State

Price-to-Rent Ratio by City

Here are 52 popular metropolitan areas and their price-to-rent ratios. As of the third quarter of 2022, the median home sale price in the U.S. was $454,900, the Federal Reserve Bank of St. Louis reported.

Median sale price listed comes from Redfin as of December 2022. Median rents listed come from the Zumper National Rent Report from November 2022, based on a one-bedroom apartment. Remember, as home prices and rents shift over time, so do the ratios.

1. San Francisco

It’s no secret that San Francisco housing prices are way up there. The median sale price was $1,352,500, and the median rent for a one-bedroom apartment was $3,000 per month (or $36,000 a year). That gives the hilly city a price-to-rent ratio of nearly 38.

2. San Jose, Calif.

Golden State housing continues its pricey reputation in San Jose. The median sale price here was $1,222,500, and the city had a median one-bedroom rent of $30,480 annually ($2,540 a month), leading to a price-to-rent ratio of 40.

3. Seattle

The Emerald City had a median sale price of $820,000. Meanwhile, the median annual rent for a one-bedroom was $23,160, for a price-to-rent ratio of around 35.

4. Los Angeles

A median sale price of $965,000 and a median one-bedroom rent of $29,160 a year ($2,430 a month) shines a Hollywood light on renting, with a rent-to-price ratio of 33.

5. Long Beach, Calif.

With a median home price of $765,000 and one-bedroom rent averaging $1,770 a month, Long Beach earned a ratio of 36.

6. Honolulu

The ratio in the capital of Hawaii is a steamy 25, with a $552,500 median sale price and a median rent of $21,600 per year.

7. Oakland, Calif.

Oakland, across the bay from San Francisco, had a median sale price of $870,000 and median rent of $26,760 a year ($2,230 a month). This earned the location a price-to-rent ratio of 32.

8. Austin, Texas

A hotbed for artists, musicians, and techies, Austin had a price-to-rent ratio of nearly 27. This was thanks to a median sale price of $540,000 and median annual rent of $20,160.

9. San Diego

Hop back to Southern California beaches and “America’s Finest City,” where a median sale price of $835,000 and median rent of $30,000 a year led to a ratio of almost 28.

10. New York, N.Y.

The median sale price here was $790,000 and median rent was $45,480 a year ($3,790 a month), which equates to a price-to-rent ratio of roughly 17.

Of course, the city is composed of five boroughs: the Bronx, Brooklyn, Manhattan, Queens, and Staten Island, and it’s probable that most of the sales under $790,000 were not in Manhattan (where the median sale price was $1.2 million) or Brooklyn (where the median was $950,000). Just looking at Manhattan using the same annual average rent figure, the ratio looks more like 26.

11. Boston

With a median sale price of $775,000 and median rent of $36,000 a year, Beantown had a price-to-rent ratio of over 21.

12. Portland, Ore.

The midpoint of buying here of late was $524,500, compared with median rent of $18,480 per year, for a price-to-rent ratio of 28.

13. Tucson, Ariz.

In Tucson, the median sale price of $329,950 and median annual rent of $11,280 came out to a ratio of 29.

14. Denver

The Mile High City logged a renter-leaning ratio of nearly 29, thanks to a median sale price of $575,000 and median annual rent cost of $20,040.

15. Colorado Springs, Colo.

With a median sale price of $420,000 and annual rent of $14,760, this city at the eastern foot of the Rocky Mountains had a recent price-to-rent ratio of 28.

16. Albuquerque, N.M.

In the Southwest, Albuquerque heated up to a ratio of 26, based on a median home sale price of $300,000 and annual rent of $11,400.

17. Washington, D.C.

The nation’s capital is another pushpin on the map with a high cost of living. The median sale price of $650,000 compares with median rent of $27,600 annually ($2,300 a month), translating to a ratio of nearly 24.

18. Mesa, Ariz.

With a median sale price of $430,000 and median annual rent of $16,320, Mesa has a price-to-rent ratio of 26.

19. Las Vegas

Sin City has reached a ratio of 25, based on a $385,000 median sale price vs. $15,600 in annual rent.

20. Phoenix

Phoenix’s price-to-rent ratio has revved up to 24, with a median home sale price of $408,000 and $16,680 in rent.

21. Raleigh, N.C.

North Carolina’s capital, the City of Oaks, logs a ratio of nearly 27. This is based on a $407,500 median home sale price and median annual rent of $15,240.

22. Tulsa, Okla.

Tulsa had a price-to-rent ratio of 19, with median annual rent of $10,680 and home sale prices at a median of $203,750.

23. Dallas

This sprawling city had a recent median sale price of $400,000 and median annual rent of $17,040, leading to a price-to-rent ratio of 23.

24. Sacramento, Calif.

This Northern California city had a recent median sale price of $450,000 and median annual rent of $18,720, for a price-to-rent ratio of 24.

25. Fresno, Calif.

Fresno makes the list with a price-to-rent ratio of 20, based on median home sale prices of $380,000 and median annual rent of $15,960.

26. Oklahoma City

The capital of Oklahoma had one of the lower price-to-rent ratios until recent home price spikes. It logs a ratio of 24 lately, based on a median sale price of $251,800 and median annual rent of $10,440.

27. Arlington, Texas

Back to the Lone Star State, this city between Fort Worth and Dallas has a price-to-rent ratio of 24. This is thanks to a median sales price of $320,000 and median annual rent of $13,200.

28. San Antonio

This Texas city southwest of Austin had a median sale price of $285,000 and median annual rent of $13,920, resulting in a price-to-rent ratio of 20.

29. El Paso, Texas

El Paso traded a low price-to-rent ratio for a higher one when home prices rose. It’s at a 23, based on recent figures of a median sale price of $235,000 and median rent at $10,200 a year.

30. Omaha, Neb.

With a median sale price of $255,000 and median annual rent of $10,920, Omaha has a recent home price-to-rent ratio of 23.

31. Nashville, Tenn.

The first Tennessee city on this list is the Music City, with a price-to-rent ratio of 21. Nashville has a median sale price of $440,000 and a median annual rent of $20,400 ($1,700 per month).

32. Virginia Beach, Va.

The ratio here has nearly reached 20, based on a median home sale price of $330,000 and median rent of $16,800 per year.

33. Tampa, Fla.

This major Sunshine State city has a price-to-rent ratio of almost 21, based on a median home sale price of $410,000 and median annual rent of $19,800.

34. Jacksonville, Fla.

This east coast Florida city had a recent ratio of 19, based on a median sale price of $289,000 and median rent of $15,000 per year.

35. Charlotte, N.C.

Charlotte’s price-to-rent ratio of 22 arises from a median home sale price of $391,900 and median annual rent of $17,760.

36. Fort Worth, Texas

Panther City’s price-to-rent ratio has crept up to 22, based on a median home sale price of $340,000 and median rent of $15,120 per year.

37. Houston

Houston, we have a number: it’s a price-rent-ratio of 19. That’s based on a median sale price of $305,000 and median annual rent of $16,080.

38. Louisville, Ky.

Kentucky’s largest city has a median home sale price of $224,950 and median annual rent of $12,720. That leaves Louisville with a price-to-rent ratio of almost 18.

39. Columbus, Ohio

The only Ohio city on this list has a price-to-rent ratio of 19, due to a median sale price of $249,900 and median annual rent of $12,840.

40. Atlanta

Heading South, Atlanta has a median sale price of $400,000 and median annual rent of $19,440, for a price-to-rent ratio of 20.

41. Miami

Those looking to put down roots in this vibrant city will find a price-to-rent ratio of just under 19, based on a median home sale price of $525,000 and median rent of $19,200 annually.

42. Minneapolis

The Mini-Apple is sweeter on renting, with a ratio of 21. This is based on a median sale price of $320,000 and median annual rent of $14,880.

43. New Orleans

Next up is another charming southern city. New Orleans has a price-to-rent ratio of nearly 18, given a median sale price of $325,000 and median rent of $18,240 per year.

44. Kansas City, Mo.

In this Show-Me State city, a median home value of $246,000 and median annual rent of $12,720 equate to a price-to-rent ratio of 19.

45. Chicago

Chi-Town’s 14 price-to-rent ratio is based on a $310,000 median home sale price and $22,440 median annual rent.

46. Memphis, Tenn.

Memphis logs a price-to-rent ratio of nearly 15, with a median home sale price of $179,500 and median annual rent of $12,240.

47. Indianapolis

The ratio in this capital city is 18, thanks to a median home sale price of $225,000 and median annual rent of $12,360.

48. Philadelphia

This major East Coast city had a recent median sale price of $250,750 and median annual rent of $17,640, for a price-to-rent ratio of 14.

49. Baltimore

Charm City had a recent median home sale price of $215,000 and median annual rent of $16,560, resulting in a price-to-rent ratio of 13.

50. Newark, N.J.

Newark, anyone? The median sale price here is $409,000, with median rent at $1,400 a month (or $16,800 a year), leading to a ratio of 24.

51. Milwaukee

Milwaukee is slightly more favorable to homebuyers than renters, thanks to a price-to-rent ratio of 15. This Midwest city had a recent median sale price of $180,000 and median annual rent of $11,640.

52. Detroit

Detroit saw a spike in home sale prices, though the latest median sale price was a relatively low $82,000, compared with median annual rent of $13,200. This resulted in a price-to-rent ratio of 6.

How to Calculate Price-to-Rent Ratio

If you don’t see your city on the list, rest assured that it’s possible to calculate price-to-rent ratio yourself. To do so, you’ll simply take the median home sale price in your area and divide it by median annual rent.

Here’s an example: Let’s say the median rent in a city is $3,000 a month, and the median sale price is $1 million. You’d divide $1 million by $36,000 ($3,000 per month multiplied by 12, the number of months in the year). The result is a price-to-rent ratio of nearly 28.

The Takeaway

The price-to-rent ratio lends insight into whether a city is more favorable to buyers or renters. Usually in a range of 1 to 21-plus, the ratio is useful to house hunters, renters, and investors who want to get the lay of the land.

If you’re in the market to buy, whether as a primary homeowner or an investor, give SoFi Mortgage Loans a look. SoFi Home Loans have competitive rates. Plus, you may qualify for a loan with well under 20% down

Interested in a home loan with SoFi? Find your rate in minutes.

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility 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.
SOHL0722010

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If you’re home shopping, you may be looking at duplexes. These properties are typically a single structure with two separate units. At face value, buying a duplex might seem like a BOGO (buy one, get one free) deal, but it isn’t as simple as purchasing two homes for the price of one.

It’s important to analyze the pros and cons of buying a duplex before you start bidding or sign a contract. In this guide, you’ll learn about the following topics:

Defining ‘Duplex’

A duplex is composed of two living units on top of each other or side by side.

Duplexes have separate entrances for each occupant. That means single-family homes that have been subdivided typically do not count as duplexes.

For a side-by-side duplex, both entrances are likely on the street. If a duplex is stacked, the second-floor occupant might share an exterior entrance with the first-floor occupant, and then have an entrance to themselves upstairs.

In addition to private entrances, the units have their own bathrooms, kitchens, and other living features. In terms of the exterior, occupants may share a backyard, garden, or driveway.

Every duplex has one thing in common: a shared wall. If the duplex units are side by side, the occupants will share a wall. One on top of the other? Occupants share a ceiling/floor.

Just because properties share a wall doesn’t inherently make them a duplex. Sometimes duplexes are confused with twin homes.

A twin home may look like a duplex, but the shared wall is in reality the lot line between the two homes. So it’s two connected properties, each on its own lot. A duplex is two properties, owned by the same person, on a single lot.

The square footage of each duplex half is typically quite similar to the other. In many, occupants will find that the layouts mirror each other (if they’re side by side), or duplicate exactly (if they’re on top of each other).

Properties with carriage houses or guesthouses are not considered duplexes: They usually do not share walls, and the smaller residence is considered an accessory dwelling unit or ADU.

Duplexes fall in the category of multifamily dwellings, which also include triplexes and quads (aka fourplexes). According to the National Multifamily Housing Council, more than 17 million renters (or about 17% of all renters) live in two- or four-unit dwellings.

Benefits of a Duplex

Duplexes have the exciting “two for one” energy, which can make buying them enticing. The style of living comes with benefits for the buyer, including:

•   Income to help with mortgage. Duplex owners who decide to live in one of the units can rent out or Airbnb the other, making income to help offset the monthly mortgage payments and upkeep.

Recommended: 25 Things to Know When Renting Out an Airbnb

•   Potential tax benefits. Mortgage interest is tax-deductible for a primary or secondary home if the home acquisition debt is $750,000 or less ($375,000 for a married couple filing separately).

   Resident duplex owners can write off mortgage interest and property tax only on the half of the property they live in. However, if they have a renter, they can write off repairs to that unit, any utility bills paid for the rental, and management fees. The IRS even allows the owner to depreciate the rented half of the property.

•   Flexibility in the future. Having two homes on one lot opens up options for owners. They can rent out a unit or use it as an office or studio space. In the future, the unit could become an apartment for aging parents or a guest suite for visiting family members.

•   Landlord proximity. If a duplex owner is getting into the landlord business for the first time, it might be beneficial to live close to the tenant. In the event of a repair or emergency, the tenant is just steps away.

   Additionally, because of landlord proximity, duplex owners might find that renters keep the home in better condition. If the landlord is living on the property, a tenant might be less likely to abuse features or leave problems unreported.

   A duplex could also be a good opportunity to live next to a family member or close friend. It means both parties live on the same property but not with each other. For some arrangements, it’s a good balance between living together while also apart.

•   Affordability. If you’re wondering how much duplexes cost, know this: Because it’s two properties with a single price, duplexes can be more affordable than two single-family homes. Plus, duplexes may often be located in more affordable neighborhoods.

Recommended: Factors That Affect Property Value

Drawbacks of a Duplex

Double the property doesn’t always mean double the fun. Here’s why a duplex might not be the right fit for all buyers:

•   Affordability. When numbers are crunched, two properties in one sounds like a deal, but the price of a duplex may be higher than that of a single-family home nearby. And if a duplex buyer does not plan to occupy the property, the down payment will typically be at least 15% of the purchase price, and homeowners insurance, known as landlord insurance, will usually be more expensive (often as much as 25% more) for an investment property. This can be a key concern when thinking about how to buy a duplex.

•   Tax season could be complicated. Yes, a homeowner can offset costs with a tenant in a duplex, but they’ve just signed themselves up for a more complicated tax scenario than with an owner-occupied single-family home.

•   Landlord responsibilities. Many homebuyers are drawn to the idea of a duplex because they can generate income while living there. However, being a landlord isn’t just about collecting rent checks each month. Duplex owners are responsible for their renter’s unit, meaning fixing issues and being available for general repairs.

   No one wants to address an overflowing toilet at 2 am, but as a landlord, that might well be a reality. It’s a 24/7 job, and not only will a duplex owner be responsible for fixing the issues, but the cost of repairs will have to come out of their pocket.

•   Finding good tenants. Finding renters can be challenging. Owning a duplex doesn’t automatically guarantee extra income, and the process of finding reliable renters can be time-consuming. Plus, duplex owners will have to start the process anew each time a tenant moves out.

   Remember, if the second dwelling is unoccupied, the duplex owner still owes the same amount each month. Before buying a duplex, it’s worth considering how much time owners can put into searching for the right tenant, and if they want to have that responsibility long term.

•   Bad tenants. Let’s face it, not all tenants will be perfect. In reality, they could be loud, rude, messy, and/or late on rent. There are a multitude of things that could go wrong with a renter, and duplex owners should be comfortable bringing issues to the table. Owners who decide to live onsite could get stuck with a less-than-considerate neighbor.

Recommended: 31 Ways to Save for a Home

Estimate a Mortgage Payment for a Duplex

Now that you know about the pros and cons of owning a duplex, if you’re still interested in the idea of purchasing one, use the mortgage calculator below to get an estimate of what future mortgage payments would be.

Obtaining a Mortgage

If, now that you know the pros, the cons, and the costs, you are still ready to move ahead, the next step is how to buy a duplex would be financing your purchase. A potential duplex buyer who plans to occupy one of the units can apply for an FHA loan, VA loan, or conventional financing. (Investors are limited to conventional mortgage loans.) FHA loans can be a good choice for first-time home buyers, those with less-than-perfect credit, and buyers who do not have a large down payment.

Check out our first-time home buyers guide for additional information on mortgages, loans, and closing costs.

Applicants may be able to use projected rental income to qualify for a loan. For rental income to be taken into account, though, renters usually must have already signed a lease. And not all of the projected income applies; a percentage is usually subtracted to account for maintenance and vacancies.

It makes sense for would-be buyers to have a good feel for their budget, as well as the potential costs associated with buying a property.

Knowing whether you plan to live at the address or rent out both units is a big consideration. Investors usually need a higher down payment than owner-occupants do. (Investment properties don’t qualify for private mortgage insurance, so typically a down payment of at least 20% is needed to get traditional financing.)

The Takeaway

Buying a duplex can be a great opportunity to own two properties, perhaps occupying one and earning rental income on the other. But there are pros and cons to be considered, as well as implications for your finances.

If you are moving ahead with buying a home, SoFi can help. SoFi offers mortgage loans with competitive rates, and qualifying first-time homebuyers can put as little as 3% down.

Great rates, available to view in minutes: See how easy SoFi Mortgage Loans can be.

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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.
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Do you need to open a new bank account? If you’re armed with the right information, opening an account online or in person won’t take long. In some cases, you can apply for a checking or savings account in a matter of minutes.

Whether you’re a first-time banker or changing from one financial institution to another, here’s information that may help make the process easier. We’ll review what you’ll need to open a bank account and highlight the differences between checking and savings accounts. We’ll also share some details about how to use a new bank account. Ready? Here we go!

What Will I Need to Open a Bank Account?

Here’s a list of what you are likely to need when opening a bank account. Gathering them before you actually begin the process of starting a new account will help you save time and frustration:

1. Qualifying information: First, you’ll need to make sure you’re eligible to open a bank account. If you’re under 18, many (but not all) banks may require a parent or legal guardian to open the account with you.

2. Identification: You’ll also need to provide a valid government-issued photo ID such as a driver’s license, non-driver state ID card, or passport.

3. Personal information: Be prepared to provide basic information such as your birthdate, Social Security or Taxpayer Identification number. You’ll also need to give contact information such as your address, phone number, and email.

◦  Other account holder information: If you’re opening a joint account, you’ll need the identifying and personal information listed above for all the account owners.

4. Initial deposit: You will likely need an initial deposit when opening a bank account. The minimum amount required to open an account varies from bank to bank but in some cases, it can be as low as $25. In some cases, it may even be absolutely zero! (We’ll share more on this in a minute.) If you’re transferring the minimum deposit from another bank, you will likely need the routing and account numbers.

5. Username and password: If you’re applying online or opening an account at an online-only bank, you’ll need to establish a username and password.

6. Signatures: If you are applying for an account in person at a branch, you’ll be able to sign all documents there. If you’re applying online, you may be able to use an e-signature, or, depending on the bank, you may have to wait and sign documents that are sent to you via the mail.

Why Open a New Bank Account?

You probably know that bank accounts offer convenience, safety, and flexibility. In fact, if you’re like most people, you probably already have an account or two up and running. But sometimes, there’s a good reason to start a new bank account. Perhaps you want to open a savings account in addition to your checking and earn more interest as you work towards a goal, like the funds to pay for a vacation. Or maybe an online bank offers a great incentive (say, a higher interest rate and fewer fees) than the bricks-and-mortar financial institution you are currently using.

Bank Account Types to Choose From

There are two main types of basic bank accounts: checking and savings accounts. Many people choose to open multiple types of bank accounts at the same time.

Type of Account	Pros	Cons
Checking Account	Easy access to money Unlimited withdrawals/transfers Low initial deposit; typically, $25-100 but possibly $0 FDIC-insured Debit card Direct deposit	No or low interest rate Possible minimum balance required Overdraft and nonsufficient funds often assessed
Savings Account	Earns interest Easy access Low initial deposit of $25 to $100 Low risk FDIC-insured	Fees Low annual percentage yields (APYs) No tax benefits Some account restrictions (such as limited monthly withdrawals)

If you’re looking for a bank account to use primarily for paying expenses, a checking account with no or low fees is probably best. If you are trying to save for short-term goals such as a car, vacation, or down payment on a home, a savings account may fit your needs. Here’s a closer look.

Checking Account

A checking account is held at a financial institution and allows withdrawals and deposits. Checking accounts are liquid. In most cases, you are allowed an unlimited amount of deposits and withdrawals. That’s different from most savings accounts that may limit transactions.

You can get to your money using checks, ATMs, electronic debits, and debit cards tied to the account. You can deposit using ATMs, direct deposit, and over-the-counter deposits.

Some checking accounts may pay interest on your balance, but at a very low rate. Almost all bank checking accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per individual. This protects your money against sudden bank closures and other crises.

Many banks offer apps and other digital tools that help keep track of your checking account balance. They also enable you to make deposits, transfers, and automatic bill pay, as well as provide general budgeting and financial information.

Depending on where you open the account, there may be minimum balance requirements and other fees to contend with, such as overdraft or non-sufficient funds (NSF) fees, if your balance dips below zero.

Savings Account

A savings account is an interest-bearing account also held at a financial institution. Savings accounts are an important source of funds for banks and other finance companies to use as loans. Just about every bank and credit union offers them, and they can be a good place to save funds you’ll need in the short term while still earning a modest amount of interest. The minimum deposit is usually in the range of $25 to $100. A word to the wise, though: High-interest savings accounts may charge a monthly maintenance fee that can erode your interest earned and your savings.

Like checking accounts, most savings accounts are FDIC-insured. The amount of withdrawals you can make over a certain period of time may be limited (often six per month). Savings account interest rates vary, but in most cases, the amount of interest paid is quite modest (though online banks tend to offer higher rates than bricks and mortar banks). This is especially true when comparing them to less-liquid savings vehicles such as CDs. With most savings accounts, banks may change their rates at any time.

One last thing to remember: Any interest earned on a savings (or checking) account is considered taxable income and will be reported to the IRS. You will also want to check with banks to see what the minimum deposit and balance requirements are and what kinds of fees are applied to savings accounts.

💡 Recommended: How Does a Savings Account Work?

How Much Money Do You Need to Open a Bank Account?

You will likely need an initial deposit to open your checking account or your savings account. For checking accounts, this can be as low as $25 or $100, depending on the bank and the account services you’ve signed up for. In some cases, though, a bank (usually an online bank) may let you open an account for less – even with no money until your first paycheck is deposited, for instance.

You can transfer money from an existing account at a bank or credit union into your new account, but be aware the existing account may charge a fee for this. If you’re opening an account in person, cash or a check will work. In some cases, you may have to wait several days for a check to clear before you have access to those funds.

Using Your New Bank Account

After your account is opened and funded, you’re ready to go. Be sure to keep an eye out for anything coming to you in the mail, such as a debit card or paper checks.

•   Utilize Online Features: Next, you’ll want to sign up for any electronic features associated with your account that may help you manage your money. This includes online bill pay, which allows you to pay bills electronically, eliminate paper checks, and take advantage of remote check deposits. Account alerts are another benefit of electronic bank accounts, as they can warn you about unusual activity in your account and if your balance is getting low.

•   Track Activity: This last feature is important: You’ll want to keep close track of the activity in your checking account to make sure you don’t overdraw. Most banks charge hefty overdraft fees for purchases that put the account in the red. Those fees can add up fast.

•   Consider Linking Accounts: If you’ve opened both a savings and checking account, you may want to consider linking the two. This way, you may be able to avoid overdraft charges and have a place to put any extra money from your checking account into a more lucrative, interest-bearing account.

As you see, starting a bank account takes just a little bit of time and information. Doing so is an important step towards optimizing your financial life and giving you a place to keep your money, access it – and even grow it and put it to work for you.

Bank Better With SoFi

Looking for one-stop banking? With high interest banking from SoFi, you can quickly open qualifying accounts that earn a healthy APY, banish fees (overdraft, monthly maintenance, and more), and give you access to your direct-deposit paycheck up to two days earlier! And you’ll have access to 55,000 fee-free ATMs within the Allpoint network worldwide just to make things even more convenient.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

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Photo credit: iStock/atakan

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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.
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