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Installing solar panels on your home allows you to do your part for the planet while also reducing your monthly utility bills. However, the cost to purchase panels and have them installed can be a deterrent. Even if you know you’ll save money over the long term, it may be hard to come up with the funds to pay for the project up front.

Fortunately, there are tax incentives as well as financing options that make paying for a solar system a lot more manageable. Solar financing involves using instruments, such as loans and leases, to pay for a solar system in installments over time rather than in one lump sum at the time of purchase. Each financing option has different features, advantages, and drawbacks.

Read on to learn more, including how much solar panels cost today, how much they can help you save, and what solar financing options can help you cover the initial bill.

The Cost of Solar Panels

The cost of solar panels varies by location, the type of solar panels, and the system’s size, but the average cost of a residential system is currently $20,534. The actual cost of solar panels can vary greatly depending on location, house features, and size of system. However, state and local tax incentives and rebates can lower the cost.

There are also different financing options available that allow you to pay for a solar system in installments rather than in one lump sum up front. The monthly amount owed on a solar loan can be less than an average utility bill.

Recommended: Strategies to Lower Your Energy Bill When Working From Home

Potential Benefits of Solar Panels

While solar panels have the potential to save homeowners money and do a lot of good for the planet, they come with a high price tag. Solar power financing can help make solar energy possible for more people, but not everyone qualifies.

Even if your solar panels don’t eliminate your electric bills, they can lead to significant savings. Generally, the initial expense of the purchase of a solar system can be recouped in 5-15 years, depending on energy costs in your state. After recouping installation costs, the amount you’ll save over the life of your panels will continue to add up.

Another benefit of solar panels is the potential to increase the resale value of your home. Research has shown that homes with solar panels can sell for 5%-10% more than those without them.

For some people, one of the biggest benefits of installing solar panels, however, is knowing that they’re using renewable energy and helping to reduce greenhouse gases. This could especially be important for those living in a state where the majority of the energy generated is through nonrenewable power sources.

Recommended: How Much Does It Cost to Remodel or Renovate a House?

Potential Drawbacks of Solar Panels

While solar panels have the potential to save homeowners money and do a lot of good for the planet, they come with a high price tag. Solar power financing can help make solar energy possible for more people, but not everyone qualifies.

Another drawback to solar energy is that it is sunlight dependent. If there is a long stretch of overcast weather, or if you live in an area that doesn’t get a lot of sun, you might not be able to generate enough solar energy to take care of your energy needs. However, solar batteries (which store excess energy) can help mitigate this issue.

Solar panels and the wiring they require can also use up a significant amount of space. Depending on how many panels you need for your home, it can be difficult to find adequate space with sufficient sun exposure to install a solar system.

Also, keep in mind that uninstalling a solar system and moving it can be difficult and costly. As a result, a solar system is not something you can generally take from house to house. It’s best to consider it as an investment in your home.

Saving Money by Installing Solar Panels

More than six million homeowners in America currently have solar panels. One reason is the savings it can offer over time. Once installed on your roof, solar panels typically last for more than 25 years. Hypothetically, if your solar system eliminates your electric bill and you normally spend about $150 a month on electricity, that would bring in a potential savings of $45,000 over the life of the system.

Keep in mind, however, that solar panels don’t always eliminate your electricity bill. And, as with any home improvement project, it’s important to consider the upfront costs, how long you plan to live in your home, and if you can find home improvement financing options that work with your budget.

Four Options for Solar Panel Financing

While converting to solar can pay for itself over time, it requires a sizable upfront investment. Here are some options that can help make it easier to foot the bill.

1. Tax Credits and Rebates

A smart solar power financing strategy starts with taking advantage of all available tax credits and rebates. The federal government offered a 30% tax credit for solar panels that, unfortunately, expired on December 31, 2025. But if you installed solar panels before that date, you still qualify for the tax credit.

Unlike a deduction, a tax credit is an amount of money that you can subtract, dollar for dollar, from the income taxes you owe. So, if you pay $30,000 to install a new solar system, you’ll qualify for a roughly $9,000 tax credit, which equates to $9,000 more in your pocket.

In addition, many states offer rebates that further reduce the cost. To help people learn more about state and local incentive programs, North Carolina State University’s NC Clean Energy Technology Center offers a nationwide directory of programs.

2. Solar Panel Leases

A unique option for solar panel financing is a solar lease or power purchase agreement (PPA). With a lease or a PPA, a company installs the solar system on your roof, and you pay that company for your energy each month, which is typically 10%-30% lower than your usual electric bill. The company owns the panels and remains responsible for any required maintenance.

Since you don’t own the solar system, however, you can’t take advantage of any tax rebates or other incentives that come with purchasing solar panels outright. Also, solar lease and PPA contracts can extend for 20 years. If you want to move before the contract is up, you would need to find a buyer who wants to take over your contract or could end up paying a hefty cancellation fee.

3. Secured Solar Panel Loans

Since you are adding to and improving your home, you might consider using a home equity loan or home equity line of credit (HELOC) to finance solar panels. This type of financing is secured by the equity you have in your home. Because the debt is secured (which lowers the risk to the lender), you may qualify for a lower interest rate. However, if you are unable to repay the loan or credit line, the lender can take your home to recoup its losses. Also, you need to have equity in your home to qualify for a home equity loan or HELOC.

4. Unsecured Solar Panel Loans

An unsecured solar panel loan is an unsecured personal loan that you can use to purchase solar panels. You don’t have to have any equity in your home or use your home as collateral to qualify for an unsecured solar panel loan. To get approved, the lender considers your income and your credit rating (among other financial factors that vary from lender to lender).

With an unsecured personal loan, you receive a lump sum up front, which you can use for virtually any type of expense, including solar panels. These loans typically have fixed rates so your monthly repayments stay the same over the term of the loan, which is often one to seven years. Because this type of solar panel financing is unsecured, rates can be higher than you might get with a home equity loan or HELOC.

The Tax Benefits of Solar Panels

There was a 30% federal tax credit for solar panel systems installed between 2022 and 2025. That is no longer available, but there are still state-level solar incentives and policies, which vary widely. You can look up what’s available in your area in the DSIRE database, operated out of North Carolina State University. Your local utility may also offer clear energy incentives, which can help you save money on solar panels.

The Takeaway

There’s no question that solar panels are environmentally friendly. Over time, they can also be economically friendly, saving you money on your electricity bill. Doing some research about residential solar panels and general home improvement financing is a good step to take to see if it’s the right choice for your home.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

✓ Checking your rate will not affect your credit score † .

FAQ

How much does it cost to lease a solar panel system?

According to Consumer Affairs, the average lease cost for solar panels runs between $150 and $250 per month. The amount you’ll pay will depend largely on the size and production of the system.

How much can you save using solar panels?

According to Consumer Affairs, the average homeowner saves $25,000-$90,000 over the 25-year lifespan of their solar panels. However, savings depend on a number of factors, including where the home is located, the size of the system, and the roof position.

Is there a tax credit for installing solar panels?

Currently, there is no federal tax credit for newly installed solar systems. The previous tax credit ended under the One Big Beautiful Bill Act of 2025. However, there are various state-level tax incentives.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

SOPL-Q326-063

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Updating your home can be done without a full (and expensive) renovation. There are a number of light lift projects that can give your home a whole new look and feel and even increase its resale value. Exterior upgrades, such as fresh paint, a new front door, and better landscaping or outdoor lighting, can add to your home’s curb appeal. Indoor improvements, such as updated lighting fixtures, paint, or wallpaper, can give the interior of your home a more up-to-date, high-end look. Here are four ways you can upgrade your home without breaking the bank.

Exterior Improvements

A home’s front door is the focal point of the exterior. To upgrade its appearance, you might replace the door or paint it and add new hardware. Decorating the door with a seasonal wreath or another personalized touch can also add to its charm.

Besides a front door refresh or upgrade, other exterior improvements you might consider include a new mailbox, a new porch light fixture, and perhaps some window boxes with plants and fresh flowers that add a bright contrast to your home’s exterior color.

Front door styles that are currently trending include bold colors (from ruby to bright yellow or blue), natural wood stains, and more glass (such as custom inserts and floor-to-ceiling sidelights).

How you landscape your front yard will depend upon where you live and the climate there. In general, though, modern trends include:

•   Natural landscaping using native plants, creating landscaping that’s eco-friendly and easy to maintain

•   Pollinator gardens that attract butterflies, bees, and other insects that help pollinate

•   Edible gardens, including lettuce, peppers, tomatoes, and more (creativity is key)

Recommended: 15 Ways to Boost Your Curb Appeal for a Winter Open House

Lovely Lighting

Outdoor lighting doesn’t need to be white. Filters can add a range of colors. These lights can spotlight key areas of landscaping, highlight where you like to entertain, or look attractive for even more curb appeal while providing illumination.

Size-wise, both tiny and boldly large lights are in vogue, and although lanterns aren’t a new trend, they’re still considered stylish. Updating recessed lighting is another popular home improvement project.

After a period of all-white being a hot trend for interior lighting, table lamps and hanging lighting fixtures are appearing more often as dark neutrals in brown, black, or gray. They can be used to update the white, cream, or gray choices in a home.

Paying attention to texture in lighting fixtures can add interest and variety. Materials can range from wood to wicker and rattan and can be crafted in contemporary shapes to avoid an overly rustic look. Also still trending are geometrically designed lighting fixtures, from simple to more complex shapes.

Painting and Wallpapering

Painting rooms in a home can transform their appearance. What colors are trending? Currently, homeowners are favoring dusty pink, cool brown, eggshell white, and soft green. However, unless you’re planning to sell sometime soon, personal taste is what matters most when picking paint colors.

Wallpaper trends also run the gamut, including those with a texture and colors often inspired by landscapes. In this style of wallpaper, expect to see some blues, greens, and neutral shades. Some people like to have one pictorial wallpaper wall, which looks like a mural in a room.

Wow Factor on Windows

In-style curtains often have hues found in nature, from green to ochre, and can also feature flowers, landscapes, and more. Geometric prints or two-tone materials may also appeal to some people. Velvet can be used to create a more intimate space.

Consider using double or triple curtain rods to add layers of window coverings. Then you can add a layer that filters light and enhances privacy, while also selecting curtains with the appearance you enjoy. Many designers recommend placing your curtain rod close to ceiling height vs. at the top of the window for a more dramatic and chic effect.

Recommended: How Much Does It Cost to Replace Windows?

Costs of a House Upgrade

The type of house upgrades listed here might be considered low-cost or low-end renovations and can cost as little as $3,000 for a 1,250-1,600-square-foot home. If, once momentum gets going, the low-end house upgrade turns into a higher-end one, the average cost could be closer to $40,000, according to the home improvement site Angi.

Another cost-related factor is where the home is located. Pricing in urban areas is typically higher than in rural areas, depending on the area’s cost of living.

Plus, upgrades in older homes may take more time and attention to complete. If the home is officially considered to be historic, there may be guidelines about what changes can be made.

Recommended: Renovation vs. Remodel: What’s the Difference?

Financing a House Upgrade

Here are some options for financing a home upgrade.

•   Sometimes, homeowners are able to pay for these upgrades out of pocket. This can be true when the costs are relatively small or when money has been saved for the costs of the renovation. This can be the smart choice when possible: no debt, no interest to pay.

A downside to paying for home upgrades with cash may be that the homeowner empties a savings account or cuts corners on the renovations to avoid needing to borrow funds. Or if, say, a big medical bill pops up and the emergency fund was used to renovate, then high-interest credit cards might need to be used to pay that debt.

•   You might consider a home equity line of credit (HELOC) to finance a house upgrade. This type of loan allows you to borrow against the equity in the home to pay for renovations. How much is available to borrow will depend upon how much equity is available and the loan-to-value ratio (LTV) that a lender permits. For example, if a lender has an 80% LTV ratio, that means the institution would:

◦   Appraise the home (e.g., $250,000).

◦   Calculate 80% of that ($200,000).

◦   Subtract current mortgage balances (e.g., $125,000).

◦   Consider what’s left over ($200,000 – $125,000 = $75,000) to be equity in the home.

The lender would also consider the financial profile of the borrower when reviewing the loan application. HELOCs often have a low initial interest rate, and usually, the homeowner can choose to pay interest only during the draw period. However, there may be upfront fees, and the rate is often variable with high lifetime caps.

•   Another option might be a home improvement loan, which is an unsecured personal loan and not attached to the home’s equity. Funding can usually be granted more quickly with fewer fees. This may be a good option for people who don’t have enough equity in their homes for their project or who don’t want to use their home as collateral.

Recommended: How to Apply for a Personal Loan

The Takeaway

There are a number of ways you can upgrade your home that don’t involve tearing down walls or putting on a $150,000 addition. Lower-cost upgrades, ranging from $3,000-$40,000 or more, may still require spending more cash than you have just sitting in the bank, however. Plus, you may not want to deplete your savings in order to upgrade your home. A personal loan could be a good option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

How do you update your home?

A good plan for updating your home can be to start with changes that can shift the mood of a room. This includes paint and/or wallpaper, carpets and rugs, window treatments, and lighting, among other features.

How to update a home without renovation?

To update a home without a major renovation, make changes to surfaces, such as repainting in a different color, swapping in new curtains or blinds, and adding fresh rugs or refinishing the floors. You can also focus on modular or cosmetic upgrades, such as updating hardware, swapping out light fixtures, or adding peel-and-stick wallpaper, that completely refresh your space without structural alterations or complex construction work.

How much do home updates cost?

The price of home updates can range considerably depending on the cost of living in your area, how much you DIY vs. outsource to professionals, and your taste level and the changes you actually make. A small update can start at $3,000, but prices in the five figures can be common.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOPL-Q326-066

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Whether you’ve just moved into a new home or want to breathe new life into your current one, refacing cabinets in your kitchen could really transform the space.

Cabinet refacing involves changing the cabinet exterior surfaces only and can cost significantly less than a full cabinet replacement. How much will it set you back? The cost to reface kitchen or bathroom cabinets ranges from roughly $4,500-$10,550, with the national average coming in at around $6,750.

Read on to learn what factors affect refacing costs, how to keep a cabinet makeover project within your budget, and how to get started.

Average Cost of Cabinet Refacing

Cabinet refacing allows you to give your kitchen a refresh at a significantly lower price tag than a full kitchen remodel. The exact cost will depend on the materials you choose, the size of the room, labor costs, and where you live. However, the cost typically runs between $4,500 and $10,550 or an average of $6,750.

If you have a small kitchen, DIY the project, and choose budget-friendly materials, you could spend a lot less than the average cabinet refacing cost. On the other hand, if you have a large kitchen, hire a contractor, and go with top-of-the-line materials, you could spend significantly more.

Recommended: 20 Small Kitchen Remodel Ideas and Designs

Cabinet Makeover Costs by Budget

The good news is that you can give your cabinets a refresh on virtually any budget. Here’s a look at what you can accomplish at different price points.

Budget: Under $1,000
If you’re looking to spend less than $1,000, you can likely reface the cabinets in a small kitchen yourself using laminate veneers. However, you may need to keep the original hardware.

Budget: $1,000 to $5,000
With more wiggle room in your budget, you may be able to hire a contractor to reface your cabinets using laminate or wood veneer and also replace the hardware. However, you may not be able to add accessories such as a built-in wine rack or under-cabinet lighting.

Budget: $5,000 to $10,000
With this budget, you can likely hire a contractor to install high-end wood veneer and hardware, plus add cabinet accessories, even for a large kitchen. With a smaller space, you may be able to reface your cabinets with solid wood.

Budget: $10,000 to $15,000
If you can spend $10,000-plus on the project, you should be able to hire a contractor to install new solid wood doors and drawer fronts, choose luxurious hardware, and add fancy accessories. You might also be able to add a couple of custom cabinets to match your newly upgraded cabinets.

Reasons to Reface

Refacing old cabinets can give your kitchen an updated look for 30%-50% less than a full cabinet replacement. This makes it an appealing option for homeowners looking to do a kitchen renovation on a budget. What’s more, there are a wide range of resurfacing options to choose from, so you can likely find a look that fits your kitchen design vision. The process is also faster and more environmentally friendly than a remodel.

Keep in mind, however, that refacing might not be the best option if the existing cabinets are damaged or you need a better kitchen layout. While refacing can make your kitchen look and feel brand new, it won’t change its layout or functionality.

Standard Options for Refacing

When you reface cabinets, there are four common types of finishes you can choose from. Here’s a look at each option.

Plastic Laminates

The laminate is cut to size and applied to the cabinet boxes and doors using a special adhesive. This is one of most budget-friendly refacing options, ringing in between $50 and $125 per square foot. However, plastic laminate is not as resistant to chipping and cracking as other refacing materials.

Wood Veneer

Wood veneers give you the look of wood cabinets without the high cost. They come in thin sheets designed to mimic standard species of wood, such as oak, cherry, maple, and ash, and run between $100 and $250 per square foot. While wood veneer is stronger than laminate, it’s not as durable as real wood.

Rigid Thermofoil (RTF)

Rigid thermofoil laminate is another budget-friendly refacing choice. It’s made of plastic (Formica or melamine) but looks like wood and requires little care. Just keep in mind that the melamine version of RTF is not recommended for hot or humid environments. Refacing with RTS can run roughly $60-$125 per square foot.

Solid Wood

Solid wood refacing material is the priciest option but also the longest-lasting and easiest to repair. A solid wood refacing project can run anywhere from $200 to $500 per square foot. However, the cabinets will look high-end, and the doors and drawers will be extremely durable.

Other Factors That Affect the Cost of Refacing

When coming up with your budget for a cabinet makeover, there are some other costs and upgrades you may want to factor in. Here’s a look at add-ons that can level up your kitchen refresh:

•   Hardware replacement: Replacing all the hardware on your cabinets can cost anywhere from $100-$1,000, depending on the material and style.

•   Crown molding: Depending on the materials used and the labor involved, installing crown molding can run around $700-$2,100.

•   Under-cabinet lighting: Having strip, built-in, or puck lights installed under your cabinets can run around $200-$300 per light. If your budget is tight, you can get peel-and-stick lights for as little as $20-$30.

•   Glass: If you want to add glass inserts to some, or all, of your kitchen cabinets, plan on spending an extra $100-$300 per linear foot of glass you add.

•   Handy accessories: If you’re interested in adding some extras, such as a built-in spice rack, built-in wine rack, pull-out trash can, or a lazy Susan, you’ll need to add some additional funds to your refacing budget.

Getting Started

If you are ready to move forward with refacing, it can be a good idea to shop around and get estimates from at least three contractors.

As you interview potential installers, be sure to ask about their experience with cabinet refacing and if they’re insured and licensed. You may also want to ask the following questions:

•   What kind of refacing material do you recommend for this area?

•   How long will this project take?

•   Can I use my cabinets as soon as you’re done?

•   How long will the refacing last?

•   Do you make any changes to the interior of the cabinets?

•   Does the estimate include handles and drawer pulls?

•   Will you remove the doors and drawers to work on them at your shop or do all the work at my home?

•   Can you use hardware that I’ve already purchased?

•   Can you add features such as crown molding, under-the-cabinet lighting, or glass inserts?

•   Do you offer a warranty, and if so, what does it include?

Recommended: 10 Steps for the Perfect Bathroom Remodel

Financing Your Home Improvement

While a cabinet makeover can give your kitchen a face-lift for an affordable price, you’ll still need to come up with a significant sum of cash to cover the cost of materials and labor. If you’re eager to get going but don’t have enough money on hand, you may be able to finance the project using a home improvement loan.

A home improvement loan is essentially a personal loan designed to be used to pay for home upgrades and renovations. Available through banks, online lenders, and credit unions, these loans are typically unsecured (meaning your home isn’t used as collateral to secure the loan). You also don’t need to have any equity built up in your home to be approved. Instead, the lender decides how much to lend to you and at what rate based on your financial credentials, such as your credit score, income, and how much other debt you have.

Once approved, you receive a lump sum of cash up front you can then use to cover the cost of refacing your cabinets. You repay the personal loan (plus interest) in regular installments over the term of the loan, which can range from five to seven years.

The Takeaway

If you want to breathe new life into your kitchen or bathroom, refacing the cabinets can be a good option to consider. The project involves swapping out the cabinet exterior surfaces, and it costs 30%-50% less than a full cabinet replacement. On average, you’ll pay around $6,700, though costs can range between $4,500 and $10,500. However, the exact cost will depend on your materials, the size of the room, labor, and where you live.

As you’re finalizing your design plans, it’s a good idea to also nail down how you’ll finance the project. You have various options, including credit cards, savings, or a home improvement loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Is it cheaper to reface or replace cabinets?

In most cases, it’s cheaper to reface cabinets compared to replacing them. Refacing can be 30%-50% less expensive than a full replacement.

Can I reface my cabinets myself?

If you’re handy and ready to flex your DIY muscle, you can certainly reface cabinets without the help of a contractor. In fact, if your space is small and you choose budget-friendly materials, you could save a significant amount of money by doing the work yourself.

How long does it take for a professional to reface cabinets?

According to Home Depot, a professional cabinet refacing installation project typically takes around three to five days to complete. As with any home improvement project, unexpected issues may affect this timeline.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

SOPL-Q326-061

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Conventional loans are the most popular kind of mortgage, but a government-backed mortgage such as an FHA loan is easier to qualify for and may have a lower interest rate. FHA home loans have attractive qualities, but borrowers should know that mortgage insurance usually tags along for the life of the loan.

What Is an FHA Loan?

The Federal Housing Administration has been insuring mortgages originated by approved private lenders for single-family and multifamily properties, as well as residential care facilities, since 1934.

The FHA backs a variety of loans that cater to the specific needs of a borrower, such as FHA reverse mortgages for people 62 and older and FHA Energy Efficient Mortgages for those looking to finance home improvements that will increase energy efficiency (and therefore lower housing costs).

But FHA loans are most popular among first-time homebuyers, in large part because of the relaxed credit requirements.

Recommended: Tips to Qualify for a Mortgage

FHA Loan Requirements

If you’re interested in an FHA home loan to buy a single-family home or an owner-occupied property with up to four units, here are the details on qualifying.

FHA Loan Credit Scores and Down Payments

Borrowers with FICO® credit scores of 580 or more may qualify for a down payment of 3.5% of the sales price or the appraised value, whichever is less.

Those with a poor credit score range of 500 to 579 are required to put 10% down.

The FHA allows your entire down payment to be a gift from a family member, close friend, employer or labor union, charity, or government homebuyer program. The money will need to be documented with a mortgage gift letter.

FHA Loan DTI

Besides your credit score, lenders will look at your debt-to-income ratio, or your monthly debt payments compared with your monthly gross income.

FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 43% maximum for a conventional loan.

FHA Mortgage Insurance

FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, which can be rolled into the loan. On top of that, as of 2025, the annual MIP for new homebuyers is 0.15%-0.75% of the loan balance.

For a $300,000 mortgage balance with a loan-to-value ratio of more than 95% and a loan term greater than 15 years, that’s an upfront MIP of $5,250 and a monthly MIP of $137.50 at a 0.55% rate.

That reality can be painful, but MIP becomes less expensive each year as the loan balance is paid down.

There’s no getting around mortgage insurance with an FHA home loan, no matter the down payment. And it’s usually only shed by refinancing to a conventional loan or selling the house.

FHA Loan Limits

In 2026, FHA loan limits in most of the country are as follows:

•   Single unit: $541,287

•   Duplex: $693,050

•   Three-unit property: $837,700

•   Four-unit property: $1,041,125

The range in high-cost areas is $1,249,125 (for a single unit) to $2,402,625 (for a four-unit property). For Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the range is $1,873,625 (for a single unit) to $3,603,925 (for a four-unit property).

FHA Interest Rates

FHA loans usually have lower rates than comparable conventional loans.

The annual percentage rate (APR) — the annual cost of a loan to a borrower, including fees — may look higher on paper than the APR for a conventional loan because FHA rate estimates include MIP, whereas conventional rate estimates assume 20% down and no private mortgage insurance.

The APR will be similar, though, for an FHA loan with 3.5% down and a 3% down conventional loan.

FHA Income Requirements

There are none. High and low earners may apply for an FHA loan, but they must have at least two years of employment history.

Recommended: How to Afford a Down Payment on Your First Home

Types of FHA Home Loans

Purchase

That’s the kind of loan that has been described.

FHA Simple Refinance

By refinancing, FHA loan borrowers can get out of an adjustable-rate mortgage or lower their interest rate.

They must qualify by credit score and income and have an appraisal of the property. Closing costs and prepaids can usually be rolled into the new loan.

FHA Streamline Refinance

Homeowners who have an FHA loan also may lower their interest rate or opt for a fixed-rate FHA loan with an FHA Streamline Refinance. Living up to the name, this program does not require a home appraisal or verification of income or credit.

The new loan may carry an MIP discount, but you’ll pay the upfront MIP in addition to monthly premiums. An exception: The upfront MIP fee of 1.75% is applied as a partial credit to the new loan if you refinance into an FHA Streamline Refinance or FHA Cash-out Refinance within three years of closing on your FHA home loan.

Closing costs are involved with almost any refinance, and the FHA doesn’t allow lenders to roll them into a Streamline Refinance loan. If you see a no closing cost refinance for an FHA loan, that means that instead of closing costs, a lender will charge a higher interest rate on the new loan.

You’ll continue to pay MIP after refinancing unless you convert your FHA loan to a conventional mortgage.

FHA Cash-Out Refinance

You don’t need to have an FHA loan to apply for an FHA Cash-Out Refinance. Whatever kind of loan the current mortgage is, if the eligible borrower has 20% equity in the home, the refinanced loan, with cash back, becomes an FHA loan.

The good news: Homeowners with lower credit scores may be approved. The not-great news: They will have to pay mortgage insurance for 11 years.

Any cash-out refi can trigger mortgage insurance until a borrower is back below the 80% equity threshold.

FHA 203(k) Loan

In addition to its straightforward home loan program, the FHA offers FHA 203(k) loans, which help buyers of older residences finance both the home purchase and repairs with one mortgage.

An FHA 203(k) loan can be a 15- or 30-year fixed-rate or adjustable-rate mortgage.

Some homeowners take out an additional home improvement loan when the need arises.

Note: SoFi does not offer FHA 203(k) loans at this time. However, SoFi does offer FHA Streamline Refinance, FHA Cash-Out, and FHA purchase loan options.

FHA vs Conventional Loans

Is an FHA loan right for you? If your credit score is between 500 and 620, an FHA home loan could be your only option. But if your credit score is 620 or above, you might look into a conventional loan with a low down payment.

You can also buy more house with a conventional conforming loan than with an FHA loan. Conforming loan limits in 2026 are $832,750 for a one-unit property and $1,249,125 in high-cost areas.

Borrowers who put less than 20% down on a conventional loan may have to pay private mortgage insurance (PMI) until they reach 20% loan-to-value. But borrowers with at least very good credit scores may be able to avoid PMI by using a piggyback mortgage and others by opting for lender-paid mortgage insurance.

One perk of an FHA loan is that it’s an assumable mortgage. That can be a draw to a buyer in a market with rising rates.

The Takeaway

An FHA home loan can secure housing when it otherwise could be out of reach, and FHA loans are available for refinancing and special purposes. But mortgage insurance often endures for the life of an FHA loan.

Some mortgage hunters might be surprised to learn that they qualify for a conventional purchase loan with finite mortgage insurance instead. And some FHA loan holders who have gained equity may want to convert to a conventional loan through mortgage refinancing.

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.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What credit score do you need for a government loan?

A borrower with a credit score of 580 or more may be able to qualify for an FHA loan with a 3.5% down payment. Someone with a score of 500 to 579 may still be able to take out a loan, but only with a down payment of at least 10%.

Is there an income limit for FHA loans?

There are no income minimums or maximums to receive an FHA loan. People of any income can apply.

Are FHA loans hard to get approved for?

For many borrowers, it may be easier to get approved for an FHA loan than for a conventional loan. This is because the credit score and debt-to-income ratio requirements are typically lower, and FHA loans don’t require large down payments.

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Photo credit: iStock/Ihor Lukianenko

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOHL-Q326-088

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For many people, a monthly mortgage payment is their biggest recurring bill. It may be the main expense that guides the development and management of their monthly budget because it is an important bill to pay on time.

Prevailing wisdom says that your mortgage payment shouldn’t be more than 28% of your gross (pretax) monthly pay. But whatever that sum actually is, you may be wondering how to shave down the amount. Think about it: A lower mortgage payment could reduce your financial stress. And it can also open up room in your budget to allocate more money toward shrinking other debt, pumping up your emergency fund, and saving for retirement or other goals.

Below, you’ll learn more about your mortgage payment and possible ways to lower it.

Pros and Cons of Lowering Your Mortgage Payments

There are upsides and downsides to lowering your mortgage payments.

On the one hand, learning how to lower your monthly mortgage payment means you could have more money to apply elsewhere. You might apply the freed-up funds toward:

•   Paying down other debt

•   Building up your emergency fund

•   Putting more money in your retirement savings

•   Covering discretionary spending

On the other hand, there are downsides to consider too:

•   You might wind up paying a lower amount over a longer period of time, meaning your debt lasts longer.

•   You could pay more in interest over the life of the loan.

•   If a lower monthly payment means you are not paying your full share of interest due, you could wind up in a negative amortization situation, in which the amount you owe is going up instead of down.

How to Lower Your Mortgage Payments

Now that you know a bit about how mortgage payments work and the pros and cons of lowering your mortgage payments, consider these ways you could minimize your monthly amount due.

Recommended: How to Pay Off a 30-Year Mortgage in 15 Years

1. Refinance Your Mortgage

One of the best ways to reduce monthly mortgage payments is to refinance your mortgage. A refinance (not to be confused with a reverse mortgage) means replacing your current mortgage with a new one, with terms that better suit your current needs.

There are a number of signs that a mortgage refinance makes sense, such as lower interest rates being offered or the desire to secure a fixed rate when you have an adjustable-rate mortgage. If your credit score has improved markedly since you purchased your home, you may qualify for a better rate than you were able to obtain initially.

Refinancing can result in a more favorable interest rate, a change in loan length, a reduced monthly payment, and a substantial reduction in the amount you owe over the life of your mortgage. Do note, however, that there are often fees for refinancing your mortgage.

A cash-out refinance can refinance your loan and provide you with a lump sum to use for home improvement projects. It’s often less costly than taking out a separate home improvement loan. (You can use a Home Improvement Cost Calculator to get an idea of what your project will cost.)

2. Recast Your Mortgage

If refinancing isn’t for you, study up on how to lower mortgage payments without refinancing — specifically, by doing a recast. If you get a bonus or other windfall, consider throwing some of that money at your mortgage. If you are in a position to make a major lump-sum payment toward the loan principal on your home loan, you may benefit from mortgage recasting.

With recasting, your lender will reamortize the mortgage but retain the interest rate and term. The new, smaller balance equates to lower monthly payments. Worth noting: Many lenders charge a servicing fee and have equity requirements to recast a mortgage, but fees are significantly lower than they would be for a refinance, and you don’t have to worry about what current mortgage rates might be.

If you don’t have a large sum on hand to use for a recast, you can also make extra payments on a schedule or whenever you can. Just make sure you tell your lender to apply the extra funds to the principal and not the interest. Paying extra toward the principal provides two benefits: It will slowly reduce your monthly payment, and it will pare the total interest paid over the life of the loan.

3. Extend the Term of Your Mortgage

If your goal is to reduce your monthly payment, though not necessarily the overall cost of your mortgage, you may consider extending your mortgage term. For example, if you refinanced a 15-year mortgage into a 30-year mortgage, you would amortize your payments over a longer term, thereby reducing your monthly payment.

This technique could lower your monthly payment but will likely cost you more in interest in the long run.

(That said, just because you have a new 30-year mortgage doesn’t mean you have to take 30 years to pay it off. You’re often allowed to pay off your mortgage early without a prepayment penalty by paying more toward the principal.)

4. Get Rid of Mortgage Insurance

Mortgage insurance, which is needed for some loans, can add a significant amount to your monthly payments. Luckily, there are ways to eliminate these payments, depending on which type of mortgage loan you have.

Getting rid of the FHA mortgage insurance premium (MIP): Consider your loan origination date, which impacts when you can get rid of the extra expense of mortgage insurance:

•   July 1991 to December 2000: If your loan originated between these dates, you can’t cancel your MIP.

•   January 2001 to June 3, 2013: Your MIP can be canceled once you have 22% equity in your home.

•   June 3, 2013, and later: If you made a down payment of at least 10%, MIP will be canceled after 11 years. Otherwise, MIP will last for the life of the loan.

Another way to shed MIP is to refinance to a conventional loan with a private lender. Many FHA homeowners may have enough equity to refinance.

Getting rid of private mortgage insurance (PMI): If you took out a conventional mortgage with less than 20% down, you’re likely paying PMI. Ditching your PMI is an excellent way to reduce your monthly bill.

To request that your PMI be eliminated, you’ll want to have 20% equity in your home, whether through your own payments or through home appreciation. Your lender must automatically terminate PMI on the date when your principal balance reaches 78% of the original value of your home. Check with your lender or loan program to see when and if you can get rid of your PMI.

5. Appeal Your Property Taxes

Here’s another of the seven ways to lower your mortgage payment: Take a closer look at your property taxes. Your property taxes are based on an assessment of your house and land conducted by your county’s tax assessor. The higher they value your property, the more taxes you’ll pay.

If you think you’re paying too much in taxes, you can appeal the assessment. If you do, be prepared with examples of comparable properties in your area valued at less than your home. Or you may also show a professional appraisal.

To challenge an assessment, you can call your local tax assessor and ask about the appeals process.

Recommended: First-Time Homebuyer Programs

6. Modify Your Loan

Getting a loan modification from your lender is different from a refinance and is often a solution for homeowners who wouldn’t qualify for a new loan because they are experiencing financial difficulties. A modification changes the terms of a loan to make monthly payments more affordable. It’s a tactic that is usually used to provide relief to homeowners who are struggling to make their loan payments. If this is your situation, you can ask your lender for a new repayment timetable, a lower interest rate, or a switch from an adjustable rate to a fixed rate. Lenders aren’t obligated to agree, but if you can show proof of financial hardship, such as bank statements and tax returns, this may be an option.

7. Shop for a Lower Homeowners Insurance Rate

Many homeowners take a “set it and forget it” approach to homeowners insurance and pay for their insurance through their monthly mortgage payment. It’s smart to assess your coverage annually to make sure it is adequate. Take this opportunity to shop around for a lower rate. Three ways to potentially lower your insurance costs: Increase your deductible, buy your home and auto policies from the same insurer, and explore whether making your home more secure or storm-resistant might qualify you for a lower rate. Just remember: If you are getting a new policy, make sure it is fully in place before you cancel your old one.

The Takeaway

How to lower your mortgage payment? There are several possible ways. And who wouldn’t love to shrink their house payment? You might look at strategies to build equity and ditch mortgage insurance, extend the term of your loan, or refinance to reduce your monthly payment.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

A new mortgage refinance could be a game changer for your finances.

FAQ

What is the average mortgage payment?

According to the Federal Housing Finance Agency’s National Mortgage Database, the median monthly mortgage payment in the U.S. (excluding property taxes and homeowners insurance) is $2,023 as of Q1 2026. But if you want a lower monthly payment, you could pursue a mortgage refinance or ask your lender to recast your mortgage after paying a lump sum toward your principal.

Can you pause or temporarily reduce mortgage payments?

If you can demonstrate that you are experiencing sudden financial hardship, a lender may allow you to pause or temporarily reduce your mortgage payments for 12 months or so through a process called mortgage forbearance. You’ll continue to accrue interest on your loan during this time, but requesting and being granted forbearance can help prevent foreclosure and damage to your credit.

Does refinancing always lower monthly mortgage payments?

Refinancing doesn’t always lower your mortgage payment amount. Borrowers who do a cash-out refinance (borrowing against their home equity to get a lump sum they can use for education expenses, for example) might emerge from the refi with higher monthly payments. Another possible scenario: If you obtain a lower interest rate with a refi but choose a shorter loan term (10 or 15 years, for example), your monthly payment amount might increase.

Can rental income help with monthly mortgage payments?

Taking on a roommate or building an accessory dwelling unit (ADU) on your property that you rent out can certainly help defray monthly mortgage expenses. It won’t lower what you owe on your mortgage, but it will reduce your actual out-of-pocket cost.

What credit score do you need to refinance for a lower mortgage payment?

If you’re refinancing a conventional mortgage, you’ll typically need a minimum FICO® credit score of 620, although a score of 740 or more qualifies borrowers for the best interest rates. If you have a government-backed FHA loan, you’ll need a score of 580 or more. Whether refinancing will result in a lower mortgage payment will depend on the interest rate on your original mortgage, current interest rates, and the type of refi you choose, as well as your credit score.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

SOHL-Q326-092

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