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Conventional loans are the most popular kind of mortgage, but a government-backed mortgage like 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.

As of March 2023, new FHA borrowers will pay less for insurance. The Biden-Harris Administration announced it was reducing premiums by .30 percentage points, lowering annual homeowner costs by $800 on average. The administration hopes the cuts will help offset rising interest rates.

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 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 45% 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. As of March 2023, monthly MIP for new homebuyers is 0.15% to .75% — most often 0.55%.

For a $300,000 mortgage balance, that’s upfront MIP of $5,250 and monthly MIP of $137.50 at the 0.55% rate.

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

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 2023, FHA loan limits in most of the country are as follows:

•   Single unit: $472,030

•   Duplex: $604,400

•   Three-unit property: $730,525

•   Four-unit property: $$907,900

The range in high-cost areas is $1,089,300 (for single unit) to $2,095,200 (four-unit property); for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the range is $1,633,950 (for single unit) to $3,142,800 (for 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 established credit accounts.

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 refundable 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.

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 2023 are $726,200 for a one-unit property and $1,089,300 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; 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. The Biden-Harris Administration recently reduced monthly MIP for new homebuyers to help offset higher interest rates.

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.

SoFi offers conventional fixed-rate mortgages with competitive interest rates and cancellable PMI, as well as refinancing. Check out SoFi’s low rate home mortgages.

Qualifying first-time homebuyers can put as little as 3% down, and others, 5%.

View your rate today.

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When you buy a home, you’re likely paying more than just the down payment and closing costs. You’ill probably also need to purchase homeowner’s insurance. While this coverage is not mandated by law, many mortgage lenders require it before they agree to finance the purchase of your home.

Here’s what first-time homebuyers need to know before shopping for homeowners insurance.

What Does Homeowners Insurance Cover?

Homeowners insurance coverage provides protection for both a home and its contents against damage, theft, and up to 16 named perils, including fire, hail, windstorms, smoke, vandalism, and theft. It also typically includes personal liability coverage for accidents that may happen on the property (think of people slipping and falling down your stairs, or your dog biting a neighbor on the property).

On the flip side, basic homeowners insurance likely won’t cover damage from disasters such as floods and earthquakes, and even war (seriously). Homebuyers who live in an area prone to certain events or natural disasters may want to consider supplemental coverage. In some cases, their lender may even require it.

It’s a good idea to learn what’s generally covered by each homeowners insurance policy type — and what isn’t — to ensure you have the right protection in place.

When You Need to Buy Homeowners Insurance

If buyers plan to get a mortgage to purchase their home, their lender will likely require they obtain homeowners insurance coverage before signing off at closing.

In reality, this is a sound business tactic, as the lender will want to protect its investment, which is the property, not the person it’s lending to (harsh, we know). Let’s say the home is damaged in a windstorm or burns to the ground. Insurance will cover the cost, after a deductible, without burdening the homeowner. The homeowner can then continue to pay their mortgage on time, much to the delight of the lender.

Again, if you live in an area prone to certain disasters like floods or earthquakes, your lender may require additional coverage. Check with your lender on what’s necessary before signing.

If a person’s first home happens to be a condo or co-op, the board may also require specific coverage, thanks to a shared responsibility for the entire complex.

Recommended: House or Condo: Which Is Right For You? Take the Quiz

Can You Forgo Homeowners Insurance?

Technically, there are no laws requiring a person to obtain homeowners insurance, but it’s a rule put in place by many lenders.

If you’re paying cash for a new home, you can forgo purchasing homeowners insurance, though that may be a risky proposition.

Think you can somehow snake the system? Think again. If a lender doesn’t feel that the homebuyer is working hard or fast enough to find homeowners insurance before closing, the lender may go ahead and purchase insurance in that person’s name with what’s called “lender-placed insurance.”

This isn’t as cool as it sounds. Not only will it increase the mortgage payment, lender-placed insurance is typically more expensive than traditional homeowners insurance. And it may not even provide all the protection a homeowner needs or wants.

To give yourself enough time to find the right policy for you, aim to start shopping around a good 30 days before closing.

How Much Coverage a Person Needs

How much homeowners insurance a new homeowner needs will depend on the value of their home and the possessions in it. As a first step, would-be homeowners can ask their agent for a recommended amount of coverage.

After determining that number, it’s also a good idea to take stock of belongings and see if any items may require additional coverage (think expensive antiques, paintings, or other irreplaceable items). It could also be smart to photograph and digitally catalog major items in a home for proof needed on any claims.

Replacement Cost vs. Actual Cash Value

When shopping for homeowners insurance, there’s replacement cost coverage and actual cash value coverage.

Replacement cost coverage pays the amount needed to replace items with the same or similar item, while actual cash value coverage only covers the current, depreciated value of a home or possessions.

This means that if you have actual cash value coverage and disaster hits, you’ll only be able to get enough cash for the depreciated value of the home and items, not the cost of what it may take to replace them.

Most standard homeowners insurance policies cover the replacement cost of a physical home and the actual cash value of the insured’s personal property, but some policies and endorsements also cover the replacement cost of personal property.

The upshot: It’s best to go for replacement cost coverage whenever possible.

Recommended: How Much Is Homeowners Insurance?

The Takeaway

Is homeowners insurance required to buy a home? If you’re taking out a mortgage, that’s almost always a “yes.” It’s worth looking at your options — and understanding what will and will not be covered — so you can feel at ease in your new home for years to come.

Of course, shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium. To help simplify the process, SoFi has partnered with Lemonade to bring customizable and affordable homeowners insurance to our members.

Lemonade is a name you can trust. It has exceptional ratings, is fully licensed, and reinsured by some of the most trusted names on the planet. Plus, it donates any leftover money to nonprofit partners chosen by customers.

Check out homeowners insurance options offered through SoFi Protect.

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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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The main factors that can hurt a home appraisal include needed updates, comparable properties, your home’s location, and whether you hired an inspector to flag issues or necessary repairs. By getting ahead of the factors within your control before an appraisal, you may get a more favorable answer to the all-important question of what your house is really worth.

The more you know and understand about the home appraisal process, the better. Here’s a crash course of sorts on the process and what negatively affects home appraisal.

Recommended: Should I Sell My House Now or Wait?

A Primer on Home Appraisals

A home appraisal reveals the fair market value of a home, which is important whether you’re buying, selling or refinancing a mortgage. An appraisal can also be used to determine property taxes. Lenders require appraisals because they ensure that the lender won’t offer you a loan that’s more than what the home is worth.

So, what do appraisers look for when they do a home appraisal? A real estate appraiser, who is a third party licensed or certified by the state, will review a home inside and out, looking at a home’s age, size, foundation, appliances and neighborhood, among other things. They will then compare the house to similar homes in the area to assess its value.

An appraisal is usually required by a lender when a buyer is getting a mortgage or when someone is refinancing their mortgage. If an appraisal is for a home sale, neither the buyer nor the homeowner can be present. When someone is refinancing, on the other hand, the homeowner is permitted to attend. That no doubt is a plus as it’s an opportunity for the homeowner to ensure the appraiser takes note of any upgrades and new features that could increase their home’s worth.

Things That Can Hurt Your Home Appraisal

Much hinges on the appraisal, so you’ll want it to go as smoothly as possible. Start by knowing what hurts a home appraisal so you can avoid any hiccups that could prevent you from getting the highest value for your home.

1. Much-Needed Updates That Never Happened

If you’ve been putting off any needed upgrades, this is when it could come back to bite you. Let’s say you’ve been meaning to renovate your kitchen and somehow just didn’t get around to it. A kitchen that looks pretty much like it did 30 years ago isn’t going to wow anybody, least of all an appraiser who will wonder what else is in decline.

While it can be helpful to take care of some common home upgrades that can net you a return on your investment, you don’t necessarily want to go crazy updating either. Not only could it be tougher to recoup all the money you put into home improvements, you may find that while you love the changes you’ve made, your taste may not have universal appeal. It’s a delicate balance to make upgrades that will get two thumbs up from the appraiser and the potential buyers.

2. Comparable Properties

When it comes to housing, you do kind of have to keep up with the Joneses. With appraisals, it’s all about sales of comparable homes over the last 12 months. What are homes similar to yours on your street or a few blocks over selling for? If they are getting top dollar that will push up the price of your home. On the flip side, if those homes are hanging around on the market for months and selling at prices below expected, that could put a drag on what you can get for yours.

Comparable sales help determine the market, which is why both your real estate and your appraiser will look at them. Ideally, the appraiser, as much as possible, is comparing apples to apples so you get a fair appraisal. The other properties should be similar in size, age and amenities, among other factors. It’s a losing proposition for you if the appraiser goes for the extreme, say a house that sold at a bargain because someone was in a hurry to bail for whatever reason.

3. Skipping a Home Inspection

When it comes to your house, ignorance is not bliss. While you may know when you need to make a repair to a leaky roof, for instance, there can be plenty wrong that’s not obvious to you. That’s why it’s a good idea to have a home inspection before you put your house on the market.

A home inspector can suss out all manner of malfunctions that could be plaguing your house, particularly things you may be clueless about. If you get bad news, think of it as good news since you’ll now have the opportunity to make necessary home repairs before you put your house on the market and an appraiser comes with a magnifying glass of sorts looking for signs of trouble.

4. An Undesirable Location

Few things matter more in real estate than location. If you’re in a neighborhood that’s seen as flawed or your house is on a busy or noisy street, that could all come into play when it comes to the value of your property.

Location also counts within your home. If your layout is dated — say it’s old-fashioned and highly compartmentalized instead of today’s more in-demand open layout concepts — that could be less attractive to buyers. Or, they might only be interested in knocking down walls and reconfiguring the space, which likely means they’ll want to pay less for the house if they are going to have put money into it to bring it in line with what they’re looking for.

4 Ways to Prevent Low Home Appraisals

Just like there are some things you can get out ahead of before they hurt your home appraisal, there are also some moves you can make to prevent your home appraisal coming in lower than you’d like.

1.   Hire your own appraiser: Typically, the lender hires the appraiser. However, there’s no reason you can’t hire your own appraiser before the sale. Your realtor should have a handle on someone who is experienced and has a reputation for giving fair estimates. You then can ask the buyer or lender’s appraiser to review what your appraiser produced.

2.   Provide records: If you have records of repairs and upgrades that’s the kind of proof that works in your favor. It also doesn’t hurt to have documentation like photos — before and afters aren’t just for an Instagram post of your new haircut.

3.   Prepare for the appraiser’s visit: Don’t dismiss the importance of maintaining curb appeal. Your home should be clean inside and outside before the appraiser comes over. Strive to get as close to an interior design catalog as you can.

4.   Dig up property comparables on your own: You don’t have to leave it to the appraiser and real estate agents to do all the homework. Go the extra mile and consider calling real estate agents with homes in escrow to get the sales prices. Create a list that you can pass along to the appraiser.

Checking Your Home Value Without an Appraisal

You can get a sense of what your home is worth even if you don’t get an appraisal. There are several websites that can give you valuable insight into your home’s potential value, including Zillow, Trulia, Redfin, Realtor.com and Eppraisal, among others.

Another option is to use a house price index (HPI) calculator , which relies on data from mortgage transactions over time to estimate a home’s value. Projections are based on both the purchase price of the home and the changing value of other homes nearby. This tool can help you see how much a house has appreciated over time. You’ll also get a glimpse of estimated future changes in mortgage rates.

Recommended: Does Net Worth Include Home Equity?

The Takeaway

Because your home is likely your biggest asset, it’s worth putting the time and effort into the appraisal process. The payoff could be huge if you tend to the major factors that hurt an appraisal or get proactive about preventing a low appraisal.

If you’re worried about budgeting for any necessary updates or repairs, a tool like SoFi Insights can help you track your spending in different categories.

Stay on top of your budget as you get your house appraisal ready.

Photo credit: iStock/ucpage

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Despite a slight dip this month, foreclosure rates in the U.S. are continuing to rise annually. According to property data provider ATTOM , the number of housing units with foreclosure filings in April was 32,977, a nearly 8% increase from the previous year. The expiration of COVID-era government programs such as foreclosure moratoriums and loan forbearance has largely influenced this rise in numbers, which has left many homeowners without any recourse.

With the U.S. median home price hovering around $380,000, home ownership is becoming increasingly difficult for new buyers and existing owners alike. Experts believe that high mortgage interest rates are exacerbating the situation, with the interest rate for a 30-year fixed mortgage lingering near 6.39% as of May 18th. This represents a week-over-week decrease of 0.04% and a year-over-year increase of 1.12%.

The Federal Reserve has been working to combat inflation by raising interest rates, but these hikes are also causing mortgage rates to rise, making it more expensive to finance a home or refinance an existing mortgage. Borrowers are advised to stay informed about their mortgage payments and to work closely with their lenders to explore options for assistance if needed.

Read on for the foreclosure rates in April 2023 – plus the five counties or county equivalents with the highest rates within those states.

50 State Foreclosure Rates

As previously noted, foreclosure rates decreased marginally compared to last month, but are up slightly compared to last year. Read on for April foreclosure rates for all 50 states — plus the District of Columbia — beginning with the state that had the lowest rate of foreclosure filings per housing unit.

District of Columbia

Ranking in population between Vermont and Alaska, the country’s second-and-third-least populous states, Washington, D.C. observed 114 foreclosures in April, up 42.5% from the previous month. With a total of 344,306 housing units, the foreclosure rate of the Nation’s Capital was one in every 3,020 households, putting it in between the states of Nevada (#8) and Indiana (#9).

50. South Dakota

The Mount Rushmore State nabbed the 50th spot for its foreclosure rate for the eighth month in a row. Having 388,373 total housing units, the fifth-least populous state had a foreclosure rate of one in every 55,482 households with 7 foreclosures. Only four counties in South Dakota saw foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Meade, Codington, Minnehaha, and Lincoln.

49. Vermont

In 49th place for population, the Green Mountain State also ranked 49th for its foreclosure rate this month. Of the state’s 333,519 housing units, 9 homes went into foreclosure at a rate of one in every 37,058 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Washington, Rutland, Franklin, Windham, and Chittenden.

48. Montana

Listed as 44th in population, the Treasure State rated 48th for highest foreclosure rate. With 29 foreclosures out of 512,553 housing units, Montana’s foreclosure rate was one in every 17,674 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Fallon, Powell, Lincoln, Roosevelt, and Custer.

47. North Dakota

The Peace Garden State’s foreclosure rate was one in every 16,823 homes. This puts the fourth-least populous state — with 370,111 housing units and 22 foreclosures — in 47th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Williams, Ward, Stutsman, Morton, and Stark.

46. Kansas

The Sunflower State ranked 46th in April. With 1,272,290 homes and a total of 82 housing units going into foreclosure, the 35th most populous state’s foreclosure rate was one in every 15,516 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Scott, Brown, Stafford, Franklin, and Barber.

45. Rhode Island

The eighth-least populous state placed 45th for highest foreclosure rate. A total of 33 homes went into foreclosure out of 481,168 total housing units, making the foreclosure rate for the Ocean State one in every 14,581 households. Only three counties in Rhode Island saw foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Providence, Newport, and Kent.

44. Kentucky

With a total of 1,988,420 housing units, the Bluegrass State saw 158 homes go into foreclosure, thus landing in 44th place in April. This puts the foreclosure rate for the 26th most populous state at one in every 12,585 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Hardin, Carroll, Union, Kenton, and Boyd.

43. Washington

Sorted as 13th in population, the Evergreen State ranked 43rd again for highest foreclosure rate. Of its 3,170,695 housing units, 266 went into foreclosure, making the state’s foreclosure rate one in every 11,920 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Chelan, Lincoln, Cowlitz, Island, and Kitsap.

42. Massachusetts

The 15th most populous state ranked 42nd for highest foreclosure rate in April. Of the Bay State’s 2,979,634 housing units, 252 went into foreclosure, making for a foreclosure rate of one in every 11,824 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Plymouth, Franklin, Hampden, Berkshire, and Worcester.

41. West Virginia

Ranked 39th in population, the Mountain State claimed the 41st spot this month. It has a total of 859,437 housing units, of which 75 went into foreclosure. This means that the foreclosure rate was one in every 11,459 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Pleasants, Randolph, Kanawha, Marshall, and Ohio.

Recommended: Tips on Buying a Foreclosed Home

40. Wyoming

The country’s least populous state claimed the 40th spot for highest foreclosure rate this month. With 271,818 housing units, of which 27 went into foreclosure, the Equality State’s foreclosure rate was one in every 10,067 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Converse, Weston, Carbon, Uinta, and Campbell.

39. Oregon

The 27th most populous state ranked 39th again for highest foreclosure rate in April. Of the Pacific Wonderland’s 1,798,864 homes, 195 went into foreclosure, making for a foreclosure rate of one in every 9,225 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Malheur, Lake, Tillamook, Columbia, and Crook.

38. Wisconsin

With 297 foreclosures out of 2,718,369 total housing units, America’s Dairyland and the 20th most populous state secured the 38th spot with a foreclosure rate of one in every 9,153 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Douglas, Dodge, Kenosha, Marquette, and Juneau.

37. New Hampshire

The Granite State, also the 41st most populous state in the U.S., ranked 37th for highest foreclosure rate. New Hampshire saw 78 of its 636,480 homes go into foreclosure, making for a foreclosure rate of one in every 8,160 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Strafford, Grafton, Rockingham, Coos, and Hillsborough.

36. Mississippi

Ranked 34th in population, the Magnolia State experienced 164 foreclosures out of 1,317,375 housing units. This puts the foreclosure rate at one in every 8,033 homes and in the 36th spot in April. The counties with the most foreclosures per housing unit were (from highest to lowest): Clay, Itawamba, Simpson, Copiah, and Leflore.

35. Missouri

Coming in at 19th in population, the Show-Me State came in 35th for highest rate of foreclosures in April. Of its 2,782,081 homes, 380 went into foreclosure, making for a foreclosure rate of one in every 7,321 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Webster, Dent, Barton, Mississippi, and Moniteau.

34. Tennessee

Ranked 16th in population, the Volunteer State endured 416 foreclosures out of its 3,011,124 housing units. This puts the foreclosure rate at one in every 7,238 households and in 34th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Hancock, Rhea, Monroe, McNairy, and Fentress.

33. Alabama

Listed as 24th in population, the Yellowhammer State came in 33rd for highest foreclosure rate this month. Of its 2,278,526 homes, 315 went into foreclosure, making for a foreclosure rate of one in every 7,233 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Calhoun, Henry, Monroe, Washington, and Clarke.

32. Virginia

With 508 homes going into foreclosure, the 12th most populous state ranked 32nd for highest foreclosure rate in April. Having 3,596,100 total housing units, the Old Dominion saw a foreclosure rate of one in every 7,079 households. The counties and independent cities with the most foreclosures per housing unit were (from highest to lowest): Surry, Covington City, Galax City, Franklin City, and Hopewell City.

31. Idaho

Ranked 38th in population, the Gem State received the 31st spot due to its 111 housing units that went into foreclosure in April. With 742,145 total housing units, the state’s foreclosure rate was one in every 6,686 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Minidoka, Power, Gooding, Payette, and Bonneville.

Recommended: What Is a Short Sale?

30. Minnesota

Ranked 22nd for most populous state, the Land of 10,000 Lakes obtained the 30th spot for highest foreclosure rate in April. It has 2,470,483 housing units, of which 378 went into foreclosure, making the state’s foreclosure rate one in every 6,536 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Sherburne, Chisago, Faribault, Cottonwood, and Steele.

29. Colorado

The 21st most populous state ranked 29th for highest foreclosure rate this month. Of the Centennial State’s 2,454,873 housing units, 377 went into foreclosure, making for a foreclosure rate of one in every 6,512 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Logan, Prowers, Bent, Pueblo, and Fremont.

28. Utah

The Beehive State placed 28th for highest foreclosure rate. Of its 1,133,558 housing units, 175 homes went into foreclosure, making the 30th most populous state’s foreclosure rate one in every 6,477 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Box Elder, Carbon, Tooele, Utah, and Juab.

27. Arkansas

Listed as the 33rd most populous state, the Land of Opportunity took the 27th spot for highest foreclosure rate in April. The state contains 1,361,880 housing units, of which 222 went into foreclosure, making its latest foreclosure rate one in every 6,135 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Dallas, Calhoun, Clay, Howard, and Poinsett.

26. Maine

Ranked 42nd in population, the Pine Tree State placed 26th for highest foreclosure rate. With a total of 737,782 housing units, Maine saw 122 foreclosures for a foreclosure rate of one in every 6,047 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Piscataquis, Penobscot, Franklin, Androscoggin, and Somerset.

25. Arizona

Sorted as 14th in population, the Grand Canyon State withstood 541 foreclosures out of its total 3,056,890 housing units. This puts the foreclosure rate at one in every 5,650 homes and in the 25th spot. The counties with the most foreclosures per housing unit were (from highest to lowest): Graham, Santa Cruz, Pinal, Cochise, and Yuma.

24. Nebraska

Ranking 37th in population, the Cornhusker State placed 24th with a foreclosure rate of one in every 5,532 homes. With a total of 840,802 housing units, the state had 152 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Red Willow, York, Hamilton, Scotts Bluff, and Hitchcock.

23. Hawaii

The Paradise of the Pacific, and the 40th most populous state, came in 23rd for highest foreclosure rate in April. Of its 556,937 homes, 101 went into foreclosure, making for a foreclosure rate of one in every 5,514 households. Only three of the five counties in the state saw foreclosures. They were (from highest to lowest): Hawaii, Honolulu, and Maui.

22. Connecticut

With 317 of its 1,527,039 homes going into foreclosure, the Constitution State had the 22nd highest foreclosure rate at one in every 4,817 households. In the 29th most populous state, the counties that had the most foreclosures per housing unit were (from highest to lowest): Windham, Litchfield, Hartford, New London, and Fairfield.

21. Texas

The Lone Star State withstood 2,440 foreclosures this month. With a foreclosure rate of one in every 4,686 households, this puts the second-most populous state in the U.S., with a whopping 11,433,880 housing units, into 21st place. The counties with the most foreclosures per housing unit were (from highest to lowest): Kaufman, Liberty, Tom Green, Scurry, and Atascosa.

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20. Oklahoma

The Sooners State landed the 20th spot in April. With housing units totaling 1,741,721, the 28th most populous state saw 377 homes go into foreclosure at a rate of one in every 4,620 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Canadian, Garfield, Dewey, Grady, and Logan.

19. North Carolina

The ninth-most populous state claimed 19th place for highest foreclosure rate in April. Out of 4,673,933 homes, 1,026 went into foreclosure. This puts the Tar Heel State’s foreclosure rate at one in every 4,555 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Tyrrell, Gates, Camden, Nash, and Jones.

18. Louisiana

Sorted as 25th in population, the Pelican State placed 18th for highest foreclosure rate this month. Louisiana had a foreclosure rate of one in every 4,260 households, with 485 homes out of 2,066,323 housing units going into foreclosure. The parishes with the most foreclosures per housing unit were (from highest to lowest): Tangipahoa, Livingston, Beauregard, Washington, and Plaquemines.

17. Michigan

Ranked 10th in population, the Wolverine State secured the 17th spot with a foreclosure rate of one in every 4,256 homes. With a total of 4,566,504 housing units, the state had 1,073 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Shiawassee, Lapeer, Lenawee, Montcalm, and Eaton.

16. Georgia

Ranked eighth in population, the Peach State took the 16th spot for highest foreclosure rate. Of its 4,375,039 homes, 1,043 were foreclosed on. This puts the state’s foreclosure rate at one in every 4,195 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Irwin, Taliaferro, Pulaski, Lamar, and Warren.

15. New York

With 2,050 out of a total 8,449,178 housing units going into foreclosure, the Empire State claimed the 15th spot in April. The fourth-most populous state’s foreclosure rate was one in every 4,122 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Orange, Nassau, Putnam, Richmond, and Suffolk.

14. New Mexico

The 36th most populous state claimed the 14th spot for highest foreclosure rate. Of the Land of Enchantment’s 937,397 homes, 233 went into foreclosure, making for a foreclosure rate of one in every 4,023 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Otero, Eddy, Chaves, San Juan, and Dona Ana.

13. Alaska

The Last Frontier saw 79 foreclosures in April, making the foreclosure rate one in every 3,997 homes. This caused the third-least populous state, with a total of 315,797 housing units, to claim the 13th spot. The boroughs with the most foreclosures per housing unit were (from highest to lowest): Kodiak Island, Ketchikan Gateway, Matanuska-Susitna, Anchorage, and Kenai Peninsula.

12. California

The country’s most populous state ranked 12th for highest foreclosure rate. Of its impressive 14,328,539 housing units, 3,604 went into foreclosure, making the Golden State’s foreclosure rate one in every 3,976 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Lake, Humboldt, Shasta, Riverside, and Siskiyou.

11. Pennsylvania

The Keystone State had the 11th highest foreclosure rate this month. The fifth-most populous state saw 1,455 homes out of 5,728,788 total housing units go into foreclosure, making the state’s foreclosure rate one in every 3,937 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Delaware, Philadelphia, Berks, Montgomery, and Susquehanna.

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10. Iowa

The Hawkeye State had the 10th highest foreclosure rate this month. With 394 housing units out of 1,407,100 homes going into foreclosure, the 31st most populous state’s foreclosure rate was one in every 3,571 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Jasper, Tama, Lucas, Lee, and Union.

9. Indiana

The 17th largest state by population, the Crossroads of America landed the ninth spot with a foreclosure rate of one in every 3,546 homes. Of its 2,911,562 housing units, 821 went into foreclosure in April. The counties with the most foreclosures per housing unit were (from highest to lowest): Starke, Wayne, Jasper, Grant, and Delaware.

8. Nevada

Ranked 32nd in population, the Silver State took the eighth spot for highest foreclosure rate. With one in every 2,899 homes going into foreclosure, and a total of 1,269,846 housing units, the state had 438 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Clark, Nye, Humboldt, Lyon, and Washoe.

7. Florida

The third-most populous state in the country has a total of 9,764,897 housing units, of which 3,374 went into foreclosure. This puts the Sunshine State’s foreclosure rate at one in every 2,894 homes and into seventh place. The counties with the most foreclosures per housing unit were (from highest to lowest): Osceola, Hamilton, Polk, Duval, and Gadsden.

6. Ohio

The Buckeye State placed sixth in April with a foreclosure rate of one in every 2,728 homes. With a total of 5,232,733 housing units, the seventh-most populous state had a total of 1,918 filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Cuyahoga, Auglaize, Huron, Butler, and Lucas.

5. Delaware

The sixth-least populous state in the country, the Small Wonder took fifth place this month. With one in every 2,603 homes going into foreclosure and a total of 445,104 housing units, the state saw 171 foreclosures filed. Having only three counties in the state, the most foreclosures per housing unit were (from highest to lowest): Kent, New Castle, and Sussex.

4. South Carolina

The 23rd most populous state had the fourth highest foreclosure rate with one in every 2,495 homes going into foreclosure. Of the Palmetto State’s 2,325,248 housing units, 932 were foreclosed on this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Kershaw, Dorchester, Fairfield, Williamsburg, and Richland.

3. New Jersey

With a foreclosure rate of one in every 2,334 homes, the Garden State placed third for highest foreclosure rate in April. The 11th most populous state contains 3,738,342 housing units, of which 1,602 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Camden, Cumberland, Atlantic, Burlington, and Sussex.

2. Maryland

Ranked 18th for most populous state, America in Miniature placed second for highest foreclosure rate in April. With a total of 2,516,341 housing units, of which 1,102 went into foreclosure, the state’s foreclosure rate was one in every 2,283 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Charles, Prince George’s County, Cecil, Calvert, and Kent.

1. Illinois

The Land of Lincoln has once again claimed the first spot for highest foreclosure rate. Of its 5,412,995 homes, 2,437 went into foreclosure, making the sixth-most populous state’s foreclosure rate one in every 2,221. The counties with the most foreclosures per housing unit were (from highest to lowest): Dewitt, Stark, St. Clair, Livingston, and Will.

The Takeaway

Of all 50 states, California had the most foreclosure filings (3,604), and South Dakota had the least (7). As for the states with the highest foreclosure rates, Illinois, Maryland, and New Jersey took the top three spots, respectively.

Two regions – The Great Lakes and the Mideast – tied for having the largest presence among the 10 states that ranked the highest for foreclosure rates. The states in the Great Lakes region were (from highest to lowest): Illinois, Ohio, and Indiana. The states in the Mideast region were (from highest to lowest): Maryland, New Jersey, and Delaware.

Two regions – The Plains and New England – tied for having the largest presence among the 10 states that ranked the lowest for foreclosure rates. The states in the Plains region were (from highest to lowest): Kansas, North Dakota, and South Dakota. The states in the New England region were (from highest to lowest): Massachusetts, Rhode Island, and Vermont.

Discover more about home loans at SoFi.

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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.
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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A jumbo loan is a mortgage that is larger than the loan-servicing limits set by the Federal Housing Finance Agency (FHFA). If you know you need a large loan to cover a higher home mortgage loan, you might be wondering how to qualify for a jumbo loan.

Jumbo loan qualifications are more stringent than conforming conventional loans. Because a jumbo loan is a nonconforming loan, banks take on more risk as they are not able to sell the loan to government-sponsored enterprises Fannie Mae and Freddie Mac. Since the loans are not guaranteed by the government, lenders are more cautious about the type of borrowers they do business with.

What this means for your money: You need conditions to be pretty optimal to qualify for a jumbo loan. But it can be done. Learn more here, including:

•   How to qualify for a jumbo loan

•   What factors lenders consider for jumbo loans

•   The jumbo loan qualification process

•   How to decide if a jumbo loan is right for you

Jumbo Mortgage Requirements

The current limits for jumbo loans are defined as exceeding $726,200 for single-family homes, except in Alaska, Hawaii, and some federally designated markets that are considered high-cost. In those areas, the limit that’s exceeded is $1,089,300 since these locations tend to have pricier housing markets.

Jumbo mortgage requirements are similar to conventional conforming loan requirements, but there are some key differences that make them harder to qualify for.

A High Credit Score

Experts recommend a credit score of 700 or above for jumbo loan borrowers. A higher credit score when buying a house is indicative of a borrower’s behavior with credit and how likely they are to repay the loan. A higher credit score is needed for the higher loan amounts of a jumbo loan. That lofty score can help the lender feel more secure that you’ll pay back the amount you borrow.

Cash Reserves

A cash reserve is how much liquid money you have at your disposal. What counts as liquid money can vary from lender to lender. For example, some will allow a percentage of vested 401(k) funds to count toward the reserve requirement. Others do not.

Because jumbo loans are so large, lenders look for cash reserves in your account to guard against default. For the best jumbo loan terms, lenders can require as much as 12 months of reserves.

A Low Debt-to-Income Ratio

A debt-to-income ratio is the amount of income you make relative to the amount of debt obligations you have. If you have what is considered too much debt, the lender will not offer a loan to you. With jumbo loans, a healthy DTI ratio is essential to qualify for the mortgage. A DTI ratio below 43% is recommended or possibly a lower figure.

What Does the Jumbo Qualification Process Include?

When you’re looking at jumbo loan requirements and the qualification process, there are some things you should keep in mind. Here, what’s needed to get a mortgage:

Documents Required for Jumbo Loan

When you apply for a jumbo loan, the lender will look to verify the information you provided. Some documents you may be required to provide include:

•   Two years of tax returns

•   Profit & Loss (P&L) statement if you’re a business owner

•   Pay stubs

•   Bank statements

•   Documentation for other income

Loan-to-Value Ratio Evaluation

In addition to your application, the jumbo loan will require an appraisal of your property to ensure they’re not lending too much on the home (that is, more than it’s worth). This appraisal will ensure the home’s price is not too high and determine that the loan-to-value ratio (LTV) is within its guidelines.

Evaluating How Jumbo Down Payments Will Impact You

How much you put down on the home of your dreams will impact what loan you qualify for. If you’re able to put down enough, you may be able to forgo the jumbo loan requirements and get into a conforming conventional loan.

Is a Jumbo Mortgage Right for You? Questions To Ask

When it comes to making a decision on a jumbo loan, it’s helpful to ask yourself some questions that can help determine if a jumbo loan will work for you.

Do I Have Good Credit?

Ask yourself if your credit is strong enough to qualify for a jumbo loan. These mortgages do come with higher loan amounts and higher payments, and a good credit score range (over 700 typically) can help you get the best terms possible to qualify for a jumbo loan.

Do I Have a Low DTI and High Cash Reserves?

It’s important to have a low debt-to-income ratio and ample reserves to qualify for a jumbo mortgage, as discussed above. While some lenders may go up to as high as a 43% DTI, others will want to see a lower number.

Can I Prove I’m in Good Financial Health?

Qualifying for a jumbo mortgage goes beyond the numbers. Can you demonstrate to the lender that you’re able to continue making payments? Do you have a consistent job history? Are all the other financial factors in your life lined up so you can afford the mortgage?

Is the Property Value High Enough for a Jumbo Loan?

The jumbo loan value minimum (and conforming loan limits) is $726,200 for most areas in the U.S. If your mortgage is below this amount, you’ll want to look at financing with a conforming conventional loan instead. In high-cost areas, the home would have to hold a value of more than $1,089,300.

Do I Have Enough Money Saved?

A down payment on a property that merits a jumbo loan will often be a significant amount of cash. And while some closing costs are a flat fee that won’t go up, many are labor-intensive or percentage-based (3% to 6% of the loan amount), so your jumbo loan closing costs are larger than for a conventional, conforming loan.

Recommended: 18 Mortgage Questions for Your Lender

The Takeaway

If you are in the market for a high-value home, a jumbo mortgage can help you make it your own. However, you will need to meet the loan requirements, which may be somewhat more demanding than those for a conforming loan. By focusing on optimizing your credentials and financial profile, you can work to secure the mortgage that makes your home-ownership dreams come true.

When you’re ready to take the next step, consider what SoFi home loans have to offer. Jumbo loans are offered with competitive interest rates, with no PMI, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.

FAQ

Is it harder to qualify for a jumbo loan?

Yes, jumbo loans are harder to qualify for. You will need a larger down payment than you would with a conforming loan, a higher credit score, a low debt-to-income ratio, more cash reserves, and a tighter loan-to-value ratio.

What credit score do you need for a jumbo loan?

For a jumbo loan, you may want to aim for a credit score above 700.

Do jumbo loans require a 20% down payment?

It is possible to obtain a jumbo loan with a down payment as low as 10% or possibly even lower.

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Photo credit: iStock/lovenimo

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.
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 .
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