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This just in: Houses are expensive. But some houses are really expensive. If you have your heart set on a luxurious oceanside mansion (or just a modest home in an ultra-high-cost city like New York or San Francisco), you may need to seek out a jumbo mortgage: one whose dollar amount surpasses the conforming loan limits set by the Federal Housing Finance Administration (FHFA) each year. In 2026, that limit is $832,750 in most cases, though in some high-cost areas the limit can range up to $1,249,125, and in two counties in Hawaii the limit is $1,299,500. Any mortgage that exceeds those amounts is considered a jumbo loan.

What Are Jumbo Loans?

Jumbo loans are those in which the mortgage total surpasses the conforming loan limits set by the FHFA. The conforming loan limits change annually. As noted above, in 2026, a jumbo loan is one whose total is more than $832,750 in most areas, though in select high-cost areas, the limit goes up to $1,249,125.

Your mortgage total is the amount of money you borrow in order to purchase a house — an amount that can be calculated by subtracting your down payment from the agreed home purchase price. (Keep in mind, though, that this figure isn’t the same as how much you’ll pay in full over the lifetime of the loan, since you’ll also owe interest to the bank that provides the loan. Still have questions? Check out our mortgage payment calculator with interest.)

Conventional loans are offered privately through banks, credit unions, and other financial institutions, unlike other loans which are supported by a government agency such as the USDA (U.S. Department of Agriculture). Conventional loans are easily the most common type of home loan.

If you’re wondering about jumbo loans vs. conventional loans, it’s important to understand that jumbo loans are a type of conventional loan. But whereas most conventional loans are also conforming loans and are available with a minimum down payment as low as 3% for qualified first-time homebuyers, jumbo loans are considered nonconforming and typically require a larger down payment — usually at least 10%. You’ll also likely need a very high credit score in order to be eligible to take out a jumbo loan.

Like other conventional loans, jumbo loans can be either fixed-rate loans or adjustable-rate mortgages (ARMs).

How Jumbo Loan Limits Are Calculated

As we’ve seen above, the specific jumbo loan limits where you live (or where you’re planning to buy a home) will vary depending on the area’s cost of living. The FHFA offers a convenient conforming loan limit map that allows you to see what the conforming loan limits (otherwise known as jumbo loan limits) are in your area, broken down by county.

The jumbo loan limit is determined each year by the FHFA using current housing price data. That way, the limits are tied to real information in the world about how much it actually costs to buy a home in a given area. Conforming loan limits — also known as the jumbo loan limits — change each year; new limits for the coming year are typically announced in late November.

What Is the Jumbo Loan Limit in 2026?

As mentioned above, in 2026, the jumbo loan limit for the vast majority of the U.S. is $832,750, and the highest conforming loan limit, in the most expensive places to live, is $1,299,500. To see exactly what the jumbo loan limits are in your area, visit the FHFA’s map.

2026 Conforming Loan Limits by Region

Conforming loan limits are not established by region but rather according to the county where a property is located. However counties with higher conforming loan limits tend to cluster in certain parts of the country, including the Pacific coast of California, parts of Colorado and Idaho, the Nashville area, and parts of Massachusetts, New York, New Jersey, and the Washington, D.C. area. Alaska and Hawaii also have especially high conforming loan limits. The FHFA conforming loan limit map shows these regions clearly.

High-Cost Area Considerations

Why do some counties have especially high conforming loan limits? The FHFA is required to adjust its conforming loan limits each year to reflect the change in the average U.S. home price. Some areas have especially high-priced homes. For areas in which 115% of the local median home value exceeds the baseline conforming loan limit value, the applicable loan limit will be higher than the baseline loan limit. No surprise, then, that counties such as New York County have higher conforming loan limits (in this case $1,209,750).

Jumbo Loan Requirements

Jumbo loans are, well, big — which means the qualification metrics for getting a home loan are pretty strict. (After all, that’s a whole lot of money the lender stands to lose if you default.) While every lender has its own specific algorithm for qualifying potential borrowers, here are some rules of thumb when it comes to jumbo loan requirements:

Credit Score Requirements

While there’s no specific credit score that guarantees you’ll qualify for a jumbo loan, most lenders will likely require a high one — after all, it’s a fairly risky prospect to lend that much money to someone. Credit scores range from 300 to 850. Scores of 670 to 739 are considered good; scores of 740 to 799 are considered very good, and scores of 800 and above are considered exceptional. You’ll likely need a score of at least 700 or 720 to qualify for a jumbo loan.

Down Payment Requirements

We touched on this briefly, but jumbo loan lenders often require their borrowers to provide a more substantial down payment than conventional loan lenders do. While a minimum of 10% is a good rule of thumb, some lenders may ratchet up the minimum to 25% or 30%.

Considering how large jumbo loans are already, that means you’ll probably need a significant amount of cash lying around in order to successfully apply for one — 10% of $900,000, a relatively small jumbo loan, is already $90,000.

Debt-to-Income Ratio Requirements

Your debt-to-income (DTI) ratio is a measurement of your existing debt burden expressed as a percentage. It’s calculated by totalling all your monthly debt payments and dividing that figure by your gross monthly income.

Conventional loans usually required a DTI ratio of 45% or lower. (Many lenders cut off qualification at lower percentages.) Again, while there’s no one advertised maximum DTI ratio for a jumbo loan, you’ll likely want to have as little debt as possible in order to qualify — not to mention in order to have the money on hand each month to make that massive mortgage payment.

Income and Asset Documentation

Jumbo loan lenders are, of course, primarily concerned with your ability to repay the loan. That means that, along with the above-mentioned factors, they’ll also want proof that you earn a reliable and high income — and in some cases that you’ve already stockpiled enough wealth that you’ll be able to make your payments for several months even if you lose your job. For this reason, qualifying for a jumbo loan can be especially challenging for a self-employed worker.

Advantages and Disadvantages of Jumbo Loans

So, now that you understand them better, is a jumbo loan right for you? Like any financial decision, taking out a jumbo loan has both benefits and drawbacks to carefully consider. Here are some of the pros and cons of jumbo loans.

Alternatives to Jumbo Loans

If you find yourself having trouble qualifying for a jumbo loan, you could look into other nonqualifying mortgages, such as bank statement loans — or potentially borrow a significant amount of money from family or friends. There is another alternative as well.

Piggyback Loans

One way to avoid taking out a jumbo loan is to borrow an amount below the conforming loan threshold (in most places, that would be less than $832,750 in 2026).

Then the borrower would take out a second “piggyback loan” to fund the rest of the purchase. These are often home equity loans and might have higher interest rates than a home mortgage loan. So being able to execute this strategy would depend on the borrower having another property to borrow against, such as a second home. Note: SoFi does not offer piggyback loans at this time.

If you know that you are coming into a large infusion of cash, such as from a bonus, inheritance, or the sale of another property that you own, the piggyback strategy might work because you will have funds to start paying off the second loan in the near future. However, if the home you’re vying for is that much of a stretch, it may make more financial sense to find something a bit more modest and apply for a conforming loan instead.

The Takeaway

Jumbo loans are large mortgages that don’t conform to the limits set by the FHFA — and therefore come with stricter qualification requirements. While jumbo loans can help those who qualify to access a high-value house, they can also be hard to keep up with unless your income is correspondingly high.

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, no private mortgage insurance, and down payments as low as 10%.

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

FAQ

How do I find my local jumbo mortgage limit?

Jumbo loan limits are set by the Federal Housing Finance Agency (FHFA) each year and are determined by county. The FHFA Conforming Loan Limit Values map shows every county in the U.S. and its limits for single-family and multi-unit properties.

What is the FHA jumbo loan limit?

The Federal Housing Administration (FHA) guarantees loans made by private lenders, and each year it sets maximum FHA loan amounts based on the median home prices for an area. Technically, the FHA does not have a “jumbo loan” designation, but would-be FHA loan borrowers can look up FHA mortgage limits on the U.S. Department of Housing and Urban Development site.

Why are jumbo loan limits necessary?

Most mortgage loans issued in the U.S. are guaranteed by Fannie Mae and Freddie Mac, which helps reduce risk for lenders and ensure that loans are affordable and available to homebuyers. But the guarantee has to stop somewhere, and conforming loan limits draw that line. This is why jumbo loans have more stringent borrower requirements than conforming loans — lenders who make jumbo loans don’t have Fannie Mae and Freddie Mac to fall back on if a jumbo borrower defaults.

What credit score do you need for a jumbo loan?

A jumbo loan will typically require a credit score of at least 700 or even 720, however this is only one of several requirements for this large loan, so a high score is no guarantee that a borrower will qualify.

Can jumbo loan limits change every year?

Conforming loan limits (also known as “jumbo loan limits”) do change annually. The Federal Housing Finance Agency typically releases new limits for the coming year each November.

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Photo credit: iStock/Wirestock

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

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

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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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^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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Many Americans are finding tiny houses, or those that measure several hundred square feet in size, are a great way to live. They can be both economical and eco-friendly, and some people say they simplify life, which can bring many benefits.

If you’re curious about tiny houses or are currently contemplating one, it’s important to know that financing these dwellings may be different than securing a traditional mortgage. Here’s a guide to tiny houses and how to secure funds to buy or build one.

What Is a Tiny House?

A tiny house is often defined as a home that is between 100 and 400 square feet. In contrast, the median size of a single-family American home is currently 1,834 square feet as of October 2025, according to the Federal Reserve Bank of St. Louis data. That’s almost five times bigger than the biggest tiny home. Here are some other facts to know about this kind of dwelling.

•   Owners live in their tiny homes themselves, rent them out, use them as a small vacation home or even build them as an accessory dwelling unit (ADU) on the same lot as their primary residence. Tiny homes may be on wheels, or they may sit on a fixed foundation.

•   Prefab homes can be delivered complete to the site, or there are modular homes that require some assembly on site. Those who would rather build their own house can hire an architect or draw up plans to their own specifications. There are small homes in all kinds of styles, from a classic Colonial or Victorian to a ranch style or A-frame or ultra-modern design.

•   Local zoning rules will determine whether or not a person can build or move into a tiny home. And building codes will determine things like ceiling height.

•   Tiny houses may not have good resale value since they are such a specific type of home and are often highly customized. Before buying a tiny house as an investment property, it might be wise to consult a real estate investment professional.

Tiny House Pricing

In 2025, the average sales price for a single-family home was about $534,100, according to U.S. Census Bureau data. Tiny homes cost quite a bit less, with an average of $82,500. That price can vary up and down depending on the size of the home, materials used, and amenities (yes, some tiny homes have luxe, spa-style bathrooms, for example). The price of the building is not the only thing to consider.

Buyers of tiny homes must factor in the price of buying or leasing land on which to place the home if they don’t already own it, as well as the cost of hooking it up to utilities.

If the tiny home is on a foundation, there may be state and local property taxes to pay. If the tiny house is on wheels, though, there likely won’t be property tax assessed.

Recommended: Is Buying a House a Good Investment?

Financing the Land

If property needs to be purchased to have a place to put a tiny home, an option for financing is a land loan. There are three types of land loans: raw land loans, unimproved land loans, and improved loans.

•   Raw land loans are for land that’s completely undeveloped with no electricity, roads, or sewer access.

•   Unimproved land loans are for properties that have more access to amenities like utilities, but lack utility meters.

•   Improved land loans are for land with access to roads, water, and electricity.

The size of the down payment and the interest rate of the loan will depend on what type of loan is needed. For example, lenders may consider raw land to be a riskier option than improved land and require a bigger down payment and higher interest rates.

Mortgages for Tiny Homes

Qualifying for a home loan for a tiny home may be tricky. Some lenders may not be willing to offer first or second mortgages for tiny home financing. However, if a tiny home has a foundation and complies with local building codes, it may qualify for certain mortgages.

Tiny homes may also qualify for what is known as a “chattel mortgage,” a mortgage for moveable personal property. The tiny home acts as security for the loan, and the lender effectively becomes the owner of the tiny home until the loan is paid off and ownership is transferred back to the borrower.

This differs from traditional mortgages that are secured by a lien on the property. Because the size of the loans are typically small, chattel mortgages may have relatively short terms, though interest rates may be relatively high.

Personal Loans

A personal loan can allow individuals access to money that they can use for any personal, family, or household purpose, from paying off credit cards to an effective tiny house loan. Depending on the lender, loan amounts can range from a few thousand dollars to $100,000. When the applicant is approved for a personal loan, they’ll receive the loan amount in a lump sum and pay it back in installments with interest.

Personal loans may be secured or unsecured. Unsecured loans are not backed with any collateral, and the interest rates currently range from about 6% to 36%, depending largely on the borrower’s credit score.

Secured loans are backed by collateral, such as personal savings, a car, or another home owned by the same borrower. They typically come with a lower interest rate than their unsecured counterparts. However, it’s important to note that if a personal loan is defaulted on, the borrower’s assets could be seized by the lender to repay the debt.

Home Equity Loans

The equity someone may have built up in a home they already own can be tapped to finance a tiny home for use as a vacation home, rental property, or ADU. A home equity loan is a fixed amount of money secured by a borrower’s home.

Usually, up to 85% of the equity accumulated in a home can be borrowed, though actual loan amounts will also depend on the applicant’s income and credit history. The home equity loan is repaid with monthly payments over a fixed term. And if the borrower fails to repay, the lender can foreclose on the house.

A home equity line of credit (HELOC) may be another option to finance a tiny home. HELOCs differ from home equity loans in that the borrower doesn’t receive a single lump-sum payment from the lender.

Rather, a HELOC gives the borrower access to a line of credit that can be drawn down, paid back, and drawn down again, if need be, within a certain time period. The HELOC is secured by the borrower’s home, so as with a home equity loan if the debt is not paid, the lender can use the home as collateral.

Loans From Tiny House Builders

A tiny house builder or contractor may be able to help secure financing through unsecured loans based on an applicant’s credit score, or secured loans backed by the value of the tiny home. These tiny-house loans may have longer terms and lower starting interest rates than personal loans, but they may require a downpayment.

RV Loans

If the tiny house has wheels and is certified as an RV by the Recreational Vehicle Industry Association, an RV loan may be another option for financing. Online lenders, banks, and credit unions may all offer RV loans. In many cases, the tiny house will serve as collateral for the loan, the same way a car would serve as collateral in an automobile loan.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

If you’re in the market for a tiny house, you may need to think beyond traditional mortgages. Home equity, HELOC, and personal loans, among other options, may be available forms of financing that can set you on your way to owning the tiny house of your dreams.

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 NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

How big is a tiny home?

Tiny homes are typically between 100 and 400 square feet.

How much does a tiny home cost?

Currently, the average cost of a tiny home is about $82,500, but there’s considerable variation depending on location, size, style, and other factors.

How to afford a tiny home?

There can be several ways to finance a tiny home, including possibly a mortgage loan, home equity loan, HELOC, builder loan, RV loan, or personal loan.

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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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All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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 .

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 housing market is rising in some areas of America and falling in others. If you find yourself in a hot seller’s market, it can be challenging to buy a house, but doing so, even with a low down payment, is possible.

Lenders are willing to approve mortgages with lower down payment requirements if you qualify and are comfortable with paying mortgage insurance.

Read on for advice on navigating the real estate market if you have a small down payment but a fair amount of competition from other prospective buyers.

What Is Considered a Low Down Payment?

While many people believe you need at least a 20% down payment to buy a house, the average down payment by a first time homebuyer at the end of 2025 was 10%. And low-down-payment mortgage loans — even home loans with zero down payment — do exist.

Given the wide range above, what’s actually considered a low down payment? Popular mortgage programs out there may require as little as 3% down, and a couple of more specific home loan programs allow 0% down.

The reason why that 20% down payment figure keeps popping up is that any amount less than that will likely entail some form of mortgage insurance, an ongoing fee charged by most lenders.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Challenges of Buying in a Seller’s Market With a Small Down Payment

If you’re wondering how to buy a house with a low down payment, it’s important to acknowledge a painful truth in today’s housing market: There’s truth to the saying “cash is king,” and that continues to be evident in a seller’s market, where real estate investors who pay all cash frequently outbid prospective first-time homebuyers. All-cash sales have risen to a historic high of 26% in 2025, according to the National Association of Realtors. Be ready for these potential challenges if you intend to buy a house with a small down payment.

Longer Closing Time

Closing on a home with a mortgage-contingent offer to buy takes longer than closing with a cash offer. There’s often more paperwork, and underwriters will require time to ensure that your financials are in order before green-lighting your mortgage.

Lenders May Disagree With Mortgage Minimums

Just because a mortgage loan program allows for low-down-payment mortgage loans for qualified buyers doesn’t mean a lender will accept a down payment of 3%. Lenders have wide latitude to dictate their own terms, and it’s fairly common for them to set their own minimum down payment requirement somewhere above what the stated minimum for the program is.

Home Sellers May Be Nervous About Your Ability to Close

While it’s true that all funds from your down payment and mortgage transfer to the seller at closing, many sellers still buy into the old “bird in hand” adage when it comes to accepting offers. A higher down payment signals a buyer’s financial capacity and is, therefore, more attractive in the eyes of the homeowner.

If sellers accept a bid with a low down payment, they may run an increased risk of the buyer being rejected at the last minute by the mortgage lender.

In a deal involving a mortgage backed by the Federal Housing Administration (FHA), if the home is appraised for less than the agreed-upon price, the sellers must match the appraised price or the deal will fall through. FHA guidelines require home appraisers to look for certain defects. If any are found, the sellers may have to repair them before the sale.

Struggles With Competitive Offers and Bidding Wars

When your down payment is limited, you may find it difficult to compete in a bidding war. To help your case, if you are obtaining a conventional loan, seek out mortgage preapproval before beginning your home search in earnest. And consider writing a “love note” to the seller in your offer letter. Compliment something you especially like about the house and try to find some common ground with the seller that will appeal to their emotions. Thank the seller for considering your offer.

Recommended: Private Mortgage Insurance (PMI) vs. Mortgage Insurance Premium (MIP)

Types of Low-Down-Payment Mortgages

If you’re trying to score a home with a small down payment, there are some ways you can approach it to increase your odds. Some of the most popular low-down-payment mortgage programs are:

FHA Loans

FHA loans backed by the Federal Housing Administration, allow for a down payment as low as 3% to 5%. The government guarantee makes these loans more palatable for mortgage lenders and easier for a homebuyer to afford.

Fannie Mae HomeReady

Buyers who are within 80% of area median income for the census tract where a home is located can put down just 3% with this program. You don’t need to be a first-time buyer to take advantage of this program, however if all buyers are first-timers, you may be required to take a homebuyer education class.

Conventional 97 Loan

This loan allows first-time homebuyers of any income level to put only 3% down and finance the other 97% of their purchase with a fixed-rate mortgage with a term of up to 30 years. A credit score of 620 is required, although it will take a score of 680 to take full advantage of the features of this loan. At least one buyer must be a first-timer, and if all buyers are first-time homebuyers, a homeowner education course is usually required.

Conventional Mortgage

If you don’t qualify as a first-time homebuyer you can still obtain a low-down-payment home loan with a down payment as low as 5%. Conventional mortgage loans can be either fixed or adjustable rate, and you could take anywhere from 10 to 30 years to repay what you owe, depending on the mortgage term you choose. You’ll need a credit score of 620, and the higher your score, the better the interest rate you will likely be offered. If you put down less than 20%, you’ll need to pay for private mortgage insurance (PMI) with your monthly payment until you have 20% equity in your home.

Recommended: Home Affordability Calculator

Types of No-Down-Payment Mortgages

It is also possible to buy a house with no money down at all. Here are two common no-down-payment mortgages you may want to explore:

VA Loan

A VA loan backed by the U.S. Department of Veterans Affairs, allows eligible active-duty military members, veterans, reserve members, National Guard members, and certain surviving spouses to purchase a home with a zero-down-payment mortgage. If you think you might be eligible for a VA loan, your first step is to obtain a Certificate of Eligibility from the VA. Then you’ll obtain the loan from a lender (most will require a 620 credit score or better). While there is no mortgage insurance required, there is usually a VA funding fee.

USDA Loan

USDA loans are for low- and moderate-income buyers living in rural areas. The fixed-rate loan allows for the purchase of a new home but also allows borrowers to wrap some renovation costs into a home purchase. The loan can be used for modular or manufactured housing. There is no down payment or minimum credit score required for this loan.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Pros and Cons of Zero-Down-Payment Mortgage Loans

There are both benefits and disadvantages to going into homeownership with no down payment. Here are a few points to think about.

Recommended: Home-Buying Process Checklist

How Down Payment Assistance Can Help

If you’re struggling to come up with a down payment and a zero-down-payment loan isn’t an option, you may be able to get help. Consider exploring both of these options:

Down Payment Assistance (DPA) Programs

Many governments and nonprofits offer down payment assistance programs for first-time homebuyers — those who have not owned a principal residence in the past three years. The funds may come in the form of a loan or a grant. Some lenders can even assist you in qualifying for these programs to help offset the upfront costs of homebuying.

Cash Gift for Down Payment

Finally, you can also ask a family member, or sometimes a domestic partner, close friend, or employer, to help with the down payment by contributing gift money. The money can’t come with any strings attached, and a gift letter will likely be required by the lender. This is a popular option for parents and in-laws who want to help their children buy a first home.

Low- or No-Down-Payment Considerations

Mortgage Insurance

Buyers who put down less than 20% on a home purchased with a conventional mortgage can expect to have to pay for private mortgage insurance until they reach 20% equity in their home. Those who finance their home with an FHA loan will need to pay an upfront and annual mortgage insurance premium for the life of the loan. Some other government-backed loans also have similar fees.

Higher Cost Overall

Home loans cost money, in the form of interest. And because more of the home’s price must be financed when you put down a low down payment (or none at all), the total cost of the home will be greater than if some or all of the home purchase was covered by cash.

Less Equity Initially

The larger the down payment on a home, the more equity the buyer has on move-in day. Of course, you will build equity with your monthly mortgage payments, but in a process called mortgage amortization, a greater proportion of your monthly payment goes toward interest in the early years of a home loan, with less going to pay down the principal. The balance shifts gradually over the years of your loan, but you build equity slowly at the outset of a home loan.

The Takeaway

Buying a home with a small down payment is possible, even in a seller’s market. With preparation and the right mortgage lender, you may be able to land a place to call your own even with a low down payment — or no down payment at all.

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 mortgage has the lowest down payment?

Homebuyers who qualify can get a VA mortgage (backed by the U.S. Department of Veterans Affairs) or a USDA loan (from the U.S. Department of Agriculture) with no down payment at all. For other loan types, the lowest down payment amount is 3%.

Are zero-down mortgages a good idea?

Zero-down-payment home loans can help you get settled into a home sooner, but there are a few things to consider: You will not have any equity in your home at the outset, and equity builds slowly in the earliest years of a home loan. Your zero-down-payment loan will also be larger than the loan you would have if you made a down payment, so over the long haul, you will pay more for the home. However, if buying with no down payment allows you to take advantage of low interest rates, it might be worthwhile.

Is it harder to get your offer accepted with a small down payment?

If a seller is considering similar offers, the buyer with the larger down payment might have an edge. Being preapproved for a home loan can give you an advantage, however. If you can’t make a large down payment, consider obtaining preapproval.

Can a low down payment affect your mortgage rate?

Lenders may perceive buyers with lower down payments to be a greater risk, so a low down payment can sometimes result in a higher interest rate.

Are there programs to help first-time buyers compete in a seller’s market?

There are both national and local programs to help first-time homebuyers, including first-time homebuyer loan programs and down payment assistance programs. While these programs are not designed specifically to help buyers in a seller’s market, they certainly can’t hurt.

Should I wait for a buyer’s market if I only have a small down payment?

Whether or not to wait for a buyer’s market will depend on how soon you wish to buy a home and which local market you’re searching in. If waiting will allow you to build money for a larger down payment or improve your credit score, it might be worthwhile. The same is true if you foresee any reason the market might cool in the future. But if you need to settle down now, consider exploring nearby housing markets that might be a little less heated. And line up your mortgage preapproval to position yourself for success.

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

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

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
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.
^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. ^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency. 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-Q425-198

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In the ever-evolving landscape of real estate, the U.S. foreclosure market often unveils key trends that will shape the future of homeownership. According to property data provider ATTOM, the number of housing units with foreclosure filings in October was 36,766, up 3% from the prior month and 19% from a year ago. Rob Barber, CEO of ATTOM, notes that “Foreclosure activity continued its steady upward trend in October, the eighth straight month of year-over-year increases.”

Nationwide, one in every 3,871 housing units had a foreclosure filing in October 2025. Foreclosure starts increased nationwide by nearly 20% from last year. States with the greatest number of foreclosure starts in October 2025 included Florida, Texas, California, Illinois, and New York. Borrowers should stay up to date on their mortgage payments and work closely with their lenders to explore options for assistance if needed.

Read on for the foreclosure rates in October 2025 – plus the top three counties with the worst foreclosure rates in each state.

50 State Foreclosure Rates

As previously noted, foreclosure rates saw an increase compared to the previous month and year. Read on for the October 2025 foreclosure rates for all 50 states — beginning with the state that had the lowest rate of foreclosure filings per housing unit.

50. South Dakota

The Mount Rushmore State nabbed the 50th spot once more for its foreclosure rate in October. Having 398,903 total housing units, the fifth-least populous state had a foreclosure rate of one in every 26,594 households with 15 foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Minnehaha, Yankton, and Pennington.

49. Montana

Listed as 44th in population, the Treasure State rated 49th for its foreclosure rate in October. With 25 foreclosures out of 522,939 housing units, Montana’s foreclosure rate was one in every 20,918 homes. The counties with the most foreclosures per housing unit were: Blaine, Sweet Grass, and Dawson.

48. Vermont

In 49th place for population, the Green Mountain State ranked 48th for its foreclosure rate in October. Of the state’s 337,072 housing units, 19 homes went into foreclosure at a rate of one in every 17,741 households. The three counties in the state with the most foreclosures were: Rutland, Addison, and Windham.

47. Mississippi

Ranked 34th in population, the Magnolia State experienced 93 foreclosures out of 1,332,811 total housing units. This puts the foreclosure rate at one in every 14,331 homes and into the 47th spot in October. The counties with the most foreclosures per housing unit were (from highest to lowest): Wayne, Jefferson, and Copiah.

46. West Virginia

Ranked 39th in population, the Mountain State claimed the 46th spot for the month of October. It has a total of 859,653 housing units, of which 65 went into foreclosure. This means that the foreclosure rate was one in every 13,225 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Jefferson, Berkeley, and Wetzel.

45. North Dakota

The Peace Garden State’s foreclosure rate was one in every 9,865 homes. This puts the fourth-least populous state — with 374,866 housing units and 38 foreclosures — into 45th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Hettinger, Bowman, and McIntosh.

44. Kansas

The Sunflower State ranked 44th for highest foreclosure rate in October. With 1,285,221 homes and a total of 136 housing units going into foreclosure, the 35th most populous state’s foreclosure rate was one in every 9,450 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Anderson, Ottawa, and Decatur.

43. Wisconsin

With 304 foreclosures out of 2,750,750 total housing units, America’s Dairyland and the 20th most populous state secured the 43rd spot with a foreclosure rate of one in every 9,049 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Kewaunee, Langlade, and Marquette.

42. New Hampshire

The Granite State, and the 41st most populous state in the U.S., ranked 42nd for highest foreclosure rate. New Hampshire saw 72 of its 644,253 homes go into foreclosure, making for a foreclosure rate of one in every 8,948 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Coos, Hillsborough, and Rockingham.

41. Rhode Island

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The eighth-least populous state placed 41st for highest foreclosure rate in October. A total of 58 homes went into foreclosure out of 484,615 total housing units, making the foreclosure rate for the Ocean State one in every 8,355 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Washington, Providence, and Kent.

40. Oregon

The 27th most populous state ranked 40th for highest foreclosure rate in October. Of the Pacific Wonderland’s 1,838,631 homes, 234 went into foreclosure, making for a foreclosure rate of one in every 7,857 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Lake, Umatilla, and Clackamas.

39. Nebraska

Ranking 37th in population, the Cornhusker State placed 39th in October with a foreclosure rate of one in every 7,506 homes. With a total of 855,631 housing units, the state had 114 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Red Willow, Webster, and Wayne.

Recommended: Tips on Buying a Foreclosed Home

38. Minnesota

Ranked 22nd for most populous state, the Land of 10,000 Lakes obtained the 38th spot for highest foreclosure rate in October. It has 2,519,538 housing units, of which 365 went into foreclosure, making the state’s foreclosure rate one in every 6,903 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Isanti, Wadena, and Wabasha.

37. Hawaii

The Paradise of the Pacific, and the 40th most populous state, came in 37th for highest foreclosure rate. Of its 564,905 homes, 84 went into foreclosure, making for a foreclosure rate of one in every 6,725 households. Only three of the five counties in the state saw foreclosures. They were (from highest to lowest): Hawaii, Honolulu, and Kauai.

36. Washington

Sorted as 13th in population, the Evergreen State ranked 36th for its foreclosure rate in October. Of its 3,262,667 housing units, 496 went into foreclosure, making the state’s foreclosure rate one in every 6,578 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Garfield, Clallam, and Franklin.

35. Alabama

Listed as 24th in population, the Yellowhammer State came in 35th for highest foreclosure rate in October. Of its 2,316,192 homes, 361 went into foreclosure, making for a foreclosure rate of one in every 6,416 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Jefferson, Geneva, and Chilton.

34. New Mexico

The 36th most populous state claimed the 34th spot for highest foreclosure rate in October. Of the Land of Enchantment’s 949,524 homes, 151 went into foreclosure, making for a foreclosure rate of one in every 6,288 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Valencia, Torrance, and Chaves.

33. Missouri

Coming in at 19th in population, the Show-Me State took the 33rd spot for highest foreclosure rate in October. Of its 2,809,501 homes, 459 went into foreclosure, making for a foreclosure rate of one in every 6,121 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Scott, Mississippi, and Barton.

Recommended: What Is a Short Sale?

32. Kentucky

With a total of 2,010,655 housing units, the Bluegrass State saw 329 homes go into foreclosure, thus landing in 32nd place in October. This puts the foreclosure rate for the 29th most populous state at one in every 6,111 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Whitley, Bath, and Grant.

31. Tennessee

Ranked 16th in population, the Volunteer State endured 521 foreclosures out of its 3,095,472 housing units. This puts the foreclosure rate at one in every 5,941 households and in 31st place for the month of October. The counties with the most foreclosures per housing unit were (from highest to lowest): Lake, Crockett, and Hawkins.

30. Virginia

With 620 homes going into foreclosure, the 12th most populous state ranked 30th for highest foreclosure rate in October. Having 3,654,784 total housing units, the Old Dominion saw a foreclosure rate of one in every 5,895 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Staunton City, Emporia City, and Buena Vista City.

29. Pennsylvania

The Keystone State had the 29th highest foreclosure rate. The fifth-most populous state saw 995 homes out of 5,779,663 total housing units go into foreclosure, making the state’s foreclosure rate one in every 5,809 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Monroe, Philadelphia, and Snyder.

28. Wyoming

The country’s least populous state claimed the 28th spot for highest foreclosure rate in October. With 275,131 housing units, of which 50 went into foreclosure, the Equality State’s foreclosure rate was one in every 5,503 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Carbon, Campbell, and Sublette.

27. Alaska

The Last Frontier saw 59 foreclosures in October, making the foreclosure rate one in every 5,406 homes. This caused the third-least populous state, with a total of 318,927 housing units, to claim the 27th spot. The boroughs with the most foreclosures per housing unit were (from highest to lowest): Dillingham, Haines, and Bethel.

26. Massachusetts

The 15th most populous state ranked 26th for highest foreclosure rate in October. Of the Bay State’s 3,014,657 housing units, 591 went into foreclosure, making for a foreclosure rate of one in every 5,101 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Hampden, Berkshire, and Dukes.

25. Michigan

Ranked 10th in population, the Wolverine State secured the 25th spot with a foreclosure rate of one in every 4,776 homes. With a total of 4,599,683 housing units, the state had 963 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Muskegon, Monroe, and Hillsdale.

24. New York

With 1,792 out of a total 8,539,536 housing units going into foreclosure, the Empire State claimed the 24th spot in October. The fourth-most populous state’s foreclosure rate was one in every 4,765 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Broome, Orange, and Tioga.

23. Arkansas

Listed as the 33rd most populous state, the Land of Opportunity ranked 23rd for highest foreclosure rate in October. The state contains 1,382,664 housing units, of which 293 went into foreclosure, making its latest foreclosure rate one in every 4,719 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Cleveland, Poinsett, and Van Buren.

22. Louisiana

Sorted as 25th in population, the Pelican State placed 22nd for highest foreclosure rate in October. Louisiana had a foreclosure rate of one in every 4,602 households, with 455 out of 2,094,002 homes going into foreclosure. The parishes with the most foreclosures per housing unit were (from highest to lowest): Iberville, Ascension, and Beauregard.

Recommended: Are You Ready to Buy a House? — Take The Quiz

21. Colorado

The 21st most populous state ranked 21st for highest foreclosure rate in October. Of the Centennial State’s 2,545,124 housing units, 562 went into foreclosure, making for a foreclosure rate of one in every 4,529 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Morgan, Sedgwick, and Pueblo.

20. Indiana

The 17th largest state by population, the Crossroads of America landed the 20th spot in October with a foreclosure rate of one in every 4,421 homes. Of its 2,953,344 housing units, 668 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Blackford, Noble, and Jasper.

19. Arizona

Sorted as 14th in population, the Grand Canyon State withstood 722 foreclosures out of its total 3,142,443 housing units. This puts the foreclosure rate at one in every 4,352 homes and into the 19th spot in October. The counties with the most foreclosures per housing unit were (from highest to lowest): Pinal, Yuma, and Cochise.

18. North Carolina

The ninth-most populous state claimed 18th place for highest foreclosure rate. Out of 4,815,195 homes, 1,135 went into foreclosure. This puts the Tar Heel State’s foreclosure rate at one in every 4,242 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Camden, Pender, and Rowan.

17. Maine

Ranked 42nd in population, the Pine Tree State placed 17th for highest foreclosure rate in October. With a total of 746,552 housing units, Maine saw 177 foreclosures for a foreclosure rate of one in every 4,218 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Sagadahoc, Waldo, and Penobscot.

16. Connecticut

With 376 of its 1,536,049 homes going into foreclosure, the Constitution State had the 16th-highest foreclosure rate at one in every 4,085 households. In this 29th most populous state, the counties that had the most foreclosures per housing unit were (from highest to lowest): Greater Bridgeport, Northeastern Connecticut, and Naugatuck Valley.

15. Georgia

Ranked eighth in population, the Peach State took the 15th spot for highest foreclosure rate in October. Of its 4,483,873 homes, 1,101 were foreclosed on. This puts the state’s foreclosure rate at one in every 4,073 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Johnson, Newton, and Wilkes.

14. Oklahoma

The Sooners State landed the 14th spot in October. With housing units totaling 1,763,036, the 28th most populous state saw 462 homes go into foreclosure at a rate of one in every 3,816 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Canadian, Jackson, and Marshall.

13. Idaho

Ranked 38th in population, the Gem State received the 13th spot due to its 206 housing units that went into foreclosure in October. With 776,683 total housing units, the state’s foreclosure rate was one in every 3,770 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Washington, Gooding, and Gem.

12. New Jersey

With a foreclosure rate of one in every 3,716 homes, the Garden State ranked 12th for highest foreclosure rate in October. The 11th most populous state contains 3,775,842 housing units, of which 1,016 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Sussex, Cumberland, and Atlantic.

11. Texas

The Lone Star State withstood 3,441 foreclosures in October. With a foreclosure rate of one in every 3,456 households, this puts the second-most populous state in the U.S., with a whopping 11,890,808 housing units, into 11th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Liberty, San Jacinto, and Franklin.

Recommended: Your 2025 Guide to All Things Home

10. California

The country’s most populous state ranked 10th for highest foreclosure rate in October. Of its impressive 14,532,683 housing units, 4,265 went into foreclosure, making the Golden State’s foreclosure rate one in every 3,407 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Shasta, Mendocino, and Kings.

9. Utah

The Beehive State placed ninth for highest foreclosure rate in October. Of its 1,193,082 housing units, 364 homes went into foreclosure, making the 17th most populous state’s foreclosure rate one in every 3,278 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Tooele, Millard, and Box Elder.

8. Maryland

Ranked 18th for most populous state, America in Miniature took eighth place for highest foreclosure rate in October. With a total of 2,545,532 housing units, of which 778 went into foreclosure, the state’s foreclosure rate was one in every 3,272 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Baltimore City, Calvert, and Somerset.

7. Iowa

The Hawkeye State had the seventh highest foreclosure rate in October. With 443 out of 1,427,175 homes going into foreclosure, the 31st most populous state’s foreclosure rate was one in every 3,222 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Wapello, Tama, and Cherokee.

6. Ohio

The Buckeye State placed sixth in October with a foreclosure rate of one in every 3,079 homes. With a sum of 5,271,573 housing units, the seventh-most populous state had a total of 1,712 filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Fayette, Knox, and Seneca.

5. Nevada

Ranked 32nd in population, the Silver State took the fifth spot for highest foreclosure rate in October. With one in every 2,747 homes going into foreclosure, and a total of 1,307,338 housing units, the state had 476 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Lyon, Churchill, and Mineral.

4. Delaware

The sixth-least populous state in the country, the Small Wonder nabbed fourth place in October. With one in every 2,710 homes going into foreclosure and a total of 457,958 housing units, the state saw 169 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.

3. Illinois

The Land of Lincoln had the third-highest foreclosure rate in all 50 states in October. Of its 5,443,501 homes, 2,118 went into foreclosure, making the sixth-most populous state’s foreclosure rate one in every 2,570 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Clinton, Lee, and Coles.

2. South Carolina

The 23rd most populous state had the second-highest foreclosure rate in October with one in every 1,982 homes going into foreclosure. Of the Palmetto State’s 2,401,638 housing units, 1,212 were foreclosed on in October. The counties with the most foreclosures per housing unit were (from highest to lowest): Dorchester, Lee, and Spartanburg.

1. Florida

The third-most populous state in the country has a total of 10,082,356 housing units, of which 5,512 went into foreclosure. This puts the Sunshine State’s foreclosure rate at one in every 1,829 homes and into first place in October. The counties with the most foreclosures per housing unit were (from highest to lowest): Osceola, Charlotte, and Okeechobee.

The Takeaway

Of all 50 states, Florida had the most foreclosure filings (5,512), and South Dakota had the least (15). As for the states with the highest foreclosure rates, Florida, South Carolina, and Illinois took the top three spots.

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.

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

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

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

SOHL-Q425-206

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Before most house hunters can close the deal, they need to qualify for a mortgage. Learning how to apply for a mortgage in advance — and breaking the process down into digestible steps — can help applicants feel better prepared and avoid any unpleasant surprises during the process. (Good news: The mortgage application process is one of those things that is more complicated to explain than to experience!)

Ready to learn how to apply for a home loan? Here are the seven steps in the mortgage process, including moves you can make that may expedite your approval.

Table of Contents

1. Submit Your Mortgage Application

You’ve found the ideal property, made an offer on the house, and put your down payment into escrow. If you didn’t already get preapproved for a mortgage online, it’s time to apply for a mortgage. There are many different mortgage types, and choosing one will depend on your income, down payment, location, financial approach, and lifestyle. Some choices you’ll need to make at this stage of the mortgage process are:

•   A conventional home loan or a government-insured loan, such as an FHA loan backed by the Federal Housing Administration or a VA loan backed by the U.S. Department of Veterans Affairs)

•   A fixed-rate or an adjustable-rate mortgage

•   Your repayment term: typically 15, 20, or 30 years

A good lender will walk you through your options, whether you’re looking at a home requiring an FHA mortgage or a high-priced home with a jumbo loan.

Your lender will have the required forms for your mortgage loan application, and you can often submit everything online, but you’ll want to have the following at hand:

•   Proof of identity.

•   Documentation of income: W-2s or 1099s, your most recent income tax filing, profit-and-loss statements if self-employed, pay stubs, Social Security and retirement account info, information on alimony and child support, etc.

•   Documentation of assets: bank accounts, real estate, investment accounts, etc. If you received help from a family member to fund your down payment, a gift letter will be necessary.

•   Documentation of debts: any current mortgage you might have, car loans, credit cards, student loans, etc.

•   Information on property: street address, sale price, property size, property taxes, etc.

•   Employment documentation: current employer information, salary information, position/title, length of time at employer, etc. In general, lenders like to see two years of employment on a loan application. Self-employed individuals will generally submit two years of tax returns.

2. Schedule Your Home Inspection and Appraisal

It can take a little time to get your inspection and appraisal on the calendar, and then you can expect to wait at least a few days to get the reports. So now’s the time to make sure these two important aspects of the home-buying process are moving along.

A home inspection may not be required, but it’s a good idea to hire an inspector (your real estate agent may have recommendations, but you can shop around) to thoroughly check the property inside and out for undisclosed problems. If the inspector uncovers expensive issues, you may negotiate for a price reduction, which could affect your mortgage principal amount. If the problem is a dealbreaker, the inspector’s report could help you back out of the deal without penalty.

Review this home inspection checklist to make sure your inspector will cover all the bases. In some cases, a general home inspector may find an issue that requires a more specific expert to take a look (and yes, that’ll cost more money — but it may be worth the cost).

Don’t let the infatuation with a seemingly perfect property blind you. If there are serious issues that come up during the inspection and the sellers won’t budge on price (or agree to fix them before closing), seriously consider walking away. You won’t recoup the money you paid for the inspection — a home inspection costs between $300 and $500 — but if it keeps you from investing in a money pit, it’s money well spent.

An appraisal will be necessary as part of the mortgage underwriting process. It’s an independent evaluation of a home’s value. It will describe the property and what makes it valuable. Factors that affect the appraisal value include the location, condition, amenities and features, and market conditions in the area.

A lender requires a home appraisal to ensure that it isn’t lending more than the property is worth. If the appraisal comes in too low, the lender won’t lend extra money to cover the gap. Buyers will need to cover the difference with their own money or renegotiate the price with the seller to match the appraisal.

Recommended: Local Housing Market Trends

3. Secure Homeowners Insurance

You’ll need to buy homeowners insurance before you can close on your new home, so now’s the time to scout around for a policy that provides the coverage you need at the price you feel is right. Thanks to the appraisal, you can feel confident in the value of the home, which will help in the insurance process.

Before you commit, get quotes from a few different companies. Taking the time to do so at this step of the mortgage process will ensure your coverage is shipshape when you reach your closing. Your prospective lender will want to know the home is covered and many homeowners make their insurance premium payments as part of their monthly mortgage bill.

4. Undergo Loan Processing and Review

While you are taking care of your insurance coverage, the lender will be processing and reviewing your loan application to make sure you meet all the mortgage loan requirements. A major part of the mortgage loan process is the underwriting phase. The underwriting process begins after you complete your mortgage application, ends after all the documentation has been completed, and includes the appraisal.

During the process, the underwriter examines the borrower’s financials, as well as the appraisal, title search, and proof of homeowners insurance. The lender will perform a hard credit inquiry. In general, the better your credit score, the better the mortgage rate you’ll be approved for. If your score is above 740, you’ll qualify for the best rates. But in general, you’ll need a minimum 620 credit score to buy a house. Lenders are required to do a second credit check before final mortgage loan approval and may likely ask for further documentation.

The average time between submitting a mortgage application and closing is about 50 days, so if you’re wondering how long does the underwriting process take for a mortgage, you can expect things to take a little under two months, start to finish. During this period, it’s wise to observe a self-imposed “credit freeze.” That is, don’t run up your credit cards beyond what you usually spend each month. Put off major purchases. Don’t apply for new credit cards, take out auto loans, or take on any other new debt. And, of course, make sure to pay all your bills on time. If there’s any significant change in your credit history, your closing may be delayed or even derailed. Should something major come up (like an expensive medical emergency), call your lender to let it know.

Responding quickly to any questions or requests from your lender can help keep your application on track.

Recommended: What’s the Difference Between a Hard and Soft Credit Inquiry?

5. Receive Your Approval and Closing Disclosure

It can be tough feeling like your life is on hold while you’re waiting for the mortgage underwriting process to be completed. Try to be patient and let things play out. Now is a good time to reach out to friends and family who have been through the mortgage loan process before and commiserate. Consider this your orientation into the homeownership club.

Once the appraisal is complete and all documentation has been reviewed and verified, the underwriter will complete the mortgage underwriting process and recommend approval, denial, or pending. A pending decision is given when information is incomplete. You may still be able to get the loan by providing the documentation asked for.

It’s a happy day when your lender officially notifies you that you have been approved for your home loan. After underwriting approval with a “clear to close,” you’re set to close on your loan. The mortgage closing disclosure you receive from the lender is a required document. This five-page form from your lender will outline the home mortgage loan terms, including the loan principal, interest rate, and estimated monthly payment. It also lays out how much money is owed for closing costs and the down payment.

Lenders are required by federal law to provide the mortgage closing disclosure at least three business days ahead of the closing date. Make sure you read it immediately and thoroughly.

6. Do A Final Walk-Through of the Home

Before arriving at closing, you’ll want to do a final walk-through of the property you’re purchasing. During this walk-through, confirm that the sellers have made any repairs that were agreed to — and that they haven’t removed anything, such as an appliance or light fixture, that was meant to be left, per the purchase agreement.

7. Attend the Closing Meeting

Closing day comes after the mortgage loan approval process is completed. All parties will sign the final documents and ownership is legally transferred from the sellers. In the days prior to your close, the lender should provide a final list of closing costs. Closing costs are typically 2% to 5% of the mortgage principal and may include items like:

•   Lender fees

•   Appraisal and survey fees

•   Title search/title insurance fees

•   Recording fees

•   First year of private mortgage insurance (PMI) premiums, if required

You can pay closing costs by wire transfer a day or two before, or by cashier’s check or certified check the day of closing.

In the past, buyers and sellers, their agents, and lawyers would gather in the same room to sign the paperwork at closing. In recent years, remote online closings have become more common. The closing may be virtual, but the feelings of relief and happiness that typically result are very real.

The Takeaway

Applying for and securing a home mortgage loan follows a simple process that can seem complicated the first time you do it. But if you reply to questions promptly and are organized with your documents, it’s actually pretty simple — even if it does involve a little waiting time.

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

How long is a mortgage loan in processing?

It takes a little under two months from the date you submit your mortgage application to closing on the house — the average timeline is about 50 days. In some scenarios, you may be able to close in as little as 30 days.

How do you know when your mortgage loan is approved?

Your mortgage loan officer will contact you when your loan is approved. They may call you to give you the good news, but you’ll want to see it in writing so watch for an email as well.

What should I avoid after applying for a mortgage?

You want to keep your financial situation as stable as possible during the mortgage application process. That means don’t open new credit accounts, and keep your credit utilization down (no extra swipes on those credit cards). Don’t fall behind on any bill, either

What looks bad on a mortgage application?

Key red flags on a mortgage application include a high level of debt relative to your income, a low credit score, or a history of late or missed debt payments. A lender might also be concerned about any large, unexplained influx of cash into your bank account in the months leading up to your application. A history of gambling or repeated use of payday loans might also be cause for concern from a lender’s perspective.

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Photo credit: iStock/MicroStockHub

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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.

SoFi Mortgages
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
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.
^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. ^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency. Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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.

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