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The housing market has been super-heated in recent years, and although the rise in home prices has cooled slightly in early 2025, they continue to be high. But a slight dip in mortgage costs has some buyers venturing back into the market.

You may be wondering if this is the year to sell your home, or would it be wise to wait another year or two? That’s not a simple yes/no decision. A variety of factors come into play when making a big lifestyle and financial move like this one.

Here, we’ll provide guidance on how to size up the pros and cons of selling now, including:

•   What is the housing market like in 2025?

•   What are good reasons to sell your house?

•   What are good reasons to wait to sell your house?

•   Should I sell my house now or wait? If so, what are selling tips?

•   Should I buy a house in 2025?

Examining the Housing Market in 2025

The coronavirus pandemic brought an unprecedented demand for housing as many people became less tethered to the workplace and needed houses that would accommodate the shift to working from home. The housing market heated up, and it really hasn’t let up since.

After a dip between 2020 and 2023, mortgage rates have climbed. Today, home prices are high and 30-year fixed mortgage rates, though they have dropped a bit, are persistently in the high 6.00% range.

What does that mean for the housing market in 2025? It’s not exactly a seller’s market, but if you choose to put your home up for sale, you might be able to command a good price. If you’re selling so you can buy another house, there’s more to dig into than local market conditions in order to answer the question, “Should I sell my house now?” Let’s look at the pros and cons.


💡 Quick Tip: An online property tracker can help you monitor your home equity over time. That’s important for understanding your net worth and finding sufficient insurance protection.

3 Reasons to Sell Your House

Now could be the smartest time to sell your house, depending on your specific situation. Here are some compelling reasons to sell your house in 2025.

Reason #1: Your House Is Worth More Now

Housing prices have climbed pretty steadily upward over the last decade. Unless you purchased recently, your home has likely gained in value. No one can say what the future holds for house prices, so selling could allow you to hedge your bets.

If you take a look at how much equity you have in your home and find that you are sitting pretty, it could be a great time to cash out and buy something else, especially if you are downsizing. Or if you know you will want to sell within the next year or two, it might be wise to make a move now since property values may slip lower in the near future.

Recommended: How Much Is My House Worth?

Reason #2: A Few Minor Repairs Could Increase Value

Even if your home is already worth more than in the past, you can get even more value out of it if you make common home repairs like touching up the exterior paint or refreshing the landscaping. A fresh coat of paint can make your place all the more appealing if you put it on the market, and is more cost-efficient than doing a major renovation such as updating a kitchen or baths.

Reason #3: Houses Are Selling Fast

In 2025, the median time a home is on the market in the U.S. is 51 days, according to Fred Economic Data. By comparison, homes were typically on the market for 83 days in 2023 and 61 days in 2024. Check your local housing market on a real estate site such as Redfin. If the market is listed as competitive, and home prices or the price per square foot have risen in recent years, this could be a good time to sell. Just remember, if homes are moving fast, you should be ready to move. Explore different types of mortgage loans and dive into the market for your next place so you’ll have a home and a home loan teed up when you sell.

3 Reasons You Should Wait to Sell Your House

While there are some great reasons to sell your home right now, it may not be the right time to sell for everyone. Here’s why you might want to wait.

Reason #1: You Can’t Afford to Buy

Selling and walking away with a nice profit is great…but not so great if you need to buy another house, especially if you’re staying in the same area. Buying a house may be cost-prohibitive for you, especially when you factor in closing costs on top of the inflated pricing.

Also, there’s no avoiding the fact that it is still somewhat costly to borrow money. As of late-June 2025, the average mortgage rate for a 30-year fixed-rate mortgage was 6.77% versus 5.70% in late June of 2022.

That said, if you live in an expensive area, you could sell your home and move to a more affordable state. Or you might look into different mortgage loan products and options (for instance, buying down your rate by paying points) to make a move less cost-prohibitive. Another option? Consider renting a home instead of buying for a while. A buy-or-rent quiz could help you make that decision.

Recommended: The Cost of Living in the U.S.

Reason #2: You Owe More Than You Could Sell For

If you are upside-down on your mortgage payments though, selling won’t provide a solution. Perhaps you took out a second mortgage or not have paid enough on your first mortgage to recoup the expense by selling, even at a higher price. That means you would still owe money on a house you no longer live in after selling.

If this is the case, it may be better to build equity over time before selling.

Reason #3: You’re Not Ready to Make Home Repairs

While making home repairs before selling could help you get a higher price for your home, that doesn’t necessarily mean you have $30,000 lying around to make those improvements. If you know that certain repairs would help you get more for your house but you can’t afford to make them right now, it may be better to wait to sell a house until you can afford to invest in those home improvements.

Tips for Selling (and Buying) a Home

Before coming up with your own answer to the question of “Should I sell my house,” consider these points:

•   Figure out how much you can afford to pay to buy another. You could get prequalified for a mortgage to gain an understanding of your budget. If you can only afford a house that’s smaller than your current one, or in a neighborhood you don’t want to live in, there’s not much point in selling only to end up worse off.

•   Look at comparables to understand market trends and how much homes are selling for in your neighborhood. Go to open houses to see what sort of updates and features sellers are offering so you have an idea of what to do to get your own house ready for sale.

•   Contemplate being represented by a real estate agent or doing it yourself. There are some great DIY sites that can cut down on the fees you pay to sell, but you will probably have to invest time, effort, and cash into marketing your property.

For instance, if you’re selling your house on your own, invest in professional photos rather than taking your own, and get the house staged (that means more than just removing all the toys and dog beds before a showing!). The better you present your home, the better the price you can command.

•   Remain patient if you’re also buying. It can feel frustrating to be outbid for what seems like the house of your dreams, but it can be a reality right now. Don’t force a decision — the right house will find you.

The Takeaway

Selling your house this year could be a smart financial decision, but it’s important to make sure you’re looking at the bigger picture with your finances. Consider the pros and cons of selling in today’s market. Think about where you plan to live when you leave your current home and run the numbers on those costs on the down payment and the new mortgage. Explore rates and terms with different lenders to get a feel for the market.

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

FAQ

Should I rent my house or sell it?

Whether you should sell or rent your home comes down to your local market and your financial goals. If the rental market is healthy in your area and you can make a profit from renting, this could be a good choice as long as you are willing to shoulder the burden of managing a rental. Another reason to rent could be that the home sale market in your area is depressed and waiting to sell might increase your profit. If homes are selling briskly in your area and you don’t want to manage a rental, or if you need the funds from the sale of the house to fund your next home purchase, it’s time to sell.

Should I sell my house as is or fix it up?

So long as there is nothing catastrophic happening with your house (a leaky roof, cracked pipes, for example), it’s probably best to just go ahead and put the property on the market vs. fixing it up first. Make sure it’s clean and tidy for showings, but don’t worry about updating a kitchen or bath or doing other big fixes. Renovations can be expensive and time-consuming. Just be prepared for a potential buyer to ask for price concessions for any significant issues.

Is renting more profitable than selling?

Whether renting or selling your home is more profitable depends in large part on your local real estate market. The real issue may be: Do you want to take the income all at once (in which case, you should sell) or are you comfortable with a passive income drip from renting? It might take many years for your rental income to equal the income you would garner from selling. Are you willing to wait and game to manage a rental in the meantime? Remember, too, that rental income is taxed, while a certain portion of the capital gains from selling a home are protected from federal taxes. Consider talking to a tax expert before deciding.

Is renting really throwing money away?

Renting is not throwing money away — after all, you’re getting a place to live in the transaction. Moreover, if renting allows you to pay down debt, move around for work, or wait out a hot housing market until prices cool, it’s a particularly good investment.

Can I sell my house and still live in it rent-free?

It may be possible to sell your house and live there rent-free — if you can come to an agreement with whoever purchases your property. Some buyers might allow you to stay rent-free for a brief time while you close on your next home purchase. It’s also possible to negotiate a sale-leaseback agreement so that you can stay longer in your home while paying rent. A third option for those age 62 and over is a home equity conversion mortgage: You stay in your home but begin to draw down funds based on your equity. After your passing, your heirs settle the property’s sale.

How long can you stay in your house after selling?

How long you can stay in your home after selling it depends on the arrangement you are able to make with the new owners. A written agreement detailing the terms should be part of the negotiations around the sale.

What are two advantages of renting?

Renting a home can allow you to explore a city or neighborhood before committing to it. It also relieves you of the burden of maintaining a property. Renting may also allow would-be homebuyers to shore up their credit score or save for a down payment purchasing a home. In some markets, renting is significantly less expensive than owning. These are just some of the advantages of renting vs. buying a home.

Photo credit: iStock/AlexSecret

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

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

SOHL-Q225-313

If you’re buying a home and have a down payment of less than 20% of the purchase price, you may need to pay for private mortgage insurance (PMI) or a mortgage insurance premium (MIP). This insurance protects your lender in the event that you default on your loan. It also presents an additional cost for you — a charge you’ll have to keep paying for part or all of the life of the loan. But it can be worthwhile since, for many aspiring homeowners, it can unlock a chance at homeownership.

Private mortgage insurance may be required for conventional home loans — those not backed by a government program. A mortgage insurance premium is a little different and is always a part of an FHA-insured loan, at least for a number of years. Both are intended to protect lenders against losses if borrowers default on their home loans. Here’s a guide to how they work, how they differ, how much they cost, and when you can possibly escape their hold on you.

What Is Private Mortgage Insurance?

PMI is a type of coverage typically required by lenders on conventional conforming loans. A lender might stipulate PMI when you make a down payment that is less than 20% of an accepted offer or asking price.

Most conventional mortgages are “conforming,” which means they meet the requirements to be sold to Fannie Mae or Freddie Mac. It’s best to consult the lender when you apply for a loan about whether you will have to pay for PMI.

Although PMI adds a cost, it can allow you to qualify for a loan that you otherwise might not get. And it can help you to buy a house without putting 20% down.

How Much Does PMI Cost?

The price of PMI varies, but often is 0.5% to 1% of the total loan amount annually. The cost depends on the type of mortgage you get, your credit score, the loan-to-value (LTV) ratio, and more. It also depends on the amount of PMI that your loan program or lender requires. PMI could run as high as 6% of the amount you borrow.

Usually, homeowners required to pay PMI do so monthly, rather than annually, and it’s included in their mortgage payments. A few may opt for lender-paid mortgage insurance (LMPI), an option where the lender for the home loan pays the cost of mortgage insurance. For that convenience, however, a homebuyer will usually pay a slightly higher interest rate, and more over the life of the loan.

Despite the cost, PMI may be more economical than an FHA loan if you’re a borrower with a FICO® score of around 740 or above who can put 3.5% down.

When Can You Stop Paying PMI?

Buying a home may require you to pay PMI, but there are ways to get to the point where you can stop paying it.

First, there is a legal end to PMI. Under the Homeowners Protection Act, also known as the PMI Cancellation Act, your lender is required to cancel PMI automatically once your mortgage balance is at 78% of the home’s original value. That generally means either the contract sales price or the appraised value of your home at the time you purchased it, whichever is lower (or, if you have refinanced, the appraised value at the time you did so). Which figure is used for the original value can vary by state.

Second, you can have your home reappraised, which will likely result in a new value, and ask your servicer to cancel PMI if you have built equity of 20% or more of the current value. Owners of homes that have appreciated, either over time or thanks to home improvements, may benefit from this. You may need to be proactive with your lender and meet specific eligibility requirements to help make that happen.

Third, you may be able to refinance your mortgage. If you have at least 20% equity, you can possibly qualify for a conventional loan that won’t require PMI.
Finally, the Consumer Financial Protection Bureau notes that if you have stayed current on your payments and reached the halfway point of the loan’s schedule, PMI can be canceled, even if your mortgage balance hasn’t yet reached 78% of the home’s original value.

💡Quick Tip: A major home purchase may mean a jumbo loan, but it doesn’t have to mean a jumbo down payment. Apply for a jumbo mortgage with SoFi, and you could put as little as 10% down.

What Is a Mortgage Insurance Premium?

If they’re securing a home loan backed by the Federal Housing Administration, borrowers pay for a different type of coverage, known as a Mortgage Insurance Premium or MIP. When it comes to FHA loans, MIP applies no matter what your loan term or down payment amount.

A key reason people choose FHA loans is the ability to buy a home even with a low down payment — these loans allow you to put down as little as 3.5%. But keep in mind that even with that affordable down payment, this type of loan bears costs and, as a borrower, you’ll want to understand them.

MIP runs for 11 years or the loan’s full term, depending on the borrower’s down payment, the balance owed, and LTV. As the homebuyer, you also pay a one-time upfront MIP premium of 1.75% of the base loan amount, which can be rolled into the loan. On top of that, you’ll have an annual premium that is divided by 12 to determine your payment, which is added to your monthly mortgage payment.

Recommended: Different Types of Mortgage Loans, Explained

How Much MIP Will You Pay on an FHA Loan?

Like a mortgage interest rate, MIP fluctuates. The ongoing annual MIP is calculated with a rate that’s currently around 0.15% to 0.75%. It is divided by 12 and added to your monthly mortgage payment. What you’ll pay in the end depends on your loan-to-value (LTV) ratio — also known as the price minus your down payment — and the length of the loan.

If you take out an FHA loan for the common term of 30 years, or any length of time greater than 15 years, your monthly MIP costs will be determined by calculating the loan’s annual average outstanding balance, based on what banks refer to as its amortization schedule. This figure is then multiplied by the annual MIP rate and divided by 12 to determine a monthly payment.

That is the amount that will be added to your principal payment on your home loan, along with charges like escrow amounts for property taxes and the monthly cost of your homeowner’s insurance.

Here’s an example: Let’s say you borrow less than or equal to $726,200 to buy your home, and make a down payment of 5% or less. You’ll pay an annual MIP of 0.50% on your loan. On a home loan of $300,000, you’ll pay MIP of about $1,500 per year, or $125 per month.

The following chart details approximate monthly payments based on different loan and down payment amounts. Remember, LTV is the total home price, or 100%, minus the percentage you take care of in your down payment.

Some homeowners can pay off their loans more quickly. By choosing a shorter term, such as 15 years, you could take advantage of a lower MIP.

Take the 15-year option, which gives you a better deal with a lower rate. If you were to borrow less than or equal to $726,200 and put down 10% or less as a down payment, you’d pay an annual MIP of just 0.15%. On a $300,000 home loan, that’s more like $450 a year, or $37.50 a month.

This all may seem complicated, but many people find that the flexibility of an FHA loan, if you can secure one, makes it worth paying the MIP.

Thinking about buying a fixer-upper and making it beautiful and functional again? FHA offers the FHA 203(k) home loan for that — something that few lenders do, especially if the home isn’t in good enough shape to be lived in, but it may be worth investigating.

Recommended: FHA Mortgage Loan Calculator

Can You Get Rid of MIP?

Possibly. If you took out an FHA loan before June of 2013, you may be able to cancel your MIP. You would need to now have 22% equity in your home — meaning your loan balance has reached 78% of the purchase price noted on your mortgage paperwork — and have made all payments on time. (FHA lenders do not automatically cancel your MIP once you reach that threshold. You’ll need to ask for it to be stopped.)

If your FHA loan originated more recently than June 2013, however, different rules govern it. If your down payment totals less than 10%, you must pay the MIP for the life of the loan. Made a down payment of 10% or more? MIP expires in 11 years.
Other ways to unburden yourself of MIP include paying off the FHA loan or refinancing it into a conventional loan with a private lender, which will give MIP the heave-ho.

What About Refinancing?

If you have a mortgage that includes PMI or MIP and your property value has increased significantly, the option of refinancing is one to think about.

Some borrowers may find that at a certain point they can qualify for a conventional home loan without mortgage insurance.

Refinancing holds appeal because of the possibility of locking in a better rate and reducing your monthly payment. Equity-rich homeowners sometimes like the option of a cash-out refinance.

But as with your original mortgage, you’ll face closing costs if you refinance.

What about a “no-closing-cost refinance” you might see advertised? You’ll either add the closing costs to the principal or get an increased interest rate.

The Takeaway

Glass half-full: Private mortgage insurance and mortgage insurance premium open the door to homeownership to many who otherwise could not buy a property. Glass half-empty: PMI and MIP can really add up.

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

FAQ

Is it a better option to put down 20% or to pay PMI?

It’s great to make a down payment of 20% and avoid private mortgage insurance (PMI), but not everyone can afford to do it. It can be particularly hard for first-time homebuyers, who often don’t have income from the sale of another residence to fund their next home purchase. Use a home affordability calculator to look carefully at monthly mortgage payment amounts for various home prices and interest rates. Put down what you can afford and try not to compromise your ability to cover other bills, including the mortgage payment itself.

How long will I pay PMI?

If you’re paying private mortgage insurance, you’ll need to continue until you’ve built up 20% equity in your home (based on the original sale price). At this point, you can request in writing that your loan servicer cancel PMI as long as you’re current on your payments.

How are FHA MIP rates determined?

The FHA reevaluates and updates MIP rates periodically. Changes are based on the condition of its Mutual Mortgage Insurance Fund, and current housing and economic conditions.

Can I cancel my FHA MIP once I’ve reached a certain equity level?

No. Unlike the private mortgage insurance on a conventional loan, which goes away after a homeowner reaches 20% equity, FHA MIPs cannot be canceled.

Are MIP payments tax-deductible?

Unfortunately, no. The Further Consolidated Appropriations Act of 2020 allowed qualified taxpayers to take a tax deduction for MIP and PMI costs for the tax years 2018 through 2021, but the deduction has expired and is no longer available.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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

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

SOHL-Q225-186

A home equity line of credit (HELOC) is a revolving credit line secured by your home. HELOCs give you access to cash that you can use to make improvements or repairs, consolidate debts, or cover large expenses.1

Lenders set HELOC requirements to determine who qualifies, but you’ll typically need a minimum amount of equity, good credit, and a steady income. Read on to learn how to get a HELOC and what you can expect during the application process.

What Is a HELOC?

A home equity line of credit is an open-ended line of credit that allows you to borrow against your home equity. Equity is the difference between what you owe on your home and its fair market value.

HELOCs have an initial draw period, during which you can access your credit line. You can borrow what you need when you need it, up to a preset credit limit. You can even make payments to pay down your balance and then borrow up to the credit line again. The draw period may last five to 15 years, and your lender might only require you to make interest payments toward the principal you’ve borrowed during that time. Once the draw period ends, you’ll repay the principal amount, plus interest.

Interest rates on a HELOC are typically variable, meaning they can go up or down over time following movements in a benchmark rate. That means your payment can increase or decrease. Some lenders offer fixed-rate HELOCs, though that’s less common.1 Incidentally, a HELOC isn’t the only type of home equity loan. There’s also a standard home equity loan, in which a lender loans you a lump sum that you begin repaying immediately.

How the HELOC Application Process Works

The HELOC approval process is fairly straightforward. You’ll need to:

•   Choose a lender and apply for a HELOC

•   Provide the lender with required supporting documents

•   Complete underwriting

Underwriting is a process in which a lender verifies certain information about you and your home to assess your creditworthiness and decide whether to approve you for a HELOC.

During underwriting, the lender will check your credit, review your income and debt, and assess your home’s value. That last step is particularly important as you’ll need to have sufficient equity in the home to qualify for a HELOC.

How long does it take to get a HELOC? It varies, but a typical time frame for approval is two to six weeks from the date you submit your application.

HELOC Requirements

Knowing how to qualify for a HELOC can help you gauge whether you’re a good candidate and help you narrow down which lender to work with. HELOC requirements vary by lender but generally include:

•   Good credit

•   A low debt-to-income (DTI) ratio

•   Sufficient home equity

A “good” credit score on the FICO® scale is a score of 670 or better, and as a general rule, lenders like a score in the upper 600s. FICO credit scores are used by 90% of top lenders for credit decisions.

Your DTI ratio measures how much of your gross income goes to debt repayment each month. Lenders look at your DTI ratio to determine how much money you have available each month to make HELOC payments. Home equity lenders generally look for a DTI below 50%, but the lower, the better.

Perhaps most importantly, lenders want to know how much equity you have in your home. This is where your loan-to-value (LTV) ratio comes into play. This ratio measures how much you want to finance versus your home’s appraised value. Typically, lenders look for an LTV of no more than 85%, meaning you have at least 15% equity in the home.

HELOC Approval Tips

There’s no special secret to how to get a HELOC; you’ll just need to find the right lender to work with and meet their approval requirements. With that being said, here are a few tips that could smooth the path to HELOC approval.

•   Reduce debt. Paying down some of your existing debt could improve your DTI ratio, potentially making you more attractive to lenders.

•   Check your credit. Checking your credit reports and scores is an opportunity to learn what lenders will see and address any errors or mistakes that could be hurting your score. If you find an error, you can dispute it with the credit bureaus to have it removed or corrected.

•   Calculate your equity and LTV. If you don’t know these numbers, take a minute to figure them out. Here’s how to calculate home equity: subtract what you owe on your primary mortgage from your estimated home value. To find your LTV, divide your mortgage balance by your home’s estimated value.

You could also get preapproved for an equity loan. HELOC preapproval means that a lender has done a cursory check of your credit and finances to conditionally approve you.

Preapproval for a HELOC can give you an idea of what loan terms you’re likely to qualify for. Keep in mind that you’ll still need to submit a full application and complete underwriting to get a HELOC.

Common HELOC Mistakes to Avoid

You want to know how to get a HELOC, but it’s just as important to understand what could hurt your application. Here are a few HELOC mistakes to avoid as you navigate the approval process.

•   Don’t overborrow. HELOCs only charge interest on the amount of your credit line you use. However, that’s no reason to get a larger line of credit than you need. If you only need $50,000 for a home improvement project, for instance, but get a $100,000 HELOC because a lender is willing to approve you for that amount, you could end up with more debt to repay than you’d planned on.

•   Don’t assume a HELOC is your only option. There are so many ways to use a HELOC, but you may find that a different type of loan makes more sense. Weigh the benefits of a HELOC vs. a home equity loan or a personal line of credit vs. a HELOC to decide which borrowing option to pursue.

•   Don’t apply without comparing options. With so many HELOC lenders to choose from, it makes sense to do some comparison shopping. Study HELOC rates and compare lenders’ draw periods, repayment terms, fees, and approval requirements to see which lender is the best fit for your needs.

•   Don’t forget to plan your budget. Missing payments on a HELOC could put your home at risk, since it secures the loan. Calculating how much you can afford to pay in the draw period and repayment period can help you avoid a scenario where you’re in danger of losing your home to foreclosure because your HELOC payments are too steep.

•   Don’t miss out on tax breaks. Here’s a tip about HELOCs and taxes: if you use the money to pay for home improvements, the interest is tax-deductible. If you’re getting a HELOC to handle major or minor home upgrades, keep your receipts so you can write the interest off at tax time. Right now, this benefit is good through the 2025 tax year; consult a tax advisor for the latest updates.

How to Apply for a HELOC

Ready to apply for a home equity line of credit? It’s not an overwhelming process if you know what you’ll need to do and what you can expect from the lender. Here’s how to apply for a HELOC, step by step.

1. Check Your Home Equity and Credit Score

If you haven’t calculated your equity or checked your credit scores yet, now’s the time to do that.

You can use a home equity calculator and a loan-to-value calculator to find your equity amount and LTV. You can pull copies of your credit reports for free through AnnualCreditReport.com. You can also log in to your credit card accounts to see if free FICO score access is a card benefit. SoFi offers free access to your VantageScore, which is an alternative to FICO.

Note that checking your credit reports or scores yourself won’t impact you in any way. However, hard pulls (which happen when a lender checks your credit) will show up on your credit reports and take points away from your scores.9

2. Gather Required Documents

You’ll need some documentation to complete your HELOC application. The good news is that it’s more or less the same as what you needed to apply for the loan you used to buy the home.

A lender may ask for copies of your:

•   Driver’s license or government-issued ID

•   Bank account statements

•   Investment account statements

•   W-2s

•   Tax returns

•   Profit and loss statement and cash flow statement if you’re self-employed

Gathering these documents beforehand can save you time and potentially speed up your HELOC approval.

3. Submit your HELOC Application

If you’ve chosen a lender and you’ve got your documents, you’re ready to apply for a HELOC. Many lenders allow you to do this online. You’ll just need to complete all required sections, then upload the requested documents.

Review your application carefully before you hit submit to check for errors and look for any questions that you accidentally left blank. If everything looks good, you can move ahead with submitting your application.

4. Underwriting and Home Appraisal Process

Once the lender receives your application, they’ll move forward with underwriting. The lender will check your credit and schedule an appraisal, which you’ll be expected to pay for up front.

Lenders may schedule an in-person appraisal, a drive-by appraisal, or a desktop appraisal. The in-person appraisal requires a professional appraiser to come to the home and look over the property to determine a valuation. A drive-by appraisal doesn’t require the appraiser to enter the home, while a desktop appraisal is done remotely using home valuation software.

What if the appraisal comes in too low? That could keep you from getting approved for a HELOC. You can ask the lender to reconsider or schedule a new appraisal with a different appraiser. You’ll have to pay any additional appraisal fees.

5. HELOC Approval and Closing Process

If all goes well and you’re approved for a HELOC, closing is the final step. You’ll sign all of the HELOC documents and pay closing costs, unless the lender is allowing you to roll them into the loan.

Once you’ve closed on your HELOC, the lender will make your line of credit available to you. That can take a few business days. Once your HELOC account is set up, you may be able to access your credit line using a special credit card or debit card, or paper checks. If you got your HELOC through a local bank, you could also visit a branch to make withdrawals.

The Takeaway

Doing some research can help you decide if getting a HELOC makes sense for you, and once you’re set on a HELOC, a little more research can help you determine which lender will offer the best rate and terms. HELOC approval is ultimately up to the lender, but you can make yourself more creditworthy by paying down debt and taking good care of your credit profile before you apply.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

How long does it take to get a HELOC?

The exact timing varies, but generally, it can take between two and six weeks to get approved for a HELOC. Factors that affect the speed of HELOC approval can include your choice of lender, your financial situation, and the results of your home appraisal.

Can I get a HELOC with bad credit?

It’s possible to find lenders who will offer HELOCs for bad credit, though there are some caveats to know. A lower credit score can add more obstacles to approval overall. If you are approved, you’ll likely pay a higher interest rate or more fees to make up for the higher degree of risk the lender is taking on.

Does a HELOC require an appraisal?

Lenders generally require an appraisal for a HELOC because they need to know how much your home is worth. Without an appraisal, they can’t determine how much equity you have and whether you have a sufficient LTV to qualify for a HELOC.

How hard is it to get a HELOC?

How hard — or easy — it is to get a HELOC depends on your financial situation. For example, getting a HELOC may be a breeze if you’ve got near-perfect credit, make a six-figure income, and are sitting on a pile of equity. If everything isn’t universally rosy, you can still qualify. It’s up to each individual lender to decide whom to approve, so if you don’t qualify the first time you apply, you may still be able to borrow.

What are the requirements for a HELOC?

Getting a HELOC is similar to getting a mortgage to buy a home. You’ll need to show a lender that you have sufficient income to repay a HELOC and that you have a history of responsible credit use, which means paying back what you borrow on time. You may also need to undergo a home appraisal to determine the value of your property, and thus your equity amount.

What disqualifies you for a HELOC?

Lack of a credit history, lack of income, lack of adequate equity, or overwhelming debt could all be barriers to getting approved for a HELOC.

Photo credit: iStock/shapecharge

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

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

SOHL-Q225-038

For many homebuyers, especially those purchasing for the first time, the prospect of coughing up a five-digit down payment is the most intimidating part of the process. But the good news is, these days, it’s possible to put down far less than 20%. Depending on the loan type you qualify for, you may be able to put down as little as 3%, which translates to $6,000 for a $200,000 house.

Here’s what you need to know about the income requirements, down payment options, and other important pieces of the financial puzzle if you’re considering purchasing a home for $200,000 or so.

How Much Income Do I Need to Afford a $200K Home?

Among other factors, like your credit score and your available down payment, mortgage lenders do consider your income when determining what you can qualify for as a first-time buyer. But instead of enforcing one specific cut-off point for household income, most lenders use a more complicated algorithm to decide whether or not a would-be borrower can qualify.

There is, however, a quick rule of thumb that can help first-time homebuyers figure out an approximate income ballpark that will ensure you can make your mortgage payments. A long-standing financial guideline suggests you should spend no more than 30% of your gross income on your housing payment each month. Although rising costs mean this metric is harder to meet in some American cities and states than others, it’s still a good place to start.

So, consider your $200,000 potential home purchase. It’s not exactly a jumbo loan, but it still comes with costs. Using a mortgage calculator, you can get a rough idea of how much your monthly mortgage payment might be, depending on your interest rate and available down payment.

For a $200,000 home with a 3% down payment ($6,000), with an interest rate of 7%, a 30-year fixed-rate mortgage would come with a payment of about $1,300. But you’ll also need to factor homeowners insurance, property taxes, and — because you put down less than 20% as a down payment — private mortgage insurance. This means your housing costs would be in the neighborhood of $1,600 per month. In order to meet the 30% guideline, that would mean you’d need to earn about $4,800 per month, or $57,600 per year, to comfortably meet your housing payment responsibilities.

However, your lender may require a higher level of income to qualify you for the loan, depending on your other qualifying factors.

How Much is the Down Payment for a $200K House?

If you choose to put down the 20% that will keep you from having to pay private mortgage insurance, the down payment for a $200,000 house will come out to $40,000.

However, conventional loans allow well-qualified borrowers to put down as little as 3%, which is only $6,000 on a $200,000 home. You could also choose to put down an intermediary amount, such as 5% ($10,000) or 10% ($20,000).

What Are the Down Payment Options for a Home Worth $200K?

The specific down payment options that are available to you will depend on your lender, your qualifying factors (such as credit history and income), and what type of mortgage loan you opt for.

For instance, conventional loans allow well-qualified first-time homebuyers to put down just 3%, while down payments for FHA loans, backed by the Federal Housing Administration, bottom out at 3.5% for borrowers with a credit score of at least 580 (or 10% for those whose scores are as low as 500). If you obtain a VA loan (backed by the U.S. Department of Veterans Affairs), you might be able to put down nothing at all.

What Does the Monthly Mortgage Payment Look Like for a $200K Home?

As you’re thinking about how much is the down payment for a $200K house, you’ll also need to consider how the mortgage payments will fit into your budget. As noted, the best way to understand what you stand to pay monthly on a home loan is to use a mortgage calculator. The payment calculated above — $1,300 — assumes a low down payment (3%) and an interest rate of 7% before taxes, insurance, and private mortgage insurance. If, however, you put down a higher amount up front — say, 10% or $10,000 — and had an interest rate of 5%, your loan payment would go down to around $1,000 per month (again, before property insurance, homeowners insurance, and mortgage insurance).

What to Do Before You Apply for a $200K Mortgage

If you’re considering applying for a $200,000 mortgage — or any mortgage, for that matter — it’s a good idea to pull your credit history and ensure that everything on your report is accurate to your knowledge. If you have high revolving debt balances or a relatively low credit score, it may also be worthwhile to work on improving your credit score before you apply so as to attain the lowest available interest rates.

At the big-picture level, deciding where you want to buy a house is perhaps the most important step toward ensuring you’re happy in your new home. Choosing the right locale can really help lower your cost of living. While everyone knows housing prices in big cities have skyrocketed over the last decade or so, there are affordable places to live in the U.S. if you know where to look. Moving to a new city or state is a big project, but doing so can lower the average monthly expense per person by hundreds of dollars.

Finally, if the down payment is the biggest hurdle between you and your homeownership dream, be sure to check out down payment assistance programs that may help bridge the gap. Grants may be available at the state, federal, and local government levels, as well as low-interest loans.

Should I Get Preapproved Before Applying for a Mortgage?

The mortgage preapproval process helps you understand how much house you’re able to afford given your current financial situation — and also shows sellers that you’re motivated and serious. In general, getting preapproved before seriously hitting the housing market is a good idea, but keep in mind that your preapproval does have an expiration date — normally between 60 and 90 days after you go through the process.

How to Get a $200K Mortgage

From banks to credit unions to digital-first financial institutions, there are many places to get a $200,000 mortgage, whether you’re buying your first home or hoping to get better terms and save money as part of a mortgage refinance. These days, much of the application process can be done entirely online. You can prequalify and get a general sense of your borrowing power by answering a few simple questions. Seeking a lender’s preapproval requires submitting more information and financial documentation.

The Takeaway

The down payment for a $200,000 house can be as low as 3% ($6,000) or as high as 20% ($40,000) or even higher, depending on your financial situation and goals. Many homebuyers, especially first-timers, put down less than 20% on the road to their dream home.

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

FAQ

How much should I make to afford a $200,000 house?

Using the 30% rule of thumb (your housing costs should not exceed 30% of your gross income) and assuming a housing payment of about $1,600 per month (including property taxes, private mortgage insurance, and homeowners insurance), you should make about $4,800 per month, or $57,600 per year, to comfortably afford a $200,000 house. However, your mortgage lender may have different income requirements depending on your other qualifying factors.

What credit score is needed to buy a $200,000 house?

While there’s no specific credit score floor for purchasing a home of any price, the higher your score, the better your loan terms stand to be — including your interest rate. With an FHA loan, which is designed specifically for first-time buyers who may be facing financial hurdles on their journey to homeownership, you may qualify with a score as low as 500 if you can come up with a 10% down payment. Many lenders who offer conventional loans require a minimum credit score of 620.

How much is a $200K mortgage per month?

Your monthly mortgage payment depends on many factors, including your interest rate and loan term (how long you have to pay it off). For a 30-year fixed-interest loan at a rate of 7%, with a down payment of 3%, your monthly mortgage payment on a $200,000 home would be about $1,300 before other expenses such as property taxes, insurance, and private mortgage insurance.

photo credit: iStock/Milan Markovic

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.

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

SOHL-Q225-141

The money you’ll need for a down payment on a $100,000 home could be $0 or $20,000 – or more. The answer is specific to you, and it comes down to two factors: One, the type of home mortgage loan you opt for and other personal preferences, and two, your qualifications as a borrower.

If you’re ready to buy a $100K house, you’ll want to know where you fit in the equation when it comes to your down payment. That’s where we come in. This is a comprehensive guide with real examples and numbers to help you understand how much down payment you’ll need for a home of your own. We’ll cover how much income you should have, how different factors affect your down payment, and the process of getting a mortgage.

How Much Income Do I Need to Afford a $100K Home?

If you don’t have any debt (no auto loan, student loan, or credit-card debt, for example), you need a minimum of $2,650 per month, or $31,800 per year to afford a $100K home loan. That’s assuming a 7.00% interest rate and no down payment. If you have $500 in debt payments every month, the income requirement increases to $4,000 per month, or $48,000 per year.

Keep in mind that qualifying for a mortgage depends on more than your income. There are several factors your lender will consider to qualify you for a mortgage. It’s always best to find out exactly what a lender requires, but in general, these tend to be:

Credit score: For any lender to approve your mortgage, you’ll need a credit score high enough for the loan you want. If you’re looking at an FHA loan, backed by the Federal Housing Administration, and have a 10% down payment, you could qualify with a credit score as low as 500. Other government-backed loans from the USDA and VA have no minimum credit score requirement, while a conventional mortgage often requires a credit score of 620 or above.

Income: You need to make enough income to cover your mortgage and your monthly obligations.

Debt: Your monthly debt obligations are factored into the equation. Any monthly debt you have decreases the monthly mortgage payment you qualify for. Lenders also look for your debt-to-income (DTI) ratio – all of your debt added together divided by your gross income – to be no more than 36% of your income.

Type of loan: The type of mortgage loan affects how much income you’ll need to afford a $100,000 mortgage. This is because different types of loans have different interest rates and down payment requirements.

Interest rate: The interest rate environment affects home affordability and changes how much income you need to afford a $100,000 mortgage. Remember that if rates drop after you purchase, you can always consider a mortgage refinance.

Property details: Property details matter – such as location and age – because it will affect your affordability. The age and build details of the house affect homeowners insurance and property taxes. This changes how much income you need.

These are examples of how much income you need to afford a $100,000 home. There are various loan terms, interest rates, down payments, and debt loads.

How Much Is the Down Payment for a $100K House?

The down payment needed for a $100,000 house varies by loan type. In some cases, such as with a VA loan (backed by the U.S. Department of Veterans Affairs) or a United States Department of Agriculture (USDA) loan, you may be able to avoid a down payment altogether. In most cases, if you’re a first-time homebuyer or haven’t owned a primary residence in the last three years, you’ll need between 3% and 3.5% ($3,000 to $3,500) for the down payment on a $100,000 home.

Here’s a breakdown of the minimum down payment by loan type for a first-time buyer. (A $100,000 home is within the conforming loan limits and is not considered a jumbo loan.) Keep in mind, putting down less than 20% requires you to purchase some type of mortgage insurance, the costs of which will be included in your loan.

What Are the Down Payment Options for a Home Worth $100K?

First of all, congratulations if you have found a home valued at $100,000. Given that the average U.S. home price is much higher than that, you must be shopping in one of the best affordable places in the U.S.!

Purchasing a home for $100,000 will help keep your overall cost of living in line. Your down payment options on a $100K mortgage depend on your loan type. As mentioned above, there are some options where you don’t have to put any money down, and others where you need to put down at least 3%. Here are some common down payment options for a home worth $100K:

•   0% = $0

•   3% = $3,000

•   3.5% = $3,500

•   5% = $5,000

•   20% = $20,000

If you’re worried about coming up with a down payment, there are down payment assistance programs that might be able to help. You need to meet the program requirements, which are often geared toward first-time homebuyers located in a specific area who need financial assistance. The property itself also must meet certain conditions outlined by the program.

Recommended: The Cost of Living in the U.S.

What Does the Monthly Mortgage Payment Look Like for a $100K Home?

The monthly mortgage payment for a $100,000 home works out to roughly $665 for principal and interest. When you add in taxes, homeowners insurance, and mortgage insurance, you’ll be closer to $925 per month. These numbers assume a 7.00% interest rate on a 30-year loan with property taxes of $1,250 and a homeowners insurance premium of $750. These numbers will be different, of course, depending on your area, property, and personal qualification factors.

The following is a sample table of the different monthly mortgage payments you could see on a $100K mortgage with varying down payment amounts, interest rates, and loan terms.

As you can see, there’s a wide variance in monthly payments for a $100,000 mortgage. Shorter terms, higher interest rates, and lower down payments result in higher monthly payments — although with a shorter term, borrowers will pay less interest over the life of the loan. Longer loan terms, lower interest rates, and higher down payments result in lower monthly payments.

What to Do Before You Apply for a Mortgage on a $100K Home

If you’re not quite ready to apply for a mortgage on a property valued at $100,000, there are some steps you can take in the meantime to help you qualify as a first-time homebuyer or even as a repeat homebuyer.

•   Talk to a lender. Even if you’re not ready to apply for a $100,000 mortgage, it’s better to get your questions answered sooner rather than later. A good lender can explain your options and help get you on the path to mortgage qualification.

•   Set your goals. Write down what you want and how you’re going to get it. Put a plan in place for qualifying for a mortgage. You might consider paying down debt or saving for a down payment.

•   Check your credit. See where you’re at and what you need to do to improve your credit score. A good credit score will get you the best interest rates and save you money for years.

•   Shop around for a loan Look at different lenders with different loan options. Get loan estimates and be sure you’re comparing apples to apples. Look at the loan’s annual percentage rate (APR), which includes fees.

Recommended: Average Monthly Expenses for One Person

Should I Get Preapproved Before Applying for a Mortgage?

Getting preapproved for a mortgage is a great strategy. Mortgage preapproval is a strong indication that you’ll be approved for the loan. It can help you make decisions about what loan will be best for you and puts you in a better position to negotiate with sellers. Going through the mortgage preapproval process helps your true financial picture become clear.

How to Get a $100K Mortgage

Getting a mortgage on a $100,000 home is a simple process if you’re qualified, but you might not be familiar with it if you’re buying your first home. According to the Consumer Financial Protection Bureau, the process looks like this:

Prepare to shop for a loan

This step involves getting your finances in order. You’ll assess your spending, figure out how much you want to spend, how much you can save for a down payment, and pull all your documents together (tax return, bank statement, etc.)

Explore loan choices

You’ll learn about the different types of loans, loan costs, and shop around for a lender.

Choose a loan offer

Request loan estimates and preapprovals from several different lenders, look closely for loan details that matter most to you, and choose a lender you can trust and that can offer you competitive pricing.

Close on the new loan

Once you’ve selected a loan officer, you’ll send over the contract to them to get the mortgage process started. You’ll submit required documents, schedule a home inspection and other due diligence items, obtain title and homeowners insurance, and review documents before closing.

The Takeaway

The down payment for a mortgage on a home valued at $100,000 ranges from $0 to $20,000, though you could put down even more. The factors that affect how much you need for a down payment depend on your loan type and personal preference and qualifications. If you go with a VA loan, for example, you might not need a down payment at all. If you have a credit score above 580 and you opt for an FHA loan, your down payment will be a minimum of 3.5%. And a qualified first-time homebuyer can get a conventional mortgage from some lenders with a downpayment as low as 3%.

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

FAQ

How much should I make to afford a $100,000 house?

How much you need to make to afford a $100,000 house starts at about $32,000 per year. This assumes you have no debt and can secure a 7.00% interest rate on your mortgage. Your debt and interest rate are some of the biggest factors determining how much you need to make to afford a $100,000 home.

What credit score is needed to buy a $100,000 house?

The credit score needed to buy a $100,000 house depends on the type of mortgage you get. The credit score requirements for an FHA loan is generally 580, unless you’re able to make a down payment of 10% or more, in which case, you can have a credit score as low as 500. For a conventional loan, it’s 620. For a USDA or VA loan, there’s no minimum credit score requirement for the program, though a lender may impose one.

How much is a $100K mortgage per month?

A $100,000 mortgage with a 7.00% interest rate and a 30-year term is roughly $924 per month. That amount includes $665 in principal and interest, $167 for taxes and insurance, and $92 for mortgage insurance.

Photo credit: iStock/Mariia Vitkovska

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.

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