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Townhouses offer convenience and amenities that appeal to a range of homebuyers. They’re also growing in popularity, with new townhouse construction up 23% in the 12-month period from mid-2023 to mid-2024, compared with the previous 12 months. Construction costs also increased during the same time period.

Whether you’re building an investment property or your own new home, determining the project cost is essential before breaking ground. The cost to build townhouses depends on the size, location, number of units, onsite amenities, and the style of the building.

What Is a Townhouse?

A townhouse, also called a townhome, is a type of single-family home that has two or more floors and a shared wall with at least one other home. Compared to different home types, like duplexes and triplexes, each townhouse is individually owned and has its own entrance. Given the high-density design, townhouses tend to be more common in urban and suburban communities.

Townhouses often have their own yard or garage, but may share other communal amenities, such as a pool or tennis court, with neighboring townhouses. These shared facilities are typically governed by a homeowner’s association (HOA), which townhouse owners pay fees to for managing amenities and providing services like landscaping and snow removal.

If choosing between a condo or townhouse, another distinction is that townhomes usually have more autonomy in customizing the exterior of their home and outdoor living space, and more responsibility for that space as well.

Recommended: What is a Townhouse?

What Determines the Cost of Building a Townhouse?

The cost to build townhomes depends on a variety of factors. The type of townhouse, size, number of units, location, and additions like garages and basements all contribute to the total construction cost.

Here’s what to consider when estimating how much it costs to build a townhouse.

Type of Townhouse

There are different types of townhouse layouts and configurations, including traditional, stacked, and urban.

•   Traditional: Generally organized in a row with two floors of living space, a basement, and garage.

•   Stacked: Refers to townhouse units stacked in a multi-floor building, which typically have their own entrances.

•   Urban: Similar to traditional townhomes, but often have more modern and spacious floor plans and higher prices.

Another key decision when purchasing a new construction home or townhome is whether to go with a modular or stick-built design. The components of a modular townhome are manufactured off-site, saving time and labor.

Stick-built townhouses are constructed on-site using a wooden frame and finished with a brick or vinyl exterior. This type of construction allows for greater customization, but generally comes at a higher cost than modular townhomes.

Recommended: Pros and Cons of Building a Townhouse

Square Footage

The cost to build a townhouse is impacted by the size, which is measured in square feet.

Townhomes cost between $80 to $200 per square foot on average. Because townhouses share walls and occupy smaller lots, they’re often more affordable than detached single-family new construction, which breaks down to an average of $162 per square foot.

Using the square footage to estimate total townhome cost is a fairly straightforward calculation. For instance, builders can expect to pay between $160,000 and $400,000 to erect a 2,000-square-foot townhouse based on the average range. Bear in mind that does not include the cost of the building site.

With these estimates, you can compare mortgage rates and determine what financing you qualify for.

Number of Rooms

The interior layout, including the number and types of rooms, is a key determining cost factor.

Not all rooms are created equal though, with kitchens and bathrooms being the most expensive due to appliances, tiling, plumbing, and more complex electrical work. The living spaces and bedrooms are generally simpler and cheaper to build.

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

Number of Units

By definition, townhouses are built in groups. Leveraging economies of scale to build multiple units or a complex could reduce the cost per unit. Keeping the design and floor plan consistent across units can also lower the price.

So, how much does it cost to build a townhouse complex? That depends on the extent of amenities included, as well as the number of units.

Location

Location, location, location. Where you choose to build a townhouse will impact the cost of construction and its value once completed.

The cost of labor varies significantly between regions. Paying builders and contractors typically accounts for up to 40% of new home construction expenditures. The location of the townhouse also matters in terms of costs related to accessing the site and sourcing materials.

Additions

Wondering how much to build townhomes with attractive amenities? Here’s what you can expect to pay for common townhome add-ons.

•   Basement: Building a basement foundation can cost anywhere between $24,000 and $50,000 or more on average.

•   Driveway: The materials and installation costs for a new driveway range from $7 to $22 per square foot depending on the material used.

•   Fencing: More affordable fence materials like wood, vinyl, and composite range from $10 to $45 per linear foot.

•   Garage: Cost varies by size, with one-car garages ranging from $10,500 to $27,000 and double garages costing between $15,000 and $40,000.

•   Pool: Expect to pay between $44,499 and $87,349 for an in-ground pool, with vinyl and fiber-glass lining typically costing less than concrete.

•   Shed: Adding a storage shed normally ranges from $800 to $18,000, with pre-fabricated options usually costing less than custom builds.

💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

Construction Cost for Building a Townhouse

Construction costs are often the deciding factor when you’re thinking of buying or building a house. Townhouses are generally less expensive to build per unit than a detached single-family home.

In addition to the factors discussed above, townhouse construction involves a range of pre-construction costs, like purchasing land, building permits, and architectural or design fees. The materials and labor usually account for the majority of the expenses to build a townhouse.

Townhouses can be designed as starter homes or luxury properties, and project budgets can be structured according to the target market and expected return on investment. Still wading into the waters of homebuying? Consult our Home Loan Help Center for useful tips and guides to master the basics.

Recommended: Construction Loans for Building a House

The Takeaway

How much does it cost to build a townhouse? In short, it depends on the type of townhouse, size, number of units, location, and added amenities. But you can estimate roughly $80 to $200 per square foot or between $160,000 and $400,000 for a 2,000 square-foot abode, not including land cost.

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 many townhouses can fit on an acre?

The number of townhomes that can fit on an acre will depend on what’s permitted by local zoning, as well as space allocated for landscaping, parking, and other amenities. However, an acre can accommodate around 12-18 two- or three-story townhomes.

How much are utilities in a townhouse?

Utility costs vary by location, unit size, personal energy use, and equipment used for heating and cooling. Due to their smaller footprint, townhomes typically have lower utility bills than single-family homes.

Should I buy a townhouse or single-family home?

There are pros and cons with either type of home. Townhomes may require less maintenance and include extra amenities, while single-family homes can offer more space and discretion in how you design and decorate your home’s exterior.

What are the disadvantages of living in a townhouse?

Living in a townhouse can mean less privacy from your neighbors and more noise from shared walls.

Photo credit: iStock/vkyryl

*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.

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.

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

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

Exterior Improvements

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

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

Front door styles that are currently trending include bold colors (from fire engine red to deep greens and bright blues), natural wood stains, and more glass (such as custom inserts and floor-to-ceiling sidelights).

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

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

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

•   Edible gardens, including lettuce, peppers, tomatoes, and more. Creativity is key!

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

Lovely Lighting

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

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

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

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

Painting and Wallpapering

Painting rooms in a home can transform their appearance. What colors are trending? Currently, homeowners are favoring dusty pink, cinnamon brown, cool grays, and bright purples. However, unless you’re planning to sell some time soon, personal taste is what matters most when picking paint colors.

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

Wow Factor on Windows

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

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

Recommended: How Much Does It Cost to Replace Windows?

Costs of a House Upgrade

The type of house upgrades listed here might be considered low-cost or low-end renovations, and can cost as little as $3,000 for a 1,250 to 1,600 square foot home. If, once momentum gets going, the low-end house upgrade turns into a middle-end one, the average cost could be closer to $5,200, according to the home improvement site Angi.

Another cost-related factor is where the home is located. Pricing in urban areas might be twice as high as in rural areas, depending on the area’s cost of living.

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

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

Financing a House Upgrade

Here are some options for financing a home upgrade.

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

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

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

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

◦   Calculate 80% of that ($200,000).

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

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

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

•   Another option might be a home improvement loan, which is an unsecured personal loan and not attached to the home’s equity. Funding can usually be granted more quickly with fewer, or sometimes no, fees. This may be a good option for people who don’t have enough equity in their homes for their project or who don’t want to use their home as collateral.

Recommended: How to Apply for a Personal Loan

The Takeaway

There are a number of ways you can upgrade your home that don’t involve tearing down walls or putting on an $150,000 addition. Lower-cost upgrades, ranging from $3,000 to $50,000 or more, may still require spending more cash than you have just sitting in the bank, however. Plus, you may not want to deplete your savings in order to upgrade your home. A personal loan could be a good option.

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

FAQ

How do you update your home?

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

How to update a home without renovation?

To update a home without a major renovation, make changes to surfaces, such as repainting in a different color, swapping in new curtains or blinds, and adding fresh rugs or refinishing the floors.

How much do home updates cost?

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

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.

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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.

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