When you’re buying a home, one of the questions you might be asking is, “How does buying a house affect taxes?” The short answer? Buying a home could reduce your overall tax liability if you itemize deductions and pay a large amount of mortgage interest.
There are other conditions that need to be met, and it is possible that the amount of tax you owe will stay the same. Of course, it’s always best to consult with a tax advisor for your individual situation.
To give you a general idea about how buying a home in 2025 affects taxes, we’ve compiled everything you need to know about how tax breaks work, what you can deduct, and whether or not it will make sense to itemize deductions.
• Buying a house can have tax implications, such as deductions for mortgage interest and property taxes.
• Homeowners may be eligible for the mortgage interest deduction if they itemize their deductions on their tax return.
• Home expenses that are not deductible include down payment, home repairs, utility payments, and home association or condo fees, among other expenses.
• A tax deduction reduces the amount of money you are taxed on, while a tax credit is an amount that’s subtracted from the tax you owe.
• It’s important to consult a tax professional to understand how buying a house will specifically impact your taxes.
Does Buying a House Help With Taxes?
It’s possible that buying a house can help with taxes — but only for tax filers who itemize their deductions. In 2020, the most recent year with data available, approximately 90% of Americans took the standard deduction rather than itemizing. This signals that it may be unlikely you’ll have enough deductions for itemizing to make sense. Of course, if it can reduce your taxes, it’s worth looking into.
You might also be wondering, “How does buying a house in cash affect taxes?” If you don’t have a mortgage, you’re not paying interest, so you’re not able to take the home mortgage interest deduction. But you’re still able to deduct property taxes if you itemize. Remember to consider this even if your property taxes are part of your mortgage payments.
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How Do Homeowner Tax Breaks Work?
Tax breaks start as Congressional bills passed into law and funded by the U.S. Congress. However, it is up to individual homeowners to find and file the correct paperwork to take advantage of these tax breaks.
Tax breaks come to homeowners as either tax credits or tax deductions.
The Difference Between Tax Deductions and Tax Credits
The difference between a tax deduction and a tax credit is where it appears on IRS form 1040 and how much it reduces your final tax bill or refund. This will make more sense after we explain each.
Deductions On IRS Form 1040, deductions are compiled before being subtracted from your income. This is done before tax is calculated, so having deductions can reduce the overall amount of tax you owe. But because a deduction comes before tax is calculated, the reduction in tax liability is generally less than if the amount of tax owed was directly reduced by a credit (though this depends on the amount of each).
Credits Credits are subtracted from the amount of tax you owe. If you don’t owe tax but are instead receiving a tax refund, credits can increase the amount of money coming your way from the IRS. Generally speaking, credits put more money back in your pocket. You may have heard about a first-time homebuyer tax credit. A bill that would have provided for this benefit was introduced in 2021 and again in 2024, but as of July 2025 it had not passed into law.
Deductions are more common; however, with the revamp of the tax code in 2017 with the Tax Cuts and Jobs Act, the standard deduction was increased substantially and fewer people find the need to itemize. The One Big Beautiful Bill’s passage in July 2025 made that increase permanent and enhanced it slightly. Nevertheless, it’s probably a good idea to add “keep track of possible tax deductions” to your list of New Year’s financial resolutions.
What Are the Standard Deduction Amounts for 2025?
It’s important to know the standard deduction amounts so you know if taking the home mortgage loan interest deduction will make financial sense for you.
• For single filers: $15,570
• For head of household: $23,6325
• For married people filing jointly: $31,500
If the amount of mortgage interest you pay is far below the threshold for choosing the standard deduction, you may not be able to find enough deductions for itemizing to make sense. The increased standard deduction in 2017 made this especially true, but there are certain scenarios where you should still itemize deductions.
You should itemize deductions if the total amount of your deductions is more than the standard deduction. If you are in any of the following situations, you may have enough qualified deductions for itemizing to make sense.
• If you have large medical or dental expenses that are not paid for by an insurance company
• If you paid a large amount of interest on your mortgage
• If you donated large sums to charity
• If you can claim a disaster or theft loss
• If you cannot take the standard deduction
• If you can qualify for large amounts of the “other itemized deductions” found on the IRS forms
It’s hard to say if your individual situation will mean that itemizing deductions makes sense. It may be worth it to consult with a tax professional.
Which Home Expenses Are Tax Deductible?
When you’re looking for home expenses that are tax-deductible, the IRS defines it very narrowly. The costs that are deductible include:
• State and local real estate property taxes up to $40,000 in 2025. This amount will reset annually to 101% of the previous year’s amount until 2030, when it will return to $10,000.
• Home equity loan interest if you used the funds from a home equity loan to buy, build, or substantially improve your property. Note that eligible home equity loan interest is considered part of your mortgage interest and contributes to the totals for that deduction (below).
◦ For loans taken out after December 15, 2017: You can deduct home mortgage interest on the first $750,000 of debt or the first $375,000 of debt for a married person filing separately.
◦ For loans taken out on or prior to December 15, 2017: You can deduct home mortgage interest on the first $1,000,000 of debt or the first $500,000 for a married person filing separately.
Which Home Expenses Are Not Tax Deductible?
Most home expenses, unfortunately, are not tax deductible. These include things to budget for after buying a home. The IRS specifically outlines these living expenses that cannot be claimed as a deduction:
• Utility expenses, like gas, water, electricity, garbage, sewer, internet, etc.
• Home repairs
• Insurance
• Homeowners association or condo fees
• Cost of domestic help
• Down payment and earnest money
• Closing costs
• Depreciation
Potential tax deductions are one thing to factor into your financial considerations as you think about whether you are ready to buy a home, but they certainly aren’t what should be driving your decision to make a purchase.
How Much House Can You Afford Quiz
The Takeaway
It is possible for the amount of tax you owe to be lower after you become a homeowner — but only if certain conditions are met. You’ll want to do the math and compare what your taxes will look like when you itemize deductions vs. when you take the standard deduction. That will be the best way to tell how buying a house will affect your taxes.
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FAQ
What is the tax break for buying a house in 2025?
If you itemize deductions on your federal return, you can claim a deduction for your mortgage interest paid on a home bought in 2025, along with state and local taxes paid in 2025.
Will my tax return be higher if I bought a house?
While there are a lot of factors that go into a tax return, generally speaking, if the deductions that come from homeownership reduce your tax liability compared to previous years while all other factors remain the same, then you should owe less (or even get money back).However, you will likely have to pay property tax.
How does buying a house with cash affect taxes?
If you buy your home with cash, you won’t be able to utilize the mortgage interest tax deduction. However, since you will also not be paying any interest, that may not be significant enough to warrant getting a mortgage if you can afford not to. Consult your tax advisor to see what makes the most sense for you.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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For many homebuyers, safety is a top concern when shopping for a house. It can influence where you feel comfortable living, and safety ratings can have a big effect on local housing market trends.
If you’re in the market to buy or rent a home and you’re looking for just the right spot, check out this list of the 50 safest cities from NeighborhoodScout.
• The safest cities in the U.S. are determined based on the number of violent and property crimes per 1,000 inhabitants in each city.
• Factors such as low crime rates, strong law enforcement presence, and proactive community initiatives contribute to a city’s safety.
• The safest cities can vary by region and population size, with smaller cities often ranking higher.
• Safety rankings can help individuals and families make informed decisions about where to live and raise children.
How Is the Safest Cities List Determined?
To compile its list of the safest cities, NeighborhoodScout looks at FBI statistics for property and violent crime in cities across the country that have a population of 25,000 or more. This list now includes areas with a township form of government, which has resulted in a larger pool of locations and many newcomers to the list. (See the full list of 100 safest cities on the NeighborhoodScout site.)
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What Are the Safest Cities in the US?
The safest cities in America tend to be suburban areas close to major cities like Boston. Only one spot on this list, Rexburg, Idaho, is outside a major metropolitan area.
Massachusetts is home to the most cities on the list at 18. Texas, with six cities on the list, ranks in second place.
Here’s a countdown of the 50 safest cities in the U.S. that you could call home. Consider safety, along with local housing market trends, if you’re thinking about relocating.
50. Friendswood, Texas
Friendswood began as a Quaker town in 1895 and became known for growing and preserving Magnolia figs. Since the 1950s, it has transformed into a quiet bedroom community 30 minutes from Houston and Galveston.
Population: 41,004
Total Crime Rate (per 1,000 residents): 6.5
Chance of Being a Victim: 1 in 152
Major City Nearby: Houston
49. Newton, Massachusetts
A strong school system and proximity to downtown Boston draw homebuyers to this suburban community, which is actually a cluster of 13 villages.
Population: 87,453
Total Crime Rate (per 1,000 residents): 6.5
Chance of Being a Victim: 1 in 152
Major City Nearby: Boston
48. Prosper, Texas
This growing town in the Dallas area is known for great schools and beautiful scenery. Texas has no state income tax, which may be a draw for many homebuyers, although it does have a sales tax and property taxes may be higher than in some other areas.
Population: 34,136
Total Crime Rate (per 1,000 residents): 6.4
Chance of Being a Victim: 1 in 155
Major City Nearby: Dallas
47. Dracut, Massachusetts
Dracut was home to Pennacook Indian settlements before Europeans arrived in the 1650s, and the town’s early economy depended on manufacturing and milling. The town provides easy access to the Lowell and Boston metropolitan areas.
Population: 32,159
Total Crime Rate (per 1,000 residents): 6.4
Chance of Being a Victim: 1 in 155
Major City Nearby: Boston
46. Shrewsbury, Massachusetts
Shrewsbury was incorporated in 1727 and rests just outside the Boston metropolitan area near the city of Worcester. Although the violent crime rate has risen in recent years (while the property crime rate has declined), it is still one of the safest places to live in the U.S.
Population: 38,999
Total Crime Rate (per 1,000 residents): 6.4
Chance of Being a Victim: 1 in 156
Major City Nearby: Worcester
45. Keller, Texas
Settled in the 1850s and named for a railroad foreman, Keller today blends urban amenities with a small-town emphasis on quality of life for its residents. The lovely Big Bear Creek Trail cuts through the city, ensuring access to a natural setting.
Population: 45,397
Total Crime Rate (per 1,000 residents): 6.3
Chance of Being a Victim: 1 in 158
Major City Nearby: Dallas
44. Rochester Hills, Michigan
This Detroit suburb features the 102-acre Avon Nature Study Area on the Clinton River and the Rochester Hills Museum, where visitors can learn about pioneer farmers, Native American history, and local ecology.
Population: 76,028
Total Crime Rate (per 1,000 residents): 6.2
Chance of Being a Victim: 1 in 160
Major City Nearby: Detroit
43. Beverly, Massachusetts
Beverly is a suburb of Boston on the North Shore of Massachusetts, just north of Salem. Like its witchy neighbor, Beverly offers historic New England architecture and water access.
Population: 42,446
Total Crime Rate (per 1,000 residents): 6.2
Chance of Being a Victim: 1 in 161
Major City Nearby: Boston
42. North Kingstown, Rhode Island
Sailboats bob on the water in this pretty Narragansett Bay town. A cluster of villages, the town was settled in the 17th century and boasts some buildings from that era, as well as the Silas Casey Farm, which is maintained as a classic New England farmstead.
Population: 27,911
Total Crime Rate (per 1,000 residents): 6.1
Chance of Being a Victim: 1 in 162
Major City Nearby: Providence
41. Ballwin, Missouri
This West St. Louis town, home to high-quality public schools, is located within 30 minutes of five universities and colleges. It has a diverse array of housing options at many price points.
Population: 30,870
Total Crime Rate (per 1,000 residents): 6.1
Chance of Being a Victim: 1 in 162
Major City Nearby: St. Louis
40. Melrose, Massachusetts
Another suburb of Boston, Melrose was first known as Ponde Fielde due to its many ponds and streams. The charming Downtown Melrose, known for its Victorian architecture, is on the National Register of Historic Places.
Population: 29,312
Total Crime Rate (per 1,000 residents): 6.0
Chance of Being a Victim: 1 in 164
Major City Nearby: Boston
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39. Milton, Georgia
Milton has one of Georgia’s highest rates of educational attainment and lowest rates of unemployment. The majority of its 39 square miles are zoned for agriculture, so residential lots are large here, at least one acre.
Population: 41,259
Total Crime Rate (per 1,000 residents): 5.9
Chance of Being a Victim: 1 in 167
Major City Nearby: Atlanta
38. Commerce Township, Michigan
Commerce Township boasts easy access to lots of lakes, although not all are accessible to the public. If waterfront living is a goal, there are many options here, from smaller, older cottages to spacious new homes.
Population: 38,718
Total Crime Rate (per 1,000 residents): 5.9
Chance of Being a Victim: 1 in 169
Major City Nearby: Detroit
37. Wylie, Texas
Once known as the “Onion Capital of the World,” Wylie is a fast-growing community with strong schools and abundant recreation opportunities for families.
Population: 59,394
Total Crime Rate (per 1,000 residents): 5.9
Chance of Being a Victim: 1 in 169
Major City Nearby: Dallas
36. Waltham, Massachusetts
Nicknamed “the watch city” because it was home to an early watch factory, this diverse Boston suburb dates from the 17th century. Today, it is home to both Bentley University and Brandeis University.
Population: 64,015
Total Crime Rate (per 1,000 residents): 5.8
Chance of Being a Victim: 1 in 169
Major City Nearby: Boston
35. Merrimack, New Hampshire
Options abound in Merrimack. Within an hour, you can get to busy Boston, hike in the beautiful Kearsarge Mountain State Forest, or take a dip at Hampton Beach State Park on the Atlantic coast.
Population: 27,132
Total Crime Rate (per 1,000 residents): 5.7
Chance of Being a Victim: 1 in 172
Major City Nearby: Manchester
34. Little Elm, Texas
A suburban vibe and easy access to parks and lakes, including an entertainment district on the shores of Lake Lewisville, would make this an appealing place to live even if crime rates weren’t so exceptionally low.
Population: 51,042
Total Crime Rate (per 1,000 residents): 5.6
Chance of Being a Victim: 1 in 176
Major City Nearby: Dallas
33. Edwardsville, Illinois
Edwardsville may be in Illinois, but it is a suburb of St. Louis and benefited from proximity to Route 66 as it grew. Among the oldest cities in Illinois, it has produced five of the state’s governors.
Population: 25,218
Total Crime Rate (per 1,000 residents): 5.5
Chance of Being a Victim: 1 in 178
Major City Nearby: St. Louis
32. Andover, Massachusetts
Andover, about 23 miles north of Boston, was incorporated in 1646 and later became a thriving mill town. The city is home to prestigious college prep school Phillips Academy.
Population: 36,517
Total Crime Rate (per 1,000 residents): 5.4
Chance of Being a Victim: 1 in 182
Major City Nearby: Boston
31. Cumberland, Rhode Island
Cumberland boasts a lovely bike trail which is part of a continuous 31.9-mile route. Its unique public library is built on the site of a former monastery, with tranquil walking paths and has offered, in the summer, a free “Music at the Monastery” concert series.
Population: 36,434
Total Crime Rate (per 1,000 residents): 5.4
Chance of Being a Victim: 1 in 184
Major City Nearby: Providence
30. Brandon, Mississippi
This city may be approaching its 100th birthday, but it is one of the fastest-growing cities in Mississippi.
Population: 25,373
Total Crime Rate (per 1,000 residents): 5.3
Chance of Being a Victim: 1 in 186
Major City Nearby: Jackson
29. Mundelein, Illinois
Less than an hour west of Chicago, Mundelein offers well-priced housing and a strong school system. Top employers are industrial and manufacturing companies, but the village also offers easy access to the Windy City.
Population: 31,560
Total Crime Rate (per 1,000 residents): 5.3
Chance of Being a Victim: 1 in 187
Major City Nearby: Chicago
28. Wellesley, Massachusetts
West of Newton, Wellesley is a much smaller municipality, though the median household income is higher, at $250,001, and the homeownership rate tops 80%.
Massachusetts makes a good showing on the safest cities list, representing nearly 30% of the burgs listed.
Population: 30,711
Total Crime Rate (per 1,000 residents): 5.2
Chance of Being a Victim: 1 in 190
Major City Nearby: Boston
26. Reading, Massachusetts
Another Boston suburb just north of the city, Reading is a town of about 9,374 households with a median household income around $163,725.
Population: 25,223
Total Crime Rate (per 1,000 residents): 5.1
Chance of Being a Victim: 1 in 192
Major City Nearby: Boston
25. Mason, Ohio
Mason is the largest city in Warren County. The county is known as “Ohio’s Largest Playground” and boasts regional attractions including the Grizzly Golf and Social Lodge, the Great Wolf Lodge, and Kings Island amusement park.
Population: 35,089
Total Crime Rate (per 1,000 residents): 5.1
Chance of Being a Victim: 1 in 192
Major City Nearby: Cincinnati
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24. Billerica, Massachusetts
Billerica sits on the Shawsheen and Concord rivers about 20 miles northwest of Boston and is home to about 15,653 households.
Population: 41,453
Total Crime Rate (per 1,000 residents): 5.1
Chance of Being a Victim: 1 in 195
Major City Nearby: Boston
23. Johns Creek, Georgia
The City of Johns Creek is a fairly young one, having been designated in 2006. But it is home to 200 companies and a thriving population.
Population: 82,065
Total Crime Rate (per 1,000 residents): 4.9
Chance of Being a Victim: 1 in 202
Major City Nearby: Atlanta
22. West Bloomfield, Michigan
This township less than 30 miles from Detroit has many small- and medium-sized lakes. West Bloomfield has a large Jewish population and is home to the J, formerly known as the Jewish Community Center of Metropolitan Detroit.
Population: 65,560
Total Crime Rate (per 1,000 residents): 4.9
Chance of Being a Victim: 1 in 204
Major City Nearby: Detroit
21. Colleyville, Texas
Conveniently sandwiched between the Dallas and Fort Worth areas, Colleyville offers a rural feel close to big-city amenities.
Population: 25,986
Total Crime Rate (per 1,000 residents): 4.8
Chance of Being a Victim: 1 in 206
Major City Nearby: Dallas
20. South Kingstown, Rhode Island
South Kingstown is home to two scenic beaches, as well as picturesque farmlands and a riverfront walkway.
Population: 31,851
Total Crime Rate (per 1,000 residents): 4.7
Chance of Being a Victim: 1 in 212
Major City Nearby: Providence
19. Windsor, Colorado
The only Colorado city on the list, Windsor, near the front range of the Rocky Mountains, once boasted giant herds of bison and a bustling sugar beet industry. Today, it is a hotbed of green industry, including windmill blade production and ethanol production.
Population: 35,788
Total Crime Rate (per 1,000 residents): 4.5
Chance of Being a Victim: 1 in 218
Major City Nearby: Greeley
18. Wakefield, Massachusetts
Residents of Wakefield enjoy easy commuter-rail service to Boston and recreational activities on and around scenic Lake Quannapowitt.
Population: 27,104
Total Crime Rate (per 1,000 residents): 4.5
Chance of Being a Victim: 1 in 218
Major City Nearby: Boston
17. Madison, Mississippi
This suburb of Jackson has a rural feel and a small-town atmosphere. It is a popular choice for retirees.
Population: 27,719
Total Crime Rate (per 1,000 residents): 4.5
Chance of Being a Victim: 1 in 221
Major City Nearby: Jackson
16. Avon Lake, Ohio
This suburb of Cleveland lies on the shore of Lake Erie. Ample parks, a bike trail, and an aquatic center ensure residents of all ages have plenty of options for fitness.
Population: 25,588
Total Crime Rate (per 1,000 residents): 4.3
Chance of Being a Victim: 1 in 232
Major City Nearby: Cleveland
15. White Lake, Michigan
Of the four Michigan cities on this list, White Lake ranks the safest.
Population: 30,990
Total Crime Rate (per 1,000 residents): 4.2
Chance of Being a Victim: 1 in 233
Major City Nearby: Detroit
14. Needham, Massachusetts
Like many of the Massachusetts cities on this list, Needham is a well-off bedroom community of Boston, with a median household income of about $212,241.
Population: 32,048
Total Crime Rate (per 1,000 residents): 4.2
Chance of Being a Victim: 1 in 233
Major City Nearby: Boston
13. Milton, Massachusetts
Milton, an attractive suburb 10 miles south of Boston, is the birthplace of former U.S. President George H.W. Bush.
Population: 28,388
Total Crime Rate (per 1,000 residents): 4.2
Chance of Being a Victim: 1 in 233
Major City Nearby: Boston
12. Oswego, Illinois
Located about 50 miles west of Chicago on the Fox River, Oswego lies on two rail lines and near three state highways and two U.S. highways. It has experienced rapid growth in recent years.
Population: 35,316
Total Crime Rate (per 1,000 residents): 4.1
Chance of Being a Victim: 1 in 238
Major City Nearby: Chicago
11. Independence, Kentucky
The only Kentucky town to make it to the list, Independence is a short drive across the Ohio River to Cincinnati.
Population: 28,920
Total Crime Rate (per 1,000 residents): 3.9
Chance of Being a Victim: 1 in 253
Major City Nearby: Cincinnati
10. Rexburg, Idaho
Rexburg, in eastern Idaho, is one of the only cities on this list that’s not near a major metropolitan area. Its proximity to nature is one of its calling cards. Yellowstone National Park is just 80 miles away.
Population: 35,300
Total Crime Rate (per 1,000 residents): 3.9
Chance of Being a Victim: 1 in 253
Major City Nearby: N/A
9. Muskego, Wisconsin
This cozy city sits within the orbit of Milwaukee and is around 88 miles from Chicago.
Population: 25,242
Total Crime Rate (per 1,000 residents):3.8
Chance of Being a Victim: 1 in 265
Major City Nearby: Milwaukee
8. Lexington, Massachusetts
Known as the town where the first shots of the Revolutionary War were fired, Lexington is a suburb of Boston where the median household income tops $200,000.
Population: 34,071
Total Crime Rate (per 1,000 residents):3.7
Chance of Being a Victim: 1 in 270
Major City Nearby: Boston
7. Zionsville, Indiana
Excellent schools and stable home values attract residents looking for a small-town feel just 20 minutes outside Indianapolis.
Population: 31,702
Total Crime Rate (per 1,000 residents):3.6
Chance of Being a Victim: 1 in 275
Major City Nearby: Indianapolis
6. Fulshear, Texas
Fulshear has grown significantly in size in the 21st century, though it has retained its small-town charm.
Population: 25,169
Total Crime Rate (per 1,000 residents): 3.6
Chance of Being a Victim: 1 in 276
Major City Nearby: Houston
5. Arlington, Massachusetts
Settled in 1635 as the town of Menotomy, Arlington was renamed in 1867 in honor of those buried at Arlington National Cemetery. The city is about six miles from Boston.
Population: 45,617
Total Crime Rate (per 1,000 residents): 3.4
Chance of Being a Victim: 1 in 292
Major City Nearby: Boston
4. Marshfield, Massachusetts
Marshfield is about 30 miles from Boston on the South Shore where Cape Cod meets the Massachusetts Bay. The year-round population grows to 40,000 in the summer months.
Population: 25,869
Total Crime Rate (per 1,000 residents): 3.3
Chance of Being a Victim: 1 in 300
Major City Nearby: Boston
3. Lake in the Hills, Illinois
Once a sleepy rural community home to seasonal residents who enjoyed the area’s lakes, Lake in the Hills became a quickly growing suburb of Chicago in the last few decades.
Population: 28,945
Total Crime Rate (per 1,000 residents): 3.1
Chance of Being a Victim: 1 in 321
Major City Nearby: Chicago
2. Franklin, Massachusetts
Franklin is conveniently located between Boston and Providence, Rhode Island. The town is named in honor of Benjamin Franklin, whose donated books formed the first public library in the country.
Population: 33,036
Total Crime Rate (per 1,000 residents): 2.9
Chance of Being a Victim: 1 in 344
Major City Nearby: Boston
1. Ridgefield, Connecticut
This pretty colonial town nestled in the foothills of the Berkshire Mountains was founded over 300 years ago and today ranks as America’s safest city. Visitors come for its historic Main Street. Families stay for its strong schools and, of course, its excellent safety rating.
Population: 25,011
Total Crime Rate (per 1,000 residents): 1.9
Chance of Being a Victim: 1 in 510
Major City Nearby: Bridgeport
The Takeaway
It’s a safe bet that house hunters will find many of these 50 safest cities in the U.S. appealing. There’s a lot to like about these towns in addition to their low crime rates, including great schools, high-quality housing stock, and natural wonders.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
What is the No. 1 safest town?
Safety can be tricky to gauge, but Ridgefield, Connecticut, was recently named America’s safest town by NeighborhoodScout.
What is America’s happiest city?
Happiness is highly subjective. However, a 2025 WalletHub analysis that looked at 25 key happiness indicators found that Fremont, California, ranked highest.
What U.S. city has the highest quality of life?
Quality of life can mean different things to different people, but overall, Brookline, Massachusetts, ranked highest in a 2025-2026 evaluation by U.S. News & World Report. The publication’s annual Quality of Life index looks at factors like quality of education, average commute time, health care availability and quality, and others to rank U.S. cities.
*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.
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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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As far as the simple math goes, a $200,000 home loan at a 7% interest rate on a 30-year term will give you a $1,330.60 monthly payment.
That $200K monthly mortgage payment includes the principal and interest. But here’s where options become evident: How much your interest will cost you each month is determined by your mortgage term and interest rate. You might pay a lower or higher annual percentage rate (or APR), and you might opt for a variable rate loan or a different term (say, 15 years).
Understanding what your total mortgage will cost vs. just the payments on a $200K mortgage can be a smart way to look at your finances when you’re buying a home. If you want to know the full cost of a $200K mortgage, read on for the breakdown so you can make the best decision for your home purchase.
The total cost of a $200,000 mortgage may surprise you. Beyond the principal, there are upfront costs to acquire the mortgage as well as long-term costs that come from paying years of interest. Here’s a closer look.
Key Points
• A $200,000 mortgage can cost around $1,000 per month, depending on the interest rate and loan term.
• Factors that affect the monthly cost of a mortgage include the loan amount, interest rate, loan term, and property taxes.
• Private mortgage insurance (PMI) may be required if the down payment is less than 20% of the home’s value.
• Homeowners insurance and property taxes are additional costs to consider when budgeting for a mortgage.
• It’s important to carefully consider your budget and financial goals before taking on a mortgage to ensure you can comfortably afford the monthly payments.
Upfront Costs
These expenses can include the following:
• Closing costs: What you pay to secure a mortgage for the property you want. They include fees for appraisals, title insurance, government taxes, prepaid expenses, and mortgage origination fees.
The average closing cost on a new home is between 3% and 6% of the loan amount. This works out to be between $6,000 and $12,000 for a $200K mortgage.
• Downpayment: While the average down payment on a home is around 13%, you can often elect to put down an amount that works for your financial situation. This is cash you put down vs. the amount you borrow for your mortgage. Some of the most common amounts for a down payment on a $200,000 house can be:
◦ 20% down payment: $40,000
◦ 10% down payment: $20,000
◦ 5% down payment: $10,000
◦ 3.5% down payment: $7,000
◦ 3% down payment: $6,000
Long-Term Costs
The total cost for a $200K mortgage at today’s interest rates is almost half a million dollars. Over the course of the 30-year loan on a $200K mortgage at 7% APR, you will pay $279,017.80 in interest for a total cost of $479,017.80.
It’s a bit of a surprise to most borrowers that the amount they will pay in interest exceeds the price of the home. After all, $279,000 in interest costs for a $200,000 home doesn’t seem like it would come from a 7% APR, but that’s how mortgage APR works.
By choosing a mortgage term that’s 15 years, you substantially decrease the total $200K mortgage cost. The monthly payment on a 15-year loan at 7% APR increases to $1,797.66 from $1,330.60 for a 30-year mortgage. But 15 years of interest will cost $123,578.18 with a 7% APR, bringing the total cost of the principal plus interest to $323,578.18.
To compare the 15-year vs. 30-year mortgage that costs $479,017.80, that’s a savings of $155,439.62. In short, if you’re able to pay another $450 on your mortgage every month, you’ll save over $100,000 during the course of your loan.
“Really look at your budget and work your way backwards,” explains Brian Walsh, CFP® at SoFi, on planning for a home mortgage.
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with as little as 3% down.
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Estimated Monthly Payments of a $200K Mortgage
Since interest costs can vary so much, here’s a handy table to help you estimate what your monthly home mortgage loan costs would be for a $200,000 mortgage. The APR can vary considerably, depending on the lender, whether you choose variable or fixed rate, and other loan specifics.
The APR makes a huge difference in your monthly payment. When your monthly payment is increased because of a higher interest rate, you’ll pay hundreds of dollars more each month as well as tens, if not hundreds, of thousands more over the course of the loan.
Here’s what your monthly $200K mortgage payment and total loan cost will look like in 15-year and 30-year loan terms with different APRs.
APR
15-year loan payments
Total loan cost (200K + interest)
30-year loan payments
Total loan cost (200K + interest)
3.5%
$1,429.77
$257,357.71
$898.09
$323,312.18
4%
$1,479.38
$266,287.65
$954.83
$343,739.01
4.5%
$1,529.99
$275,397.58
$1,013.37
$364,813.42
5%
$1,581.59
$284,685.71
$1,073.64
$386,511.57
5.5%
$1,634.17
$294,150.04
$1,135.58
$408,808.08
6%
$1,687.71
$303,788.46
$1,199.10
$431,676.38
6.5%
$1,742.21
$313,598.65
$1,264.14
$455,088.98
7%
$1,797.66
$323,578.18
$1,330.60
$479,017.80
7.5%
$1,854.02
$333,724.45
$1,398.43
$503,434.45
8%
$1,911.30
$344,034.75
$1,467.53
$528,310.49
8.5%
$1,969.48
$354,506.24
$1,537.83
$553,617.71
9%
$2,028.53
$365,135.97
$1,609.25
$579,328.28
9.5%
$2,088.45
$375,920.89
$1,681.71
$605,415.03
10%
$2,149.21
$386,857.84
$1,755.14
$631,851.53
Again, it’s pretty shocking to see that a $200K mortgage could possibly cost over $600,000 with a 10% interest rate on a 30-year loan. If you want to play around with different numbers, this mortgage payment calculator can help.
200K Mortgage Amortization Breakdown
Amortization shows you how much of your monthly payment is applied to the original loan amount, or principal.
Loans are amortized so that most of your monthly payment goes toward interest each month when you’re just starting to repay your loan. When you’re toward the end of your loan term, most of the money goes toward the principal.
In the example below, of $200K mortgage payments and balances, you’ll see that over the course of the first year, the borrower made $15,967.20 in payments ($1,330.60 per month for 12 months). Of this, $13,935.65 is applied to interest and only $2,031.55 to the principal.
To qualify for any mortgage, you will need to show that you can afford a down payment, have a solid credit score, and have a consistent work history, among other factors.
One key qualification is your ability to afford the loan you are applying for. An example: For a $200,000 mortgage with a $1,330.60 payment, lenders look for your housing expenses to be between 25% and 28% of your gross income. That means your monthly income should be at least $4,752.14 for the $1,330.60 payment to meet that guideline. That’s just over $57,000 per year if you have no other debts.
Another way lenders look at how much house you can afford is your debt-to-income ratio (aka your DTI). Lenders look for your total debt expenses (including the new housing payment) to be no more than 36% of your gross monthly income. For a borrower making $10,000 per month, for example, debts should not exceed $3,600 per month, including the new housing payment.
To find your debt-to-income ratio, multiply your monthly income by .36. Set that number aside. Next, add up all of your debt obligations, including car payments, credit cards, hospital bills, etc. Then, add in your new mortgage payment to your existing debt payments.
As a formula, it looks like this:
• Monthly income X .36 = Max debt-to-income ratio.
• Mortgage payment + debts = Total debts
• Max debt-to-income ratio > total debts
Compare the two numbers to see where you stand with the maximum DTI versus your total debts. If you’re not in the desired range, know that some lenders will allow a higher percentage; you might shop around if your DTI is above the 36% mark. However, the terms might not be as desirable. It can be wise to explore your options with a mortgage professional or look online at a home loan help center.
This is an example of why you always hear the advice to pay down debt to qualify for a better, bigger mortgage. The amount of debt you have directly affects how much mortgage you’re able to qualify for.
How Much House Can You Afford Quiz
The Takeaway
Understanding the monthly and total cost of a $200K mortgage can help you understand the options available for financing a home purchase, as well as understand the implications on your long-term financial situation. You can then assess what’s possible and make decisions about the best way to finance a $200K mortgage.
With any mortgage, you’ll want a lender on your side. SoFi Mortgage Loans have dedicated loan officers waiting to help. Competitive interest rates, low down payment options, and a wide range of loan terms can help you make a mortgage for your home possible.
See how smart, flexible, and simple a SoFi Mortgage Loan can be.
FAQ
How much is a down payment on a $200K house?
A 20% down payment on a $200K house is $40,000. A 5% down payment is $10,000, and a 3.5% is $7,000. Talk with various lenders to see what you might qualify for.
How can I pay a $200K mortgage in 5 years?
Making extra payments or larger lump-sum payments can help you pay off your mortgage faster. For a $200K mortgage amortized over 5 years, you’ll need to pay the original loan amount of $200K, plus five years of interest payments. If you look at the full 30-year amortization chart (above), that’s $68,099.48 in interest and a total of $268,099.48 you’ll need to pay back to the lender.
Over five years and 60 equal payments, this works out to $4,468.32 each month to pay off your mortgage in five years. (Quick side note: the amount of interest you’ll pay in an accelerated five-year repayment plan won’t nearly be this much because your extra payments to the principal will decrease the amount of interest you pay every year.)
How much mortgage can I qualify for on a $200K salary?
How much mortgage you qualify for depends on your income, debt levels, down payment, loan program, and credit score, among other factors. As a rule of thumb, you may be able to qualify for homes between 2 and 3 times your gross annual salary. For a $200K salary, you may be looking for homes in the $400K to $600K range.
Photo credit: iStock/AnnaStills
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
A reverse mortgage may help older Americans who find they need more money in retirement. It’s common for inflation and rising medical costs to be issues. A reverse mortgage allows them to convert some of their home’s equity into cash, which can benefit their financial situation.
Protections established over the past few years by the U.S. Department of Housing and Urban Development (HUD) focus on lowering the risk previously associated with reverse mortgages. What’s more, the federal and state governments have taken aim at deceptive marketing practices that can minimize the complex aspects of reverse mortgage agreements.
That said, it’s wise to proceed with caution. There are still considerable cons to reverse mortgages, and borrowers may be unaware of the finer points. One important fact: It is possible to lose your home if you don’t comply with all the loan terms. Take a closer look at this topic here.
Key Points
• Reverse mortgages allow eligible homeowners 62+ to convert home equity into cash.
• Most reverse mortgages are HECMs, insured by the government.
• Borrowers must stay current with property taxes, insurance, and maintenance.
• Defaulting can lead to having to repay the loan or lose the house.
• Alternatives to reverse mortgages include home equity loans, personal loans, and refinancing.
Why Do People Choose a Reverse Mortgage?
A reverse mortgage allows qualifying homeowners age 62 and older to convert part of the equity they’ve built up in their primary residence into money they can use to pay off their existing mortgage or for any other expenses that come up in retirement (from health care costs to home repairs).
The big selling point for reverse mortgages is that the loan usually doesn’t have to be paid back until the last borrower, co-borrower, or eligible nonborrowing spouse dies, moves away, or sells the home. And when it is time to repay the loan, neither the borrower nor any of the borrower’s heirs will be expected to pay back more than the home is worth.
Main Types of Reverse Mortgages
There are three basic types of reverse mortgages. The most common is a home equity conversion mortgage (HECM), which is the only reverse mortgage insured by the U.S. government and is available only through an FHA-approved lender. An HECM can be used for anything, but there are limits on how much a homeowner can borrow.
Note: SoFi does not offer reverse mortgages or home equity conversion mortgages (HECM) at this time.
There are also proprietary reverse mortgages, which are private loans that may have fewer restrictions than HECMs — including how much a homeowner can borrow.
And there are single-purpose reverse mortgages, which are typically offered by nonprofit organizations or state or local government agencies that may limit how the funds can be used. Most of the time, when someone refers to a reverse mortgage, though, they’re talking about an HECM.
Reverse Mortgage Terms to Know
There are safeguards in the reverse mortgage process that protect borrowers. However, there are also loan terms borrowers are required to uphold or risk defaulting and potentially triggering a mortgage foreclosure. They include:
Staying Current With Ongoing Costs
Borrowers must stay up to date on property taxes, homeowners insurance, homeowners association fees, and other costs, or they could risk defaulting on the loan. An assessment of a borrower’s ability to pay for those ongoing expenses is part of the reverse mortgage application process, and if it looks as though money might be tight, a lender may require a borrower to set up a reserve fund, called a “set-aside,” for those costs. (In this way, it’s akin to an emergency fund, which is there to cover expenses if needed.)
Maintaining Full-Time Residency
Borrowers (and eligible non-borrowers) must use the home as their primary residence — the home they occupy for most of the year. If they move out of the house or leave the home for more than six months, or receive care at a nursing home or assisted living facility for more than 12 consecutive months, it could result in the lender calling the loan due and payable.
The lender also may choose to accelerate the loan if the borrower sells the home or transfers the title to someone else, or if the borrower dies and the property isn’t the principal residence of a surviving borrower.
Keeping the Home in Good Repair
Because the home is collateral and may have to be sold to repay the loan, lenders may require borrowers to do basic maintenance that will help the property keep its value (e.g., repairing a leaky roof or fixing a problem with the electrical system). If an inspector feels the home is not being properly maintained, the lender could take action.
What Happens If a Reverse Mortgage Borrower Defaults?
If the homeowners default, the first thing that could happen is that future loan payments may be stopped. And if the problem isn’t corrected within the lender’s stated timeline, the loan may become due and payable, which means the money the lender has distributed to the borrower, plus any interest and fees that have accrued, must be repaid. In that case, the borrower typically has four options:
• They can pay the balance in full and keep their home.
• They can sell the home for the lesser of the balance or 95% of the appraised value and use the proceeds to pay off the loan.
• They can sign the property back to the lender.
• They can allow the lender to begin foreclosure.
No matter what the homeowners decide to do, the process could take months to complete. HECM lenders may offer borrowers additional time to fix the problem that put them into default, or the borrowers may qualify for extensions or a repayment plan.
But in the meantime, there could be other implications — if the homeowners are no longer getting money they need to pay their bills or if the lender reports the default to credit monitoring agencies — that could affect the homeowners’ credit scores.
A Few Alternatives to Consider
The advertisements some lenders use to sell their reverse mortgages can be convincing, and some seniors may see these loans as a convenient way to get some extra cash or as a much-needed lifeline.
But, as with any financial decision, there are advantages and disadvantages — and alternatives — to be considered. There are other ways homeowners may be able to get help that could be less complicated and less limiting than a reverse mortgage.
Here are a few options:
• Borrowers may wish to tap into their home’s equity with a traditional home equity loan or home equity line of credit. They’ll have to make monthly payments, and their income and credit history will be considered when they apply, but the terms may be more flexible and the overall cost may be lower than a reverse mortgage. Because the home is used as collateral, there’s still a risk of foreclosure.
• Low interest-rate personal loans might be another option for homeowners who qualify for a competitive interest rate based on their income and credit. Borrowers who don’t have much equity in their home may choose to look into this type of loan, which is unsecured and is paid out in a lump sum. While foreclosure is not a worry with a personal loan, there still may be consequences to the borrower’s credit rating if they don’t uphold the loan terms.
• Borrowers who are struggling to keep up with their bills in retirement may find that refinancing a mortgage with a new, lower-cost mortgage might be an option to help them lower their monthly payments and stay on track with their budget.
Or, if they need extra cash right away and can get a low enough interest rate, they may want to look into a “cash-out refinance,” which would involve taking out a new loan for a larger amount based on the equity they’ve built up during the years they’ve lived in the home.
Unfortunately, no matter which type of loan homeowners might choose, there could be risks.
The government requires a counseling session for reverse mortgage borrowers for a reason: They’re complex, and it can be helpful to have someone cover all the rules and costs involved.
Homeowners may also want to pay a financial advisor and tap their expertise about what type of loan, if any, fits with their needs, goals, and where they are in their retirement.
Though reverse mortgages are available to homeowners starting at age 62, borrowers who expect to have a long retirement may choose to wait until they’re older to tap into their home equity, so they don’t risk running out of money in their later years.
The Takeaway
For people 62 and older who own their homes, getting a reverse mortgage may be a good way to get funds during retirement. If this is an option you’re considering, be sure to evaluate what responsibilities you’d have and the risks as well as the advantages. But know that there is information, counseling, and protection to help make it unlikely that you would lose your home after getting a reverse mortgage.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How do people lose their homes from a reverse mortgage?
With the most common type of reverse mortgage – a home equity conversion mortgage (HECM) – it’s possible for your lender to take your home if you don’t meet the mortgage obligations. These include staying current with ongoing costs (like property taxes, homeowners insurance, and homeowners association fees, for example), maintaining the property, and using it as your primary residence where you live more than half the year.
Do you give up your house in a reverse mortgage?
When you get a reverse mortgage, your lender does not own your house. You still retain the title and own your house for the duration of the mortgage, unless you default.
What is the six-month rule for home mortgages?
One of the conditions of the most common kind of reverse mortgage – a home equity conversion mortgage (HECM) – is that your home must be your primary residence. That means you must live there more than half the year – six months – or you will be violating the terms of the reverse mortgage.
*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 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.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
If your credit is not quite up to a lender’s preferred level to get favorable interest rates and terms on your own, you might consider a joint personal loan. With this type of loan, you would have a co-borrower, an additional borrower who is obligated to repay the debt alongside you, the primary borrower. A co-borrower who has solid credit, income, and other financial credentials can help you qualify for a personal loan.
Here are key things to know about using a co-borrower on a personal loan.
• Joint personal loans involve two borrowers (a primary and a co-borrower) who share equal responsibility for repayment and ownership of the loan funds.
• Using a co-borrower with strong credit can help improve approval chances, secure lower interest rates, and potentially qualify for a larger loan amount.
• Unlike cosigners, who are only responsible for repayment if the primary borrower defaults, co-borrowers have equal ownership and repayment responsibilities throughout the life of the loan.
• Common uses for joint personal loans include debt consolidation, funding large expenses, or managing shared financial responsibilities, particularly among couples or family members.
What Are Joint Personal Loans?
Joint personal loans are loans that take into account multiple borrowers’ creditworthiness in the approval process. There are typically two borrowers on this type of loan — a primary and a secondary borrower — to establish joint personal loan eligibility.
Being a co-borrower on a loan comes with different rights and responsibilities than being a cosigner on a loan.
• Co-borrowers, along with the primary borrower, have equal ownership of loan funds or what is purchased with the loan funds and are equally responsible for repayment of the loan over the life of the loan.
• Cosigners have no ownership of the loan funds or what they’re used to purchase, and they are responsible for repayment only if the primary borrower fails to make payments.
How to Use Joint Personal Loans
If you don’t feel confident about qualifying for a loan, or have concerns about a potentially higher interest rate due to your overall creditworthiness or other reasons, finding a reliable co-borrower might help improve your chances of approval, along with the interest rate and terms you’re offered.
Couples can use a joint personal loan for a wide variety of purposes, including consolidating high-interest debts, paying for a large expense or event (like a wedding), or funding a remodeling project.
One common reason why someone might consider a joint personal loan is that they cannot qualify for a loan on their own, or they would like to snag a lower interest rate or qualify for a larger loan amount than they could on their own.
• They are seeking a larger loan than they could on their own.
How Much Can You Save With Joint Personal Loans?
Having two borrowers on one personal loan may help you to qualify for a more favorable interest rate than if just one person’s income and credit are considered. Different lenders will have different qualification requirements, though, so it’s a good idea to compare lenders.
Using a joint personal loan for debt consolidation can be one way to lower the amount of interest paid on outstanding debt. Again, how much savings is accomplished depends on multiple factors, such as the interest rate offered and how long it takes to pay down the debt.
When your application for a joint personal loan is reviewed, the lender will look at your combined income and debt obligations. Perhaps the primary borrower has a relatively low income and high debt load. By adding a co-borrower who has a strong salary (say, a spouse’s salary in the six figures) and minimal debt, the odds for loan approval could be enhanced.
Say that the primary applicant has a debt-to-income ratio, or DTI, of 48%, which is above the 36% many lenders prefer. If a co-borrower has a DTI of 22%, the couple’s DTI as a whole is 35%, bringing it to a level that may gain approval.
Credit History of Both Applicants
Similarly, lenders will take into account both applicants’ creditworthiness. Perhaps the primary borrower has what’s known as a thin file, meaning they don’t have a very deep credit history, or has a fair credit score. If their co-borrower has a credit score in a higher range (very good or exceptional), that could convince a lender to approve the loan and potentially at a lower rate and with more favorable terms. The co-borrower could help assure the lender of the duo’s creditworthiness.
What Credit Score Is Required for a Joint Personal Loan?
There is no definite answer to this question, but, in general, applicants with higher credit scores qualify for loans with lower average personal loan interest rates. And, vice versa, applicants with lower credit scores generally qualify for loans with higher interest rates.
Lenders tend to be risk-averse and prefer to lend money to people who they believe will repay it in full and on time. An applicant’s credit report — a summary of how responsible they are with credit that has been extended to them in the past — and credit score are tools lenders use to assess risk.
Before applying for a joint personal loan, it’s a good idea to review your credit report. If there are errors or discrepancies, you can file a dispute with the credit reporting agency. If you have poor credit or a limited credit history, you might consider taking some time to improve your credit profile before applying for a loan. Lenders will look at both applicants’ credit reports during the joint personal loan approval process, so it’s worth it for your credit to be in good shape.
The basic process of applying for a loan is the same, no matter the number of applicants. Lenders will typically request the same information on either an individual or a joint loan application: proof of identity and address and verification of employment and income, in addition to any lender-specific information. For an individual loan application, there is just one person’s information to verify. Joint loan applications require information for each applicant.
Individual
Joint
Only one applicant’s creditworthiness is considered in the approval process.
Creditworthiness of both applicants is considered in the approval process.
One income is considered in the approval process.
Combined incomes of all applicants are considered in the approval process./td>
Only one applicant signs the loan application.
The loan application is specifically for more than one applicant, and both must sign it.
One borrower is responsible for repaying the loan.
All borrowers are responsible for repaying the loan.
Cosigned Loan vs Joint Personal Loan: The Advantages
Arguably, the primary borrower on either a cosigned loan or a joint personal loan has a bigger advantage than the cosigner or co-borrower. Depending on one’s perspective, however, all parties involved can reap benefits from these partnerships.
The Advantages of Choosing a Cosigned Loan
The advantage lies almost exclusively with the primary borrower on a cosigned loan. If they default, the cosigner is responsible for repaying the loan, although the primary borrower’s credit will likely be negatively affected. Ownership of the loan funds or what they purchased with the money is solely the primary borrower’s.
A personal loan cosigner’s main advantage may be in the form of a benevolent feeling from helping a close friend or family member.
The Advantages of Choosing a Joint Personal Loan
The main advantages of a joint loan are two-fold. There is equal ownership of the loan funds or the property purchased with those funds. Choosing a joint loan also means you may be able to present a more positive financial profile when applying than you could alone, signaling to lenders that it’s more likely the monthly loan payments will be made. This could pay off with a lower interest rate and more favorable terms.
Because joint loans give both co-borrowers equal rights, they are well-suited for people who already have joint finances or own assets together.
Cosigned Loan vs Joint Personal Loan: The Disadvantages
Both cosigned and joint loans include an additional borrower. However, a co-borrower taking out a joint loan has different rights and responsibilities than a cosigner, which can be risky.
The Disadvantages of Choosing a Cosigned Loan
The disadvantages of a cosigned loan lie mostly with the cosigner, not the primary borrower. The cosigner does not have any ownership rights to the loan funds or anything purchased with the loan funds. They are, however, responsible for repayment of the loan if the primary borrower fails to make payments.
The cosigner’s credit can be negatively affected if the primary borrower defaults on the loan, and their future borrowing power could be affected if a lender decides extending more credit would be too risky.
The Disadvantages of Choosing a Joint Personal Loan
People who already share financial responsibilities — married couples or parents and children, for example — may be the ones who consider joint personal loans, so there is typically some familiarity present.
That trust matters because co-borrowers have equal ownership rights to the loan funds or what the loan funds purchased. And it’s also important to have confidence in a co-borrower’s ability to repay the loan because each borrower is equally responsible for repayment over the entire life of the loan.
What’s the Better Loan Option?
If you’re seeking a loan with a spouse or relative and one of you has the strong credit history needed to get a favorable interest rate and terms, then a joint loan as co-borrowers may be right for you.
However, if you’d rather have a loan in your name with a little added security, then having a cosigner may make more sense.
No matter which situation you find yourself in, it’s important to weigh all of the options and do the necessary research that will allow you to arrive at the best joint personal loan option for you. (You might also consider personal loan alternatives as part of your research.)
After all, taking out a loan and repaying it responsibly has the power to put someone on a path to a more secure financial future, but it can also come with risks for each party.
It’s not uncommon for lenders to offer joint personal loans, but some research is necessary to find the right lender for your unique financial situation.
Looking at lenders of joint personal loans online is a good first step. Prequalifying to check joint personal loan eligibility is a fairly quick and easy process.
If you’re already an established customer at a local bank or credit union, you may also want to look at loan options there.
Tips for Applying for a Joint Personal Loan
If you decide to pursue a joint personal loan, consider these points to make the process easier.
Communicate Financial Responsibilities Clearly
As you apply for a joint personal loan, it’s wise to make sure you both agree on the details, such as the loan amount, the monthly payment you can afford, and who will pay it (will you split it 50/50?), and when. Develop a contingency plan if you struggle to make a payment.
Compare Lenders and Loan Terms Together
It’s also important to make sure the two of you are aligned on reviewing and deciding upon your loan. It’s wise to consider at least a few loan offers to see what rates and terms are available. For instance, a shorter loan term can mean higher monthly payments but less interest paid over the life of the loan. That might be preferable, if you can afford it, versus a longer term with a lower monthly payment, because that winds up often costing more in total.
Also make sure you both understand the consequences of late or missed payments before embarking on the loan together.
The Takeaway
Co-borrowers may help a primary borrower secure a personal loan by presenting a more positive financial profile and securing more favorable rates. However, these joint loans also require a great deal of forethought since both borrowers have access to the funds and responsibility for repaying the debt.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.
FAQ
Can you apply for joint personal loans?
As long as the lender allows co-borrowers, you can apply for a joint personal loan.
What is the maximum amount of people for a joint personal loan?
Typically, a joint personal loan has two co-borrowers, but the maximum number of co-borrowers is up to the individual lender. Some allow for more than two borrowers.
Do joint personal loans get approved faster?
It’s likely to take more time for a joint personal loan to be approved than an individual loan because the lender will check the credit of each applicant.
Does a joint loan affect both credit scores?
Yes, a joint loan affects both borrowers’ credit scores. If loan payments are made on time, the borrowers could see a positive impact on their credit. If, however, payments are late or missed entirely, that can negatively impact each of the borrowers’ credit.
Can one person be removed from a joint personal loan?
Removing one person from a joint personal loan is dependent on the lender’s specific guidelines. It can be a complicated process that may involve refinancing the loan into a new individual loan, provided the solo borrower qualifies.
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