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Buying a house with your partner? You’ll need to make many decisions during the process — like figuring out who gets to use that sweet spare room as a home office or what your landscaping will look like. But one of the most important choices is how the two of you hold the title of the house. It might sound like a no-brainer, but there are actually a few different legal ownership designations to know and understand.

Both joint tenancy and community property with right of survivorship are ownership structures that can be used by partners buying a home together. But community property with right of survivorship is specifically reserved for married couples, and is only available in certain states. Community property with right of survivorship offers certain tax benefits in the event that one spouse dies before the other, but both of these ownership structures confer joint ownership over the property to both people whose names are on the title.

Let’s take a closer look.

What Is Joint Tenancy?

In order to fully understand community property, it’s helpful to first understand joint tenancy, which is the ownership structure that came first. In fact, community property with right of survivorship is a fairly new legal designation; it was invented by the California legislature back in 2001.

Before that time, joint tenancy was one of the most common ways that couples — or other parties holding an asset together — designated their ownership. Joint tenancy basically states that everyone has equal ownership over the shared asset, be it a piece of real estate or a joint brokerage account. Conceptually, it helps to think about each person owning 100% of the asset, rather than each holding a proportional amount (50/50, 33/33/33, etc). If you and your spouse are first-time homebuyers on the market, understanding this legal jargon is an important step in the journey.

Joint tenancy could be shared between more than two people under certain circumstances — like if you and two friends bought a vacation home together. But because everyone in the agreement owns 100% of the asset, nobody can sell their share of it or will it to their heirs after their death. That’s the “right of survivorship” part: Any surviving parties automatically have ownership rights over the asset if one of the owners dies.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

What Is Community Property?

Community property works very similarly to joint tenancy, but is reserved specifically for married couples. (That’s why it’s also sometimes known as marital property.) Community property is only a legal designation in a handful of U.S. states, including:

•   Arizona

•   California

•   Idaho

•   Louisiana

•   Nevada

•   New Mexico

•   Texas

•   Washington

•   Wisconsin

Three additional states — Alaska, South Dakota, and Tennessee — allow couples to decide whether or not they’d like to opt into a community property ownership structure — whereas in the other states listed, community property is the default status for shared ownership of assets between married couples. It is, however, always possible to opt out of the community property system with a prenuptial agreement.

Under community property, each partner has equal joint ownership over shared assets — which, again, can range from a piece of real estate to bank accounts and even to debt (like a mortgage). This means that, in the event of a divorce, all assets are required to be split 50/50 — which is part of why some partners in those states might opt to sign a prenup ahead of time, if they want to hold onto an asset no matter what.

However, community property also comes with the added bonus of some tax incentives for spouses — which is part of why it was created in the first place.

Recommended: The Cost of Living By State

The Difference Between Joint Tenancy and Community Property With Right of Survivorship

The most salient difference between joint tenancy and community property with right of survivorship comes down to taxes.

That’s right: This ownership structure is really all about how much a surviving spouse stands to owe Uncle Sam if their partner passes away.

What Are the Tax Benefits for Surviving Spouses in Community Property States?

In a joint tenancy situation, even with right of survivorship, a property sold after the death of a spouse would be subject to capital gains taxes — taxes levied against earnings on an asset like a home or an investment.

Part of the reason buying a house is considered such a good financial move is because homes tend to appreciate, or grow in value, over time. With the capital gains tax, a surviving loved one would be required to pay taxes on that appreciated value if they chose to sell the home after their spouse’s death.

Community property with right of survivorship, however, allows these proceeds to be exempt from the capital gains tax — which can ease the overall financial burden in an already difficult time.

What Is the Right of Survivorship in Real Estate?

Now let’s take a look at the piece that both joint tenancy and this type of community property have in common: right of survivorship.

Right of survivorship in real estate pretty much does what it sounds like — it confers the surviving partner, in the event of the other party’s death, the right to continue to live in the house. Again, this can ease the burden for a surviving spouse in an incredibly difficult emotional time, when there are already other significant financial planning steps to take. However, it also means that couples under this ownership structure are unable to give the home to an heir, or anyone else, in their will. The property will instead automatically be under the ownership of the surviving spouse.

Recommended: How Home Ownership Can Help Build Generational Wealth

How Does a Right of Survivorship Work With a Will?

So what happens if a person sharing community property — or joint tenancy, for that matter — with right of survivorship tries to leave some or all of their property to an heir in a will?

While every legal case is different, in most cases, the right of survivorship will take precedence over wishes stated in a will. So if Rebecca and Ann share a home under community property with right of survivorship, and Rebecca writes into her will that she’d like to leave her share of the home to her grandson Pete, it’s very likely this wish will be superseded by Ann’s right to survivorship in the event of Rebecca’s death.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Community Property vs Community Property With Right of Survivorship

It’s important to understand that the right of survivorship part of this kind of agreement is separate from the community property part.

Community property basically states that assets acquired in a marriage are evenly shared between the partners, 50/50 — and must be distributed that way in the event of a divorce. But without the right of survivorship, a partner would still be able to will their 50% of the home to whomever they want, which may or may not be their surviving spouse. Those few extra words make a big difference!

The Takeaway

Community property with right of survivorship is a legal ownership structure that confers ownership rights and possible tax benefits to married couples, while also creating rules as to how assets are distributed in the event of a divorce. You’ll need to decide on your preferred ownership structure when purchasing a home, along with other important decisions you’ll make.

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 difference between joint tenancy and community property with right of survivorship in California?

Although the designation of community property with right of survivorship was originally invented in California, couples can own property there under either ownership structure — and indeed, many maintain joint tenancy. Community property requires couples to split assets 50/50 in a divorce, which is not the case with joint tenancy. However, in both cases, right of survivorship confers the surviving spouse the right to ownership over the home, and other assets, in the event of one spouse’s death.

What is the difference between joint tenancy and community property in California?

In California, as in all states, the most salient difference between joint tenancy and community property is how a property is taxed in the event it is sold after one party’s death. In addition, community property is an ownership structure only available to married couples.

What are the disadvantages of community property with a right of survivorship?

While every type of shared ownership structure has both benefits and drawbacks, one drawback of community property with right of survivorship is that neither owner can choose to will their share of the property to an heir — instead, ownership is automatically conferred to the other party in the event of their death. Additionally, community property must, by law, be split 50/50 in the event the couple divorces, whereas in other cases there’s more flexibility about what constitutes an “equal” dispersal of assets.

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Photo credit: iStock/andresr

*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 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.

This article is not intended to be legal advice. Please consult an attorney for advice.

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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A $450,000 fixed-rate mortgage, with an annual percentage rate (APR) of 7.3% and a 30-year term, would cost you $3,085.07 per month, or $37,020.84 per year in combined principal & interest payments. Of course, your exact payment would depend on your interest rate and other individual factors.

The same loan amount with a 15-year fixed-rate loan would warrant a lower mortgage rate, but the monthly payment would be higher due to the compressed repayment period. For example, a 15-year mortgage for $450,000 with a 6.3% APR would cost $3,870.68 per month, or $46,448.16 per year.

Keep in mind that these costs factor in your mortgage alone but don’t account for any taxes, fees, insurance, or other payments you may incur over your ownership period. Let’s break down the expected costs of a $450K mortgage payment as well as any additional expenses you’ll need to keep in mind over the life of your loan.

Total Cost of a $450K Mortgage

While it’s easy to focus on your monthly mortgage payment, the economics of taking out one of the many different types of home loans become more pronounced when you weigh the total lifetime cost of the loan.

To put this into perspective, the total cost of the 30-year $450,000 mortgage quoted above at an APR of 7.3% would cost you $1,110,624.90 in payments over the life of the loan. If you were to make every single payment on schedule without any prepayments or late payments, you would pay $660,624.90 in interest over 30 years. A shorter mortgage term would result in significant savings on interest.

Owning a home also involves other costs aside from your mortgage, including things like maintenance, and property taxes; we’ve broken these down into the upfront and long-term costs below.


💡 Quick Tip: SoFi’s new Lock and Look⁺ feature allows you to lock in a low mortgage financing rate for up to 90 days while you search for the perfect place to call home.

Upfront Costs

Upfront costs on a home usually consist of all the expenses required to close on your home purchase, including closing costs, your down payment, and any earnest money you put down on the property.

While your earnest money and down payment are rolled into the purchase price of the home and will eventually come back to you in the form of home equity, closing costs consist of fees to compensate lenders, agents, and other third-parties for the services they provide to facilitate your home purchase.

Earnest money This generally won’t be more than 1-2% of the home’s purchase price and can be rolled into the down payment on your home. It serves as a good-faith deposit to show that you’re serious about buying a home.

Down payment On average, down payments typically make up 3-20% of the purchase price of the home according to the underwriting standards of most major mortgage programs. Lenders usually require a down payment contribution to ensure that buyers have some “skin” in the game, which reduces the likelihood of default on a loan. You also may wish to contribute a greater down payment upfront if you can afford it, as it also directly reduces the amount you need to borrow on your mortgage.

Closing costs Average upfront closing costs will typically set the buyer back 2-5% of the total purchase price of your home, however the amount paid will vary depending on the taxes and fees in your area as well how the fees are allocated between the buyer and seller.

Long-Term Costs

Long-term costs include property taxes, homeowner’s insurance, maintenance, and utility bills.

Property taxes These are levied annually and can vary anywhere from around 0.5% of your home’s assessed value to as high as 3% or more depending on your state and county of residence.

Insurance The average cost of homeowners insurance in the United States is $1,393 per year. However, this can vary widely depending on your policy terms and property type. In many cases, you can save hundreds of dollars on your home insurance each year by shopping around for the best provider.

Maintenance Maintenance expenses vary widely depending on the age and condition of your home. Generally, it’s a good idea to set aside 1-2% of the cost of your home annually for emergency expenses such as roof repairs, plumbing issues, or appliance repairs.

Don’t forget to factor in homeowners association, co-op, or condo fees if these apply to your purchase.

Recommended: First-Time Homebuyers Guide

Estimated Monthly Payments on a $450K Mortgage

The estimated monthly payment on a $450K mortgage with a 7.3% APR and 30-year loan term is $3,085.07. The interest payments on fixed-rate mortgage loans are front-weighted, which results in $4,313 worth of principal paid back within the first year, even though you’ve made total payments of $37,020.83.

As principal is paid off over time, the balance on which interest accrues will decline. As a result, the majority of your monthly payments made during the early years of your mortgage will be dedicated towards interest. During the later years, the principal portion making up your monthly payment will increase as well, accelerating the rate at which you pay off your mortgage.

Here’s an amortization table showing how that plays out over the life of the loan:

Year	Beginning balance	Interest paid	Principal paid	Ending balance
1	450,000.00	$32,707.58	$4,313.25	$445,686.75
2	$445,686.75	$32,381.96	$4,638.87	$441,047.89
3	$441,047.89	$32,031.76	$4,989.07	$436,058.82
4	$436,058.82	$31,655.13	$5,365.71	$430,693.11
5	$430,693.11	$31,250.05	$5,770.78	$424,922.34
6	$424,922.34	$30,814.40	$6,206.43	$418,715.91
7	$418,715.91	$30,345.86	$6,674.97	$412,040.94
8	$412,040.94	$29,841.95	$7,178.88	$404,862.06
9	$404,862.06	$29,300.00	$7,720.83	$397,141.23
10	$397,141.23	$28,717.13	$8,303.70	$388,837.53
11	$388,837.53	$28,090.26	$8,930.57	$379,906.97
12	$379,906.97	$27,416.07	$9,604.76	$370,302.21
13	$370,302.21	$26,690.98	$10,329.85	$359,972.36
14	$359,972.36	$25,911.16	$11,109.67	$348,862.69
15	$348,862.69	$25,072.46	$11,948.37	$336,914.31
16	$336,914.31	$24,170.44	$12,850.39	$324,063.93
17	$324,063.93	$23,200.33	$13,820.50	$310,243.43
18	$310,243.43	$22,156.99	$14,863.84	$295,379.58
19	$295,379.58	$21,034.87	$15,985.96	$279,393.63
20	$279,393.63	$19,828.05	$17,192.78	$262,200.85
21	$262,200.85	$18,530.12	$18,490.71	$243,710.14
22	$243,710.14	$17,134.21	$19,886.62	$223,823.52
23	$223,823.52	$15,632.92	$21,387.91	$202,435.60
24	$202,435.60	$14,018.28	$23,002.55	$179,433.06
25	$179,433.06	$12,281.76	$24,739.07	$154,693.99
26	$154,693.99	$10,414.14	$26,606.69	$128,087.30
27	$128,087.30	$8,405.53	$28,615.30	$99,472.01
28	$99,472.01	$6,245.29	$30,775.54	$68,696.46
29	$68,696.46	$3,921.96	$33,098.87	$35,597.59
30	$35,597.59	$1,423.24	$35,597.59	$0

💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

How Much Interest Is Accrued on a $450K Mortgage?

One choice you will need to make is the term of your loan. Often the choice is a 30-year versus a 15-year loan term. Over a 30-year term, a $450K mortgage with a 7.3% APR will accrue $660,624.90 in total interest expense over the life of the loan, assuming no prepayments. A similar loan balance with the same interest rate and a 15-year loan term will accrue $291,703.73 worth of interest.

The amount of interest accrued on a mortgage is directly related to the loan balance, interest rate, and speed at which the loan is repaid. The faster a loan is repaid, the less interest that is accrued on the loan balance. This is because the interest has less time to accrue as the loan is paid off.

Monthly Payment Breakdown by APR and Term

We’ve broken down the estimates for a $450K mortgage payment across two interest rates, assuming both 30-year and 15-year terms. Try using a mortgage payment calculator to estimate the payments on your loan terms.

Interest rate	30-yr term	15-yr term
5%	$2,416	$3,559
5.5%	$2,555	$3,677
6%	$2,698	$3,797
6.5%	$2,844	$3,920
7%	$2,994	$4,045
7.5%	$3,146	$4,172
8%	$3,302	$4,300

What Is Required to Get a $450K Mortgage?

To qualify for a $450K mortgage, you’ll need to meet minimum income and credit requirements, have enough funds on hand for the lender-mandated down payment, and fall within loan limits for the property type you’re attempting to purchase in your area. We’ve spelled out each step of the process below.

1.    Estimate your budget and review your finances

You can start by pulling a copy of your credit report and conducting an honest review of your budget. All Americans are entitled to one free copy of their credit report each year at Annualcreditreport.com; it’s important to do a detailed review of your credit history to ensure everything is correct and address any outstanding issues.

It’s a good idea to shore up your credit score by taking care of any outstanding debt, within reason, prior to starting the loan approval process. Your credit profile doesn’t have to be perfect, but it’s important to ensure it’s as spotless as possible to 1) increase your probability of being approved, and 2) ensure you get the best terms on your loan.

2.    Get prequalified with multiple mortgage lenders

This step will give you an estimate of how much home you can afford. During this step, each lender will do a soft-pull on your credit report, calculate your debt-to-income (DTI) ratio, and give you a sense of how much you would be eligible to borrow at what interest rate. From there, you’ll move on to getting preapproved for a mortgage in the amount you think you will need to purchase a home.

Recommended: Home Loan Help Center

3.    Place a bid on your dream home

You’ll work with an agent to scout homes in your top neighborhoods and identify your potential dream home. It’s important to have your lender preapproval in hand when you arrive at this step in the process, as that signals to both your agent and home sellers that you’re serious about buying a home.

4.    Complete the mortgage application process

Once you’ve submitted a bid and had your offer accepted, you’ll furnish your chosen lender with more financial documentation so that it can formally underwrite your mortgage loan. All your terms will be finalized during this formal mortgage application stage.

5.    Close on your home

Assuming no hiccups arise during the underwriting process, once your loan is formally approved, the only thing to do is wait for the closing date and ensure all legal forms are signed and payments are transferred in good order. Congratulations!

The Takeaway

A $450,000 mortgage could mean you’re spending between $2,400 and $4,300 per month to pay off your loan, depending on your interest rate and loan term. Even a fraction of a percentage point in your quoted interest rate can mean the difference of tens of thousands of dollars in interest payments over the life of your loan. Consequently, it’s important to get the best terms for your mortgage to maximize your value in this transaction.

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 much does a $450,000 mortgage cost per month?

While the estimates will vary depending on your quoted interest rate and loan terms, a $450,000 mortgage with a 6% interest rate would cost $2,698 per month over 30 years.

What credit score is required for a $450K mortgage?

In most cases, the minimum FICO score required for a conventional $450,000 mortgage is 620, according to Fannie Mae’s underwriting guidelines. However, to qualify for the best terms, you’ll want your credit score to be as high as possible.

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Photo credit: iStock/Hispanolistic

⁺Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 91 calendar days at the time of preapproval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

*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 for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How does subleasing work? Whether you’re a current tenant thinking about subleasing your apartment or a prospective renter looking at a possible subtenant situation, you might be wondering if it makes sense to sublease an apartment.

Subleasing is like renting from another renter instead of the landlord. The rights of the original lease between the owner and the original tenant are transferred to the subtenant, yet the original tenant is still responsible to fulfill contractual obligations of the lease. If the subtenant doesn’t pay, for example, the original tenant will likely still need to pay the landlord rent. (Note that subleasing is different from subletting, in which you let a new tenant take over your current lease and have a direct relationship with your landlord.)

Subleasing may be considered when a tenant needs to move out before it expires. It’s also common when a tenant needs to leave for a short time and wants to return to the apartment later.

What Is Subleasing?

Subleasing is a legal way for a tenant to rent out their property to another tenant (also called a subtenant). The original tenant remains on the lease and is expected to fulfill the obligations of that lease. They may be responsible for damages and unpaid rents caused by the subtenant, for example.

There are a number of scenarios where subleasing might make sense, such as when a tenant wants to rent out extra rooms or when the original tenant needs to leave the area for a new employment opportunity. Breaking leases can be quite costly, so if the landlord allows for a unit to be subleased, finding a subtenant can ease the financial burden on the original tenant. Likewise, if a tenant is able to rent out extra rooms, they can factor that into the money they have available to spend on rent and may be able to afford the apartment better.

How Does a Sublease Work?

A sublease only works if it is allowed by the landlord. Basically, a sublease creates a new landlord-tenant relationship between the original tenant and the subtenant instead of between the landlord and the subtenant.

The new tenant pays the original tenant and the original tenant pays the landlord. The subtenant must fulfill contractual obligations to the original tenant (who acts as landlord) while the original tenant must abide by the lease agreement made with the landlord.

Recommended: How Much Rent Can I Afford on $60K a Year?

When to Consider Subleasing

When canceling/breaking your lease is incredibly expensive, you’re probably looking at what it takes to sublease your apartment or home. Certain situations may make more sense than others when it comes to subleasing.

•   You are temporarily moving to a different location for work and would like to return to your apartment.

•   You have an opportunity to study or work abroad for a semester.

•   You bought a home and have a home mortgage loan to pay for and may need a subtenant to finish your lease for you.

•   You’re moving for a job opportunity and need a subtenant to finish your lease for you.

•   Your family has increased in size and you need a bigger apartment.

•   A personal situation, such as a sudden need to care for an elderly or disabled family member, makes it necessary to move.

Keep in mind, landlords may not allow subleasing. It’s usually specified in the original rental agreement if subleasing isn’t allowed. If your contract does not forbid it, you’re likely able to sublease your apartment.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Pros and Cons of Subleasing

Subleasing has some pros and cons to consider.

Pros of subleasing

•   The financial burden of a lease you can’t fulfill is eased.

•   You may be able to avoid expensive fees for breaking your lease.

•   You may be able to move to a more suitable housing situation for you if you find a subtenant.

•   You may earn income if your subtenant pays more than you pay to rent the property.

Cons of subleasing

•   You may have to act as landlord.

•   You could incur costs for damages caused to the property by the subtenant.

•   You may need to pay rent if the subtenant is unable to.

Recommended: First-Time Homebuyer Programs and Loans

Examples of Subleasing an Apartment

Here’s an example of how subleasing an apartment works: Let’s say you take a hard look at whether you should buy or rent, based on your budget, and you decide to buy or build a house. You find your dream home unexpectedly quickly. Paying for both rent and a mortgage is costly, so you want to find a subtenant to take your spot at the apartment.

You check your lease and there’s nothing in there that disallows it. You advertise, people call you, you meet, and eventually find someone you think would be good. You get them to fill out an application and check their income, credit, and background.

Once everything looks good, have them sign a sublease agreement with you. You move out of the apartment and into your new home. They move in, they pay you, and you pay the landlord. Once your lease is up, assuming you do not renew it, the subtenant will need to work out a new lease with the landlord if they want to stay in the rental.

How to Sublease Your Apartment

So, exactly how does subleasing an apartment work? When it comes to the nitty-gritty details, the process looks something like this:

1. Find a subtenant. Since you’re assuming the role of landlord, you’ll want to advertise and vet the subtenant fully. A landlord will often complete a background check, credit check, and verify income on a tenant — you should do the same with your subtenant.
2. Sign a sublease. Creating a sublease that protects you is key. You’re still responsible for the lease agreement you signed with the landlord, so you’ll need to be as specific as possible about what the situation and rights of the sublease entail.
3. Collect rent from the subtenant. Now that you have a subtenant, you’ll need to collect rent from them and pay your landlord. You’re still responsible for filling the terms of your original lease, after all.
4. Continue paying rent to the landlord as per the original lease agreement. As the primary tenant, you’re responsible for rent to the landlord. If your subtenant doesn’t pay it, you may need to figure out a way to pay the landlord so you’re not in breach of your contract.
5. When your lease and contract ends, the subtenancy will end. The subtenant will no longer have any rights once your lease ends. In apartment complexes, it’s common for the subtenant to apply for a new lease with the landlord and become the tenant.

Recommended: How to Rent an Apartment with No Credit

Tips to Subleasing an Apartment Your First Time

Subleasing an apartment isn’t easy, but it may be the right move to allow you to move on. If it’s your first time, you’ll want to keep these things in mind:

•   Make sure subleasing is allowed in your lease agreement. The last thing you want is to breach your contract. That gives your landlord justification for keeping your deposit and pursuing legal action against you. While this sounds extreme, it’s also not outside the realm of possibility.

•   Screen your subtenant carefully. Since you’re acting as landlord, you’ll want to ensure the subtenant is able to pay and maintain the property. Consider running a background check and credit check, and verifying income. Don’t go off your gut — every rookie makes this mistake — but instead, verify the information the prospective tenant gives you. A good subtenant will make your life 100% easier.

•   Get a professional to create a sublease contract. The contract between you and your subtenant should be strong, or you open yourself up to legal and financial trouble. A professional can help. Some items that may need to be included in the sublease are:

◦   Name of the sublessor

◦   Name of the sublessee

◦   Location of the property

◦   Beginning and end dates of the sublease

◦   Rent and deposit amounts

◦   Due date of rent

◦   Terms and conditions of the original lease

◦   The document should be signed by both parties and possibly by the landlord if it is required

💡 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.

The Takeaway

Subleasing can help you cover the cost of a lease you need to get out of, but it’s not easy and it’s not without risk. Even if you do a great job finding and screening the new tenant, there’s no guarantee they will pay and keep the property in tip top shape. But it’s also possible you’ll find a great subtenant and help you get to the next stage of your life, whether it’s moving in with your partner or buying your first home.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is the difference between a lease and sublease?

A lease is a legal contract that grants rental rights for a tenant directly with the landlord. A sublease is a contract between the initial tenant and a second tenant.

Is subleasing easier?

With subleasing, you take on the role of landlord with a new tenant while maintaining a contract with your landlord, so it’s not an easy path. You collect rent from the subtenant and pay the landlord. Along with this, you assume the risk of another tenant damaging the property or not paying.

How does subleasing work in California?

In California, you simply can’t sublease legally without your landlord’s written permission. First, you’ll want to check your lease agreement to make sure subleasing is permitted. Then, if it is allowed, you’ll still need to get written consent from your landlord before subleasing.

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Photo credit: iStock/StockRocket

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 for more information.

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.

This article is not intended to be legal advice. Please consult an attorney for advice.

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When buying a house, many of us get caught up in the down payment and other large upfront costs. It’s important to factor in the long-term costs associated with a $250,000 mortgage, which includes the monthly mortgage payment.

Just how much will that payment be each month? Read to learn the monthly cost of a $250K mortgage.

Total Cost of a $250K Mortgage

Homebuyers have some large expenses to deal with before making mortgage payments. Both upfront costs and long-term expenses should factor into figuring out how much house you can afford.

Upfront Costs

Upfront costs associated with buying a home are more than just the earnest money and down payment. A buyer can expect to pay closing costs, including some or all of the following:

•   Abstract and recording fees associated with the documentation of a property, which can cost from between $200 to $1,200 and $125, respectively.

•   Application fees for a mortgage from the lender, which can cost up to $500.

•   Appraisal fees to estimate the home’s value for the lender, which could cost between $300 to $400.

•   Home inspection fees if the buyer opts for an inspection of the property before buying, can run between $300 to $500 on average.

•   Title search and title insurance fees are required to ensure there are no liens or unexpected claims to the property being purchased. This usually costs between $75 to $200.

These fees before and during closing don’t include the down payment. The median down payment on a house is 13%, but to avoid things like private mortgage insurance, a buyer may have to put down as much as 20% of the home’s purchase price.

A buyer who takes out a $250K mortgage and makes a 20% down payment is likely putting in around $62,500. In addition to the down payment and closing costs, keep in mind expenses around moving and furnishing a new home.


💡 Quick Tip: You deserve a more zen mortgage. SoFi Mortgage Loan Officers are dedicated to closing your loan on time — backed by a $5,000 guarantee offer.^‡

Long-Term Costs

You’ll pay down the principal plus interest on your loan over the long term, with a higher proportion of interest in your monthly payments early in the life of the loan. Near the end of your loan term, you’ll be paying almost entirely principal.

If you put down less than 20% on your home, you may also be paying private mortgage insurance (PMI) each month. Here are some other long-term costs:

•   Maintenance Homeowners should factor in the cost of maintenance and repairs in their long-term housing budget. Many owners default to the 1% rule, setting aside 1% of a home’s purchase price annually for ongoing repair costs.

•   Property taxes These vary based on your location but can be thousands of dollars a year.

•   Homeowners association (HOA), co-op, or condo fees These also vary, but you will know what they are before you close on the property.

•   Insurance Depending on where your home is located, you may need hazard insurance to cover you in the event of a natural disaster, in addition to standard homeowners insurance.

Recommended: First-Time Homebuyer Guide

Estimated Monthly Payments on a $250K Mortgage

The monthly cost of a $250K mortgage payment will vary based on several factors, including:

•   Down payment, or how much a buyer puts down when purchasing a home

•   Length of loan, or the timeline in which a buyer agrees to pay off their mortgage

•   APR, the annual percentage rate of the mortgage

Breaking things down further, the terms can also influence the monthly payments on a $250K mortgage. Buyers can choose between a:

•   Fixed-rate mortgage, where they pay the same APR over the life of the loan.

•   Adjustable-rate mortgage (ARM), where buyers typically pay a lower rate at the beginning of the loan, but the APR will change over the life of the loan.

How you choose from among the different types of home mortgage loans will depend on your financial goals and qualifications.

Monthly Payment Breakdown by APR and Term

What interest rate a buyer will get when applying for a mortgage depends on the market and their financial history. The length of the loan can also impact the estimated monthly mortgage payment. A 30-year loan will have lower monthly payments but you will pay significantly more interest over the life of the loan:

Interest rate	15-year term	30-year term
3.00%	$1,726	$1,054
3.5%	$1,787	$1,122
4%	$1,849	$1,193
4.5%	$1,912	$1,266
5%	$1,976	$1,342
5.5%	$2,043	$1,419
6%	$2,110	$1,499
6.5%	$2,178	$1,580
7%	$2,247	$1,663

As a reminder, these estimates do not include additional costs that might be included in monthly payments, like insurance and property taxes. Consider using a mortgage calculator to figure out monthly payments based on personalized annual percentage rate (APR) and terms.

How Much Interest Is Accrued on a $250K Mortgage?

How much interest a homeowner will accrue on a $250K mortgage depends on the APR and terms of the loan. As a general rule of thumb:

•   The higher the APR, the more interest paid

•   The longer the loan, the more interest paid

In the beginning, monthly mortgage payments will primarily cover the interest on the mortgage, paying only a small portion of the principal. However, over the life of the loan, the homeowner begins to pay more toward the principal and less in interest.

For example, on a $250K mortgage with a 30-year loan term and 4% APR, a buyer can expect to pay $179,673.77 in interest over the life of the loan. For a $250K mortgage with a 15-year loan term and 4% APR, a buyer will pay $82,859.57 in interest.

While the owner will pay less in interest with a shorter loan term, they can expect higher monthly payments than a 30-year loan term.


💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

$250K Mortgage Amortization Breakdown

Suppose a buyer secures a $250K mortgage on a home with a 7% rate and a 15-year term. Their monthly payment on the mortgage, including principal and interest, would be roughly $2,247.

Here’s how those payments would split between interest and principal balance over the life of the loan, otherwise known as an amortization breakdown:

Year	Beginning balance	Annual interest paid	Annual principal paid	Ending balance
1	$250,000	$17,190	$9,774	$240,226
2	$240,226	$16,484	$10,481	$229,744
3	$229,744	$15,726	$11,239	$218,506
4	$218,506	$14,914	$12,051	$206,454
5	$206,454	$14,042	$12,922	$193,532
6	$193,532	$13,108	$13,857	$179,675
7	$179,675	$12,107	$14,858	$164,817
8	$164,817	$11,032	$15,932	$148,885
9	$148,885	$9,881	$17,084	$131,801
10	$131,801	$8,646	$18,319	$113,482
11	$113,482	$7,321	$19,643	$93,838
12	$93,838	$5,901	$21,063	$72,775
13	$72,775	$4,379	$22,586	$50,189
14	$50,189	$2,746	$24,219	$25,970
15	$25,970	$995	$25,970	$0

Keep in mind that this table doesn’t include additional costs that may be rolled into mortgage payments, such as insurance or property taxes.

Amortization tables can be helpful tools for understanding payments across the life of a mortgage.

What Is Required to Get a $250K Mortgage?

The process of getting a $250K mortgage has several requirements, including:

•   You’ll need a credit score of at least 500 for some mortgages, but most lenders require a score of 620 or more

•   You’ll prequalify for a mortgage. You’ll provide a little information about yourself and the lender will perform a soft credit inquiry. This will give you a sense of what the lender might offer in terms of interest rate.

•   You’ll find the right lender. The right lender for a borrower will vary based on the rates they offer, in addition to other fees and features.

•   You’ll fill out a mortgage application and get preapproved for your mortgage. The application may require tax documents, W-2s, and bank account statements. If you’re preapproved, you’ll receive a letter from the lender providing conditional approval for the mortgage within a certain window, typically 60 to 90 days. SoFi’s Help Center can help you start your journey to homeownership today.

The Takeaway

Considering monthly payments on a $250,000 mortgage is an important step in understanding the budget behind buying a home. Multiple factors can impact the monthly cost, including interest rate and loan terms, making it essential to consider all options and make the choice that best suits your budget.

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’s the monthly payment on a $250K mortgage?

The size of your payment will depend primarily on the length of the loan’s term and its interest rate. A 15-year term at 7% would give you a monthly payment of about $2,247, while a 30-year term at 7% would yield a payment of $1,663. Note that although the 30-year term has a lower monthly payment, you’ll pay significantly more in interest over the lifetime of the loan.

How long will it take to pay off a $250K mortgage?

How long it takes to pay off a $250,000 mortgage will depend on the term of your loan and whether you refinance along the way. You might have a loan term of 30, 20, 15, or even 10 years. And remember, you can always pay off your loan sooner if you like, although in rare cases there can be a prepayment penalty.

How much do I need to earn to get a $250K mortgage?

You’d need to earn about $90,000 per year in order to afford a $250,000 mortgage, so that your monthly debt payments don’t cause undue financial stress.

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Photo credit: iStock/Worawee Meepian

*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 On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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 for more information.

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.

Read more