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When you’re considering applying for a mortgage, one of your top questions is probably “What is the monthly payment going to be?”

For a 100K mortgage, the payment on a 30-year loan at 7% interest would be $665.30. For a 15-year mortgage loan term, the payment increases to $898.83, which helps you pay off the loan sooner and pay less in interest costs over the entire loan.

Your own loan will depend on a number of factors, including but not limited to fluctuating interest rates. Here’s what goes into a 100K mortgage, what income is required to get one, and what your payments would look like over the life of the loan.

Total Cost of a 100K Mortgage

The total cost of a 100K mortgage goes beyond the monthly payment. There are upfront costs and ongoing, long-term costs to consider, all of which affect how much house can you afford.

Upfront Costs

Upfront home loan costs can include:

•   Closing Costs: There are costs you need to pay to get a mortgage, but they are not a part of the original loan. These are known as closing costs and include things like the mortgage origination fee, the cost of an appraisal, attorney fees, title fees, taxes, prepaids, and other expenses. With the average closing cost on a new home adding between 3% and 6%, that works out to $3,000 to $6,000 on a 100K mortgage.

•   Down Payment: Unless you are able to obtain a 0% down payment loan, you’ll need some money to afford the down payment on a 100K mortgage loan.

The average down payment on a home is 13%, as per the National Association of Realtors®. This works out to $13,000 on a $100,000 home.

If you don’t quite have this amount, there are other types of mortgage loans that offer low down payment options. 3% and 3.5% are common, which would come out to $3,000 and $3,500 for the down payment on a 100K home.

Long Term Costs

Here are the ongoing costs of a mortgage loan:

•   Interest. The biggest expense you’ll have over the life of the loan is interest. Interest costs are huge, especially in an economy with higher annual percentage rates (APRs). You’ll pay more in interest than you do in principal if you keep the mortgage loan for the whole 30-year loan term.

For a $100K mortgage with a 30-year term and 7% APR, the interest costs total $139,508.90.That’s on top of the $100,000 original loan amount. Adding the two together, you’re looking at paying $239,508.90 for the original 100K mortgage. Take a look at our mortgage payment calculator or the amortization table further down if you’re more curious about this amount.

•   Escrow. You may pay for taxes and insurance through your escrow account every month. This expense doesn’t go away, even when you pay off your mortgage. The amount of tax and insurance varies by state and policy.

Estimated Monthly Payments of a 100K Mortgage

Payments on a 100K home will ultimately be determined by your loan term and interest rate. And the interest rate is determined by a number of factors. Of course, the Fed’s rate matters, but so too do such aspects as:

•   Credit score. A good credit score can afford you a lower interest rate on your mortgage.

•   Down payment. Generally, putting down a larger down payment affords you a lower interest rate.

•   Home location. There are certain areas where you may be offered a lower interest rate just because of where you live.

•   Loan amount. If you need a larger loan, such as a jumbo loan, you’ll usually see a higher interest rate. The same can be true of much smaller homes, such as tiny homes.

•   Interest rate type. If you choose a loan with an adjustable APR, you may initially have a lower interest rate.

•   Loan type. You’ll see different interest rates based on what loan type you’re using. Examples include VA loans, FHA loans, and a USDA loan which may offer a lower (or no) down payment as well as lower interest rates.

•   Loan term. Choosing a mortgage term that’s shorter can help you score a lower interest rate.

Recommended: First-Time Homebuyer Guide

Monthly Payment Breakdown by APR and Term

It’s helpful to see what potential mortgage loan payments on a 100K mortgage may be, adjusting for term length and APR variance. Keep in mind these costs do not include escrow items, such as taxes or insurance.

APR	Monthly Payment on a 30-Year Loan	Monthly Payment on a 15-Year Loan
3.5%	$449.04	$714.88
4%	$477.42	$739.69
4.5%	$506.69	$764.99
5%	$536.82	$790.79
5.5%	$567.79	$817.08
6%	$599.55	$843.86
6.5%	$632.07	$871.11
7%	$665.30	$898.83
7.5%	$699.21	$927.01
8%	$733.76	$955.65
8.5%	$768.91	$984.74
9%	$804.62	$1,014.27
9.5%	$840.85	$1,044.22
10%	$877.55	$1,074.61

How Much Interest Is Accrued on a 100K Mortgage?

Each month, your payment is split into principal and interest payments. Those interest payments go to the bank as payment for lending you money. Principal payments go toward the original loan amount and pay down the loan.

The longer the loan term, the more you’ll pay in overall interest. For a 100K mortgage on a 30-year term with a 7% APR, the interest costs total $139,508.90 on top of the original loan.

On a 15-year term with the same parameters, the interest costs are a more modest $61,789.09. Yes, your monthly payments are higher, but the difference between a 15 vs. 30 year mortgage with 7% APR is significant.

Recommended: Home Loan Help Center

100K Mortgage Amortization Breakdown

The amortization of a 100K mortgage shows how much of your monthly payment pays off the loan each month.

You can see in the early years of your mortgage, more of your monthly payment goes toward interest, and very little of your loan is paid off. In later years, more of the payment will go toward the principal.

Year	Monthly Payment	Beginning Balance	Total Amount Paid	Interest	Principal	Ending Balance
1	$665.30	$100,000.00	$7,983.60	$6,967.81	$1,015.79	$98,984.19
2	$665.30	$98,984.19	$7,983.60	$6,894.39	$1,089.21	$97,894.95
3	$665.30	$97,894.95	$7,983.60	$6,815.64	$1,167.96	$96,726.96
4	$665.30	$96,726.96	$7,983.60	$6,731.21	$1,252.39	$95,474.55
5	$665.30	$95,474.55	$7,983.60	$6,640.66	$1,342.94	$94,131.59
6	$665.30	$94,131.59	$7,983.60	$6,543.59	$1,440.01	$92,691.55
7	$665.30	$92,691.55	$7,983.60	$6,439.49	$1,544.11	$91,147.41
8	$665.30	$91,147.41	$7,983.60	$6,327.86	$1,655.74	$89,491.65
9	$665.30	$89,491.65	$7,983.60	$6,208.17	$1,775.43	$87,716.19
10	$665.30	$87,716.19	$7,983.60	$6,079.81	$1,903.79	$85,812.38
11	$665.30	$85,812.38	$7,983.60	$5,942.19	$2,041.41	$83,770.95
12	$665.30	$83,770.95	$7,983.60	$5,794.61	$2,188.99	$81,581.94
13	$665.30	$81,581.94	$7,983.60	$5,636.38	$2,347.22	$79,234.69
14	$665.30	$79,234.69	$7,983.60	$5,466.70	$2,516.90	$76,717.75
15	$665.30	$76,717.75	$7,983.60	$5,284.75	$2,698.85	$74,018.87
16	$665.30	$74,018.87	$7,983.60	$5,089.64	$2,893.96	$71,124.88
17	$665.30	$71,124.88	$7,983.60	$4,880.45	$3,103.15	$68,021.68
18	$665.30	$68,021.68	$7,983.60	$4,656.10	$3,327.50	$64,694.16
19	$665.30	$64,694.16	$7,983.60	$4,415.56	$3,568.04	$61,126.09
20	$665.30	$61,126.09	$7,983.60	$4,157.62	$3,825.98	$57,300.08
21	$665.30	$57,300.08	$7,983.60	$3,881.03	$4,102.57	$53,197.49
22	$665.30	$53,197.49	$7,983.60	$3,584.46	$4,399.14	$48,798.32
23	$665.30	$48,798.32	$7,983.60	$3,266.46	$4,717.14	$44,081.14
24	$665.30	$44,081.14	$7,983.60	$2,925.44	$5,058.16	$39,022.95
25	$665.30	$39,022.95	$7,983.60	$2,559.78	$5,423.82	$33,599.10
26	$665.30	$33,599.10	$7,983.60	$2,167.69	$5,815.91	$27,783.17
27	$665.30	$27,783.17	$7,983.60	$1,747.26	$6,236.34	$21,546.80
28	$665.30	$21,546.80	$7,983.60	$1,296.45	$6,687.15	$14,859.60
29	$665.30	$14,859.60	$7,983.60	$813.02	$7,170.58	$7,688.98
30	$665.30	$7,688.98	$7,983.60	$294.64	$7,688.96	$0.00

What Is Required to Get a 100K Mortgage?

When you’re applying to qualify for a mortgage, lenders look for a few key things to approve your application.

•   How much debt you will be carrying. Lenders look for your monthly payment to be lower than 28% of your gross monthly income. A 100K mortgage payment at 7% interest on a 30-year term is $665.30. For this payment to be less than 28% of your monthly income, your monthly income needs to be over $2,376, assuming you have no debt. This turns into a $28,512 yearly salary requirement to afford a 100K mortgage payment.

If you have debt, the calculation changes a little bit. Your lender will add your monthly debts to your projected monthly mortgage payment. These two numbers added together need to be less than 36% of your monthly income. This calculation a lender does is known as the debt-to-income ratio, or back-end ratio.

“If you have multiple debts, you want to make your minimum payments so you don’t hurt your credit score,” Kendall Meade, a Certified Financial Planner at SoFi said. “If you have cash left over after that, you should develop a strategy for which debts to pay off first,” she suggested.

•   Credit score. It’s advisable to have a credit score of 620 or higher when applying for a mortgage loan.

•   Consistent work history. If you are unemployed, self-employed, or have recently changed jobs, lenders may be less likely to approve your loan. They may worry about your having a steady enough income to make your payments.

How Much House Can You Afford Quiz

The Takeaway

A 100K mortgage will have a monthly cost that varies depending on such factors as the loan’s interest rate, the term of the loan, and whether it’s a fixed- or variable-rate loan. By understanding more about how the cost of a mortgage is calculated, plus the related costs, you can be better prepared for the milestone of being a homeowner.

When you’re ready to apply for a mortgage, SoFi will be there for you. Our rates are competitive, and we offer flexible loan terms and down payment options (as little as 3% for first-time homebuyers) to suit your needs. The online application simplifies the process, and our dedicated Mortgage Loan Officers can help you every step of the way.

See how smart and simple a SoFi Mortgage Loan can be.

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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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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.

Total Cost of a 200K Mortgage

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.

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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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.

APR	15-year loan payments	30-year loan payments
3.5%	$1,429.77	$898.09
4%	$1,479.38	$954.83
4.5%	$1,529.99	$1,013.37
5%	$1,581.59	$1,073.64
5.5%	$1,634.17	$1,135.58
6%	$1,687.71	$1,199.10
6.5%	$1,742.21	$1,264.14
7%	$1,797.66	$1,330.60
7.5%	$1,854.02	$1,398.43
8%	$1,911.30	$1,467.53
8.5%	$1,969.48	$1,537.83
9%	$2,028.53	$1,609.25
9.5%	$2,088.45	$1,681.71
10%	$2,149.21	$1,755.14

Recommended: First-Time Home Buyer Guide

Monthly Payment Breakdown by APR and Term

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.

Year	Mortgage Payment	Beginning Balance	Total Amount Paid for the Year	Interest Paid During the Year	Principal Paid During the Year	Ending Balance
1	$1,330.60	$200,000.00	$15,967.20	$13,935.65	$2,031.55	$197,968.38
2	$1,330.60	$197,968.38	$15,967.20	$13,788.78	$2,178.42	$195,789.89
3	$1,330.60	$195,789.89	$15,967.20	$13,631.29	$2,335.91	$193,453.93
4	$1,330.60	$193,453.93	$15,967.20	$13,462.42	$2,504.78	$190,949.09
5	$1,330.60	$190,949.09	$15,967.20	$13,281.34	$2,685.86	$188,263.18
6	$1,330.60	$188,263.18	$15,967.20	$13,087.17	$2,880.03	$185,383.10
7	$1,330.60	$185,383.10	$15,967.20	$12,879.00	$3,088.20	$182,294.83
8	$1,330.60	$182,294.83	$15,967.20	$12,655.74	$3,311.46	$178,983.30
9	$1,330.60	$178,983.30	$15,967.20	$12,416.34	$3,550.86	$175,432.38
10	$1,330.60	$175,432.38	$15,967.20	$12,159.64	$3,807.56	$171,624.77
11	$1,330.60	$171,624.77	$15,967.20	$11,884.38	$4,082.82	$167,541.90
12	$1,330.60	$167,541.90	$15,967.20	$11,589.24	$4,377.96	$163,163.88
13	$1,330.60	$163,163.88	$15,967.20	$11,272.76	$4,694.44	$158,469.38
14	$1,330.60	$158,469.38	$15,967.20	$10,933.39	$5,033.81	$153,435.50
15	$1,330.60	$153,435.50	$15,967.20	$10,569.48	$5,397.72	$148,037.73
16	$1,330.60	$148,037.73	$15,967.20	$10,179.28	$5,787.92	$142,249.76
17	$1,330.60	$142,249.76	$15,967.20	$9,760.87	$6,206.33	$136,043.37
18	$1,330.60	$136,043.37	$15,967.20	$9,312.20	$6,655.00	$129,388.32
19	$1,330.60	$129,388.32	$15,967.20	$8,831.13	$7,136.07	$122,252.17
20	$1,330.60	$122,252.17	$15,967.20	$8,315.25	$7,651.95	$114,600.16
21	$1,330.60	$114,600.16	$15,967.20	$7,762.08	$8,205.12	$106,394.98
22	$1,330.60	$106,394.98	$15,967.20	$7,168.93	$8,798.27	$97,596.64
23	$1,330.60	$97,596.64	$15,967.20	$6,532.88	$9,434.32	$88,162.27
24	$1,330.60	$88,162.27	$15,967.20	$5,850.89	$10,116.31	$78,045.90
25	$1,330.60	$78,045.90	$15,967.20	$5,119.56	$10,847.64	$67,198.20
26	$1,330.60	$67,198.20	$15,967.20	$4,335.40	$11,631.80	$55,566.33
27	$1,330.60	$55,566.33	$15,967.20	$3,494.53	$12,472.67	$43,093.59
28	$1,330.60	$43,093.59	$15,967.20	$2,592.86	$13,374.34	$29,719.19
29	$1,330.60	$29,719.19	$15,967.20	$1,626.01	$14,341.19	$15,377.96
30	$1,330.60	$15,377.96	$15,967.20	$589.31	$15,377.89	$0.00

Recommended: Understanding the Different Types of Mortgage Loans

What Is Required to Get a 200K Mortgage?

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.

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Photo credit: iStock/AnnaStills

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.

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 .

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While it is possible to buy a second home without a down payment, the scenarios where you can do so are quite rare.

Traditional zero-down payment programs may not be available to you because you’re no longer a first-time homebuyer. Lenders are also hesitant to offer second home mortgages with low down payments. The down payment requirements for a second home are usually 10% or more.

But you may be in luck: Sometimes you can figure out how to buy a second home with no down payment. Read on to learn:

•   What does buying a second home involve?

•   What are the usual down payment requirements for a second home?

•   How can you buy a second home with no down payment?

What to Know About Buying a Second Home

Buying a second home comes with a different set of guidelines and rules than purchasing your first home. You’re no longer considered a first-time homebuyer, which disqualifies you from many down payment assistance programs. However, your situation will be treated differently depending on how you want to use the property. Consider the following possibilities:

Moving into the Second Home

If your plan is to keep your first home as a rental property and move into the second home, you may have some options. A low interest mortgage loan may be available in one of two ways.

•   USDA loans in approved areas have zero down payment options. You’re allowed to get a second home with a zero-down USDA loan if you meet certain requirements involving citizenship, income, and other factors. You must live in the property as your principal residence, and you cannot have a USDA loan on your first property. In addition, you must financially qualify for both homes. To count rental income for the first home, USDA requires 24 months of rental income history.

Other qualifiers for this kind of loan include:

•   The current home no longer meets your needs for certain reasons (for example, if your family is growing and you live in a two-bedroom home, you’re relocating for a new job, or you’re getting divorced).

•   You don’t have another way to obtain the property without the USDA loan.

•   You can only keep one other house besides the new second home.

If, say, you’re moving from to a new region for a job opportunity and USDA loans are available in the area you’re moving to, it’s possible to keep your first home and buy a second if you meet the above conditions.

Worth noting: An obstacle for borrowers can be that lenders need a way to verify rental income. A signed lease and bank statements may not be enough. Your lender may want to see the rental income reported on your taxes for two years to count.

•   VA Loans may also offer zero down payment options. Available to veterans, service members, and surviving spouses, these government-backed loans can only be used to purchase property that will be a primary residence. So, if you’re moving from one place to another and qualify, you can use a VA loan to purchase the next property with no money down.

Buying the Second Home as a Vacation Home or Rental

Is there a way to buy a second home with no down payment if you plan to use it as a vacation home or rental? Options are few and far between if you’re not planning to use the property as your principal residence. When you’re looking at non-owner-occupied financing, lenders usually want a bigger down payment, not a smaller one.

That said, here are a couple of options that could answer the question of how to buy a second home with no down payment:

•   Private loans: If you finance through a relative or other private source, it’s possible to obtain a no-money-down mortgage. Terms are agreed upon by both parties.

•   Seller financing: Much like a private loan, the conditions of seller financing (aka owner financing) a loan are whatever the two parties agree on. If the seller is willing to let you buy the property with no money down, you might be able to make this work. However, seller financing usually comes with a bigger down payment, not a smaller one.

Do You Need a Down Payment on a Second Home?

Down payment requirements for a second home are usually higher. Lenders also look for a higher credit score. The loftier down payment requirement and credit score reflect the fact that the lender is taking on elevated risk since borrowers are more likely to default on a second home than a first home. A lender may expect your down payment to be right around the average down payment on a house, which is currently 13%.

Yet, your mortgage lender is also looking for a loan that accommodates your unique situation to help you to buy a second home. Though no down payment options are rare, your lender may have access to financial products that allow for a smaller down payment.

Can You Buy Another Home When You Have a Current Mortgage?

If you financially qualify, buying another house when you have a mortgage is possible. Generally speaking, lenders look for a strong credit history and enough income to cover your debts (including the cost of the new mortgage) to determine if you qualify for an additional mortgage.

Recommended: What Is a Second Mortgage?

Using Home Equity as a Down Payment Source

If you don’t have enough cash for a down payment on a second home, you may be able to tap your home equity. A home equity loan or a home equity line of credit (HELOC) can help you access money to use for a down payment on a second home.

Though not all lenders will permit this, using home equity may be possible if you want to keep your first home and have no other way of obtaining enough money for a down payment on your second.

It may be advisable to get a home equity loan or HELOC while you are still living in your first house. This allows you to qualify for owner-occupant rates, which are typically much lower than non-owner-occupied rates.

Recommended: HELOC vs. Home Equity Loan: How They Compare

The Takeaway

While there aren’t many options for financing a second home with no down payment, you may be in luck. There are some no down payment loans available to qualified buyers, and these loans can help you preserve cash for renovations, improvements, and other expenses. Even if you can’t find a no down payment mortgage for a second home, you will likely have a number of financing options you can tap into that may allow you to snag another property.

When you’re thinking about home financing options, whether for a mortgage or a HELOC, you’ll want a flexible, helpful partner to help you through the process. SoFi can do just that. In addition to mortgage loans, we offer a home equity line of credit that can help you tap into your home’s value and use the funds for a variety of purposes. You can access up to 95% of your home’s equity up to $500,000, enjoy low interest rates, and have a dedicated SoFi Mortgage Loan Officer to guide you.

Unlock your home’s value with a home equity loan brokered by SoFi today.

FAQ

What is the minimum down payment for a second home?

For a second that is not going to be your primary residence, most lenders look for at least a 10% down payment.

How do I buy a second home without 20% down?

With a higher credit score and other financial qualifications, you may be able to find a lender or a program with a required down payment less than 20%.

Can I buy another house if I already have a mortgage?

If you’re a qualified buyer with good debt and income levels with a strong credit history, a lender may be able to approve you for a second mortgage.

Can I use my equity to buy another house?

It may be possible to use home equity to buy another home. Contact a lender to go over your unique situation.

Photo credit: iStock/Nuttawan Jayawan

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.

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Do you have kitchen envy, daydreaming about Shaker cabinets, farmhouse sinks, or sleek marble countertops? Join the club: Kitchen remodeling is one of the most popular kinds of home renovation projects, with the typical “small” kitchen redo costing upwards of $28,000. These kinds of upgrades can be worthwhile, with more than 70% of the cost being recouped when the home is sold.

Perhaps you’re planning a kitchen refresh. If so, one of the first steps is likely to figure out what your dream kitchen will look like. Once you know that, you can begin to delve into what exactly you want to do and buy and then how to finance it.

So, first things first: To help you get in touch with your inner kitchen designer, consider the three broad categories of styles: traditional, contemporary, and transitional. Which one is for you?

Read on to:

•   Learn more about kitchen styles

•   Take a kitchen personality quiz to zero in on the best fit for your taste

•   Understand how to afford the kitchen you crave

Traditional Kitchen Style

Even when other styles rise in popularity, the traditional kitchen continues to hold its own, remaining among the most popular. At the core of traditional kitchens is a time-honored approach to design that refers to the styles of the past.

Among the signature touches:

•   Raised-panel or glass-front cabinets

•   Warm wood tones

•   An earthy, rustic color palette

•   Classic sinks, faucets, and knobs, such as a farmhouse style in porcelain or marble

•   Molding, whether at ceiling, along the top of cabinetry, or elsewhere

•   Country or European touches often find a place in traditional kitchens, whether that means floral backsplash tiles or lace curtains.

Contemporary Kitchen Style

At the other end of the design spectrum is contemporary kitchen style. Just as the name suggests, these spaces tend to be clean-lined and sleek. Among the typical features are:

•   Cabinets are often slab-style (meaning without knobs) or otherwise minimalist.

•   Typically, these kitchens use sleek materials, whether wood, steel, or lacquer.

•   Color schemes tend to be neutral, from all white and futuristic to grays and beiges to moody black. However, some people like to mix in pops of color.

•   Appliances are typically disguised as cabinetry (you may hear this called paneled appliances) to keep the clean-lined look going.

•   Decorative accessories are discouraged. If you like showing off your teapot collection, this look probably isn’t for you.

Recommended: Cost to Repair a Plumbing Leak

Transitional Kitchen Style

If you find that you appreciate some elements of traditional style and some of contemporary, then a transitional style kitchen may be just right for you. This style combines elements of both styles in a unique way.

For example:

•   Transitional kitchens might include classic, simple Shaker-style cabinets but in bold shade, like teal, which makes them look more modern.

•   Countertops are often quartz or quartzite, which can have the warmth of natural tones but sleek edges.

•   Appliances are often built-in or stainless steel.

•   Pendant lighting, with its clean lines, is a signature of the transitional style.

•   Wood plank flooring, with its traditional warmth, is often incorporated in these kitchens.

•   If you think you’ll be selling your home, then going transitional can be a safe bet to make your home appealing to a broad swath of potential buyers.

Kitchen Style Quiz

Now that you have a basic grounding in these three looks, take the kitchen style quiz.

Now that you have insight onto the kitchen look you gravitate towards, learn more about what remodeling involves.

Remodeling Your Kitchen

A kitchen remodel can be a good way to boost the value of your home, with possibilities ranging from fairly inexpensive — new paint, new faucets, and new cabinet pulls, for example — to a full-scale remodel that could cost you more than $100,000. A few smart strategies:

•   When remodeling, it makes sense to prioritize your spending in a way that creates a kitchen that works well for your lifestyle.

For example, if you and your partner love to cook gourmet meals and experiment with new recipes, it makes sense to allocate your budget to be a true chef’s kitchen, perhaps with a commercial-style range. If, on the other hand, you’re envisioning a kitchen where all the neighborhood kids will gather for pizza and homework, consider that in your design and perhaps budget for a cushy, built-in banquette.

•   It can also be wise to create a budget and keep an eye on which options can wind up being very pricey maneuvers. The cost of rewiring and moving plumbing lines, for instance, can be quite steep. Have a couple of well-recommended tradespeople pitch your job (don’t skimp on checking references) before picking one.

•   Build in contingencies for your project to go over budget and past the deadline. It happens, and being prepared for that kind of wiggle room can help you avoid a lot of stress. For instance, inflation’s impact on kitchen remodeling can be significant so it’s wise to plan ahead on that front.

•   Also stay aware of what changes require a permit (you may be surprised at how often one is needed) and prepare for how that will impact your timeline.

Financing Your Remodel

Once you’ve decided how you want to update your kitchen and have considered the average cost of a kitchen remodel, then one of the next considerations is how to pay for it. If you need to finance the project, you may have such options as:

•   You could do a cash-out refinance if you have equity in your home. This involves refinancing your current mortgage for its remaining balance plus the amount needed to do your remodel.

•   A home equity line of credit might also make sense if you have equity. This involves using your home as collateral and opening a line of credit (like a credit card) to tap as work is done on your kitchen. You then repay the debt over time.

•   Another secured option is a home equity loan, which gives you a set amount of money to use towards your renovation.

•   It can make sense to consider an unsecured home improvement loan to help you get the remodel done, too.

Because this is a kind of personal loan, this means you don’t need to have home equity nor put your home on the line as collateral.

Like all loan products, there are pros and cons to personal loans. What matters most when financing your kitchen remodel is finding the option that suits your financial and personal needs best.

Recommended: Can I Pay Off a Personal Loan Early?

All Your Finances. All in One App.

At SoFi, applying for an online home improvement loan is quick and easy. Approved loans can be funded in as little as one day, which means you can get started on your remodel more quickly. Plus, SoFi Personal Loans offer fixed rate payments, which can help you budget and keep your project on schedule.

SoFi: We make home improvement loans simple and speedy.

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

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.

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

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For many people, purchasing a home is the very definition of living their best life and achieving the American dream. But it’s not the right choice for everyone or might not be the right move to make at a given moment.

Owning a home may be the biggest financial commitment you’ll ever make, so it makes sense to carefully consider the upsides and downsides of buying vs. renting. Sometimes, the flexibility and affordability possible with renting can be a good fit.

Read on for advice that will help you answer, “Should I rent or buy a house?”

•   Learn the pros and cons of buying vs. renting a home

•   Take a quiz to help you decide if you should buy or rent a home

•   Find out the steps to take when you’re ready to start hitting the open houses

Rent or Buy a Home: Pros and Cons

Deciding whether to rent vs. buy is a very individual decision. There’s no rule about which is better; much will depend on your personal goals and your financial situation.

Here, take a closer look at whether it is better to buy or rent a house.

Advantages of Renting

Here, the upside of being a renter:

•   Low-maintenance lifestyle. Your landlord is typically responsible for repairs and maintenance, so your time and money can be spent elsewhere.

•   Potentially lower monthly expenses. Your landlord may also pay some of your monthly utilities, and you aren’t responsible for paying property taxes.

•   Flexibility. When your lease is up, you can renegotiate or move…across the street or across the country. If you aren’t ready to lock into a location for at least a few years, renting can be a smart step.

•   Low investment. You don’t need to make a big investment (like the down payment and closing costs associated with home buying) when you move into a rental. You might have to put down a security deposit, but that will typically be much less costly.

Disadvantages of Renting

Now, consider the downside of being a renter vs. a homeowner.

•   Rules to follow. Your landlord may have restrictions that you don’t like, such as no pets or no remodeling.

•   Not building wealth. The rent you pay each month doesn’t give you any equity in a property. It just goes to the owner, unless you set up a rent-to-own agreement.

•   Lack of control over your monthly charges. Your rent could spike due to inflation, the housing market heating up in your area, and other factors.

•   Uncertainty. If the owners decide to sell the building you live in, you may need to move unexpectedly and quickly, which can also get expensive.

Advantages of Buying

If you decide to buy vs. rent, here are some of the benefits you may enjoy.

•   Building wealth. As you make mortgage payments, you are usually building home equity.

•   Tax advantages. Homeowners may be able to deduct both mortgage interest and their property tax payments (plus possibly other related expenses) from their federal income taxes if they choose to itemize their deductions.

•   Freedom. You have far fewer restrictions involving remodeling, pet ownership, and so forth. Want to paint a bathroom purple, rip out a wall, or adopt five rescue dogs? Go for it.

•   Stability. You can put down roots in a community and school district. When you decide to move, it’s your decision.

•   Affordability. Sometimes a mortgage payment can be cheaper than rent, especially if you get a good mortgage rate.

Looking at the price-to-rent ratio of a city helps gauge whether it makes more sense to buy or pay a landlord. The housing market dynamics of your location may determine this aspect of whether to buy or rent a house.

Disadvantages of Buying

Now that you know the potential upsides of owning your own home, take a look at the potential drawbacks.

•   High costs. The price of homeownership may be painful in a hot market.

What’s more, accumulating the cash to make a down payment can be challenging and take years of saving. Plus, the closing costs when securing a home can be considerable.

•   Credit score. You typically need to qualify for a mortgage, and your credit score will be a factor. Those with excellent credit scores will get better rates; those with lesser scores may want to wait to build their rating before buying.

•   Maintenance. You’re generally responsible for all repairs, maintenance, and utilities, plus homeowners insurance, property taxes, and any homeowner association (HOA) dues. These can not only impact your finances but also your lifestyle. Taking care of a home and property can require an investment of time and energy.

•   Locked in place. You probably can’t pick up and move on a whim. If you decide to move, until your home is sold, you’re still responsible for mortgage payments and the expenses attached to your new place.

Take the Rent or Buy Quiz

Are You Really Ready to Buy?

When deciding between renting vs. buying a house, the answer may already be clear to you. If you’ve decided to buy, it might make sense to take the following steps.

•   Make sure you’re ready for a long-term commitment. If you’ve saved enough for a down payment and know how much house you can afford, those are good signs. Otherwise, create a home-buying budget and saving plan to get started.

•   Consider if your line of work allows for job continuity with steady income. Have you had this type of income for the past two years or more? That kind of stability can be important to lenders.

•   If your debt-to-income ratio (DTI) appears too high for a loan program you would like to apply for, you may need to consider paying down some debt. To calculate your DTI ratio, divide your monthly debt payments by your monthly gross (pretax) income. The federal Consumer Financial Protection Bureau advises renters to consider keeping a DTI ratio of 15% to 20% or less (rent is not included in this ratio). However, mortgage lenders usually like to see a DTI ratio of no more than 36%, though that is not necessarily the maximum.

•   Save money for a down payment, closing costs, and other fees, plus some funds for moving expenses and any remodeling/repairs.

•   Check if your credit score is good enough to buy a house, and, if yours falls short, work on building it.

•   Do a gut check to see if you’re really ready to be your own landlord, meaning being responsible for your own home maintenance, inside and out.

•   Get pre-qualified or pre-approved for a mortgage by providing a few financial details to lenders, who usually will do a soft credit check and estimate how much you may be able to borrow and the terms. A pre-qualification or even a pre-approval can also help give you a leg up when you start home shopping.

The Takeaway

Should you buy or rent a home? That will be a personal decision, reflecting your finances, the housing market’s dynamics, your willingness to take on the responsibilities of homeownership, and your inclination to put down roots in a certain location. Both owning and renting have pros and cons, and making the right decision will likely require deep thinking and thorough planning.

If you’re ready to become a bona fide homeowner, getting pre-qualified for a mortgage loan with SoFi is quick and convenient. SoFi offers competitive rates and may require as little as 3% down for qualifying first-time homebuyers.

SoFi: The smart and simple way to find your home mortgage rate.

FAQ

Is it better to rent or buy a home?

There isn’t a simple yes/no answer to whether it is better to rent or buy a home. Each has its advantages and disadvantages and may or may not suit a person’s needs at a given moment. For instance, owning a home can allow you to build equity and personal wealth, but the maintenance responsibilities and expenses may offset that. Renting may be cheaper, but you may not be able to personalize your space the way you’d like or perhaps own pets.

Is renting cheaper than owning a home?

Renting can be cheaper than owning a home, though that can depend upon housing market conditions in a given area and the particulars of the home in question. In general, people who rent don’t have to pay property taxes and they may not be responsible for the cost of improvements and repairs, which can make things more affordable.

Is homeownership a good investment?

Buying a home can be a good investment. It allows you to build equity and may offer tax deduction opportunities. However, if property taxes rise steeply or major home repairs loom (like a new roof), home ownership could prove financially challenging.

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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.

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.

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.

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