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A bathroom renovation can add beauty to your home and boost its value. If you have a small bathroom, you’ll want a remodel that makes the most out of the space.

Fortunately, there are lots of interior design tricks to make a tiny bathroom feel like a spa getaway.

But even a small-bathroom remodel can cost big bucks. Here are some tips on how to redo the loo without taking a bath on the investment.

Basics of Remodeling a Small Bathroom

Here are some things to consider when remodeling a small bathroom:

•   Bathtub. Installing a new bathtub typically costs about $7,000, HomeAdvisor says, although the price tag can run the gamut.

•   Sinks. Ditto on price. There’s a vast difference between a porcelain pedestal sink and a unit with a marble countertop.

•   Toilet. There are several types: one-piece, two-piece, in-wall, high-tank, and integrated toilets (with bidet). A two-piece toilet may cost $100 to $300. The labor cost for any toilet ranges from $100 for a simple installation to several hundred for a wall-hung toilet, which must connect to the studs.

•   Tile. Bathroom tiles for the floor and walls come in a wide range of materials, colors, and styles. Classic ceramic subway tiles run about $2 per square foot, while marble tiles cost around $6 to $9 per square foot.

•   Fixtures and hardware. Faucets, shower knobs, lighting, and towel racks can be an inexpensive way to spruce up your bathroom if you stick to mid-priced materials.

•   Storage. Cabinets and shelves add stylish functionality to a small bathroom.

•   Length of the project. A bathroom renovation can take weeks. If you have a second bathroom, great. Otherwise, you may need to seek temporary accommodations or plan a vacation.

•   Labor. Labor costs can eat up the majority of any small-bathroom remodel. The more you can DIY, the more you’ll save.

Average Cost of a Small-Bathroom Remodel

Whether you’re a first-time homebuyer — generally defined as anyone who has not owned a principal residence in the past three years — or an existing homeowner, you might be interested in a low-budget small-bathroom remodel.

What constitutes “small”? A small bathroom typically measures around 40 square feet. A half-bath with only a shower can be 20 square feet or less.

What constitutes low budget? For low-end fixtures with DIY labor, expect to pay about $70 per square foot (vs. $250 per square foot for high-end fixtures installed by a contractor), according to HomeAdvisor.

You probably didn’t ask yourself How much does it cost to remodel a small bathroom? when you were plugging numbers into a home affordability calculator, and in any case, the answer isn’t clear cut.

The average cost of a small-bathroom remodel is $6,500, according to HomeAdvisor, but depending on the quality of materials and need for installation, the cost can range from $1,500 to $15,000.

Professional labor can cost around $50 to $110 an hour. Tile installation and plumbing generally rack up the most work hours.

Recommended: How to Find a Contractor

Is Removing a Tub a Good or Bad Idea?

Bathtubs tend to take up a lot of space. When remodeling a small bathroom, you may be tempted to remove yours and replace it with a walk-in shower.

But most people love a long soak in a hot bath. Whether you’re planning to put your home on the market within a few years or you need to sell your house fast, removing your bathtub may reduce your buyer pool, especially if you only have one in the house.

10 Low-Cost Ways to Remodel a Small Bathroom

If you don’t have the financial means or the DIY know-how to do a gut renovation, there are more affordable ways to transform your bathroom and make it feel like new.

1. Salvage the Bathtub

A small-bathroom remodel with tub replacement can really inflate your costs. For around $300 to $600, you can have an old tub reglazed or refinished and put the savings toward some rubber duckies.

2. Tilt Toward Reasonable and Limited Tile

Tile can be another high-ticket item when it comes to a bathroom remodel. Luckily your bathroom is small. To save money, consider lower-cost porcelain and ceramic tile. You can also create a tile wall accent rather than full-on tile.

You might want to tile either your floor or walls but not both. Peel-and-stick tiles (often vinyl) can be a budget-friendly option for flooring.

3. Refresh With Light Paint Colors

A fresh paint job is a surefire way to revitalize any space, and the cost to paint may be the lowest among ways to transform a room. Light colors will make a small room feel larger.

To create the illusion of more space, match the wall color with the floor tiles and go with white for the ceiling. Light, continuous color from floor to ceiling will help elongate the room.

4. Upgrade the Showerhead

Don’t have the means to totally redo your shower? A high-quality showerhead can add a new and luxurious experience to your bathroom. Rain showerheads start at a few hundred dollars.

5. Replace Light Fixtures

Swapping out old fixtures for new ones can do a lot for an outdated bathroom. Many affordable bathroom light fixtures are available at home improvement stores, or you could consider recessed lighting.

6. Add Shelves and Storage

To lend a sense of height to your small bathroom, try adding an open shelving unit above the toilet for extra storage space. Decorate with photos, candles, and bottles of colorful bath salts.

7. Make Accessories Sing

Perk up your tired bathroom with a new shower curtain, fluffy hand towels, and a plush bath mat. A pop of color against a newly white-tiled wall can make a big splash.

8. Consider Sliding Shower Doors

Shower doors that open on hinges can take up a lot of space in a small bathroom. For around $100 to $300, you could buy a sliding glass door unit. You’ll pay an additional $200 to $300 for installation.

9. Add a Mod Mirror, Mirror on the Wall

A large, long mirror that stretches over the sink area can add the illusion of more space and help brighten the room with reflective light. Home improvement stores offer reasonably priced bathroom mirrors, including ones with cabinets for extra storage.

10. Pedestal Sink vs Vanity?

While a pedestal sink can create a sense of space, it can also come with a higher price tag than a vanity sink because drain pipes and water supply lines have to be obscured. A vanity also provides storage.

Ways to Finance a Small-Bathroom Remodel

When the budget for your small-bathroom remodel exceeds the amount in your piggy bank, there are several financing options.

Credit Cards

Slapping down a credit card is an easy way to finance your small-bathroom renovation. If you have a 0% interest card, it can be a smart way as well, plus you could earn travel or other bonus points.

But if you have a high-interest card, or don’t think you’ll be able to pay off the debt before that 0% jumps to 21%, that could spell trouble. You could end up paying a lot more for your new tub in interest charges, and could hurt your credit if you can’t make a payment.

Personal Loan

A personal loan for a small-bathroom redo can be a good option.

With a home improvement loan, you’ll receive a lump sum from a financial institution and repay it with interest in monthly installments. These loans typically offer same-day funding with no collateral required.

Approval and the rate offered are based on creditworthiness and other personal financial factors.

HELOC

If you own your home and have sufficient home equity, you may be able to qualify for a home equity line of credit (HELOC), using your home as collateral.

A HELOC rate is usually lower than that of a credit card or personal loan. You only make payments on what you spend, and the borrowing limit can be higher than with a credit card or personal loan.

Most HELOCs have a variable rate. There may be minimal withdrawal requirements, plus fees and closing costs. If you default on a HELOC, you risk losing your house.

The Takeaway

A small-bathroom remodel can pack a big punch and raise your home’s value. Focus on a few key upgrades and design elements to make a small bathroom more inviting.

How to finance a bathroom redo? SoFi offers home improvement loans for $5,000 to $100,000. The loans come with a fixed rate, absolutely no fees, and fast funding.

With a HELOC brokered by SoFi, you can access up to 95%, or $500,000, of your home equity to remodel a bathroom or any other area of your home.

Get started making your home improvement dreams a reality with a HELOC.

FAQ

How can I cheaply renovate a small bathroom?

Doing it yourself will save the most money. Ideas include refreshed paint, an interesting shower curtain and fluffy towels, and new lights, shelves, and new hardware. It’s a good idea to leave plumbing and wiring issues to a pro.

How much is a small-bathroom remodel?

The average cost to remodel a small bathroom is $6,500, according to HomeAdvisor. That said, the price point can vary widely based on your tastes and the extent of the project. And the one constant with any remodeling project is that you will spend more than you planned.

How much does it cost to DIY a small bathroom?

A DIY reno of a 40-square-foot bathroom could cost about $4,000, HGTV notes. Add a 30% overage allowance for a realistic budget of $5,200.

What is the best way to remodel a small bathroom?

Start with a list of must-haves and nice-to-haves. Read up on types of toilets (it’s true, the unsung toilet comes in many varieties), sink fixtures, and lighting. That will help inform your budget and whether you need to hire a contractor.

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Photo credit: iStock/Drazen_

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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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Some buyers may be, well, buoyed by the thought of living on the water full time. Living in a floating house is unique, and building one may be a more ambitious undertaking than building a houseboat.

What’s the cost of building a floating house? Read on to learn about the expenses, benefits, and considerations associated with these aquatic abodes.

Average Cost of Building a Floating Home

The cost to build a floating house will vary based on the size, features, labor, and materials, but a 1,200-square-foot model starts at over six figures, a Dutch architect and advocate says.

These are not houseboats, which are self-propelled and free to move about. Nor are they usually tiny house tiny, though some are. They’re often twice as big as a houseboat.

An alternative to building a floating home is to buy an existing one. A quick look shows listings ranging from under $100,000 to over $1 million on the West Coast, and a home floating in the Florida sun for a few hundred thousand. Buying or renting a slip will add to the cost.

In comparison, the cost to build a house of 1,200 square feet could be about $165,600, based on $138 per square foot, not including the land.

Factors That Affect the Cost of Building a Floating Home

There are at least two foundational considerations when building a floating home: constructing the platform the home will rest on, and finding a slip at a moorage for rent or purchase.

The cost of building a floating house could ebb and flow depending on who’s doing the building — is this a DIY project or do you need to find contractors? — and the following factors.

The Foundation

Traditionally, floating homes rested on giant logs, but over time logs begin to sag and sink, requiring pressure-filled barrels under them to shore up the whole shebang.

Nowadays, these homes stay afloat using concrete floats. One type of concrete float is filled with foam, which creates buoyancy. The other concrete float is empty, and like a bowl placed upside down in water, the space and pressure keep the home floating.

Size of the House

Generally, the bigger the home, the more expensive the build. And the larger the home, the more floats it will require, further adding to the cost.

Floating homes are limited by the size of the moorage, meaning buyers have to work within specific parameters. That means building up, but only as much as the floats allow.

Design and Materials

The more custom or high-end designs integrated into the home, the more the build could cost. From custom cabinets in the kitchen to nonstandard windows, these add-ons carry a higher price tag.

Alternatively, floating homes can be prefabricated, using a standard design to lower the cost. Similarly, some companies are now using decommissioned shipping containers as building materials, which could cut down on the total cost to build a floating house.

Another cost to keep in mind is the siding material. Float houses are on the water and subject to the elements, which means the exterior materials must be resilient.

Interior Finishes

As with a traditional home, the choice of interior finishes can drive the cost of a floating house up or down. Opting for a prefabricated floating house may lower the spend on the interior.

Other Expenses of a Floating Home

Mooring and Insurance

Floating-home owners pay a monthly moorage fee or a homeowners association fee. The cost will vary by moorage but could be $1,000 a month.

There could be a transfer fee to assume a rental slip. Insurance may be hard to find and expensive. Marinas may require liability coverage.

Utilities

Floating homes are permanently affixed to the moorage and hooked up to local utilities, including water, sewage, and electric or gas.

If a floating house is designed with efficiency in mind, the monthly cost of utilities will likely be similar to traditional homes in the area. But a lack of shade could mean higher bills for cooling.

Some floating homes rely on a plumbing pump to carry sewage out of the home. It could create a higher electric bill.

Furniture

The average cost to furnish a home is $16,000, but since a floating home resides dockside, it’s harder to transport large items to the property. That could mean hiring extra labor or larger delivery fees.

Additionally, floating homeowners may be constrained by the dimensions of a smaller space, meaning custom or specialty furniture that fits in with and into the home.

Financing Your Floating Home

In some states, a floating home is considered personal property, so it cannot be built or purchased with a traditional home mortgage loan. A local bank or credit union may offer a floating home loan with at least 20% down and at a higher rate than a usual home loan. An inspection, at your expense, will likely be required to see if the home is in adequate shape to qualify.

Another option is a personal loan, which provides fast cash but usually has a higher rate than a secured loan.

Options for homeowners who have built sufficient home equity and are dreaming of a floating home include a home equity line of credit (HELOC), home equity loan, and cash-out refinance.

How Long Do Floating Homes Last?

With regular upkeep and maintenance, owners of floating homes can expect their property to last 50 to 60 years before requiring rebuilding or refurbishment.

Pros and Cons of Living on a Floating Home

If you hear the siren call of the floating-house lifestyle, it’s a good idea to weigh the good vs. the not-so-great before taking the plunge.

Pros

Some of the benefits floating-home owners can expect include:

•   Tight-knit community. Dock living means living close to neighbors. A floating community could be a great fit if that’s your thing.

•   Good choice if downsizing: Minimalists, retirees, and others with an affinity for the water may find a floating home a chance to downsize.

•   Doesn’t require an engine. Floating homes are permanently docked, so buyers or builders don’t need to factor in the costs of a motor. Greener still, one DIY floating-home builder crafted a home on a lake in British Columbia that has a pellet stove, solar power, a composting toilet, and an evaporation gray water system.

•   Water views all the time. If you prioritize proximity to nature, you can’t beat living on the water. A cup of coffee or glass of wine is always accompanied by a pretty vista.

•   May be less expensive housing. You may be able to build a floating home for less than a single-family home, especially in some of the hot spots for floating homes.

•   Potential for tax breaks. In some states, floating homes are considered personal property, not “real property.” Those owners will not pay annual property taxes but will pay personal property tax. Also, interest paid on a loan for a floating home as a first or second home can be included in the mortgage interest deduction if you itemize.

Cons

Now the potential downers:

•   Costs go beyond the build: Moorage or HOA fees can range from a few hundred dollars to $1,000 a month. Insurance can be pricey.

•   Limited locations. Floating-home communities are uncommon, meaning vacancies are even less frequent. It could be hard to find a dock community to take a floating home to, or it could mean waiting for a spot.

•   Weather damage. Constant exposure to saltwater or freshwater can take a toll on a floating home. That can translate into more frequent repairs and replacements, adding to the cost of upkeep.

•   Financing challenges. It can be hard to secure financing to construct or buy a floating home.

The Takeaway

Build your own floating home? A few do take on that challenge, which can pay off in terms of cost and self-satisfaction. Others will look into buying a floating house that’s already berthed, as moorage can be a challenge.

Whether you’re interested in building or buying a floating home, a HELOC brokered by SoFi could be the answer.

Access up to 95%, or $500,000, of your home equity, and borrow what you need, when you need it.

Tap your home equity to tether your floating-home vision to reality.

FAQ

Can you live permanently in a floating home?

Yes, floating homes can be permanent residences.

Do you have to pay property tax on a floating home?

Floating-home owners don’t have to pay property taxes in some states or cities. It varies by location.

Where can you get a loan to build a floating home?

Floating homes don’t qualify for traditional mortgages. Options include a floating-home loan from a small pool of lenders, a personal loan, a home equity line of credit, a home equity loan, and a cash-out refinance.

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Photo credit: iStock/Roman_Makedonsky

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.

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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Building a home could take an average of nearly eight months, but a contractor- or owner-built house could stretch the timeline beyond a year.

It’s not as simple as buying a plot of land and heading to Home Depot. Construction permits, financing, and even the weather can lengthen your timeline.

Average Time to Build a House

Despite the extra time it takes to build a home from scratch rather than buy an existing home, it’s no surprise that many Americans are opting to build a home.

Why? To customize a home to their tastes, for one thing. And the narrowing gap between the average cost to build a house and the cost of buying an existing home.

The average cost to build a house, including the land, was nearly $450,000 in May 2022, the National Association of Home Builders reported. The median cost to buy an existing home was a bit over $414,000.

So how long does it take to build a house?

According to the U.S. Census Bureau’s latest home building statistics, from 2021, the average time to build a one-unit residential building is 7.6 months. Here’s the breakdown.

Construction Purpose	Average months
Built for Sale	6.7
Contractor Built	12.6
Owner Built	14.3

This time frame encompasses the entire home building process, from obtaining building permits to picking out the design.

Factors That Affect How Long It Takes to Build a House

As with everything, the devil is in the details, so let’s look at factors that influence how long it takes to build a home.

Type of House

The type of home and design will have a significant impact on the construction timeline.

If you’re buying new construction, it will fall into one of these categories:

•   Tract homes. These go up in a new development. The buyer chooses the design features and lot.

•   Spec homes. With these move-in-ready homes, the buyer still might be able to choose some of the finishings.

•   Custom homes. A builder customizes a house to the buyers’ specifications on their land.

Predesigned home packages likely accelerate the construction timeline, while custom homes are likely to extend it. After all, custom designs require more coordination between architects, engineers, and contractors.

House Size

Naturally larger homes take longer to build than smaller homes.

If you’re planning on a particularly ornate design, make sure you budget extra time (and money) for the project.

Larger properties with complex layouts are also more likely to encounter greater engineering challenges than simpler layouts. It’s also likely that unanticipated issues will arise during the build.

Location

While scenic, remote areas are attractive to many people seeking to build a primary or vacation home, the locale will heavily affect the ease of transporting materials, workers, and equipment.

Rocky terrain will also be more expensive and difficult to excavate and prep for construction. Installing common utilities will be more difficult.

Weather

Unless you’re looking into a modular home vs. a stick-built home, inclement weather can severely delay construction, as many parts of the process cannot be completed in rain or snow.

Your worksite may get flooded due to lack of completed drainage, and building materials may be damaged if not properly protected.

Financing

Homeowners with sufficient equity in their home could apply for a home equity line of credit to fund their new home.

But many people will seek a construction loan. Obtaining a construction loan comes with its own complications.

Expect underwriting to take longer than it does for a typical mortgage, as the lender will want a detailed plan, budget, and schedule for the construction. The lender may also need to approve your builder.

Permits

Construction permits and zoning approval for home building can be significant time drains and are often beyond your control. A good contingency is to find a contractor who is familiar with the local application process.

Materials and Labor

Volatility in material prices and availability made it hard for contractors to plan projects in 2022. As lumber and plywood prices settled down, cement and diesel costs rose. Shortages in cement and concrete products were expected to endure.

The availability of labor slowed construction starts in 2022 and was expected to remain the top challenge for most contractors.

In general, contractors are particularly busy during the spring and summer, so contracting with a builder before those seasons could be a good idea.

The Process of Building a House

Here’s the typical home construction timeline:

•   Buy land and obtain financing

•   Obtain building permits and approvals

•   Excavate the land and prep the foundation

•   Build the framework and install utilities

•   Put in walls, floors, and roof

•   Install fixtures, appliances, and finish the exterior/interior

•   Landscape, pave driveways, and prepare the grounds

•   Get a final inspection from authorities

Shortening the Time It Takes to Build a House

While much of the home building process is outside your control unless you’re actually building the house yourself, there are ways you can mitigate the chance of complications.

Here are a few ways you can shorten the average time it takes to build a house.

Avoid Deviating From the Plan

One of the best ways to avoid lengthening a construction timeline is to ensure that you have building plans finalized well before you break ground, and sticking to them.

Making last-minute changes is anathema to construction timelines.

Communicate

Avoid being the bottleneck when it comes to decision-making. The construction team will likely take their cues from you. So if you’re late answering an email, design query, or request for approval, your contractor will often be unable to proceed without your input.

Reduce Complexity

Keeping things simple will probably lead to a faster build, if that’s a priority. More complex plans clearly lead to lengthier construction times and introduce a greater likelihood that unforeseen problems will arise.

Craft the Contract With Care

The construction contract should contain a deadline for completion and what will happen in the event of a delay.

It’s common for a contract to specify that “substantial completion” must occur by a certain date, and to define that. A clause can express that extensions can be given for unforeseen delays.

When a change is made after a contract is signed, it’s referred to as a “change order.” The change order might specify a deadline extension or new completion date.

Builders who breach the contract may be responsible for damages.

The Takeaway

How long does it take to build a house? It could take seven to 14 months. A construction contract will typically contain a deadline and what will happen if a delay occurs. Allowing for a reasonable schedule can help ensure that your project finishes on time.

3 Home Loan Tips

1. Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.
2. 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.
3. When building a house or buying a nontraditional home (such as a houseboat), you likely won’t be able to get a mortgage. One financing option to consider is a personal loan, which can be faster and easier to secure than a construction loan.

FAQ

How long does it take to build a house by yourself?

For the ambitious home builders among us, it takes over 14 months to build a house, on average. The timeline can easily stretch out to two years or longer, depending on your experience and whether or not you choose to employ any assistance.

What causes delays when building a house?

Plenty of factors can delay a build. They include:

•   Owner-caused delays

•   Contractor-caused delays

•   Weather

•   Logistics

•   Obtaining permits and approvals

•   Size and scale of the project

•   Communication

Can I get a loan to build a house?

You can apply for a construction loan or if you already have a home, a home equity line of credit, home equity loan, or cash-out refinance to fund the new home. A personal loan could be used for at least part of the build.

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Photo credit: iStock/acilo

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.

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

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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What’s a duplex? It’s a two-for-one special in the real estate world: two units in one building on one plot of land.

Duplexes are the perfect blend of income production and personal space for some. For others, they may be too small and involve too much maintenance.

Read on to learn what a duplex is and who should consider owning one.

Characteristics of a Duplex

Duplexes, which fall into the multifamily property category, have these common characteristics:

•   Single lot. While there are two units, they’re on the same lot.

•   Shared yard. Duplex units will typically share a yard and will have a common wall or ceiling/floor.

•   Similar size and layout. The two units in a duplex may not be exact replicas, but they often have the same square footage and a similar layout.

Types of Duplexes

Duplexes take one of these forms:

Stacked

When the two units are atop each other, that’s a stacked duplex. Occupants have a common ceiling or floor.

Side-by-Side

In a side-by-side duplex, units are next to each other. Occupants have a shared wall.

In general, the units in a multifamily property have separate entrances, kitchens, bathrooms, and utility meters.

Here’s what a duplex is not: a “twin home.” With a twin home, two homes share a wall, but each is an individually deeded home on an individual lot.

Pros and Cons of Owning a Duplex

Duplex living isn’t for all homeowners but could be the perfect fit for some. Let’s start with some upsides.

Pros of Buying a Duplex

•   House hacking. An owner can live in one unit and rent out the other, earning income to help cover a mortgage.

•   Affordability. Owner-occupants can use a government-backed home loan and enjoy the same low or no down payment requirement that they would with a primary home. Also, duplexes are often located in more affordable neighborhoods, and buying a two-unit property will typically cost less than buying two stand-alone single-family homes.

•   Tax advantages. Owner-occupants can write off mortgage interest and property tax on the half of the property they live in. If the other half is a rental, they can write off repairs to that unit, any utility bills paid for it, and any management fees. The owner can depreciate the rented half of the property.

•   Easy tenant management. For first-time landlords, living in a unit and renting the other one can be a lower-stress alternative to investment property. A resident owner can address issues immediately and keep an eye on ongoing maintenance.

•   Buying property together. Whether it’s friends owning real estate together or a multigenerational household looking for some private space, a duplex might be a perfect fit, as the property is already naturally divided into two. There’s proximity but also space.

•   A boost in getting a mortgage. With conventional or government-backed financing, you can usually use projected rental income to qualify for the loan. The lender will add a portion of the rental income to your gross income to determine your debt-to-income ratio.

Cons of Buying a Duplex

Some drawbacks also exist. They include:

•   Lack of privacy. In a duplex, occupants are on top of each other or right next door. Sharing a wall or ceiling/floor might be hard for some homeowners. If privacy is a priority, a duplex might not be the right fit. That’s also true of co-op and condo living.

•   Possibly a large down payment. If both units will be leased, you won’t qualify for a government-backed loan. You’ll need to put down at least 20% for a conventional loan and will pay a higher interest rate. If you do plan to live in one of the units and use a conventional loan, you may qualify to put 15% down.

•   Tricky taxes. Tax season gets more complicated for duplex owners than owners of traditional single-family homes.

•   Sharing space. Duplex owners may have to share a laundry room or backyard with the other occupants.

•   Landlord duties. Unless a duplex owner purchases the property with another party or has the property managed, they’ll have to serve as landlord for some or all of the home. That means regular maintenance and searching for tenants, which could be stressful for some homeowners.

Recommended: Pros and Cons of Different Types of Homes

Finding a Duplex

Duplexes are enticing to people looking for a starter home, other owner-occupants, and real estate investors, which can make the search much more competitive.

As duplexes are often more expensive than single-family homes, figuring out your budget before the search will help (give this mortgage calculator a whirl), as will having your anticipated down payment at the ready and credit in good shape.

Having financing lined up can make the process more seamless. If the duplex will be owner-occupied, that may help determine which kind of loan to choose among the different mortgage types.

Should you go with a mortgage broker or direct lender? You can get quotes from both.

They should be able to answer your mortgage questions. And it pays to shop around for home loan offers.

Should You Own a Duplex?

Owning a duplex isn’t for everyone, but it could be the place to call home for buyers who want to dip their toes into the investment property market. Although duplexes come with quirks, some benefits (especially rental income) may outweigh the drawbacks.

If you do plan to live at the property, you might eventually outgrow it and move on. In that case, your home equity can help purchase the next home.

And that duplex and other assets can help build generational wealth.

The Takeaway

What is a duplex? Two living units in one property. Duplexes pack a two-for-one punch when it comes to real estate ownership. They aren’t the right fit for all house hunters, but so many buyers are interested in duplexes that they’re a hot ticket.

Ready to start searching for a duplex? Begin the journey with SoFi Mortgages.

SoFi offers mortgages for owner-occupied primary residences, second homes, and investment properties.

Check out all the advantages of SoFi home loans.

FAQ

How can I profit from my duplex?

Duplexes can be either entirely rental properties or owners can choose to occupy one of the units. As an owner-occupant, you can use rent from the other unit to supplement or perhaps pay your monthly mortgage entirely.

As an investment property, you can collect rent on both units, with the profit potential based on the monthly mortgage payment.

How do I rent out a duplex?

There’s a high likelihood you’ll rent out one of the units year-round. However, some duplex owners use the other unit as a guest space, short-term rental, or even an artist studio, depending on their needs.

Should I sell my duplex?

Deciding whether or not to sell your property is a personal choice based on circumstances and the local market. A duplex, though, can be a good property to keep as an investment, as the two units provide a lot of flexibility for renters, Airbnb guests, and an owner’s place to live.

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Photo credit: iStock/RichLegg

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.

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Buying a house with bad credit can be challenging, but it’s doable with planning and preparation. Subprime borrowers — homebuyers with lower credit scores — may be eligible for both federally backed loans and conventional mortgages.

If your credit score is less than stellar but you’re ready to buy a home, it’s important to pause and take stock of your finances. This guide will review strategies and steps to secure a mortgage and buy a house with bad credit.

How to Buy a House With Bad Credit

Lenders will consider a number of factors — not just your credit score — when determining if you’ll be approved for a mortgage. Your debt-to-income ratio and proof of income represent a couple of things you need to buy a house.

Figuring out how to buy a house with a so-called bad credit score can vary on a case-by-case basis. These eight tips will help you assess your financial situation and plan accordingly to buy a house with bad credit.

Recommended: Understanding Mortgage Basics

1. Get Your Credit Reports

As the saying goes, knowledge is power. Assessing your credit is a valuable first step to understand where you stand in qualifying for a mortgage.

A credit report can provide a detailed overview of your creditworthiness, including your total debt, payment history, and age of your credit accounts. You can request free credit reports from this site or once a year directly from each of the three major credit reporting companies: Equifax, Experian, and TransUnion.

Upon receipt of your credit reports, it’s important to review any derogatory marks (e.g., late payments) and check for errors. Addressing mistakes could give a quick boost to your credit score.

Many lenders use the FICO® score model to calculate credit scores, from 300 to 850, and categorize them like this.

Exceptional	800-850
Very Good	740-799
Good	670-739
Fair	580-669
Poor	300-579

It’s not uncommon for your FICO score to differ slightly among the three credit reporting companies, so mortgage lenders take the average or use the middle score.

According to the June 2021 Origination Insight Report by Ellie Mae, the average FICO score ranged from 743 to 753 for mortgages that closed in the first half of 2021. Borrowers with credit scores in this range or higher generally receive the most competitive mortgage rates.

Meanwhile, borrowers with credit scores below 650 represented only 6.2% of mortgages in June 2021.

An estimated 30% of U.S. consumers had credit scores in the subprime range, or less than 670, in Q1 of 2021, Experian found. (There is no universal definition of “subprime.” And Experian sometimes uses the term “nonprime,” for the category of borrowers with scores between 601 and 660.)

2. Plan to Pay a Higher Mortgage Interest Rate

Lenders may consider borrowers with poor credit more likely to default on a mortgage loan. To account for this risk, borrowers with lower credit scores usually face higher interest rates.

A modest increase in the mortgage interest rate can bump up your monthly payment and translate to much more interest paid over the life of the loan. For example, a borrower with a 30-year fixed-rate loan of $250,000 at 5% interest would pay $53,468 more in interest than a borrower with a 4% interest rate.

Paying a higher interest rate may be an unavoidable part of buying a house with bad credit. An option is to refinance your mortgage later to secure a lower rate and save on interest, especially if you make timely payments and improve your credit over time.

3. Pay Your Other Debts

How much debt you have and your ability to pay it is another factor lenders weigh when approving mortgage loans. This is captured through your debt-to-income ratio. Your DTI ratio is your monthly debt obligations divided by your gross monthly income and multiplied by 100.

Higher DTI ratios suggest that borrowers have less ability to make monthly payments. A 43% DTI ratio is usually the highest a borrower can have to obtain a qualified mortgage.

Paying off other debts, like credit cards and student loans, can improve your DTI ratio and signal to lenders that you can afford mortgage payments. Reducing your debt can boost your credit score too by lowering your credit utilization ratio, which is a measure of the amount of available revolving credit you use.

4. Draw Up a Budget

Buying a home is exciting, and it’s easy to lose sight of the true cost of homeownership when shopping for your dream home. But this puts you at risk of becoming “house poor,” meaning you have to spend a disproportionately high share of your monthly income on housing.

Although buying a home is a way to build wealth, having little left over from your paycheck makes it hard to save for retirement and realize other financial goals.

The dreaded B-word, budgeting, is a useful way to ensure that you can afford a home before you walk away with the keys.

An effective budget accounts for both the upfront costs of buying a home (down payment and closing costs) and the long-term expenditures. Besides the loan principal and interest, it’s important to consider property taxes, homeowners insurance, and maintenance, as well as private mortgage insurance (PMI) if you plan to put less than 20% down on a conventional loan, or mortgage insurance premiums (MIP) for an FHA loan, no matter the down payment. They add up, but PMI and MIP allow many people to buy homes who otherwise wouldn’t be able to.

You can get a sense of how much your monthly mortgage payment might be with SoFi’s mortgage calculator tool.

Recommended: Homeownership Resources

5. Save Up a Down Payment

If you’re a buyer with subpar credit, putting more money down on a home can be advantageous. A larger down payment means borrowing less money, making the loan less risky to lenders and improving the chances of qualifying with bad credit. A smaller loan amount also accrues less interest.

But of course, saving up for a down payment can be challenging. If you meet first-time homebuyer qualifications, you may be eligible to receive down payment assistance.

Recommended: First-Time Home Buying Guide

6. Opt for an FHA Loan

Buyers with lower credit scores or less money tucked away for a down payment could benefit from an FHA loan. FHA loans are issued by private lenders but are insured and regulated by the Federal Housing Administration.

Borrowers with credit scores of at least 580 may put just 3.5% down. If your credit score is 500 to 579, you might still qualify, but need to make a 10% down payment. Borrowers who have declared bankruptcy in the past may still qualify for an FHA loan.

Keep in mind that borrowers with higher credit scores who qualify for a conventional (nongovernment) mortgage may put just 3% down.

7. See if You Are Eligible for a VA or USDA Loan

The federal government backs other loan types that can help buyers with fair credit.

Active-duty service members, veterans, or certain surviving spouses may use a VA loan to purchase a primary residence. VA loans usually don’t require a down payment, and the U.S. Department of Veterans Affairs does not set a minimum credit score for eligibility. Lenders have their own requirements, though, so it’s important to compare options.

The U.S. Department of Agriculture guarantees mortgages issued to low- and moderate-income homebuyers in eligible rural areas. No down payment is needed, and the USDA does not specify a credit score requirement. But lenders will still evaluate a borrower’s credit history and ability to pay back the loan.

VA loans typically come with a one-time funding fee that varies; USDA loans, an upfront and annual guarantee fee.

8. Build Up Your Credit Scores

Raising your credit scores can increase your chances of qualifying and securing better loan terms, but it takes time. Negative marks usually stay on your credit reports for seven years.

Paying bills on time, every time, can gradually build up your credit scores. And if possible, it’s a good idea to stay below your credit limits and avoid applying for several credit cards within a short amount of time.

Soft credit inquiries do not affect credit scores, no matter how often they take place. Multiple hard inquiries if you’re rate shopping for an auto loan, mortgage, or private student loan within a short period of time are typically treated as a single inquiry.

But outside of rate shopping, many hard pulls for new credit can lower your credit scores and indicate distress in a lender’s eyes.

The Takeaway

Can you buy a house with bad credit? Yes, but you may have to put more money down or accept a higher interest rate to qualify. If taking steps to improve your credit aren’t enough, you might consider using a cosigner or exploring federal loan programs.

Knowing how to buy a house with bad credit is a good first step to making it happen. You can check out this home loan help center to continue your homebuyer education.

If your financial foundation is feeling pretty firm, consider a home loan with SoFi. Qualifying first-time buyers can put as little as 3% down.

View your rate with just a few clicks.

FAQ

Is a 500 credit score enough to buy a house?

Yes, but the options are limited. Borrowers with a credit score of 500 might be able to qualify for an FHA loan.

How can I buy a house with bad credit and income?

Lenders look at your full financial picture, not just credit and income, in a mortgage application. Certain loan types don’t have strict credit or income requirements either.

What is a good down payment for a house with bad credit?

A 20% down payment is ideal, but most borrowers aren’t able to put that much down. Any increase in your down payment could improve your loan terms.

How do I know if I’m eligible for an FHA loan?

FHA loan requirements include proof of employment and the necessary down payment based on the borrower’s credit score (those with scores of 580 or above qualify for the 3.5% down payment advantage). The home must be a primary residence, get appraised by an FHA-approved appraiser, and meet minimum property standards.

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Photo credit: iStock/SDI Productions

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 .

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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