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Student loans are often the go-to choice for families who need help paying for a child’s college education. But as you put together your financing plan, you may find there are other options worth considering — including using a home equity line of credit, or HELOC — to cover some college costs.

Both types of borrowing have advantages and disadvantages that may influence your decision to use one or both to pay for school. Read on for a look at student loans vs. HELOCs and how each can be used to help with your family’s educational and financial goals.

What Is a HELOC?

A home equity line of credit, or HELOC, is a revolving line of credit provided by a private lender and secured with the equity you have in your home.

HELOCs are sometimes confused with home equity loans, but they are not the same thing. Because a HELOC is a line of credit, you pay interest only on the amount of money you’ve actually borrowed. Payments can vary from month to month. As you replenish the account by making payments, you can borrow from it again. With a lump-sum home equity loan, a borrower receives all the money upfront and pays interest on the entire loan amount from day one.

A HELOC can be used to pay for just about anything — including tuition, books and supplies, housing, transportation, and other college expenses. But because the line of credit is secured with your home, if you fall behind on your payments, you risk foreclosure. And should you decide to sell your home, you may be required to repay what you currently owe.

Recommended: Different Types of Home Equity Lending

What Are Student Loans?

Student loans allow students and, in some cases, their parents, to borrow money to pay for a college education. Here’s how the two main types of student loans work:

Federal Student Loans

There are a few different types of federal student loans, and each has its own rules when it comes to how much you can borrow and how the money is repaid. But generally, they offer lower interest rates than many other types of loans and include more protections for borrowers, including temporary relief programs in case of financial hardship and even the potential for loan forgiveness.

To apply for federal student aid, you must submit the Free Application for Federal Student Aid (FAFSA®) form. If you qualify for assistance and accept what’s offered, the school will apply your federal loan funds to your outstanding account charges (tuition, fees, etc.). Whatever is left after that will then be turned over to you to use for other educational costs.

Private Student Loans

Private student loans are issued by nongovernment lenders, such as banks, credit unions, and other financial service companies. Because the federal government does not back these loans, they do not offer the same repayment options or safety-net protections as federal loans. So if your family (student and/or parents) qualifies for federal student loans, you’ll probably want to tap those first. However, if you’ve exhausted your federal financial aid and require additional funds, you may find you can get the help you need by borrowing through a private lender.

Key Differences Between a HELOC and Student Loans

While you may decide to use federal or private student loans, a HELOC, or all three types of financing to help pay for a college education, it’s important to be aware of some key differences in how they work.

Interest Rates

•   Federal student loans are usually the way to go for borrowers who are looking for the lowest interest rates available. The government sets a fixed interest rate for these loans, so once you sign on the dotted line, you can expect to pay the same rate for the life of the loan. But different types of federal student loans have different interest rates, and the way interest starts accruing on these loans also varies. If you have a subsidized loan, for example, you won’t accrue any interest while you’re in school, for six months after you leave school, or during any deferment. The U.S. Education Department pays the interest during these periods. The interest on an unsubsidized loan starts accruing immediately, however, and it is the borrower’s responsibility.

•   Private student loans are generally available with a choice of a fixed or variable interest rate, but the individual lenders set these rates, and they can vary quite a bit. It’s important to shop for the most competitive offer based on your creditworthiness and other qualifications.

•   HELOCs have a variable interest rate, which means the rate fluctuates over time. This can be good or bad, depending on which way interest rates are going. If rates drop, the borrower can benefit; but if they rise, it may make it harder to keep up with the payments. Still, because a HELOC is secured with your home, the interest rate may be lower than with unsecured borrowing, such as a personal loan or credit card. And because it’s a line of credit and not a lump-sum loan, you’ll be charged interest only on the amount you’ve actually borrowed.

Recommended: Student Loan Interest Rates Guide

Fees

•   Federal student loan borrowers are often surprised to learn they’ll be expected to pay an origination fee on each loan they receive. Origination fees are currently 1.057% for federal subsidized and unsubsidized loans for undergraduate and graduate students, and 4.228% for federal PLUS loans for parents and graduate students. The lender who is servicing the loan also may charge a fee if a payment is more than 30 days late.

•   Private student loan fees can also vary based on the lender you choose. Some may charge an origination fee or fees for late payments, while others, including SoFi, have zero account fees on student loans.

•   HELOC fees vary depending on the lender, but they often include application/origination, notary, title search, appraisal, credit report, document prep, and recording fees. There also may be an annual maintenance fee and charges for early termination or account inactivity.

Repayment Terms

•   Federal student loans offer the most repayment options for borrowers, including a fixed payment plan that ensures loans are paid off within 10 years and income-driven plans that base your monthly payment on your earnings and your family size. Some borrowers may also be able to have a portion of their loans forgiven. And those who have multiple federal student loans may choose to consolidate them into a single Direct Consolidation Loan. Another plus: Student and parent borrowers may be eligible for a deferment period if they become unemployed, experience an economic hardship, or serve in the military. (Be aware that repayment terms and deferments are set to change for new borrowers beginning July 1, 2026.)

•   Private student loans have different repayment terms depending on the lender and can often be repaid over a period of 10 to 15 years or longer, usually starting six months after graduation. There is no loan forgiveness with a private student loan, but some lenders, including SoFi, may offer borrowers a student loan deferment period that’s similar to what some federal loans offer. However, you can expect your loan to continue accruing interest during this time.

•   HELOC borrowers are usually required to make at least a minimum monthly payment during their account’s “draw” period. When the draw period ends — typically after 10 years — access to the line of credit ends and the lender sets up a repayment schedule based on the balance owed.

Credit Requirements

•   Federal student loan borrowers who are undergraduates don’t have to worry about passing a credit check as part of their application process — and they don’t need a cosigner to get a loan. Though parents and graduate students do have to pass a credit check to get a federal loan, there’s no required minimum credit score.

•   Private student loan lenders may have different credit requirements, but all borrowers (including undergraduates) should expect to go through a credit check. Lenders generally will be looking for a solid credit history, a good to excellent credit score, and other factors that show the borrower — alone or with the help of an eligible student loan cosigner — has the ability to repay the loan.

•   HELOC credit requirements can vary, but lenders typically require that you have at least 15% to 20% equity in your home, a healthy debt-to-income ratio that shows you can afford to take on the added debt load, and a credit score that indicates you can reliably repay the money you owe.

Tax Deductibility

•   Federal student loan interest payments can qualify for a tax deduction of up to $2,500, as long as you use the loan to pay eligible higher education expenses for yourself, your spouse, or a dependent. And you don’t have to itemize deductions on your return to get the tax break: The interest you pay is considered an income adjustment, so there’s no separate form to fill out.

•   Private student loan interest payments qualify for the same tax deduction as federal student loans, with the same requirements.

•   HELOC borrowers can now claim their interest payments as a deduction, regardless of how the funds are used. Prior to 2026, interest paid on money used for college didn’t qualify for a tax break.

Borrowing Limits

•   Federal student loans have different borrowing limits based on the loan type and your student status (undergraduate or graduate) or if you’re a parent.

•   Private student loan limits can vary by lender; there is no set borrowing limit as with most federal loans. However, the maximum amount you can borrow may be based on your school’s estimated cost of attendance minus any other forms of financial aid you receive, your creditworthiness, and other factors.

•   HELOC lenders may allow you to tap up to 90% of your home equity. For example, if your home is valued at $350,000 and you owe $250,000, you might qualify for a $90,000 HELOC: 350,000 – 250,000 = 100,000 x .90 = 90,000.

Alternative Options

Although you can use a HELOC to pay for college — especially if you find you need more money than you can get in student loans — there are other options that could help your family manage education costs.

Scholarships and Grants

A wide range of scholarships and grants are available to students who are willing to take the time to do some research and apply. And this type of financial aid, which can come from private organizations, colleges, and other sources, doesn’t have to be repaid.

Work Study or a Part-Time Job

A work-study program or part-time job can also help pay some college costs. A student can check with the financial aid office at their school to learn more about participating in federal or state work-study programs. And local businesses like coffee shops, restaurants, retail stores, and markets often hire college workers to help out at night and on the weekends.

529 Plans

If your student is still a few years away from attending college, you may want to look into a state-sponsored 529 college savings plan, also known as a qualified tuition program. These tax-advantaged plans offer parents and others an opportunity to save ahead for a family member’s college expenses.

The Takeaway

Using a HELOC vs. student loans to pay for college has advantages and disadvantages. Because you have to pay interest only on the amount you actually borrow, a HELOC can be an affordable alternative, or addition, to lump-sum student loans. And since your home is used as collateral with a HELOC, the interest rate may be lower than with some other borrowing options. Of course, this also means you could lose your home if you can’t make your HELOC payments.

You may want to exhaust any federal financial aid for which your family is eligible — and check out potential private student loan offers — before turning to a HELOC for help. Federal student loans offer borrower protections you can’t expect with a HELOC, and you won’t be putting your home at risk.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Can I use both a HELOC and student loans?

Yes, if the federal financial aid for which you are eligible doesn’t cover all your college costs, you may choose to combine a HELOC with both federal and private student loans. You may want to compare all your options before moving forward, however, and it may be helpful to make a plan for how you expect to use and repay the money you borrow.

Does the interest rate on a HELOC vary?

Yes, a HELOC comes with a variable interest rate, which means the rate you pay fluctuates based on the benchmark interest rate.

Are student loan interest rates fixed?

Federal student loans have fixed interest rates, so you’ll pay the same rate for the life of the loan. Private student loans may be offered with a choice of a fixed or variable interest rate.

Can you use a HELOC to pay off student loans?

If you can qualify for a lower interest rate, you might consider using a HELOC to pay off your student loans. But it’s important to keep in mind the upfront and ongoing costs that come with a HELOC. You’ll also lose the protections that student loans offer borrowers and could put your home at risk if you can’t make your HELOC payments.

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Photo credit: iStock/andresr

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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.

SOISL-Q126-013

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Attending college in the U.S. can be expensive. In addition to tuition and fees, students may need to cover the cost of room and board, along with other expenses, such as books and lab fees.

To help students going to college manage their budget, it’s important that they carefully weigh their options when it comes to public and private schools. In-state tuition at a public college can be far cheaper than out-of-state tuition or a private nonprofit school.

College Tuition in the United States

The United States has some of the world’s highest tuition costs, and prices have risen steeply over time, driven in part by increasing demand and the availability of loans. More recently, however, factors such as the increased availability of financial aid have kept average net tuition prices relatively stable.

Colleges have also added amenities to their campuses to help attract higher-paying students. While appealing to many students, this has a knock-on effect on the cost of attendance. Schools are also spending more on administration.

Average College Tuition Costs

The cost of college varies depending on whether students choose to attend public or private institutions. Public schools generally have different costs for in-state and out-of-state tuition.

The average tuition cost for 2025-2026 for an in-state student at a public four-year school is $9,750 per year. A student attending a public four-year program from out of state can expect to pay an average of $28,386 per year, according to the Education Data Initiative.

Students who wish to attend a private nonprofit four-year college will pay an average of $38,421 per year.

In addition to tuition and fees, students also have to cover other costs, such as room and board and transportation. These additional expenses will vary depending on whether you’re living on or off-campus, but they can add more than $10,000 to the annual cost of attending college. The average annual cost of attendance for students attending a public four-year in-state program is $27,146. Out-of-state students face an average of $45,708 per year. And for students attending a private nonprofit four-year program, the average annual cost of attendance is $58,628.

Recommended: What Is the Average Cost of College Tuition?

States With the Cheapest College Tuition

College tuition prices for public four-year institutions vary widely by state. Generally speaking, public colleges in the South and the West are the cheapest to attend. Colleges in the Northeast are the most expensive. Vermont has the most expensive in-state tuition and fees, topping out at an annual average of $19,223. New Hampshire is a close second at $18,839. To learn more, take a look at the annual study published by the College Board that tracks trends in college pricing and financial aid.

Here’s a look at the states with the cheapest in-state tuition and fees at four-year flagship university programs over the 2025-2026 school year.

Florida

University of Florida
In-state tuition and fees: $6,380
Out-of-state tuition and fees: $30,900

North Carolina

University of North Carolina at Chapel Hill
In-state tuition and fees: $7,020
Out-of-state tuition and fees: $43,152

Wyoming

University of Wyoming
In-state tuition and fees: $8,245
Out-of-state tuition and fees: $24,865

Montana

University of Montana
In-state tuition and fees: $9,188
Out-of-state tuition and fees: $34,312

Idaho

University of Idaho
In-state tuition and fees: $9,400
Out-of-state tuition and fees: $28,636

South Dakota

University of South Dakota
In-state tuition and fees: $9,687
Out-of-state tuition and fees: $13,299

Mississippi

University of Mississippi
In-state tuition and fees: $9,990
Out-of-state tuition and fees: $30,150

Utah

University of Utah
In-state tuition and fees: $10,004
Out-of-state tuition and fees: $31,748

Georgia

University of Georgia
In-state tuition and fees: $10,034
Out-of-state tuition and fees: $30,878

Nevada

University of Nevada, Reno
In-state tuition and fees: $10,309
Out-of-state tuition and fees: $28,941

Arkansas

University of Arkansas
In-state tuition and fees: $10,496
Out-of-state tuition and fees: $29,146

West Virginia

West Virginia University
In-state tuition and fees: $10,752
Out-of-state tuition and fees: $30,432

Paying for College

Because the price of college tuition, fees, and room and board can be so high, many students have to take out student loans and apply for grants and scholarships to make college affordable. Students may take out federal loans or private loans to help them pay for school. They’ll have to repay these loans through a series of monthly payments with interest.

The U.S. Education Department offers federal loans under the William D. Ford Federal Direct Loan Program. This program includes four types of federal loans:

•   Direct Subsidized Loans are available to undergrads who demonstrate financial need. The Education Department covers the interest on these loans while the students are enrolled in school at least half-time.

•   Direct Unsubsidized Loans are available to undergrads, graduate students, and professional students and are not based on need.

•   Direct PLUS Loans are for graduate and professional students and parents of dependent undergrads. Eligibility is not based on financial need. Effective July 1, 2026, new PLUS loans will no longer be available for grad and professional students. However, borrowers who already received a grad PLUS loan can continue borrowing under current terms through the 2028-2029 school year.

•   Direct Consolidation Loans allow students to combine federal loans into a single loan.

To apply for federal student loans and other forms of federal aid, students must fill out the FAFSA®, or Free Application for Federal Student Aid, each year.

Recommended: FAFSA Guide

Private student loans may be available through private lenders, such as banks and online lenders. These institutions set their own terms, interest rates, and loan amounts. When determining individual rates and terms, lenders will generally evaluate the applicant’s credit history, among other factors. Private student loans are typically considered a last resort when it comes to financing college because they aren’t required to include the same borrower benefits or protections (such as income-driven repayment options) as federal student loans.

There are also various sources of financial aid that can help students pay for school. This aid can come from federal, state, school, and private sources.

•   Grants, such as federal Pell Grants, are a form of financial aid that doesn’t need to be paid back, unlike student loans.

•   Scholarships are funds offered to students, often based on academic performance, an area of study, or special talents. Scholarships also do not generally need to be repaid.

•   Work-study programs allow students to earn money while they’re in school. Students may qualify for the federal work-study program based on financial need.

•   Many schools offer financial aid or scholarships.

The Takeaway

College can be a huge expense, but there are also a lot of benefits of a college education. As you’re considering schools, it’s important to evaluate all of your options and think seriously about choosing one that’s in your budget, as well as finding manageable ways to pay for it. That may mean attending a public school in the state you live in. And if you live in one of the states with the cheapest in-state tuition, you may pay less than $10,000 a year to go to school.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How much does college cost on average in the US?

The estimated average cost of attendance for one year of college (living on campus) is $27,146 for in-state students at public four-year schools, $45,782 per year for out-of-state students at public four-year schools, and $58,628 for students at private nonprofit schools.

What state has the cheapest tuition?

States with the cheapest in-state tuition include Florida, Wyoming, and Montana. For out-of-state students, Florida, South Dakota, and North Dakota have some of the cheapest tuition.

What funding options are available?

By filling in the FAFSA, students can apply for federal loans. Direct Subsidized Loans are based on need, while Direct Unsubsidized Loans and Direct PLUS Loans are not need-based, and Direct Consolidation Loans allow students to combine federal loans. Further options may include grants, scholarships, work-study programs, and school-based financial aid.

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Photo credit: iStock/Bet_Noire

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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.

SOISL-Q126-012

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The funds from a personal loan can be used for anything from paying off high-interest credit card debt to setting up a new home gym. But how hard is it to qualify for a $3,000 personal loan? And what if you have bad credit? Lenders may charge higher interest rates and financing fees because a borrower with bad credit is considered higher risk. Should you turn to a non-bank lender in this situation?

Read on to find out how to get a personal loan, what credit score you need for a personal loan, and where to go to get a loan if you have bad credit.

Can I Get a $3,000 Personal Loan with Bad Credit?

A personal loan is money borrowed from a bank, credit union, or online lender. (Banks and credit unions can do business online, of course, and some do business entirely online.) Personal loan amounts range from $1,000 to $100,000, and the principal is paid back with interest in fixed monthly payments, typically over several months to seven years. Personal loans are flexible, meaning they can be used for virtually any purpose, from a cross-country move to home improvements. There are even vacation loans and wedding loans in the personal loan category.

Getting approved for a personal loan that is $3,000 with bad credit may mean you have to jump through a few hoops to qualify. What is bad credit? According to FICO®, someone with a score of 580 or below is considered to have “poor” credit (the lowest rating tier) and poses a high risk to a lender.

When calculating an individual’s credit score, FICO and other rating agencies will look at a variety of factors, including whether you pay bills on time, how long you have held credit lines or loans, how much of your available credit you are currently using, how often lenders have pulled your credit report, and your history of bankruptcy or foreclosure.

A low credit score indicates that you could be at a higher risk of defaulting on a loan. To compensate for that risk, a lender may charge you a higher interest rate for a loan or credit card, or you may have to put down a deposit or provide collateral.

Factors Lenders Consider Beyond Credit Score

When lenders evaluate your application for a personal loan, they might consider other factors in addition to your credit score. Your debt-to-income (DTI) ratio — the amount of your monthly debts divided by your monthly pretax income — will be important. Lenders prefer a DTI ratio below 35% or 40%.

Lenders may also consider your income history. Having a steady source of income and showing gradually increasing income will help your case.

What Is the Typical Credit Score Required for a $3,000 Personal Loan?

While some personal loan lenders allow you to apply with a very low credit score, many require a minimum credit score of 620 to be considered for a $3K loan. Generally, the higher your credit score, the lower the interest rate you will pay when compared to other borrowers seeking the same size loan. A score of 670 to 720 or higher is preferred for the best available rates.

Benefits of a $3,000 Personal Loan

The benefits of a $3,000 personal loan include flexibility and predictability. The loan can be used for pretty much anything you need, and the payments will be the same each month until the loan is paid off.

Interest Rates and Flexible Terms

The interest rate for a personal loan will typically be fixed for the term of the loan, and the repayment terms are flexible, ranging between a few months to seven (or more) years. Personal loans typically have a lower interest rate than a credit card, and the rates can be much better if you have excellent credit. You might also be able to borrow more using a personal loan versus a credit card.

Fixed Monthly Payments

A personal loan will have fixed monthly payments for the life of the loan, which makes budgeting for bills easier.

No Collateral Required

Using collateral for personal loans typically is not necessary. These are called “unsecured” loans. Unsecured personal loans are also sometimes called “signature loans.”

Some loans require the borrower to use their car or home as an asset to guarantee the loan. The interest rate may be a little higher for an unsecured loan than it would be for a secured loan because the lender assumes more risk, but you won’t risk your car or home if you default. There are also hard money personal loans, often used by those investing in real estate. These use the home as collateral. But most personal loans don’t involve collateral.

Recommended: Secured vs. Unsecured Personal Loans

Cons of a $3,000 Personal Loan

A personal loan might not be the best option depending on your situation and the loan’s purpose. Here are some of the downsides to a personal loan.

Debt Accumulation

Many people use personal loans to pay off credit card debt because the interest paid on a credit card is generally more than the interest paid on a personal loan. However, this can be a double-edged sword if clearing your credit card balances tempts you to use those cards again and rack up even more debt.

Origination Fees and Penalties

Personal loans may come with significant fees and penalties that can drive up the cost of borrowing. Though some lenders don’t charge origination fees, these fees are common and can run as high as 10% of the loan amount. If you decide to pay off the balance before the term ends, you may have to pay a penalty.

Interest Rates May Be Higher Than Other Options

This is particularly true for people who have a low credit score. In that case, a credit card might charge a lower rate than a personal loan.

If you have equity in your home, another option is a home equity line of credit (HELOC) or a home equity loan. Alternatively, a balance transfer credit card might charge a lower interest rate than you’re currently paying on your credit card balance.

Risk of Relying on Personal Loans for Ongoing Expenses

Whatever method of borrowing you choose, it’s a red flag if you are seeking a loan or piling up credit card debt to cover routine costs like your rent, groceries, or heating bills. If this is the case, take a hard look at how you are spending money throughout your life to determine whether you have opportunities to redistribute funds so you don’t need a loan for everyday expenses. Credit counseling might be helpful to you.

Where Can I Get a $3,000 Personal Loan?

You can obtain a personal loan from many different sources, each with its own distinctive qualities.

Banks and Credit Unions

A bank will typically require good credit to qualify for a personal loan. You may also need an account with the bank. Account holders are likely to qualify for the lowest interest rates and bigger loans. Some banks will require you to visit a branch and complete the application in person, but not all banks and credit unions have branches and some do business only online.

Credit unions may offer lower interest rates and more flexible terms for members. Having a history with a credit union might boost your eligibility. Through March 10, 2026, federally chartered credit unions cap annual percentage rates (APRs) at 18%, so borrowers with imperfect credit may receive lower rates than they would elsewhere. This cap may or may not be extended in future months.

Online Lenders

Online lenders do business entirely online. Some (but not all) are technically banks, in that they are regulated at the federal or state level. Online lenders offer a streamlined application process, and loans are often funded within two days. Some users choose online lenders for reasons of speed. Others might opt for an online lender because some online lenders have more lenient credit score requirements for personal loans than brick-and-mortar banks.

When using an online lender, you can typically get prequalified and see your potential loan terms before you apply. An online lender might do a soft credit check to prequalify you for a loan, but your credit rating will not be affected. If the idea of applying entirely online and tracking every step of your loan process from your phone appeals to you, an online lender could be a good fit. Check interest rates and loan terms as you would with any lender.

Peer-to-Peer Lending Platforms

Peer-to-peer lending has grown in popularity in recent years. It allows those who wish to borrow money to connect through an app with investors (individuals or companies) willing to lend. Loans can be approved and funded in as little as one day. Some peer-to-peer platforms have lower credit score requirements or higher loan limits than banks, credit unions, or online lenders. This type of lending has become especially popular among entrepreneurs starting small businesses. The time allotted for borrowers to repay the loan may be shorter than it would be with a bank, while the fees may be higher.

How to Apply for a $3,000 Personal Loan

1.    Check your credit reports. You may find errors on your reports that you can fix to boost your eligibility for lower-rate loans.

2.    Compare the terms and conditions offered by lenders. A personal loan calculator can help you determine what your payments will be.

3.    Prequalify if you can, because it won’t affect your credit score and will help you with your comparison.

4.    Consider using your car or other collateral to get a better rate with a secured loan.

5.    Use a cosigner (with good credit) to get a better rate. The cosigner’s credit rating is considered along with your own, but they must agree to pay the loan if you cannot.

6.    Gather the documents you need and apply to the best lender. Examples of documents you may be asked to provide are W-2s, paystubs, and financial statements.

What Happens After Approval and Funding

Once you’ve filed your application, you’ll await word as to whether your loan request has been approved. If your application is approved, the lender will deposit the funds into the bank account or your choice. If you are using the loan to pay down credit card debt, some lenders will pay the credit card lender for you. The whole process could take anywhere from a day to two weeks. You’ll then begin making monthly payments covering a portion of the principal (what you have borrowed) and the interest.

💡 Quick Tip: To find the lowest personal loan rate with SoFi, compare different term lengths and select the option that best fits your budget and financial goals.

Choosing Between $5,000 and $10,000 Personal Loans

When you’re thinking about applying for a personal loan, it’s important to understand the different factors that can affect your borrowing costs: the loan amount, the APR, and the repayment term. As a reminder, the APR, or annual percentage rate, is the interest rate plus any fees — in other words, the total cost of borrowing. Let’s examine how the APR might affect costs by looking first at the costs of a $5,000 loan:

$5,000 Personal Loan

Here’s an example of what your costs would be if you took out a $5,000 loan with a three-year term at various APRs:

APR	Monthly Payment	Total Interest Cost
8%	$157	$640.55
12%	$166	$978.58
16%	$176	$1,328.27

Now let’s see what happens to costs if you increase the loan amount to $10,000.

$10,000 Personal Loan

If you’re wondering how much of a personal loan can I get and consider a larger loan amount, it helps to compare the costs of smaller and larger loan amounts. The monthly payment on a personal loan of $10,000 with a 12.00% APR and a three-year term would be $332.13. The loan’s total interest cost by the end of the term would be $1,957.15.

A Shorter Repayment Term

The shorter the repayment term, the higher your monthly payments will typically be. If you were to opt for the same $10,000 loan and got the same 12.00% APR rate but had a five-year term rather than a three-year one, the monthly payment would be $222.44 and total interest cost would be $3,346.67.

The Takeaway

A personal loan is a way to get flexible financing quickly. A personal loan can be used for nearly any purpose, and the term of the loan can range from a few months to seven or more years. Banks, credit unions, online lenders, and peer-to-peer lenders offer these loans at varying interest rates.

Personal loans are popular for people who want to consolidate their debt or pay off credit cards that charge a higher interest rate. The requirements for a $3K loan depend on the lender, but a good credit score will typically get you a better rate. It’s important to check rates and examine fees at various lenders before diving into the application process.

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

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What credit score is needed for a $3,000 personal loan?

A score of at least 620 is typically required to qualify for an unsecured personal loan, though some online lenders and peer-to-peer lenders will accept lower scores. To qualify for a lender’s lowest interest rate, however, borrowers generally need a score of at least 670 to 720 or higher.

Is it possible to get a $3,000 loan with bad credit?

Some lenders, primarily online or peer-to-peer lenders, will extend personal loans to people with bad credit. In fact, some online lenders will specifically advertise personal loans for borrowers with bad credit. However, the terms may include high interest rates and fees.

What’s the monthly payment on a $3,000 personal loan?

The monthly payment on a $3,000 personal loan will depend on the loan term and the interest rate. For example, the monthly payment on a two-year $3,000 loan with an annual percentage rate (APR) of 12.00% would be $141.22. The monthly payment on a $3,000 loan with a six-year term and an APR of 12.00% would be $58.65.

How long does it take to get approved and funded for a $3,000 personal loan?

Depending on the lender and your financial credentials, it is possible to be approved in as little as a day, although the entire process — from application to receiving funds — can sometimes take up to two weeks.

Can I use a $3,000 personal loan for any purpose?

Borrowers can use funds from a personal loan for practically anything. Debt consolidation (paying off credit card debt) is a common use, but some borrowers use personal loans to pay for travel, medical bills, or a wedding, among other things. The important thing when taking out a personal loan is that you have a strategy in place to repay what you have borrowed.

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Photo credit: iStock/nortonrsx

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.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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 .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOPL-Q126-005

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Thanks to high demand and inflation, the cost of home repairs has been on the rise. In 2025, the average household spent $2,041 on maintenance and $1,143 on emergency repairs, according to Angi’s State of Home Spending Report. The report also found Millennials led all generations in spending, with an average total home spend of $14,199, including the highest maintenance ($2,601) and emergency ($1,519) expenditures.

The most common home repairs include the usual suspects: electrical, plumbing, HVAC, water damage, and termite damage. Keep reading to learn more about these issues and the cost of repair or replacement, so you can pick up tips on maintaining the value of your home and be prepared for repairs when reality bites.

Estimated Cost of the Most Common Home Repairs

Low-cost preventive measures — like cleaning your gutters or getting your heating and cooling systems serviced annually — can help keep common home repair costs down. But even with the best preparation, surprises (like a busted pipe or roof leak) happen, and when they do, you can be on the hook for thousands of dollars. Whether you’re a new or longtime homeowner, it’s a good idea to plan for — and budget for — home repairs.

Below is a roundup of the most common home repairs and average costs.

Foundation Repair

A number of different issues can occur with foundations, some of which are more serious (aka, costly) than others. Among the most common problems are foundation cracks, which can be caused by house settling or changes in soil pressure around the home. Cracks can lead to water damage or cause the walls in your foundation or home to bow. Foundations can also begin to sink, due to changing weather patterns, nearby tree roots, or erosion.

Since the foundation is the footprint of your home, repairs can be complicated and expensive. According to Angi, foundation repair costs can range anywhere from $2,224 to $8,129.

Average cost of foundation repair: $5,172

Electrical Issues

While there are many home repairs you can safely DIY, electrical issues and wiring are generally best left to professional electricians. Working with live wires can be dangerous and faulty electrical work can be a significant fire hazard. Some signs you may need to call an electrician include:

•   Burning smell coming from an outlet

•   Buzzing or sizzling noises coming from an outlet

•   Flickering lights

•   Outlets feel hot to the touch

•   You have 2- rather than 3-prong outlets

•   Circuit breaker continually trips

•   Appliances spark when plugged in

Depending on the length and complexity of the job, the cost of hiring an electrician ranges between $163 and $536. Installing a new outlet can run $100 to $450, while replacing a breaker panel can cost anywhere from $519 to $2,187.

Average cost of electrical repairs: $348

Recommended: What Is the Cost to Rewire a House?

Roof Repair

Your roof protects your home from the elements, so it’s important to keep it in top condition. If you notice any damage or signs of wear and tear, you’ll want to address them sooner rather than later. This can help prevent small problems from becoming serious and expensive. Signs that your roof may be compromised include broken, cracked, curling, or missing shingles, and any interior signs of water damage (such as dark spots or discoloration on walls or ceiling and/or mold or rotting wood in the attic).

The cost of a roof repair will depend on your home’s location, roofing material, size of your home, and the type of roof. On average, costs run between $393 and $1,939. By contrast, a full roof replacement can run between $5,870 to $13,223. Due to the significant price difference, you would generally only invest in a new roof if the damage to your existing roof is extensive or the roof is near the end of its life.

Average cost of roof repairs: $1,158

Repair or Replace a Water Heater

Due to mineral buildup and the routine breakdown of components, water heaters do not last forever. Depending on how extensive the repairs your water heater requires, you can be on the hook for a new unit entirely. And if you’ve ever taken a cold shower in the middle of winter, you know this is one repair that is essential to your quality of life.

On average, homeowners spend anywhere from $222 to $990 on water heater repairs. Your actual bill will depend on the cost of the part needed for the fix, how much your local water heater professional charges for labor, and the length of the job. Where you live and where the water heater is located in your home can also impact costs.

Average cost of water heater repairs: $606

Water Damage

Water damage is fairly common. It can result from a crack in an old pipe, a leaky roof, an unusually strong storm, or sewage backup. To prevent mold growth and further damage, it’s best to fix the issue and clear out moisture as soon as you spot it.

Water damage restoration can involve replacing wallboard, flooring, and/or ceilings, as well as ensuring that no mold spores are left behind to spread once the repairs are complete. Two important factors influencing price are the square footage affected and the type of water (i.e., whether it’s clean or has been contaminated with potentially harmful substances). The cost of water damage restoration generally ranges between $1,384 and $6,387.

Average cost to fix water damage: $3,867

Replacing Pipes

Replacing older pipes is a common home repair often needed after a home inspection. Common problems include dated construction materials with a known problem in their manufacturing, signs of corrosion, clogs, and leaks. And because pipes run behind walls and underground, repair costs often include patching up interior holes and dug-up yards.

The good news is that not all leaks, burst pipes, and signs of corrosion require replacing large amounts of plumbing. Often, a plumber can replace a small section of the pipe affected by the damage. The cost to install pipes for a repair ranges from $372 to $2,131, though it can run higher if the damaged pipes are difficult to access.

Average cost to install pipes: $1,251

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

Septic System Repair

A septic tank contains and filters household wastewater. If it is damaged or not functioning properly, it’s important to deal with the problem quickly — otherwise, you could be dealing with a smelly and costly mess. Sewage backups can occur when the septic tank becomes clogged or full, there’s a problem with devices within the tank, or there’s a blockage in the home’s main drain line leading to the tank.

Depending on the type of repair, tank size, permits, and other factors, the cost of a septic tank repair runs, on average, between $628 and $3,039. A small fix like repairing a septic tank lid could cost less ($150 to $500); but if you need to replace the tank, you could be looking at a bill as high as $12,000.

Average cost to repair a septic system: $1,830

Heating or Air Conditioning Repair

Your home’s HVAC (which stands for heating, ventilation, and air conditioning) system plays a key role in keeping your home comfortable to live in. Though there are many different types of HVAC systems, they generally all work by using energy to heat or cool the air to a desired temperature. The system may also add/remove moisture and filter your home’s indoor air.

An HVAC system typically has two main components: a heater (which could be a furnace, boiler, or heat pump) and an air conditioning (AC) unit. The type of system you have and the component that’s broken will significantly influence the cost of repairs. For example, an AC system repair can run anywhere from $130 to $2,000, while a furnace repair tends to run between $132 and $503. On average, homeowners spend between $130 and $2,000 on HVAC repairs.

Average cost to fix a heating or air conditioning system: $350

Mold Removal

Mold develops inside homes as a result of moisture and can lead to health problems. Signs that you may have a mold problem include:

•   Musty odor in a specific area

•   Discoloration on the walls

•   Peeling, cracking, or warping of floors or walls

•   Leaks or water damage

•   Darkening around tile grout

•   Worsening of allergy symptoms

While you may be able to remove small amounts of mold yourself (provided you’re certain the mold isn’t toxic), often the best option is to hire a mold remediation professional.

The cost for mold removal will vary widely depending on where it is located in your home. Mold growth in hard-to-reach areas, like drywall or your HVAC system, generally costs more to remediate since it can require more time, materials, and labor. The size of the infestation and the type of mold that is growing also influence costs. On average, mold removal runs between $1,223 and $3,753.

Average cost of mold removal: $2,367

Termite Damage

The problem with termites is that they literally eat away at your house. They can also eat through your budget: The cost to repair termite damage can range anywhere from $1,000 to $10,000 or even more.

Generally, the longer termites chew on the wooden structure of your home, the more costly the repair will be, so it’s key to recognize — and deal with — any signs of a termite infestation early. If you catch a termite problem early, for example, you may only need to replace a few damaged boards or joists, which can run from $250 to $1,000. If the problem goes on for a while, however, you may need to replace damaged walls, framing, or floors — at a cost of $1,000 to $3,000. Worst-case scenario: Termites do enough damage to your home’s infrastructure (like beams or load-bearing walls) that it becomes structurally unsound. A major termite repair job can run you more than $37,000.

Average cost to repair termite damage: $3,000

Factors That Affect Home Repair Costs

Home repair costs can vary widely based on geographic location and other cost drivers. These are the things that might influence your bill:

Age of the Home

Not surprisingly, older homes will typically have higher repair costs. Sometimes the repair itself isn’t the driver of the increase, but rather the costs associated with postrepair restoration, such as repairing plaster walls or replacing intricate woodwork. The higher cost of buying a fixer upper can stick with you even after an initial renovation if the renovation is cosmetic and doesn’t address underlying mechanical issues such as dated wiring or plumbing.

Location and Labor Costs

The cost of living in the area where your home is located will help determine your repair costs. In higher-cost areas, labor costs also tend to be higher.

Materials and Permit Fees

Constructions materials costs have increased alongside labor costs and even outstripped them in some cases. Copper (used in wiring) and other electrical components have seen especially intense cost increases. Building permit costs vary widely by geography but high-cost areas often tend to have high permit costs. Moreover, this is one cost that is entirely out of the control of the homeowner or the contractor.

Average Cost of Home Repairs

Trying to predict — and budget for — home repairs can be challenging. However, there are several rules of thumb that can help homeowners. Being prepared for home repair costs is one of those personal finance basics you’ll want to have a handle on as a homeowner.

•   The 1% Rule. One common guideline is to set aside approximately 1% of your home’s value annually for home maintenance.

•   The Square Foot Rule. Another formula is to set aside $1 for every square foot of livable space.

•   The 10% Rule. Put aside 10% of all your main monthly expenses.

If you don’t have enough savings to cover the cost of a necessary home repair, there are financing options, including a home equity line of credit (HELOC), a home equity loan, or a credit card (though this can be an expensive choice).

You can also use a personal loan to cover the cost of home repairs or improvements.

How to Budget for Home Repairs

One way to ensure you have cash on hand when home repair needs arise is to plan ahead and start budgeting and saving in advance.

Creating a Home Maintenance Fund

You can help ensure you’ve saved a cushion for repairs by creating a home maintenance fund.

Emergency vs. Planned Repairs

It’s one thing to create a maintenance fund and periodically do some preventive maintenance.

Home Warranty Considerations

Some homeowners choose to pay for a home warranty in order to ensure that repair costs are covered when the time comes.

Quick Tip: Check out SoFi’s home improvement loan rates to find competitive options for financing your next repair or renovation project.

The Takeaway

It’s tough to predict the cost of home repairs.

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

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

How do I estimate home repair costs?

As a general rule, experts estimate that your annual home repair costs will average either $1 per square foot or 10% of your housing costs.

What repairs are usually not covered by homeowners insurance?

Every homeowners insurance policy is slightly different.

When should I hire a professional instead of doing it myself?

Assuming you aren’t a licensed tradesperson, it’s best to hire a professional.

How much should I budget annually for home repairs?

There are several guidelines for budgeting for home repair.

What is the most expensive home repair?

The most expensive home repairs tend to be foundation repairs, full roof or septic tank replacements, or repairs due to extensive termite damage.

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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.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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 .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

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.

SOPL-Q126-008

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Updating the wiring in a house could cost between $6 and $10 per square foot, but keeping old wiring could have disastrous consequences. Electrical issues are the third most common cause of house fires in the United States. Modern technology also may demand rewiring a house. Powering multiple electronic devices, having adequate interior and exterior lighting, and heating and cooling a home to today’s standards are difficult if a home’s electrical system is not up to the task. Given all this, rewiring is a common way to upgrade your home. Let’s explore what’s involved and how much is it to rewire a house.

Factors That Affect the Cost to Rewire a House

Rewiring a home involves removing the outdated wiring inside a home’s walls and installing new, modern wiring that can safely meet today’s electrical needs.

Rewiring is typically done by a licensed electrician who strips out the old wiring and runs new wiring throughout the entire house, installs a new circuit breaker panel to handle the load of the new wiring system, and ensures that building codes are met.

It can be a big job — and an expensive one, too. Let’s look at some common factors that can impact the total cost.

Size of the House

The bigger the home, the more materials and labor the job will likely require. And that can drive up the price. Rewiring a 1,300-square-foot house, for instance, runs around $7,800 to $13,000. For a 2,500-square-foot home, you can expect to pay between $15,000 to $25,000.

House’s Age

Older homes weren’t constructed with 21st century living in mind, so a rewiring project will likely cost more. Common necessities like opening a wall to reach out-of-the-way wiring ($4-$8 per square foot), upgrading outdated wiring ($200-$2,300), and replacing an electrical outlet ($125-$200) can all add to the price tag.

Extent of Work Needed

Small-scale projects are typically cheaper than larger, more complex ones. If you’re planning to set up a new alarm system, run wiring to a backyard shed, or upgrade the electric panel, you’ll likely need to adjust your budget accordingly.

Type of Wiring and Materials Used

The average cost to rewire a house is just that: average. And your own house rewire costs will vary based on the materials used in the job. Below we’ll get into the details of how different materials can affect your job costs.

Local Labor Rates and Permit Requirements

If you’re in a high cost of living area, you can expect hourly rates for electricians, drywall repair, and painting to be above national averages. This, too, will affect the cost of your job.

Recommended: How to Find a Contractor for Home Remodeling

Signs You Need to Rewire a Home

Flickering lights, outlets making a popping sound, or tripped breakers indicate that a home might need to be rewired. When buying an older home, a home inspection typically reveals if rewiring is recommended or necessary.

Even before a professional inspection, prospective homebuyers may be able to get a good idea of how the home is wired by peeking into the attic, basement, or crawl space.

Vintage charm does not extend to knob and tube wiring, which was common through the mid-1900s. The lack of a ground wire is seen as a significant fire hazard, and most carriers will deny homeowners insurance for a home that has knob and tube electrical wiring.

Another way to check for outdated wiring is to find the electrical panel and see if it has modern breaker switches or round fuses. The fuses indicate that the system is outdated, and rewiring the house might be recommended.

In almost every state, home sellers must disclose defects, but cautious buyers may still want to include the inspection contingency in the purchase contract.

If you’re living in a home with older wiring and notice that your circuit breakers trip often, lights flicker, the light switches feel warm to the touch, or there is a burning smell coming from an outlet, it’s time to schedule an appointment with an electrician and explore house rewire costs. Get ready to encounter one of the more common home repair costs

What’s Involved in the Rewiring Process?

Rewiring a house can be a costly endeavor in part because it is a complex process. After all, most of those wires are inside your walls. Depending on the extent of the job, rewiring could involve any or all of the following: Replacing or adding circuits; running new wire through walls, ceiling, and floors; replacing (and potentially adding) outlets and switches; installing ground fault circuit interrupters, which are often required by building codes in areas with potential exposure to moisture such as kitchens and bathrooms. After the work is done, the electrical contractor will test the system.

Filing for building permits before the work and managing an inspection once it is done will also likely be necessary. And in some jobs, an electrical service upgrade will be needed to bring more power to the home. This adds to cost and complexity.

Now let’s look more closely at how much does it cost to rewire a home based on the type of materials being used.

Cost to Rewire a House Per Material

The cost of rewiring a house depends on square footage and how easy or difficult it is to access the space. But the wiring and cable materials can also have an impact. Let’s take a look:

•   Used in most homes, nonmetallic (NM) cables are easy to install, flexible, and cost-effective. If you’re rewiring these cables, expect to pay between $0.40 and $0.80 per linear foot, according to Angi.

•   Underground feeder (UF) cables are similar to NM cables, except that they’re designed to go underground or in damp areas. Rewiring UF cables costs around $0.50 to $0.75 per linear foot.

•   Durable and able to handle high temperatures, THHN and THWN wires are often used in an unfinished space, like a basement, or for hot water heaters and garbage disposals. They cost $0.80 to $1.60 per linear foot to rewire.

•   Coaxial cables have high bandwidth support and are easy to install, which once made them a go-to choice for televisions and video equipment. Today, they’re more commonly used to connect cable or satellite TV signals or for internet connectivity. These cables cost around $0.25 to $0.35 per linear foot to rewire.

Updating a doorbell or thermostat? You’ll likely be working with low-voltage wires, which are used for circuits less than 50 volts. Rewiring typically costs between $0.25 and $0.35.

Copper vs. Aluminum Wiring

As you explore rewiring the house, you may find references to both aluminum and copper wire. If your home dates to the 1970s, it may have aluminum wiring, which was used often in that era because it was light and cheap. Unfortunately, it was also more prone than copper to oxidizing and expanding, which created hazards. Copper is the preferred material and what you will likely be upgrading to. Copper’s conductivity makes it highly efficient and a lower fire risk than aluminum.

Cost of Upgrading the Electrical Panel

If the wiring in your home is outdated, it is possible that your electrical panel will also need an update to provide the level of service necessary for the needs of a modern home. A basic panel upgrade can cost $2,000 to $4,000, with additional costs for a service upgrade requiring underground wiring, for example.

Additional Costs for Smart Home or Energy-Efficient Upgrades

These days, there are abundant add-ons for any wiring project. The universe of smart-home devices seems to be expanding exponentially. A basic smart-home upgrade for your home, often done alongside a rewiring job, might run you between $2,000 and $7,000. This would include installing a hub with a smart speaker and automated door locks, thermostat, and smart lighting in several rooms. If you go all in on a smart refrigerator and other gadgets, the price could climb as high as $16,000.

Recommended: How Much Is My House Worth?

How to Cover Your House Rewiring Costs

Rewiring a home is not a small expense. Fortunately, there are several ways to pay for it. Here’s a look at some options.

Home Equity Loans

If you’ve built up equity in your home and are facing a major rewiring project, one possible solution is a home equity loan. There are three main types of home equity borrowing to consider: a fixed-rate home equity loan, a home equity line of credit (HELOC), and cash-out refinancing. All of these use your home as collateral, meaning that if you miss payments you could face foreclosure.

Each has its pros and cons. For instance, with a fixed-rate home equity loan, you receive a lump sum payment, which you’ll pay back over a period of time with a set interest rate.

A HELOC, on the other hand, is revolving debt. As the balance borrowed is paid down, it can be borrowed again during the draw period, which typically lasts 10 years. HELOCs tend to have a variable interest rate, so payments are less predictable.

With a cash-out refinance, you can refinance your mortgage for more than what you currently owe, and then take the difference in cash that you can use to cover your renovation.

Home Improvement Loans

A home improvement loan is a type of personal loan used to fund renovations and upgrades, including rewiring a house. Once your loan application is approved, you’ll receive a lump sum of cash, which you can use to pay for home improvements. You’ll repay the loan, with interest, in regular installments over the life of the loan — typically five to seven years.

These loans are unsecured, which means your home isn’t used as collateral. As a result, they often come with a higher interest rate than a home equity loan or HELOC.

💡 Quick Tip: Check out SoFi’s home improvement loan rates to explore competitive terms and find the right financing for your renovation needs.

Credit Cards

A credit card is a fast, easy way to fund a rewiring project, and it can be a good option if you’re able to pay off the balance on the card that month. Or look for a card with an introductory 0% annual percentage rate (APR), as this allows you anywhere from six to 18 months to pay back the balance with zero interest. But keep in mind that any balance left after the promotional period ends will start accruing the card’s regular APR.

Also watch for surcharges on credit card transactions. Many tradespeople charge fees for clients using credit cards, and these can quickly add a considerable sum to a larger project.

Government Assistance or Energy Efficiency Incentives

The U.S. Department of Energy provides tax credits and rebates for certain home energy projects, so it’s a good idea to check the DOE site to see what might be available when planning your project. Local governments and utility companies may also offer incentives if your project is considered energy efficient. The U.S. Department of Agriculture also provides grants and loans to qualified low-income households looking to make home improvements. And if you are purchasing a home that needs rewiring, you may be able to finance the purchase and renovation with an FHA 203(k) loan.

Cash

Depending on the scope of the project and your budget, you may decide to dip into your savings account or withdraw money from your emergency fund, if you have one, to cover the cost of rewiring a home.

As you create a budget and weigh your financing options, look for opportunities to save money. Research how much rewiring a house costs in your area, and include a cushion in your budget for unexpected expenses. If you’re not planning to tackle the job yourself, gather quotes from reputable licensed electricians in your area and see which one can offer you the best deal.

Finally, factor in the long-term costs and benefits. Although rewiring might seem cost-prohibitive when buying a single-family home, owners may find that the cost of rewiring a house — and the peace of mind the upgrade provides — can be money well spent.

Regardless of how you choose to pay for your rewiring job, it’s a good idea to track your home improvement costs, as these records may come in handy for tax purposes if you tackle home improvement projects to increase your home’s value before selling the property.

The Takeaway

At $6 to $10 per square foot, the cost of rewiring a house may seem high. But adequate electrical panels and modern wiring can amp up your home value and prevent fires. Wondering how you’re going to pay for it all? Home equity loans, savings, credit cards, and home improvement loans are all ways to pay for the average cost to rewire a house.

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

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Is it worth rewiring an old house?

It’s not only worth rewiring an old house, it’s an important safety measure and a way of protecting your investment. Replacing outdated wiring can help prevent a house fire and add value to the property. Plus, updated, energy-efficient fixtures are sometimes included in a remodeling job of this scope, which can potentially lower utility costs.

How much does it cost to replace all the electrical wiring in a house?

According to the home services website Angi, home owners can expect to pay anywhere from $601 to $2,590 to rewire a house. However, if you have an older, larger home, you’ll likely pay closer to $6,000.

Can a house be rewired without removing drywall?

In many cases, at least some drywall or plaster will need to be removed during a rewiring project. But talk to your electrician to see if the work can be done without disrupting your walls.

What permits or inspections are needed to rewire a house?

All but the most minor electrical work typically requires a permit, although regulations are set locally so you’ll want to explore exactly what is required in your area. Rewiring a house is quite a big job and so any costs associated with permitting should be part of the electrician’s bid.

How long does it typically take to rewire a house?

Rewiring a house can take anywhere from a few days to a few weeks, depending on the size of the job. Angi reports an average time of three to 10 days, with longer times for older and larger houses. If rewiring is happening in the context of other renovations, such as an HVAC installation or plumbing work, you can expect it to take longer. Add additional time for replacing sheetrock or plaster that has been removed and repainting the affected area.

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Photo credit: iStock/Dmitriev

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