Even in a hot real estate market, it’s possible to learn how to buy a house with no money down. Zero-down home loans aren’t available everywhere and to every borrower, but if you do qualify and can find an area with a zero-down mortgage, homeownership could be much more attainable.
Here’s exactly what you need to know about how to buy a house with no money down.
• It’s possible to buy a home with no money down using certain mortgage programs, but eligibility depends on your situation and location.
• VA and USDA loans offer zero-down payment options — VA for eligible service members and USDA for qualifying rural properties.
• Down payment assistance programs from local or state agencies can help first-time and low- to moderate-income buyers cover upfront costs.
• A down payment gift from a family member can be used toward buying a home if properly documented.
• It’s important to compare lenders and understand loan terms and fees, since zero-down mortgages can come with higher rates, mortgage insurance, or stricter requirements.
Can You Buy a House With No Money Down?
It is possible to buy a house with no money down in certain situations. Some government-backed loans, such as VA and USDA mortgages, offer 0% down options for eligible borrowers. Buyers may also use down payment assistance programs or seller concessions, though credit, income, and eligibility requirements still apply.
There are a few avenues you can take to get a mortgage loan and buy a home with no money down, including:
• Buy a home with a VA or USDA loan. These loans, from the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture, do not require a down payment.
• Receive assistance for your down payment or closing costs from a state or local program or a family member.
• Receive a lender credit.
• Ask for a seller concession.
Note: SoFi does not offer USDA loans at this time. However, SoFi does offer FHA, VA, and conventional loan options.
USDA Loan
A USDA loan requires no money down and is intended for buyers in rural areas. There are two ways the U.S. Department of Agriculture loans money:
• Single-family housing direct loans
• Single-family housing guaranteed program
The direct loans are issued by the USDA and come with a 33-year term for low- and very-low-income households. (Very-low-income applicants may stretch the repayment term to 38 years.) The guaranteed program is run through approved lenders with a 30-year fixed rate for low- to moderate-income households.
VA Loan
A VA loan guaranteed by the U.S. Department of Veterans Affairs is a zero down payment mortgage with low interest rates for qualified veterans, active-duty service members, certain reservists and National Guard members, and surviving spouses. Most borrowers pay a one-time funding fee, which can be rolled into the loan. Lenders can be more flexible with credit scores, mortgage amounts, and debt-to-income ratios.
Down Payment and Closing Cost Assistance Programs
Many city and state agencies offer different mortgage types and down payment assistance to buyers, especially low- to moderate-income homebuyers, first-time homebuyers, veterans, and people buying in federally targeted areas.
The terms vary. Sometimes the assistance for a down payment is in the form of a second mortgage that is repaid over time. Other terms include deferred payments that are only due if the property is sold, loans that are forgivable if the property is occupied by an owner for a specified amount of time, and even grants.
A down payment gift from a family member can also help you buy a house with no money down. The main thing to remember about a down payment gift from a family member is that the money must be properly documented with a gift letter. Your lender will likely provide a template to make sure you have all the crucial elements included.
Lender Credits
Lender credits are what you get when you agree to pay a higher interest rate in return for some money that the lender contributes toward your closing costs. The more lender credits you receive, the higher your rate will be. With some lenders, you can cover your closing costs entirely with lender credits. This is a common practice when refinancing a loan.
Seller Concessions
One strategy real estate agents have used is to ask for a credit from the seller, to be contributed toward the buyer’s closing costs. Making an offer above asking price in tandem with the seller concessions makes this option more palatable for sellers in a competitive housing market.
Buying a house with no money down takes some research, but could be well worth your time. With a VA or USDA loan, down payment assistance, gift money, or lender credits, it is possible to obtain a no money down mortgage. Qualifying first-time buyers can also still catch a break with a conventional mortgage loan — some lenders will let you put just 3% down.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
Can cash gifts be used as a down payment?
Yes, but certain rules must be followed for the gift to be documented by the lender, usually in the form of a gift letter.
Are there any homebuyer grants?
Sometimes, but they’re usually reserved for first-time buyers, veterans, or people buying homes in federally targeted areas. You might start a search for assistance with your state housing finance agency or HUD and then look for city and county programs.
What are down payment assistance programs?
Down payment assistance programs help homebuyers afford down payments and sometimes closing costs as well. This is done in the form of grants and loans, and can vary by location.
What credit score do I need to buy a house with no money down?
For a zero down mortgage backed by the USDA or VA, lenders are advised to look at a borrower’s situation case by case. Approved USDA loan lenders usually require a minimum credit score of 640, though the department itself doesn’t have a credit score requirement.
Most VA loan lenders will want to see a credit score above 620, but again, the VA does not have a minimum credit score. Applicants may qualify with a score below 620 when debt, income, and the ability to shoulder future mortgage payments are given a close look.
Down payment assistance programs often require a minimum credit score of 620.
Photo credit: iStock/Paperkites
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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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Home prices may have flattened out a bit in some markets, but VA loan limits are still getting a bit of a boost in 2026.
For most U.S. counties, lenders’ baseline limit for VA loans (backed by the U.S. Department of Veterans Affairs) is now $832,750, compared to $806,500 in 2025. And loan limits for single-family homes in counties with higher home costs also increased — from a maximum (or “ceiling”) of $1,209,750 in 2025 to $1,249,125 in 2026.
What could higher loan limits mean for you? If you’re a veteran considering a home loan, read on for a breakdown of what you can expect if you purchase a home this year.
• VA home loan limits for 2026 have increased from $806,500 to $832,750, reflecting high home prices.
• VA loan applicants with full entitlement because they are first-time homebuyers or have paid off previous VA loans do not have to worry about loan limits.
• The national ceiling for high-cost counties has risen from $1,209,750 to $1,249,125.
• Higher limits allow more veterans to qualify for larger loans without a down payment, benefiting those in expensive areas.
• The VA guarantees up to 25% of the loan amount, with limits based on the borrower’s remaining entitlement.
What Is the VA Loan Limit?
To be clear: The VA doesn’t limit how much an eligible veteran, service member, or survivor using a VA loan benefit can borrow to finance a home. There are only limits on how much of the loan amount the VA will guarantee if the borrower is unable to repay the mortgage. And that limit can vary based on the status of the borrower’s VA entitlement.
Most borrowers who apply for a VA loan have something called “full entitlement.” This means that if the borrower defaults, the VA will guarantee — or repay the lender — up to 25% of whatever loan amount the lender approved based on its own criteria. If you’re a first-time homebuyer, or if you’ve paid off a past VA loan, you can expect to have a full entitlement.
But if a borrower has what the VA refers to as a “remaining entitlement” (they have a VA loan they’re still paying back), the VA will limit its guarantee based on the Federal Housing Finance Agency (FHFA) loan limit in the county where the home is being purchased.
Instead of paying the lender up to 25% of the full loan amount if the borrower defaults, the VA will limit its guarantee to up to 25% of the applicable FHFA loan limit minus the amount of the entitlement the borrower already used. Borrowers can still get a VA loan using their remaining entitlement, but they may have to make a down payment to get that loan.
To check your VA entitlement status, you can request a certificate of eligibility (COE) through your lender, online, or by mail.
💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you from start to finish.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Questions? Call (888)-541-0398.
When Do VA Loan Limits Apply?
You may wonder when VA loan limits apply and, more specifically, how annual changes to loan limits are calculated. The VA bases its loan guarantee limits on the conforming loan limits (CLL) the FHFA sets for conventional home mortgage loans that are eligible for purchase by Fannie Mae and Freddie Mac.
By law, the FHFA must adjust these limits annually to reflect changes to home prices in the U.S. Between the third quarter of 2024 and the third quarter of 2025, home prices increased, on average, by 3.26%, based on the FHFA House Price Index. So the 2026 baseline CLL increased by that percentage.
But your county’s loan limit could be considerably higher, depending on average home prices in your area.
Higher home prices across the U.S. brought the FHFA’s baseline limit (and, therefore, the VA’s baseline limit for 2026) to $832,750 for a single-family home in most counties.
But in counties where 115% of the median home value is higher than the baseline CLL, the limit has been increased by a percentage that reflects those higher prices. There is a ceiling, or cap, however, of 150%.
Here’s what that looks like for a single-family home in 2026 vs. 2025.
VA Loan Limits in 2026and 2025
Year
National Baseline
115% to 149%
National Ceiling (150%)
VA Loan Limits 2026
$832,750
$957,662 to $1,240,797
$1,249,125
VA Loan Limits 2025
$806,500
$927,475 to $1,201,685
$1,209,750
If you’re buying in Alaska, Hawaii, Guam, or the U.S. Virgin Islands special statutory provisions dictate the loan limit, which in 2026 is $1,249,125 for a single-family home.
VA Loan Limit Example
Here’s a hypothetical example of how a borrower could be affected by the county loan limit on a VA loan.
Let’s say Joe, a Navy veteran, wants to buy a home in San Diego County, even though he knows the cost of living in California is higher than average. Joe manages to find a $715,000 single-family home and he wants to buy with a VA loan, but he still owes $100,000 on another VA loan.
The 2026 single-family limit in San Diego County is $1,104,000. Since the VA will guarantee up to a quarter of that amount, Joe has a maximum entitlement of $276,000.
$1,104,000 x .25 = $276,000
But Joe has to subtract the amount of his entitlement he’s already used, which leaves him with $176,000.
So, the VA would guarantee up to $176,000 of Joe’s loan.
Since most lenders want at least 25% of a borrower’s loan amount to be covered by the VA entitlement and/or a down payment, Joe might have to make a $2,750 down payment to get a VA loan for this home.
$715,000 x .25 = $178,750
$178,750 – $176,000 = $2,750
How Does My County Loan Limit Affect Me?
Just like Joe in the example above, if you’re using a remaining entitlement, your county loan limit could determine whether you’ll have to make a down payment to buy the home you want.
It doesn’t mean you can’t get the loan. If you have enough to make the down payment required by your lender, you may even qualify for a VA-backed loan that’s more than your county loan limit.
It’s important to note that though the example provided here is for a home purchase, the same entitlement limits apply if you’re considering refinancing your VA loan. In that case, your county limit could affect how much you’ll be asked to pay in closing costs.
💡 Quick Tip: Apply for a VA loan and borrow up to $1.5 million with a fixed- or adjustable-rate mortgage. The flexibility extends to the down payment, too — qualified VA homebuyers don’t even need one!
How to Apply for a VA Home Loan
Most VA loans are “VA-backed” loans, which means they’re issued by approved private lenders. The VA’s guarantee that it will help repay the lender if a borrower defaults is an incentive for lenders to offer these loans with attractive terms.
Still, it can be a good idea to shop around for the loan that best meets your family needs, and compare interest rates, fees, customer service, and any additional benefits various lenders might be offering.
You also may want to compare the terms of your top VA loan offer to what you can get with different types of mortgage loans, including a conventional loan.
Of course, no matter which type of loan you ultimately choose, you’ll still have to qualify for a mortgage with a lender.
There isn’t a requisite minimum credit score for VA loans. Instead, the VA asks lenders to review the borrower’s “entire loan profile,” which could include your credit history, DTI ratio, employment history, and assets. Individual lenders also may have their own approval criteria you should be aware of when you’re ready to apply for a VA loan.
Pros and Cons of VA Loan Limits
The VA loan limit is just one of several factors you may want to consider if you’re thinking about using a VA loan for a home purchase or a mortgage refinance. Like any other mortgage option, VA loans have their pros and cons. Here are a few to keep in mind:
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Pros:
• Interest rates may be lower with a VA loan than with a conventional loan.
• You may not need to make a down payment or pay mortgage insurance.
• Though non-VA jumbo loans may require a higher down payment, this isn’t necessarily true with a VA jumbo loan.
• If you decide to sell your home, you can allow the buyer to assume (or take over) your existing mortgage.
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Cons:
• VA purchase loans are only for primary homes; you can’t use the loan to buy a vacation home or to invest in a home that isn’t your main residence.
• The VA charges a one-time “funding fee” that’s designed to cover foreclosure costs when homebuyers default on a loan. Currently, the fee ranges from 1.25% to 3.3% of the loan.
• The home you hope to buy must be evaluated by a VA-approved appraiser to ensure it meets the VA’s minimum property standards. If the home you want is too rundown, it may not pass this appraisal.
VA loan limits are based on home prices in the U.S., and they’re adjusted annually to reflect price increases.
If you’re a first-homebuyer or you’ve paid off a past VA loan, you shouldn’t have to worry about VA loan limits. But if you want to buy a home and you already have a VA loan, the loan limit for your county could determine whether you’ll have to make a down payment to qualify for the amount you hope to borrow.
SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.
Our Mortgage Loan Officers are ready to guide you through the process step by step.
FAQ
Will VA home loan limits increase in 2026?
VA home loan limits increased significantly in 2026. The baseline limit for VA loans is now $832,750, compared to $806,500 in 2025.
What is the conforming loan limit for 2026?
The national baseline conforming loan limit for 2026 is $832,750, although some counties have higher limits. The VA loan limit for a county is the same as its conforming loan limit.
What is the DTI limit for a VA loan in 2026?
The Department of Veterans Affairs hasn’t set a hard-and-fast limit on the debt-to-income (DTI) ratio it requires for its loans. But generally, lenders allow a 41% maximum for a VA loan.
Photo credit: iStock/Thai Liang Lim
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
^SoFi VA ARM: At the end of 60 months (5y/1y ARM), the interest rate and monthly payment adjust.
At adjustment, the new mortgage rate will be based on the one-year Constant Maturity Treasury (CMT) rate, plus a margin of 2.00% subject to annual and lifetime adjustment caps.
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Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
The monthly payments on a $400,000 mortgage could range from about $2,300 to more than $3,700, depending on the loan’s interest rate, term, and other factors. But hopeful homebuyers would be wise to consider how much that mortgage could cost over time as well as what the monthly payments might be.
Read on for a breakdown of what some of your home-buying costs might be, and how they could affect the total cost of a $400,000 mortgage.
• Monthly payments on a $400,000 mortgage vary widely depending on the interest rate and loan term.
• Longer loan terms lower monthly payments but increase total interest, while shorter terms raise monthly costs but reduce overall interest paid.
• Closing costs like lender fees, appraisal costs, taxes, and optional mortgage points can add 3%–6% of the loan amount upfront.
• Interest costs over the life of the loan are significant, potentially totaling hundreds of thousands of dollars on a 15‑ or 30‑year mortgage.
• Shopping around for different lenders, loan types, and rates helps borrowers find the best fit.
What Will a $400,000 Mortgage Cost?
There are several different costs you may run into when taking out a mortgage. Most of the time, they can be divided into three main categories.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Questions? Call (888)-541-0398.
Closing Costs
Closing costs are expenses you’ll pay upfront when you get a loan. They can include things like loan processing fees, third-party services such as appraisals and title insurance, and government fees and taxes. You also may decide to pay mortgage points (also called discount points) upfront on your loan to lower the interest rate.
Closing costs can vary significantly from one loan type and lender to the next, but they generally range from 3% to 6% of the mortgage amount.
Monthly Payments
Monthly mortgage payments, which are paid over the life of your loan, typically include two main parts:
• Principal: This portion of your mortgage payment goes directly toward paying back the amount you borrowed.
• Interest: This is the fee the lender will charge you for borrowing money. The amount of interest you pay each month will be calculated by multiplying your interest rate by your remaining loan balance.
Escrow
Some homebuyers may also have a third amount, called escrow, included in their closing costs and/or monthly payments. Lenders often collect and hold money in an escrow account so they can be sure critical bills like homeowners insurance and property taxes are paid on time. (Curious about the most budget-friendly places to buy? Check out this list of the most affordable cities in each state.)
What Would the Payment Be on a $400,000 Mortgage?
We’ll keep things simple and eliminate the costs associated with an escrow account to calculate what the payment on a $400,000 mortgage’s monthly payments might be.
Let’s say you wanted to purchase a home for $500,000, and you had $100,000 for a down payment. If your lender offered you a 7% annual percentage rate (APR) on a 15-year loan for $400,000, you could expect your monthly payment — principal and interest — to be about $3,595. If you had a 30-year loan with a 7% APR, your payment could be about $2,661.
Here are some more examples that show the difference between a 15-year loan vs. a 30-year loan, using SoFi’s Mortgage Calculator:
APR
Payment with 15-year Loan
Payment with 30-year Loan
5.5%
$3,268
$2,271
6.5%
$3,484
$2,528
7.5%
$3,708
$2,796
Where Can You Get a $400,000 Mortgage?
Homebuyers may have a few different options when deciding where to go for a mortgage, including online banks and lenders, and traditional banks and credit unions. Because the rates and terms lenders offer may vary, it can be a good idea to shop around for a mortgage that’s the right fit for your individual needs.
Before you start looking for quotes, though, you may want to sit down and review the different types of mortgages you can qualify for. How would a 15-, 20-, or 30-year mortgage affect your monthly payments? Are you looking for a fixed or adjustable mortgage rate? Would you be better off with a conventional mortgage or a government-backed loan? (Some loans may have more flexible requirements for down payment amounts or a borrower’s credit score.)
Once you start comparison shopping, you can note the pros and cons of various offers and narrow down your choices. You also may want to read some online reviews of the lenders you’re considering.
How Much Interest Will You Pay on a $400,000 Mortgage?
The interest rate your lender offers can make a big difference to the overall cost of your mortgage. So can the mortgage term you choose.
On a $400,000 mortgage at a 7% APR, for example, your total interest costs could range from $247,156 to $558,036, depending on the length of the loan you choose (15 vs. 30 years).
Spreading out your mortgage payments over a longer term can lower your monthly payment, but you can expect to pay more for the loan overall. Your financial circumstances at the time you take out your loan may dictate which is a priority for you. (If you go for a longer loan, and your situation changes, you may decide to refinance your home mortgage to a shorter term down the road.)
How Does Amortization Work on a $400,000 Mortgage?
Though your payment will remain the same every month (if you have a fixed-rate loan), the amount you’ll pay toward interest vs. principal will change over the life of your home loan. In the first years, the majority of your payment will go toward interest. But as your balance goes down, more of your payment will go toward principal.
Your lender can provide you with a mortgage amortization schedule that shows you how the proportions will change as you make payments on your loan.
Here’s what the amortization schedules for a $400,000 mortgage with 30- and 15-year terms might look like. (Keep in mind that your payments may include other costs besides principal and interest.)
Amortization Schedule, 30-Year Loan at 7% APR
Year
Amount Paid
Interest Paid
Principal Paid
Remaining Balance
1
$31,934.52
$27,871.28
$4,063.24
$395,936.76
2
$31,934.52
$27,577.55
$4,356.97
$391,579.79
3
$31,934.52
$27,262.58
$4,671.94
$386,907.85
4
$31,934.52
$26,924.85
$5,009.67
$381,898.18
5
$31,934.52
$26,562.70
$5,371.82
$376,526.36
6
$31,934.52
$26,174.37
$5,760.15
$370,766.21
7
$31,934.52
$25,757.97
$6,176.55
$364,589.66
8
$31,934.52
$25,311.46
$6,623.06
$357,966.60
9
$31,934.52
$24,832.68
$7,101.84
$350,864.76
10
$31,934.52
$24,319.29
$7,615.23
$343,249.53
11
$31,934.52
$23,768.78
$8,165.74
$335,083.80
12
$31,934.52
$23,178.48
$8,756.04
$326,327.76
13
$31,934.52
$22,545.51
$9,389.01
$316.938.75
14
$31,934.52
$21,866.78
$10,067.74
$306,871.01
15
$31,934.52
$21,138.98
$10,795.54
$296,075.46
16
$31,934.52
$20,358.57
$11,575.95
$284,499.51
17
$31,934.52
$19,521.74
$12,412.78
$272,086.73
18
$31,934.52
$18,624.42
$13,310.10
$258,776.63
19
$31,934.52
$17,662.23
$14,272.29
$244,504.35
20
$31,934.52
$16,630.49
$15,304.03
$229,200.31
21
$31,934.52
$15,524.16
$16,410.36
$212,789.95
22
$31,934.52
$14,337.85
$17,596.67
$195,193.28
23
$31,934.52
$13,065.79
$18,868.73
$176,324.55
24
$31,934.52
$11,701.76
$20,232.76
$156,091.79
25
$31,934.52
$10,239.14
$21,695.38
$134,396.41
26
$31,934.52
$8,670.78
$23,263.74
$111,132.66
27
$31,934.52
$6,989.04
$24,945.48
$86,187.18
28
$31,934.52
$5,185.73
$26,748.79
$59,438.39
29
$31,934.52
$3,252.05
$28,682.47
$30,755.92
30
$31,934.52
$1,178.60
$30,755.92
$0
Amortization Schedule, 15-Year Loan at 7% APR
Year
Amount Paid
Interest Paid
Principal Paid
Remaining Balance
1
$43,143.76
$27,504.57
$15,639.19
$384,360.81
2
$43,143.76
$26,374.01
$16,769.75
$367,591.06
3
$43,143.76
$25,161.72
$17,982.04
$349,609.02
4
$43,143.76
$23,861.80
$19,281.96
$330,327.06
5
$43,143.76
$22,467.90
$20,675.85
$309,651.21
6
$43,143.76
$20,973.24
$22,170.51
$287,480.69
7
$43,143.76
$19,370.54
$23,773.22
$263,707.47
8
$43,143.76
$17,651.97
$25,491.79
$238,215.68
9
$43,143.76
$15,809.16
$27,334.59
$210,881.09
10
$43,143.76
$13,833.14
$29,310.61
$181,570.48
11
$43,143.76
$11,714.28
$31,429.48
$150,141.00
12
$43,143.76
$9,442.24
$33,701.52
$116,439.48
13
$43,143.76
$7,005.95
$36,137.80
$80,301.67
14
$43,143.76
$4,393.55
$38,750.21
$41,551.47
15
$43,143.76
$1,592.29
$41,551.47
$0
How to Get a $400,000 Mortgage
If you’re feeling intimidated by the whole home-buying process, breaking it down into some manageable steps may make things a little less overwhelming.
1. Determine What You Can Afford
Reviewing your income, debts, monthly spending, and how much you’ve saved for a down payment can be a good place to start. This will help you decide how much of a down payment you can handle and how much house you can afford.
2. Compare Different Loans and Lenders
Once you know what you can afford, you can start looking for the loan type, interest rate, loan term, and lender that meet your needs.
3. Consider Getting Preapproved
If you’ve decided on a loan and lender, it can be a good idea to go through the preapproval process. Getting a letter from your lender that says you’re preapproved for a certain loan amount lets sellers know you’re a serious buyer. (And it can come in handy if you get into a bidding war for your dream home.)
4. Get Ready to Go House Hunting
When you have your loan lined up, you can look for and potentially make an offer on a house. And since you already know how much you can afford, you can target homes in that range.
5. Submit a Full Mortgage Application
Once your offer is accepted and you’re ready to move forward, your lender will ask you to complete a more formal loan application and provide additional financial information and documentation.
6. Prepare for Closing
While you’re waiting for a final loan approval and a closing date, you can shop for homeowners insurance, get a home inspection, and make sure you have all the money you need for your down payment and closing costs.
7. Take Ownership of Your New Home
At the closing you can sign all the necessary paperwork, hand over the funds needed to make the purchase, and — congratulations! — get the keys to your new home.
Researching the different costs you might have to pay if you plan to take out a $400,000 mortgage can help you stick to your budget and avoid unpleasant surprises.
The choices you make about the type of loan you get, the interest rate, loan term, and other costs, will all play part in how much you pay every month — and over the length of the loan. So it can be a good idea to run the numbers before you decide on a particular lender or loan.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How much is a $400,000 mortgage a month?
The monthly payment for a $400,000 mortgage could range from about $2,300 to more than $3,700, depending on several factors, including the interest rate and loan term.
How much income is required for a $400,000 mortgage?
Lenders will look at several factors besides your income to determine if you can afford a $400,000 mortgage. You can expect to be asked about your debt, credit history, assets, and the down payment you plan to make.
How much is a down payment on a $400,000 mortgage?
Your down payment may vary depending on the price of the house you choose, the type of loan you get, and if you want to avoid paying private mortgage insurance as part of your borrowing costs. Traditionally, lenders like to see a 20% down payment, which on a $500,000 home would be a $100,000 down payment and a $400,000 mortgage. But many lenders accept lower down payments.
Can I afford a $400,000 mortgage with a $70,000 salary?
Since your housing costs (monthly payments, insurance, etc.) would likely be more than half your monthly salary, it could be a challenge to afford a $400,000 mortgage on a $70,000 salary.
Photo credit: iStock/svetikd
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
A $100,000 mortgage comes with a monthly payment (principal, interest, taxes, and insurance) of around $840, assuming a 6.5% interest rate and a 30-year term. Your lender will look for income in the $28,000 range to make that monthly payment, assuming you don’t already have existing debt.
If you’re wondering how we got to this income level, you’ll want to stick around to see exactly how to get the mortgage you need for the home you want. We’ll go through everything you should know about the income required for a $100,000 mortgage.
• To afford a $100,000 mortgage, monthly payments (including principal, interest, taxes, and insurance) are roughly $840–$874 on a 30-year loan with 6.5% interest.
• Lenders commonly use debt-to-income guidelines — such as keeping total monthly debt below 36% of income — to determine what you can afford.
• Without other debts, you’d generally need to earn at least around $28,000–$29,000 per year to qualify for a $100,000 mortgage.
• Existing monthly debts (like car payments or student loans) increase the income needed to qualify for the same mortgage amount.
• Factors like your down payment size, credit profile, and debt load also influence how much you’ll actually qualify for.
Income Needed for a $100,000 Mortgage
The income needed for a $100K home mortgage loan depends on your existing debt and down payment. The amount you’ll qualify for goes up and down based on how much you owe and how much you’re willing to put down. (This is where a home affordability calculator comes in handy.)
For example, if you put down $25,000 on a property that costs $125,000, your $100,000 mortgage works out to about $840 monthly, including principal, interest, taxes, and insurance on a 6.5% annual percentage rate (APR). That $840 should be at maximum 36% of your monthly income (assuming you have no debt), which means you need to make at least $2,333 per month, or $28,000 per year, to afford the payment.
Of course, your existing debt affects your $100,000 mortgage: If you’re carrying $400 in additional debt each month, you’ll need more income to qualify for the loan. Here’s a look at the math:
How Much Do You Need to Make to Get a $100K Mortgage?
To recap: For a $100,000 mortgage, you need to make a minimum of roughly $28,000 per year. To get this number, we calculated the percentage of income based on the 28/36 rule of thumb, which states that mortgage payments should be 28% or less of your gross income and no more than 36% of your total monthly debts. Thus, if you have no debt, a lender could approve a monthly payment that is 36% of your income. Some lenders may be even more generous with these ratios.
A $100,000 mortgage at a 6.5% interest rate on a 30-year term with estimated taxes and insurance works out to be $874. Working backward, we find that $874 is 36% of $2,428 per month, or $29,138 per year.
Keep in mind, that number is without other debt. If you have a car loan or credit card bills, you’ll need to make a higher income.
Lenders look for debt-to-income (DTI) ratios below 36%, but your chances of qualifying for the mortgage you want improve drastically if you have a minimal amount of debt. Conversely, with a lot of debt, the loan amount you qualify for is much lower.
What Determines How Much House You Can Afford?
Qualifying for a mortgage involves balancing the following factors:
• Income. Your income is one of the most important factors in determining how much house you can afford. Generally, the higher your income, the more house you can afford. But it’s not the only factor.
• Debt. Debt is a huge factor in determining how much house you can afford. Every monthly debt payment you have is calculated in your debt-to-income ratio. When you have too much debt, you’ll struggle to qualify for the mortgage you want.
• Down payment. The higher your down payment, the higher purchase price you can take on. It also changes how much you’ll qualify for because a 20% down payment eliminates mortgage insurance.
A million dollar mortgage seems like a high mark, but if you’re in a state with a high cost of living, it can be relatively common. If you do need to borrow that much, you’ll also likely need a jumbo loan, also called a nonconforming loan, which usually has more stringent requirements.
Whatever amount you need to borrow, take a look at a mortgage calculator or talk to a lender to take your individual situation into account and get the most accurate number.
What Mortgage Lenders Look For
To qualify for a $100,000 mortgage, you’ll need to show the lender you’re a reliable borrower. For the best rates on a $100,0000 mortgage, lenders are going to look closely at the following factors:
• Credit history. A credit history full of on-time payments, low credit balances, and only necessary credit inquiries may look ideal to a lender. If your credit has some imperfections, it may still be possible to get a mortgage for a $100,000 home.
• Debt-to-income ratio. If you have too much debt, a lender isn’t going to approve you, no matter how high your credit score is. If you don’t meet the lender’s debt-to-income (DTI) ratio, you may be out of luck. Pay off some debt and try to qualify in the future.
• Income. Income is the biggest factor that affects your odds of approval. Lenders want to see that you make enough to pay back the loan.
• Down payment. A higher down payment represents less risk to the lender, and you may be rewarded with a lower interest rate on your mortgage. Remember that if you qualify for a mortgage but not at the best possible interest rate, you can consider refinancing your mortgage in the future.
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$100,000 Mortgage Breakdown Examples
To illustrate the income needed for a $100,000 mortgage, we’ve put together a few scenarios. All assume a 7% APR, but different debt levels will affect how much you qualify for. Keep in mind the taxes and insurance numbers may not reflect your area. The cost of home insurance in Florida, for example, is going to be much higher than in Utah.
When you break down a $100,000 mortgage, it will look similar to this:
Terms
• Home purchase price: $125,000
• Down payment: 20% or $25,000
• Mortgage amount: $100,000
• APR: 7%
Monthly payment: $874
• Principal and interest: $665
• Taxes and insurance: $209
If you don’t have a down payment, it’ll look more like this:
Terms
• Home purchase price: $100,000
• Down payment: 0% or $0
• Mortgage amount: $100,000
• APR: 7%
Monthly payment: $924
• Principal and interest: $665
• Private mortgage insurance: $95
• Taxes and insurance: $164
You’ll notice that you have to pay PMI, an increase of $95. (PMI is required when the down payment is less than 20%.) However, taxes and insurance may be lower because you’re purchasing a less expensive property.
• May be easier to qualify for than a higher mortgage
• Mortgage insurance premiums are smaller for lower mortgages
• May allow home ownership vs. renting
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Cons:
• Appreciation may come more slowly
• A lower-priced house may not suit your needs in a few years
• You might be buying a fixer-upper
How Much Will You Need for a Down Payment?
For a $100,000 mortgage, you may be able to qualify for loans with 0% down payment options. The chart illustrates several loan types and the minimum down payment required for each.
Loan type
Minimum down payment
Amount for a $100,000 loan
Conventional
3%
$3,000
Federal Housing Administration (FHA)
3.5%
$3,500
U.S. Department of Veterans Affairs (VA)
0%
$0
U.S. Department of Agriculture (USDA)
0%
$0
If you’re able to put down 20%, you’ll be able to avoid PMI, which is arguably the most hated fee on a mortgage. (If you have it, you’ll want to get rid of it as soon as possible.)
There are some scenarios where you’ll be able to buy a $100,000 home with no money down. These options have 0% down payment requirements for borrowers who qualify.
0% Down Payment Mortgages
• VA mortgages:VA mortgages are for qualified veterans and service members. A certificate of eligibility (COE) based on service and duty status is required. These loans have no down payment requirement.
• USDA mortgages:USDA mortgages, designed for low- and moderate-income borrowers in rural areas, have no down payment requirement. The interest rate is comparable to a conventional loan, and the mortgage insurance is much lower than the FHA’s.
Can You Buy a $100K Home With a Small Down Payment?
If you can find a $100K house, there are several ways to pull off a small down payment.
• Conventional mortgages:Conventional mortgages have options for down payments as low as 3% of the purchase price. These loans require mortgage insurance, but do allow for it to drop off once the mortgage reaches 20% equity.
• FHA mortgages:FHA mortgages allow for down payment options as low as 3.5% of the purchase price. The mortgage insurance is more costly and doesn’t ever go away, but FHA loans have more flexibility when it comes to credit requirements.
The other options for 0% down payment mortgages — VA loans and USDA loans — also apply here.
Is a $100K Mortgage with No Down Payment a Good Idea?
If you can find a home that requires just a $100K mortgage and can afford the payment, then a no-down-payment mortgage may be a good idea. This is especially true if it can help you get into a home sooner.
A $100K mortgage with no down payment does come with a higher monthly payment due to the higher mortgage amount and required mortgage insurance premium.
How to Improve Your Chances of Approval
If you’re struggling to qualify for a $100K mortgage, there are steps you can take to improve your qualifications as a borrower.
Pay Off Debt
Paying off debt is the secret formula to help you afford a home. When your debt is paid off, your lender doesn’t need to count anything toward your monthly debts. This leaves you with the ability to qualify for a higher mortgage amount.
Look into First-Time Homebuyer Programs
First-time homebuyer programs can help with down payment and closing costs assistance, homebuyer education, and rate buydowns. Most cities and states have some type of program to help first-time homebuyers, so you’ll want to research the program available in your local area.
Your credit history is a key piece of the puzzle your lender is putting together, and it takes time to build. These ideas can help.
• Check your credit report. Errors on a credit report are common. You’ll want to take a good look and see if there’s anything you can do to take better care of your credit. Can you pay off an account? Can someone add you as an authorized user on their account to help build your credit history?
• Consider opening a credit account. You need to use credit to build it. If you have a limited credit history, consider opening a credit card or applying for a credit-builder loan. Pay your bill on time each month, which may help build your credit.
• Automate your payments. Use your bank’s bill pay function to automate your payments. You’ll never miss a payment and build your credit history with beautiful, on-time payments.
Start Budgeting
Tracking your money is one of the best ways to get better control of it. When you know where your money is going, you can do powerful things with it. That includes saving a little bit every month for a down payment on a house.
Alternatives to Conventional Mortgage Loans
If you’re looking at alternatives to a conventional mortgage, here are some places to look:
• Private lending. Private lenders may be able to help borrowers with special circumstances. You might pay a higher interest rate, but the lender also might have more flexible qualifications.
• Seller financing. It’s possible to enter into an agreement with a seller where you pay them directly instead of the bank. The buyer and seller will agree upon the details privately.
• Rent-to-own. Along the same lines as seller financing is the rent-to-own option, where the seller agrees to finance the property before the buyer is able to purchase it.
Mortgage Tips
Finding a mortgage that suits your needs is important. Here are a few quick tips to get you through the process of choosing a lender and finding the right mortgage for you.
• Shop around. Different lenders have different mortgages, so be sure to shop around to find a mortgage with a rate, term, and conditions that work for you.
• Compare loan estimates. Ask each lender you’re considering for a loan estimate and be sure to submit the same information to each lender (loan amount, loan type, etc.). This will give you a standard form from each lender that can help you compare the fees, interest rates, and terms of each loan offered before you go through the mortgage preapproval process.
• Go with a reputable lender. It’s hard to know if a lender is going to be good from the get-go, but you can read reviews on Trustpilot and the Better Business Bureau to get an idea of what closing a loan with the company is going to be like.
The Takeaway
Affording a $100,000 mortgage requires reliable income, the right debt-to-income ratio, and healthy credit. There are a number of zero down payment mortgages that can aid your mission to buying a home, too.
For most people around the country, the biggest problem is likely going to be finding a $100,000-$125,000 home. When you do find a home at an affordable price, you’ll need a minimum of roughly $28,000 in income to qualify for the mortgage.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How much house can I afford if I make $36,000 a year?
With an income of $36,000 per year, or $3,000 a month, going by the 28/36 rule, the amount of mortgage you’re looking for is between $840 and $1,080. With a 7% interest rate and homeowner’s insurance and taxes, that puts your purchase price at a maximum of $140,000, assuming you have no other debts.
What is the monthly payment on a $100K mortgage?
A monthly payment for a $100K mortgage is $665 per month (assuming a 7% interest rate and 30-year term). This amount includes principal and interest only.
How much home loan can I get if I make $100K?
How much home loan you can get on a $100,000 income depends on your debt, credit score, interest rate, and down payment. Many lenders aim for housing costs below about 28% of income, which could translate to a mortgage roughly in the $300,000 to $400,000 range.
Photo credit: iStock/ElenaMorgan
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
‡Up to $9,500 cash back: HomeStory Rewards is offered by HomeStory Real Estate Services, a licensed real estate broker. HomeStory Real Estate Services is not affiliated with SoFi Bank, N.A. (SoFi). SoFi is not responsible for the program provided by HomeStory Real Estate Services. Obtaining a mortgage from SoFi is optional and not required to participate in the program offered by HomeStory Real Estate Services. The borrower may arrange for financing with any lender. Rebate amount based on home sale price, see table for details.
Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.
HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.
SoFi Bank, N.A. (NMLS #696891) does not perform any activity that is or could be construed as unlicensed real estate activity, and SoFi is not licensed as a real estate broker. Agents of SoFi are not authorized to perform real estate activity.
If your property is currently listed with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
If you’re a parent with a child planning to attend college, you’ve likely already begun to worry about how you’re going to pay for their college tuition. However, the percentage of parents who pay for their child’s college education may be lower than you think. Learn more about the statistics, and get tips on how to afford your child’s college tuition.
• Almost 60% of families created a plan to pay for their child’s college education in 2025, with many relying on borrowing.
• Parent PLUS Loans and private parent loans are common borrowing options, with different interest rates, fees, and eligibility requirements.
• Refinancing existing student loans can free up money for future college expenses, but it may eliminate federal benefits and protections.
• Saving strategies include high-yield savings accounts, 529 college savings plans, and Coverdell Education Savings Accounts for tax advantages and investment growth.
• Starting early with even small contributions allows funds to grow over time and reduces the reliance on student loans for future education costs.
What Percentage of Parents Pay for Their Children’s College Education?
According to Sallie Mae’s “How America Pays for College 2025” survey, 59% of families created a plan to pay for college before enrollment in 2025, and nearly half (48%) reported that they borrowed to help pay for it.
However, the reality is that paying for even a percentage of the total college bill can be difficult for most families. How much should parents be saving exactly? Average yearly tuition, fees, and living expenses per student currently amount to $38,270, according to the Education Data Initiative. (As you might guess, private colleges can be significantly more expensive than in-state public universities.)
To put it another way, the typical family plans to contribute over $150,000 to the total college cost for four years, and they could seek to save tens of thousands of dollars to finance their kiddos’ higher education.
💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-hidden-fees loans, you could save thousands.
What Student Loans Are Available to Parents?
Parents considering borrowing a student loan to pay for their child’s education can opt for a federal Parent PLUS Loan or explore options available with private lenders.
According to the same Sallie Mae 2025 survey mentioned earlier, parents’ income and savings covered nearly half of college expenses (48%) in the 2024–25 academic year, with scholarships, grants, and borrowing making up the rest.
Parent PLUS Loans are a type of federal student loan available for parents of dependent undergraduate students.
To apply, parents or their undergraduate child must first fill out the Free Application for Federal Student Aid (FAFSA®). They can then apply for the PLUS Loan directly on the federal aid website. A credit check will be conducted to review any adverse credit history, but approval typically won’t depend on factors such as the applicant’s credit score or debt-to-income ratio.
Parent PLUS Loans have a fixed interest rate that is set annually by Congress. For loans disbursed on or after July 1, 2025, and before July 1, 2026, the rate is 8.94%. Direct PLUS Loans carry an origination fee of 4.228% when disbursed between October 1, 2020, and before October 1, 2026.
Private Parent Loans
Private loans for parents are available from private financial institutions, including banks and credit unions. These lenders generally review factors such as the applicant’s credit score and income, and those of any cosigner. Private lenders determine their own interest rates, terms, and repayment plans.
To help you decide whether a fixed or variable interest rate would be best for your financial situation, compare annual percentage rates (APRs) among lenders. Some private lenders charge an origination fee, while others do not.
Saving for Future College Costs
It can be daunting to even think about saving in the range of $40,000 each year to pay for your child’s college costs on top of all your other financial responsibilities. One recommendation is to pay off your own student loans before putting significant amounts of money into college savings. Some parents find that refinancing their own student loans if they haven’t yet paid them off can help them save — giving them more financial wiggle room to fund their child’s future education expenses.
Student loan refinancing can help you save on your student loans so you can start putting money aside for your kid’s education by allowing you to trade in all your student loans for one new loan with a potentially lower interest rate and more favorable repayment terms.
However, refinancing your student loans has both pros and cons. You should first consider whether the benefits outweigh any potential negatives. For example, you may be able to secure a more competitive interest rate and lower your monthly costs, but refinancing federal loans will eliminate access to borrower protections or benefits. So, if you are using one of these benefits — such as Public Service Loan Forgiveness — refinancing may not make sense for you.
In addition, if you refinance for a longer term, you may have to pay more interest over the life of the loan, which is why you should read up on the topic with student loan refinancing guides and other resources.
When you refinance your student loans, the lender looks at your current financial situation, including your credit score, income, and future earning potential, to calculate an interest rate that could be lower than what you might be paying to the federal government or a private student loan lender.
Refinancing Options
If you are interested in refinancing student loans with bad credit, be aware that it may be more challenging to secure a competitive interest rate. It’s possible to find a lender and refinanced loans that meet your needs, but you may need to shop around. Be patient as you go through the process.
You might also consider adding a cosigner to your application. A student loan cosigner is someone who agrees to take on responsibility for the loan if you, the primary borrower, are unable to make payments in the future.
If you’re unable to add a cosigner or wish to refinance without a cosigner, you might want to take some time to build your credit. A few tips on building credit include making monthly payments on time, maintaining a low debt-to-income ratio, and checking your credit report regularly to correct any errors.
On top of potentially saving on interest rates, refinancing your student loans can consolidate multiple student loan payments into one monthly payment. This can simplify your money management and bill payments.
What’s more, if you can shorten your loan term through student loan refinancing, you could pay off your student loans even faster, reducing the amount of interest you pay over the course of your loan. Those savings can be used for your child’s future education — potentially helping them avoid having to take out too many student loans themselves.
There are a few options to help parents maximize their savings. One of the main benefits of saving up for college tuition while your child is still young is that time is on your side.
• If you can sock away even small amounts of money over time, it can earn interest or dividends over time, depending on where you invest it — potentially increasing the amount you’ll have to put toward your child’s tuition payments.
• Once you’ve decided to start saving up for a college fund, you’ll need to decide where to put that money. Some parents choose to set aside cash in a regular savings account, but the relatively low interest rates on most standard savings accounts mean that your money may not grow as much as you’d like it to over time. A high-yield savings account with compound interest can help your funds grow.
• Many parents consider a government-sponsored savings program to net significant tax benefits or invest their money so it will grow over time.
• When it comes to government savings plans, you can choose from a 529 College Savings Plan, which offers generous tax benefits, or a Coverdell Education Savings Account, which allows you to invest in stocks and bonds to cover education expenses.
The Takeaway
Most parents plan to contribute to their child’s college expenses, and starting to save today can help you put more money aside. If you still have student loans to repay from your own college days, one option is to refinance them with a lower interest rate to create some wiggle room in your budget to pay for your child’s tuition.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
How many families fill out the FAFSA?
Recent National College Attainment Network data shows that national FAFSA completion rates for high school seniors were about 46% for the 2025 cohort (as of June 2025). According to the U.S. Education Department, more than 5 million 2026–27 FAFSA® forms were successfully submitted by students and families across the country, representing a nearly 150% increase in the number of applications submitted at the same time last year.
Should parents borrow or ask their child to borrow money to pay for their college education?
It depends on the situation. Parent loans may offer lower interest rates for federal loans, but the parent assumes full responsibility. Student loans often have more flexible repayment options and forgiveness programs but may have stricter borrowing limits.
What are the pros and cons of refinancing student loans?
Refinancing student loans could yield a more competitive rate and lower your monthly payments. However, when you refinance federal student loans, you lose federal protections, such as forbearance. And, if you refinance for a longer term, you could wind up paying more interest over the life of the loan.
SoFi Student Loan Refinance Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
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