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Figuring out whether you will get approved for a credit card is seemingly simpler now with credit card approval odds calculators. These tools can offer guidance, highlighting credit cards with high approval odds in your favor. However, they are not always reliable.

It can be helpful to also understand the key factors that can help make you a more desirable borrower for credit card companies, thus increasing your future approval odds.

What Are Credit Card Approval Odds?

Credit card approval odds inform you of the likelihood that you’d get approved for a particular credit card. How these approval odds are determined, including which details are assessed, can vary between services and card issuers.

For example, a credit card approval odds calculator might suggest that, based on your credit score and income, you have an 80% chance of getting approved for a credit card. It might also offer you a few credit cards with high approval odds to explore.

Checking Your Credit Card Approval Odds

Using a credit card approval odds calculator offers a glimpse of your approval chances but not a promise. That’s because a credit card company or credit card marketplace can’t provide a 100% assurance of your approval without going through a formal underwriting process.

Underwriting is the step where a lender or issuer evaluates your credit portfolio and application details (such as existing debt and income) to calculate whether it would be a risk to extend credit to you. Since this process can only happen after an application is submitted, a tool that states you have high approval odds doesn’t mean your eventual approval is guaranteed.

Prequalifying for a Credit Card Approval

There are a couple of ways to obtain a prescreened credit card to gauge your approval odds: receiving a prequalification offer or requesting a prequalification from a credit card issuer.

Using a Prescreened Offer

Based on your general information from the credit bureaus, card issuers might send you an unsolicited prescreened offer stating that you might be qualified for its credit card.

At this step in the process, the card company has only looked at limited markers, such as whether you’ve met its minimum credit score requirement. It hasn’t performed a hard credit check or evaluated your existing debt or income to base an approval on. However, if you receive a prequalification offer, this can be a positive sign that your approval odds are better than if you hadn’t received it.

Checking the Card Issuer’s Website

You don’t always have to cross your fingers in hopes that a card issuer will give you a prescreened offer. Some credit card issuers offer a prescreening form that you can fill out to see if you’re prequalified for its card. If your preferred card doesn’t let you request a prequalification, you might find more insight on the issuer’s website about what’s required for approval.

While you’re on the card issuer’s site, it’s helpful to review its response timelines so you can track your prequalification or application progress. This includes the timeline for an application decision, as well as how long it takes to get a credit card if you’re approved.

What to Do if You Prequalify

If you prequalify for a credit card, you can choose to submit an application. Doing so will require a hard credit inquiry before a decision is made, which can temporarily have an effect on your credit score.

Additionally, you can continue shopping around for different cards to see if another product offers a lower interest rate or better incentives.

Recommended: How to Avoid Interest on a Credit Card

What to Do if You Don’t Prequalify

If you don’t prequalify for a credit card, you can proceed in a few ways:

•   Hold off on getting a new card. Too many hard credit inquiries might flag you as a high-risk borrower who’s reliant on credit. If you’ve recently had multiple inquiries on your credit, consider waiting a couple of months before reapplying for a new card.

•   Build your credit score. Card issuers typically look at your credit score to see if it meets its minimum requirement. A higher credit score is a positive indicator that you’re a responsible borrower.

•   Apply for a secured credit card. A secured credit card can be a credit-building card in which you deposit money or collateral in a certain amount. This amount acts as your credit limit.

•   Appeal the decision. If you applied for a credit card and were denied, the issuer must legally inform you of the reason for the denial. If you can provide more information that might sway the issuer in your favor, you can ask them to reexamine your application.

Recommended: Tips for Using a Credit Card Responsibly

Tips for Improving the Likelihood of Approval

Whether you’re getting a credit card for the first time or adding a new card to your rotation, there are a few steps you can take to improve your approval odds.

Reviewing Your Credit Report

Your credit report gives credit card issuers a comprehensive view of your borrowing habits to date. Since it’s a highly scrutinized factor when approving applications, review your credit report before submitting an application.

Check that all accounts, their statuses, and the amounts are accurate. If you spot an account that looks outdated or incorrect, reach out to the credit bureaus immediately to dispute it.

Taking a Look at Your Credit Score

In addition to ensuring your credit report is accurate, evaluate where your credit score stands today. Credit scores are the most common credit card requirements that influence your approval odds. For instance, if a card issuer explicitly states that its minimum credit score required is 720 but your score is 650, your credit card approval odds might be low.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

Minimizing Your Debt

Keep your debt-to-income (DTI) ratio as low as possible. Credit issuers use this ratio as a way to determine whether you can afford to pay back potential purchases made on the card. The ratio is based on your aggregate monthly debt amount divided by your gross monthly income.

Stating All of Your Income

As mentioned above, your income is one of multiple factors used to determine your credit card approval odds. A higher income can reduce your DTI ratio, making you a less risky customer to extend credit to.

You can include various types of income sources on your application. This might include your salary from your full-time job, earnings from a side gig, Social Security benefit payouts, and alimony.

Managing Payment History and Credit Utilization

Staying on top of your existing loan and credit card payments keeps your credit score healthy. This means paying at least the minimum amount due and making those payments on time every month.

Additionally, be aware of how much of your total credit limit you’re using, compared to how much credit you have access to. This ratio is called your credit utilization ratio. The lower it is, the better. Many financial experts say that no more than 30% or better still, less than 10% is a good number.

Recommended: When Are Credit Card Payments Due?

Comparing Cards Carefully

With so many credit card products on the market, choosing a credit card that suits your borrowing needs and qualifications can help you find the right card.

Ensure you’re comparing credit cards with the same credit card features between different cards to accurately determine their pros and cons. Some considerations to make when comparing credit cards include:

•   APRs: The annual percentage rate, or APR, is how much you’ll pay in interest if you carry a balance on the card. The lower the interest rate, the better.

•   Balance transfer costs: Some issuers offer a zero-interest balance transfer promotion for a limited period, while others don’t. Similarly, some credit cards charge an additional balance transfer fee.

•   Penalty APRs: If your account becomes delinquent, some card issuers impose a higher penalty APR on your existing balances and future transactions. Make sure you understand how a credit card works and which rules apply.

•   Fees: Certain cards charge an annual fee just for the privilege of carrying the card. This fee is in addition to interest charges you might pay for rolling over a balance, month over month.

•   Rewards program: If you’re after credit card rewards, compare the details of each card’s program. For example, look at whether rewards points or miles are tiered or offered for specific categories or if there’s a flat rewards rate for all purchases.

•   Incentives: You might encounter special promotions, such as a welcome bonus or a promotional 0% APR. These added perks can factor into your decision.

The Takeaway

Although a credit card approval odds tool can offer broad guidance about whether you’ll be approved for a credit card, it doesn’t replace a card issuer’s underwriting criteria. The credit card company relies on its own underwriting team and algorithms to ultimately decide whether your application is approved. This decision is based on the specific information on your application and your creditworthiness.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Does getting rejected for a credit card hurt my credit?

It depends on the specifics of how you are rejected. A credit card preapproval rejection typically doesn’t hurt your credit since preapprovals usually involve a soft credit check. However, if you move forward with a credit card application that involves a hard credit inquiry, your credit score might temporarily drop, regardless of whether you were approved or denied.

Are credit card approval odds accurate?

Generally, credit card approval odds calculators don’t provide a 100% guarantee that you’ll be approved. There have been reported cases of tools claiming that a consumer has high approval odds for a card only to get denied upon applying. The card issuer is the only entity that can accurately say whether you’re approved for a credit card.

How can I improve my credit card approval odds?

The best way to get good approval odds for credit cards is to minimize high-risk borrowing practices. One way to achieve this is by building your credit score. Keep your credit balances low, make timely monthly payments, maintain long-standing credit accounts, and avoid opening multiple new lines of credit in a short period.

How do you guarantee credit card approval?

There’s no way to absolutely guarantee credit card approval for any particular card. Card issuers base their decisions on a number of factors, such as your credit history, credit score, income, credit utilization, debt-to-income ratio, and more.

Photo credit: iStock/akinbostanci

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Dealing with unauthorized credit card charges by family members or friends can get complicated. Your credit card issuer may want you to file a police report and even take legal action against the person who made the charges. You’ll have to decide whether it’s worth potentially damaging your relationship with your family member or friend.

One of the main advantages of using a credit card for purchases is that, in many cases, you’re not liable for fraudulent charges. If your card is lost or stolen, usually, all it takes is a quick chat with your credit card issuer to resolve the issue. While this likely means you won’t be liable for a relative’s charges made without permission, read on to learn more about managing this scenario.

Authorized vs Unauthorized Credit Card Charges

While you are responsible for paying back any authorized credit card charges, in many cases, you will not need to cover any unauthorized charges.

Credit cards generally come with a 0% liability guarantee, meaning that you’re not liable for any unauthorized or fraudulent charges that were made with your credit card or account information. This can help protect you against credit card scams and other fraudulent activity, as well as charges made to your card without your permission.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

Legal Protection Against Unauthorized Use of Credit Cards

There are two main federal laws that help to protect you against unauthorized use of your credit card or account information:

•   Fair Credit Billing Act (FCBA): This law limits your liability for unauthorized credit card charges to $50, though many card issuers lower your liability to $0 for all unauthorized charges.

•   Electronic Fund Transfer Act (EFTA): Sometimes referred to as Reg E, this law limits liability for ATM transactions or debit card charges, among other types of transactions, if it’s reported within 60 days.

Recommended: What Is a Charge Card?

Tips for Handling Accidental Possession of Credit Cards

One effective thing you can do to help avoid unauthorized use of your credit card by a third party is to keep it in your possession. Make sure you know where your credit cards are at all times, especially if you have teens or other adults living in your home.

It’s also a great idea to regularly monitor your bank accounts and credit card accounts. That way, you can spot any unauthorized charges quickly.

Tips for Handling Unauthorized Credit Card Charges

If unauthorized charges were made to your credit card, here are some tips for how to handle the situation.

Contact Your Credit Card Issuer

The first thing you’ll want to do if you spot an unauthorized credit card charge on your account is to contact your credit card issuer. You can do this by calling the number printed on the back of your credit card or contacting your issuer through your online account.

Request a Refund

As the refund process may vary slightly by issuer, the customer service representative you talk with can help you figure out how to request one. A refund is also sometimes referred to as a credit card chargeback. In many cases, the bank may provisionally credit your account while investigating fraudulent charges. If it cannot complete the investigation within 10 business days, it must generally provide provisional credit.

File a Police Report

In some cases, your bank or credit card company may request you to fill out a police report. In other cases, the card issuer may file a police report themselves. This can make the situation complicated if it’s a friend or family member who made the unauthorized charges.

Disputing Credit Card Charges

Disputing credit card charges is another term for reporting unauthorized or fraudulent activity on your account. When you dispute a credit card charge, you’re letting the card issuer know that you believe you should not be responsible for paying that particular charge. It’s important to dispute any fraudulent charges as soon as possible.

Recommended: Tips for Using a Credit Card Responsibly

Reporting Unauthorized Credit Card Use

It’s good financial practice to regularly review your bank and credit card accounts for a number of reasons. One reason is to report any unauthorized credit card use as soon as you see it. When handling fraudulent charges, it’s important to report them immediately and then let your bank or credit card company investigate them.

Recommended: How to Avoid Interest on a Credit Card

Tips for Avoiding Credit Card Fraud and Unauthorized Use

There are two things that you’ll want to do to avoid unauthorized use on your credit card:

•   First, make sure that you keep track of your cards and don’t leave them where someone else might use them.

•   Second, regularly monitor your bank and credit card accounts. That way, you can report any unauthorized use to avoid being liable for any credit card purchase interest charges that may accrue otherwise.

The Takeaway

Federal law limits consumers’ liability for fraudulent or unauthorized charges, and many credit cards have a $0 fraud liability policy. So if you do have any unauthorized or fraudulent charges, make sure to report them to your credit card issuer right away.

Where this situation can get complicated is if it’s a friend or family member who made the unauthorized charge. In the case of unauthorized use of a credit card by a family member or friend, you’ll need to decide whether to try to get the money back directly from that individual or report the charge to your card issuer, which may mean filing a police report.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Who is liable for unauthorized credit card charges?

Federal law limits a consumer’s liability for credit card charges and credit card fees stemming from unauthorized use. If you see a charge on your credit card account that you don’t recognize, make sure to report it to your card issuer as soon as possible.

How do credit cards investigate unauthorized charges?

Credit card companies have a variety of different ways that they investigate unauthorized charges. They may contact the merchant, review video from the purchase, or check online activity. In some cases, they may work with local law enforcement and/or pursue criminal charges.

Should you report a family member for unauthorized credit card use?

Whether or not you report a family member for unauthorized credit card use depends on the situation. Keep in mind that reporting a family member for unauthorized credit card use may lead to the card issuer pressing charges against them for fraud. So, depending on your relationship, you may not want to report your family member to the card issuer and instead try to get the money back directly from them.

Photo credit: iStock/Erdark

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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The monthly cost of a $150K mortgage will vary depending on the type of loan, the interest rate, and the length of the loan. Mortgage loan terms are typically either 15 years or 30 years. The monthly payments for a 15-year loan are significantly higher than those for a 30-year loan. However, the lifetime cost of a shorter loan term is usually lower because, overall, you will pay less interest.

There are also additional costs to consider, such as private mortgage insurance (PMI) charged on some loans, condo or HOA fees, and any hazard insurance that may be required because of the location of the home. Here’s a look at how much a $150,000 mortgage might cost per month for a 15-year and 30-year loan term.

Total Cost of a $150K Mortgage

A $150,000 30-year mortgage with a 6.00% interest rate costs around $900 a month. The same loan over 15 years costs around $1,266 a month. However, these are just estimates. The exact costs will depend on your loan’s term and other hidden costs.

The monthly payment includes the principal and interest, but if you’re a first-time buyer, you may not realize that escrow, taxes, and insurance might be additional line items. There are also upfront costs, or closing costs, that are paid when the purchase is initially finalized.

Upfront Costs

Upfront costs are the costs you pay once your offer on a home has been accepted. They are typically called closing costs, and some of them might be covered by your down payment.

Earnest Money

Also known as a good faith deposit, this is the money you put down to show the seller you are serious about buying their property. The amount will differ based on the price of the home.

Down Payment

Your down payment will likely be the biggest upfront cost you will have. The amount will vary depending on your lender, but typically it will be between 3% and 20% of the cost of the house. The more you can afford as a down payment, the lower your total loan will be, and the less you will have to pay each month in principal and interest. The following are the typical minimum down payments for the various types of home loans:

•  Conventional loan with mortgage insurance: 3%

•  Conventional loan without mortgage insurance: 20%

•  FHA loan: 3.5%

•  VA loan: 0%

•  USDA loan: 0%

Closing Costs

The lender that makes your mortgage loan will charge administration fees, including the origination fee, underwriting fees, and application fees. You can also expect to pay taxes associated with transferring the title on the property, and you may need to pay for the cost of the home’s appraisal at the closing as well.

Bear in mind that your mortgage lender may want to see that you have enough money in your bank account to pay for at least two months of mortgage payments after paying closing costs and the down payment. This amount is called reserves. It’s not something that you will have to pay, but it is an amount you may need to show will be available to you after you have paid other expenses.

Long-Term Costs

The biggest long-term cost of buying a home is usually the monthly mortgage payment, which includes a portion of the principal (the amount you borrowed) plus the interest. Here are some other costs you can expect.

Property Taxes

The seller or their real estate agent should be able to give you a sense of what the annual property taxes will be on your new home, although taxes may change annually.

HOA, Condo, or Co-op Fees

Some homes are part of a condominium association, a co-op, or a Homeowners Association (HOA). Homeowners pay a monthly fee and receive benefits such as grounds maintenance, use of a community center, or snow removal. These fees can range anywhere from $100 to $1,000 a month or more, depending on the association and location.

Home Upkeep

Home repair costs are highly variable, but as a general rule you can expect to pay out around 1%-2% of the home’s value each year for routine maintenance.

Insurance

You will, of course, need to insure your new home and its contents. You might also need to purchase hazard insurance if your area is at high risk for floods, earthquakes, wildfires, severe storms, or other natural disasters. The cost of hazard insurance can be based on a percentage of the home’s value for a year-long policy.

If you paid a smaller down payment, your mortgage lender may also require you to pay monthly private mortgage insurance (PMI) because you are considered a higher risk.

Recommended: Home Loan Help Center

Estimated Monthly Payments on a $150K Mortgage

The table below shows the estimated monthly payments for a $150,000 mortgage loan for both a 15-year and a 30-year loan with interest rates varying from 5% to 8%.

How Much Interest Is Accrued on a $150K Mortgage?

The amount of interest you pay on a $150,000 mortgage will depend on the length of the loan and the interest rate. For a 15-year loan with a 6.00% interest rate, the interest would amount to around $77,841 over the life of the loan. For a 30-year loan with a 6.00% interest rate, the interest would amount to $173,757, which is more than double.

$150K Mortgage Amortization Breakdown

An amortization schedule for a mortgage loan tells you when your last payment will be. It also shows you how much of your monthly payment goes toward paying off the principal and how much goes toward paying off the interest. Most of your payment will be used to pay off the interest early on in the loan term.

Below is the mortgage amortization breakdown for a $150,000 mortgage with a 6.00% interest rate for a 30-year loan.

SoFi offers a mortgage calculator that shows the amortization of a property of any value and for any down payment or interest rate.

What Is Required to Get a $150K Mortgage?

Getting any mortgage usually requires both an adequate income and a large enough down payment. This home affordability calculator shows you how much of a mortgage you can afford based on your gross annual income, your monthly spending, your down payment, and the interest rate.

The Takeaway

The payments on a $150,000 mortgage will depend on the term of the loan and the interest rate. As a general rule, the shorter the term of the loan, the less interest you will pay over its lifespan.

In addition to your $150,000 mortgage payment, you can also expect to pay upfront closing costs and additional costs over the years that you are a homeowner. SoFi’s home loan help center has information and calculators that can help you decide what size of a mortgage you can afford considering the upfront and hidden costs. There are special considerations and special mortgage assistance programs if you are a first-time buyer.

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.

FAQ

What will monthly payments be for a $150K mortgage?

Your monthly payment for a $150,000 mortgage will depend on the interest rate and the term of the loan. The payment for a $150,000 30-year mortgage with a 6.00% interest rate is approximately $900. The same loan over 15 years costs $1,266 each month.

How much do I need to earn to afford a $150K mortgage loan?

Assuming you go with a 30-year mortgage at an interest rate of 6.00%, you would need to earn about $50,000 a year in order to cover your mortgage plus insurance and property taxes. (As a general rule, lenders recommend these costs not exceed 28% of your gross earnings.)

How much down payment is required for a $150K mortgage loan?

The down payment you are expected to pay on a home depends on the lender. The more you pay up front, the lower your loan amount and the lower your payments will be. Conventional wisdom says your down payment should be 20%. Some lenders will accept a down payment as low as 3%, but you may have to purchase private mortgage insurance.

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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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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

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Buying a home is a big milestone, but with hefty housing prices and high mortgage rates, homeownership can feel out of reach for many Americans. And even if you can afford the down payment and monthly mortgage for your dream home, you may not have strong enough credit to qualify for the loan. So, what can you do?

Adding a qualified cosigner to your mortgage is a great way to improve your approval odds when buying a house, but there are several risks the cosigner takes on when they help you out. Below, you’ll walk you through how cosigning a mortgage works, what the requirements are, and the pros and cons.

What Is a Mortgage Cosigner?

A mortgage loan cosigner is someone (usually a relative or close friend) who signs the mortgage alongside the primary borrower but has no ownership interest in the home (and does not live in the same home). Instead, the cosigner simply agrees to take full financial responsibility for the mortgage should the primary borrower miss payments or stop paying entirely.

This is a big deal: The lender has every right to come after the cosigner if the borrower defaults on the mortgage. The cosigner may have to pay missed payments and late fees, and in most cases, the lender is able to use debt collection methods (such as filing a lawsuit or asking the court for a wage garnishment order) against the cosigner without first trying to collect from the borrower.

Having a mortgage cosigner can make a big difference in your approval odds if you don’t have a strong enough credit score to qualify for a mortgage otherwise. However, there are clearly tremendous risks to the cosigner that you should take seriously as the borrower.

How Cosigning a Home Loan Works

Whether your credit score is so low that you can only qualify for a mortgage with an extremely high interest rate — or so low that it precludes you from qualifying for a mortgage altogether — you can get a cosigner on your mortgage loan to help smooth your path.

A well-qualified cosigner should have a strong credit score and a low debt-to-income ratio (DTI ratio), meaning they should make significantly more money than they pay in debts each month. Adding this person, such as a parent, spouse, grandparent, or sibling, can suddenly make your application way more attractive to a mortgage lender. After all, the lender knows that if you fall behind on payments, your cosigner is well within their means to take over.

Assuming you are approved for a mortgage with a cosigner and close on the home, the mortgage will proceed as usual. You’ll move into the house, and the cosigner will continue living separately. They have no further responsibility — unless you stop making payments.

Because your failure to pay can negatively impact your loved one’s credit score and finances — and thus your relationship with that relative or friend — it’s imperative that you do everything within your power to stay on top of mortgage payments. Communicate with your cosigner regularly about the mortgage, and let them know the instant you suspect you’ll struggle to make a payment.

Conventional Mortgage Cosigner Requirements

If you’re using a cosigner to get a conventional mortgage, you’ll still need to meet basic conventional loan requirements. For instance, you’ll still need a minimum credit score for a mortgage with a cosigner of 620 — but if your credit score isn’t strong enough, you can rely on your cosigner’s high credit score to increase your approval odds.

There are a few other conventional mortgage cosigner requirements to keep in mind:

•  Down payment: If you’re using a cosigner, you still must use your own funds to make at least 5% of the down payment (in most circumstances).

•  DTI ratio: Using only your income (but the debt of both you and your cosigner), your DTI ratio must be no greater than 43%.

•  Loan-to-value ratio: When using a cosigner, the loan-to-value ratio (LTV), combined loan-to-value ratio (CLTV), and home equity combined loan-to-value ratio (HCLTV) usually cannot exceed 90%.

FHA Loan Cosigner Requirements

Similarly, FHA loans, backed by the Federal Housing Administration, have special cosigner requirements for a mortgage to bear in mind. FHA loans are ideal because you generally only have to put 3.5% down, which makes them great for first-time homebuyers who have limited savings to rely on.

However, if you’re adding an FHA loan cosigner, the down payment requirement jumps to 25% — unless the cosigner is a family member. In that case, the down payment remains at 3.5%.

Can parents cosign an FHA loan? Yes. But fortunately, the FHA is pretty liberal with the term “family member,” and also allows it to include:

•  A child or grandparent (including step and foster)

•  A spouse or domestic partner

•  An adopted child or foster child

•  A sibling (including step)

•  An aunt or uncle

•  An in-law (son, daughter, mother, father, brother, or sister)

The cosigner (which the FHA calls a “nonoccupying co-borrower”) must be a U.S. citizen or have a principal residence in the country.

Recommended: Guarantor vs. Cosigner: What Are the Differences?

Benefits of Mortgage Cosigners

The benefits of a mortgage with a cosigner belong primarily to the borrower. Here are a few pros of mortgage cosigners to consider:

•  Improved approval odds: Adding a qualified cosigner to your mortgage increases your approval odds, assuming the cosigner has a healthy credit score and stable income. This can be especially helpful for borrowers with low credit scores or unconventional income (such as self-employment income).

•  Lower interest rate: Even if you can qualify for a mortgage without a cosigner, you might face high interest rates. Adding a well-qualified cosigner could help you secure a lower mortgage interest rate, which means less money spent over the life of the loan and a lower, more manageable monthly payment.

•  Larger loan: You may be able to qualify for a more expensive house with the help of a cosigner. This could be crucial if you live in an area with a high cost of living (and thus more expensive real estate).

Drawbacks of Mortgage Cosigners

As you’d imagine, the cons primarily apply to the cosigner, not to the borrower. Here are a few cons of mortgage cosigners to consider:

•  Huge financial risk: Cosigning a mortgage poses a huge financial risk. If the borrower stops making payments, you’re on the hook. The lender could potentially sue you or garnish your wages to cover the payments. Plus, late payments by the borrower don’t only impact their credit score. The cosigner’s credit score will take a hit, too.

•  Limited borrowing ability: The mortgage you cosign will impact your DTI ratio. Until that mortgage is paid off (which could take three decades), your DTI ratio might be too high for you to qualify for your own loans, such as a mortgage on a new house, a personal loan, or a car loan.

•  Strained relationship: If the borrower isn’t taking enough responsibility for their home loan, you’ll have to have some difficult conversations. Disputes over money could even end your relationship (and yes, you’ll still be on the hook for the mortgage, even if you and the borrower no longer speak).

Recommended: Refinance Your Mortgage and Save

Other Factors to Consider When Cosigning a Mortgage

Planning to cosign a mortgage? Here are a few things to consider:

•  Cosigner release: Read the contract carefully to understand what your options are for eventual cosigner release. Some lenders may include a clause outlining cosigner liability release. If the primary borrower meets the lender’s strict requirements (credit score, income, history of on-time payments), you may be able to request to be released from the loan.

•  Credit monitoring: Regularly check your credit report for missed payments. While you can communicate with the borrower about how the payments are going, it’s always good to verify with an unbiased resource.

•  Long-term commitment: Remember, mortgages typically last between 15 and 30 years. Cosigning one is a long-term commitment. Make sure cosigning won’t impede any of your financial goals during that time period, and think carefully about whether the borrower is responsible enough to manage a loan of this magnitude for that long.

The Takeaway

Adding a cosigner to a mortgage loan can improve the approval odds if your credit score isn’t strong enough to get approved on your own. A cosigner can also help you secure a larger loan and/or a lower interest rate. However, cosigners assume a major financial risk when getting involved — and disagreements over money can easily end even the strongest of relationships. Proceed with caution.

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.

FAQ

Who can be a cosigner on a mortgage?

Technically, anyone can cosign on a mortgage, but because it’s a big financial risk, people usually rely on family members or very close friends. For FHA loans, cosigning with a family member is ideal, as using a cosigner who is not a relative means you have to put 25% down, instead of 3.5%.

Do I need my parents to cosign a home loan for me as a first-time homebuyer?

You do not need your parents to cosign a home loan as a first-time homebuyer. If you have a strong credit score and enough income to handle the loan on your own, you can proceed without a cosigner. But if you need help with your first home purchase, asking a parent to cosign is an option.

Can retired parents cosign a mortgage?

Yes, retired parents can cosign a mortgage. Lenders analyze cosigners’ credit scores, debts, and incomes when making an approval decision. A retired parent’s income will simply look different from a working parent’s income, and it might include Social Security payments, investment income, a retirement account distribution, or a pension.

Does having a mortgage cosigner affect my home loan approval chances?

Adding a mortgage cosigner can and should affect your home loan approval chances. The whole reason to add a cosigner is to use their stronger credit score and higher income to make you a more attractive applicant and thus improve your approval odds — perhaps at a lower interest rate or for a larger loan amount.

Is it possible to remove a cosigner from a mortgage in the future?

While challenging, it’s technically possible to remove a cosigner from a mortgage in a few ways. Assuming your own credit and income are strong, you can just ask the lender to remove the cosigner, but they won’t always say yes. Your next move, then, is to refinance the mortgage without the cosigner or wait until you sell the property, at which point you can buy your next home without a cosigner.

How do cosigners on home loans affect taxes?

Borrowers may be able to deduct mortgage interest and property taxes when filing their tax returns, but as the cosigner, you generally don’t reap these benefits. Plus, if you help the borrower by giving them money for the down payment, it may be subject to the gift tax on your tax return.

Can you have a cosigner on a VA mortgage?

Yes, you can have a cosigner on a VA loan, but unlike other types of mortgage cosigners, the cosigner must live with the borrower in the home. In addition, the cosigner needs to be another qualifying veteran, service member, or a spouse of a qualifying buyer.

What’s the difference between a cosigner and a co-borrower?

Both cosigners and co-borrowers sign a mortgage with the primary borrower to help strengthen the application, and they’re also both on the hook financially should the primary borrower not keep up with payments. However, cosigners only guarantee the loan and do not live in the home or have any ownership in the home. Co-borrowers on a mortgage share ownership of the home, and their name appears on the title.

Photo credit: iStock/tonefotografia

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.

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The U.S. Department of Veterans Affairs (VA) offers a mortgage financing program known as VA loans. It’s designed to help veterans, active-duty service members, and surviving spouses get financing for a home loan.

When applying for any mortgage, there are additional costs on top of the purchase price of the property. These costs can be complex to figure out for first-time homebuyers, so there are calculators available to help.

A loan closing costs calculator is used to estimate the closing expenses associated with a mortgage loan such as a VA loan. These costs can include appraisal fees, loan origination fees, title and homeowners insurance, recording fees, and property taxes. The calculator takes into account the amount of the loan, the term of the loan, the interest rate, and the purchase price.

This guide will help you understand these costs and calculate what these expenses might look like for your loan.

Why Use a VA Loan Closing Costs Calculator Table?

A VA loan closing costs calculator is a useful tool for anyone looking into applying for a VA loan. Because, yes, you do pay closing costs with a VA loan.

Although calculators only provide an estimate and not the final closing costs, you can enter the property and loan details and immediately get an idea about the total closing expenses you will be paying if you go through with the loan.

This helps with budgeting, comparing the cost of living in different locations, looking at different properties and loan options, and negotiation. It also helps educate borrowers about the loan process.
💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

How to Calculate Your VA Loan Closing Costs

Whether you are a first-time homebuyer or have been through the process before, it can be a good idea to acquaint yourself in advance with the fees you’ll pay when you get a home mortgage. The following are some of the common costs associated with VA loans:

•  VA funding fee: This is a required fee calculated as a percentage of the loan amount. The amount of this fee depends on factors such as the down payment amount and whether you’ve used a VA loan before. Worth noting: This is the one fee that you may be able to roll into the loan vs. pay separately.

Also, some people may be exempt from paying a funding fee, such as those who receive compensation for a service-related disability, among other scenarios.

•  Loan origination fee: This is a fee for processing the loan application (it’s charged by the lender, not the VA) and is generally a percentage of the loan amount. With a VA loan, it is typically 1% of the loan value.

•  Discount points: These are upfront payments that can be made to reduce the loan’s interest rate. Each percent of the loan amount is equal to one point.

•  Credit report fee: This is a fee for obtaining a credit report, which is used to determine the borrower’s creditworthiness. Having good credit is just one important part of qualifying for a home loan.

•  Appraisal fee: There is a fee for hiring an appraiser, who determines the value of the property being purchased.

•  Homeowners insurance: This is to secure the property against damage and losses. Borrowers generally pay the first year up front.

•  Real estate taxes: If there are any unpaid property taxes, some or all may need to be paid at closing.

•  State and local taxes: Some states or cities may impose taxes or property transfer fees.

•  Title insurance: Title insurance protects against issues with the property’s title and is generally required by lenders.

•  Recording fee: This fee covers the cost of recording the mortgage and any related documents with the government.

Worth noting: With VA loans, you can save big because private mortgage insurance (PMI) isn’t required for those putting down less than 20%, as it might be with other kinds of home loans.
💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.

2026 VA Loan Funding Fee Calculator Table

Now that you understand the different fees that may be assessed when you take out a mortgage, take a closer look at what some of these fees look like for a typical VA loan. (Rates may differ for other types of VA loans, such as those for manufactured homes or that are part of the Native American Direct Loan program.)

Examples of VA Loan Closing Costs Calculations

Below are a few examples of closing costs for a VA loan in 2026:

Example 1: First-time homebuyer with no down payment

Loan amount: $250,000
Down payment: 0% (no down payment)
Funding fee: 2.15% (first-time user)
Other closing costs: $5,000

Closing costs calculation:

Funding fee: $250,000 x 2.15% (0.0215) = $5,375
Other closing costs: $5,000
Total closing costs: $5,375 (funding fee) + $5,000 (other closing costs) = $10,375

Example 2: First-time homebuyer with a 5% down payment

Loan amount: $300,000
Down payment: 5% ($15,000)
Funding fee: 1.50% (first-time user)
Other closing costs: $6,500

Closing costs calculation:

Funding fee: ($300,000 – $15,000) x 1.50% (0.015) = $4,275
Other closing costs: $6,500
Total closing costs: $4,275 (funding fee) + $6,500 (other closing costs) = $10,775

Example 3: Subsequent homebuyer with a 15% down payment

Loan amount: $400,000
Down payment: 15% ($60,000)
Funding fee: 1.25% (subsequent user)
Other closing costs: $7,000

Closing costs calculation:

Funding fee: ($400,000 – $60,000) x 1.25% (0.0125) = $4,250
Other closing costs: $7,000
Total closing costs: $4,250 (funding fee) + $7,000 (other closing costs) = $11,250

Recommended: The Cost of Living in California

Reasons to Calculate Your VA Loan Closing Costs First

Calculating VA loan closing costs is beneficial for a few reasons:

1.   Financial planning: Calculating the closing costs for a VA loan up front helps with planning finances and budgeting to make sure you have enough money to afford purchasing a home. It prevents unforeseen expenses and reduces stress throughout the buying process.

2.   Analyzing affordability: Knowing the closing costs can help you determine whether you can afford a property.

3.   Comparison shopping: Calculating closing expenses also helps with comparing various home mortgage loans so you can choose the terms that work best for you and potentially save money. While VA loans are one option, there are many types of mortgage loan choices that may be a good fit depending on your individual circumstances.

4.   Negotiation: Understanding closing costs provides a starting point for negotiation. Certain fees or terms may be negotiable, and having this knowledge provides you, the borrower, with the information needed to get the best deal.

5.   Avoiding surprises: Planning ahead can help prevent unforeseen costs that may arise during the closing process. It also allows you to compare the estimate to the final closing costs to make sure they are all accurate.

Recommended: How Long Does It Take to Close on a House?

Tips on How to Save on Your VA Loan Closing Costs

Here are some tips for how to save on VA loan closing costs:

•  Shop around for lenders. Compare closing cost estimates from various lenders by requesting quotations from them all. It’s important to shop around for a mortgage and look into different options to find the best rates and terms.

•  Negotiate with the lender. Don’t hesitate to ask for lower fees and discuss terms. Eligible borrowers with good credit may be able to negotiate loan conditions.

•  Consider seller concessions. In some cases, it may be possible to persuade the seller of the home to cover some of the closing costs. Consult with the real estate agent during the negotiation process about this possibility to reduce costs.

•  Utilize VA loan programs and benefits. Take advantage of the benefits offered by the VA loan program. For instance, the VA funding fee can be rolled into the loan amount, and the VA has restrictions on fees which can help keep closing costs down.

•  Consider rate options. Evaluate different interest rate options and the impact they have on closing costs. For instance, a higher interest rate may offer lender credits that can be applied to closing costs. If one intends to live in the house for a long time, this may be a good option.

•  Read the Closing Disclosure (CD) carefully. The final closing costs are listed in the Closing Disclosure document. It’s important to carefully review this document to make sure there are no errors or unforeseen closing costs.

Dream Home Quiz

The Takeaway

VA loan closing costs include the financing fee, credit report fees, appraisal fees, title insurance, and other expenses associated with obtaining a VA loan. It’s important for borrowers to calculate their estimated closing costs in advance to compare loan options, negotiate fees, and prepare themselves financially for buying a home.

It’s also wise to consider a variety of loan options, from the VA or not, to make sure you are getting the right fit for your financial needs.

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.

FAQ

What is the VA funding fee for 2026?

The VA funding fees for 2026 are dependent on your down payment amount. For first use, if your down payment is less than 5%, the VA funding fee is 2.15%, after which it shifts to 3.30%. If your down payment is 5% or more, the rate is 1.50%, and if your down payment is 10% or more, the rate is 1.25%.

What percentage of closing costs can be included in a VA loan?

There is no specific limit on the percentage of closing costs that can be included in the loan amount, but the VA restricts the seller’s concessions. The VA has a 4% rule, which states that the total allowable closing costs and fees paid by the seller cannot exceed 4% of the home’s value.

What is an example of a VA funding fee?

The VA funding fee is a one-time fee paid by borrowers using a VA loan, and the amount is calculated based on factors such as the loan amount, down payment, and the borrower’s service category. For example, a first-time borrower with a $300,000 loan amount and no down payment may have a funding fee of 2.15%, resulting in a fee of $6,450.

Photo credit: iStock/Ole Schwander

^†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 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.

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