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Saving up for a down payment is a common challenge for many prospective homebuyers. FHA loans allow qualifying borrowers to put as little as 3.5% down on a property, helping lower the barriers to homeownership for many.

With an FHA loan, borrowers may also be eligible for down payment assistance. But there are other out-of-pocket expenses to keep in mind when considering an FHA loan. Let’s take a closer look at FHA loan down payment requirements and how much money you’ll need to get to the closing table.

What Is an FHA Loan?

An FHA loan is a type of mortgage that’s issued by a lender, such as a bank or credit union, but insured by the Federal Housing Administration (FHA). The purpose of the FHA mortgage program is to make homeownership more affordable for low- to moderate-income buyers.

Since FHA loans are government-insured, they offer more flexible eligibility requirements for borrowers who might not qualify for a conventional home loan. FHA loans have lower minimum down payment and credit score requirements, making them popular with first-time homebuyers and applicants with limited savings or poor credit. Compared to conventional mortgages, FHA loan interest rates are typically lower, but will vary depending on the lender and on the borrower’s credit score and finances.


💡 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 through the process.

FHA Loan Income Requirements

There aren’t any minimum or maximum income requirements to qualify for an FHA loan. However, there may be income limits for borrowers receiving down payment assistance through a state or local program.

In any case, lenders will look at an applicant’s ability to manage monthly mortgage payments and ultimately repay the FHA loan. Besides savings and assets, lenders assess an applicant’s debt-to-income (DTI) ratio, which measures the percentage of monthly income that goes toward debt payments. A lower DTI ratio is typically viewed as favorable. Depending on the lender, borrowers can get an FHA loan with a DTI ratio of up to 50%. In comparison, conventional loans typically require a DTI ratio of 43% or less.

Recommended: How Much is a Down Payment?

What Is the Down Payment Required for an FHA Loan?

Down payments are calculated as a percentage of the home purchase price. Historically, lenders looked for buyers to put down one-fifth of a home’s purchase price upfront. But you no longer always need to put down 20% on a house. The minimum down payment percentage for FHA loans depends on a borrower’s credit score.

The average down payment on a house in the U.S. was 13% in 2022. But with an FHA loan, borrowers with a credit score of 580 or more may qualify for a down payment of 3.5% of the home purchase price. Those with credit scores between 500 and 579 will need to put 10% of the home price towards a down payment. For a $400,000 house, this translates to $14,000 for a 3.5% down payment and $40,000 for a 10% down payment.


💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

What Other Cash Will I Need to Close?

Besides the down payment, the remaining amount you need to close on a house will depend mainly on the home’s purchase price. Taking out an FHA loan requires paying an upfront mortgage insurance premium (MIP) of 1.75% of the loan total. It may be possible to roll this cost into the loan, which would increase the loan principal and monthly payment amount.

Buyers will also be on the hook for FHA loan closing costs, which typically range from 2% to 5% of the home’s purchase price. Borrowers can potentially avoid the upfront expense by rolling closing costs into an FHA loan. By financing closing costs, borrowers will pay a portion of the costs each month, plus interest. Note that financing closing costs can increase a borrower’s DTI ratio and potentially impact their ability to qualify for an FHA loan.

An alternative option to cover closing costs would be to ask for seller concessions. FHA loans allow the seller to contribute up to 6% of the home value for closing costs as a seller concession.

Recommended: What Do You Need to Buy a House?

How to Save for an FHA Loan Down Payment

Understanding how much house you can afford is a useful place to start to determine your housing budget and savings goal. Using an FHA loan mortgage calculator can help crunch the numbers to determine your down payment and monthly payment based on different loan terms. Not sure you will choose an FHA loan? Use a home affordability calculator to determine how much house you can afford.

With a savings goal in mind, calculate how much you can set aside each month after paying for debts and expenses. Consider cutting discretionary spending, such as dining out and travel, to increase monthly savings.

Buyers can also get the money they need for an FHA down payment in the form of a gift from family, friends, employer, charitable organization, or government program. Gifted funds need to be accompanied by a gift letter to show the lender that the money is going toward the down payment and doesn’t need to be repaid.

Is Down Payment Assistance Available for FHA Loans?

Borrowers who can’t afford a down payment on an FHA loan may be eligible for financial assistance. Down payment assistance can come in several forms, including grants and forgivable loans. These programs are available through local, state, and federal government programs, as well as nonprofit organizations.

Most down payment assistance programs are geared towards first-time buyers. They may include additional eligibility requirements, such as income limits and participation in homebuyer education courses. Consult a list of first-time homebuyer programs and loans to see what you might be eligible for. If it has been more than three years since you have owned a home, you may qualify for first-time homebuyer status.

Additional Cost Considerations for FHA Loans

In addition to the upfront costs of a down payment, closing costs, and MIP, there are other expenses to plan for.

The MIP includes an additional annual fee besides the 1.75% that’s required for closing. Annual payments range from 0.15% to 0.75% depending on the loan terms and loan-to-value ratio. The total annual cost is divided by 12 and spread out across the monthly payments in a given year. Note that MIP usually spans the life of the FHA loan unless a borrower refinances.

Depending on the property location, borrowers may also need to pay for flood insurance to get an FHA loan.

Pros and Cons of an FHA Loan

FHA loans are popular for their lower down payment mortgage requirements, but they’re not for everyone. Here are some advantages and drawbacks to consider when comparing home mortgage loan options.

Pros:

•   Smaller down payments

•   More lenient credit score requirements

•   No income limits

•   Can finance closing costs

Cons:

•   Required to pass an inspection and appraisal

•   Must be used for a primary residence.

•   Loan limits of $472,030 to $1,089,300 for a single-family home, depending on the cost of living by state.

•   Can require an inspection and stricter standards for the condition of the property.

The Takeaway

What is the minimum down payment for an FHA loan? Borrowers with credit scores of 580 or more can put just 3.5% down, while those with scores between 500 to 579 need to put 10% toward a down payment. The combination of lower minimum credit score and low down payment make FHA loans one attractive option for first-time homebuyers.

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

What is the lowest down payment for an FHA loan?

The lowest down payment for an FHA loan is 3.5% of the loan amount. Borrowers can explore down payment assistance programs to help cover the cost.

What is the down payment for an FHA loan 2023?

The down payment for an FHA loan in 2023 ranges from 3.5% to 10% depending on the borrower’s credit score.

What will disqualify you from an FHA loan?

Borrowers could be disqualified from an FHA loan based on a high debt-to-income ratio, poor credit, or insufficient funds to pay for the down payment, closing costs, and monthly mortgage payment.

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Photo credit: iStock/Edwin Tan

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 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.

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.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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When you have a new baby on the way, you may be eager to create a nursery that’s comfortable, functional, and stylish. You can drop big bucks to turn a spare room into a dream nursery. But if you’re willing to put in some elbow grease and think outside the box, you could get the job done for much less.

Here are some creative DIY nursery ideas that won’t break the bank.

Use Paint to Make a Big Impact

If home improvement shows have taught us anything, it’s that paint can be a powerful — and cheap — way to change things up. In fact, for the cost of a few gallons of nontoxic paint, a roll of painter’s tape, and drop coverings, you can completely transform any room.

The options are limited only by your imagination. Paint all four walls the same shade to create a cohesive look, or focus the color on one wall to make a real statement. Use painter’s tape to create shapes or patterns, like stripes or chevrons, that pack the same punch as wallpaper but without the mess. If you’re artistic, paint a mural with animals or popular cartoon characters. Or considering all the time your baby will spend in their crib, you may decide to spiff up the ceiling with a pop of color.

Price tag: $125 to $250


💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

Get a Soft Rug

If you have hardwood floors, a soft rug won’t just help your feet stay warm when you come in for late-night feedings. You’ll also want a cozy surface for your baby to play, and later, learn to crawl.

You can get an area rug at a local hardware or furniture store that can bring out some of the colors in your decor and provide a soft buffer between your baby and the floor.

Price tag: $200

Make Your Own Art

Blank walls are boring, but art can be expensive to buy. So why not make your own creations?

One idea: Get jumbo letters from the local craft store that spell out your baby’s name and hang them on the wall.

Or figure out the theme of the room to help you come up with other ideas. For example, you can go to the zoo with a camera and then print out pictures of animals for an animal-themed room. Or become inspired by the night sky and put up sparkly stars and a moon on the walls. You can also find cool fabric and tack it onto a canvas for a fabric panel.

Price tag: From $25

Help Baby Sleep

Having a newborn goes hand in hand with frequent wake-up calls. But there are ways you can help baby settle down after a 3 a.m. feeding or stay asleep during a mid-afternoon nap.

Blackout curtains are a great way to prevent sunlight from seeping through window coverings — and interrupting a good nap. Making a set is doable with the help of a sewing machine and a trip to the local fabric store.

Hanging a mobile above the crib can also keep your little one entranced until their eyes start to close. You can make your own with everyday household and craft supplies, like pom poms, fabric, or paper. Simply attach the items to a string or embroidery floss, attach to a lightweight frame or embroidery hoop, and hang.

Price: From $10

Get Creative With Storage

Even if you’re a minimalist, chances are your baby will require a lot of stuff: clothes, toys, diapers, pacifiers, books…you get the idea. As you’re putting together your nursery, be sure you have ample places to store all those things. Bins, boxes, shelves, and drawers can make clean-up a breeze.

Storage systems don’t have to be expensive. You can get budget-friendly ones at local discount furniture stores. Or check online or garage sales for a used piece of furniture that you can refinish or repaint.

Just remember to fasten all the furniture to the wall so that when your baby starts pulling themselves up and walking, nothing topples over on them.

Price: From $100

Recommended: 25 Tips for Buying Furniture on a Budget

How Do You Pay for a Nursery Room Renovation

DIY-ing a nursery may save you money, but you’ll still need to make room in the budget. This can be a challenge if you’re also trying to balance the cost of hospital bills, doctor’s visits, and pricey essentials like a stroller, car seat, or crib. Here are some options you may want to consider.

Personal Savings

Tapping into your savings allows you to access the cash you need right away. However, if you’re planning to take unpaid maternity leave or are budgeting for medical expenses, you may decide it makes more sense to leave your emergency fund untouched.

Credit Card

Like personal savings, a credit card lets you pay for DIY nursery supplies now. However, at the end of the month, you’ll be billed for whatever you’ve spent. It’s important to make at least a minimum payment by the due date to avoid a late fee. But to avoid paying interest entirely, you’ll need to pay off the balance in full each month.

Recommended: Tips for Using a Credit Card Responsibly

Personal Loan

Generally speaking, a personal loan can be used for virtually anything, including decorating a nursery. Interest rates are relatively low, which means that you can likely get a loan at a low rate compared to a credit card. For that reason, it might be a much better idea than putting the expenses on a credit card, which typically have higher interest rates.

A typical term length for a personal loan is anywhere from one to 10 years. Extending your repayment over multiple years could reduce your monthly payments. But keep in mind, the longer the term length, the more you’ll pay in interest over the life of your loan.

When looking for a loan, you may want to look into securing a fixed interest rate so that you can lock in your low rate over the life of your loan.


💡 Quick Tip: Some personal loan lenders can release your funds as quickly as the same day your loan is approved.

The Takeaway

When you’re expecting a new baby, you naturally want to give them the world. This may include a room they’ll be happy to call their own. Fortunately, you can get the nursery of your dreams without having to spend a lot of money. There are creative, affordable ways to create a statement, like painting the walls or ceiling a fun shade or designing an adorable mural. Not as crafty? Explore simple, inexpensive projects, like making a mobile to hang over the crib.

If much of your budget is already earmarked for baby essentials and medical bills, you may want to explore alternate ways of paying for a nursery renovation. You could draw from your personal savings, use a credit card, or explore taking out a personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

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

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

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Thinking about taking a road trip? The rising cost of gas might put a dent in your budget if you’re not careful. But how much will you spend on gas for a trip? What should your budget be?

Using a trip cost calculator can help you determine what you are likely to spend filling up your tank on a longer trip. Then you can use that information to decide whether it’s more cost-effective to drive, take a train or bus, or fly.

Let’s look not only at a gasoline cost trip calculator table, but also why you should calculate how much you’ll spend on gas and how you can save money filling up at the pump.

Why Use a Gas Cost Trip Estimator

You may think nothing of filling up your gas tank every few weeks when you’re only driving to work and the store. But consider how much gas you’d use for a trip from, let’s say, San Diego to New York City. With gas prices on the rise, understanding what it will cost you to fuel up for an entire trip can help you better budget your expenses.

Using a gas trip cost calculator can help you figure out how much of your entire trip budget will be dedicated to fueling up.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

How to Calculate Your Gas Cost Trip

To figure out how much gas will cost for a road trip, you can, of course, use a trip cost calculator. You’ll need to input basic details, like your type of car (different sizes and types of cars burn gas at different rates) and your route, and the calculator can estimate with real-time gas prices.

But a simple method is to look at your route and the total distance in miles, and divide this number by the number of miles per gallon your vehicle gets. (You can check your owner’s manual to find this out if you don’t already know). This will tell you the number of gallons of gas you’ll need for the entire trip.

Now you’ll need to know the price of gas so you can multiply it times the number of gallons you need. Since gas prices by state may vary wildly, you might take an average of prices found in five places along the way. Tools like Gas Buddy let you search for gas prices in a given city, so you can use this for research.

Gas Cost Trip Calculator Table
Let’s use the process I outlined above to illustrate how you can be your own gas calculator for trip costs.

Distance from San Diego to NYC	2,760 miles
Miles per gallon	22
2,760/22	125 gallons
Average gas price: •   San Diego: $4.57 •   Albuquerque: $3.09 •   Saint Louis: $2.82 •   Indianapolis: $2.99 •   Philadelphia: $2.93	Average: $3.28
125 gallons x $3.28	$410 gas budget

As you can see, it would cost about $410 for gas for the entire trip. Of course, this is based on an average cost of gas, and prices will fluctuate over time and in different towns and cities.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Examples of Gas Cost Trips

Let’s look at a few other examples of trips and how much they would cost in gas.

Distance from Los Angeles to Seattle	1,335 miles
Miles per gallon	22
1,335/22	61 gallons
Average gas price: •   Los Angeles: $4.44 •   Stockton: $4.45 •   Sacramento: $4.99 •   Medford: $4.05 •   Portland: $4.99	Average: $4.58
61 gallons x $4.58	$279 gas budget
Phoenix to Dallas	1,067 miles
Miles per gallon	22
1.067/22	48.5
Average gas price: •   Phoenix: $3.13 •   Benson: $3.61 •   Deming: $3.45 •   Fort Stockton: $3.15 •   Abilene: $2.79	Average: $3.23
48.5 gallons x $3.23	$157

Reasons to Calculate Your Gas Cost

So why should you bother using a road trip cost calculator? Well, most people don’t have unlimited funds when it comes to taking a road trip, so for starters, it can help you see how much you’d spend. You might decide it’s not worth driving if the cost exceeds what you’d pay for a flight, bus, or train ride.

Even if you’re not planning a big trip, looking at how much it costs to drive on a tank of gas can be helpful for maintaining your month-to-month budget. Once you understand how much you’re spending on gas, you might explore how to improve gas mileage to get more bang for your buck or you might limit how often you drive to save money.

Tips on How to Save on Gas Money

Speaking of saving money, let’s look at how to save money on gas.

Plan Where You’ll Fuel Up

If you’re planning a road trip, use a tool that shows you exactly where the cheapest gas can be found. You might be able to save $.10 or more a gallon simply by planning ahead. There are even some trip fuel cost calculators that will help you plan where to stop based on gas prices.

Consider How You Pay

There are different types of credit cards that can help you save at the pump. Branded gas credit cards often offer rewards that will shave off a few cents per gallon or give you a bonus after you’ve charged a certain amount of purchases.

You might also consider a cash back credit card that gives you cash or credits for your purchases once you’ve hit a certain threshold.

Look into Alternative Transportation

You may be quick to rely on cars to get around, but there are often other overlooked methods of transportation to consider. Whether it’s a bus, train, Uber, or plane, you might be able to save money by leaving your car at home.

You can also cut your gas costs by splitting them with a friend.

Another way to stick to your travel budget? A money tracker app, which can help you keep tabs on where your money is going while you’re on the road.

Only Use Premium if Necessary

Most cars run just fine on regular unleaded gas, which can be significantly cheaper per gallon than premium versions, especially if you’re on a long trip. Check your car manufacturer’s recommendations to see if you can use regular unleaded gas.

Drive an Empty Car

The heavier your car is, the more gas it burns. So if you’ve been lugging around something heavy unnecessarily, consider leaving the load at home before you drive.

Who Should Save Money on Gas

The real question is, who shouldn’t save money on gas? We could all benefit by keeping a little extra cash in our pockets.

That said, if you’re planning a long road trip, you’ll probably want to explore ways to improve gas mileage and to save on gas. Also if you have a long commute to work, you might be spending more on gas than necessary.

The Takeaway

Paying attention to how much gas costs, particularly for a road trip or long commute, is just smart financial planning. Whether you use an online version or crunch the numbers on a piece of paper, a gas trip cost calculator can help you figure out how much you may want to budget for fill-ups.

Take control of your finances with the SoFi Insights money tracker app. Connect all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do I calculate gas cost for a trip?

To calculate gas for a long road trip, divide the number of miles of the route by the miles per gallon your car gets. This is the number of gallons you’ll need to drive the distance. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

How much would 1 mile of gas cost?

Divide the cost per gallon by the number of miles per gallon your car will go. For example, if you pay $3.99 per gallon and your car gets 22 miles per gallon, driving one mile would cost about $.18.

How do you calculate fuel to destination?

To calculate how much fuel you’ll need to get to your destination, divide the number of miles of the remaining route by the miles per gallon your car gets. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

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Photo credit: iStock/georgeclerk

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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

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

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Going through a divorce can be an overwhelming experience. There’s already the emotional pain of divorce, and then partners must also divide up money and assets and break down the financial structure that they’ve built together.

Piled on top of the logistics of divorce, some people may find themselves managing money on their own for the first time in their lives. These added financial stressors can make a difficult situation even more challenging.

Fortunately, there are some simple things you can do prior to getting a divorce that can take some of the stress out of the process. While every couple’s situation is different, what follows is a basic roadmap for how to prepare for a divorce financially.

7 Steps to Financially Prepare for a Divorce

Divorces can range from being hard-fought battles in court to peaceful mediation that happen outside of the courtroom. Either way, when it comes to divorce and finances, the money eventually needs to be split up. Here’s how to make the process of dividing up assets go as seamlessly as possible.

Step 1: Gather Your Financial Statements

A good first step to preparing for a divorce is to gather current and past financial statements so you can get a full picture of your shared and individual accounts. Having quick access to all this information can also save time (and, in turn, money) when you consult a lawyer. Here’s what you may need:

•   Checking, savings and investment account statements (past year)

•   Current statements for retirement plans (IRAs, 401k plans, or pensions)

•   List of assets acquired before and during your marriage (real estate, vehicles, boats, etc.)

•   Debt statements and balances (mortgages, auto loans, personal loans, credit cards, and credit lines)

•   Credit card statements (past year).

•   Recent pay stubs

•   Income tax returns (past three years)

Step 2: Document Your Assets

Since you’ll be dividing up all of your assets, it’s a good idea to take inventory of all of the assets you own (both individually and jointly), such as your home, car, and anything items with a high value. Collect receipts, photos or videos of each item, and note whether the asset is owned by you, owned by your spouse, or shared. You’ll also want to assign a value to each asset (if you own valuable antiques or collectibles, you might need to hire a professional appraiser).

Step 3: Track Your Finances

You’ll also want to begin tracking how much you’ve been spending each month — and on what. This will not only help you build a budget post-divorce, but it is also critical for your attorney (and later the judge) in deciding how to split assets and debts, and whether to award spousal or child support.

You can use your bank and credit card statements to come up with average spending from the past couple of years, including household bills, food, clothing, entertainment, home maintenance, transportation, child care, and anything else that you spend money on. Once you have a sense of what you’ve been spending, do your best to project future expenses. You can use previous years as a guide but also factor in potential future expenses (like a child’s school tuition and extracurricular activities).

Recommended: How to Track Your Monthly Expenses: Step-by-Step Guide

Step 4: Prepare to Make Some Difficult Choices

Splitting financial accounts tends to be relatively straightforward, but dividing up “real” assets like your home and any other treasured joint possessions, can be more complicated, So it’s a good idea to think of anything that falls into that category and what will make the most sense for you and your spouse moving forward.

If you own your home, that is likely going to be the largest asset you’ll need to make a decision about. If the home is being supported by two incomes, neither you nor your spouse may be able to afford to stay there on your own. Often, the simplest choice is to sell the home and split the proceeds. However, if children are involved, and it’s financially feasible, one parent might opt to buy out the other to maintain some normalcy. What will work best for you and your spouse will depend on your unique personal and financial situation.

Step 5: Be Frugal

No doubt you’re aware that divorce can be expensive. The average cost of a divorce in the U.S. is $12,900. You could spend significantly less if there are no major contested issues, or it could run a lot more should you end up going to trial over several issues.

Either way, now is probably not a good time to run up large expenses, either individually, or as a unit. If you and your spouse don’t have money set aside for hiring a divorce attorney and other related expenses, try to agree about each spending a conservative and comparable amount, while continuing to use your joint and individual accounts.

This can be a good time to eliminate or pare back your expenses where possible. For example, you might cancel unused subscriptions and memberships, attempt to dine out less, and use the clothes that you own. There are tons of creative ways to be frugal — so you can do it in a way that aligns with your values.

Step 6: Seek Out the Right Professional Help

If you and your spouse want to minimize legal expenses and think you can amicably split your assets, you might consider consulting a mediator. A mediator acts as a neutral third party to help you negotiate an agreement on the splitting of assets and making other arrangements (in some cases, custody of children) and could save you significant time and money.

If mediation is not an option, you’ll need to find a divorce attorney to handle your legal affairs and represent your respective sides in the negotiations (you’ll each need your own attorney). You might also consider getting help from a qualified financial adviser to make sure that all assets are divided, transferred successfully into new accounts, and reinvested, if necessary (again, you’ll likely each want your own financial adviser).

Step 7: Separate Your Finances

As you move towards divorce, you’ll want to set up your own checking and savings accounts and get your paycheck automatically deposited there. You’ll also need to redirect any direct deposits and update any automatic payment information. You can then start using the new accounts for all your own personal future deposits and expenses. The old joint accounts will need to be split between you and your spouse.

You may also want to consider opening your own retirement account (if you don’t have one). This is especially important if you are expecting to get money from your spouse’s retirement account as part of your divorce. Transferring the funds directly into your retirement account can help you avoid paying taxes on the money now.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with up to 4.60% APY on SoFi Checking and Savings.

FAQ

How much money should I save for a divorce?

The average cost of a divorce is $12,900. However, you could spend significantly less. A divorce with no major contested issues runs, on average, $4,100. Or you might end up spending more. Divorces that go to trial on two or more issues can cost as much as $23,300.

Should you separate finances before a divorce?

If you know divorce is inevitable, it can be a good idea to start the financial separation process as soon as possible. If your money is in a joint account, you can begin by opening a new individual checking account and savings account. Next, you’ll need to redirect any direct deposits and update any automatic payment information. Use the new account for all your own personal future deposits and expenses. You might opt to keep one joint account open, however, to pay for household expenses until you are officially divorced.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is 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.

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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If you’re thinking about buying a property, you may wonder how much you should pay for a new home. After all, that can impact the size (and type) of mortgage you apply for.

The truth is, though, your mortgage is just one piece of the puzzle when deciding how much to spend on a home. To figure out what you can realistically afford, you need to understand all of your potential housing costs, including what may seem like unexpected costs that crop up when you own a property. That way, you can truly prepare for how much money it will take to cover your expenses as a homeowner.

So, are you in the club of those who are wondering, “How much home can I afford?” Then read on for four important tips to help determine whether a home will suit your budget. Given how big an expense homeownership can be, you will likely want to be well armed with information before you start hitting the open houses and making bids.

1. Calculate Potential Housing Costs

If you’re calculating how much you should pay for a new home, it can be an important step to write down all potential costs connected with buying a house and then paying the monthly expenses. This list can include:

•   Down payment

•   Mortgage payment

•   Property taxes

•   Homeowners’ insurance

•   Mortgage insurance, if applicable

•   Closing costs.

Since the mortgage payment is typically a big-ticket budget item, it can be a good move to check out a few different options (say, fixed-rate vs. adjustable-rate; 15-year vs. 30-year terms) from a few lenders and at a couple of different amounts to get a handle on what that cost is likely to be.

Also, you may want to also make a list of:

•   Expected repairs

•   Planned updates/renovations.

Don’t forget about ongoing costs. It may be tempting to leave this out of your initial budget, but it’s unlikely you’ll find a place that won’t require some changes. These estimates could be a factor in your budget and your decision about what to buy. For instance, you’ll want to prepare for such expenses as:

•   Utilities. If you’re moving to a house from a small apartment, you could be paying considerably more in, say, heating and cooling costs.

•   Landscaping or other maintenance of your property beyond the house.

You’ll also likely want to make your new house a home, and there is nothing wrong with that as long as you’ve budgeted for the estimated expense. In other words, include the following in your calculations:

•   Moving costs

•   The cost of new furniture and furnishings (curtains, hardware, the works).

Although these latter expenses aren’t part of your required monthly housing payments, they’re worthwhile to keep in mind.


💡 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 through the process.

Estimate Your Future Housing Costs

Need help figuring out these costs in more detail? The home affordability calculator below provides additional insight into how much it costs to purchase a home and the expected monthly payment associated with being a homeowner, including insurance costs, property taxes, and closing costs.

2. Determining What Is Paid Up Front

Now that you have an all-encompassing list of what you think a potential property might cost, both for a monthly payment and possible expenses, you can divvy up those costs into two categories: upfront costs and monthly costs.

Upfront costs include things like the down payment on the home and other fees such as closing costs and paying for home inspections. Monthly costs are your recurring mortgage payment, property taxes, and insurance(s), which may be rolled into the mortgage payment or paid separately. There are also other possible expenses you may pay down the line for furniture, repairs, renovations, etc.

This will help you get a handle on how much cash you will need to spend when getting a mortgage and becoming a homeowner. And it will also tell you what it will look like to keep your home up and running, month after month.

As you consider how much you should pay for a new home, know that it may be wise to have a cash buffer as you go into homeownership. In other words, don’t clean yourself out when buying a home. You don’t want to risk overdrafting your bank account, and you need to be prepared for how inflation could cause your expenses to tick up.

Recommended: What to Know About Getting Preapproved for a Home Loan

3. Look at Monthly Costs in Terms of Your Budget

Now that you have an idea of what your monthly housing costs could be, you can begin to fit those into your overall budget.

There are different budgeting methods, but most involve knowing and balancing your take-home pay, the cost of your “needs” and “wants” each month, and how much you are putting towards savings.

As you evaluate your projected homeowner figures, you want to ask yourself:

•   Do the numbers work, leaving you with some room to breathe?

•   Are you able to save for other financial goals, such as retirement?

•   Will you be able to maintain your current quality of life, or will you have to make cuts to accommodate your new housing expenses?

•   What do the numbers look like if you were to buy a somewhat more or less expensive home? (This can help you, especially if you are interested in a house that winds up in a bidding war and potentially selling for over the asking price.)

Overextending yourself in order to purchase a home is not recommended. Living paycheck to paycheck and worrying about money after you buy a property could take some joy out of your new nest.

💡 Quick Tip: You never know when you might need funds for an unexpected repair or other big bill. So apply for a HELOC (a home equity line of credit) brokered by SoFi today: You’ll help ensure the money will be there when you need it, and at lower interest rates than with most credit cards.2

4. Considering Unexpected Costs

Being a homeowner can be wonderful and rewarding, but it can also be expensive and, at times, exhausting. Roofs leak. Hot water heaters fizzle out. Gutters need cleaning.

You may want to set proper expectations regarding not only how much homeownership will cost in terms of the typical expenses, but also in terms of the full universe of maintenance and potential costs. Budget accordingly.

Next, you might want to consider what could happen in the event of a job layoff. Even great employees can lose their jobs, so have a plan in the event that this happens. And how would you keep up with costs in the unfortunate event of illness?

If you have no plan for how to make a mortgage payment in the event that you or your spouse loses work, you might not be quite ready for homeownership. You may want to build up your cash reserve before diving in.

For instance, most financial experts recommend that you save three to six months’ worth of expenses in an emergency fund in case of a job loss, health emergency, or other financially difficult events.

Those funds can be vital to see you through a tough financial moment. And if you do have this amount of money set aside (good job!), don’t be tempted to raid it for, say, your down payment or other costs related to buying a home. It’s a very important bundle of cash to have on reserve.

Recommended: How to Shop Around for a Mortgage Lender

The Takeaway

Buying a house can be a huge rite of passage and a big part of adulting. As you contemplate owning your own home, it’s important to be sure you understand both the upfront and ongoing costs of homeownership and know how they fit into your budget. In addition, understanding the unexpected expenses that may crop up can be a wise move.

A key part of your calculations will be checking your mortgage options and how much that will cost you every month. This can be one of the big recurring costs to budget for.

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.

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*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.

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 for more information.

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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To obtain a home equity loan, SoFi Bank (NMLS #696891) may assist you obtaining a loan from Spring EQ (NMLS #1464945).

All loan terms, fees, and rates may vary based upon individual financial and personal circumstances and state.

You may discuss with your loan officer whether a SoFi Mortgage or a home equity loan from Spring EQ is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit brokered through SoFi. Terms and conditions will apply. Before you apply for a SoFi Mortgage, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and loan amount. Minimum loan amount is $75,000. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria.

SoFi Mortgages originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org). Equal Housing Lender. SoFi Bank, N.A. is currently NOT able to accept applications for refinance loans in NY.

In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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