SoFi

Home prices may have flattened out a bit in some markets, but VA loan limits are still getting a bit of a boost in 2026.

For most U.S. counties, lenders’ baseline limit for VA loans (backed by the U.S. Department of Veterans Affairs) is now $832,750, compared to $806,500 in 2025. And loan limits for single-family homes in counties with higher home costs also increased — from a maximum (or “ceiling”) of $1,209,750 in 2025 to $1,249,125 in 2026.

What could higher loan limits mean for you? If you’re a veteran considering a home loan, read on for a breakdown of what you can expect if you purchase a home this year.

What Is the VA Loan Limit?

To be clear: The VA doesn’t limit how much an eligible veteran, service member, or survivor using a VA loan benefit can borrow to finance a home. There are only limits on how much of the loan amount the VA will guarantee if the borrower is unable to repay the mortgage. And that limit can vary based on the status of the borrower’s VA entitlement.

Most borrowers who apply for a VA loan have something called “full entitlement.” This means that if the borrower defaults, the VA will guarantee — or repay the lender — up to 25% of whatever loan amount the lender approved based on its own criteria. If you’re a first-time homebuyer, or if you’ve paid off a past VA loan, you can expect to have a full entitlement.

But if a borrower has what the VA refers to as a “remaining entitlement” (they have a VA loan they’re still paying back), the VA will limit its guarantee based on the Federal Housing Finance Agency (FHFA) loan limit in the county where the home is being purchased.

Instead of paying the lender up to 25% of the full loan amount if the borrower defaults, the VA will limit its guarantee to up to 25% of the applicable FHFA loan limit minus the amount of the entitlement the borrower already used. Borrowers can still get a VA loan using their remaining entitlement, but they may have to make a down payment to get that loan.

To check your VA entitlement status, you can request a certificate of eligibility (COE) through your lender, online, or by mail.

💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you from start to finish.

When Do VA Loan Limits Apply?

You may wonder when VA loan limits apply and, more specifically, how annual changes to loan limits are calculated. The VA bases its loan guarantee limits on the conforming loan limits (CLL) the FHFA sets for conventional home mortgage loans that are eligible for purchase by Fannie Mae and Freddie Mac.

By law, the FHFA must adjust these limits annually to reflect changes to home prices in the U.S. Between the third quarter of 2024 and the third quarter of 2025, home prices increased, on average, by 3.26%, based on the FHFA House Price Index. So the 2026 baseline CLL increased by that percentage.

But your county’s loan limit could be considerably higher, depending on average home prices in your area.

These differences are, in part, due to the variability of cost of living by state.

2026 VA Loan Limit Calculator Table

Higher home prices across the U.S. brought the FHFA’s baseline limit (and, therefore, the VA’s baseline limit for 2026) to $832,750 for a single-family home in most counties.

But in counties where 115% of the median home value is higher than the baseline CLL, the limit has been increased by a percentage that reflects those higher prices. There is a ceiling, or cap, however, of 150%.

Here’s what that looks like for a single-family home in 2026 vs. 2025.

VA Loan Limits in 2026 and 2025

If you’re buying in Alaska, Hawaii, Guam, or the U.S. Virgin Islands special statutory provisions dictate the loan limit, which in 2026 is $1,249,125 for a single-family home.

VA Loan Limit Example

Here’s a hypothetical example of how a borrower could be affected by the county loan limit on a VA loan.

Let’s say Joe, a Navy veteran, wants to buy a home in San Diego County, even though he knows the cost of living in California is higher than average. Joe manages to find a $715,000 single-family home and he wants to buy with a VA loan, but he still owes $100,000 on another VA loan.

The 2026 single-family limit in San Diego County is $1,104,000. Since the VA will guarantee up to a quarter of that amount, Joe has a maximum entitlement of $276,000.

$1,104,000 x .25 = $276,000

But Joe has to subtract the amount of his entitlement he’s already used, which leaves him with $176,000.

So, the VA would guarantee up to $176,000 of Joe’s loan.

Since most lenders want at least 25% of a borrower’s loan amount to be covered by the VA entitlement and/or a down payment, Joe might have to make a $2,750 down payment to get a VA loan for this home.

$715,000 x .25 = $178,750

$178,750 – $176,000 = $2,750

How Does My County Loan Limit Affect Me?

Just like Joe in the example above, if you’re using a remaining entitlement, your county loan limit could determine whether you’ll have to make a down payment to buy the home you want.

It doesn’t mean you can’t get the loan. If you have enough to make the down payment required by your lender, you may even qualify for a VA-backed loan that’s more than your county loan limit.

It’s important to note that though the example provided here is for a home purchase, the same entitlement limits apply if you’re considering refinancing your VA loan. In that case, your county limit could affect how much you’ll be asked to pay in closing costs.

💡 Quick Tip: Apply for a VA loan and borrow up to $1.5 million with a fixed- or adjustable-rate mortgage. The flexibility extends to the down payment, too — qualified VA homebuyers don’t even need one!

How to Apply for a VA Home Loan

Most VA loans are “VA-backed” loans, which means they’re issued by approved private lenders. The VA’s guarantee that it will help repay the lender if a borrower defaults is an incentive for lenders to offer these loans with attractive terms.

Still, it can be a good idea to shop around for the loan that best meets your family needs, and compare interest rates, fees, customer service, and any additional benefits various lenders might be offering.

You also may want to compare the terms of your top VA loan offer to what you can get with different types of mortgage loans, including a conventional loan.

Of course, no matter which type of loan you ultimately choose, you’ll still have to qualify for a mortgage with a lender.

There isn’t a requisite minimum credit score for VA loans. Instead, the VA asks lenders to review the borrower’s “entire loan profile,” which could include your credit history, DTI ratio, employment history, and assets. Individual lenders also may have their own approval criteria you should be aware of when you’re ready to apply for a VA loan.

Pros and Cons of VA Loan Limits

The VA loan limit is just one of several factors you may want to consider if you’re thinking about using a VA loan for a home purchase or a mortgage refinance. Like any other mortgage option, VA loans have their pros and cons. Here are a few to keep in mind:

Recommended: 2026 Home Loan Help Center

The Takeaway

VA loan limits are based on home prices in the U.S., and they’re adjusted annually to reflect price increases.

If you’re a first-homebuyer or you’ve paid off a past VA loan, you shouldn’t have to worry about VA loan limits. But if you want to buy a home and you already have a VA loan, the loan limit for your county could determine whether you’ll have to make a down payment to qualify for the amount you hope to borrow.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Will VA home loan limits increase in 2026?

VA home loan limits increased significantly in 2026. The baseline limit for VA loans is now $832,750, compared to $806,500 in 2025.

What is the conforming loan limit for 2026?

The national baseline conforming loan limit for 2026 is $832,750, although some counties have higher limits. The VA loan limit for a county is the same as its conforming loan limit.

What is the DTI limit for a VA loan in 2026?

The Department of Veterans Affairs hasn’t set a hard-and-fast limit on the debt-to-income (DTI) ratio it requires for its loans. But generally, lenders allow a 41% maximum for a VA loan.

Photo credit: iStock/Thai Liang Lim

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

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

SOHL-Q126-018

A $100,000 mortgage comes with a monthly payment (principal, interest, taxes, and insurance) of around $840, assuming a 6.5% interest rate and a 30-year term. Your lender will look for income in the $28,000 range to make that monthly payment, assuming you don’t already have existing debt.

If you’re wondering how we got to this income level, you’ll want to stick around to see exactly how to get the mortgage you need for the home you want. We’ll go through everything you should know about the income required for a $100,000 mortgage.

Income Needed for a $100,000 Mortgage

The income needed for a $100K home mortgage loan depends on your existing debt and down payment. The amount you’ll qualify for goes up and down based on how much you owe and how much you’re willing to put down. (This is where a home affordability calculator comes in handy.)

For example, if you put down $25,000 on a property that costs $125,000, your $100,000 mortgage works out to about $840 monthly, including principal, interest, taxes, and insurance on a 6.5% annual percentage rate (APR). That $840 should be at maximum 36% of your monthly income (assuming you have no debt), which means you need to make at least $2,333 per month, or $28,000 per year, to afford the payment.

Of course, your existing debt affects your $100,000 mortgage: If you’re carrying $400 in additional debt each month, you’ll need more income to qualify for the loan. Here’s a look at the math:

$840 mortgage + $400 additional debt = $1,274 total monthly debt

$1,274 is 36% of $3,539 per month, or $42,468 per year.

In other words, if you have $400 in debt and are looking for a $100,000 mortgage, you’ll need to earn $42,468 per year.

For the most accurate numbers, try using a mortgage calculator with taxes and insurance.

How Much Do You Need to Make to Get a $100K Mortgage?

To recap: For a $100,000 mortgage, you need to make a minimum of roughly $28,000 per year. To get this number, we calculated the percentage of income based on the 28/36 rule of thumb, which states that mortgage payments should be 28% or less of your gross income and no more than 36% of your total monthly debts. Thus, if you have no debt, a lender could approve a monthly payment that is 36% of your income. Some lenders may be even more generous with these ratios.

A $100,000 mortgage at a 6.5% interest rate on a 30-year term with estimated taxes and insurance works out to be $874. Working backward, we find that $874 is 36% of $2,428 per month, or $29,138 per year.

Keep in mind, that number is without other debt. If you have a car loan or credit card bills, you’ll need to make a higher income.

Recommended: I Make $100,000 a Year, How Much House Can I Afford?

What Is a Good Debt-to-Income Ratio?

Lenders look for debt-to-income (DTI) ratios below 36%, but your chances of qualifying for the mortgage you want improve drastically if you have a minimal amount of debt. Conversely, with a lot of debt, the loan amount you qualify for is much lower.

What Determines How Much House You Can Afford?

Qualifying for a mortgage involves balancing the following factors:

•   Income. Your income is one of the most important factors in determining how much house you can afford. Generally, the higher your income, the more house you can afford. But it’s not the only factor.

•   Debt. Debt is a huge factor in determining how much house you can afford. Every monthly debt payment you have is calculated in your debt-to-income ratio. When you have too much debt, you’ll struggle to qualify for the mortgage you want.

•   Down payment. The higher your down payment, the higher purchase price you can take on. It also changes how much you’ll qualify for because a 20% down payment eliminates mortgage insurance.

A million dollar mortgage seems like a high mark, but if you’re in a state with a high cost of living, it can be relatively common. If you do need to borrow that much, you’ll also likely need a jumbo loan, also called a nonconforming loan, which usually has more stringent requirements.

Whatever amount you need to borrow, take a look at a mortgage calculator or talk to a lender to take your individual situation into account and get the most accurate number.

What Mortgage Lenders Look For

To qualify for a $100,000 mortgage, you’ll need to show the lender you’re a reliable borrower. For the best rates on a $100,0000 mortgage, lenders are going to look closely at the following factors:

•   Credit history. A credit history full of on-time payments, low credit balances, and only necessary credit inquiries may look ideal to a lender. If your credit has some imperfections, it may still be possible to get a mortgage for a $100,000 home.

•   Debt-to-income ratio. If you have too much debt, a lender isn’t going to approve you, no matter how high your credit score is. If you don’t meet the lender’s debt-to-income (DTI) ratio, you may be out of luck. Pay off some debt and try to qualify in the future.

•   Income. Income is the biggest factor that affects your odds of approval. Lenders want to see that you make enough to pay back the loan.

•   Down payment. A higher down payment represents less risk to the lender, and you may be rewarded with a lower interest rate on your mortgage. Remember that if you qualify for a mortgage but not at the best possible interest rate, you can consider refinancing your mortgage in the future.

$100,000 Mortgage Breakdown Examples

To illustrate the income needed for a $100,000 mortgage, we’ve put together a few scenarios. All assume a 7% APR, but different debt levels will affect how much you qualify for. Keep in mind the taxes and insurance numbers may not reflect your area. The cost of home insurance in Florida, for example, is going to be much higher than in Utah.

When you break down a $100,000 mortgage, it will look similar to this:

Terms

•   Home purchase price: $125,000

•   Down payment: 20% or $25,000

•   Mortgage amount: $100,000

•   APR: 7%

Monthly payment: $874

•   Principal and interest: $665

•   Taxes and insurance: $209

If you don’t have a down payment, it’ll look more like this:

Terms

•   Home purchase price: $100,000

•   Down payment: 0% or $0

•   Mortgage amount: $100,000

•   APR: 7%

Monthly payment: $924

•   Principal and interest: $665

•   Private mortgage insurance: $95

•   Taxes and insurance: $164

You’ll notice that you have to pay PMI, an increase of $95. (PMI is required when the down payment is less than 20%.) However, taxes and insurance may be lower because you’re purchasing a less expensive property.

Recommended: Home Loan Help Center

Pros and Cons of a $100,000 Mortgage

When comparing the different types of mortgage loans, there are some benefits and drawbacks to a $100,000 mortgage.

How Much Will You Need for a Down Payment?

For a $100,000 mortgage, you may be able to qualify for loans with 0% down payment options. The chart illustrates several loan types and the minimum down payment required for each.

If you’re able to put down 20%, you’ll be able to avoid PMI, which is arguably the most hated fee on a mortgage. (If you have it, you’ll want to get rid of it as soon as possible.)

Recommended: Best Affordable Places to Live

Can You Buy a $100K Home With No Money Down?

There are some scenarios where you’ll be able to buy a $100,000 home with no money down. These options have 0% down payment requirements for borrowers who qualify.

0% Down Payment Mortgages

•   VA mortgages: VA mortgages are for qualified veterans and service members. A certificate of eligibility (COE) based on service and duty status is required. These loans have no down payment requirement.

•   USDA mortgages: USDA mortgages, designed for low- and moderate-income borrowers in rural areas, have no down payment requirement. The interest rate is comparable to a conventional loan, and the mortgage insurance is much lower than the FHA’s.

Can You Buy a $100K Home With a Small Down Payment?

If you can find a $100K house, there are several ways to pull off a small down payment.

•   Conventional mortgages: Conventional mortgages have options for down payments as low as 3% of the purchase price. These loans require mortgage insurance, but do allow for it to drop off once the mortgage reaches 20% equity.

•   FHA mortgages: FHA mortgages allow for down payment options as low as 3.5% of the purchase price. The mortgage insurance is more costly and doesn’t ever go away, but FHA loans have more flexibility when it comes to credit requirements.

The other options for 0% down payment mortgages — VA loans and USDA loans — also apply here.

Is a $100K Mortgage with No Down Payment a Good Idea?

If you can find a home that requires just a $100K mortgage and can afford the payment, then a no-down-payment mortgage may be a good idea. This is especially true if it can help you get into a home sooner.

A $100K mortgage with no down payment does come with a higher monthly payment due to the higher mortgage amount and required mortgage insurance premium.

How to Improve Your Chances of Approval

If you’re struggling to qualify for a $100K mortgage, there are steps you can take to improve your qualifications as a borrower.

Pay Off Debt

Paying off debt is the secret formula to help you afford a home. When your debt is paid off, your lender doesn’t need to count anything toward your monthly debts. This leaves you with the ability to qualify for a higher mortgage amount.

Look into First-Time Homebuyer Programs

First-time homebuyer programs can help with down payment and closing costs assistance, homebuyer education, and rate buydowns. Most cities and states have some type of program to help first-time homebuyers, so you’ll want to research the program available in your local area.

Recommended: Finding Down Payment Assistance Programs

Care for Your Credit Score

Your credit history is a key piece of the puzzle your lender is putting together, and it takes time to build. These ideas can help.

•   Check your credit report. Errors on a credit report are common. You’ll want to take a good look and see if there’s anything you can do to take better care of your credit. Can you pay off an account? Can someone add you as an authorized user on their account to help build your credit history?

•   Consider opening a credit account. You need to use credit to build it. If you have a limited credit history, consider opening a credit card or applying for a credit-builder loan. Pay your bill on time each month, which may help build your credit.

•   Automate your payments. Use your bank’s bill pay function to automate your payments. You’ll never miss a payment and build your credit history with beautiful, on-time payments.

Start Budgeting

Tracking your money is one of the best ways to get better control of it. When you know where your money is going, you can do powerful things with it. That includes saving a little bit every month for a down payment on a house.

Alternatives to Conventional Mortgage Loans

If you’re looking at alternatives to a conventional mortgage, here are some places to look:

•   Private lending. Private lenders may be able to help borrowers with special circumstances. You might pay a higher interest rate, but the lender also might have more flexible qualifications.

•   Seller financing. It’s possible to enter into an agreement with a seller where you pay them directly instead of the bank. The buyer and seller will agree upon the details privately.

•   Rent-to-own. Along the same lines as seller financing is the rent-to-own option, where the seller agrees to finance the property before the buyer is able to purchase it.

Mortgage Tips

Finding a mortgage that suits your needs is important. Here are a few quick tips to get you through the process of choosing a lender and finding the right mortgage for you.

•   Shop around. Different lenders have different mortgages, so be sure to shop around to find a mortgage with a rate, term, and conditions that work for you.

•   Compare loan estimates. Ask each lender you’re considering for a loan estimate and be sure to submit the same information to each lender (loan amount, loan type, etc.). This will give you a standard form from each lender that can help you compare the fees, interest rates, and terms of each loan offered before you go through the mortgage preapproval process.

•   Go with a reputable lender. It’s hard to know if a lender is going to be good from the get-go, but you can read reviews on Trustpilot and the Better Business Bureau to get an idea of what closing a loan with the company is going to be like.

The Takeaway

Affording a $100,000 mortgage requires reliable income, the right debt-to-income ratio, and healthy credit. There are a number of zero down payment mortgages that can aid your mission to buying a home, too.

For most people around the country, the biggest problem is likely going to be finding a $100,000-$125,000 home. When you do find a home at an affordable price, you’ll need a minimum of roughly $28,000 in income to qualify for the mortgage.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

How much house can I afford if I make $36,000 a year?

With an income of $36,000 per year, or $3,000 a month, going by the 28/36 rule, the amount of mortgage you’re looking for is between $840 and $1,080. With a 7% interest rate and homeowner’s insurance and taxes, that puts your purchase price at a maximum of $140,000, assuming you have no other debts.

What is the monthly payment on a $100K mortgage?

A monthly payment for a $100K mortgage is $665 per month (assuming a 7% interest rate and 30-year term). This amount includes principal and interest only.

How much home loan can I get if I make $100K?

How much home loan you can get on a $100,000 income depends on your debt, credit score, interest rate, and down payment. Many lenders aim for housing costs below about 28% of income, which could translate to a mortgage roughly in the $300,000 to $400,000 range.

Photo credit: iStock/ElenaMorgan

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

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

SOHL-Q126-084

Finding an affordable apartment you love in the neighborhood of your choice can feel like you’ve won the lottery. But before you can call the movers, you’ll need to take the first step and go through the screening process. In most cases, this means filling out a rental application.

Rental applications are a way for landlords to determine whether or not a potential tenant will be responsible when it comes to paying the rent. In order to do so, the property owner or management company may also ask for a credit reference. This is a person, company, or document that provides details about your credit history.

There are different types of credit references, and your landlord may require more than one to ensure you’ll be a no-risk, trustworthy tenant.

What Are Credit References on a Rental Application?

Along with asking for your name, address, employment information, and past residential history on your application, a landlord will want to make sure you regularly meet your financial obligations. After all, a landlord or property manager doesn’t want to take a risk on someone who doesn’t pay their monthly rent in full and on time. This is where a credit reference comes into play.

Credit references are documents, businesses, or individuals that can verify your credit history. Similar to character references a prospective employer might request before they hire you, a credit reference refers to a person or a company with whom the applicant has had a positive financial relationship.

The credit reference provides the landlord with details about an applicant’s financial situation, such as the length of the financial dealings with the entity, the applicant’s payment record, and whether they’re in any debt.

How Does a Credit Reference on a Rental Application Work?

When you decide upon an apartment rental, the first thing you need to do is notify the landlord or property manager as soon as possible, especially if you live in a city where rental competition is stiff. If the place is still available, you’ll be asked to submit a paper or electronic rental application.

Depending on the landlord or property manager’s application process, you may be asked to provide credit references on the form. This could entail listing any current creditors’ names and contact information, detailing the amounts owed on any loans, or answering whether or not you’ve ever declared bankruptcy.

After you’ve completed the application, the landlord will typically contact the credit sources you provided. It’s best to be honest when filling in any past and present financial information on the application. If not, chances are the landlord will find out on their own during the credit reference check. Not being truthful at the start can be a glaring red flag for the landlord, increasing the likelihood they’ll reject the application.

Types of Credit References

There are several kinds of credit references a landlord may use to confirm you’re in good financial shape and will be able to afford the monthly rent. Financial agreement documents such as asset documentation, credit reports, and character reference letters are some things landlords often request.

Read on to learn about three types of credit references a landlord may require:

Credit Report

Credit reports — a credit check used by employers, lenders, and landlords to gauge how responsible a person is when it comes to managing credit and handling their financial obligations — are the most commonly used credit reference. These statements detail someone’s credit history, including their payment record, current account balances, and any outstanding debts, including those referred to a collection agency.

There are three major credit bureaus that issue credit reports. A landlord may use one or two of these credit reporting agencies or order a more comprehensive tri-merge credit report, which culls data from all three companies.

As part of their credit check, landlords may request your FICO® Score or, less commonly, your VantageScore. In either case, this is a three-digit number that reflects how dependable you are when it comes to paying back borrowed debt. Both companies use a 300-850 credit score range.

Landlords typically look for a score of 600 or above. Depending on whether they pull your credit score through FICO or VantageScore®, where the number lands in the 600-plus range may be considered a good or fair credit score. For instance, FICO’s fair credit scores are between 580 and 669, while their good credit range is between 670 and 739. VantageScore’s fair credit scores range from 601 to 660, and good credit falls between 661 to 780.

According to the Fair Credit Reporting Act, a landlord cannot run a credit check without your prior authorization. And, if you do give permission to run a credit check, the landlord may charge you an additional fee, so be sure to check your rental application carefully.

Asset Documentation

Asset documentation gives proof of a person’s financial assets and is considered a highly effective type of credit reference. Landlords may want to know if an applicant has back-up funds for rent in case there are unseen circumstances, such as job loss.

A landlord may ask you to provide certain documents, such as several months’ worth of statements from your current checking, savings, retirement, and/or investment accounts. In order to obtain these records, you’ll need to ask the financial institutions that manage your assets to provide them to the landlord or property management company, unless you can supply them on your own.

Recommended: Do Banks Run Credit Checks for a Checking Account?

Character and Credit Reference Letters

Professional and personal references can be a great option for vetting someone’s financial reliability. While a landlord might be more interested in your credit score and asset documentation, a character reference letter may help give you an edge.

Character reference letters can come from a previous landlord, employer, faith leader, professor, or an entity you’ve previously done business with, like a utility company. Ideally, you’ll want to get a letter from any source that can speak to your reliability and conscientiousness and explain why you’d be an ideal tenant.

How Do Credit References Impact Rental Applications?

Credit references can have a significant impact on whether or not you get the apartment. If the landlord reviews your credit history and has any concerns about your income to debt-to-income ratio or low credit score, they can turn you down.

On the flip side, seeing a stellar record of paying your bills on time and verifying you’ve been a trustworthy tenant in the past can help convince a landlord you’re the right choice.

Examples of Credit References

•   Letters of reference from any former landlords stating you’ve paid your rent routinely and have had an issue-free relationship

•   A copy of your credit report

•   Checking or savings account bank statements

•   Documentation from a utility company listing a positive payment history

•   Character reference letters from personal or professional acquaintances

When You Need Credit References on an Apartment Application

Generally, landlords will want credit references when considering whether to approve an application of a first-time renter, someone who makes a lower salary, or a person who has no credit history. In such scenarios, the renter will want to consider having a guarantor or cosigner on the application.

Guarantors or cosigners are people who have good credit and can sign the lease with you. A cosigner can be a parent, family member, or friend who agrees to take legal responsibility for paying your rent if for some reason you can’t.

How Long Does It Take to Process a Rental Application?

In most cases, rental applications are approved within 24 to 72 hours. Property management companies that oversee larger complexes and have ample staff can process applications faster than a solo landlord.

It may take longer to approve an application when, for example, you’re applying with a cosigner or if you’re renting with roommates. That’s because there are more people involved, more credit references to gather, and more credit reports to pull.

Tips for Credit References

Prepare in Advance

You may not be initially required to provide credit references on your application, but that doesn’t mean a landlord won’t ask for it later. Get your ducks in a row by gathering any necessary paperwork and reaching out to anyone you may want as a character reference.

If you think you’re going to need a cosigner, start a conversation with that person so they’re not totally blindsided or asked to commit at the last minute.

Check Your Credit Report

Running and reviewing your credit report can tip you off to any errors and indicate any fraudulent activity. You can also resolve any credit issues that might give a landlord a reason to reject your application.

According to the Consumer Financial Protection Bureau, you are entitled to request one free copy of your credit report every week from each of the three credit bureaus. You can order your free report by visiting AnnualCreditReport.com.

You can also sign up for credit score monitoring through SoFi and get insights on your financial health and credit.

Choose Your Character References Carefully

Make sure the people you’re asking to vouch for your dependability are those you trust, know well, and will be able to communicate clearly what makes you a good renter.

Don’t Be Afraid to Give the Landlord a Head’s Up

Sometimes a lower credit score or a record of late or missed payments may not be your fault. Certain life events can cause financial upheaval, such as being a victim of identity theft, getting laid off, or abruptly losing a roommate, leaving you responsible for the entire rent.

Writing a letter to the landlord offering an explanation for the spotty record — and attesting you’re working hard to build your credit — may save you from being rejected outright.

Recommended: How to Rent an Apartment With No Credit

The Takeaway

When applying for a rental apartment or home, providing solid credit references allows a landlord or a property manager to determine your ability to pay the rent in full every month. Credit references can impact whether or not your application is approved. Knowing what types of credit references you may have to produce — and taking care to monitor your credit report and clean up any issues — can help boost your odds of landing that coveted home.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view 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.

FAQ

What should I put as a credit reference?

Your landlord will typically be the one to dictate what credit references they want. But if they only run a credit report, you may want to send along anything else that could bolster your financial worth, such as savings and investment account statements.

What is an example of a credit reference for an apartment application?

Examples of credit references may include your bank, previous landlords, companies whose bills you pay regularly, supervisors, or your faith leader.

How do you get a credit reference?

You may be able to obtain a credit reference by requesting a copy of your credit report, authorizing a credit check, or asking for a character reference letter.

How many credit references do you need?

It depends on the landlord. While some won’t ask for any credit references, others will require one or more. To be safe, it’s probably a good idea to plan for at least two.

Can you buy a credit reference?

No. Credit references need to be earned by capably managing your money, paying your bills, and having minimal debt. While you can pay a credit repair company to go over your credit report and dispute any errors on your behalf, you still have to do the heavy lifting of diligently meeting your overall financial responsibilities.

Photo credit: iStock/FluxFactory

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.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

Third-Party 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.

SORL-Q325-005

Modular homes are often misunderstood, but these homes are built to the standards of their site-built brethren, are typically more affordable, and go up faster.

Just like other homes, they may appreciate in value.

Read on to learn whether or not a modular home might tick all your boxes.

Characteristics of a Modular Home

Remember the Sears mail-order kit homes? The catalog, debuting in 1908, offered all the materials and blueprints to build a house. Sears had sold an estimated 75,000 kit houses by the time the catalog was discontinued in 1942.

They were prefabricated homes, meaning that some part or all parts were built in a factory. The term still applies to modular, panelized, and manufactured homes. (Kit homes are still sold and appeal to DIYers who don’t need a general contractor to handle everything.

Modular homes are born almost entirely in a factory. Box-like modules — complete with walls, floor, ceiling, wiring, light fixtures, cabinets, and a heating, ventilation, and air-conditioning system — are trucked to the homesite, lifted by crane, and put together.

Manufactured homes, formerly called mobile homes, are also built in a factory and meet a federal code, but modular homes must meet the same state and local building codes as stick-built homes. They’re permanently attached to a standard foundation and are real property.

Modular houses come in a huge variety of designs and styles, from accessory dwelling units (ADUs) to three-bedroom homes with sleek, contemporary designs. Many companies offer a menu of layout options, and buyers may be able to customize features.

Recommended: Guide to Buying, Selling, and Updating Your Home

Pros and Cons of a Modular Home

Here are some upsides and downsides of modular construction.

Pros

Speed: A modular home or apartment building can go up in around half the time — or sometimes even faster — compared to similar site-built residential structures. While conventional, on-site construction of a single-family home typically takes 9-12 months or more, modular projects are often completed in as little as 3-4 months. The modules are built off-site while the foundation is being prepared. Weather delays are far less of a concern.

Lower Cost: Modular homes are typically cheaper than stick-built homes. The climate-controlled factories are specialized, and production processes are streamlined.

Greener: Modular construction results in fewer carbon emissions than traditional building methods. It requires less transport of workers and materials and fewer carbon-intensive products, such as concrete and steel. Producing buildings in a factory setting promotes recycling and reuse. In addition, modular buildings can be designed to achieve Leadership in Energy and Environmental Design (LEED) certification.

Possibility of gaining value: A well-built modular home, like any stick-built home, will tend to appreciate. The value holds up better in communities where modular homes aren’t uncommon.

A way to ease the housing crisis: Urban cities are looking at prefab housing to mitigate the U.S. housing shortage, and prefab-housing startups have sprouted nationwide. MiTek, a startup owned by Warren Buffett’s Berkshire Hathaway Inc., is, it says, “making modular mainstream.” It plans to ship kits of manufactured building parts to be assembled by general contractors. Former President Joe Biden and Vice President Kamala Harris updated a plan to increase the housing supply in August 2023, pledging the construction of more than 2 million new homes. That plan included modular housing.

A smarter way of doing business: PulteGroup, the country’s third-largest home construction company, is investing in off-site manufacturing of parts for a percentage of the homes the company builds each year. A lack of labor has been the biggest challenge facing contractors. Modular construction can help a company do more with fewer workers.

Now for the not-so-great news.

Cons

Zoning hurdles: Modular builders face pushback from many cities, as off-site construction isn’t mainstream and each city has its own zoning laws.

Financing: If modular homebuyers can’t pay cash, many will have to finance the build with a construction-only or construction-to-permanent loan (aka one-time-close loan). The down payment on land and the home for a construction loan will often be up to 30%, unless it’s one of the government-backed loans described below. A modular-home buyer who already owns the land can use the land as equity and may be able to borrow all of the construction cost if they meet the criteria for the loan.

You and the contractor usually need to be approved for the loan. Money is disbursed based on a draw schedule. Payments are typically interest only and start out small.

With the construction-to-permanent loan, some lenders, for a fee, will let you lock in a fixed rate with a “float down” option if rates have fallen. If you choose a variable rate, you’ll pay the current rate when the mortgage converts.

A two-time-close loan is composed of a short-term loan for the construction phase and a permanent mortgage for the completed home. You’re essentially refinancing when your home is complete. You’ll need to be approved and pay closing costs, but the rate could be better. In most cases, you can compare other lenders’ offers to get the best rate and terms on the permanent mortgage.

An FHA one-time close loan is a government-backed home loan program that applies to modular homes and the land. The minimum down payment is 3.5%.

A VA one-time close loan allows eligible service members to finance modular construction, lot purchase, and permanent mortgage with no money down.

A personal loan, sometimes for up to $100,000, could fund part of the modular construction or the purchase of the land. Keep in mind that unsecured loan rates are higher than rates on secured loans.

Qualified homeowners may be able to use a home equity line of credit (HELOC), home equity loan, or cash-out refinance to give rise to their modular aspirations.

HOA blockage: Some homeowners associations may not allow modular construction in the neighborhood.

Contractor expertise: Unless you have construction chops yourself, you still have to find a contractor. You’ll also need to secure a piece of land if you don’t own the land already.

All the extras: Among the disadvantages of modular homes is the difficulty of determining the total price. Buyers pay not only for the home but also for the land, foundation prep, and transportation.

Possibly a big upfront payment: A builder may want payment in full before construction begins.

Finding a Modular Home

You may want to search for “modular home companies by state” or “prefab homes by state.” Of course, there are Facebook and Reddit modular discussions. Word of mouth is another avenue to find a modular home builder.

Some modular home manufacturers sell directly to homeowners, and others work through a network of retailers.

At least one modular company has developed factory relationships across the U.S.

Keep in mind that this style of construction is still pretty rare, at least in this country. In 2024, only 28,000 single-family U.S. homes were built using modular or panelized construction methods. That’s about 3% of the total market share for off-site construction that year.

Recommended: Home Affordability Calculator

Who Should Get a Modular Home?

People who want a new home up and ready more quickly and at a lower cost than a stick-built home might be smart to think modular.

Environmentally conscious buyers might find modular construction a breath of fresh air. Folks who want a modern ADU for a primary residence or vacation home might want to go modular.

People who appreciate efficiency and innovation might be drawn to modular construction.

It helps to already own the land. If you don’t, and this won’t be a cash deal, it’s important to understand the pros and cons of construction loans and other financing options.

The Takeaway

Modular homes are faster to complete and less expensive than site-built homes, but perceptions and financing can be challenges. If you do plan to build even an ADU out back, check your local zoning, compare modular vs. stick-built construction, and know your terms (manufactured vs. modular, real property vs. personal property). It all can be confusing.

SoFi can lend a hand. Do you plan to use a construction-only loan and need a permanent mortgage after the build is done? SoFi offers mortgages with competitive rates and a variety of repayment terms.

SoFi also offers personal loans of $5,000-$100,000, which could fund the land or more, and brokers a HELOC that may allow you to access up to 90% of your home equity to fund your modular vision.

SoFi now offers flexible HELOC options to turn your home equity into cash. Access up to 85% of your home equity, or $350,000, to finance home improvements or consolidate debt. Competitive interest rates and repayment terms up to 20 years could result in lower monthly payments versus other loans. And the online application process is quick and convenient.

FAQ

What is a modular home, and how is it different from a manufactured home?

A modular home is built in factory-made sections and assembled on-site, meeting the same state and local building codes as traditional stick-built homes. Unlike manufactured (mobile) homes, modular homes are permanently attached to a foundation and classified as real property.

Are modular homes cheaper and faster to build than traditional homes?

Yes, modular homes are typically more affordable due to efficient factory production and streamlined processes. They can also be completed much faster, often in a few months, since construction and site preparation happen simultaneously with fewer weather delays.

What are the main challenges of buying a modular home?

Buyers may face zoning restrictions, limited acceptance by some homeowners associations, and more complex financing options, such as construction loans. Additionally, total costs can be hard to estimate due to land purchase, site preparation, transportation, and possible large upfront payments.

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

SoFi 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.

SOHL-Q126-257

Whether shopping for a home or an investment property, buyers may come across multifamily homes. The first need-to-know, especially for financing’s sake, is that multifamily properties with two to four units are generally considered residential buildings, and those with five or more units are commercial.

This guide explains whether multifamily homes are a good idea for homebuyers or investors.

What Is a Multifamily Home?

Put simply, a multifamily home is in a building that can accommodate more than one family in separate living spaces. Each unit usually has its own bathroom, kitchen, utility meter, entrance, and legal address.

Of the more than 45 million American households that rent, around 60.4% live in multifamily buildings.

Among the different house types are duplexes, which contain two dwelling units, while a triplex and quadruplex consist of three and four units, respectively. A high-rise apartment building is considered a multifamily property.

What about ADUs? A home with an ADU — a private living space within the home or on the same property — might be classified as a one-unit property with an accessory unit, not a two-family property, if the ADU doesn’t have its own utilities and provides living space to a family member.

Multifamily Homes vs Single-Family Homes

On the surface, the differences in property types may seem as straightforward as the number of residential units. But there are other considerations to factor in when comparing single-family vs. multifamily homes as a homebuyer or investor.

Unless you plan to hire a manager, owning a property requires considerable time and work. With either type of property, it’s important to think about how much time you’re able to commit to handling repairs and dealing with tenants.

If you’re weighing your options, here’s what you need to know about single-family and multifamily homes.

Pros and Cons of Multifamily Homes

There are a number of reasons to buy a multifamily home: Rental income and portfolio expansion are two.

Buying real estate is one ticket to building generational wealth. But there are also downsides to be aware of, especially if you plan to purchase a multifamily home as your own residence.

So what are multifamily homes’ pros and cons? That can depend on whether it’s an investment property or a personal residence.

As Investment

Investing in multifamily homes can come with challenges. Take financing.

A mortgage loan for an investment property tends to have a slightly higher interest rate and stricter qualifications, and a down payment of 20% or more is usually required, though there are ways to buy a multifamily property with no money down.

Government-backed residential loans don’t apply to non-owner-occupied property, but there are commercial FHA loans for different situations:

•   Purchasing or refinancing apartment buildings with at least five units that don’t need substantial rehabilitation

•   New construction or substantial rehabilitation of rental or cooperative housing of at least five units for moderate-income families, elderly people, and people with disabilities

•   Residential care facilities

Upfront and annual mortgage insurance premiums (MIP) apply.

Before adding a multifamily home to your real estate portfolio, take note of the pros and cons of this investment strategy.

As Residence

Buyers can choose to purchase a multifamily home as their own residence. They’ll live in one of the units in an owner-occupied multifamily home while renting out the others.

Owners can use rental income to offset the cost of the mortgage, property taxes, and homeowners insurance while building wealth.

Another advantage is financing. With a multifamily home of 2-4 units, an owner-occupant may qualify for an FHA, a VA, or a conventional loan and put nothing down for a VA loan and little down for a conventional or FHA loan. (However, most VA loans require a one-time funding fee, FHA loans always come with MIP, and putting less than 20% down on a conventional loan for an owner-occupied property, short of a piggyback loan or lender-paid mortgage insurance, means paying private mortgage insurance.)

What are multifamily homes’ pros and cons as residences?

It’s worth noting that an owner-occupant can move to a new residence later on and keep the multifamily home as an investment property. This strategy can help lower the barrier to entry for real estate investing, but keep in mind that loan terms may require at least one year of continued occupancy.

Recommended: Tips to Qualify for a Mortgage

Who Are Multifamily Homes Right For?

There are several reasons homebuyers and investors might want a multifamily home.

Multifamily homes can help you enter the real estate investment business or diversify a larger portfolio. It’s important to have the time to commit to being a landlord or the money to pay for a property manager.

For homebuyers in high-priced urban locations, multifamily homes may be more affordable than single-family homes, given the potential for rental income. It might be helpful to crunch some numbers with a mortgage payment calculator.

Multigenerational families who want to live together but maintain some privacy may favor buying a duplex or other type of multifamily home.

What to Look for When Buying a Multifamily Home

There are certain characteristics to factor in when shopping for a multifamily home.

First off, assess what you can realistically earn in rental income from each unit in comparison to your estimated mortgage payment, taxes, and maintenance costs. Besides what the current owner reports in rent, you can look at comparable rental listings in the neighborhood.

When looking at properties, location matters. Proximity to amenities, school rankings, and transportation access can affect a multifamily home’s rental value.

The rental market saturation is another important consideration. Buying a multifamily home in a fast-growing rental market means there are plenty of renters to keep prices up and units filled. The vacancy rate — the percentage of time units are unoccupied during a given year — of a property or neighborhood is an effective way to estimate rental housing demand.

Depending on your financing, the condition of a multifamily home may be critical. With a VA or FHA loan, for instance, chipped paint or a faulty roof could be a dealbreaker.

Read up on mortgage basics to learn about what home loans you might use for a multifamily home and their terms.

Finding Multifamily Homes

Like single-family homes, multifamily homes are featured on multiple listing services and real estate websites. Browsing rental listings during your multifamily home search can help gauge the market in terms of vacancy rates and rental pricing.

Working with a buyer’s agent who specializes in multifamily homes can also help narrow your search and focus on in-demand neighborhoods.

Alternatively, you can look into buying a foreclosed home. This may help you get a deal, but it’s not uncommon for foreclosed properties to require renovations and investment.

The Takeaway

Buying a multifamily home as a residence or investment property can provide rental income and build wealth. It’s also a major financial decision. Whether you’re planning to be an owner-occupant will affect your financing, so seriously consider this option and run the numbers to see if you stand to recoup your costs — and ideally make a profit — from the building’s rental income.

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 is the difference between residential and multifamily?

Some multifamily homes — those with fewer than five units — are considered residential real estate. Larger properties with more than five units are commercial real estate.

What financing options are available for multifamily properties?

Multifamily homes with 2-4 units are often eligible for residential financing, such as conventional, FHA, or VA loans, especially if you plan to be an owner-occupant. Properties with five or more units are generally classified as commercial and require a commercial real estate loan or specific commercial FHA loans.

How long do I need to occupy an owner-occupied multifamily home?

As an owner-occupant, you can eventually move out and convert the property to an investment. However, loan terms typically require at least one year of continued occupancy.

Photo credit: iStock/krzysiek73

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.

SOHL-Q126-252