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Typically, a savings account is a safe, insured place to sock away your cash and earn some interest. You usually don’t use this money for spending, as you do with a checking account, nor is it necessarily the growth vehicle of investments, which also typically bring risk.

A savings account can be a good place to store funds for future goals. This could mean a short-term goal, like a fund for holiday gifts or a beach rental next summer. You might also use a savings account for longer-term goals, like the down payment on a house.

What Is a Savings Account?

Savings accounts can be a great way to diversify a financial strategy. While a person might not want to put all their money into a savings account, this kind of financial product can complement their larger financial plan.

Compared to investments, savings accounts can be a safer spot to put cash away for short-term savings. Savings accounts typically earn more interest than checking accounts.

To look at this in more details, savings accounts set themselves apart because:

•   They’re insured. The money in a savings account is insured by the FDIC (Federal Deposit Insurance Corporation). The usual limits are up to $250,000 per depositor, per account ownership category, per insured institution. When an account is insured, it guarantees that the customer will be able to access their money even in the very rare event that a bank goes out of business. Savings accounts in FDIC-insured institutions are generally a safe place to keep cash.

•   They earn interest. Unlike many checking accounts, savings accounts are interest-bearing — that means the bank will pay an annual percentage yield (APY), based on the money in the account.

Savings vs. Checking Account

Are you wondering what the difference is between a savings vs. a checking account?

•   A checking account is designed to be the hub of your financial life, with money flowing in and out.

•   Typically, you will earn no or low interest with checking accounts, but you will not face transaction limits.

•   With a savings account, money typically stays in the bank (or most of it). Since the bank can then use some of it to meet other business needs (such as loans to other clients), it pays you interest for the privilege of using some of your money in this way.

•   Savings accounts typically do pay interest, though it will vary depending on the kind of account and perhaps how much you have on deposit.

•   With a savings account, you may be limited to six outgoing transactions per month, depending on the financial institution. If you go over that number, you may be charged, have your account switched to a checking account, or even have your account closed.

How Does a Savings Account Work?

Savings accounts work by depositing funds into a savings account. The bank, as mentioned above, expects you to keep the funds there, where they can use some of the money to make, say, loans to others.

To compensate you for using your money in this way, the bank pays you interest. So, as your money sits there, it is growing. This can help you reach your financial goals sooner.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

How to Use a Savings Account

Generally, a savings account is used for short-term savings goals, like an upcoming vacation or large purchase. This type of account is generally used to save or plan for expenses that don’t come up on a daily basis.

If you have multiple short-term savings goals, you might choose to open multiple savings accounts. You don’t have to open up an account for every goal, but keeping separate savings accounts could make budgeting easier. Watching balances grow could be an excellent motivator to keep saving.

On the other hand, financial minimalists might be overwhelmed by juggling multiple account numbers and balances. In that case, having more than one savings account might cause more confusion than clarity. The important thing is knowing how much you are saving and where.

Some specific reasons a person might open a savings account (or two):

•   An emergency fund. Emergencies crop up when least expected. That means the money always needs to be liquid and available. A savings account can be a good place to build and keep an emergency fund.

•   Short-term saving goals. Many things could fall under this umbrella, including upcoming travel, saving for a downpayment on a home, or putting aside funds to purchase a car. A savings account can be a good place for savings goals you hope to accomplish within the next few months or a year.

These are just a couple of the ways someone could use a savings account when it comes to personal finance.

There’s no one right way to use a savings account, and, depending on a person’s preference and goals, they might keep one or multiple savings accounts.

How Much to Keep in a Savings Account

How much to keep in a savings account will vary depending on a variety of factors, which may include your income level, your expenses and cost of living, and your financial goals.

For starters, experts advise having the equivalent of three to six months’ worth of basic living expenses in an emergency fund, as noted above. This can be a valuable cushion if you have unexpected bills or a job loss.

Otherwise, financial experts typically advise that you save 20% of your pay. Some of this might go towards investments and some might go into a savings account (or a couple of them) at the bank. It’s a personal decision.

Pros of a Savings Account

Savings accounts yield lots of benefits for their users. Account benefits vary by financial institution, so customers might want to check the fine print for rates and details.

•   Earned interest. As money sits in a bank account, it makes more money. The bank pays you a rate since it uses your cash, lending it out to other customers at a higher interest rate. But don’t worry, savings account holders can access their savings at any time.

•   Easy access. A savings account is typically more liquid than an investment account, making it a good candidate for short-term savings goals, since account owners can easily and quickly access their money. Typically, a customer can transfer the funds online with the click of a few buttons.

•   Low risk. Since savings accounts are liquid and easy to get to, they’re generally regarded as low risk. Savings accounts don’t have the risk associated with investing. If a person is saving up for a big purchase in the next year or two, they might want to consider keeping the money in a savings account, where they can access it easily without the concern of market volatility.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

Cons of a Savings Account

While savings accounts have their fair share of benefits, they also have a few drawbacks.

•   They might require a minimum balance. Some savings accounts require a minimum balance, depending on the financial institution. That means the account can’t fall below a certain amount. If it does, there could be a fee or extra charges headed the account holder’s way.

•   Limited transactions. With the benefit of higher-than-average interest comes the drawback of potentially limited savings account withdrawals, deposits, and transfers. The Federal Reserve lifted its rule that banks must penalize members who make more than six transactions per month from their savings accounts in 2020. However, banks can still penalize you (with fees) if they want to. It’s a good idea to ask your bank about its policy before making more than six transactions in a month.

•   Setup fees. Depending on the financial institution and type of account, there could be fees associated with opening a savings account. This varies by institution.

•   No tax advantage. If you are thinking about saving for your future, you might get tax breaks with a different kind of retirement vehicle, such as a 401(k) or an IRA.

Types of Savings Accounts

While they follow the same general rules, not all savings accounts are built the same. What follows are some different types of savings accounts you’ll likely find available.

1. Traditional Savings

A traditional savings account is offered by most financial institutions and typically comes tied directly to a checking account. These accounts are often offered by brick-and-mortar banks. A traditional savings account typically will have a low-interest rate compared to other savings accounts.

2. High-Yield Savings

As the name suggests, a high-yield savings account will have a higher yield than a traditional savings account. Often, these accounts are found at online banks (see below). The higher APY may come with caveats that vary by bank, such as requiring a large initial deposit and/or monthly balance. The bank might also be more likely to limit transactions to six per month.

3. Online Savings

Online-only banks don’t have to support expensive brick-and-mortar branches, which can enable them to offer annual APYs that are higher than traditional savings accounts. These online savings accounts also tend to have low initial deposit requirements and typically don’t charge monthly maintenance fees.

Recommended: Savings Account Interest Calculator

Alternatives to Savings Accounts

There are other short-term savings options that don’t involve investment risk. Here are a few alternatives.

Certificate of Deposit (CD)

A certificate of deposit (CD) is similar to a high-yield savings account when it comes to interest rates. However, when a person sets up a CD, they have to commit to keeping it there for a certain amount of time, and early withdrawal can lead to penalties. As a general rule of thumb, the longer the length of the CD, the better the interest rate.

Money Market Deposit Account (MMA)

A money market deposit account (MMA) is often similar to a high-yield savings account but may include features of a checking account as well, such as providing checks and a debit card. Account holders typically need to meet requirements and adhere to the transaction limits to see the benefits. These may include a minimum balance, and a limited number of transactions per month (including deposits, withdrawals, and transfers).

Cash Management Account

A cash management account (CMA) functions as both a spending and a savings account and may offer investing features. Often offered by brokerage houses, these accounts may offer a higher interest rate than a traditional savings account. With many CMAs, account holders can write checks, pay bills, transfer funds, and make deposits.

What to Consider When Choosing a Savings Account

When choosing a savings account, consider the following factors:

•   Interest rate: There is considerable variation, and your money might earn a fraction of a percent or several percentage points. It can be wise to shop around for the highest rates.

•   Fees. Some financial institutions may hit you with fees, such as monthly account maintenance fees. Ask in advance before signing up.

•   Minimum opening deposit and balance requirements. These can stipulate that you put and then keep a certain amount of money in the account. Make sure you are aware of the guidelines and can adhere to them.

•   Transaction limits. As discussed above, some banks place limits on the number of times you can pull money out of your savings account. Know whether your account would have penalties if you exceed the number.

•   Accessibility. You want to be sure you can reach your bank and your money when you need to. Depending on your banking and lifestyle, this could mean a local vs. a national bank, or an online bank vs. a traditional one.

The Takeaway

Most savings accounts are bank accounts that let you store your money securely while earning interest. Using a savings account separates money you intend to use at a later date, say for a large purchase or upcoming event, from everyday spending money that is kept in your checking account.

High-yield savings accounts and online savings accounts often offer higher interest than traditional savings accounts.

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.

FAQ

How exactly does a savings account work?

A savings account is typically a secure, insured way of keeping your money on deposit with a financial institution. For the privilege of having your money on deposit and being able to use it to lend to others, a bank pays the depositor interest.

Can you withdraw money from a savings account?

Yes, you can likely withdraw money from a savings account. Check with your financial institution to see whether they have a monthly limit regarding the number of withdrawals or whether there are fees if your balance falls under a certain amount.

Is a savings account worth it?

For many people, a savings account is a worthwhile financial product. It keeps your money secure and pays some interest as you save towards goals, whether that’s an emergency fund or a travel fund.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

SOBNK-Q325-028

In general, it’s a good idea to keep bank statements for at least one year. If they contain any tax-related information, however, you may want to hold them for at least three years, and possibly as long as seven.

Here’s a closer look at how long you should keep bank statements, why you may want to keep them around, and how to store them.

What’s in a Bank Statement?

A bank statement is a document created by your bank that summarizes the financial activity in your account, such as your checking account or savings account, over a specific period, typically a month. It serves as an official record of all transactions, including deposits, withdrawals, and fees, and provides the beginning and ending balances for the period.

Information you’ll find on your bank statement can help you manage your bank account and may include:

•   The statement period dates

•   Personal details such as your name and bank account number

•   Interest earned and the applicable APY (annual percentage rate)

•   Any fees charged during the reporting period

•   Deposits, withdrawals, and transfers

•   Starting and ending balance

The purpose of a bank statement is to help you understand exactly what is happening with your bank account and keep track of what is going in and coming out.

How Do You Receive Bank Statements?

You may have the option to receive paper or electronic bank statements.

With paper bank statements, your financial institution will mail you a copy each month, or you can head to your local branch (if you have the option) and request one. If you sign up for electronic statements (or e-statements), the bank will typically send you an email notification that your e-statement is available, along with a link to access it securely through their online banking platform.

Whether you receive paper statements or opt to go paperless, you can typically access your current and previous bank statements any time by logging into your online account. You can simply look at the statement online or you can opt to download a copy to your computer.

Recommended: What Is a Debit Card?

Benefits of Keeping Bank Statements

You generally want to keep your bank statements going back at least 12 months, and possibly longer. Here’s a look at why it’s a good idea to keep them around:

Refer to Them at Tax Time

You want to be sure you have accurate numbers when it comes to filing your taxes, and having bank statements makes it easier to do your calculations. It can be especially helpful if you’re self-employed and are reporting income and business expenses.

Though you may not need to hang onto your bank statements after 12 months, it may make sense to hold onto them for three years (or even up to seven) in case you need information so you can file an amended tax return or in the event that you get audited. In fact, there are IRS guidelines on how long you should hang onto your bank statements depending on your financial and tax scenario.

Provide Proof of Payment

You can use your bank statements to track any payments you’ve made in case there are any issues. For example, if your lender believes you missed your monthly mortgage payment, you can provide them with a copy of your bank statement to show the transaction went through.

Or if you’re unsure whether your employer paid out your semiannual bonus, you can look at your bank statement to make sure they did. If not, you can show this documentation when you contact your payroll department.

Some lenders for various loan applications may also want to take a look at your bank statements to verify your income.

How long you should keep your bank statements for this specific reason is up to you. Keep in mind that banks are legally required to keep customers’ statements for at least five years, but many keep them for longer. It’s a good idea to ask your bank how long they hold onto your statements. If you want to hang onto them for longer, it’s best to download or save a copy for your own records.

Spot Fraud or Identity Theft

If you’re concerned about fraudulent transactions or just want to keep an eye on your bank account, regularly reviewing your bank statements gives you insights into your account. It can help you spot any suspicious activity. The sooner you can see these types of transactions, the sooner you can report them to your bank and get matters resolved.

Recommended: How Many Bank Accounts Should You Have?

Where to Keep Bank Statements

Where to keep bank statements will depend on whether they are paper or digital:

Paper Bank Statements

You’ll need to find physical space if you want to store paper statements. Depending on how many bank accounts you have, you might use an accordion file with a pocket for every month of the year, or you might use a single filing folder for each year. Either way, keep these folders in a safe, out-of-the-way place where they will be protected from damage or theft.

Electronic Bank Statements

Electronic statements don’t require as much physical space, which can be an advantage of online banking, but you will need some type of system for storing them. You might create one main digital folder on your computer or cloud storage service for your bank statements, the set up subfolders for each year. This can make it easy to find the right documents when you need them, such as during tax season or should you ever get audited by the IRS.

What to Do With Older Bank Statements

If you no longer need your bank statements, you’ll want to dispose of them safely and securely. That’s because they contain sensitive information that you don’t want going into the wrong hands.

Shredding Your Documents

You can shred your documents to protect your sensitive information by either purchasing your own shredder or heading to your local office supply store and paying for professional shredding. (Some communities may offer free paper shredding days throughout the year.)

Completely Delete Electronic Copies

If you have electronic copies, make sure to delete them from your computer and any backup sources. Check your computer’s trash bin or other folders to ensure they’re completely wiped from your device.

The Takeaway

Keeping bank statements is an important part of your overall financial health. It can help you with tasks such as accurately filing tax returns and providing proof of payment. Whether you keep hard copies or electronic statements securely, they can enhance your personal finance management.

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.

FAQ

How many months’ worth of bank statements do you need to keep?

It’s generally recommended that you hold onto your bank statements for 12 months. If the statements contain any information related to your tax returns, it’s a good idea to keep them for at least three years and possibly as long as seven years.

Is it OK to throw away old bank statements?

You can get rid of old bank statements that you no longer need. However, you want to dispose of them securely (often by shredding them) since they contain sensitive information.

Do banks destroy records after 7 years?

Banks are legally required to keep records for at least five years, but some may hang onto them for seven years. If you’re unsure, contact your bank to find out how long they hold on to your statements before destroying them.

Photo credit: iStock/fizkes

SOBNK-Q325-023

The money you’ll need for a down payment on a $100,000 home could be $0 or $20,000 – or more. The answer is specific to you, and it comes down to two factors: One, the type of home mortgage loan you opt for and other personal preferences, and two, your qualifications as a borrower.

If you’re ready to buy a $100K house, you’ll want to know where you fit in the equation when it comes to your down payment. That’s where we come in. This is a comprehensive guide with real examples and numbers to help you understand how much down payment you’ll need for a home of your own. We’ll cover how much income you should have, how different factors affect your down payment, and the process of getting a mortgage.

How Much Income Do I Need to Afford a $100K Home?

If you don’t have any debt (no auto loan, student loan, or credit-card debt, for example), you need a minimum of $2,650 per month, or $31,800 per year to afford a $100K home loan. That’s assuming a 7.00% interest rate and no down payment. If you have $500 in debt payments every month, the income requirement increases to $4,000 per month, or $48,000 per year.

Keep in mind that qualifying for a mortgage depends on more than your income. There are several factors your lender will consider to qualify you for a mortgage. It’s always best to find out exactly what a lender requires, but in general, these tend to be:

Credit score: For any lender to approve your mortgage, you’ll need a credit score high enough for the loan you want. If you’re looking at an FHA loan, backed by the Federal Housing Administration, and have a 10% down payment, you could qualify with a credit score as low as 500. Other government-backed loans from the USDA and VA have no minimum credit score requirement, while a conventional mortgage often requires a credit score of 620 or above.

Income: You need to make enough income to cover your mortgage and your monthly obligations.

Debt: Your monthly debt obligations are factored into the equation. Any monthly debt you have decreases the monthly mortgage payment you qualify for. Lenders also look for your debt-to-income (DTI) ratio – all of your debt added together divided by your gross income – to be no more than 36% of your income.

Type of loan: The type of mortgage loan affects how much income you’ll need to afford a $100,000 mortgage. This is because different types of loans have different interest rates and down payment requirements.

Interest rate: The interest rate environment affects home affordability and changes how much income you need to afford a $100,000 mortgage. Remember that if rates drop after you purchase, you can always consider a mortgage refinance.

Property details: Property details matter – such as location and age – because it will affect your affordability. The age and build details of the house affect homeowners insurance and property taxes. This changes how much income you need.

These are examples of how much income you need to afford a $100,000 home. There are various loan terms, interest rates, down payments, and debt loads.

How Much Is the Down Payment for a $100K House?

The down payment needed for a $100,000 house varies by loan type. In some cases, such as with a VA loan (backed by the U.S. Department of Veterans Affairs) or a United States Department of Agriculture (USDA) loan, you may be able to avoid a down payment altogether. In most cases, if you’re a first-time homebuyer or haven’t owned a primary residence in the last three years, you’ll need between 3% and 3.5% ($3,000 to $3,500) for the down payment on a $100,000 home.

Here’s a breakdown of the minimum down payment by loan type for a first-time buyer. (A $100,000 home is within the conforming loan limits and is not considered a jumbo loan.) Keep in mind, putting down less than 20% requires you to purchase some type of mortgage insurance, the costs of which will be included in your loan.

What Are the Down Payment Options for a Home Worth $100K?

First of all, congratulations if you have found a home valued at $100,000. Given that the average U.S. home price is much higher than that, you must be shopping in one of the best affordable places in the U.S.!

Purchasing a home for $100,000 will help keep your overall cost of living in line. Your down payment options on a $100K mortgage depend on your loan type. As mentioned above, there are some options where you don’t have to put any money down, and others where you need to put down at least 3%. Here are some common down payment options for a home worth $100K:

•   0% = $0

•   3% = $3,000

•   3.5% = $3,500

•   5% = $5,000

•   20% = $20,000

If you’re worried about coming up with a down payment, there are down payment assistance programs that might be able to help. You need to meet the program requirements, which are often geared toward first-time homebuyers located in a specific area who need financial assistance. The property itself also must meet certain conditions outlined by the program.

Recommended: The Cost of Living in the U.S.

What Does the Monthly Mortgage Payment Look Like for a $100K Home?

The monthly mortgage payment for a $100,000 home works out to roughly $665 for principal and interest. When you add in taxes, homeowners insurance, and mortgage insurance, you’ll be closer to $925 per month. These numbers assume a 7.00% interest rate on a 30-year loan with property taxes of $1,250 and a homeowners insurance premium of $750. These numbers will be different, of course, depending on your area, property, and personal qualification factors.

The following is a sample table of the different monthly mortgage payments you could see on a $100K mortgage with varying down payment amounts, interest rates, and loan terms.

As you can see, there’s a wide variance in monthly payments for a $100,000 mortgage. Shorter terms, higher interest rates, and lower down payments result in higher monthly payments — although with a shorter term, borrowers will pay less interest over the life of the loan. Longer loan terms, lower interest rates, and higher down payments result in lower monthly payments.

What to Do Before You Apply for a Mortgage on a $100K Home

If you’re not quite ready to apply for a mortgage on a property valued at $100,000, there are some steps you can take in the meantime to help you qualify as a first-time homebuyer or even as a repeat homebuyer.

•   Talk to a lender. Even if you’re not ready to apply for a $100,000 mortgage, it’s better to get your questions answered sooner rather than later. A good lender can explain your options and help get you on the path to mortgage qualification.

•   Set your goals. Write down what you want and how you’re going to get it. Put a plan in place for qualifying for a mortgage. You might consider paying down debt or saving for a down payment.

•   Check your credit. See where you’re at and what you need to do to improve your credit score. A good credit score will get you the best interest rates and save you money for years.

•   Shop around for a loan Look at different lenders with different loan options. Get loan estimates and be sure you’re comparing apples to apples. Look at the loan’s annual percentage rate (APR), which includes fees.

Recommended: Average Monthly Expenses for One Person

Should I Get Preapproved Before Applying for a Mortgage?

Getting preapproved for a mortgage is a great strategy. Mortgage preapproval is a strong indication that you’ll be approved for the loan. It can help you make decisions about what loan will be best for you and puts you in a better position to negotiate with sellers. Going through the mortgage preapproval process helps your true financial picture become clear.

How to Get a $100K Mortgage

Getting a mortgage on a $100,000 home is a simple process if you’re qualified, but you might not be familiar with it if you’re buying your first home. According to the Consumer Financial Protection Bureau, the process looks like this:

Prepare to shop for a loan

This step involves getting your finances in order. You’ll assess your spending, figure out how much you want to spend, how much you can save for a down payment, and pull all your documents together (tax return, bank statement, etc.)

Explore loan choices

You’ll learn about the different types of loans, loan costs, and shop around for a lender.

Choose a loan offer

Request loan estimates and preapprovals from several different lenders, look closely for loan details that matter most to you, and choose a lender you can trust and that can offer you competitive pricing.

Close on the new loan

Once you’ve selected a loan officer, you’ll send over the contract to them to get the mortgage process started. You’ll submit required documents, schedule a home inspection and other due diligence items, obtain title and homeowners insurance, and review documents before closing.

The Takeaway

The down payment for a mortgage on a home valued at $100,000 ranges from $0 to $20,000, though you could put down even more. The factors that affect how much you need for a down payment depend on your loan type and personal preference and qualifications. If you go with a VA loan, for example, you might not need a down payment at all. If you have a credit score above 580 and you opt for an FHA loan, your down payment will be a minimum of 3.5%. And a qualified first-time homebuyer can get a conventional mortgage from some lenders with a downpayment as low as 3%.

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 should I make to afford a $100,000 house?

How much you need to make to afford a $100,000 house starts at about $32,000 per year. This assumes you have no debt and can secure a 7.00% interest rate on your mortgage. Your debt and interest rate are some of the biggest factors determining how much you need to make to afford a $100,000 home.

What credit score is needed to buy a $100,000 house?

The credit score needed to buy a $100,000 house depends on the type of mortgage you get. The credit score requirements for an FHA loan is generally 580, unless you’re able to make a down payment of 10% or more, in which case, you can have a credit score as low as 500. For a conventional loan, it’s 620. For a USDA or VA loan, there’s no minimum credit score requirement for the program, though a lender may impose one.

How much is a $100K mortgage per month?

A $100,000 mortgage with a 7.00% interest rate and a 30-year term is roughly $924 per month. That amount includes $665 in principal and interest, $167 for taxes and insurance, and $92 for mortgage insurance.

Photo credit: iStock/Mariia Vitkovska

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-Q225-142

Auto insurance is often one of the biggest costs of car ownership. On average, coverage costs $2,012 annually — up considerably from $1,459 a year ago. With monthly rates soaring, securing lower premiums is an important way you can manage expenses.

Here’s a look at some of the cheapest car insurance companies you may shop with in 2025, as well as some strategies to keep your premiums low.

Top Cheap Car Insurance Companies

As we mentioned, the average annual cost of car insurance is about $2,012, according to a 2025 U.S. News & World Report analysis of cheap car insurance companies. The chart below demonstrates which carrier has the cheapest car insurance rates.

It’s worth noting that many companies in the study offer annual rates well below this average. You can always switch car insurance at any time, so consider shopping around for the best rates.

Recommended: Cheapest Cars to Insure

Cheapest Car Insurance Companies for Young and Teen Drivers

The cost of car insurance varies widely depending on age and gender, among other things. For instance, teens are at significantly higher risk of getting into an accident, so premiums for young drivers can be sky high — especially for male teens. The national average for male teen drivers is $7,321 per year, while the average for female teens is $6,475, according to the 2025 U.S. News & World Report analysis.

A policy with the cheapest insurance providers may save you thousands.

Cheapest Car Insurance Companies for Good Drivers

A driving record free from accidents, traffic violations, and other infractions can help you qualify for lower premiums. The national average for good drivers is $2,012 a year, or $167.66 a month. But the cheapest insurance companies offer policies that may be less. As you’ll see, the rates for good drivers are the same as the overall cheapest rates in the study.

Cheapest Car Insurance Companies for Seniors

Seniors typically enjoy the lowest average car insurance. The average married 60-year-old woman pays $1,724 per year for coverage, while her male counterpart pays an average of $1,765.

Cheapest Car Insurance Companies for High-Risk Drivers

If you get a speeding ticket or are involved in an accident, you may see your insurance premiums go up, as insurers see you as a higher risk. After one speeding ticket, for instance, the national annual premium is $2,571 on average. After an accident, it’s $2,891. That said, you may be able to secure a better deal with one of the companies below.

How to Find the Cheapest Car Insurance for You

Here’s a look at some of the strategies you may consider for how to save on car insurance.

Gather Your Information

Before you apply for auto insurance, gather pertinent information, such as your Social Security number and driver’s license number. You’ll also want a record of your driving history, including any accidents you’ve had, tickets, and driver’s license suspensions.

Pull together information about your car as well, including make, model, year of the vehicle, the mileage, and whether you own, lease, or finance it.

Get Quotes from Multiple Sources

Different insurance companies may offer different prices for the same coverage. And some insurance companies might specialize in different areas, such as roadside assistance. Get car insurance quotes from at least three or four insurance companies, so you can compare prices and coverage options and find the best deal for your needs.

Ensure Apples-to-Apples Coverage Comparison

Variables such as coverage type, limit, and deductible can all have an impact on the price of an insurance policy. So, when comparing online auto insurance policies, make sure these variables are the same across the board so you are getting a true side-by-side comparison.

How to Save on Car Insurance

In addition to comparison shopping, there are several other important ways to save on car insurance.

First and foremost, maintain a good driving record. Insurance companies typically charge lower rates for drivers who have no speeding tickets and haven’t been involved in at-fault accidents.

Ask about possible discounts for having two or more vehicles on a policy, having safety equipment like airbags, paperless billing, or bundling auto insurance with other policies.

Consider raising your deductible, which can lower your monthly premium. However, be aware that doing so may mean you pay more out of pocket if you need to use your insurance.

Finally, regularly review your policy and update as needed. You may need to update your policy if you add or remove a driver, increase or decrease the mileage you drive each year, or add or remove a vehicle from your policy.

Recommended: Compare Coverage Types

The Takeaway

Finding the cheapest insurance for your car doesn’t have to be overwhelming. Compare quotes, understand your coverage needs, and take advantage of discounts to lower your premiums without sacrificing protection. As you review your options, remember that the best deal isn’t necessarily the lowest cost. Rather, it provides a balance between cost and the coverage that’s right for you.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

Do cheaper companies offer lower-quality service?

While cheaper companies may offer lower premiums, this does not always mean that they will offer lower-quality services.

Are smaller or regional companies cheaper?

It’s possible that small or regional companies may be cheaper than national companies, but there’s no guarantee. The best thing to do is get quotes from insurers of different sizes to find a policy that meets your needs.

How much do quotes vary between companies for the same driver?

Quotes for the same driver can vary substantially between different insurance companies. That’s why it’s important to seek quotes from multiple companies.

Does bundling home and auto always result in the cheapest overall insurance cost?

Bundling home and auto doesn’t guarantee the cheapest overall insurance cost. However, many insurance companies will offer discounts if you choose to bundle policies.

How easy is it to switch car insurance companies?

Switching car insurance companies is usually relatively easy. It generally involves finding a new company and insurance policy and calling your old company to cancel. If you are financing your car, let your lender know that you have switched insurance companies.

Photo credit: iStock/FG Trade Latin

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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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Monthly car insurance premiums are one of the biggest expenses necessary for maintaining a car. Most states require you to have some form of car insurance. Only one — New Hampshire — doesn’t require it at all, though you will need to prove you can cover the cost of an accident.

Even if it’s not required by law, it is highly recommended to have insurance coverage for your car. Here’s a closer look at factors that can influence what you pay for insurance and what you can do to manage the cost.

Average Cost of Car Insurance in the U.S.

A big question on a driver’s mind when they shop for coverage: How much is car insurance per month? The average annual cost of car insurance premiums is $2,068, or about $172.33 per month, according to a 2025 study by U.S. News & World Report. That said, auto insurance quotes will depend largely on your individual situation, so the premium you’re offered may vary widely from the average.

Factors That Affect Car Insurance Rates

Insurers consider a number of different factors when setting rates for their customers. Doing so helps them determine the amount of risk they’re taking on and what they are likely to have to pay should they get in an accident. In other words, they are trying to predict how likely you are to make a claim and what the cost of that claim may be.

Age of Driver

Statistically, age plays a big role in how likely an insurance customer is to make a claim. Young, inexperienced drivers, for instance, are at higher risk of being in an automobile accident. Consider this sobering fact from the Insurance Institute for Highway Safety: Teenagers aged 16 to 19 are three times more likely to be in a fatal car accident than drivers aged 20 and older.

As a result, insurance costs for young drivers tend to be much higher than for older adults. Premium prices due to age typically level out after about age 25.

Type of Vehicle

Vehicle type has a big effect on insurance costs for comprehensive and collision coverage. The more expensive your car, the more an insurance company will have to pay to replace or repair it.

Again, this represents a greater risk for your insurance company, which they compensate for with higher rates. So if you drive a 2024 Honda Civic sedan, for example, you can expect to pay less in car insurance than you might if you drive a luxury vehicle, like a Lexus or Audi sedan.

Driving Record and Claim History

Age and vehicle type can only tell insurers so much. They will also look at your driving record to gain insight into your past driving behavior. In fact, it’s one of the most influential factors that affect insurance rates.

If you have a clean driving record, without accidents, violations, or other infractions, insurers may see you as less risky and offer you lower rates. If you have caused an accident or have moving violations, your insurance rates will likely be higher. A major infraction, like a DUI, can cause your insurance rates to skyrocket by 50% to 100% or more.

How to Lower the Cost of Car Insurance

Luckily, car insurance premiums are not set in stone. There are steps you can take to keep costs low. Let’s look at some common strategies.

Bundle Insurance Types

When you bundle insurance, you purchase multiple types of insurance from the same provider at the same time. For instance, you might bundle homeowners insurance with your auto insurance. Bundling helps streamline insurance providers’ operational costs, and it incentivizes customer loyalty. As a result, a lot of providers will offer steep discounts from 10% to 25%, depending on the coverage you choose and other factors such as where you live.

Check Insurance Coverage Needs

It pays to consider carefully how much auto insurance you really need. If you purchase more than necessary, you might not be getting much value for the extra money you spend.

You will need to purchase enough coverage to meet your state’s insurance requirements as well as requirements mandated by your loan or lease agreement if these apply.

However, consider factors such as the value of your vehicle when purchasing a policy. For example, older vehicles tend to be less valuable than newer ones. Weigh the cost of collision coverage and whether it’s worth the payout you are likely to receive if you were in an accident. If the payout is relatively low, you may be able to reduce your collision coverage.

Shop Yearly for Quotes

As the variables in your life change, so too will your insurance needs and costs. What’s more, insurance rates are always in flux due to factors such as industry trends and inflation. That’s why it’s a good idea to shop for car insurance quotes at least once a year.

Insurers set new rates for the upcoming year in December, so this may be a good time to look for the cheapest auto insurance companies. However, you can switch carriers at any time.

Understanding Different Types of Car Insurance Coverage

Generally speaking, there are six types of car insurance coverage.

•   Liability coverage: This coverage is mandatory in most states, and you are usually required to have a minimum amount that varies depending on where you live. It helps pay for the cost of injury to another person and the damage you cause to another person’s property.

•   Collision coverage: If you hit another car, or an object like a fence or a tree, collision coverage can help pay for the cost to replace or repair your vehicle.

•   Comprehensive coverage: This helps cover the cost of damage to your car by things like fire, hail, theft, and vandalism. There’s usually a deductible associated with comprehensive coverage, which you’ll have to pay yourself before the coverage kicks in.

•   Uninsured and underinsured motorist coverage: Unfortunately, not all drivers carry insurance. If you’re hit by an uninsured driver, uninsured and underinsured motorist coverage can help pay for the cost of your medical care and sometimes help repair your car.

•   Medical payments coverage: If you or your passengers are injured in an accident, this can help cover the cost of medical care.

•   Personal injury protection: Only available in some states, personal injury protection can help pay for medical expenses after an accident as well as related expenses incurred because you were injured, such as lost income.

The Takeaway

The cost of car insurance depends on a lot of factors, including the coverage you need, your driving history, your age, and the type of vehicle you drive. With so many variables, it pays to shop around for the best deals. Get quotes from several providers, and consider doing it at least once a year.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

Is $200 per month a lot for car insurance?

A monthly premium of $200 per month is more than average for car insurance. However, price depends on a lot of factors. Depending on your circumstances, $200 per month may be appropriate.

Is $500 per month a lot for car insurance?

A monthly premium of $500 per month is quite expensive, generally speaking. It is more than twice the national average.

How much should insurance for a car be per month?

Average monthly car insurance premiums are about $172.33 per month. You may pay more or less depending on your circumstances.

How much should car insurance be per year?

Average annual car insurance premiums are $2,068, though costs will vary depending on a variety of factors.

How much is car insurance for a 16-year-old?

It can be quite expensive to insure a 16-year-old driver. On average, it costs $2,735 a year to add a 16-year-old to their parents’ policy. But it costs $8,765 per year on average for that 16-year-old to have their policy.

Photo credit: iStock/stanciuc

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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.

SOPRO-Q225-035