Can You Use Your IRA to Invest in Real Estate?

There are a couple of ways to use an IRA to invest in real estate. First, you can invest in mutual funds, exchange-traded funds (ETFs), or real-estate investment trusts (REITs) that focus on real estate investments within an IRA.

It’s also possible to set up a self-directed IRA, or SDIRA, that can own physical real estate, as well as other types of alternative investments.

Using an IRA to invest in real estate property directly, however, is a complicated and potentially risky proposition. It’s important to understand the many rules and restrictions, as well as the potential advantages and disadvantages of investing in real estate in an IRA before doing so.

Key Points

•   It’s possible to invest in real estate in an IRA via conventional methods, such as buying shares of a mutual fund, ETF, or REIT.

•   Direct ownership of physical property using an IRA means setting up a self-directed IRA, or SDIRA, which requires a specialized custodian, not an ordinary broker.

•   While a SDIRA gives investors the ability to invest in alternative investments (such as real estate, commodities, and precious metals), the account holder must oversee and manage the account and all investments.

•   Investing in real estate in an IRA comes with stringent rules, including that neither the investor nor anyone in their family can own or live in the property.

•   Investors considering investing in real estate through a SDIRA should weigh their risk tolerance, overall portfolio allocation, and the potential time commitment involved.

Can You Invest in Real Estate Using an IRA?

IRAs can offer a wide variety of investment opportunities, including those that target the real estate sector. While conventional investment options within an IRA are often confined to equity and fixed-income mutual funds, exchange-traded funds (ETFs), and index funds, it is in fact possible to use an IRA to invest in real estate in various ways.

Investing in real estate may be appealing to some investors because this asset class tends not to move in sync with traditional stock and bond markets; thus real estate may provide portfolio diversification. Some real estate investments also offer the potential for passive income.

But real estate is a type of alternative investment, and as such tends not to be very liquid, which may present risks for some investors.

Ways to Invest in Real Estate With an IRA

Here are some choices investors can consider for IRA real-estate investments. But not all types of real estate can be held in any type of IRA:

•   Real estate mutual funds, real estate-focused exchange-traded funds (ETFs), real estate investment trusts (REITs) are typically available through a traditional, Roth, SEP, or SIMPLE IRA.

•   Investing directly or owning residential and commercial investment properties, tax-lien certificates, crowdfunded real estate investments typically require a self-directed IRA or SDIRA (see detail below).

1. Real Estate-Related Funds

Like any type of mutual fund, real estate funds hold a basket of investments. Real estate mutual funds tend to be actively managed funds that may hold shares of real estate-related stocks, REITs, or they may track an index.

A real estate index fund, for example, seeks to mimic the performance of a market benchmark or index.

ETFs, meanwhile, are pooled investments similar to mutual funds, but are traded on an exchange like stocks, so they offer more liquidity. ETFs may also hold real-estate related investments — typically shares of REITs.

💡 Quick Tip: Did you know that you must choose the investments in your IRA? Once you open a new IRA online and start saving, you get to decide which mutual funds, ETFs, or other investments you want — it’s totally up to you.

2. Real Estate Investment Trusts

Investors can also invest in Real estate investment trusts (REITs) directly. REITs own and manage properties on behalf of investors. REITs can target a specific niche or segment of the real estate market, such as retail shopping centers or storage facilities. Or they might hold a wide mix of property investments, including residential rental properties, office buildings, and industrial warehouses.

Dividends are often at the top of the list of benefits when weighing the pros and cons of REITs. They’re required to pay out 90% of profits to shareholders as dividends, making them a potentially reliable source of passive income.

Some of the advantages of REITs include passive income from dividends, and portfolio diversification, but these vehicles come with a number of risks. Potential risks include less liquidity and sensitivity to interest rates, as well as other factors that can negatively impact real estate markets: i.e., consumer trends, property destruction (from wear and tear, or weather), local laws and regulations.

💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.

3. Investment Properties

It’s also possible to own investment properties directly, such as commercial and residential real estate, among other types of properties. Investment properties can generate passive income through rent payments, and they may offer a profit when sold.

But investment properties typically require an upfront investment of capital, managing a mortgage, and ongoing maintenance that may be beyond the reach of most investors.

4. Tax-Lien Certificates

Tax-lien certificate investing involves buying liens that have been placed against properties in connection with unpaid tax debts. The holder of the certificate can collect interest while the property owner repays the debt. If the owner defaults on the debt, the certificate holder can take ownership of the property.

These are high-risk instruments, typically owing to the potential for losing money on tax payments and low-quality properties that don’t yield a profit.

5. Real Estate Crowdfunding

Real estate crowdfunding platforms, also known as online real estate platforms, allow a number of investors to purchase property by pooling their investment funds. Depending on which platform you’re using, the minimum investment could be as low as $500, but terms vary and the risks can be high.

Crowdfunding is even less liquid than many other types of real estate investments, since there’s typically a minimum holding period — which means investors’ money can be tied up for long periods, and there is no guarantee that a certain property or properties will turn a profit.

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1Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

What IRAs Can You Use to Invest in Real Estate?

If you’re interested in real estate funds or REITs, you may be able to invest in these through a traditional, Roth, SEP, or SIMPLE IRA. Many brokerages include real estate funds and REITs as investment options for ordinary IRA investors.

On the other hand, if you’re specifically interested in property investments or tax-lien certificates — i.e., directly investing your IRA in real estate — you’ll need to open a self-directed IRA (SDIRA) instead.

What Is a Self-Directed IRA?

A self-directed IRA is a traditional or Roth IRA that’s held by a specialized custodian that allows investors access to a broader range of investments, including alternative investments like real estate.

Unlike ordinary IRAs which are overseen by a broker, all assets in a SDIRA are researched and managed by the account holder.

Self-directed IRAs are subject to a number of IRS restrictions. Many of these rules also apply to ordinary IRAs, but it’s important to bear them in mind when thinking about investing your IRA in real estate. Specifically, you’re barred from:

•   Transacting with disqualified persons. These include your spouse and any family members, as well as your IRA beneficiary if they don’t fit either of those categories. The prohibition also extends to any business entity that’s owned by a disqualified person.

•   Using the IRA or investments in the IRA for personal benefit. Using an IRA for personal benefit in any way is not allowed. For example, if you’re collecting rental income from a property you own in the IRA, you have to deposit any profit into the IRA, along with any other income generated by self-directed IRA assets.

•   Making disallowed investments. Finally, there are some limits on what you can own in a self-directed IRA. Disallowed investments include life insurance, collectibles, and business interests in S-corporations. Transactions that count as “self-dealing” are also prohibited: i.e., borrowing money from a SDIRA, selling property to it, using it as loan collateral.

Note: While the IRS permits using an IRA to buy a first home, that doesn’t apply to self-directed IRAs.

Steps to Buying Real Estate With an IRA

If you’d like to invest in property or tax lien certificates with an IRA, you need to set up a self-directed IRA, and then purchase the property or similar investment through the SDIRA . Because it can be very difficult to secure a mortgage for this kind of purchase, most direct property purchases are paid for with cash from the SDIRA.

1. Find a Custodian

The first thing you’ll need to do is find a qualified custodian that offers self-directed IRAs for real estate investment. When researching custodians, it’s a good idea to consider their reputation in the space, customer service and satisfaction, as well as the fees you’ll pay.

2. Open a Self-Directed IRA

Once you select a custodian, you can open your SDIRA. Your custodian should be able to guide you through this process, which usually involves completing the appropriate paperwork.

Remember, you’ll need to specify whether you’d like to open a traditional or Roth self-directed IRA. Traditional IRAs allow for tax-deductible contributions, while Roth SDIRAs can offer qualified withdrawals tax free in retirement.

Your custodian may give you the option (or require you) to establish a self-directed IRA as a limited liability company (LLC). Doing so can offer an advantage, since it allows you to have full control with regard to signing authority over IRA funds.

However, setting up an LLC real estate IRA can trigger additional IRS rules against prohibited transactions.

3. Deposit Funds to Your IRA

The next step is transferring funds into your self-directed IRA. That may be as simple as scheduling an electronic transfer from a bank account. You can also roll funds over from a 401(k) or another eligible plan.

Keep in mind that self-directed IRAs follow the same annual contribution limits as other IRAs, but those limits do not apply to IRA rollovers.

4. Compare Investment Options

Once you have money in your self-directed IRA, you’ll need to decide how you want to invest it. If you’re focused on real estate, that might mean purchasing an investment property. It’s important to perform due diligence to find a property that aligns with your investment needs, goals, and risk tolerance.

Remember that self-directed IRA investment options can include:

•   Single-family or multifamily homes

•   Commercial and rental properties

•   Land

•   Tax liens

•   Mortgage notes

Each one can have a different risk/reward profile so it’s important to understand what you might gain from each one and what you may stand to lose. It’s also a good idea to consider how much of your self-directed IRA funds, and your portfolio as a whole, you’d like to allocate to real estate.

5. Purchase a Property

If you’re investing in a rental property and you’ve found one you want to buy, the final step is making the purchase. You’ll need to make an offer and once that’s accepted, you’ll need to authorize your IRA custodian to complete the transaction on your behalf. That’s important, as the property needs to be held in contract by the IRA, rather than yourself.

Pros and Cons of Investing Your IRA in Real Estate

Investing an IRA in real estate can yield some advantages but there are some serious considerations to keep in mind.

While you can use a self-directed IRA to hold real estate, which may offer some tax advantages, it’s important to know the rules so you don’t risk losing those benefits. Also, keep in mind that holding real estate inside a self-directed IRA can mean missing out on some tax advantages you’d get by owning property directly.

A self-directed IRA can offer high return potential but that means doing your homework first to find solid investments. You’ll need to spend some time researching properties to ensure that you understand the risks, as well as the level of returns you might be able to expect.

Managing a self-directed IRA may be more time-consuming than investing in a regular IRA, especially if you’re not hiring a property manager to oversee property investments. Self-directed IRAs offer less liquidity and depending on which custodian you choose, the fees may be high.

thumb_upPros:

•   Potentially for returns

•   IRA-related tax benefits

•   Diversification

•   IRAs are protected from creditors

thumb_downCons:

•   Physical real estate is subject to numerous risks

•   Stringent rules and requirements

•   Less liquid than other investments

•   Time-consuming to set up and manage

•   Fees may be high

Is Investing Your IRA in Real Estate Right for You?

Deciding whether to invest in real estate with your IRA can start with reviewing your portfolio as a whole. Here are some questions to consider:

•   Do you already own any real estate investments, including REITs or index funds?

•   If so, how much of your portfolio is allocated to real estate?

•   How much time and effort do you have to put into managing real estate investments?

•   How much money are you able to invest?

•   Do you have a trusted custodian and if not, do you know where to find one?

•   What degree of risk are you willing to take and what kind of returns are you hoping to earn?

•   Asking those kinds of questions can help you to evaluate where real estate fits into your investment plans and whether a self-directed IRA is the best option for you.

Alternative IRA Investment Options

In addition to real estate, you can also hold a wide variety of other alternative investments in a SDIRA.

•   Commodities

•   Gold and other precious metals

•   Limited partnerships

•   Private equity

Remember that the IRS bars you from owning things like artwork, antiques, rare coins or stamps, and fine wine in a self-directed IRA.

The Takeaway

Opening an IRA for real estate investing could be worth the effort if you’re hoping to diversify your portfolio beyond stocks and bonds, but it requires opening a specific type of IRA called a self-directed IRA, or SDIRA. This type of IRA isn’t available from a traditional broker, because you can use a SDIRA to hold alternative investments, such as real estate and commodities.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


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FAQ

Can I invest in real estate using my IRA?

You can invest in real estate using a self-directed IRA, or SDIRA. This type of IRA is held by a custodian and allows you to choose from a wider range of investment options than regular IRAs. With a self-directed IRA, you can own rental properties, mortgage notes, and tax lien certificates.

How is real estate taxed in an IRA?

Real estate held in an IRA is subject to the tax rules that apply to the type of IRA. For example, if you have real estate in a traditional SDIRA then any earnings or income generated by those investments would grow tax-deferred. You’d pay ordinary income tax on them when you make qualified withdrawals in retirement. A Roth-style SDIRA would provide tax-free income on qualified withdrawals. Owing to the complexity of self-directed IRAs to begin with, it might make sense to consult a professional regarding tax implications.

What type of real estate can be held in an IRA?

A self-directed IRA can hold residential rental properties, commercial real estate investment properties, tax lien certificates, and mortgage notes. If you have a regular traditional or Roth IRA, you can use it to invest in real estate funds, ETFs, or REITs.


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



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I Make $90,000 a Year, How Much House Can I Afford?

Earning $90,000 a year puts you in a good position to afford a home priced at around $350,000, as long as you don’t already have significant other debts to pay. That’s good news considering the U.S. average home value these days is just above $342,000. But there are many variables in play that could adjust your budget up or down. Let’s examine them to get closer to your personal housing budget number.

What Kind of House Can I Afford With $90K a Year?

Congratulations! At $90,000 a year, your salary is almost $15,000 higher than the American median household income. It makes sense that you’ve set your sights on homeownership. Making $90,000 per year may feel like a lot of money … or not so much, depending on whether you live in an affordable place. The question is less about how much house you can afford than how much you can afford to spend on housing each month.

There’s a basic rule of thumb that you should spend no more than a third of your gross income (i.e., income before taxes) on housing. (Ideally, you’d spend closer to about a quarter.) So someone earning $90,000 per year, can reasonably afford to spend between $22,500 and $29,700 on housing each year — which translates to between $1,875 and $2,475 per month.

That’s a substantial enough chunk of change to cover many mortgage payments. For example, if you took out a home mortgage loan of $310,000 at an interest rate of 7%, your monthly payment might be around $2,060, which falls into your affordable range. (This assumes you make a down payment of $40,000 on a home priced at $350,000.)

However, more factors than your income affect what size loan mortgage lenders will qualify you for — and more factors than the price of the house itself affect whether or not you can afford it.


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with as little as 3% down.

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What is Debt-to-Income Ratio (DTI) — and Why Does It Matter?

Let’s take a second to talk about DTI, or debt-to-income ratio. Your DTI is, as its name suggests, a ratio of how much debt you currently have to how much income you make. It’s calculated by dividing your debts by your gross monthly income, and it’s one of the factors lenders consider when qualifying you for a home loan.

If you’re in a lot of debt — meaning your DTI is higher — it may be harder for you to qualify for a mortgage, no matter how much money you make. Inversely, if your DTI is lower, that’s a favorable mark even if you’re not making huge amounts of money.

Consider how much debt you currently carry before applying for a home loan. If you’re already paying off a car, student loan, credit card balance or all of the above, you may want to work on dialing down your debt; even if you qualify for a mortgage, your interest rate might be higher as a result.

Factoring in Your Down Payment

Along with your DTI and income, mortgage lenders also consider how much money you’re able to pay toward a home up front — otherwise known as your down payment. Although a larger down payment might not significantly shift your monthly payment, it can have an effect on the amount a lender is willing to offer you. (Having a significant amount of money available for a down payment can be a favorable marker for lenders.)

That said, it can take a long time to save up a substantial down payment, even for those earning good income — and you may be sacrificing the opportunity to build equity in the short term if you wait to buy a house.

In any case, remember that responsible homeownership will require a well-set savings habit. (After all, your new home is going to need repairs—and you won’t be able to just call your landlord anymore!)

How to Afford More House With Down Payment Assistance

For many would-be homebuyers — especially first-time homebuyers — the process of saving a downpayment is the single largest obstacle to owning a home. Fortunately, down payment assistance programs offer one way for buyers to give themselves a leg up. Offered through government agencies and nonprofits, down payment assistance programs offer very-low-cost loans or grants that can amplify whatever you’ve already saved up for a down payment.

There are often requirements in order to qualify, such as not out-earning a certain income threshold or having less than a given amount of liquid assets available. Still, these programs can bridge the gap for many first-time buyers trying to leap the down-payment hurdle into homeownership.

Other Factors That Affect Your Ability to Afford a Home

Along with your DTI, the size of your down payment, and the size of the loan you’re hoping to take out, your credit score — and credit history in general — has an impact on your housing budget. Even if you earn good money, a poor credit score may keep you from qualifying for a mortgage, and a score that is fair but not great may push your interest rate higher than it would otherwise be.

Additionally, lenders are interested not only in how much you make, but the stability of your capacity to earn that money. That means they’ll consider not only your job, but how long you’ve had it; most like to see a steady job history of two years. That said, it may still be possible to qualify for a home loan if your job is new to you if you’ve had consistent income over that time, especially if your other markers are favorable.

How to Calculate How Much House You Can Afford

To get the best sense of how much you can afford, consider trying an online mortgage calculator, or home affordability calculator, which will allow you to plug in all of your specific metrics and see how much of a mortgage you’re likely to qualify for (and the size of the associated monthly payment). Keep in mind that your mortgage is just the start. When you buy a house, you’ll also be responsible for any maintenance and upkeep, not to mention property taxes, utility costs, furnishings, and more.

Speaking to a lender is another great way to understand in depth how much house you’re likely to be able to afford based on their algorithm and your specific financial standing.


💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

Home Affordability Examples

Let’s say you earn $90,000 per year and are interested in buying a house that costs $400,000. You’ve saved up $30,000 for a down payment (7.5% of the purchase price of this home), and you have a credit score of 750.

With interest rates around 7%, as they’ve been lately, your monthly payment for such a home would likely be at or above $3,200—in part because, if your down payment is less than 20%, you’ll need to pay for mortgage insurance, which is an additional monthly cost. That’s substantially more than a third of your gross income at $90,000, so it’s probably not a good idea.

So let’s say you take your $30,000 down payment and look at a significantly cheaper home, perhaps in a significantly cheaper state. This one costs $250,000. In that case, with everything else the same, you’d likely pay less than $2,000 per month, which is a comfortable amount for your income level.

Remember that if your credit score and income trend upward after you purchase a home, and you want to improve your mortgage loan terms, you can always look into a mortgage refinance.

How Your Monthly Payment Affects Your Price Range

As you can see, your monthly payment has a huge effect on the price range of the home you’re comfortably able to afford. Although $90,000 per year may seem like a lot of income (and is, at a national level), it may not translate to being able to afford a very large or costly home.

Types of Home Loans Available to Households with $90,000 in Income

Good news: There are many different types of mortgage loans available to those who earn $90,000. Along with conventional loans from private lenders, you may also be eligible for government-subsidized loans like VA loans, FHA loans, or USDA loans, all of which can lower the qualifying requirements and make the home loan process easier for first-time homebuyers.

The Takeaway

Although $90,000 is a large income, especially for a single person, it doesn’t translate to an unlimited home-buying budget. Aside from income, your credit history, DTI, and available down payment amount also have a significant impact on how much mortgage lenders will be willing to offer you.

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


SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is $90K a good salary for a single person?

A salary of $90,000 is substantially higher than the national median household income, so yes, it’s a good salary for a single person. Exactly how good depends on where you live, as the cost of living varies significantly across the U.S.

What is a comfortable income for a single person?

“Comfortable” is relative! While one person may be comfortable sharing a home with multiple roommates, others might require more space or greater luxuries to feel satisfied. Personal finance is just that—personal—and only you can decide how much income you need to be truly comfortable.

What is a liveable wage in 2024?

The living wage changes substantially based on the cost of living where you live. For example, according to the MIT Living Wage Calculator, $14.54 per hour is a living wage for a single adult with no children in Pocatello, Idaho, but that figure goes up to $21.58 in Portland, Oregon.

What salary is considered rich for a single person?

While “rich” is relative, the top 5% of people in America earned more than $335,000 in 2021 according to a study by the Economic Policy Institute. However, depending on where you live, $90,000 may feel rich — or not. Cost of living has a major impact.


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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.

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Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
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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What Is Joint Tenancy With Right of Survivorship? Examples

Owning a home — or another type of property — with another person comes with all sorts of complications attached. Along with figuring out who’s responsible for the dishes or how to agree on what color to paint the bathroom, you also have to discern who owns what.

That’s where joint tenancy comes in. Joint tenancy means that both (or all) parties have 100% ownership in a home (or other kind property, like a bank account), rather than each owning a 50% share. Right of survivorship means that, if one of the owners passes away, the other(s) will automatically assume full ownership of the property.

Let’s take a closer look at joint tenancy with right of survivorship, or JTWROS, as well as listing some specific examples so you can see exactly how it works in action.

What Is a Joint Tenant With Right of Survivorship (JTWROS)?


Joint tenancy with right of survivorship is — as mentioned — co-ownership in an asset like a home or bank account with assumed ownership after one party’s death. So a joint tenant with right of survivorship is any one person in that ownership relationship.

With JTWROS, two or more people jointly own an entire asset — rather than each owning some proportional measure of the asset’s value.

Requirements for Joint Tenancy With Right of Survivorship


In order to establish joint tenancy with right of survivorship, all parties involved must meet four criteria known as the “four unities” of joint tenancy. They must have:

•  acquired the asset at the same time

•  obtained the same title document

•  an equal share of interest in the property

•  equally exercised their right to ownership of the property

Keep in mind that specific laws around JTWROS vary by state, so to fully understand how it works where you live, you’ll need to look up your own state’s laws. For example, in California, the default state is for co-owners of property to be tenants in common — which is a different type of ownership structure (more on that below). You should always look up your own local laws, or speak to a local legal expert, in order to ensure you fully understand your ownership rights.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


Understanding Joint Tenancy With Right of Survivorship: Examples


Definitions are all well and good — but how does JTWROS work in practice?

One of the most common examples of joint tenancy with right of survivorship is when a married couple purchases a home together. Say Rebecca and Jane buy their first home as young newlyweds, preparing to build a family and a life together.

If both Rebecca and Jane meet the four unities of joint tenancy — including purchasing the home together and having both of their names on the home’s deed — they can share 100% ownership of the home, rather than each of them laying claim to 50% of the home’s value. That means that, if either one of them were to pass away, the other would immediately assume full ownership of the home rather than having to go through the process of probate. (Of course, it also means that neither Rebecca nor Jane could choose to leave the home to someone else — including their children — without first terminating the joint tenancy.)

You could also choose to enter into a joint tenancy with right of survivorship with a non-spouse. Say you and two friends choose to purchase a condo in Seattle together, which you plan to rotate between you as a vacation home. So long as you meet the four unities and specify it at the time of purchase, you can all share 100% ownership of the condo. That said, none of you would be able to leave the condo to your children in your will, sell your share of the property, or even specify what proportion of the property value you own. In order to do any of that, you’d need to be in a tenancy in common. So as you’re thinking about a home mortgage loan, a down payment, and other details around a home purchase, it’s important to think about how you want ownership expressed on the deed as well.

Other Examples of Joint Tenancy With Right of Survivorship (JTWROS)


Although we’ve been talking primarily about homeownership in this article, keep in mind that joint tenancy with right of survivorship can apply to other sorts of ownership and property, too. For example, a married couple or pair of business partners might hold a bank account in joint tenancy with right of survivorship. The same may hold true of personal property, such as a vehicle, when purchased jointly.

Different Types of Joint Tenancy


In order to fully understand joint tenancy, you have to understand tenancy in common — which is the primary alternate ownership structure.

Tenancy-in-common allows mutual owners to designate proportional ownership (rather than sharing 100% ownership), and any tenant can sell their portion of the property whenever they choose. In addition, the right of survivorship clause does not hold, and each tenant-in-common can leave their share of ownership to a beneficiary in their will if they so choose.

Joint Tenancy with Right of Survivorship

Tenants-in-Common

Each tenant enjoys full ownership of the shared property. Tenants may designate proportional ownership: 50/50, 60/40, etc.
If one tenant dies, full ownership is automatically bestowed on the surviving tenant(s). If one tenant dies, they can will their share of the property’s ownership to anyone they want.
The four unities must be met in order for joint tenancy to be established. Tenancy in common can be established without meeting the four unities.

What are the Tax Implications of JTWROS?


Part of the reason some people choose to enter into a joint tenancy with right of survivorship is to avoid probate — the lengthy, and often costly, legal process by which a person’s assets are assigned to new owners after their death. Still, it’s important for tenants to understand that JTWROS comes with certain tax implications.

For example, if your joint tenant is not your spouse, and the value of your shared property is higher than the annual gift tax exclusion ($17,000 in 2023), the transferal of ownership at the time of their death could trigger the federal gift tax. You may also be subject to estate taxes if the value of your shared property exceeds the IRS’s threshold for that tax — $12,920,000 in 2023.

Always check with a qualified tax professional to be sure you understand the tax implications of shared property ownership.

Advantages and Disadvantages of JTWROS


As you can see by now, joint tenancy with right of survivorship has both advantages and disadvantages. Here are some of them at a glance.

Benefits of JTWROS

•  Right of ownership is automatically transferred at the time of a tenant’s death, avoiding the lengthy probate process and simplifying estate planning for families and married couples.

•  All tenants claim equal ownership over the asset, be it a home, bank account, or vehicle.

Drawbacks of JTWROS

•  No tenant can choose to leave their share of ownership to an heir in their will.

•  Because all tenants share 100% ownership of the property, if one tenant has financial trouble, this trouble affects other tenants even if their finances are in better shape. (For example, if two people share joint tenancy of a vehicle and one falls deeply enough into debt for their car to be repossessed, the other will, obviously, also be unfairly penalized in the process.)

When Does Joint Tenancy With Right of Survivorship Make Sense?


Joint tenancy with right of survivorship can be a great choice for families or married couples whose long-term financial goals and life plans are woven together — and who both have similar financial histories and habits. On the other hand, for those purchasing an asset together in the short term, or in situations where one tenant may have serious debt while another does not, joint tenancy with right of survivorship may not be the best choice.

How to Enter a JTWROS Agreement


Ensuring that a joint purchase is a JTWROS has everything to do with the wording on the asset’s title or deed — so it’s important to ensure that your mortgage lender, bank account representative, or whoever you’re making a purchase from, understands your intention to enter into a joint tenancy with right of survivorship at the time the asset is acquired.

The Takeaway


Joint tenancy with right of survivorship is an ownership structure in which all parties share 100% ownership of an asset such as a home, joint brokerage account, or vehicle. If one of the tenants dies, the ownership is automatically transferred to the other(s), which makes it a common choice for married couples and families.

Ready to take the leap into homeownership for yourself? SoFi Mortgage Loans come with competitive rates and terms suited to every phase of life.

Checking out rates is a smart step toward homeownership — take a look today.

FAQ


What is the primary advantage of being a joint tenant with right of survivorship?


One reason married couples and families so frequently choose this ownership structure is that ownership of the property is automatically conferred to the surviving tenant if the other party dies — which avoids the lengthy probate process and doesn’t require anyone to move at a very difficult emotional time.

Which tenancy is best for married couples?


Although every couple is different, many married couples choose a joint tenancy with right of survivorship to simplify their estate planning.

What is a primary feature of property held in joint tenancy?


Property held in joint tenancy is owned 100% by all parties involved — rather than each party owning a proportional share of the property’s value.


Photo credit: iStock/PeopleImages

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.


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.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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

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How to Write an Offer Letter for a House

The total number of homes for sale hit a record low in August 2023. That means home sellers may get several offers when they put their house on the market.

To help stand out from the pack, some buyers choose to write an offer letter. They may believe an offer letter could help personalize the negotiation and possibly make a connection with the seller. But writing an offer letter comes with potential risks buyers should be aware of.

Thinking about writing an offer letter? Read on to learn how to write an offer letter for a house, what to say in the letter, what to avoid, how long the letter should be, and the risks that may be involved.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


What Is a House Offer Letter?


A house offer letter is a personal letter written in hopes of helping to convince the seller to choose the buyer’s offer, especially when there are multiple offers on a house.

Offer letters have become more popular in recent years due to the high number of real estate bidding wars.

In an offer letter, a buyer, whether they’re a millennial homebuyer or any homebuyer, is trying to show the seller why they’re the ideal candidate for the house.

When writing a real estate offer letter, buyers often include certain details to help make a connection with the seller, such as:

•   Introductions. The potential buyer will want to say who they are, of course.

•   Contract details that might help. Buyers may want to briefly note that they’ve been pre-approved for a mortgage, are flexible with the closing date, or can otherwise meet the seller’s needs.

•   Compliments about the house. If there’s a well-tended garden or custom wall finishes, a buyer may want to note how much they like those things.

•   Points of connection. If a buyer noticed something in the house that could help them relate to the seller, like fishing gear in the garage or a piano in the living room, they might mention that they share those hobbies.

•   Explanation about their offer. A buyer could include the reason why they offered what they did for the house, but anyone who does this should be careful. Review it with your agent first to make sure you’re not saying something that might jeopardize the deal.

•   Thank them. Express gratitude to the seller for considering the offer.



💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

How Does a House Offer Letter Work?


Since an offer letter is an informal gesture, writing such a letter is optional. Plus offer letters do have drawbacks (more on that below).

If a buyer does write an offer letter, it would typically be sent, along with the formal offer on the house, to the seller’s agent.

Recommended: How to Write a Letter of Explanation for a Mortgage

Is It Worth It to Write a Letter With a House Offer?


A personal letter could help you stand out from others who are bidding on a house, but there’s no guarantee of that. Plus, an offer letter could cause problems. The National Association of Realtors is wary of offer letters because they might run the risk of violating the Fair Housing Act, even unintentionally. The Fair Housing Act seeks to create a level playing field for all people renting or buying a home, getting a mortgage, or seeking housing assistance.

For that reason, your real estate agent may advise against writing an offer letter. Instead, they may suggest that you choose another strategy for making your offer on a house more attractive.

How Long Should a House Offer Letter Be?


If you do decide to write an offer letter, the letter should be short and succinct. One page is plenty. And if your bid isn’t competitive enough to be on the seller’s radar in the first place, the offer letter probably won’t even be read.

What Should Not Be Included in a House Offer Letter


Perhaps even more important than what you write in your offer letter is what you should not include. Stay away from:

•   Overly saccharine statements. Sellers may get overwhelmed by buyers who are too profuse about their love for the property. Be complimentary, but don’t overdo it.

•   Letters that are too long. The seller doesn’t need to know everything you love about the house. Offer letters are more effective when they’re a page or less.

•   Too much personal detail. If you mention your partner or children, be aware that familial status is protected against discrimination under the Fair Housing Act. It’s wise not to share too much.

•   A picture of yourself or your family. This is another red flag. Race and gender, among other things, are protected against discrimination under the Fair Housing Act.



💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

How Do You Write a Strong Offer Letter?


First, make sure your home contracts offer is strong. You want to submit a strong offer before you work on a letter.

Then, when you sit down to write the letter, consider this: If you were having a conversation with your seller about the house, what would you want to tell them? Explain briefly why you love the home, and thank them for considering your offer. Keep the focus of the letter on the house, and avoid giving too many personal details. Use a friendly tone, and be genuine and sincere.

Keep the letter to one page or less.

Recommended: Guide on How to Save Money for a House

Tips for Buying a Home

Rather than an offer letter, you may want to consider one of the following strategies instead:

•   Submit a higher offer. Winning a bidding war often comes down to one factor: price. Offering a higher price for the house is an option to think about. You might also want to add an escalation clause, which can automatically increase your offer above other offers.

•   Offer all cash. That is, if you have the resources to do this. Data from Redfin suggests buyers who offer all-cash are two to four times more likely to be chosen.

•   Waive the financing contingency. Waiving this contingency could potentially increase your odds of winning the contract over other buyers, according to Redfin. Keep in mind, however, that waiving the financing contingency means you forfeit your earnest money if you can’t get financing before the contract deadlines.

And, finally, if you’re a first-time home buyer, you may want to look into first-time homebuyer programs that could be helpful to you in your quest to buy this particular home — or any home.

The Takeaway


Offer letters have become popular in recent years as the real estate market has heated up, but these letters do have drawbacks. They could even run the risk of violating the Fair Housing Act. Discuss it with your real estate agent and weigh the pros and cons carefully before writing an offer letter.

Also, consider other options that might help improve your chances of becoming a homeowner. For instance, you may decide that offering a higher price on the house, getting preapproved for a mortgage, or being flexible about the closing date is a better way to go.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How do you write a strong offer on a house?

In addition to making a strong offer on a house, you can write an offer letter. To write a strong offer letter, focus on the property. Tell the seller why you love the home, and thank them for considering your offer. Use a friendly tone, be genuine and sincere, and keep the letter to one page or less.

How to write an offer letter for a house for sale by owner?

In a house that’s for sale by owner, you’re likely dealing directly with the seller. In that case, you can address the seller by name in the letter and tell them why you like the house. Also, if you know there’s something they’re looking for, like a quick transaction, you could indicate that you’re flexible with the closing date. And if you’re preapproved for a mortgage, you could mention that as well.

How do you write a good offer letter?

Be succinct, genuine, and sincere in your offer letter. Focus on the house and why you like it, and avoid giving personal details. Thank the owner for considering your offer.


Photo credit: iStock/Gorica Poturak

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


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



*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.


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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How to Get Preapproved for a VA Home Loan

The Department of Veterans Affairs sponsors the VA loan program to help military members and surviving spouses become homeowners. If you’re interested in how to get a VA loan, you’ll need to first make sure you meet the government’s requirements and then find a VA-approved lender and seek preapproval for a loan.

Getting preapproved for a home loan can give you an idea of how much you’ll be able to afford. Having a VA loan preapproval letter in hand can also give you some leverage when it’s time to make an offer. Here’s a closer look at how to get preapproved for a VA home loan.

What Is a VA Loan?

A VA loan is a mortgage loan that’s backed by the federal government. The Department of Veterans Affairs works with a network of approved lenders that grant VA loans to military members and surviving spouses. Should a borrower default on a VA loan, the federal government steps in to help the lender recoup some of its losses.

What is a VA loan good for? There are four ways that borrowers can use them.

•   VA purchase loans allow you to buy a home through an approved lender.

•   Native American Direct Loans (NADL) help Native American veterans or veterans married to Native Americans buy, build, or improve a home on federal trust land.

•   Interest Rate Reduction Refinance Loans (IRRRL) can help make existing VA-backed loans more affordable through interest rate reductions.

•   Cash-out mortgage refinance loans can help eligible borrowers tap into their home equity to withdraw cash, while refinancing into a new loan.

In terms of how to get a VA loan, each of these options has different requirements that borrowers need to meet.



💡 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 Does VA Home Loan Preapproval Work?

Mortgage loan preapproval simply means that a lender has reviewed your financial situation and made a tentative offer for a loan. It doesn’t constitute final approval for a mortgage, but getting preapproved is often beneficial, as a mortgage preapproval letter can give you an edge if you’re vying with another buyer for a particular property.

VA home loan preapproval works much the same as any other type of mortgage preapproval, with one extra step: Before you apply for the loan, you’ll need to get a Certificate of Eligibility (COE) from the VA. This document shows your lender that you’re eligible for a VA loan, based on your service history and duty status. The minimum service requirements for a COE depend on when you served. You can request a COE online through the VA website.

After you have the COE, you’ll need to give the lender some basic information about your household income, assets, and how much you’re hoping to borrow in a process called prequalification. This will allow you to see — often in just a few minutes — what kind of mortgage terms you might qualify for. From there, you can choose a lender and go through the next step, preapproval.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


How to Get a VA Home Loan Preapproval Letter

Getting a VA home loan preapproval letter is a relatively straightforward process. Here’s what you’ll need to do.

•   Obtain your COE from the Veterans Administration.

•   Choose a VA-approved lender.

•   Complete the lender’s preapproval application.

Let’s get into the details of securing a VA home loan preapproval. First, you’ll need certain documents on hand to apply for the COE, and those documents are specific to your military status. If you are a veteran, you’ll need a copy of your discharge or separation papers. Active-duty service members will need to furnish a statement of service signed by their commander, adjutant, or personnel officer. This statement needs to include your full name, Social Security number, date of birth, date you entered duty, duration of any lost time, and the name of the command providing the statement. You can find full details and an online COE application on the VA website.

Once you have your COE and have found a prospective lender, the lender will likely ask to see certain documents to verify your income and financial situation, including:

•   Tax returns

•   Pay stubs

•   Bank account statements

•   Investment account statements

You’ll also need to provide a valid photo ID, your date of birth, and Social Security number. This information is needed to process a hard credit check, which can impact your credit score.

After your lender has everything it needs to process your preapproval, it will review your finances and complete a hard check of your credit history. Assuming your credit score and income check out, and there are no issues with your COE, you should be able to get a preapproval decision within a few days.

How to Buy a Home With a VA-Backed Loan

Home mortgage loans offered through the VA are attractive for a few reasons. For one thing, you can buy a home with no down payment required. For another, VA loans can offer more attractive interest rates than other types of mortgage loans.

Now that you know how to get a VA home loan, if you’d like to buy a home with a VA-backed loan, getting preapproved is the first step. Again, VA loan preapproval can give you an idea how much you’ll be able to borrow, which can help you narrow down your search for a property. Once you find a home that you’re interested in, making an offer is the next step.

You can use a VA-backed loan to buy:

•   Single family homes with up to four units

•   Condos in a VA-approved project

•   Manufactured homes

VA loans can also be used to build a home. You’ll need to have the home inspected and appraised to make sure that the property is structurally sound and that its value aligns with the amount you want to borrow. If there are no issues, you can move on to the closing to sign final paperwork and pay the VA loan funding fee.

This fee is a one-time payment VA borrowers are required to make to help cover the costs of the VA loan program. The amount you’ll pay for the funding fee depends on whether you’re a first-time homebuyer and how much money you put down on the home, if any. Some buyers may pay no fee at all, or have it refunded.

Recommended: Cost of Living by State

Who Is Eligible for a VA Loan?

Eligibility for a VA loan is a two-pronged test. You’ll need to be able to obtain a COE from the government on one hand, and on the other, you’ll need to be able to meet the lender’s credit score and income requirements.

COE requirements depend on your duty status and time served. Generally, you’re eligible if you are:

•   An active-duty service member who has served at least 90 days continuously.

•   A veteran who served at least 24 months continuously or 90 days of active duty.

•   A National Guard member who has served at least 90 days of active duty.

•   A Reserve member who has served at least 90 days of active duty.

These requirements assume that you served between August 2, 1990 and the present day. If you’re a veteran, National Guard member, or Reserve member who served before August 2, 1990, the service requirements are different.

You may also be able to get a COE under other conditions. Here are a few examples (find a complete list on the VA website):

•   Are a surviving spouse of an eligible service member

•   Are a Public Health Service officer

•   Served as an officer of the National Oceanic & Atmospheric Administration (NOAA)

•   Served as a midshipman at the United States Naval Academy

If you don’t meet any of the requirements to get a COE for a VA loan, then you’ll need to consider other home loan options.

How to Get Preapproved for a VA Home Loan

VA loans can be attractive to buyers since the VA doesn’t require a down payment or private mortgage insurance. If you’re wondering how to get approved for a VA loan, here are a few tips to qualify for a mortgage.

•   Consider your credit. The VA loan program has no minimum credit score requirement but the higher your score, the better your odds of being approved. A higher credit score can also help you get a lower interest rate on your loan.

•   Know your budget. Estimating how much you can afford when buying a home is important for ensuring that you don’t go over budget. If you know that you’re going to be looking at homes in the $300,000 range, for instance, then you wouldn’t want to ask for $500,000 when you’re trying to get preapproved.

•   Check the lender’s requirements. Researching VA lenders can help you find the one that’s the best fit for your needs and situation. Comparing minimum credit score requirements and income requirements can help you weed out lenders that are less likely to approve you.

Ideally, you should request preapproval from just one lender but that doesn’t mean you can’t shop around first by prequalifying with several lenders to compare rates.



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

How to Find a VA Lender

The simplest way to find a VA lender is to use the resources available on the Department of Veterans Affairs website. You can also search for VA-approved lenders online. For instance, you might try searching for “VA lender near me” or “VA lender online application” to see what results turn up. If you aren’t sure a VA loan is right for you, check out a home loan help center to get more ideas for how to finance a home purchase.

Recommended: Cost of Living in California

How to Choose the Best VA Lender for You

One of the most important considerations when weighing how to get a VA loan is choosing a lender to work with. Comparing VA lenders is similar to comparing lenders for different types of mortgage loans, including conventional or FHA options. Here are some key things to consider as you shop around:

•   VA loan interest rates

•   Closing costs the lender charges, including origination fees

•   Minimum credit score and income requirements

•   Whether you have the option to buy points if that interests you

•   How long it typically takes for the lender to close a VA loan once you’re approved

It’s also a good idea to check out reviews from previous buyers to see what they have to say about a particular lender. The better the lender’s reputation is overall, the easier they might be to work with.

Tips on the VA Home Loan Preapproval Process

VA home loan preapproval may seem a little tedious with all the information that you need to provide. But it’s important that you don’t skip this step, as preapproval can work in your favor when it’s time to buy a home.

Here are a few tips for ensuring that your VA home loan preapproval goes as smoothly as possible.

•   Carefully read through the instructions for completing the application before you begin.

•   Organize your documents beforehand so that you’re not scrambling to find information later.

•   Review your application before submitting it to make sure you haven’t overlooked anything and there are no errors.

•   Opt for an online application process if possible, which could save you some time.

How long does it take to get a VA loan? While you might be able to get preapproved the same day or the next business day, closing can take anywhere from 30 to 60 days. That’s important to know as you plan out your home purchase.

The Takeaway

VA loans can offer some attractive benefits to homebuyers and getting preapproved is usually to your advantage. It’s important to take your time to find the right lender to work with so you can get the best loan terms possible.

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

Can you get preapproval for a VA loan?

Yes, it’s possible to get preapproved for a VA home loan. You’ll need to find a VA-approved lender to work with and verify that you’re eligible to get a loan through the VA program. Having VA loan preapproval doesn’t guarantee that you’ll qualify for a mortgage, however.

What do I need to get preapproved for VA loan?

To get preapproved for a VA loan, you’ll need to find a VA-approved lender. Next, you’ll need to provide the lender with some information about your finances, along with a Certificate of Eligibility. You can obtain this document from the Veterans Administration.

How long does it take to get a VA loan preapproval?

Assuming that you have all of the necessary documents and information to process your preapproval application, it may be possible to get a decision the same day. VA loan preapproval shouldn’t take more than a few days to obtain if you’ve checked off all the lender’s requirements.


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



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Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
^SoFi VA ARM: At the end of 60 months (5y/1y ARM), the interest rate and monthly payment adjust. At adjustment, the new mortgage rate will be based on the one-year Constant Maturity Treasury (CMT) rate, plus a margin of 2.00% subject to annual and lifetime adjustment caps.

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