couple lying on floor with boxes

How Much is a Downpayment on a House?

If you’re shopping for your dream house, a key factor in whether or not you’ll get mortgage loan approval is whether you have enough money for a down payment. The amount required is typically a percentage of the home’s purchase price—and lenders traditionally want to see borrowers put down 20%. So for example, you’d need to put down $20,000 for each $100,000 of the home’s purchase price.

But, is that always true? Do you always need to put down that amount of money? If not, what are the benefits and challenges associated with a down payment that’s less than 20%?

This post will look at these questions and more to help you qualify for a mortgage loan, and ultimately turn your dream house into a reality.

If you discover you don’t yet have enough money to buy the house you want, consider our budget-making tips and savings strategies to get you where you need to be, financially speaking, to buy your house of choice.

Mortgage Loan Qualifications

The question of how much to put down on a house is really a subset of a bigger home-buying question. The question is really whether the house you want is within your budget.

Many homeowners take their household gross annual salary (before taxes) and multiply it by two and a half; that would be the most, they decide, they can afford in a house. So, if your household income is $200,000, hypothetically, the maximum purchase price, using this formula, would be $500,000. Note that this isn’t a formula used by a lender; rather, it’s a general rule of thumb that people use.

From a lender’s perspective, they often want your mortgage payment to be, at most, 28% of your gross annual income. So, using the figure of $200,000, that would equal a maximum mortgage payment of $4,666 per month ($200,000/12 x 28%).

For this last calculation, you’d need to add up your proposed housing expenses, including principal, interest, taxes, insurance, homeowners’ association fees, and potential private mortgage insurance fees.

And your estimated housing payment will depend on how much of a down payment is applied and other items included in the monthly mortgage payment such as:

•  Principal

•  Interest

•  Insurance

•  Taxes

•  Private Mortgage Insurance, if applicable

•  Homeowners’ Association (HOA) Fees, if applicable

•  Other miscellaneous assessments (such as flood/wind insurance coverage, or earthquake insurance)

To find the answer, it can help to do some reverse engineering.

Let’s say the house you want costs $400,000. If you were to finance the home with a lender, you’d need $80,000 plus closing costs to swing a 20%-down deal. So, the first question is whether you have or can get those funds easily enough.

If the answer is “yes,” then you can check your income against the formulas we’ve provided to see if all works out according to plan. If so, at least you’ve got the option to go with a 20% down payment. Whether you should or shouldn’t is another question, one we’ll address later in this post.

Before we do, let’s say you don’t have that kind of cash for the down payment. You could afford, say, 10% down plus closing costs, and still meet the income requirements. In that case, your next step is to see which lenders offer this kind of program (hint: SoFi does!). But first, let’s get into some other home loans, and consider how much you should put down on a home.

Use our calculator to get an estimate of the
total monthly house payment you can afford
to help you on your home buying journey.


FHA Loans

One home loan option is a Federal Housing Administration (FHA) loan. FHA loans are a governmental program that was initially created to help people buy homes during the Great Depression. It’s still available today and people who can’t afford larger down payments might choose this option.

The Federal Housing Administration doesn’t directly make mortgage loans. Instead, certain lenders offer FHA loans that are backed by a governmental guarantee. Because of this guarantee, lenders will typically offer more flexible guidelines for mortgage approvals, including the size of the down payment.

In general, if you have a credit score of 500 to 579 , the minimum down payment required for FHA loans is 10%. If your credit score is 580 or above, the minimum down payment is 3.5%.

VA Loans

If you’re a military veteran, active service member or, in some cases, a military spouse, you may qualify for a U.S Department of Veterans Affairs (VA) mortgage loan without a down payment. This program was created by the United States’ government in 1944 to help people returning from military service purchase homes.

Conventional Lenders

Some conventional lenders, including SoFi, will provide mortgage funding for homebuyers with less than 20% down. Often, in these cases, you’ll need to purchase private mortgage insurance (PMI) that insures the lender; this is above and beyond the type of insurance you buy to protect your home and belongings. With SoFi, the minimum down payment is 10%.

How Big Should Your Down Payment Be?

According to the National Association of Realtors , millennials made up the largest share of homebuyers at 36%—and 65% of this group were first-time home buyers. Due to their age of 37 years and younger, some Millennials haven’t had sufficient time to save for a large down payment, so the average down payment for this group was only 5%.

According to a report from U.S. Mortgage Insurers (USMI); it could take up to 36 years for an average income individual to save a 20% down payment.

In general, it makes sense to put down as much as you can comfortably afford. That’s because, the more you put down, the less you’ll be borrowing, which translates into more equity in the house and lower monthly payments. Plus, with a lower mortgage amount, you’ll pay back less interest over the life of the loan.

On the other hand, it doesn’t always make sense to empty the bank in order to put down the largest down payment possible. That’s because you’ll likely have moving expenses, plus you’ll need to pay closing costs, which can vary due to many factors such as: purchase price, state in which property is located, interest rate chosen, lender processing fees, and more.

Furthermore, the home you’re moving into may need cosmetic repairs, or you may want to redecorate, add new landscaping, and so forth. Plus, you’ll probably want to keep an emergency fund to pay for unexpected costs.

If this doesn’t all seem doable, then it may mean that you should look for a more affordable house for now and save up for your dream house. Or, if you can wait a while before buying, then you can create a savings plan to build up a down payment. If you have questions, SoFi’s Mortgage Loan Originators (MLOs) can help explain the down payment, closing, insurance, title, and escrow processes to you.

Saving for a House

If you are ready to realize your dream of homeownership, now is the time to get serious about saving. The next step is to make a plan to save up those funds.

So, we’ve created a home-buying plan to help you do just that. Steps include:

  1. Tracking your spending, including fixed expenses (rent, utilities, car payments and so forth) and variable ones (dining out, clothes shopping, hobbies and so forth). Add in expenses that you pay annually or semi-annually, breaking those down into prorated monthly amounts.

  2. Making a budget that helps you to trim back unnecessary expenses. (Does it make sense to refinance student loans or consolidate credit card debt into a low-interest personal loan?)

   3. Brainstorming ways to boost your income; don’t forget that asking for a raise may be a good option!

   4. Figuring out what you can save each month, both for emergency expenses and for your house fund.

   5. Setting a timetable for your plan to save for your house.

Mortgage Loans at SoFi

Then, when you’re ready to start looking for a home loan, you can use our mortgage calculator to quickly look at a variety of financing scenarios. And it takes just two minutes to find your rate.

•  Benefits of choosing SoFi for your mortgage loan include:

•  No hidden fees

•  No prepayment penalties

•  Flexible debt-to-income ratios, qualifying borrowers for more financing

•  Rate discounts for SoFi members

•  Choices between fixed rate and variable rate loans

•  Choices of term

You can get painlessly pre-qualified in just minutes with no obligation or commitment. When ready, select your loan and apply online. Once approved, sign paperwork and your funds will be transferred, typically within 30 days.

Ready to get started? It’s easy and convenient online to apply for your SoFi mortgage loan.


The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through `SoFi Wealth, LLC. SoFi Securities, LLC, member
FINRA / SIPC .
SOMG18103

Read more
house next to a condo

House or Condo: Which is Right For You? Take The Quiz

There’s something to be said for having peace of mind, even if it might cost you. For many, that can easily take the form of having a place to truly call your own—space that gives you privacy and the ability to customize it to your dream preferences.

Maybe you’re already picturing your deep sunken tub, eye-catching fireplace, and garden with its organically-grown fresh vegetables and bright, sweet-smelling flowers that will attract and support the honeybees.

Or, maybe the idea of having a place all your own appeals to you, but you sure don’t want to get tied down with all the upkeep that goes along with a home purchase—and the need for privacy doesn’t rank very high on your list, at all. What really matters to you is a sense of community.

If you find yourself nodding when you read the first paragraph, then it’s very possible that buying a house could be the right move for you; if you have that same type of positive reaction when reading the second paragraph, then a condo may be the better choice.

But, is it really that simple? To find out what might be right for you, we invite you to take our House or Condo Quiz—and, unlike many quizzes, this one can help to answer two important questions for you:

•   Does it make sense to purchase a home or condo, or should I stay where am I for now?
•   If it does make sense to buy, which one could be better for me? Condo or house?

Let’s get started with the quiz!

Buying a Condo vs. House

Now that you’ve taken the quiz, what do you think? Are you clear about which direction you want to take? If so, consider checking out our home affordability calculator to get a better understanding of how much house you can afford.

If not, it may be because there are several pros and cons to each choice (aren’t there, always?) and you may just need to mull them over a bit more.

Pros of Buying a House Typically Include More:

•   privacy
•   space, including storage space
•   yard
•   ability to customize your home
•   room to garden and create a pleasing outdoor space
•   control, including but not limited to having pets
•   typically no homeowners association (HOA) or HOA dues

Another pro of buying a house is that they are generally considered better investments overall.

Cons of Buying a House Typically Include:

•   higher cost
•   more work to maintain inside
•   more work to maintain outside

If, after taking the quiz and weighing the pros and cons, buying a house feels like the right choice for you, you can start brainstorming about your dream house, including its size, number of rooms, location, style and more.

Attend open houses to help decide where you could see yourself putting down roots and to see what home layout really grabs your attention. It can also be a good idea to check home prices for the type of home (size/layout) and area you are drawn to and see if it is in your price range.

Plus, SoFi offers some great home ownership resources to help you along your journey. Including a first-time home buyers guide.

Now, let’s dive into the pros and cons of buying a condo.

Check out local real estate
market trends to help with
your home-buying journey.


Pros of Buying a Condo Typically Include:

•   more affordable
•   lower expenses
•   more ease of maintenance
•   amenities included
•   less expensive homeowners insurance
•   covered maintenance
•   security
•   community activities

Cons of Buying a Condo Typically Include:

•   less privacy
•   no yard
•   rules and restrictions (noise levels, style/colors, pets and more)
•   less overall space
•   HOA fees
•   limited parking
•   slower appreciation in value
•   easier to outgrow

Plus, the mortgage interest rates might actually be higher on a condo vs. a house, and condos can be harder to sell. Lenders sometimes charge more for loans on condo units because of the strength of the condo association financials and other factors are taken into consideration and evaluated for risk.

If, after reviewing pros and cons you decide the benefits of a condo are right up your alley, then you can start creating a list of what you definitely need in yours, along with what you’d like to have, and then start looking at your options.

When to Buy

You may know what you’d like to buy (condo vs. house) and where (in what neighborhood), but do you feel as though now is the right time? If so, fantastic!

You might decide, though, that you want to rent for a while longer under certain circumstances, which can include:

•   wanting to pay down debt first, whether that’s credit card debt or student loan debt, as just two examples
•   wanting to save more money for the down payment and any associated expenses
•   needing to boost your credit score first
•   wanting more time to look at houses/condos before deciding

Renting is typically the cheapest option available for housing, because rent can be less than typical mortgage payments in certain areas of the country. Plus, there isn’t a down payment to pay (just a one-time security deposit), and the landlord usually covers repair and maintenance costs. Renting also gives you more freedom to move and, when you decide to live somewhere else, you haven’t invested your capital into the property.

Pro tip: If you want to buy a house or condo but don’t feel financially ready (or have other reasons to wait), consider putting the decision on hold while you reconfigure your budget and get ready for home ownership. You may discover that, in a relatively short time frame, your decision has changed.

Making Your Dream Home or Condo a Reality

At SoFi, you can make your home owning dreams come true with as little as 10% down on mortgages for qualified borrowers and properties. We’ve been named a 2019 award winner for the Best Mortgage Lenders for First Time Home Buyers.

Potential benefits of choosing SoFi for your mortgage loan include a more affordable down payment that allows you to buy more house, the fact that we charge no application fees or origination fees—and that we have no prepayment penalties. The pre-qualification process is painless and you can conveniently apply online.

Find out more about applying for a mortgage loan at SoFi today!


IMPORTANT: The projections or other information generated by this quiz regarding the likelihood of various outcomes are purely hypothetical, do not reflect actual results and are not guarantees of future results. 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.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.

SOMG18118

Read more
wooden house on green background

Is Buying a House a Good Investment?

Owning your own home is a quintessential part of the American Dream. It’s a haven, a space that is completely your own, offering stability and comfort for you and your family. If you have been dreaming about homeownership, you may be trying to determine if buying a home is a good investment.

People often buy homes when the timing is right in their lives; they’re mostly out of debt, they’ve saved for a down payment, they’ve built up their credit score, and they have a solid career. If you have the means, buying a home can be a great decision. For others, it may make sense to rent for a few more years to save and learn how to buy a house.

While houses are often seen as investments, they are different from stocks or mutual funds. Sure, you buy your home with the hope that the value increases over time, but it’s also an asset you use every day. And owning a home requires regular maintenance and unexpected costs.

If you’re wondering “Is buying a house a good investment?” you’ll have to do some personal reflection and take a look at your finances and future plans. There are a lot of factors to consider and only you can determine when you’re ready to buy. Here are six questions to consider when deciding if it’s time to buy a house.

Are You Willing to Own a Home for Five Years or More?

In order to determine if buying a home is a good investment for you, you’ll need to estimate the amount of time you plan to own the house.

If you don’t plan to own the house for at least three to five years, you may not break even when you sell the home. When you buy a home, you pay for more than just the house and those costs can add up.

You’re often paying for appraisals, mortgage application fees, inspections, movers, real estate agent fees, and that can add up to thousands of dollars. In order to offset all those fees, your home would generally have to appreciate by 15% to 20% prior to selling. It can be difficult to make those gains back in just three years. If you plan to live somewhere for less than five years, it could make the most sense to rent property.

Do You Have Sufficient Savings?

In order to buy a home, you’ll generally have to take out a mortgage to finance your purchase. Lenders will scrutinize your mortgage application, reviewing your credit report, employment history, and earnings to make sure you are able to make the monthly mortgage payments. Before you even get to that stage, you’ll have to save for a down payment and closing costs.

In addition to the initial cost of buying a home, there are continuing costs you’ll have to account for, such as home insurance, property taxes, general maintenance, and emergency home repairs. When you are renting, if the kitchen sink springs a leak, your landlord will take care of it.

But when you own a home, those repairs will be entirely your responsibility. Having an emergency fund saved up will help you deal with unexpected costs associated with homeownership.

One way to save for your down payment is to use a SoFi Invest account. At SoFi, you can begin investing with as little as $100 and you’ll gain access to a team of financial advisors who can work with you to establish your financial goals and create a plan to help you get there. If owning a home is your goal, investing with SoFi could help you get there.

Buy your next home with as little
as 10% down on loans up to $3 million.


Are You Confident in the Housing Market?

While the price of homes has continued to rise over the past 10 years, there has also been an increase in demand and a decrease in available housing . This can make it difficult for first-time homebuyers to find a suitable home that is in their price range. It’s important to be prepared as you start to look at homes. Understand your budget and make sure you have saved enough money to make a solid down payment on the property.

Are You Ready for the Responsibility?

When you own your own home, you have a lot of freedom to make the space completely your own. With all of this flexibility comes a lot of responsibility. If the house has a yard, you’ll be responsible for regular maintenance and upkeep.

Will you need to buy a lawn mower? If you live in an area with harsh winters, will you need to get a snow blower or hire someone to clear the driveway after each snow storm? If the roof starts to leak, you’ll have to fix it or hire someone to complete the repairs.

Make sure you are ready for the financial responsibility that comes with owning a home before you make the purchase. You’ll have to account for repairs, improvements, general upkeep, insurance, and taxes.

Are You Willing to Live with a Long-Term Loan?

Part of the process of learning how to buy a house is educating yourself on how mortgages work and the different types available. Generally, there are two types: fixed rate and adjustable-rate mortgages.

A fixed-rate mortgage keeps your payment level over time, typically 15 or 30 years, because the interest rate remains stable. The interest rate on a flexible-rate mortgage fluctuates over time. They usually start out lower than a fixed-rate loan, but often rise in later years. To see what a mortgage could mean for you, take a look at SoFi’s mortgage calculator.

While it may seem daunting to take on a 30-year obligation, a mortgage helps you build equity in an asset that generally increases in value as time passes. Is a house a good investment? Historically, yes, if you think long term.

Over the years, homeowners build up equity in the house as they methodically pay off more and more principal with each loan payment. Many smart borrowers pay extra each month toward the principal to pay off the mortgage sooner.

Ready to Buy? Consider a SoFi Mortgage

When you’re ready to take the next steps in your home-buying journey, consider taking out a SoFi mortgage loan. SoFi offers both adjustable-rate and fixed-rate mortgages, so you can choose the option that works best for you.

Applying for a loan with SoFi is easy—we offer pre-qualification online in under two minutes. Plus, there are no hidden fees.

Ready to buy your new home? Learn how a SoFi mortgage can help you buy the house of your dreams.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

MG18126

Read more

The Pros and Cons of Different Types of Home Loans

Homeownership can be both rewarding and a great financial decision for your future. But as anyone who has dipped their toes into the home-buying process knows, the pressure to find and secure the “right” mortgage loan can feel overwhelming, especially if you’re a first-time home buyer.

During the early stages of the home-buying process—perhaps while you’re researching neighborhoods and schools, shopping around for properties, and nailing down the details of your budget—it would serve you well to do some research into the types of mortgages available. That way, you’ll feel prepared when the time comes to put down an offer on the perfect home.

As you’ve likely noticed, there are quite a few mortgage loan types available to borrowers. Brace yourself, because the process definitely requires you harness your best inner comparison shopper. You’ll need to consider the ins and outs of each option alongside your personal and financial needs. To help make the decision a bit easier, we’ve compared the advantages and disadvantages of each mortgage type below.

Fixed-Rate Versus Adjustable-Rate Home Loans

First, it’s helpful to know that most home loans come with a fixed or adjustable interest rate. A fixed-rate mortgage means that your interest rate will never change. In other words, your monthly mortgage payment is locked in. Fixed-rate mortgages generally come in 15 or 30-year loans.

A 30-year fixed-rate loan is the most common, though you can save a lot in interest if you opt for a 15-year loan. Monthly payments on a 15-year loan will be much higher than for a 30-year mortgage, so it’s best to commit only if you’re confident that it works in your budget—even in the event of a financial emergency.

An adjustable-rate mortgage, called an ARM, has a fixed, usually lower rate for an initial period and then increases to a more expensive, floating rate tied to the market interest rate index. ARMs are often expressed in two numbers (like 5/1 or 2/28), although those numbers don’t follow one particular formula (they could represent years, months, number of annual payments, etc.). For example, a 5/1 ARM has five years of fixed payments and one change to the interest rate in each year thereafter.

It’s easy to be drawn to the lower initial rate offered on an ARM, but it very well could end up costing more in interest than a fixed-rate loan over the lifespan of your mortgage. An ARM might work best for someone who plans to pay off their mortgage in five years or less, or is committed to refinancing prior to the ARM’s rate increase.

Rate increases in the future could be dramatic although there are limits to the annual and life-of-loan adjustments, often leaving adjustable-rate mortgage-holders with much higher monthly payments than if they had committed to a fixed-rate mortgage.

Types of Government Home Loans

The government does not actually lend money to home buyers. Instead, “government home loans” is a catchall for loans that are insured or guaranteed by various government agencies in the event the borrower defaults. This makes the loan less risky for lenders, and allows them to provide mortgages at reasonable rates.

Federal Housing Authority (FHA) Loans:

FHA loans are one of the most popular government loan types for first-time home buyers, because they have the more lenient credit score requirements and down payment requirements. With a 580 credit score, you might qualify with a 3.5% down payment. For more, check out the FHA’s lending limits in your state.

Pros: Because FHA loans are ubiquitous and have lower down payment and credit score requirements, they are one of the most accessible loans. FHA loans give potential homeowners a chance to buy without a big down payment. Additionally, FHA loans allow a non-occupant co-signer (as long as they’re a relative) to help borrowers qualify.

Cons: Historically, the requirements for FHA mortgage insurance have varied over the years. Currently, an FHA loan requires both an up-front mortgage insurance premium (which can be financed into your loan amount) and monthly mortgage insurance. The monthly mortgage insurance has to stay in place until your loan-to-value ratio reaches 78%.

USDA loans:

The U.S. Department of Agriculture provides home loans in rural areas to borrowers who meet certain income requirements. USDA loans offer 100% financing—so no down payment is necessary—and require lower monthly mortgage insurance (MI) payments than an FHA loan. This type of mortgage loan is offered to “rural residents who have a steady, low or moderate income, and yet are unable to obtain adequate housing through conventional financing.” To find out if you qualify, visit the USDA income and property eligibility site .

Pros: USDA loans come with low monthly MI, and they are accessible loans for low-moderate income borrowers in rural areas.

Cons: You need a credit score of at least 640 to qualify. These loans, like an FHA loan, also require an upfront fee which can be financed into your loan. If you are obtaining a loan with no down payment, this could result in a loan balance higher than your loan amount.

VA loans:

The U.S. Department of Veteran Affairs provides loan services to members and veterans of the U.S. military and their families. If you are eligible , you could qualify for a loan that requires no down payment or monthly mortgage insurance.

Pros: You don’t have to put any money down or deal with monthly MI payments, which could save borrowers thousands per year.

Cons: These loans are great to get people in homes, but are only available to veterans.

FHA 203k rehab loans:

FHA 203k loans are home renovation loans for “fixer upper” properties, helping homeowners finance both the purchase of a house and the cost of its rehabilitation through a single mortgage. Current homeowners can also qualify for an FHA 203k loan to finance the rehabilitation of their existing home.

Many of the rules that make an FHA loan relatively convenient for lower-income borrowers apply here. An FHA 203k loan does not require the space to be currently livable, but it does generally have stricter credit score requirements. Many types of renovations can be covered under an FHA 203k loan: structural repairs or alterations, modernization, elimination of health and safety hazards, replacing roofs and floors, and making energy conservation improvements, to name a few.

Pros: They can be used to buy a home and fund renovations on a property that wouldn’t qualify for a regular FHA loan. And they only require a 3.5% down payment.

Cons: These loans require you to qualify for the price of the home plus the costs of any planned renovations.

Conforming Home Loans

Conforming home loans are a type of mortgage offered by private lenders. They are not insured by the government, but meet standards set by Fannie Mae and Freddie Mac (government sponsored agencies). As of 2018, the conforming loan limit is $453,100 in most of the U.S. and goes up to $679,650 in certain higher-cost areas.

Conventional Home Loans:

Conventional loans are the single most popular type of mortgage used today. These are slightly more difficult to qualify for a conventional loan than a government-backed loan. However, borrowers can obtain conventional loans for a second home or investment property.

Conventional loans typically require a minimum of a 620 credit score and a down payment between 5% and 20%. Private Mortgage Insurance (PMI) ) if you put 20% down. If you put less than 20% down, PMI is required but you have options. PMI can be paid monthly or can be an upfront premium that can be paid by you or the lender. Monthly PMI needs to stay in place until your loan-to-value ratio reaches 78%.

Pros: Pretty much any property type you’re considering would qualify for a conventional mortgage. And you have greater flexibility with mortgage insurance if you are putting down less than 20%.

Cons: Conventional loans tend to have stricter requirements for qualification and require a higher down payment that government loans.

Conventional 97 Mortgage:

Fannie Mae and Freddie Mac’s conventional 97 loan was made to compete with FHA loans. It requires a 3% down payment or 97% loan-to-value ratio, besting the FHA’s 3.5% down payment requirement. A conventional 97 loan also requires that at least one borrower be a first-time homeowner, which they define as someone who hasn’t owned a property in the past three years. Participants in this program will need to have good credit scores and the standard 43% debt-to-income ratio.

Pros: You only need to put down 3%.

Cons: Only single-unit properties qualify, and one of the borrowers must be a “first-time buyer.”

Non-Conforming Loans

If you need a loan that exceeds the limits of both a conforming loan and a government-backed loan, you’ll need a non-conforming loan. A non-conforming loan exceeds the limits set forth by Fannie Mae and Freddie Mac.

Jumbo Loans:

Because of their size, jumbo loans tend to have even stricter requirements than regular, conforming loans. Most jumbo loans require a minimum credit score above 700 and a down payment of at least 15%.

Super Jumbo Loans:

For financing of $1 million or more, you are going to need to take out what is called a super jumbo loan. These loans require excellent credit and can provide up to $3 million in financing.

Those looking to fund an expensive property purchase will likely have little choice but to use a jumbo or super jumbo loan. If that’s you, it might require taking some time to get your credit score in good shape.

The process of finding and securing the right mortgage loan requires a little bit of investigation and a whole lot of patience. Happy hunting!

Ready to do some comparison shopping? SoFi offers mortgages with competitive rates, a fast & easy application, and no hidden fees.


The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.

MG18117

Read more

How to Save for a House While You’re Still Renting

Millennials, that rather maligned generation of people born sometime between 1980 and 1995, are often the butt of jokes for being the “boomerang generation .” You know, because they seem to leave the comfort of their parent’s homes only to return again when they realize they can’t find a job or pay the bills in post-collegiate life.

And sure, many young people do indeed return to the welcome embrace of mom and dad, but it may not be because they want to. In fact, most would rather be living the American dream of owning their own home.

According to 2017 data from Apartment List , 80% of millennials want to buy a home one day. However, if you’re wondering, “How long does it take to save for a house?” there are a few things you should know.

Most of those same millennials noted in their responses that economic hardship (thanks to mounting student loan debt , low wages , and an unstable economic environment) will likely delay their homeowner dreams. And for many, it comes down to the fact that they can’t seem to save enough for that dreaded 20% down payment.

As the data additionally showed, 68% of millennials have less than $1,000 for a down payment in an account right now. Another 44% said they have not saved anything for a down payment at all. And 39% said they aren’t saving for a down payment on a monthly basis.

But, if buying a home is a top priority for you, there are ways to make that happen. Here’s how to save for a house while you’re still renting.

5 Tips to Save for a Home While You’re Still Renting

Pay Down Your Debt First

In order to save for a house, it’s imperative that you figure out a plan to pay down your existing debt. And for 30% of millennials , that means paying off more than $30,000 in student loans. And though that may seem like a monumental amount of money to pay off, there are ways to do it.

First, if you’re a full-time employee, reach out to your company’s HR department to learn more about student debt repayment assistance. Though Inc reported just 3% of companies in the U.S. currently have this type of assistance, it’s still worth a try.

Gain home-buying insights
with the latest housing
market trends.


As a more drastic measure, you could always think about going into a profession that offers partial or total student loan forgiveness (such as teaching in certain public schools), or moving to a state that will also help pay off your student loan debt just for moving there (including Alaska, Wyoming, Washington State, Florida , and more).

For a much easier fix, you could always think about looking into student loan refinancing. If your current interest rate seems unreasonably high, check out SoFi’s student loan refinancing options. By dropping your interest rates, you could significantly reduce both your payments and the length of time you’ll be making them. Which in turn could help you save for a house even while getting out of student loan debt.

Create a Budget That Will Help You Spend Less and Save More

Look, we’re not saying eating avocado toast at brunch on Sundays is really breaking the bank, but indulging in luxurious habits day after day can really add up. Creating and sticking to a realistic budget can help you spend less while saving for a house. To get there, all you need to do is follow these simple steps.

Gather your data: Figure out how much you’re earning each month (after tax), along with how much you’re currently spending. Add it all up including cell phone bills, insurance, grocery bills, rent, utilities, your coffee habit, the dog walker, gym membership, etc. Don’t miss a dime.

List your current savings: Are you currently putting money into an IRA, 401(k), or other savings plan? List it, so you can see what you’ve already got in the bank.

Really dig in and be harsh about your spending: Can you cut back anywhere? How about on that gym membership? Maybe it’s time to join 24 Hour Fitness over Equinox. How’s your takeout habit? If you really want to save for a house, you may need to learn to cook. And next time you go shopping for new clothes, make sure to clean out your closet first to ensure you actually need to buy new dress shirts.

This, admittedly, is the worst step in the budgeting process, but it’s crucial to be honest with yourself about your spending. Look on the bright side, all that hard work could help you get a new home years sooner.

Finally, remember to check in on your budget every so often and adjust as needed. For example, if you land a new job, get a promotion, or are given an annual raise, perhaps you can be adding that money to your savings account, or put it toward paying off your loans. Whichever one feels more important to you is OK, so long as that extra cash isn’t going toward more weekly lattes .

Invest With a Wealth Management Account

If you’ve paid off your debt, set realistic budgeting goals, and are raking in some dough to add to a savings account, you’re already on the right track. Now all you need to do is put your money to work for you. To make that happen, consider opening a SoFi Invest account.

With an online investment account, you can set targeted goals that are personalized for you. In this case, your goal would likely be to purchase a home within a set number of years, and SoFi can help you figure out an investment plan accordingly.

After setting a few targeted goals, you can work with a real-life financial advisor who will walk you through how to strategically invest your money so that it works for you. And we will never push you to take more risk than you want to—tell us what your risk tolerance is, and we’ll work with it. Our financial advisors will cost you $0, so no need to budget extra for that.

Automate as Much of Your Finances as Possible

This is a lot of information to process, but once you get through all the work upfront, you can start automating as much as possible. For example, have a portion of your paycheck automatically go into your savings account each month.

Then, automate a certain dollar amount to head to your SoFi Invest® account. The rest can then go into your checking account and be divvied up at will. This means less stress for you and more time designing your dream home on Pinterest. Just remember to invite us to your housewarming party when it all comes together.

Ready to open a SoFi Invest account?


Choose how you want to invest.

Ready to
do-it-yourself?

Learn more →

Want to take a
hands-off role?

Learn more →



SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.

WM18143

Read more
TLS 1.2 Encrypted
Equal Housing Lender