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An annual income of about $70,000 should put you in the position to afford a $250,000 mortgage, assuming you have relatively little other debt. But exactly what amount you’ll need to earn will depend on your interest rate, loan term, and debt level, among other factors. If you’re considering buying a new home, let’s take a closer look at how much you’ll need to earn to qualify for a $250,000 mortgage.

Income Needed for a $250,000 Mortgage

The exact income needed to afford a $250,000 mortgage loan can’t be nailed down without more information, but what we can get pretty close to is the principal and interest (P&I) payment, which represents a majority of your monthly payment. However, even this calculation won’t give you an exact income number until you know your interest rate and desired loan term (e.g., 15, 20, or 30 years).

Other factors that will influence your monthly mortgage payment are:

•   Property taxes: Lenders often collect a portion of your property taxes each month and pay the local government on your behalf. And even if you don’t pay the taxes through your lender, you’ll need to include them in your budget.

•   Home insurance: Assuming you have a mortgage, your lender will require you purchase home insurance. Depending on the house and location, you may also be required to purchase earthquake insurance and flood insurance.

•   Loan specific fees: Different types of mortgage loans have unique fees that may increase the cost of your monthly mortgage payment. For example, the guarantee fee with a USDA loan, or mortgage insurance premium with an FHA loan.

•   Homeowners association (HOA) fees: Since you’ll likely pay the HOA directly, these fees should not increase the cost of your mortgage payment, but they will increase your monthly expenses. Keep this in mind while house hunting.

Moving forward, let’s assume you choose a 30-year loan term and receive a 7.00% interest rate.

How Much Do You Need to Make to Get a $250K Mortgage?

Using a mortgage calculator, it’s easy to get some quick numbers for the P&I payment (principal and interest) on a $250,000 mortgage. If you’re willing to estimate, a mortgage calculator with taxes and insurance included will get you a little closer to what you should expect.

If we assume you take out a 30-year mortgage and have a 7.00% interest rate, the monthly P&I payment on a $250,000 mortgage would be $1,663. Assuming your lender wants you to have a maximum 28% housing-to-income ratio, then the minimum income you would need to make for your P&I payment would be about $71,271 a year or $5,939 a month. Add in your property tax, home insurance, and private mortgage insurance (PMI), which a lender will require if your down payment is less than 20% of the home’s sales price, and you’re likely looking at a monthly payment of $2,233.

Another thing you may want to try is determining how much banks are likely to lend to you. If you know your exact gross income and monthly debts, try out a home affordability calculator. Another option is to move forward with a mortgage preapproval process so you know exactly how much you have to work with.

What Is a Good Debt-to-Income Ratio?

Ideally, lenders want borrowers to stick to a 36% debt-to-income (DTI) ratio, with a maximum of 28% going toward housing costs. However, depending on your income and credit score, some lenders may accept higher DTIs.

If we consider the cost of living by state, 28% may be too much when you account for daily expenses, such as food and gas, which can skew the income needed for a $250K mortgage. Therefore, if your job and lifestyle allow you to be flexible on where you live, you might consider checking out a ranking of the most affordable states.

What Determines How Much House You Can Afford?

Lenders look at a variety of factors when determining how much house a borrower can afford, but the big four are:

•   Income

•   DTI ratio

•   Credit score

•   Down payment amount

What Mortgage Lenders Look For

If you’re a first-time homebuyer, lenders look at the following variables for each borrower:

•   Employment history

•   Income

•   DTI ratio

•   Credit score

$250,000 Mortgage Breakdown Examples

Your rate and term significantly influence how much income is needed for a $250,000 mortgage. Calculations are based on a 20% down payment, 1.25% property tax rate, and annual homeowners insurance of $2,927. Let’s take a look at the various P&I payments you can expect with different rates and different terms.

Pros and Cons of a $250,000 Mortgage

Buying a house comes with both benefits and drawbacks. Here are some things you should consider:

How Much Will You Need for a Down Payment?

With a $250,000 mortgage, the lowest down payment a first-time borrower could make with a conventional loan is $7,500. If you choose an FHA loan, the lowest down payment you can make is $8,750. VA loans (from the U.S. Department of Veterans Affairs) and USDA loans don’t require down payments. It’s worth noting that even if you have owned a home before, you might qualify as a first-time homebuyer from a lender’s perspective if it has been at least three years since you had ownership in a principal residence.

Can You Buy a $250K Home With No Money Down?

Yes. Both USDA loans and VA loans don’t require a down payment. VA loans are for qualified active and retired military and surviving spouses, while USDA loans are for homes bought in certain rural areas that the USDA has deemed to be in need of economic development.

Can You Buy a $250K Home With a Small Down Payment?

If you use a conventional loan, the lowest down payment a first-time homebuyer can make is typically 3%. The lowest down payment you can make with an FHA loan is 3.5% with a credit score of 580. USDA and VA loans don’t require a down payment, but they do have eligibility requirements.

Is a $250K Mortgage With No Down Payment a Good Idea?

Whether skipping the down payment on a home is a good idea depends on your long-term goals and what you hope to do. If you want to save money over the life of the loan, making a down payment will save you money in interest. If you need the money now for other endeavors, there’s nothing wrong with choosing a loan that doesn’t require a down payment.

Can’t Afford a $250K Mortgage With No Down Payment?

If you can’t afford a $250,000 mortgage, there are some things you can do to make homeownership a little easier.

Pay Off Debt

Paying off your debt will lower your DTI, improve your credit score, and give you more cash to work with each month. Because there are so many benefits, it may be worth your time to pay down as much debt as possible before applying for a mortgage.

Look Into First-Time Homebuyer Programs

There are many first-time homebuyer programs across the United States. Assistance can come in various forms. It may be a low-rate loan, a forgivable loan, or a grant. It often comes as a forgivable loan, which doesn’t require any form of repayment as long as certain conditions are met. Assistance is often first come first served, so apply early if you’re interested.

Build Up Credit

The lower your score, the higher your interest rate. Strengthen your credit score, and you could qualify for a better interest rate that would lower your monthly payment and save you money in interest over the life of the loan.

Start Budgeting

Take steps to eliminate unnecessary spending so you can put as much as you can toward your savings. Monthly subscriptions and dining out, for example, may need to be put on the back burner as you work toward your savings goals.

Also, any lump payments you receive throughout the year could be put toward savings. For example, an end-of-the-year bonus or tax refund should be tucked away as soon as it’s received. Currently, the average federal tax refund is $3,676. That’s 42% of a $8,750 down payment.

If you’re new to the world of mortgages and financing, check out our home loan help center where we go in-depth on everything you need to know about buying your first home or moving forward with a mortgage refinance.

Alternatives to Conventional Mortgage Loans

It depends on the seller, but some sellers are open to lease-to-own or seller financing. Another option may be to pursue a portfolio loan with a local bank or credit union. Other alternatives include government mortgage loans, such as VA, FHA, and USDA mortgage loans.

Mortgage Tips

Here are some tips to qualify for a mortgage:

•   Pay down your debts

•   Pay close attention to your credit score

•   Save up for a down payment

•   Stick with your current employer

•   Gather all supporting paperwork needed for your mortgage application

The Takeaway

For a 30-year loan on a $250,000 mortgage with a 7.00% interest rate, you’ll need a gross income of around $70,000 a year. But exactly how much income you would need to have depends on several factors that are specific to you, including your existing debts, your credit score, the loan term you choose, and the interest rate you qualify for.

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

FAQ

How much income do you need to qualify for a $250,000 mortgage?

To cover the monthly mortgage payment on a $250,000 mortgage, you’ll need an income of around $70,000 a year. For the most accurate estimate, you will need to know your exact interest rate, property taxes, home insurance, and home loan term.

Can I afford a $250K house on a $50K salary?

It would be difficult to afford a $250,000 house on a $50,000 annual salary unless you are able to make a large down payment, which would reduce your monthly mortgage costs to a manageable level. If you earn $50,000 a year and have minimal debts, you could probably afford a home up to $180,000.

What is the monthly payment on a $250K mortgage?

The monthly principal and interest payment on a $250,000 home mortgage loan ranges from around $1,600 to $2,230, depending on the loan term (15 vs. 30 years) and interest rate (6.00% to 7.00%, although a higher or lower rate might be possible). The shorter the term and the higher the interest rate, the greater your monthly payment will be.

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SOHL-Q126-210

When you cash a check, you receive the amount of cash stated on the check. Check cashing services let you cash all sorts of checks — like payroll, government, or personal checks — and receive your money on the spot, even if you don’t have a bank account.

While these services offer convenience and quick access to cash, they typically have high check cashing fees. Read on to better understand how check cashing services work and their pros and cons.

How Does Check Cashing Work?

Check cashing services can offer a way for those without a bank account to cash a check. About 6% of all Americans are unbanked, according to the most recent Federal Reserve report, meaning they’re not served by a bank or similar financial institution. They lack the kind of checking accounts that serve as the day-to-day financial hub of most people’s lives. That means they likely can’t walk into a bank branch and get cash for a check.

Instead, they may use check cashing services, such as brick-and-mortar stores like Amscot and Check City, to access cash. These businesses are designed for simple transactions like cashing checks, paying bills, buying money orders, and possibly securing payday loans. You may also find check cashing services available at major retailers, such as Kroger and Walmart.

Check cashing services can also offer convenience to those who have bank accounts. Say you receive a check in your mail on Saturday and would like to cash it to repay a friend on Sunday. Your bank is unlikely to be open, so you might use a check cashing service to complete this transaction.

How Check Cashing Works

Using a check cashing service is typically a straightforward process.

•   You present the check and proof of identification.

•   Once verified, you’ll pay a fee for this service and leave with your cash in hand, ready to use.

The transaction fee may range from 1%-10% of the check amount, depending on the particular location. Some check cashing services will cap the fee. For example, Walmart charges a maximum fee of $4 for cashing a preprinted check of up to $1,000 and a maximum fee of $8 for preprinted checks over $1,000, up to $5,000 ($7,500 during tax season).

Check cashing services are helpful if you:

•   Don’t have a bank account

•   Need immediate cash

•   Live in areas without nearby bank branches or prefer the extended hours offered by some check cashing services

Common Types of Checks Cashed

There are several common types of checks that can be brought to check cashing services.

Payroll Checks

A payroll check is a type of check that your employer issues, typically on a regular schedule — such as once a week or biweekly. You can usually receive your paycheck in the mail or in person. Many people opt for direct deposit.

Government or Tax Refund Checks

Government checks come directly from the government, as the name indicates, and can cover various forms of aid, such as financial assistance, grants, Social Security benefits, and unemployment benefits. Another familiar type of government check is a tax refund check from the Internal Revenue Service.

Personal and Business Checks

You can use personal checks to pay bills or send money to friends and family. On the other hand, companies issue business checks for a wide range of business-related transactions. Both types are common and can be cashed at check cashing services.

Recommended: Paying for Food Delivery With a Checking Account

Average Check Cashing Fees

The fees for cashing a check usually range from 1%-10% of the check’s value. The exact amount depends on the check cashing service you use, the type of check, its amount, and other factors.

For example, at Walmart, you might pay a maximum fee of $4 for preprinted checks up to $1,000, as noted above. At Amscot, fees for check cashing vary: 9.9% of the check’s amount for personal checks and 2.75% for tax refunds.

Factors Affecting Check Cashing Fees

Several factors influence the check cashing fee, including:

•   Type of check: Payroll, government, and personal checks often have different fee structures.

•   Check amount: Higher amounts might incur higher flat fees or percentage-based fees.

•   Check cashing service: Different businesses will set their own fee schedules.

•   Location: Due to local laws, fees for check cashing can vary by state or region.

Risks of Using Check Cashing Services

Before using a check cashing service, it’s important to understand the risks involved:

•   Upselling high-interest payday loans: Many check cashing places might try to sell you high-interest payday loans. These loans are very risky and expensive, potentially trapping you in a cycle of debt. While it might be convenient to cash your check there, try to avoid any payday loan offers — they can be prohibitively expensive.

•   Being a target for theft: Cashing a check might seem convenient, but leaving the premises with a large sum of cash can be risky. It makes you a target for theft since people know you’re probably carrying cash.

•   Getting caught in a problematic cycle: Using check cashing services can trap you in a cycle of fees. It can also mean missed opportunities to build financial stability with a bank or credit union.

Pros and Cons of Using a Check Cashing Service

Here’s a closer look at the upsides and downsides of using a check cashing service.

Pros

•   Check cashing services often operate outside of regular banking hours, which can be convenient.

•   Funds are typically accessible immediately, without delays or holds.

•   They provide essential financial services to underserved and unbanked individuals, allowing them to cover expenses such as rent and bills and access their tax refunds or Social Security checks.

Cons

•   Check cashing services charge high fees, usually 1%-10% of the amount cashed.

•   Locations may try to upsell customers on high-interest payday loans.

•   There are no opportunities for relationship-building benefits of banks, such as higher rates on certificates of deposit (CDs).

•   They don’t provide safe storage for money, as funds aren’t insured like they would be in a bank.

Where to Cash Checks for Free

Here are a few free ways to cash a check versus using check cashing services:

•   Direct deposit: Direct deposit provides an automated way to get paid. Your paycheck goes straight into your account electronically without needing a physical check or a trip to the bank. It’s hassle-free and saves you from paying check cashing fees. However, you do need a bank account for this.

•   Mobile or online check deposit: If you have a bank account, one of the easiest ways to deposit a check is by using your phone with mobile deposit. Usually, you sign into your bank account, snap a photo of the front and back of your check, and deposit it into your account. But keep in mind you may have to wait a day or two to access the deposited funds.

•   Check-cashing service at the issuing bank: If you can’t cash a check at your own bank or credit union (or don’t have a bank account), you could try the bank or credit union that issued the check. You can find its name on the front of the check. Depending on the bank’s policy, you might be able to cash it there without any check cashing fees.

The Takeaway

Whether or not you have a bank account, check cashing services can provide convenience and flexibility. However, they often charge high fees and present other risks. Understanding these dynamics can help you decide whether to opt for these services or explore alternatives, like trying to cash checks at the issuing bank.

FAQ

Are check cashing fees negotiable?

Check cashing fees usually can’t be negotiated. These fees are determined by the check cashing service and depend on factors like the type and amount of the check.

Do I need ID to cash a check?

Yes, you usually need to provide identification (ID) when cashing a check. However, each bank, credit union, or check cashing service may have different requirements for what qualifies as acceptable ID.

How long does it take to cash a check?

When you visit a check cashing service, you can typically walk out with your funds almost immediately. These services provide rapid access to cash.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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SOBNK-Q126-115

The average homebuyer needs an annual salary of $120,000-$160,000 to afford a $500,000 mortgage. However, if you have a lot of debt, such as student loans or credit card debt, you may need to lower your max home price.

Several factors beyond income affect how much home you can afford and how much lenders are willing to let you borrow. These include your debt-to-income (DTI) ratio, employment status, credit score, and the size of your down payment. This article looks at the income needed for a $500,000 mortgage to help you determine how much house you can afford.

Income Needed for a $500,000 Mortgage

Mortgage lenders examine more than just your income when approving you for a mortgage. For instance, they’ll also review how much money you have saved to ensure you can cover closing costs, which generally range from 2% to 5% of the purchase price. Assuming no down payment, closing costs for a $500,000 home would amount to $10,000 to $25,000.

Mortgage lenders will also consider:

•   How big your down payment is

•   Your credit score

•   Your employment history

•   Your current debts

Lenders also want to ensure you earn enough money to afford your monthly payments and pay off any debts. So, how much income do you need for a $500,000 home mortgage loan? Experts often recommend using the 28/36 rule to figure this out. According to this rule:

•   Your annual housing costs should be no more than 28% of your annual income. Someone who earns $150,000 a year could spend up to $3,500 per month on housing costs before hitting the 28% mark.

•   Your total debts — the mortgage plus any other debts, such as student loans, car loans, and personal loans — should not exceed 36% of your monthly income. If you have significant credit card debt, you may need to lower your expectations on how much house you can afford, even if you make $150,000.

Having trouble determining if you make enough money for a $500,000 home? Use our home affordability calculator to figure it out.

How Much Do You Need to Make to Get a $500K Mortgage?

By the 28/36 rule, you need to make $157,200 a year before taxes to afford a $500,000 mortgage. However, if you have a significant amount of debt, you may need to aim for a lower mortgage amount to keep your total debt below 36%.

Other factors can impact how much you need to make to get a $500,000 mortgage, including:

•   Property taxes in that city and state

•   The cost of homeowners insurance

•   Current interest rates

•   The type of mortgage loan you’re getting

•   The amount of money you have for a down payment

What Is a Good Debt-to-Income Ratio?

In general, the max DTI ratio for buying a house is 36%, meaning your total monthly debt should account for no more than 36% of your monthly income. That said, there are scenarios in which lenders will allow a higher DTI. For instance, DTI ratios can go as high as 43% for a qualified mortgage. In some cases, Fannie Mae might allow for a mortgage loan that would put a borrower at a 50% DTI ratio.

What Determines How Much House You Can Afford?

Calculating the mortgage that you can afford involves many factors, such as:

•   Income: No surprises here. How much money you make has a major impact on how much you can spend on a mortgage. Don’t forget: It’s not only the cost of the house itself. You also need to factor in the interest rate, private mortgage insurance (usually required if your down payment is less than 20%), homeowners insurance, and property taxes.

•   Debt: You should also consider how much you spend each month on debt, such as credit cards, student loans, and car loans. On top of debt, factor in other monthly expenses, such as health care costs, grocery bills, and utilities.

•   Credit score: If you have a low credit score, it will be harder to get approved for a mortgage, regardless of your income. If you are approved for a mortgage with bad credit, you’ll likely have a high interest rate, which means larger monthly payments. This might mean you need to aim for a less expensive home.

•   Where you live: Your location affects how much house you can afford. A $500,000 home in an area with a low cost of living is likely to be much larger and well cared for than a home in an urban or a coastal area, where housing costs are much higher. Use our guide to the most affordable places to live in the U.S. to help keep housing costs down.

What Mortgage Lenders Look For

During the mortgage preapproval process, lenders will consider several factors. The review is typically more intense than the process of getting a credit card or personal loan. For instance, mortgage lenders will want to review:

•   Your income (they typically want to see stable, predictable income, though it is possible to get a mortgage without regular income) and assets

•   Your credit history (the credit score needed to buy a house is 620 for most mortgage types)

•   The size of your down payment (the larger the down payment, the lower your monthly payments over the loan term)

•   Any existing debts, such as personal loans, car loans, student loans, and credit cards

$500,000 Mortgage Breakdown Examples

A number of factors impact how a $500,000 mortgage breaks down, including the interest rate (fixed or adjustable) and loan term (15 or 30 years, for example). The cost of property taxes and homeowners insurance where you live also impacts your mortgage. Using a mortgage calculator with taxes and insurance factored in when determining how much you can afford is advisable.

To understand how monthly payments on a $500,000 mortgage can vary based on the interest rate and the loan term, consider the following examples:

•   A $500,000 loan with an interest rate of 6.00% over 30 years would cost $2,998 per month before taxes and insurance.

•   A $500,000 loan with an interest rate of 7.00% over 30 years would cost $3,327 per month before taxes and insurance.

•   A $500,000 loan with an interest rate of 6.00% over 15 years would cost $4,219 per month before taxes and insurance.

•   A $500,000 loan with an interest rate of 7.00% over 15 years would cost $4,494 per month before taxes and insurance.

As you can see, the monthly payments for a 15-year loan at these interest rates would require that you earn more than $150,000 to keep your payments below 28% of gross income.

Pros and Cons of a $500,000 Mortgage

A $500,000 mortgage has both pros and cons to consider.

How Much Will You Need for a Down Payment?

Previously, families aimed to save 20% for a down payment on a house, but that’s not always a practical approach in today’s housing market. You can get a conventional mortgage loan with much less down, depending on the lender.

You can also consider alternative mortgage loan types, which have different down payment requirements.

•   Federal Housing Administration (FHA) loans only require 3.5% down; for a $500,000 house, that’s $17,500. For 2026, the FHA limit is $541,287 in most parts of the country. If you want to buy a house that exceeds this limit, you’ll need to add the difference between the loan limit and the purchase price to your down payment.

•   Veterans Affairs (VA) loans (from the U.S. Veterans Administration) and USDA loans (from the U.S. Department of Agriculture [USDA]) allow you to get a mortgage with no money down, but these loans are only available to select borrowers.

Can You Buy a $500K Home With No Money Down?

You can buy a $500,000 home with no money down if you qualify for a VA loan or USDA loan. However, only veterans, certain service members, reservists, and surviving spouses can qualify for a VA loan, and USDA loans are limited to certain properties in rural and some suburban areas.

Can You Buy a $500K Home With a Small Down Payment?

You may be able to buy a $500,000 home with a small down payment through an FHA loan (assuming you put down enough to borrow below the FHA limit). Some conventional mortgage lenders will allow qualified first-time homebuyers to put as little as 3% down.

Recommended: Home Loan Help Center

Is a $500K Mortgage With No Down Payment a Good Idea?

If you don’t have the money saved up for a down payment or want some liquid funds in your savings account for emergencies, it might be OK to get a $500,000 mortgage with no down payment. Keep in mind, however, that you’ll have no equity in the house at the start of the term. You may also be required to carry private mortgage insurance when you make a small down payment (or no down payment at all).

Can’t Afford a $500K Mortgage With No Down Payment?

Here’s how to work toward making your monthly mortgage payment more manageable.

Pay Off Debt

Wait to take on a mortgage loan until you’ve wiped out some of your bigger debts. For example, getting rid of a monthly student loan payment or credit card payment can free up more funds to put toward a higher monthly mortgage payment.

Look Into First-Time Homebuyer Programs

Research various first-time homebuyer programs if this is the first time you’re buying a house. For instance, if you can come up with a 3.5% down payment, you may be able to get an FHA loan for $500,000.

Build Up Credit

You can qualify for a lower interest rate on your mortgage if you take care of your credit score. Focus on making on-time bill payments, reducing your credit utilization, and paying down debts. Remember: A lower interest rate means lower monthly payments.

Start Budgeting

If the monthly payment for a $500K mortgage with 0% down seems too tight right now, find ways to add more flexibility to your budget. Take up a side hustle to increase your income or cut unnecessary expenses, such as streaming services or dining out.

Mortgage Tips

Hoping to buy a $500,000 home this year? We’ve got several mortgage qualification tips to help.

For instance, make sure you know the difference between fixed- and adjustable-rate mortgages and when it might make sense to refinance. Always shop around by getting prequalified with various lenders to ensure you get the best deal. Focus on your credit score before applying, but once you’re approved for a mortgage, don’t open any new credit accounts until after you close on the house.

The Takeaway

The income needed for a $500,000 mortgage depends on several factors, including your debt, down payment, and credit score. That said, adhering to the 28/36 rule means you’d need to make about $157,200 a year pretax to get a $500,000 mortgage.

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

FAQ

How much income do I need for a $500K mortgage?

By following the 28/36 rule, you’d need an annual pretax income of $157,200 for a $500,000 mortgage. However, if you have significant debts, you may need to aim for a lower home price, even with a high household income.

Can I afford a $500K house on $100K?

It would be hard to afford a $500K house on an annual income of $100,000. The only way it might be doable is to make a very large down payment to reduce the amount of money you need to borrow and, therefore, your monthly payments.

Can I afford a $500K house if I make $200K?

A $200,000 salary is generally enough to afford a $500,000 home, depending on your debt, credit, and down payment. However, if you have significant existing debt or high monthly expenses, it could limit how much you can comfortably afford.

Photo credit: iStock/cofotoisme

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When you’re ready to buy a house and need a home loan, a mortgage broker can help you shop for a mortgage, or you can go straight to a direct lender such as a bank or credit union and get the mortgage on your own.

Which way of shopping for a mortgage is better? If you have credit issues or other needs, using a broker to get an array of options might make sense. But if your financial health is solid and you want to save time and money, applying with a direct lender could be a good course of action.

In any case, it’s smart to get a few quotes and compare offers for the same type of loan and term.

What Is a Mortgage Broker?

A mortgage broker is like a personal shopper for home loans and serves as an intermediary between mortgage seekers and lenders, including banks, credit unions, and private mortgage companies.

With a single application, a broker will provide you with access to different types of mortgage loans and, if you choose one, will walk you through the underwriting process.

Mortgage brokers are licensed and regulated. You’ll want to ensure that any broker you’re interested in working with is credentialed by checking the Nationwide Multistate Licensing System and Registry consumer access site. You can also check platforms such as the Better Business Bureau and Yelp to see what past clients say.

Brokers are compensated by the borrower or lender. Borrower fees typically range from 1% to 2% of the total loan amount. Lender commissions may range from 0.5% to 2.75% of the total loan amount, but lenders usually pass the costs on to borrowers by building them into the loan.

How to Find a Mortgage Broker

You could ask your current lending institution, friends, family members, or real estate agent for a referral to a mortgage broker. After checking licensing, you may interview more than one broker before deciding on one. You might want to ask about their fees, lenders they work with, and experience.

What Is a Direct Lender?

In the mortgage broker vs. lender dichotomy, a direct lender is a bank, credit union, or mortgage company that originates, processes, and funds mortgages.

Mortgage loan officers, processors, and underwriters work for the lending company. Loan originators usually work on commission.

A loan officer may offer a mortgage at various price points, such as a loan with discount points for a lower rate or a no-closing-cost loan, which is when the lender agrees to pay the closing costs in exchange for a higher interest rate.

Recommended: First-Time Homebuyer Guide

How to Find a Direct Lender

Most people have a relationship with a bank or credit union, so you can always start by getting a quote there. But there are myriad online mortgage lenders, and it’s worth considering these options. Pulling up the day’s mortgage rates online will give you a list of direct lenders advertising their rates.

What Are the Pros of Working With a Mortgage Broker?

Because they’re able to offer a variety of quotes from different sources, brokers can be useful if you’re looking to easily compare mortgage options.

They may offer specialized loans, and because loan brokers set their own profit margins, negotiating could be easier.

A broker could be useful if you have concerns such as a fair or bad credit score or student loan debt.

What Are the Cons of Working With a Mortgage Broker?

Brokers may have preferred lenders that don’t necessarily offer the best interest rate. If paid by lender commission, a broker could be tempted to steer a borrower toward a more expensive loan.

Brokers’ loans may take longer to close.

Broker fees tend to be higher, but that could be because the mortgages offered are sometimes more complex. And mortgage brokers may charge borrowers directly (a fee of 1% to 2% of the total loan amount).

What Are the Pros of Working With a Direct Lender?

By working with a direct lender, you’ll skip the broker fees, and you may get a better rate with lower closing costs (although both lenders and brokers can offer rebate pricing — a higher interest rate in exchange for lower up-front costs).

A direct lender typically does all the loan processing, underwriting, and closing in-house.

You may be able to negotiate underwriting or origination fees.

What Are the Cons of Working With a Direct Lender?

Comparing rates and terms on your own from a sample of lenders takes time.

You’re limited to the loan programs of the institutions where you decide to shop.

What Works for My Situation?

You’ve probably toyed with at least one home affordability calculator and gotten preapproved for a loan. Once you’ve found a home and your offer has been accepted, it’s decision time on a lender. You’re not required to stay with the lender you used for preapproval.

If you have a sparse credit history, subpar credit, or other challenges, a mortgage broker might be able to find a loan program that’s a good fit. But if you have solid credit, a strong income, and assets, you may be able to save time and money by working with a direct lender.

What about rates? In weighing a mortgage broker vs. bank, there might be no difference to speak of. The rate you’re offered depends more on your qualifications than on the lender.

The mortgage loan process can seem mysterious, and a broker or a loan officer at a direct lender can act as a loan seeker’s guide. That guide should be willing to answer all of your mortgage questions, including those about points, fees, mortgage insurance, and the closing timetable.

You’ll receive loan estimates after applying. When comparing mortgage offers, it’s important to look at more than the interest rate. Be sure to compare annual percentage rates, or APRs, as well. Look at the fees in the “loan costs” section, and compare closing costs.

The Takeaway

If you’re in the market for a mortgage, you might think the choice comes down to a mortgage broker vs. direct lender. But you may get loan quotes from both and compare them. It’s called shopping, and a home is a rather important purchase. And as with any form of shopping these days, it’s easily done with a phone or computer from the comfort of your couch.

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

FAQ

Is it better to use a broker or a direct lender?

If you have a challenging credit score, limited credit history, or other financial complexities, a broker might be the way to go. But if your finances are solid, you may find going to a direct lender to be the most cost-effective way to obtain a home loan.

Why use a mortgage broker instead of just going to a bank?

A mortgage broker can research possible rates from a wide range of lenders, which could save you time. And if you have a challenging financial situation or credit history, a broker might be able to steer you toward a lender who will work with your profile.

Does a mortgage broker charge a fee?

Yes. A borrower may have to pay a mortgage broker’s fee of 1% to 2% of the loan amount. When the lender pays a broker a commission, it may range from 0.5% to 2.75% of the total loan amount, and these costs are passed on to the borrower by being built into the loan.

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

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

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Many Americans struggle to save money, but it’s generally worth the effort to do so since there can be serious downsides to not stashing away cash. Those consequences can range from going into debt, facing financial hardship after losing your job, and not being able to achieve your aspirations, such as homeownership.

There are a variety of strategies that may be helpful in saving more money, and it may be useful to put together a simple budget and set some savings goals. If all else fails, you may even want to consult with a financial professional because neglecting to save can lead to some undesired outcomes, as noted.

The Importance of Saving Money

To help you get motivated to put money in the bank, here are a dozen dangers or potential consequences related to not saving money. They may help you understand why it’s a good idea to put away cash and motivate you to tuck some into a savings account.

1. Going Into Debt

Without a savings cushion, any expense — from an unexpected car repair to paying for your child’s college education — can put you in debt. In addition, while credit cards and loans are convenient ways to afford more than your bank account, you pay more in the long run because of interest and loan fees.

Since debt often costs more than the actual expense, you can essentially save a considerable amount of money by plumping up your piggy bank. You can try easy ways to save, such as creating a simple budget or automating savings, to put aside a few dollars a month before you can spend them. These moves can ensure that you’ll be using savings instead of debt to pay for your upcoming expenses.

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

2. Having a Social Life Can Be Nonexistent

Spending time with your friends and family is likely on the list of things you enjoy most in life. But a full social calendar may put you in a sticky financial situation if you haven’t saved anything. From movie dates to happy hours to ball games, these expenses can add up.

No matter your income level, how much money you save each paycheck can make the difference between having a nonexistent social life and a happening one.

3. Life Being More Stressful

Most Americans say money is a major stressor in their lives. When you think about it, failing to save can make you feel stuck or overwhelmed. Your personal, financial, and professional life can suffer because a lack of savings has cut off your options.

Achieving your goals, financial and otherwise, may be a struggle without savings to propel you forward. The importance of saving money goes beyond paying an unexpected bill. It can affect your daily quality of life.

4. Not Having the Money for an Emergency

You’ll find many articles, resources, and financial professionals advising you to set aside an emergency fund. Life is expensive and doesn’t always go as planned. So, saving in advance helps you manage life’s unexpected costs.

For example, building an emergency fund might be a better choice than splurging if you get a raise. You’ll thank yourself later when, say, your furnace goes out, or you wind up with a major medical bill. Typically, financial advisors recommend having at least 3-6 months’ worth of basic expenses salted away in an emergency or rainy day fund.

5. Not Being Able to Celebrate Events

Life can be full of amazing milestones, such as getting married, starting a family, or graduating from college. Unfortunately, celebrating these life events with your family often takes substantial cash. Not being able to recognize these events the way you’d like to is another one of the many dangers of not saving money. The lack of a financial cushion could also lead you to skip, say, a friend’s destination wedding.

Although you could put your celebration on your credit card, you run the risk of going into debt. This’ll likely cost more over the long run since you have to pay for interest. In other words, you might still be paying it off for years to come.

6. Not Having a Viable Option if You’re Fired

No one plans on getting fired. However, it’s always possible to lose your job unexpectedly. Financial emergencies like this are an important reason to save. Saving can give you security during this kind of crisis. If you don’t have some cash available, you might have to look into financially downsizing.

This underscores the importance of saving money from your salary when you’re employed. You might consider having a small amount automatically transferred from your checking account into savings on payday.

As mentioned above, you should save at least three months of your expenses in an emergency fund. This way, you can have a solid safety net if you get laid off or are temporarily disabled and can’t work for an extended period.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

7. Not Having an Inheritance for Your Children

If you’re a parent or plan to be one, you likely want to give your kids a leg up in life. An inheritance can help your children or heirs build their nest eggs and meet life’s expenses without stress.

Having both savings and an estate plan can be a lasting, life-changing gift to those who matter to you most. These assets can serve to eliminate the possibility of financial legal challenges for your family. That said, being unable to leave a legacy is a consequence of not saving money.

8. Not Being Able to Buy a Home

Many people hope to buy a home one day, but you’ll probably need some cash saved up to initiate the purchase.

You may need a 3%-5% down payment to qualify for most conventional mortgages and 20% to avoid mortgage insurance. Buying a home also usually involves other expenses, such as closing costs, repairs, moving costs, and more. Not having savings can make it almost impossible to afford the home of your dreams.

9. Not Being Able to Go on Vacation

Without savings, it’s challenging or even sometimes impossible to take time off for some rest. When you don’t set money aside, you can get sucked into the never-ending cycle of living paycheck-to-paycheck. Since you need to work to support yourself, vacations may become less frequent or disappear altogether.

While you may think you can put a vacation on credit, that can perpetuate the “can’t save” situation, because you’ll have debt to wrangle. You could wind up coming home from your getaway to face more bills.

10. Not Having Much Financial Freedom

One of the most potent limiting factors in life can be a lack of savings. With a robust bank account to fall back on, you increase your options and flexibility. Moving to a city or state with more opportunities, taking a professional course or college classes, and starting a business can all be possibilities if you’ve saved money.

Of course, money can’t solve every problem life throws at you. However, it’s a powerful tool that allows you to access opportunities. Remembering this can help you get serious about saving money.

11. Not Being Able to Invest

If you aren’t able to save money, you likely won’t be able to invest those savings either. This means potentially missing out on market gains over time (the market tends to go up over time, though it’s volatile over the short term).

There are different levels of risk, of course, when you decide to invest your money rather than keep it in a savings account. But the main point is that if you can’t manage to save, you may also have a hard time managing to invest. That could mean that your money’s growth potential is stunted and may delay you in reaching your financial goals.

12. Not Being Able to Help Others

When someone is in financial need, lending money can help them get back on their feet. Whether it’s through providing a microloan, donating to a charity, or contributing to a scholarship, you can make a difference in the lives of others, no matter how much you give.

But if you don’t have savings, you may not be able to afford a helping hand.

Why Saving Money Is Very Important

Since money touches almost every area of your life, saving it for what matters most can be essential. Reining in your spending habits can be hard, no doubt, but the payoff quite literally is being able to afford your needs and your goals.

The Takeaway

Reaching your financial goals will likely depend, in large part, on your ability to save your money. While this can be difficult in the moment (saying no to splurges, for instance), it can set you up for years of financial wellness.

Whether you want to be able to celebrate big moments with friends, start your own business, own a home, or take a major vacation, saving money can help put you on the right path.

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

FAQ

Can I get by without saving money?

While it’s possible to get by without savings, there may come a day when you run into an unexpected expense that causes financial hardship. If you live paycheck to paycheck without an emergency fund, an unforeseen cost could set you back and make it challenging to recover.

Is debt inevitable if you do not save?

Without savings to fall back on, it’s quite possible to go into debt when unforeseen expenses arise. Contributing to a savings account, even a small amount monthly, can make unexpected costs more manageable so you can sidestep debt.

When is the best time to start saving?

It may be a good idea to start saving now to give yourself time to build a cushion. Remember, everyone has to start somewhere. Even if you can only save $20 per month, your future self will likely thank you.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 3/31/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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