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As the cost of living has increased dramatically in recent years, many older Americans are exploring a home equity line of credit for retirees. If you’ve been burning through your retirement savings and are wondering how to cover large expenses, turning to a home equity line of credit (HELOC) could be an option. You’re a candidate for this type of lending if you own your home and have built up significant equity.

There are many equity-rich retirees out there. Housing wealth among those 62 and older reached an all-time high of almost $15 trillion in 2025. So, what does it take to get a HELOC as a retiree? And what pitfalls should you watch out for? This guide should answer all your questions and leave you ready to make a smart borrowing decision in retirement.

Can Retirees Get a HELOC?

You might think that once you’re retired, it’s hard to borrow money. But a HELOC could be within your reach. Many retirees value having an available line of credit, which is best used for large, expected expenses like a major medical bill or a home improvement project.

It’s generally not a great idea to borrow to cover routine expenses, though it’s not unheard of to do so. We’ll get into the specifics of that below. Some retirees consider a HELOC as a backstop for their emergency fund. The line of credit will be there to help them cope with an unexpected expense, should one arise.

Recommended: How to Calculate Home Equity

How to Qualify for a HELOC in Retirement

If you’re a retiree living on a fixed income, you may be wondering how you would qualify for a HELOC program for seniors, considering that lenders typically base approval decisions in part on the applicant’s income. Lenders won’t rule out a HELOC application based solely on age — that would be discriminatory, after all. But they will scrutinize your finances just as they would for any borrower.

For starters, lenders will look at your home equity level (you’ll need at least 15% equity to qualify). Home equity is calculated by subtracting your outstanding home loan balance from your home’s market value. Divide the answer by the market value to get a percentage of equity.

Your credit score will come into play, too. While older adults may not have a paycheck, they do tend to have strong credit scores. In 2025, the average credit score of those ages 61 to 79 was 747, according to credit reporting agency Experian®.

Lenders also focus on your debt-to-income (DTI) ratio. So before you apply for a HELOC, scrutinize your recurring debts. Are you still making a car payment? Do you have a personal loan? Ideally, when you add up your monthly debt payments and divide by your monthly income, the ratio will be below 45% (though some lenders may accept up to 50%). If your ratio is too high, consider trying to pay down some debt before applying.

Acceptable Income Sources for Retirees

Lenders will examine your income as they do with any applicant. While you may not earn a salary, all of these potential retirement income sources will be of interest to a prospective lender:

• •   Social Security income
• •   Pension income
• •   Disbursements from a retirement plan, such as a 401(k) or IRA
• •   Investment income such as capital gains and dividends
• •   Payments from annuities
• •   Income from consulting or part-time employment
• •   Rental income from a tenant who pays you directly

Pros of a HELOC for Retirees

HELOCs have several advantages that make them an attractive way to borrow money at any stage of life. Once you understand what a HELOC is, its benefits become clear. A HELOC is a line of credit (versus a lump-sum loan) that is secured by your home, so borrowers typically enjoy lower interest rates than with a personal loan.

And because you’re dealing with a flexible credit line, you don’t have to define how much you want to borrow at the outset. You can just open the credit line and determine when and how much to spend. For borrowers considering a HELOC vs. a home equity loan, the flexibility of borrowing may help a HELOC win out.

HELOCs also are unique in that they have two phases: a draw phase and a repayment phase. The draw phase (when you are drawing down funds) might be 5, 10, or 15 years. During that time, HELOC borrowers often aren’t required to repay what they have borrowed — they must make interest payments, however. A retiree who is thinking about downsizing in the future and cashing in their home equity by selling their house could borrow during the draw phase and repay what they owe when they sell their house. You can use a HELOC interest-only calculator to see what interest-only payments might look like.

Cons of a HELOC for Retirees

The drawbacks of using a HELOC in retirement are that they typically have adjustable (also called variable) interest rates. If rates rise, your payment amount will increase as well. And if you’re on a fixed income, that can leave you feeling especially pinched. If you fail to make your HELOC payments, the lender could foreclose and you could lose your home.

Before you sign on to a HELOC, you’ll be informed how high the interest rate could rise. Look closely at what the payments would be if this were to happen. Can you handle that number?

How Retirees Can Use a HELOC

The funds you withdraw from a HELOC in retirement can be used for any purpose, and some borrowers just like to have a credit line available in case of emergency. But there are some common uses for which a HELOC is especially well suited.

Home Improvements and Aging-in-Place Modifications

One reason many retired homeowners obtain a HELOC is to fund home improvements that will allow them to continue to live in their home safely as they age. Of course, a home improvement loan is another way to borrow, but a HELOC might be a better choice if you aren’t sure how much the project will cost.

Using a HELOC to make significant home improvements may also have tax benefits. The interest costs of the HELOC may be deductible if you itemize on your federal tax return and use the borrowed funds to build or significantly improve your home. (The cost of medically necessary modifications that allow aging in place may also be deductible regardless of how you finance the project; talk with a tax advisor about your situation to learn more.)

Covering Health Care Costs

Health care costs often increase as we age, and large bills may arise if you find yourself dealing with a surprise diagnosis. A HELOC can allow you to manage these costs without falling behind on other bills. Some medical centers offer no-interest financing, so before you use a HELOC to pay for medical expenses, check into your options with the hospital that provided the services. Also make sure you have pushed what your insurer will cover to the limit and explored all available options to lower your bill or get a no-interest payment plan. If the hospital charges interest, compare its rate to that of a HELOC before making a decision.

Debt Consolidation

Maybe you’ve entered retirement with significant credit card debt. If so, you’re likely making a hefty interest payment each month. Many people of all ages use HELOCs for debt consolidation, paying off their high-interest credit card debt and then making monthly HELOC payments at a lower interest rate to reduce what they owe. In some cases, the HELOC lender will even pay off your debt, dealing directly with the creditor for you.

Supplementing Retirement Income

Some retirees do draw on their HELOC regularly to cover routine expenses. If you opt to do this, it’s important to have a plan in place to repay what you have borrowed when the draw phase ends. Here are some scenarios where using a HELOC to supplement retirement income might work: Maybe you retired early and are using the HELOC to cover costs until Social Security kicks in and you can begin drawing from a retirement account without facing a penalty. If you keep a tight rein on your borrowing and can make your HELOC payments from your retirement income when it comes, you might be okay.

Or perhaps you feel pretty confident that you are going to inherit some money within the next few years, and you’ll use that to pay off what you borrow. Another scenario: Maybe you plan to sell your home and downsize, in which case you may be able to negotiate to pay off the HELOC with proceeds from the home sale. If you use a HELOC for everyday costs, make sure you are crystal clear on when the draw phase ends and the repayment phase begins, and keep an eye on those variable interest rates.

HELOC Alternatives for Retirees

Before you move forward with a HELOC program for seniors, it’s worth considering other ways you might increase your available cash. If you’re 62 or older, you have one option unavailable to other borrowers:

HECM

An HECM, or home equity conversation mortgage, is another way that older adults can borrow based on their equity. To obtain an HECM, which is a type of reverse mortgage, all owners of the home must be 62 or older. You’ll need to have paid off your home loan or at least have substantial home equity. You also have to use the home as your primary residence. This is a federal program, so you can’t have any delinquent federal debt.

The lender will examine your income, assets, monthly living expenses, and credit history. Generally, the older you are and the more your home is worth, the higher your reverse mortgage amount could be, depending on other eligibility criteria. You can usually elect to receive the loan amount as a lump sum, installment payments, or have a line of credit available. The reverse mortgage loan and interest do not have to be repaid until the last surviving borrower dies, sells the house, or moves out for good.

Note: SoFi does not offer home equity conversion mortgages (HECM) at this time.

Home Equity Loan

One of the most commonly chosen alternatives to a HELOC, regardless of the borrower’s age, is a home equity loan. This is a lump-sum loan vs. a line of credit. And unlike a HELOC, with a home equity loan you begin to repay what you have borrowed immediately after you receive the cash. If you know exactly how much you need to borrow, a home equity loan could be attractive. But if you aren’t sure (or want to make interest-only payments instead of beginning repayment immediately), a HELOC might be a better fit.

Cash-Out Refinance

With a cash-out refinance, you can replace your existing mortgage with a new, larger loan — potentially with a lower interest rate — and receive a lump sum at the closing. The amount would be the difference between the refinance amount and whatever you owed on your original mortgage. Of course, this option results in a sizable mortgage at a time in life when you’re probably trying to unburden yourself of debt.

There are other ways to free up funds in retirement, but credit cards and personal loans tend to have higher interest rates and lower borrowing ceilings. The chief advantage of personal loans or home improvement loans is that they don’t put your home at risk of foreclosure. But in both cases, you’ll need to immediately begin to repay what you borrowed — so make sure this is doable with a fixed income. You could also consider selling your home and downsizing.

Recommended: Home Equity Loans and HELOC vs. Cash-Out Refinancing

Is a HELOC Right for You in Retirement?

A HELOC in retirement could be a good financial safety net — a way to ensure you’re always ready to pay large bills or cover unexpected expenses. It can also be a smart way to cover the cost of renovations, particularly when you take a potential tax deduction into consideration.

If you sense that you would be using a HELOC to cover everyday expenses in retirement, then make sure you can handle the cost of repaying what you borrow once the HELOC’s draw period ends. If you have the financial bandwidth to handle variable interest rates, or know you stand to inherit money or plan to sell your house down the line, a HELOC could be a good way to free up cash in the near term.

The Takeaway

A home equity line of credit for seniors requires a good credit score, a meaningful amount of equity in your home, and a steady income, which might be Social Security and could include funds from a pension, retirement plan, or investment income. It’s important to remember that if you borrow using your home as collateral, you need to ensure that the HELOC’s payments fit into your (possibly fixed) income. But if you qualify, having a HELOC can help you cover expenses in retirement and give you peace of mind.

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

FAQ

Is there a HELOC program specifically for seniors?

There isn’t really a home equity line of credit for retirees, specifically. Qualified applicants who are seniors can obtain a home equity line of credit from most lenders without applying to a special program. Programs marketed as home equity lending for seniors are typically home equity conversion mortgages, which are only available to those 62 and older. This type of reverse mortgage might function much like a line of credit, but it is technically a different financial product.

Can you get a HELOC if your only income is Social Security?

It’s not impossible to get a home equity line of credit if your only income is Social Security. Lenders will be looking at your income relative to your debts. So if you have minimal (or no) debt and a significant level of home equity (the more, the better), that will work in your favor. You’ll also need a strong credit score of at least 640. The good news is that Social Security is considered a reliable income source, unlike proceeds from investments. That will work in your favor. Before you apply, make sure you are certain you don’t have other income. Do you have a tenant sharing your home, for example? That income could bolster your application.

Does a HELOC affect Medicare or Medicaid eligibility?

Simply having a home equity line of credit won’t affect your Medicare or Medicaid benefits. If you draw cash from the HELOC and park it in your bank account, however, you could run into trouble with Medicaid. Your assets (including your bank account) will be evaluated at the beginning of each month. If you exceed the Medicaid threshold for “countable assets” (typically $2,000, though it varies by state), your benefit could be denied.

What credit score do retirees need to qualify for a HELOC?

Some lenders will approve a HELOC for a retiree at a credit score of 620, while others will require a score of 680 or more.

How does a HELOC compare to a reverse mortgage for seniors?

Both a home equity line of credit and a home equity conversion mortgage (HECM, also called a “reverse mortgage”) allow seniors to borrow money based on their home equity. A HELOC is always a line of credit and is available to a borrower of any age. An HECM could be a credit line, but might also be a lump-sum loan or monthly installment loan; it’s only available to those 62 and over. Interest on both may be tax deductible if you use the money to build or substantially improve your home. A key difference: HELOC interest is paid over the life of the HELOC and deductible for the tax year in which it is paid. HECM interest is typically not paid until the loan is settled when the home is sold (either when the homeowner dies and their estate is settled, or if they move and sell their home).

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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.

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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.

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SOHE-Q226-003

The average credit card annual percentage rate (APR) as of early 2026 is around 21%, according to the Federal Reserve. It’s no wonder that savvy cardholders are looking for ways to reduce the cost of using a card. Some ways consumers achieve this are through a cash-back rewards credit card or a low-interest credit card.

The distinction between a cash-back vs. low-interest credit card is that cash-back cards help you earn a small percentage of your spending back. Conversely, a low-interest credit card tends to charge less interest each month than a high-interest card, which is helpful for cardholders who roll their balance into the next month.

What Are Cash-Back Credit Cards?

Credit cards that offer cash-back rewards are designed as an incentive to encourage spending on the card. For every eligible purchase you charge to your card, you’ll receive a small percentage of cash back. Some cards offer 1% cash back, while others offer as much as 6% or more, depending on the program’s rules. You might earn a flat rate across all purchases, or you might earn more in certain spending categories, such as groceries or gas.

You then can redeem your earned cash-back rewards. Redemption options may include a cash payment or a statement credit toward your next bill, or you may be able to redeem the rewards for travel, merchandise, gift cards, and more.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

What Are Low-Interest Credit Cards?

Low-interest credit cards incur a lower borrowing cost compared to high-interest credit cards. A credit card that charges low interest allows you to pay less for using the card if you carry a balance. This card feature is beneficial for cardholders who repay their monthly balance in increments over time instead of in full.

The interest rate you qualify for highly depends on your creditworthiness, including your past borrowing habits and credit score. Consumers with strong credit might qualify for promotional no-interest credit cards that charge 0% APR for a limited period. After this period is over, the card’s interest rate increases, based on the cardholder’s credit and qualifications. As such, there are both advantages and disadvantages of no-interest credit cards.

Recommended: How to Avoid Interest on a Credit Card

Differences Between Cash-Back and Low-Interest Credit Cards

Below are the key differences between low-interest vs. cash-back credit cards to keep in mind when choosing a card:

Factors to Consider When Choosing Between Rates and Rewards

Your unique financial situation, borrowing habits, and the features and benefits of a particular card are what you should consider when comparing your options.

Average Balance You’ll Be Carrying Monthly

How credit cards work is that they give you purchasing power up to a limited amount, even when you don’t have the cash upfront. You can choose to repay the debt in one lump payment by your statement due date, which allows you to avoid paying interest charges. Alternatively, you can make installment payments over multiple months, in which case you’ll accrue interest charges.

Not carrying a monthly balance is one of the common credit card rules to try to stick to, but it’s not always possible. For example, you might have had an unexpected injury that resulted in a medical bill that exceeded your cash savings. In this scenario, putting some of that cost on your credit card and making small, monthly payments to repay it might be necessary.

If you don’t have sufficient cash savings or income to confidently repay your monthly balance in full each month, a low-interest card might offer an advantage over a cash-back card.

Recommended: When Are Credit Card Payments Due?

Your Average Monthly Spending

Look back at your monthly expenses and think about the total amount you’ll likely put on your credit card each month. For example, you might use a credit card to cover everyday expenses, such as dining, groceries, and gas. Cardholders who rack up high monthly balances can benefit from a cash-back credit card that offers money back on purchases they’re already making.

The caveat, however, is if you charge more expenses to your card than you can realistically pay back in full by the statement due date. If you roll over any portion of your outstanding balance into the next month, you’ll get charged interest on that amount, which cancels out any cash-back rewards you may have earned.

Recommended: Tips for Using a Credit Card Responsibly

Annual Fees

Some cards, particularly rewards cards that extend high-value benefits and incentives, might charge an annual fee., For example, a cash-back card might offer an annual $300 travel credit and 5% cash back on flight purchases but charge an annual fee of $550.

If you don’t travel enough to use up the credits and earn more cash back than the annual fee costs, that card might not be the best fit for your lifestyle. You’ll need to assess the total potential dollar value that a card’s benefits, credits, and other incentives offer in comparison to the upfront cost of the card’s annual fee.

Interest Rate Difference Between Cards

Although all credit card issuers check your credit to determine your interest rate, each card company has its own underwriting criteria. You might receive an interest rate offer of 19.99% APR for one card and an offer from another card issuer of 22.99% APR, for example. To gauge interest rates, it can be helpful to look at the current average credit card interest rates for a point of comparison.

Regardless of whether you end up with a cash-back credit card vs. low-interest credit card, it’s always a good idea to shop around for the lowest interest rate you can get. That way, if you ever need to carry a balance, you can minimize the amount of interest you end up paying.

Guide to Lowering Your Credit Card Interest Rate

Whether you are shopping around for a new credit card or have an existing card with a high APR, here are some ways to lower your interest rate:

•   Contact your card issuer. If you have been a loyal customer and kept your account in good standing, or if you’ve built your credit score since opening your account, your credit card issuer may be willing to reduce your rate.

•   Build your credit. Even if you already have good credit, working to build on that success can help you secure the most competitive interest rate in the future. Good borrowing habits, such as making on-time payments and keeping your credit utilization low (below 30% or ideally below 10%), are just some ways you may affect your score.

•   Consider a low-interest balance transfer card. If you have a high-interest card with a balance on it, and you have strong credit, a balance transfer card can allow you to move your original balance onto a low-interest card. Before proceeding, always compare the balance transfer fee against your potential savings to confirm that it’s worth it.

Remember, what’s considered a good APR for a credit card is subjective, based on your creditworthiness and other factors. Securing the lowest APR that you qualify for can help you avoid heavy interest charges if you roll over a monthly balance.

The Takeaway

Ultimately, whether you opt for a cash-back credit card or a low-interest card depends on how you plan to use the card and manage debt, as well as what kinds of perks and features matter most to you. If you often carry a balance, for instance, a low-interest card could be valuable. If you tend to follow the important rule of paying off your card balance in full every month, then the interest rate may not matter as much, but cash back could be a benefit you appreciate.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

When is a lower annual interest rate better than a low annual fee?

A lower APR is better if you typically carry a balance from one billing cycle to the next. When you roll over a balance, old and new balances accrue daily interest charges that can cost you more money out of pocket. A low annual fee is something to look for when you’re using a card to earn incentives, such as credit card rewards.

Are there credit cards with low interest and cash back?

Yes, there are credit card options that offer a low interest rate to qualified applicants, as well as cash-back rewards. However, you’ll generally need to have good credit in order to qualify for the most competitive rates offered by low-interest rewards credit cards.

How can I choose between low APR and rewards?

Consider your credit history and score to determine whether you meet the minimum qualifications for a credit card’s lowest APR. Also, examine your general credit card habits, including whether you often roll over a balance and what your monthly spending habits are like. Compare those details against the costs of carrying a card, such as annual fees and the APR you’re offered.

Is it better to find a credit card with low or high interest?

Finding a credit card that offers a low interest rate is usually the better move. The lower your APR, the less you’ll pay for borrowing on credit if you decide to carry a balance month to month.

Photo credit: iStock/AsiaVision

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

SOCC-Q226-007

For those who love living near the water — really near — a floating home may be the perfect fit. These unique dwellings provide rooms with a view, a community vibe, and more.

Isn’t this another name for a houseboat? No. Floating homes almost always stay put.

Read on to find out what a floating home is and what type of person might be the best fit for one.

Characteristics of a Floating Home

Floating homes have the following features:

•   Permanently docked: Floating homes sit on the water like houseboats, but they’re anchored and permanently connected to land-based utilities. Unlike houseboats, floating homes have no engine.

•   HOA included: Floating home residents pay homeowners association or moorage fees to maintain the docks and slips and cover common utility bills, such as water, sewer, and garbage service.

•   Slip included. Floating homes are often sold with their slip.

•   Submerged structure: The hull is often made of concrete, although it could be wood, metal, or foam. A houseboat hull is likely made of fiberglass, aluminum, or steel.

Pros and Cons of a Floating House

For water lovers, floating houses offer a unique lifestyle that might fit the bill. But they come with their fair share of drawbacks as well.

Benefits

•   Close community: Floating homes are typically very close to their neighbors. This can mean a tight-knit community.

•   No engine maintenance: Unlike houseboat owners, floating home owners don’t have to worry about the upkeep of an engine.

•   Water, water, everywhere: Forget waterfront homes. Floating homes are in the water. For the homebuyer with a love of the outdoors and watersports, the location is unbeatable.

•   Possibly less expensive housing: In certain cities in California, Hawaii, and Washington, D.C., where homes on terra firma might be sky-high, a floating home could cost less. Look into the cost of living by state if you’re thinking about a move.

•   Strong value retention: Whereas houseboats tend to depreciate, floating homes may appreciate.

•   Potential for property tax breaks: A floating home is often classified as personal property rather than real property, so it’s typically not taxed like a traditional house. Instead, owners may pay personal property taxes and other related fees. Tax laws pertaining to floating homes differ by state, county, and even water body, so it’s important to know the applicable law where the floating home exists.

Drawbacks

•   Fees: Floating home owners typically pay HOA or moorage fees. They can be sizable and keep rising.

•   Limited locations: Floating homes are pretty rare. That means limited opportunities to purchase one or limited space in moorages to build one.

•   Seasickness or motion sickness: While floating homes aren’t mobile (unless they are, in rare instances, towed), owners will still experience some rocking and rolling, which might not be the best for those with sensitivity toward motion sickness.

•   Weather and water damage: If there’s inclement weather on the body of water, floating home owners may face expenses for repairs. And being on the water all the time can take a toll on wood and metal.

•   Difficult financing: Securing a loan can be a challenge. Some lenders do offer long-term loans (but not FHA or VA loans) for floating houses. They often require at least 20% down and may have a higher rate than traditional mortgage rates. A personal loan might be another option, and a personal loan may streamline the process of closing on your purchase, as it could have a shorter timeline.

Recommended: Applying for a Personal Loan with a Co-Borrower

Moorage Rules

The moorage is the community where a floating home stays, usually permanently.

A slip in a moorage may be part of a floating house purchase. Other owners rent a slip. The price of a floating home with a slip will be much more but owning your slip likely means less in monthly fees.

Like any neighborhood, moorages will have their own personality based on the residents. As floating homes tend to be close together, the communal spirit may come into play more than in a traditional neighborhood.

Similar to an HOA, moorages have community rules, which could include:

•   Stipulations on renting out floating homes

•   Standards of exterior upkeep of floating homes

•   Quiet hours

•   The sharing of community spaces or equipment

Buyers may want to shop around for a moorage that suits their personality.

Finding a Floating Home to Buy vs Building One

Because many floating homes are sold along with the slip, buyers don’t have to seek out a new moorage for the property.

Homebuyers in the market for a floating home will have to refine their search to areas where floating homes are popular and communities are established.

The benefit of building a floating home is the technology available today. Modern floating homes typically use different foundations than older floating homes, which could translate to lower maintenance costs down the line.

But a drawback to building a floating home is the stress of finding a moorage that can accommodate it. To build a floating home, you may have to wait for an opening.

Recommended: How to Build a House

Maintaining a Floating House

When it comes to upkeep, floating homes have most of the maintenance of single-family homes, with the added challenge of keeping them afloat.

Floating home owners should keep a close eye on their home’s foundation and reach out to specialists whenever a crack or issue emerges.

Even basic repairs, such as plumbing or electrical, may require a contractor. Not all plumbers are certified scuba divers, but they may have to be to work on a floating home. That means even basic repairs could cost much more than they would for a land-based home.

Floating houses need ongoing maintenance due to exposure to the elements. Keeping siding and other exterior parts in good condition may require constant maintenance and more frequent replacement.

Who Should Get a Floating House?

Floating homes can be expensive, and fees can add up, so buyers will have to weigh whether this unusual choice among the different types of homes is worth its salt. Floating home buyers may be interested in some or all of the following:

•   A love of water and proximity to nature: With waterfront views around the entire property, floating homes are a great fit for those who love activity on the water and unbeatable sunsets.

•   A sense of community: If a buyer is looking for neighbors nearby and with similar interests, a floating community could be a great fit.

•   Minimalist living: When everything has to be hauled from the dock onto a property, it can be exhausting. Floating homes and downsizing may go hand in hand.

•   A go-with-the-flow mentality: This style of living comes with some day-to-day inconveniences. Floating homes are more susceptible to utility disruptions than land-based homes because they rely on flexible shoreline connections. If the moorage is in a remote area, cellphone service and internet access may be limited.

The Takeaway

Floating homes aren’t for everyone, but water lovers may feel the urge to say ahoy to this lifestyle steeped in nature. A floating house has benefits, but inconveniences and fees make this way of living best for a unique type of buyer.

Floating house buyers often need special financing options, too, such as a personal loan. Buying at the waterfront but not actually on the water? A conventional home loan is an option if you’re staying on terra firma.

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

FAQ

What is a floating house, and what is the difference between a floating house and a houseboat?

A floating home is permanently docked with a floating foundation. Houseboats have an engine and can move to different locations.

What is the cost of maintaining a floating home?

Maintaining a floating home may be similar to the upkeep on a waterfront or beachfront property. Basic repairs, including plumbing and electrical, will likely require a specialist with experience in floating homes, which could be more expensive.

Can you get a loan to buy a floating home?

You could use a floating-home loan, personal loan, or home equity line of credit to buy a floating house. Floating homes aren’t eligible for a traditional mortgage.

Are floating homes safe?

Most are. Most floating home communities have standards in order to maintain property values. And the homes are usually subject to inspection and enforcement of regulations of the moorage and jurisdiction.

Photo credit: iStock/DR pics24

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.

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Despite the saying “cash is king,” there are pros and cons to using cash over credit cards in everyday transactions. Likewise, credit cards have their own share of advantages and disadvantages when it comes to making purchases.

Here’s what you need to consider when choosing cash vs. credit cards, and when you might opt for using one method of payment over the other.

Defining Cash and Credit Cards

Cash — whether coins or banknotes — is legal tender that you can exchange for goods and services. According to the Merriam-Webster dictionary, cash is considered “ready money.” Translation: You actually own the value of the cash and can use it immediately during a transaction.

Credit cards can also be used to purchase goods and services. However, you’re borrowing the funds from a third party (i.e., a bank) to make your purchase today with the promise that you’ll pay the credit card balance back later.

When to Consider Using Cash

Deciding whether to use cash vs. credit depends on your purchasing situation and preferences. Situations when paying with cash is preferred might include:

•   Buying goods or services from merchants who only accept cash

•   Having credit or income that doesn’t let you qualify for a credit card

•   Limiting your spending to a specific amount

•   Keeping your personal information private during a transaction

•   Avoiding credit card-related fees

•   Avoiding credit card debt

You can also use cash to grow your money through an interest-bearing deposit account instead of spending it. If you’d like to build your savings fund, you can only do so using cash.

Recommended: How to Avoid Interest on a Credit Card

Benefits of Using Cash

Here are some benefits of using cash:

•   Since cash represents the monetary value you actually have, it makes budgeting simple. If you have $100 in cash to spend for the weekend, for instance, you’re focused on making careful decisions about how you spend that finite amount. After you’ve depleted your funds, you can’t make additional purchases until you have more cash.

•   Cash provides some convenience despite its additional physical bulkiness in your wallet.

•   For merchants, the benefit of cash vs. credit cards is that they save money on credit card processing fees. Some merchants only accept cash payments, while others offer a small discount as an incentive for customers to pay using cash.

•   Cash can be used widely by any consumer, regardless of their credit score. This makes cash a more accessible payment method for everyday purchases.

•   Cash doesn’t contain any of your personal data, so if a private purchase is important to you, cash is beneficial.

Recommended: When Are Credit Card Payments Due?

Drawbacks of Using Cash

Here are some downsides of using cash:

•   The biggest drawback to using cash vs. credit is that it caps your buying power to only the amount of cash you have. As mentioned above, this can be a benefit, but when you’re on a budget, it can restrict your ability to immediately make larger purchases.

For example, if your car unexpectedly needs a repair that costs $800 but you only have $500 in cash to pay upfront, you’ll have to make a tough decision. You might be forced to shop around for a cheaper car repair shop, spend time negotiating a lower price with the current mechanic, or possibly wait to complete the repair until you have the additional funds necessary. All of this can cost you extra time and can possibly impact your earnings if you rely on your car to drive to work.

•   Physical cash is harder to trace between transactions. Your personal information isn’t tied to cash bills in your pocket. This means that if you lose it or it gets stolen and it’s used by someone else, it’s harder to get back.

When You Might Consider Using a Credit Card

There are many use cases for credit cards, if you qualify for one. Some situations when a credit card might make sense include:

•   Making a larger purchase now and paying it off later

•   Breaking down a large purchase into smaller installment payments

•   Earning points, miles, or cash back on purchases using a rewards credit card

•   Unlocking additional purchase protections

•   Building your credit profile

Recommended: What Is a Credit Card Advance?

Benefits of Using a Credit Card

Using a credit card as a payment method for daily transactions offers various benefits when managed responsibly.

•   If you don’t have enough cash for a purchase, a credit card lets you buy it now and pay it back the following month.

•   You can choose to take out a credit card cash advance (though typically at a higher annual percentage rate (APR) than your standard purchase APR) or even send money with a credit card.

•   With a credit card, you get to choose how you’ll repay your purchases, whether in full when your billing statement is due or incrementally over multiple months. The caveat is that letting a balance roll over to the next month incurs interest charges.

•   Since all credit card activity is reported to the credit bureaus, on-time payments and other factors can be favorable to building your credit history and credit score. A high credit score can help you qualify for competitive interest rates and terms on other consumer credit products, such as other credit cards and loans.

•   Credit cards offer benefits and rewards that cash doesn’t provide. Rewards credit cards let you earn points or miles that you can then redeem for travel, cash back, gift cards, merchandise, special experiences, and more.

Different credit cards can also offer benefits such as travel cancellation protection, warranty insurance, and more. For example, some cards feature purchase protection, which replaces an item that was lost, stolen, or damaged if it was purchased using the card.

•   Using a credit card limits your liability when unauthorized or fraudulent purchases or activity occur on your account. Depending on when you report the unusual activity, you might only be liable for up to $50 of those charges. Some credit cards even have zero-liability policies.

Recommended: What Is a Charge Card?

Drawbacks of Using a Credit Card

Here are some downsides to using a credit card:

•   Interest charges, expressed as an APR, are one of the biggest disadvantages to using credit vs. cash. With how credit card payments work, unless you make full, on-time credit card payments each month, interest charges will likely apply to balances that roll over from one month to the next.

If you roll over a balance, you’ll not only pay more money toward your purchases, but your outstanding debt can snowball quickly. This can prove financially damaging to your everyday finances and to your credit if you fall behind on payments while amassing growing debt.

•   Certain credit cards also incur annual fees for the privilege of using them. This is money that you’ll pay out-of-pocket upfront. You can also incur other fees, such as foreign transaction fees, late payment fees, balance transfer fees, and more.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Is Using a Debit Card the Same Thing as Using Cash?

Using a debit card is similar to using cash. In fact, one of the biggest differences between a credit card and debit card is that debit cards draw funds from the cash that you already have in your personal checking or savings account. However, like a credit card, a debit card provides the convenience of swiping or tapping a card on a payment processing machine to make a digital transaction between your bank and the merchant’s bank.

It’s important to note that debit cards carry many of the same disadvantages as cash. For one, a debit card limits your purchasing power to the amount that’s in your checking or savings account. Additionally, debit cards don’t offer the same level of protection against unauthorized or fraudulent activity as credit cards do.

Recommended: What Is the Average Credit Card Limit?

Understanding Your Spending Habits Is Key to Picking Which to Use

Taking stock of your buying habits can help you decide whether cash vs. credit is a better option for you. When considering these two payment options, think about the following:

•   How much do you spend each month?

•   How much discretionary income do you have?

•   Where do you typically make purchases — online or in a brick-and-mortar store?

•   Do you tend to overspend or stay within a budget that you can afford?

•   If you’re thinking about a credit card, what’s your goal?

By answering these questions, you’ll likely be able to tell which payment method will be more convenient for you. For instance, if you’re trying to curb your spending, then cash might be the better bet, given how credit cards work. On the other hand, if you’re primarily an online shopper or you’re trying to build your credit history, a credit card could be worth exploring.

The Takeaway

Cash can help you contain your spending to the money you actually have. This can potentially limit the amount of debt you’d take on through credit. It can also offer convenience when it comes to shopping through cash-only merchants. The caveat is the risk you’re taking on if the cash is lost or stolen, since it can be difficult to get back.

Credit cards can offer greater protection against unauthorized activity, and they can enhance your spending power. However, access to borrowed funds could get you deeper into debt if you’re unable to repay your balance on time each month. With responsible borrowing habits, however, credit cards can be a handy way to make purchases and may offer rewards, such as cash back.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Which is better when traveling, cash or credit?

When traveling, credit cards are typically a safer option to carry than cash. It can be nearly impossible to trace lost or stolen cash and verify whether it belongs to you. If a credit card is lost or stolen, the card issuer can freeze new transactions on the account, and your maximum liability for fraudulent charges can be $50 or nothing at all.

Are credit cards safer than cash?

Yes, credit cards can be safer than cash. Credit cards typically reduce your liability in the event of unauthorized or fraudulent activity.

What is the difference between cash and credit cards?

Cash is a physical currency and liquid asset that provides you with purchasing power. When you use cash toward a purchase, you don’t owe that amount to another entity. Conversely, a credit card is a physical tool that lets you increase your purchasing power using borrowed money, but you’ll need to repay purchases made on your credit card, possibly plus interest charges.

Cash or credit, which is more convenient?

Whether cash or credit is more convenient is subjective. For example, while many merchants accept credit cards, some only accept cash payments. However, as more businesses accept digital payments and transition to cashless transactions, a credit card might be more convenient.

Photo credit: iStock/Ridofranz

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You may have grown up calling manufactured homes mobile homes — and the two terms are sometimes still used interchangeably — but these dwellings have evolved.

They’re more customizable and arguably fancier than previous iterations. Still, it’s a good idea to look beyond the sticker price.

Characteristics of a Manufactured Home

First, to clarify a popular point of confusion, modular homes and manufactured homes are different types of houses.

Both are built partially or entirely in a factory, but modular homes, aka kit homes, must adhere to the same codes that site-built homes do.

Manufactured homes are intended to be permanent dwelling units. Starting in 1976, they began to be built to a code developed by the Department of Housing and Urban Development (HUD) and moved past the name “mobile homes” and the notion of trailers placed atop blocks.

The manufactured home, built on a permanent chassis, is tested to ensure that it can be transported properly before being attached to a foundation, or the underlying chassis may be “skirted” by blocks or siding.

The home may be movable, depending on its age and condition, but few are moved. Moving a manufactured home, if it’s new enough to be moved, can cost $10,000 or more.

Recommended: Mobile vs Modular vs Manufactured Homes

Pros and Cons of a Manufactured Home

Before buying a manufactured home, the housing choice of about 20 million Americans, take a look at the following advantages and disadvantages to help you in your decision-making.

Pros

•   Cost effective: According to Legacy Housing, manufactured homes cost around 40%-50% less than comparable site-built homes, excluding the price of land.

•   High quality: Manufactured homes must adhere to the HUD code, which applies to the home’s design, construction, durability, transportability, strength, and energy efficiency. Factories also need to adhere to standards and must inspect each step during construction.

•   Few delays: Because manufactured homes are built indoors in a controlled environment, the weather won’t interfere with the timeline to construct the home.

•   Home warranties: Most manufactured homes have some form of warranty from the manufacturer to cover the structure and factory-installed plumbing, heating, and electrical systems during a specified warranty period. The seller may have its own warranties for transporting and installing the home.

•   Customizable: Most manufactured home makers allow homebuyers to customize some aspects of the home, such as certain finishes, porches, vaulted ceilings, and fireplaces.

•   Energy efficient: The HUD code ensures that manufactured homes have a high degree of energy efficiency.

•   Financing: The financing options include loans, even if the buyer will not own the land the home will rest on.

•   Appreciation: Manufactured homes may not appreciate at the same rate as other types of homes and may even depreciate. The resale value depends on the location, the age, and the condition of the home.

Cons

•   Limited customization: You can customize some parts of a manufactured home, but you may not have the options you want, depending on the builder.

•   Price increases: The average sales price of a manufactured home increased nearly 50% during the pandemic, driven by the demand for affordable housing.

•   Lot rent: Most residents own their homes but rent the land. Those who lease lots face uncertain increases in monthly costs. Park rents have been doubling and tripling.

•   Financing: Financing options may carry higher rates. Whether the home is considered real property or personal property makes a big difference.

A manufactured home built on or after June 15, 1976, and considered real property might qualify for a conventional or government-backed loan. To be considered real property, the home must be at least 400 square feet, permanently attached to a foundation, and on land that you own or plan to buy. The loans usually carry slightly higher interest rates than mortgages for traditional homes.

Financing options for manufactured homes classified as personal property include chattel loans, which come with a higher interest rate and a shorter term than most traditional mortgages. (A chattel mortgage may may be used for tiny house financing.)

FHA Title I loans and personal loans are other options for manufactured homes classified as personal property. Rates for unsecured personal loans will be higher than rates for secured loans like mortgages or chattel loans.

Recommended: How Long Do Mobile Homes Last?

Finding a Manufactured Home

Most manufactured homes are sold through retailers instead of the builders. It’s also possible to purchase manufactured homes through real estate agents and online manufactured home marketplaces.

Think of buying a new manufactured home like going to a store where you can view model homes. You’ll be able to see your options, such as the number of bedrooms, layout, and customizable features. Depending on the retailer, you may even be able to apply for financing and arrange for delivery all in the same day.

Before signing on the dotted line, make sure you read the fine print, such as what warranties come with the home. You may be able to purchase both the land and home through a manufactured home community.

Who Should Get a Manufactured Home?

A manufactured home may be a good fit for a retiree or a first-time homebuyer who is looking for a more cost-effective housing solution than a condo or single-family home, especially if they own the land underneath them.

It also may be suited for those who want a new construction home and to be able to customize parts of the structure.

The Takeaway

A manufactured home may be a good choice for some buyers, and others may want to try to buy a condo, townhouse, or single-family home.

If you’re in the latter group or buying investment property, SoFi can help you get started by providing a rate quote with no obligation.

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

FAQ

What are the advantages of manufactured homes?

One advantage of manufactured homes is the relatively low cost. Another advantage is the building standards they must meet.

Is a manufactured home considered real property?

It depends. A manufactured home is considered real property if you own both the land and the home, and the structure is permanently attached to a foundation.

Can I get a loan to buy a manufactured house?

Yes, though the type usually depends on whether the home is considered real or personal property. Classification as personal property is almost certain to preclude conventional financing. A borrower need not own the land for an FHA Title I loan from an approved lender.

Are manufactured homes safe?

Yes. Manufactured homes built after mid-1976 abide by Department of Housing and Urban Development (HUD) standards, and the agency significantly updated its manufacturing and safety standards in 2024. Most come with warranties.

Photo credit: iStock/clubfoto

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