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Getting married can be a pricey proposition, with the average wedding in the U.S. now running $36,000. If you don’t have access to a large stockpile of cash, you may think you’ll never be able to afford the kind of wedding you envision. But that’s not necessarily the case. The key is to start budgeting and saving well ahead of the big day.

Whether you long for a fairy tale wedding or you prefer something more scaled back, there are ways to save for your dream day that will ensure you have the magical moment you’ve always wanted without having to start off your marriage in debt.

Set a Budget

Do you want a big, lavish wedding worthy of the royals? A destination wedding? Or maybe something more intimate with just a few friends and family? There are different levels of spending when it comes to weddings, and deciding what is most important to you can help you determine how much you’ll need to save. A wedding cost calculator can also be a useful tool as you begin considering your budget.

Is the venue a priority? The number of people? The food? The DJ (or band)? It’s smart to start by making a list and getting a solid estimate of the costs for each of your need-to-haves and your want-to-haves. It’s also wise to leave a little wiggle room for unexpected wedding costs. Little things, such as the marriage license, dress or suit alterations, and even insurance costs, can start to eat into your budget pretty quickly.

Recommended: 8 Ways to Fund Your Wedding

Start a Savings Plan

Before you’ve locked in the date, you and your partner can start a savings plan. Some couples open a separate bank account and set up automatic monthly transfers to that account to build their wedding fund. When savings are automated, you often don’t notice the missing funds. And by picking an account with a competitive interest rate, your money can make money while you continue to plan and save.

If you’re thinking about financing part of your wedding, you’ll want to start investigating your options, which can range from credit cards to personal loans (which typically have lower rates than credit cards), early on and weighing the pros and cons of taking on debt.

Put the Wedding First

Sure, you may want to go on vacation, eat at fancy restaurants, and buy those new clothes, but you’ll be further from your goal. Instead of spending on those luxuries now, cutting back and putting that money into your shared dream wedding account can help you get to your savings goal quicker.

There are also some simple ways to cut back that won’t make you feel deprived. For example, you can take local day trips or vacations in your state instead of traveling far. Eating out just once a month and cooking at home more can cut costs. You could even get swanky and hold a cocktail hour with friends at your house instead of going to happy hour. Your new bank account will thank you.

Recommended: The Cost of Being in Someone’s Wedding

Do It Yourself

One way to keep wedding costs down is to plan the majority of the wedding yourself. If you already have experience managing projects, then this should be within the realm of your abilities. Researching the typical steps and fees associated with weddings before making any concrete decisions can be helpful, and you might also want to research budgeting tips for weddings. If that feels daunting, keep in mind that the average starting rate for a full-service wedding planner in the US is $3,000.

And though there are advantages to using a planner (they already have a contact list of professionals and know their rates, saving you a lot of time and energy), the downside is that you could be getting a one-size-fits-all experience instead of the personalized ceremony and party you want.

Comparison Shop

Just like other big expenses, getting more than one quote for each service you need can help you find the best price point to fit your needs and wants. Does your preferred venue charge a premium for a wedding but a lower price for a party? You may want to consider negotiating the price. Calling multiple DJs and catering services can help you ensure you are not overpaying. New York City is going to have very different rates than Asheville, North Carolina, for example. This might even be a factor in deciding when to have your wedding, too. For a better idea of how much costs can vary, you can check out this comparison of wedding costs by state.

You can save a ton of money by doing away with an expensive venue altogether and looking at free or inexpensive locations, such as parks, gardens, and beaches.

And if you’re willing to hold your celebration on a weekday or off-season, you’re likely to find some additional savings. For example, you can pick Friday instead of Saturday, or organize a fall or winter event to help lower your costs.

Reassess the Dress

Maybe your dream wedding includes a Vera Wang gown, but your bank account can’t swing that. Consider shopping for a vintage dress and having it altered. Or if you want a more modern look, you don’t necessarily have to buy brand new — wedding dresses are usually only worn once and then either hang in the back of a closet or get sold or donated. Resellers often offer beautiful dresses at a fraction of the initial cost.

Consider this: Wedding dresses less than three years old are usually sold for half their original price. And that Vera Wang might not be out of reach after all if you buy it used. Designer brands can sell for 40% to 80% of their original cost.

Recommended: What Is the Ideal Wedding Budget?

Where Not to Cut Costs

While you might not have much of an appetite on your big day, your guests likely will, so it’s a good idea not to scrimp on the food. It doesn’t have to be a five-star, multicourse meal, but if you want to create a memorable experience for all, it’s smart to offer quality food that doesn’t leave anyone grumbling about “wedding food.”

And what good is a dream wedding if you have bad or no photos to remember it by? A good photographer can capture all the special moments of you and your guests. These are photos that you will cherish, frame and place on your dresser, and send to your family, so avoid costs here. Although the average fee of a wedding photographer ranges from $2,500 to $4,000, it could be the best decision you make for your special day.

The Takeaway

Saving for your dream wedding might seem impossible, but it’s within your grasp if you’re willing to put in the time and effort. By cutting a few everyday costs and making automatic transfers into a high-yield savings account every month, you and your soon-to-be spouse will be able to slowly but surely build your wedding fund.

You can also find ways to trim wedding costs while staying true to your vision for the special day. If you find you’ll still need to rely on some type of financing to pay for your big day, be sure to consider all your options to find the least expensive one.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much should I spend on a wedding?

A good place to start is calculating what you can afford and adding a 10%–15% contingency to cover any unexpected costs.

When should I start saving?

Ideally, you should start saving for a wedding as soon as you get engaged, or even sooner if you’re planning to get engaged in the near future.

How do I start saving for my wedding?

Set your maximum budget and calculate the monthly amount you can realistically save. Review your spending and identify areas where you can cut down, such as unused subscriptions, eating out, or frequent vacations. It’s also a good idea to open a high-interest savings account.

What are the best ways to cut wedding costs?

Look at off-peak times/seasons for cheaper rates, such as weekdays, Sundays, winter, or early spring. Ask friends and family to get involved by making decorations. Review the guest list to cut down on numbers, look for cheaper, unconventional venues, and get multiple quotes for catering and dining options. You can also avoid smaller costs by skipping favors, buying a second-hand wedding dress, and sending digital invites.

Photo credit: iStock/standret

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.

SOPL-Q126-038

As winter approaches, it may make sense — practically and financially — to prepare for the season ahead. Seasonal weather can transform minor issues into major ones, and cracks and holes around doors and windows can allow the money you spend on heating to fly away.

Here, you’ll discover some smart moves for protecting your home, from the top of the chimney to the water heater in the basement. Plus, you’ll learn ways to finance improvements that will help get (and keep) your property in top condition.

Ways to Winterize a House

While the steps to winterize a home may differ in Alaska and Texas, it still helps to get ahead of any issues that may arise. No one wants to wind up with a leaky roof or an ice-cold home during a cold snap.

Consider winterizing several months before the season arrives. The timing of the first frost varies from state to state, and of course, there are some regions of the U.S. that enjoy mild temperatures year-round. It may help to check the National Weather Service’s data that forecasts the first frost for each state to assist in your winterization preparation timeline.

The following tips for winterizing a house may help you reduce future repair costs and heating bills.

Protect the Pipes or Pay the Piper

When deciding how to winterize a house, first consider how to address plumbing leaks and other issues.

Angi.com reports that the average burst pipe repair costs $500, but charges of up to $4,700 aren’t uncommon. Pipes in unheated areas of a home, including basements, attics, and garages, are likely to sustain damage. But pipes running through exterior walls (including those in kitchens and bathrooms) in the heated parts of your home can also freeze.

Protecting the plumbing is clearly a situation where being proactive may save you a bundle. Pipe insulation can range from $0.50 to $6 per foot, depending on whether you opt for tubular foam, spray foam, fiberglass, rubber, or other kinds of insulation. Compare that to the $4,700 figure above to repair a significant leak, and the rewards of winterization can quickly become clear.

Adding insulation to attics (typically a $1,500-$6,000 job), crawl spaces, and basements can help to keep those areas warmer, which can also help to stop pipes from freezing. (Yes, many houses have pipes in the attic.) What’s more, the Environmental Protection Agency says that homeowners can save up to 15% on heating and cooling costs by pumping up their home’s insulation. The higher an insulation’s R value — the measure of its ability to resist heat — the better it may be at keeping your home toasty. For more details on this topic, check the U.S. Department of Energy’s map and guide.

Address HVAC Maintenance and Repair

Nobody wants the heating system to perform poorly during the winter, much less have it break down.

Consider scheduling a professional maintenance appointment (about $350 on average), including a filter change, before freezing temperatures arrive. Afterward, it’s a good idea to change the filter at least every 90 days to keep your system operating optimally.

Additionally, maintenance and repairs to the heating, ventilation, and air conditioning (HVAC) system and cleaning out vents can improve airflow in your home.

One good move (if you haven’t already made it) is to install a smart thermostat. If people in a home are away during reasonably regular times of the day or you want to lower the thermostat at night, it can make sense to install a programmable thermostat to save on energy costs. You could quickly shave $100 off your annual energy bill and plunk that into a high-yield savings account or your emergency fund.

It may be time to consider a new HVAC system. The Department of Energy’s Energy Star program provides tips to homeowners to decide if replacing an HVAC system would be a good move.

Signs that it might be time to replace the unit include:

•   The heat pump is more than 10 years old.

•   The furnace or boiler is more than 15 years old.

•   The system needs frequent repairs, and/or energy bills are increasing.

•   Rooms in the home are too hot or too cold.

•   The HVAC system is noisy.

And if you are contemplating making a move to, say, a heat pump or other new system, definitely do an online search about rebates and tax deductions that may be available. The Internal Revenue Service (IRS) shares some details on its website.

Check the Roof, Gutters, and Chimney

Before winter hits, clearing the roof and gutters of leaves and other debris will help prevent snow and ice from building up and damaging the gutters — or worse, the roof.

If ice or snow gets beneath the roof shingles, it can lead to leaks and interior water damage. You may also want to check if you need to replace your gutters. Do any shingles need to be glued down or replaced? Do any small leaks in these areas need to be repaired before they become big ones?

Plus, a chimney inspection can make sense before winter arrives. A chimney could have an animal nest lodged in it, or there could be structural problems. If your home has a wood-burning fireplace, creosote buildup can create both a fire and a health hazard, so keeping up with regular cleaning is also important. With a gas fireplace, a blocked chimney could lead to carbon monoxide backup, which can be life-threatening.

Prices for these services can range widely, with a chimney inspection costing an average of $450 and a cleaning costing $254 on average.

Addressing all these issues before winter comes can help you prevent damage, reduce future repair costs and energy bills, and avoid a potentially hazardous situation.

Examine the Water Heater

You may want to check your water heater before temperatures plunge to avoid a chilly shower during winter. The usual lifespan of a heater is eight to 12 years, but various factors can impact that. Rust and corrosion can occur and lead to leaks, so be sure to check on it regularly.

A professional can examine your water heater, bleed the system to remove trapped air and mineral deposits, clean the pipes, and recommend and do repairs.

How much could this important aspect of home maintenance cost? The average repair can cost $615, according to Angi.com, and a replacement can run from $882 to $1,814.

Think About Outdoor Equipment and Plants

Preventive winterization isn’t just about your home. It can also be a good time to take care of your outdoor equipment, such as a lawn mower or other power tools, to protect them as well. Here’s another smart move: Take care of plants that could benefit from being moved indoors. More pointers include:

•   Drain the oil from the appropriate equipment and take it to a local recycling or hazardous-waste site.

•   Take care of general maintenance on equipment, including replacing old parts. That way, when spring rolls around and you need to mow your lawn or trim your bushes, you should be ready to go.

•   Inspect gas caps to check that the O-rings are intact on this kind of equipment. If not, get replacements from the manufacturer. Also, replace filters and lubricate what needs lubricating.

•   Bring in outside plants you placed outside to enjoy the summer sun when temperatures drop. Before doing so, check the plants for mealybugs, aphids, and other insects. Remove them and treat the plants as needed so the problem doesn’t spread to other plants. Read up on how to get plants acclimated to the indoors and give them the best shot at survival over the winter.

•   Prune and repot the plants that need it. An online search of reputable sources, specific to the kinds of plants you have, will likely provide good advice.

Recommended: How HELOCs Affect Your Taxes

What’s the Cost of Winterizing a Home?

The cost of winterizing your home will vary greatly depending on your home’s size, age, needs, location (a pricey suburb vs. a more affordable one), and climate. You may spend a couple of hundred dollars or (if you need a major roof repair or HVAC replacement) several thousand dollars or more.

Pipe insulation, as noted earlier, can be relatively cheap — as little as 50 cents per linear foot. If you decide to insulate further, perhaps an attic, costs can range between $1,500 to $3,500 or more.

To hire someone to clean gutters, you may pay an average of $168. An HVAC inspection might cost $300, while the cost to replace an HVAC system averages $7,500 but could tip into a five-figure price tag, depending upon the size of the home and type of system, among other factors.

Yes, there’s a huge variation in prices, but you probably want to protect your home. It’s not only your shelter. It’s also likely to be your main financial asset. To that end, there are websites that let you enter a ZIP code and get an estimate of what a winterizing activity may cost. It can make sense to get quotes from local professionals to get an exact price, compare proposals and references, and then budget accordingly once you are ready to take the next steps.

Financing Winterization Projects

Some people pay for their home winterization costs out of pocket, while others may decide to get a home improvement loan.

If you’re leaning toward a loan, there are options, such as different types of home equity loans. These secured loans — which include HELOCs, home equity loans, and cash-out refinancing — use your home as collateral for the loan.

Another option is to get an unsecured loan, such as a personal loan, to finance your costs.

Here are two popular options: HELOCs and personal loans. A HELOC, as noted, uses your home as collateral. For this to be an option, there needs to be enough equity in the property to borrow against it. The equity is your property’s current value minus the amount remaining on your mortgage. Some points to consider:

•   Usually, you will need at least 15% equity. If you have that much, and the loan amount required is large, it could make sense to apply for a HELOC.

•   You can typically borrow up to 90% of your equity.

•   The way a HELOC works is you have a draw period (typically 10 years) during which you withdraw funds up to your limit as needed. Then, you enter the repayment period, which is often up to 20 years, during which you pay back the amount you’ve used.

•   Typically, HELOCs have variable rates, but fixed-rate options may be available. Also, since these are secured loans, meaning your property acts as collateral, the interest rates may be lower than those for a personal loan.

•   Another plus is that in some cases, interest payments may be tax-deductible if the funds are used in the way specified by IRS guidelines.

•   An important note: A major downside of a HELOC (or any loan with your property as collateral) is that if you default on your loan, the lender could seize your house.

•   Also, the process of securing a HELOC can take weeks, as it usually involves a home appraisal and other steps.

A personal loan can make sense for recent homebuyers who haven’t built enough equity or those who don’t want to use their home as collateral. Some details to note include:

•   For people contemplating both small and large projects, a personal loan may make sense. The amounts available typically run from $1,000 to $100,000.

•   Unlike with a HELOC, there’s typically no tax deduction possible for the interest you pay on these loans.

•   A personal loan for home improvements (aka a home improvement loan) typically has a fixed interest rate, but variable-rate loans are often available too.

•   The loan usually provides a lump sum, and then principal and interest are paid off (most often with monthly payments) over a term of one to seven years.

•   Applying for and receiving money from an unsecured personal loan is typically much faster than with a HELOC, partly because no appraisal is required for the loan. Lenders may offer same-day approval, with funds becoming available just a few days after.

•   Having an excellent credit score can help a borrower get approved or receive favorable loan terms. Those with lower credit scores will likely pay a higher interest rate.

Deciding which type of funding may be best for your home winterization needs will depend on many factors. It’s worthwhile to shop around and compare offers so you can find the right financial product to suit your situation. It’s also wise to familiarize yourself with how to apply for a loan so you can know what to expect and how long the process will take.

Recommended: Personal Loan Calculator

The Takeaway

Preparing your home for winter weather can be an important step to protect your property, potentially heading off major repairs and reducing your energy bills. Such steps as cleaning your gutters, having your HVAC system inspected, and adding insulation can be worthwhile.

Winterizing your house can involve a wide range of costs. Fortunately, there are usually ways to finance home improvement projects, such as home equity loans (including HELOCs) and personal loans, depending on your needs.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What do I need to do to winterize my house?

Some important steps to winterize your house can include cleaning the gutters, inspecting the roof and attic, adding insulation (both to prevent heat loss and protect pipes), having your chimneys checked, and servicing your HVAC system. Don’t forget to prep your outdoor equipment and plants for the colder weather.

How do you close up a house for the winter?

If you’re closing up a house for the winter, it’s wise to get necessary inspections done (such as the roof and HVAC system), and unplug appliances. To avoid pipes freezing and bursting, shut off the water wherever possible and set the thermostat to no less than 55 degrees Fahrenheit. Fill exterior holes that could allow critters inside, clean out gutters, and move plants and outdoor equipment inside.

How do you winterize a house so pipes don’t freeze?

Set your home’s thermostat to no lower than 55 degrees Fahrenheit at any time of day. Insulating pipes well, especially those near the home’s exterior, can also help prevent pipes from freezing.

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.

SOPL-Q126-054

A VA home loan is a type of mortgage that helps make homeownership more accessible for eligible veterans, military service members, and surviving spouses. The loan is backed by the U.S. Department of Veterans Affairs and available through certain VA-approved lenders. If you’re interested in how does a VA home loan work and whether you might qualify, here’s a step-by-step guide to walk you through the process.

What Is a VA Home Loan and How Does It Work?

A VA loan is a mortgage backed by the federal government, which gives private lenders more confidence in approving applications to eligible individuals. On top of that, there’s no down payment required, enabling military members and veterans to buy a home faster than they could if they had to save up cash for money down.

Who Qualifies for a VA Loan?

Veterans, service members, and eligible surviving spouses are able to apply for a VA loan. There’s a minimum active-duty service requirement for veterans that varies based on when you served and whether you served during war or peacetime. Current service members (including National Guard and Reserve members) also have minimum service time requirements.

Surviving spouses may qualify if you get certain types of VA Dependency and Indemnity Compensation or your spouse is either missing in action or being held as a prisoner of war. Eligible individuals also need to meet the lender’s credit and income requirements for mortgage loans.

Recommended: Home Loan Help Center

How Do VA Home Loans Work?

There are seven steps to apply for a VA loan and make it to closing day.

Step 1: Determine Eligibility and Get a COE

The first part of the VA loan process is confirming your eligibility. First, make sure you meet the service or surviving spouse requirements. Then apply for a Certificate of Eligibility (COE), which is a document that shows lenders that you’re able to apply for a VA loan.

Lenders with specific VA loan experience may let you apply through their online system. Otherwise, you can apply for your COE directly through the VA. You’ll need to provide documentation that proves your service.

Step 2: Find a VA-Approved Lender

Not all lenders are authorized to offer VA loans, so you need to narrow your search to those that are approved by the U.S. Department of Veterans Affairs. Compare personal recommendations, online reviews, and loan terms (such as mortgage rates and fees) to help choose the best VA lender.

Step 3: Get Preapproved for a Loan

How does a VA loan work once you pick a lender? In addition to receiving your COE, getting a VA mortgage preapproval makes sure you likely meet the financial requirements of taking out a home loan. Your lender will look at your credit score, income, debt, and other financial information to give you a preapproved loan amount and interest rate. Some lenders have lower credit score requirements than they would for a conventional mortgage loan, and you could be approved with a score of 600 or better. Include your mortgage preapproval letter with your offer to strengthen your odds of getting chosen by a seller.

Recommended: VA Mortgage Calculator

Step 4: Shop for a Home

Next, it’s time to shop for a home that meets the requirements of a VA loan, which are stricter than conventional loan requirements. The home must be safe, structurally sound, and sanitary based on analysis by a VA-assigned appraiser.

When looking at houses, also consider sellers who are willing to let you assume their own VA loan. How does a VA assumable loan work? Essentially, you take over the seller’s existing mortgage in order to keep favorable loan terms (such as a low interest rate). The downside is you’ll need to cover the gap between the current loan and the sales price either in cash or another type of financing.

Step 5: Make an Offer and Sign a Purchase Agreement

Once you’re preapproved and have found a home you love, make an offer through your real estate agent. You typically need to disclose your home loan type in the offer letter, and you should also include your mortgage preapproval letter.

Step 6: VA Appraisal and Underwriting

An appraiser evaluates the property to make sure the loan amount doesn’t exceed the value. He or she also points out any necessary repairs that fall under the VA’s Minimum Property Requirements. This work will need to be taken care of before closing.

The underwriting process reviews your mortgage application and checks to see if there have been any significant changes to your financial situation. The underwriter verifies your income, confirms your credit, and reviews the property details before giving the final stamp of approval.

Step 7: Closing and Moving In

Closing on a VA loan is just like closing with any other type of mortgage. You must bring a photo ID, proof of your homeowners insurance policy, and payment for any closing costs you’re responsible for.

Types of VA Home Loans

How does a VA loan work for buying a house? It depends on the type of VA loan you use. There are actually several options to choose from.

VA Purchase Loans

A VA purchase loan is like a traditional mortgage. You can typically choose between a 15- and 30-year loan term and can select a fixed or adjustable interest rate. No down payment is required as long as you meet the income requirements. While there are VA loan limits if you don’t have your full entitlement, you can apply for any size loan with no down payment.

How does a VA jumbo loan work? If your entitlement is fully intact, you can apply for as much as you’d like with no down payment, as long as you can afford the payments. But some lenders may require you to have a few months of mortgage payments in savings.

VA IRRRL (Interest Rate Reduction Refinance Loan)

A VA IRRRL lets you refinance an existing VA loan to get different terms. The goal is to qualify for a lower interest rate or switch from an adjustable rate to a fixed one. In order to qualify, you must already have a VA loan and use the IRRRL for that loan. You also must certify that you either live in the home or used to live in the home covered by the VA loan.

VA Cash-Out Refinance

A VA cash-out refinance loan lets you tap into your home equity by replacing your current mortgage with a new, larger loan amount. Once the original lender’s balance is paid off, you’ll get the difference as cash. You can refinance both VA and non-VA mortgages.

Native American Direct Loan (NADL)

A Native American Direct Loan is for veterans who are Native American or are married to a Native American. With this loan, you can buy, build, or improve a home on federal trust land. Like a traditional VA loan, there’s no down payment required. NADL loans are not made by banks but rather through the VA directly, so it’s best to check eligibility directly with the VA.

Pros and Cons of VA Home Loans

Wondering if a VA loan is right for you? Consider the advantages and disadvantages first.

One other consideration is how a VA loan works for the seller. Some sellers have the idea that VA loans take longer to close than conventional loans, and in a hot real estate market, that might be a factor. In truth, the difference between VA loan and conventional loan timelines is negligible. Moreover, the idea of any potential delay may be offset by the often higher closing rate that comes with VA loans.

The Takeaway

Once you understand what is a VA loan and how does it work, you will see that VA loans can make homeownership more accessible for service members, veterans, and surviving spouses. While the process takes some extra steps compared to a conventional mortgage, the financial benefits may be worth it.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Can I use a VA loan more than once?

Yes, you can use a VA loan more than once, as long as you have entitlement left from previous purchases. When you pay off a previous VA loan in full, you can replenish your full entitlement to qualify for another no down payment loan.

Can I buy a second home with a VA loan?

You can buy a second home with a VA loan, but you must use it as your primary residence. So how does a second VA loan work? The main factor is whether you need a down payment. If you don’t have full VA entitlement because of another VA loan, you may need to make a down payment on the property.

What credit score do I need?

The VA doesn’t have a required minimum credit score for a VA loan. Instead, individual lenders set their own qualifications, usually requiring at least a 600.

Can I use a VA loan for a fixer-upper?

It is possible to use a VA loan for a fixer-upper, but you won’t be able to use a standard VA loan if the property doesn’t meet the safety and sanitation requirements. Instead, you’ll need to qualify for a VA renovation loan that covers both the mortgage and the repair costs. How does a VA construction loan work? Once approved, contractors are paid through an escrow draw account. The lender oversees payments, but you get to approve every transaction first.

Do VA loans require a down payment?

VA loans do not require a down payment. However, you’ll need to meet the financial requirements for your desired loan amount in order to get approved.

Photo credit: iStock/AndreyPopov

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.

SOHL-Q126-015

Your down payment isn’t your only upfront cost when buying a home. You’ll also need to pay closing costs, which are fees that come with taking out a home loan and transferring ownership of the house. Closing costs typically range from 2% to 5% of your mortgage amount, but they can vary depending on your lender, mortgage type, and other factors. Understanding how much closing costs are on a home can help you prepare and avoid financial surprises on closing day.

What Are Closing Costs?

Closing costs are fees you’ll have to pay on closing day, as you finalize the purchase of a home. They cover costs that go into funding a mortgage and transferring ownership of the house from seller to buyer.

Some lender fees include origination, application, and underwriting fees. You might also pay for an appraisal, title services, and escrow deposit, as well as prepay some property taxes and homeowners insurance premiums.

Both buyers and sellers pay closing costs. While many of the fees for buyers are mortgage-related, the fees for sellers can include agent commissions, attorney fees, and transfer taxes.

How Much Are Closing Costs on a Home Purchase?

The average cost of closing a home is often 2% to 5% of your loan amount. If you’re taking out a mortgage for $450,000, for example, expect to pay closing costs around $9,000 to $22,500. Your specific costs will vary depending on the lender you choose and the type of mortgage loan you choose. For instance, FHA loans and VA loans come with their own specific upfront fees.

If you’re purchasing a house with cash and not taking out a mortgage, you’ll still have to pay closing costs. What is the percentage of closing costs in this scenario? Expect to pay about 1% to 3% of the purchase price. For a home purchase of $450,000, for example, you might pay $4,500 to $13,500.

You may be able to lower closing costs by shopping around for certain services, like title search and insurance services. Negotiating with your lender or getting seller concessions can also bring costs down.

Closing Cost Breakdown

Closing costs refer to a number of individual fees related to your mortgage and home purchase. Here are common closing cost line items that you’ll encounter.

Loan Origination Fee

Along with meeting mortgage loan requirements, you may have to pay an origination fee to take out a mortgage. This fee covers the cost of processing and underwriting your mortgage. It typically adds up to 0.5% to 1% of your total loan amount. Some lenders don’t charge an origination fees, but may charge higher interest rates to offset this.

Appraisal Fee

Is appraisal part of closing costs? Yes, your lender will request a home appraisal to find out the property’s current value, since the lender can’t loan you more than a property is worth. If your offer exceeds the value, you’ll have to see if the seller will adjust the price or pay the rest in cash. Rescinding your offer is also a possibility if you have an appraisal contingency. Expect the appraisal fee to cost around $300 to $600.

Title Insurance

Title insurance protects you and your lender if issues arrive over the home’s ownership, such as liens or unpaid taxes. Lenders require a lender’s title insurance policy, which may cost 0.1% to 1% of your mortgage. You can also elect to purchase owner’s title insurance.

Escrow Fee

You’ll pay escrow fees to a third party, such as an escrow company or real estate attorney, to manage funds and documents during the real estate transaction. They may cost 1% to 2% of the home purchase price but can vary by location and the escrow company you use.

Attorney Fee (Where Applicable)

Some states require that you hire a real estate attorney to handle closing and review all your documents. And some buyers hire an attorney even if it’s not required.

Home Inspection Fee

A home inspection can identify issues with the property before you buy it. An inspector will check out the home’s foundation, plumbing, electrical, and other systems and look for anything that needs repairs. Inspection fees may cost around $300 to $425.

Recording Fee

Your local government charges this fee to document your property purchase and update local records. It may cost around $125.

Prepaid Property Taxes and Insurance

You may have to pay some of your property taxes and homeowners insurance premiums upfront at closing, as well as private mortgage insurance (PMI) if your down payment was less than 20%. These funds will go into an escrow account, and your lender will draw from the account to pay those bills on your behalf.

Mortgage Points (If Applicable)

You may have the option to purchase mortgage points at closing in exchange for reduced mortgage rates. One point usually brings your rate down by 0.25 percentage points and costs about 1% of your loan amount. If you have cash on hand, buying mortgage points may save you money if you plan to stay in the house for a long time.

Improving your credit profile could also help you qualify for a better interest rate. The average credit score to buy a house was over 700 at last count.

Buyer vs. Seller Closing Costs

Both buyers and sellers have to pay closing costs, but the fees they pay differ. Buyers typically cover lender, appraisal, and inspection fees, along with prepaying taxes and insurance. Sellers usually pay transfer taxes and may also pay some or all of the commission for the real estate agent(s) involved in the transaction.

In the case of a private home sale directly between a buyer and seller, sellers don’t have to pay real estate agent commissions. In this case, how much closing costs are on a private home sale can be significantly less for sellers.

How to Estimate Closing Costs

Closing costs generally add up to 2% to 5% of your loan amount. It can be tough to estimate a precise figure upfront, since there are so many fees that go into the amount.

After you’ve gotten mortgage preapproval and picked a lender, you can ask for a loan estimate that will outline your fees and charges. You can also use online closing cost calculator tools to estimate your costs.

Lenders are required to send you a document called a Closing Disclosure at least three business days before closing day. This document will contain all your final loan terms and closing costs.

How to Reduce Closing Costs

While you can’t avoid closing costs completely, you can take steps to reduce them, such as:

•   Ask for seller concessions: A seller may agree to cover some closing costs in certain circumstances, such as when the seller needs to part with the property quickly.

•   Shop around with lenders: Fees vary among lenders, so shop around to find a mortgage with low closing costs and a competitive interest rate. Comparing home loans from multiple lenders could save you thousands of dollars over the life of your mortgage.

•   Negotiate with your mortgage provider: Once you’ve chosen a lender, you could try asking if the company can reduce or waive any fees.

•   Research different service providers: There are some closing costs you can shop around for, such as title services and real estate attorneys.

•   Explore closing cost assistance programs: There are government and nonprofit down payment and closing cost assistance programs that provide grants to help buyers cover closing costs. These are often available to first-time homebuyers or low-income buyers.

The Takeaway

With the average cost of closing on a home running 2% to 5% of the loan amount, closing costs can add thousands of dollars to your upfront expenses when you buy a home. While you can’t avoid them completely, you may be able to reduce your costs by shopping around for lenders and services, negotiating seller concessions, and exploring homebuyer assistance programs. By understanding how much closing costs on a home purchase are, you can plan your budget in advance and avoid surprises on closing day.

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

Do closing costs include the down payment?

Closing costs don’t typically include the down payment you make when purchasing a house. Closing costs are separate fees buyers must pay to take out a mortgage and finalize a real estate transaction, such as loan origination fees, appraisal fees, and title insurance fees.

Can closing costs be rolled into the mortgage?

You may have the option of rolling the cost of closing on a house into the mortgage so you can spread them out over time instead of paying them upfront. This approach can increase your total loan amount and long-term costs.

Are closing costs tax deductible?

Most closing costs are not tax deductible. However, you can deduct some costs, like mortgage points and upfront property taxes, for the year you purchased the home. You can also write off your mortgage interest and local property taxes if you itemize your return. Consult a tax advisor for intel on your specific circumstances.

What if I can’t afford closing costs?

If you can’t afford the cost of closing on a house, you might try negotiating for seller concessions or asking your lender to reduce or waive some fees. Shopping around with lenders or for some services could also help you reduce costs. Other options include rolling closing costs into your mortgage, applying for closing cost assistance grants, or taking more time to save before you buy a home.

Can I use gift funds for closing costs?

You can use gift funds for closing costs as long as you follow lender rules and provide all the required documentation. For instance, the gift funds must come from an approved donor, such as a relative, and be accompanied by a gift letter signed by the donor.

Photo credit: iStock/Drs Producoes

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

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

SOHL-Q126-016

Both a home inspection and a home appraisal often involve someone visiting a house that’s for sale and having a look around. But an appraisal determines the value of the house, while an inspection focuses on determining what condition the home is in. The two processes are often confused, especially by first-time homebuyers. But they are actually quite different, and it’s important to understand appraisal vs. inspection when you’re buying a property. There’s a good chance you will need both an appraisal and an inspection before your home purchase is complete.

What Is a Home Appraisal?

A home appraisal is an estimation of a property’s value. Getting an appraisal will be a significant step in your progress toward obtaining approval for a home loan and scheduling a closing. This is true even if you already have mortgage preapproval.

The appraiser is an objective, trained professional who will typically visit the home and factor several things into the estimate of its value: the home itself (number of bedrooms and living areas, outbuildings, special features such as a pool); the lot size; the condition of the home; the area where the home is located, and recent sale prices of comparable properties nearby.

Sometimes, particularly if you are refinancing your home loan or taking out a home equity loan, the appraiser won’t come to the home. Instead, they’ll rely on data analysis to render an estimated value, a process called a “desktop appraisal.”

What Is a Home Inspection?

A home inspection also involves a visit, by a different trained professional: the inspector. The inspector does a visual review of the home’s condition and mechanical systems. The inspector isn’t tasked with determining the value of the home, and typically doesn’t care how many bedrooms there are, for example, but will care whether the heating system is working properly in those bedrooms.

An inspector will look at the electrical and plumbing systems, the foundation, the roof and the basement. He or she is on the lookout for drainage issues, mold, cracks in the foundation, and other things that would signal a safety or health hazard or a potentially costly repair. The typical home inspection checklist is a long one. A full home inspection is more extensive than the four-point inspection that is a minimum requirement for some home insurance policies. There are also specialized inspections for things like well water quality, radon, swimming pools, septic systems, and fireplaces, for example.

You may have heard that some buyers waive the home inspection, meaning that they agree to skip it in order to curry favor with a seller in a hot housing market. Indeed, this has become more common in recent years, and by the fall of 2025, roughly one in five buyers waived the inspection, according to the National Association of Realtors. Skipping the inspection does speed the process of buying and get you to the closing faster. But as a general rule, it’s a good idea to take the time to have an inspection. It could reveal a costly and/or hazardous problem.

Recommended: The Basics of Homeownership

Key Differences Between Appraisal and Inspection

Below you’ll find a quick look at how the appraisal and inspection processes compare. One thing the two do have in common? The buyer will have to pay for both. An inspection will typically run you $300 to $425, while an appraisal could be $300 to $600.

When Do You Need an Appraisal vs an Inspection?

If you are buying a home with a mortgage, you should obtain both an inspection and an appraisal. The latter will be part of the process of qualifying for a mortgage. But in what order should you tackle the appraisal vs. inspection?

Try to have the inspection done first, right after your offer on the home is accepted. After all, if the inspection turns up something catastrophic, whether from a health and safety or cost standpoint (or all of the above), you may want to back out of the deal. In that case, an appraisal won’t be necessary. Assuming the inspector’s report leaves you wanting to move forward with the purchase, you’ll proceed immediately to contact a lender, explore mortgage rates, and get the lender’s instructions regarding the appraisal.

If you are buying a home in a cash transaction, you don’t technically need an appraisal. You may still want to request one to ensure that the price you are paying for the home is appropriate. However, you will probably still want an inspection in a cash transaction.

You may be wondering if you can still have an inspection if you are buying a house sold “as-is.” Indeed, it’s a good idea to do so. Even if the seller won’t reduce the price or make other accommodations for something that turns up during the inspection, it’s helpful to be aware of any problems so that you can weigh the pros and cons of backing out of the deal.

Recommended: Should I Lock My Mortgage Rate Today?

Common Misconceptions

If you’ve never been through the home-buying process, it might seem as if the home inspection vs. appraisal difference is insignificant. But most buyers will need both as they’re preparing to buy a house. The appraisal will be necessary to obtain a mortgage, and the inspection will help ensure that the buyer is taking out that loan with eyes wide open about what repairs the home may need.

Another common misconception is that an FHA appraisal also serves as the home inspection. If you’re seeking to purchase with an FHA loan, backed by the Federal Housing Administration, your appraisal will have specific requirements. FHA appraisers are required to examine the home for certain health and safety red flags. So it may seem as if the home is being “inspected” during the appraisal stage. But the list of what an FHA appraiser is looking for is fairly short, so it’s still a good idea to get an inspection as well.

How to Prepare for Each

If you’re the homebuyer, there is little you need to do to prepare for an appraisal vs. inspection. You can research home inspectors in the area in advance so that you have an inspector’s number at the ready when the time comes. Your lender will likely recommend a specific appraiser for you to use.

Your most important job is to ensure that these two appointments are scheduled in a timely manner and that someone provides access to the home when the appraiser or inspector visits. This is often a task for the real estate agents involved in the sale. If you are able to attend the inspection, it’s a good idea to do so: You can pick up tips about the property’s condition just by watching the inspector, and some inspectors will talk you through their process, which can be an education in itself.

A homeowner who is selling a property will need to provide access to their home. But it’s also a good idea for homeowners preparing for an appraisal to tidy the home and remove clutter (many owners do this before they begin showing the property). A homeowner might also prepare documentation of upgrades to show the appraiser, such as a sales receipt for a new roof or HVAC system. After all, it is in the owner’s best interest to ensure that the home is valued for whatever price buyer and seller have agreed upon.

Appraisal and Inspection in the Real Estate Contract

You will likely sign your purchase contract with the seller of the house before the inspection and appraisal are complete. And there are important contract clauses, called contingencies, that could protect you in the event that the inspection or appraisal go south. Both are fairly standard, although you will need to ensure they are included in your purchase contract. It’s also important to keep an eye on any time constraints in the contract to ensure, for example, that the inspection is done quickly so that you have time to review the results within the appropriate time frame.

An inspection contingency allows the buyer to exit the contract in the event that certain significant issues are discovered in the home inspection. An appraisal contingency allows an exit if the home fails to appraise for the agreed-upon price.

Let’s look at what happens after both the inspection and the appraisal:

Inspection Once you receive the inspector’s report, you’ll want to review it with your real estate agent and discuss whether the inspector has revealed any issues that might change the amount you want to pay for the house. These can become points of negotiation with the seller. You might request that the seller make certain repairs before sale, or you can negotiate for a credit toward the cost of certain repairs at the closing.

Whether or not the inspection provides you with any leverage will depend on the state of the local real estate market (in a hot market, you may have no room to negotiate). If the property was being sold “as-is,” you likely won’t have any wiggle room, either.

If the issues revealed by the inspection are so serious or costly that you change your mind about buying the property, you can exercise the inspection contingency, assuming one is in place. If you waived inspection or don’t have an inspection contingency, you can probably still walk away, but you may lose your earnest money.

Appraisal The appraisal contingency is very common and states that if the home does not appraise for the agreed-upon purchase price, the buyer can walk away from the deal, keeping their earnest money. If the home does in fact appraise below the purchase price, you may have trouble getting a mortgage. So your first step, assuming you still want to purchase the property, will likely be to try to negotiate with the seller. If the seller won’t budge on price, you may decide to use the appraisal contingency as your off-ramp.

The Takeaway

As you consider a home appraisal vs. home inspection, remember that it’s not a question of either/or. A homebuyer typically needs both on the journey to purchasing a property, and each serves a specific purpose. The inspection helps ensure you aren’t purchasing a money pit (at least not without a warning), and the appraisal helps ensure the property isn’t costing more than it is worth. A solid appraisal is an important step in your mortgage process.

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 an appraisal more important than an inspection?

There isn’t really a contest where home inspection vs. appraisal is concerned. Both processes are an important part of buying a home. The appraisal will be required if you need to obtain a mortgage (and even if you are paying cash, you might want an objective view of the home’s value). And the inspection is a way of protecting yourself from unexpected costs associated with repairs — not to mention a way to spot health and safety hazards in the property that might not be visible to the untrained eye.

Can a home inspection lower the appraisal?

The home inspector and appraiser will likely not cross paths, nor share reports. So the findings of an inspection won’t directly affect the appraisal. A major defect found on inspection could, however, be seen by an appraiser as well — examples include a cracked foundation, water damage, or a leaky roof.

What fails a home appraisal vs. home inspection?

Significant red flags that might be seen on an inspection or by an appraiser would be a damaged roof, water leaking, or a crack in the home’s foundation. Evidence of mold might be another obvious concern. In either case, it isn’t really a case of “pass or fail” so much as a trigger for a discussion between buyers and the seller or buyers and their prospective lender. The exception? If an appraiser for an FHA loan transaction finds that the home doesn’t meet FHA loan requirements for health and safety, that could scuttle the loan.

Do cash buyers still need an inspection?

Cash buyers aren’t required to have an inspection, but it’s still a good idea to have one. A trained inspector might notice things your average buyer would not, and if a home needs costly repairs, any buyer — even one capable of buying a house with cash — would probably want to know that before the closing instead of afterward.

How long do appraisals and inspections take?

A home inspection usually takes two to four hours for an average-size home. The inspector’s report is typically generated within 48 hours afterward. An appraiser’s walk-through of a home might take between one and three hours. It can take a week to 10 days for the appraisal to be generated, however. This is because after viewing the home, the appraiser also does research into sale prices of surrounding, comparable properties.

Photo credit: iStock/Prostock-Studio

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.

SOHL-Q126-013