Jun
08
2026
How Bid and Ask Price Work in Trading

Bid and Ask Price: Definition, Example, How It Works

By | Growing Wealth, invest, Investing | Comments Off on Bid and Ask Price: Definition, Example, How It Works

Bid and ask are commonly used investing terms, and they refer to the best potential price at which a security on the market could be bought or sold for at any given time. In other words, the best price that buyers and sellers would potentially be willing to buy (the “bid” price) or sell (the “ask” or offer price) the asset.

It’s important for traders to understand the bid vs. ask price of a security, as well as the difference between the two, which is known as the bid-ask spread. The market price is a historical price: the price of the last trade that occurred with the security. The bid and ask prices, on the other hand, show what buyers and sellers would be willing to trade the security for now.

Key Points

  • The bid price is the highest price a buyer is willing to pay for a security, reflecting market demand.
  • The ask price is the lowest price a seller is willing to accept, representing market supply.
  • The bid-ask spread, the difference between bid and ask prices, serves as a transaction cost and indicates market liquidity.
  • Narrow bid-ask spreads suggest high liquidity and trading volume, while wider spreads indicate lower liquidity.
  • Investors use the bid-ask spread to assess market sentiment and risk, with narrower spreads indicating lower risk.

What Is Bid and Ask?

If you’re new to online investing or investing in stocks, you’re probably wondering about bid and ask prices. Bid and ask prices show the current market supply and demand for the security. The bid price represents demand for a security; the ask price represents supply.[1]

When an asset has high liquidity — i.e. the market has a high trading volume not dominated by selling — the bid and ask prices will be fairly close. In other words the bid-ask spread, or the difference between the bid and ask prices, will be narrow in a highly liquid market. When there’s a greater gap between demand and supply, the spread will be wider.

That’s why the bid-ask spread is often considered a gauge of liquidity.

Bid Price

The bid price is the best potential price that retail investors would be willing to pay to buy a security.

So if a trader wants to sell a security, they would want to know how much they’d be able to sell it for. They can find out the best price they could get for the security by looking at the current bid price in the market, which would show the highest potential amount they could get for it.

Ask Price

Conversely, ask price is the lowest price investors are willing to sell a security for at any given time. If a trader wants to buy a security, they want to get the lowest possible price, so they look at the ask price to find out what that is.

Example of Bid and Ask Price

Let’s imagine that an investor wants to buy Stock X at the quoted price of $75, so they plan to buy 10 shares for $750. But they end up paying $752. That’s not an error, but rather because the ask price (the selling price) is $75.20.

Here’s the breakdown:

Quoted Price Ask Price Shares Purchased Total Paid
$75.00 $75.20 10 $752

The current price of $75 per share is the last traded price. But prices can change quickly, and in this case the ask price was 20 cents higher. The bid or buyer’s price is almost always lower than the ask price.

Investors can use limit orders to set specific parameters around the price at which they’re willing to buy or sell a security. This can give investors some control, so they’re not simply paying the current price, which may or may not be advantageous.

Evaluating the bid-ask spread can be part of an investor’s due diligence when trying to gauge rates of return for different securities.

What the Bid-Ask Spread Signals

How far apart the ask price and bid price are can give you a sense of how the market views a particular security’s worth.

If the bid price and ask price are fairly close together, that suggests that buyers and sellers are more or less in agreement on what a security is worth. On the other hand, if there’s a wider spread between the bid and ask price, that might signal that buyers and sellers don’t necessarily agree on a security’s value.

How Are Bid and Ask Prices Determined?

Essentially it’s the supply and demand of the market that sets the bid and ask prices. And many factors can play into supply vs. demand. Because of this, investors who are interested in active investing can use the difference in price between the bid and the ask of a security to gauge what the market thinks the security is worth.

Investors and market-makers can place buy or sell orders at a price they set. These orders will be fulfilled if someone is willing to sell or buy the security at that bid or ask price. Those order placements determine the bid and ask price.

What’s the Difference Between Bid and Ask Prices?

In any market, from stocks to real estate to lemonade stands, there is almost always a difference between what someone is willing to pay for an item versus what someone wants to sell it for.

A buyer may want to buy a house for $300,000, but the seller is selling it for $325,000. An investor may want to buy a stock for $100, but the sell or ask price is $105.

That difference in price is called the spread, and when the spread is narrow it’s a lot easier to close the sale. When the spread is wider, there is a bigger gap between what the buyer thinks an item is worth vs. what the seller thinks it’s worth.

What Does It Mean When Bid and Ask Are Close?

A narrow spread, i.e. when the bid and ask price are close, means traders will be able to buy and sell the security at roughly the same price. This generally means there is a high trading volume for the security, with a lot of people willing to buy and sell because of high demand.

If demand increases for the security, the bid and ask prices will move higher, and vice versa. If there is a surge in demand, but not enough supply, that might drive the bid price up. Conversely, if supply outpaces demand, the bid price of a security could fall In either case, the spread would likely get wider when the bid or the ask prices outweighs the other.

The Bid-Ask Spread

The bid-ask spread is the gap between the two prices: the bid or buyer’s price and the ask or offer price. There are different factors that can affect a stock’s spread, including:

  • Liquidity. A measure of how easily a stock or security can be bought and sold or converted to cash. The more liquid an investment is, the closer the bid and ask price may be, since the market is in agreement about what the security is worth.
  • Trading volume. This means how many shares of a stock or security are traded on a given day. As with liquidity, the more trading volume a security has, the closer together the bid and ask price are likely to be.
  • Volatility. A way of gauging how rapidly a stock’s price moves up or down. When there are wider swings in a stock’s price, i.e. more volatility, the bid-ask price spread can also be wider as market makers attempt to profit from the price changes.

Who Benefits From the Bid-Ask Spread?

The difference in price between the bid and the ask is where brokers and market makers make their profit.

But traders can also benefit from the bid-ask spread, if they use limit orders to get the best possible price on a desired trade, as opposed to using market orders.

How the Bid-Ask Spread Is Used

When you understand how bid-ask spread works, you can use that to invest strategically and manage the potential for risk. This means different things whether you are planning to buy, sell, or hold a stock.

If you’re selling stocks, that means getting the best bid price; when you’re buying, it means paying the best ask price. Essentially, the goal is the same as with any other investing strategy: to buy low and sell high.

Bid-Ask Spread Impact on Trading Profits

Naturally, the bid-ask spread impacts trading profits, and in fact can act almost as a hidden cost.

For example, if an investor places a market order on a stock with a bid price of $90 and an ask price of $91, they’ll get the stock at $91 per share. If the price of the stock rises 5%, so the bid price is now $94.50 and the ask price is $95.55 and the bid-ask spread is $1.05.

If the investor decides to sell the shares they bought at $91 through a market order, they will receive $94.50 per share. So their profit is $3.50 per share, even though the stock price rose by $4.55. The $1.05 gap in profit reflects the $1.05 bid-ask spread on this stock.

Wide vs Narrow Bid-Ask Spread

What is the difference between wide and narrow bid-ask spreads, and what is the significance of each? Here’s a rundown.

Narrow Bid-Ask Spreads

The bid-ask spread, often just called the spread, is tighter when a security has more liquidity, i.e. there’s higher trading volume for that stock. When you think of big companies, industry leaders, constituents of different indexes like the Dow Jones or the S&P 500, those companies may have higher volume and narrower spreads.

Wider Bid-Ask Spreads

Conversely, smaller companies or those that aren’t in demand tend to have wider spreads, reflecting a lower level of market interest. These trades tend to be more expensive, as investors must contend with lower liquidity.

Impact of the Bid-Ask Spread

The narrower the bid-ask spread, the more favorable it is for traders. If an investor wants to buy 100 shares of Stock A at $60, but shares are being offered at $60.25, that 25 cent spread may not seem like much. It would add up to $25 (100 x 0.25). But if that trader wanted to buy 500 shares or more, the cost of the spread is about $125.

The Takeaway

Bid and ask prices help traders know exactly how much they may buy and sell securities for. The bid price is the highest price a buyer is willing to pay for a security. The ask price is the lowest price a seller is willing to accept. The difference between them is the bid-ask spread, or “spread.” The spread ends up being a transaction cost, as market makers pocket the cost of the spread.

Since the bid price and the ask price are essentially a function of supply and demand in the market, investors can consider the bid-ask spread as a gauge of risk. The narrower the spread, the more aligned buyers and sellers are on the value of a certain security, and thus there’s higher volume and more liquidity — and lower risk to the investor that the stock or security might lose value (although it could, as there are no guarantees).

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

FAQ

Do I buy a stock at the bid or ask price?

You buy a stock at the ask price, that’s the lowest price the seller is willing to offer.

Is the last price the same as the market price?

The last price is the last traded price for a security, or the last price at which it closed. The market price is the best current price.

Is it better if your bid is higher than the asking price?

The bid price is typically lower than the seller’s price or ask price, so it would be unusual if the bid was higher than the ask. If a bid price is higher than the ask, a trade would occur, but it would put the buyer at risk of a potential loss.

About the author

Laurel Tincher

Laurel Tincher

Laurel Tincher is an entrepreneur and investor with a passion for climate solutions, emerging industries, and storytelling. With experience spanning climate tech, blockchain, event production, and other industries, she is known for her creative and forward-thinking approach to problem-solving and strategic investments. Read full bio.

Article Sources
  1. Investor.gov. Bid Price/Ask Price.

Photo credit: iStock/eclipse_images

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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Jun
08
2026
Getting a Mortgage Without a Regular Income

Getting a Mortgage Without a Regular Income

By | Home Ownership, mortgage | Comments Off on Getting a Mortgage Without a Regular Income

Qualifying for a home loan can be especially challenging if you don’t have a regular paycheck.

Even if you have a solid credit score, money in the bank, and low or no debt, you can still expect mortgage lenders to check on your income to be sure you can afford your loan payments. And you may face stricter eligibility requirements if you’re a seasonal employee or a freelance or gig worker.

Having an inconsistent income isn’t an insurmountable hurdle, but there are some basic guidelines homebuyers should be aware of as they prepare to apply for a mortgage.

Here, you’ll learn:

•   Can you get a mortgage without a job?

•   How do you apply for a mortgage if you have seasonal income?

•   What sort of income documentation do you need?

•   How can you improve your chances of mortgage approval?

Key Points

•   Two years of employment and income history are typically required for mortgage approval.

•   Part-time income may be easier to qualify with compared to seasonal income.

•   Self-employed individuals need to provide two years of 1099s and other financial documents.

•   A higher credit score and lower debt-to-income ratio improve mortgage approval chances.

•   Additional assets and income sources can help in qualifying for a mortgage.

Is Employment Required to Qualify for a Mortgage?

Usually, you’re required to show two years’ worth of employment and income on a mortgage application. Lenders use the information on a loan application to evaluate a borrower’s risk based on a number of factors, including their credit history, assets, how much debt they can comfortably handle, and the amount and reliability of their income.

If you can prove to your lender that you can make your monthly house payment even though you don’t have a traditional employment situation, you still may be able to qualify for a mortgage. In fact, you may be able to get a mortgage without a job at all if you can prove that you have adequate financial resources.

For example, a retired couple may be eligible for a mortgage based on their Social Security and pension payments alone. And if that isn’t enough for a mortgage, income from other sources may push things ahead. For instance, they may be able to qualify if they have a retirement account they can tap, rental property income, or investments that pay dividends or interest. A divorced individual may be able to use alimony or child support payments to qualify for a home loan. And certain types of long-term disability income also may be accepted.

Applying for a Mortgage With Seasonal Income

If you’re earning an income but some or all of your work is seasonal, you should be prepared to provide extra documentation that proves your income is dependable.

For example, seasonal employees who work for the same company (or in the same field) every year should be ready to furnish two years’ worth of W-2 forms and pay stubs or a completed Request for Verification of Employment form (Form 1005). Your employer (or employers) also may have to confirm to your lender that you’re scheduled to work again the next season, also known as a verbal verification of employment.

Remember, the lender wants to be as certain as possible that you can manage your home mortgage loan. If you’ve been working at the seasonal job for less than two years (or if you can’t prove the work will continue), you may not be able to get past the underwriting process. In other words, your mortgage loan wouldn’t be approved.

In that case, you may have to wait until you’ve put in more time on the seasonal job, or you could consider applying with a co-borrower or cosigner to improve your chances of getting a loan.

Part-Time Income vs Seasonal Income

Some points to note about part-time vs. seasonal income:

•   Income documentation requirements are generally less demanding for part-time workers than for seasonal workers.

•   Part-time workers still must provide paperwork that supports the income information on their mortgage application. But if a lender can see that a borrower has year-round employment and a regular paycheck — even if they work fewer than 40 hours a week — that consistency can help with qualifying for a mortgage.

•   Even if you work full-time or overtime in a seasonal job (as a store cashier during the holidays, for example, or at a theme park during the summer), you may have a harder time proving that your income is stable.

Recommended: Mortgage Calculator With Taxes and Insurance

Proof of Income Documentation

Proving income stability can also be a challenge for freelancers and gig workers who are trying to qualify for a mortgage.

Instead of pulling out pay stubs and W-2s to prove their income, as employees with more traditional jobs do, self-employed workers have to round up their 1099s and other documentation from their business, such as bank statements, tax returns, profit and loss statements, etc. They need to share those as proof of income for a mortgage, along with the required information about their personal finances.

Documentation requirements can vary depending on the lender or the type of loan, but freelance and contract workers typically need to provide proof of at least two years of self-employment income to qualify for a home mortgage loan. And if that income is significantly different from one year to the next or is going down instead of up, the lender may have questions about the borrower’s ability to keep up with mortgage payments over the long term.

Something else to keep in mind:

•   Though it may be tempting to take advantage of every tax break for your freelance business, those deductions might affect how a mortgage lender looks at your bottom line.

•   If you’ve accepted some payments under the table to avoid taxes, you won’t be able to count that money as income on your loan application.

Gathering Your Income Documentation

Not having the proper income documentation can slow down the mortgage loan process, so it can be a good idea to gather up your paperwork well before you actually sit down to apply.

If you’re a first-time homebuyer or you aren’t clear on what you might need as a seasonal or self-employed worker, a good lender will walk you through the list, but here are a few things you’ll likely need:

•   Tax returns from the past two years, including personal and business returns if you’re self-employed.

•   Two years’ worth of W-2s or year-end pay stubs or 1099s if you’re self-employed.

•   Bank statements, including personal and business bank statements if you’re self-employed.

•   Verification of your employment. If you’re a seasonal worker, your employer would state that you’re expected to be hired again. If you’re self-employed, you might provide a letter from a CPA verifying that you’ve been in business for at least two years. You also could include a client list with contact information or your company’s website.

•   Statements verifying additional assets.

•   Proof of other income sources, such as alimony and child support, disability income, Social Security, etc.

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

Questions? Call (888)-541-0398.

Improve Your Chances of Mortgage Approval

A stable income can be key to getting a mortgage, but lenders will also consider several other financial factors when evaluating an application. If you want to improve your chances of qualifying for a home loan — and get the lowest interest rate possible — here are a few things to focus on.

Credit Score

Generally, borrowers need a FICO® credit score of at least 620 to qualify for a fixed-rate conventional mortgage. But a higher score (670-739 is considered “good”) could make you more appealing to lenders and help you get a lower interest rate. Before you apply for a loan, it’s a good idea to check on your credit score and make sure your credit reports are accurate and up to date.

Down Payment

Coming up with a larger down payment could boost your chances of being approved for a loan. (The tools in SoFi’s Home Loan Help Center can help you figure out the amount you can afford.)

Debt-to-Income Ratio (DTI)

In general, mortgage lenders like to see a DTI ratio of no more than 36%. To figure out your DTI, add up your monthly bills, such as housing costs and any monthly loan or debt payments, and divide that total by your monthly gross (pretax) income to get your DTI percentage. If your DTI is running high, lowering or eliminating some debt before applying for a mortgage can make you look like less of a risk.

Cash Reserve

Your lender also may want you to see that you have an emergency fund or an asset you can liquidate easily, just in case your income falls short of expectations.

Recommended: Mortgage Preapproval Need to Knows

The Takeaway

If you don’t have a traditional job with a regular paycheck, you may have to jump through a few extra hoops to qualify for a mortgage. But if you can show your lender that you have reliable and consistent income — and a solid credit score and low debt-to-income ratio — you may be able to qualify for a home loan even without a typical 9-to-5 job.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Can I qualify for a mortgage using seasonal income?

You can qualify for a mortgage using a seasonal income if you can prove you’ve worked in a seasonal job for at least two years. The money you’ve earned, once documented as proof of income for a mortgage, may help you qualify.

Can I include tips as part of my income when qualifying for a mortgage?

If you keep good records and claim the tips you receive from customers on your income tax return, you may be able to include that money as income on your mortgage application. But if you pocket the money and don’t report it on your taxes, you can’t expect your lender to count it.

Are there any exceptions to the two-year employment requirement when applying for a mortgage as a seasonal or freelance worker?

If you change employers but remain in the same line of work from one year to the next, you may be able to get around a lender’s two-year requirement. Let’s say, for example, you’re a swimming coach. If you move from one county to another but still teach swimming at a community pool, the fact that you changed employers may not affect your income eligibility.

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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.

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

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Jun
08
2026

Pharmacist Loan Forgiveness Programs: What They Are and How to Qualify

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | Comments Off on Pharmacist Loan Forgiveness Programs: What They Are and How to Qualify

Pharmacists graduate from college with a well-earned degree, but also with a lot of student loan debt. According to the latest data from the American Association of Colleges of Pharmacy, the average student loan debt for pharmacy school graduates is $178,642.

Fortunately, there are a variety of loan forgiveness programs for pharmacists. Depending on where you work and the type of service commitment you’re able to make, you could qualify for partial or even full pharmacist loan forgiveness.

Read on to learn about the federal student loan forgiveness programs for pharmacists, plus other ways to help repay your loans if you don’t qualify for pharmacist student loan forgiveness.

Key Points

•   The average student loan debt for pharmacy school graduates is $178,642.

•   Pharmacists may qualify for a loan forgiveness program or a loan repayment program to help with their loan debt in exchange for working in designated areas for a certain number of years.

•   The State Loan Repayment Program provides up to $37,500 annually in loan repayment for qualifying pharmacists who serve in shortage areas.

•   The National Health Service Corps offers up to $100,000 in loan repayment for eligible pharmacists treating substance use or opioid use disorders in underserved areas.

•   Pharmacists may also consider income-driven repayment plans or student loan refinancing to help manage their student loan debt.

Can Pharmacists Get Loan Forgiveness?

It may sound too good to be true, but there is such a thing as pharmacist loan forgiveness. Many of the loan forgiveness programs for pharmacists are available at the federal level, while others are offered by states. And while some programs pertain only to federal student loans, others also cover private student loans.

Recommended: Student Loan Refinancing Guide

6 Student Loan Forgiveness Programs for Pharmacists

Here are some of the top federal student loan forgiveness programs for pharmacists, along with their eligibility requirements.

Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on federal Direct loans, which include Direct Subsidized loans, Direct Unsubsidized loans, Direct PLUS loans (but not Parent PLUS loans), and Direct Consolidation loans.

Qualifying borrowers can get PSLF after making the equivalent of 120 qualifying monthly payments under an income-driven repayment (IDR) plan while working full-time in public service for an eligible employer such as a federal, state, local, tribal, or military government organization or a qualifying nonprofit.

If you are a pharmacist working for one of these organizations and have eligible loans, you may qualify for PSLF. To apply, sign up for an IDR plan at StudentAid.gov if you aren’t already enrolled in one. Then certify your employment — there is a form your employer needs to fill out — and submit it electronically. The PSLF Help Tool can assist you through the process.

Next, you’ll need to make 120 qualifying payments toward your student debt under the IDR plan. Once you do that, you can submit your application for forgiveness.

State Loan Repayment Program (SLRP)

Through the State Loan Repayment Program (SLRP), the Health Resources and Services Administration provides grants each year to states for loan repayment programs for primary care providers, including pharmacists, who work in shortage areas. The loan repayment is up to $37,500 per year and covers qualifying federal and private student loans.

To be eligible, an individual must be a U.S. citizen or U.S. national, have a health license or certificate in the state in which they are working, and be currently employed full-time at an eligible site. Check with your state for more information and detailed requirements.

NHSC Loan Repayment Programs

The National Health Service Corps (NHSC) has a variety of different loan repayment programs for health care providers who work at specified health sites, typically in underserved communities, for a certain period of time.

For pharmacists, the programs available include:

•   The NHSC Substance Use Disorder Workforce Loan Repayment Program, which provides up to $75,000 in loan repayment for medical professionals, including pharmacists, who treat substance use or opioid use disorders and work full-time for three years at an NHSC-approved treatment facility in an underserved community

•   The NHSC Rural Community Loan Repayment Program, which offers up to $100,000 in loan repayment for medical professionals who treat substance use or opioid use disorders in a rural, underserved community full-time for three years

In addition to the requirements mentioned above, to be eligible for either program, applicants must be U.S. citizens or U.S. nationals and have the appropriate professional health license or certificate.

National Institutes of Health Loan Repayment Programs

The National Institutes of Health (NIH) loan repayment programs are designed to recruit and retain highly qualified health professionals in biomedical and biobehavioral research careers. Because of the high cost of education, these individuals often leave research to go into private industry or practice.

The NIH loan repayment programs may help health professionals, including pharmacists, by repaying up to $50,000 in qualified education debt in exchange for either extramural (not employed by the NIH) or intramural (employed by the NIH) status.

To be eligible, you must be a U.S. citizen, U.S. national, or permanent resident with a qualifying degree and have total qualified educational debt equal to or in excess of 20% of your institutional base salary. You must also meet qualified research requirements and research funding requirements, depending on whether you have an extramural or intramural position.

Indian Health Service Loan Repayment Program

The Indian Health Service (IHS) Loan Repayment Program can help qualifying individuals, including pharmacists, repay their health profession education loans for up to $50,000 in exchange for a two-year service commitment in health facilities that serve American Indian and Alaska Native communities.

You may qualify if you:

•   Are a U.S. citizen

•   Are registered for Selective Service (if you are male)

•   Have a health profession degree or are in your final year

•   Have a pharmacy license

•   Commit to practice at an Indian health facility

You must also begin service on or before September 30 for two continuous years of practice. You can extend your contract annually until your student debt has been paid off.

Health Resources and Services Administration Faculty Loan Repayment Program

Individuals who come from a disadvantaged background, have an eligible health profession degree or certificate, including a pharmacy degree or certificate, and are a faculty member at an approved health professions school with a contract for two years or more working full- or part-time may qualify for loan repayment through the Health Resources and Services Administration faculty loan program.

If you are eligible, you could receive up to $40,000 in loan repayment assistance for qualifying educational loans, plus funding to offset the tax burden of the award.

What to Do If You Don’t Qualify for Pharmacist Student Loan Forgiveness

If you don’t qualify for pharmacist student loan forgiveness, there are still ways to make repaying your student loans easier. Below are two options to consider.

Income-Driven Repayment

Income-driven repayment (IDR) plans base your monthly student loan payment amount on your income and family size, which can help lower your payments. The remaining balance will be forgiven by the end of your repayment period, which is either 20 or 25 years, depending on the plan.

The federal government offers the following types of income-driven repayment plans:

•   Income-Based Repayment (IBR) plan: Under the IBR plan, a borrower’s monthly payments are generally equal to 15% of their discretionary income.

•   Saving on a Valuable Education (SAVE) plan: Under SAVE, borrowers with a $12,000 principal balance or less and who made 10 years of monthly payments would receive loan forgiveness. However, the SAVE plan has been blocked in court, and it has been terminated as of 2026 due to a federal court ruling. Borrowers who were already enrolled in SAVE were placed in forbearance, but interest started accruing on their loans again in August 2025. The Department of Education has announced that loan servicers will begin notifying SAVE borrowers in July 2026 that they have 90 days to enroll in a different repayment plan or else they will be automatically reassigned.

•   Pay As You Earn (PAYE) repayment plan: With PAYE, payments are generally equal to 10% of your discretionary income. While the PAYE Plan was closed to new enrollment in July 2024, it was reopened to new enrollment in mid-December 2024. It also offers credit to eligible borrowers enrolled in the SAVE plan toward Public Service Loan Forgiveness (PSLF) and IDR plans once they get out of forbearance and enroll in PAYE. However, PAYE will be sunsetted by July 2028.

•   Income-Contingent Repayment (ICR) plan: The ICR plan offers monthly payments that are either the lesser of what you would pay on a repayment plan with fixed monthly payments over the course of 12 years, adjusted based on your income, or 20% of your discretionary income. ICR was also closed in July 2024 but was reopened to new enrollment in December 2024. It will be fully eliminated by July 2028.

You can apply for one of these income-driven repayment plans online through your loan servicer or by submitting a paper form. You can select the IDR plan you’d like or ask your servicer to choose a plan for you based on the lowest monthly payment possible.

Refinancing

If an IDR plan isn’t right for you, you may want to explore refinancing student loans to save money. When you refinance student loans, you replace your old loans with one new loan from a private lender. Ideally, your new loan would have a lower interest rate or a more favorable loan term.

With student loan refinancing, you can refinance federal student loans, private student loans, or both. However, be aware that when you refinance federal loans, they become ineligible for federal benefits, such as income-based repayment plans and forgiveness.

A student loan refinancing calculator can help you determine if refinancing makes sense financially for your situation.

The Takeaway

Pharmacists who are struggling to repay their federal student loans may be eligible for any one of a number of different student loan forgiveness programs or loan repayment programs to help them tackle their debt.

And those aren’t the only options for potential relief: Borrowers who don’t qualify for these programs can consider income-driven repayment plans or student loan refinancing to help manage their student loan payments.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How can I get 100% federal student loan forgiveness?

The Public Service Loan Forgiveness (PSLF) program, income-driven repayment (IDR) plans, and a total and permanent disability (TPD) discharge could eliminate the remaining balance on your federal student loans if you qualify. You may also receive a full discharge if your school made a substantial misrepresentation or omission, if a breach of contract has occurred, or if your school violated the law.

How long does it take to pay off a student loan?

It depends on your repayment plan and loan term. For a standard repayment plan, it can take 10 years, or 30 years for consolidation loans. An extended repayment plan can take up to 25 years.

What if I never pay off my student loans?

Missing a payment for your loan could result in late fees, meaning you’ll have to pay even more overall. Repeatedly missing payments may also damage your credit score, which will make it more difficult to secure a loan and may lead to wage garnishment.

About the author

Melissa Brock

Melissa Brock

Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Read full bio.

Photo credit: iStock/PeopleImages

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.


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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Jun
08
2026

What to Do if Your College Closes: a Guide for Student Loan Borrowers

By | Going to College, Student Loans, student_loan | Comments Off on What to Do if Your College Closes: a Guide for Student Loan Borrowers

When you enroll in college, the last thing you expect is for your college to close. College closures are a real possibility, however. According to BestColleges.com, at least 89 public and nonprofit colleges have closed or merged since March 2020, with private nonprofit school closures impacting nearly 53,400 students.

If your college closes, there are steps you can take to transfer to another school or apply for a student loan discharge. Here’s what to do and how to handle your student loans if your college closes.

Key Points

•   At least 89 public and nonprofit colleges have closed or merged since March 2020.

•   Gather academic records immediately after a college closure to facilitate transfer to another institution.

•   Contact federal loan servicers to understand the options, including potential loan discharge and repayment plans.

•   Evaluate eligibility for federal student loan discharge through programs such as closed school discharge and borrower defense to repayment.

•   With private student loans, contact lenders to see what assistance they may offer.

Understanding the Impact of College Closure

A college closure can affect your educational progress and your student loans. Here’s what to expect.

Immediate Effects on Your Education

If your college closes, you’ll no longer be making progress toward your degree. Classes may be canceled mid-semester, and you won’t earn the credits you were working toward. If you’re interested in continuing your education, you’ll have to see if your college has a teach-out agreement with another school, which is a contract that allows students to finish their program of study with the other school, or if you can transfer your credits to another institution.

Potential Consequences for Your Student Loans

If your college closes, do you still have to pay off your student loans? That depends.

You may be eligible for federal student loan discharge through the closed school discharge or borrower defense to repayment programs. However, if you accept a teach-out plan to complete your degree at another school, you won’t be able to discharge your student loan debt.

There’s also no guarantee that you’ll qualify for a closed school discharge or borrower defense, and the process may take a while. While you’re waiting, you’ll have to start paying back your student loans once the six-month grace period is over.

If you have private student loans, there is no universal closed school discharge for these loans. Contact your lender to see how they might be able to help you.

Steps to Take Immediately After College Closure

Having your school close unexpectedly can feel like a nightmare, but there are steps you can take to get back on track.

•   Gather your school records: Request your school records as soon as possible, especially if you’d like to transfer to another school. These include your transcript, a record of your credits and degree progress, financial aid information, and any other relevant communications you’ve received from your school.

•   Find out about teach-out options: Some colleges offer a teach-out option, which lets you immediately transfer to a different school and pick up where you left off. Make sure to research the new school before you accept this agreement, however, to ensure it has a good reputation and fits your academic and financial needs. Be wary of unaccredited programs, as they may not offer a high-quality education or strong student outcomes.

•   Research credit transfers to other schools: You can also explore alternative colleges for finishing up your degree. Consider prioritizing accredited programs, since accreditation suggests that a college meets high standards for quality and is eligible for federal financial aid. Find out if your credits will transfer to the new college so that you don’t have to start from scratch.

•   Contact your loan servicers: If you took out student loans, reach out to your loan servicers to notify them about the school closure and find out about next steps. You might find that your loans will enter repayment in six months unless you enroll at least half-time in another school.

•   Explore student loan discharge options: You may be eligible for a discharge of your federal student loans if your school closes and you don’t accept a teach-out transfer. As previously mentioned, private student loans don’t have as many options, but it’s worth contacting your lender to find out.

Recommended: Federal Student Loan Interest Rates Explained

Student Loan Discharge Options

Borrowers who experience a college closure may be eligible to have their federal student loans discharged through two programs:

•   Closed school discharge: With this program, you may be able to have your federal student loans discharged if you were enrolled when (or withdrew shortly before) your college closed. New rules to streamline the discharge program were scheduled to go into effect in mid-2023, but due to legal challenges, the Department of Education will process closed school discharge applications under pre-2023 rules.

•   Borrower defense to repayment: This program offers federal student loan discharge to borrowers who were misled or defrauded by their schools. Qualifying borrowers could also get reimbursed for amounts they already paid toward the loan and request a removal of negative marks from their credit report. Similar to the closed school discharge program, however, the latest borrower defense rules have been blocked by a court injunction. Borrowers can still apply online for borrower defense discharge, but the Department of Education will use old rules to determine eligibility.

Eligibility Criteria for Loan Discharge

To be eligible for the closed school discharge program, you must meet the following requirements:

•   Your school closed while you were enrolled, on an approved leave of absence, or had withdrawn less than 180 days prior.

•   You will not be accepting a teach-out agreement or transferring your credits to a new school.

•   You did not already graduate or complete your program.

For borrower defense to repayment, you might qualify if you can prove one of the following about your college:

•   Substantial misrepresentation: Your school misled you about its educational services, costs, or another important factor.

•   Substantial omission of fact: Your school concealed important information that would have impacted your decision to enroll.

•   Breach of contract: Your school did not do what it promised to do in its agreement with you.

•   Aggressive and deceptive recruitment: The college pressured you to act immediately on an enrollment or student loan decision or engaged in other aggressive recruitment practices.

•   Judgment: A court ruled that your school violated the law.

•   Prior secretarial action: The Department of Education revoked a participation agreement or financial aid recertification with your school.

Application Process for Loan Discharge

If you qualify for closed school discharge, your loan holder should send you an application that you can submit to your loan servicer. Alternatively, you can contact your servicer directly about how to apply.

If your grace period ends and your application is still under review, it’s a good idea to start making student loan payments. Otherwise, you risk damaging your credit and racking up late fees.

For the borrower defense program, you can apply online on the Federal Student Aid (FSA) website. The application takes about three hours to complete.

You’ll need to sign in with your FSA ID and provide your school name, program of study, and enrollment dates. You’ll also have to give documentation to support your application for borrower defense.

But be aware that the process to get a student loan discharge from borrower defense is lengthy. According to the Department of Education, it can take up to three years to process and make a decision on your application.

Recommended: Student Debt Analysis by Major

Alternatives to Loan Discharge

Student loan discharge is not guaranteed, especially with the various legal challenges that have cropped up in recent years. Some alternatives to consider include:

•   Transferring to another school: You could accept a teach-out plan or transfer credits to another school of your choice to complete your program and earn your degree.

•   Paying back your student loans: Explore your options for repayment plans, such as the standard 10-year plan and income-driven repayment, along with these strategies for paying back federal student loans.

•   Pursuing loan forgiveness or repayment assistance: You may be eligible for student loan forgiveness or repayment assistance, depending on your profession and where you work.

•   Refinancing student loans: Through student loan refinancing, you might qualify for a better interest rate or more favorable loan terms than you have now. Avoid refinancing federal student loans if you’re pursuing closed school discharge or another federal program, however, as doing so would make them ineligible for federal loan cancellation programs and other benefits.

Long-Term Considerations

Having your school close its doors is an extremely stressful situation, and it’s important to act quickly to obtain your transcript and other academic records. Once you’ve gotten your documents in order, though, take a deep breath and consider what comes next.

You can finish up your degree at another college and continue working toward your academic and professional goals. Rather than accepting a teach-out plan right away, do your own research on colleges and credit transfers to find the best place for you.

If you’d rather press pause on your education or your credits won’t transfer, explore your options for federal student loan discharge. You’ll need to pay your student loans once your grace period ends, however, or you could end up with damage to your credit score. This student loan payment calculator can help you estimate your monthly and long-term costs.

The Takeaway

If your college closes while you’re enrolled, you may not have to pay your federal student loans thanks to the closed school discharge program. Alternatively, you can consider transferring your credits to a new school to finish up your education there.

If neither of these options is right for you, you can pursue loan forgiveness, repay your loans, or opt for student loan refinancing if you can qualify for favorable terms. Review all the alternatives to determine the best path forward for you, your education, and your financial situation.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can I transfer my credits to another institution if my college closes?

You may be able to transfer your credits to another institution if your college closes, but it depends on the requirements of the school and program. For instance, some colleges may only accept credits from accredited colleges. Check with your target school to see if the credits you’ve earned so far would be transferable.

Am I eligible for student loan discharge if my school closes?

You may be eligible for federal student loan discharge through the closed school discharge program if your school closes. To qualify for this program, your school must have closed while you were enrolled, on an approved leave of absence, or within 180 days after you withdrew.

How do I obtain my academic records from a closed college?

If your college closes, contact school administrators as soon as possible to obtain your academic records. If this isn’t possible, reach out to your state’s agency that oversees higher education for help locating your records. Some schools allow you to order transcripts through the National Student Clearinghouse, so that might be another option for you.

Photo credit: iStock/Unaihuiziphotography

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Not all repayment options may be available for all loans. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is current as of 3/2/2026 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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.


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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Jun
08
2026
8 Tips for Buying a House When You Have Bad Credit

8 Tips for Buying a House When You Have Bad Credit

By | Home Ownership, mortgage | Comments Off on 8 Tips for Buying a House When You Have Bad Credit

Buying a house when you have bad credit can be challenging, but it’s doable with planning and preparation. Subprime borrowers (homebuyers with low credit scores) may be eligible for both federally backed loans and conventional mortgages.

If your credit score is less than stellar but you’re ready to buy a home, it’s important to pause and take stock of your finances. This guide will review the strategies and steps involved in securing a mortgage and buying a house when you have bad credit.

Key Points

•   If you know your credit score is lower than what mortgage lenders look for, you can still qualify with preparation and a good strategy.

•   Check your credit reports to understand your financial standing and identify errors that may be bringing down your score.

•   Prepare for higher interest rates, which may lead to larger monthly payments and more interest over time.

•   Pay down your existing debts to lower your debt-to-income (DTI) ratio and improve your chances of qualifying for a loan.

•   Explore loan options for bad credit, such as FHA, VA, or USDA loans that offer accessibility with lower down payments and more.

How to Buy a House When You Have Bad Credit

Lenders will consider a number of factors — not just your credit score — when determining if you’ll be approved for a mortgage. Your debt-to-income ratio and proof of income represent a couple of things you need to buy a house.

The best plan to buy a house when you have a so-called bad credit score can vary on a case-by-case basis. These eight tips will help you assess your financial situation and figure out how to buy a house despite your credit concerns.

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

Questions? Call (888)-541-0398.

Recommended: Understanding Mortgage Basics

1. Get Your Credit Reports

As the saying goes, knowledge is power. Assessing your credit is a valuable first step to understanding where you stand regarding qualifying for a mortgage.

A credit report can provide a detailed overview of your creditworthiness, including your total debt, payment history, and the ages of your credit accounts. You can request free credit reports from this site or once a year directly from each of the three major credit reporting companies: Equifax®, Experian®, and TransUnion®.

Credit scoring is undergoing changes due to new Federal Housing Finance Agency (FHFA) regulations revising credit score requirements on mortgage loans. While a new FICO® system (FICO 10T) is on the way, lenders can currently utilize a model called VantageScore 4.0 or stick with Classic FICO. You may want to stay apprised of your scores under each of these models.

Upon receipt of your credit reports, it’s important to review any derogatory marks (e.g., late payments) and check for errors. Addressing mistakes could give a quick boost to your credit score.

Many lenders use the FICO score model to calculate credit scores, from 300 to 850, and categorize them like this.

Exceptional 800-850
Very Good 740-799
Good 670-739
Fair 580-669
Poor 300-579

It’s not uncommon for your FICO score to differ slightly among the three credit reporting companies, so mortgage lenders take the average or use the middle score.

According to first-quarter 2026 data from the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, nearly two-thirds of newly originated mortgages went to borrowers with credit scores higher than 760. Only borrowers with credit scores at this level or higher generally receive the most competitive mortgage rates.

According to VantageScore’s Credit Gauge in December 2025, the percentage of people in their subprime-borrower category increased from 18.5% to 19%. VantageScore is a credit-scoring system collaboratively developed by credit bureaus Equifax, Experian, and TransUnion.

2. Plan to Pay a Higher Mortgage Interest Rate

Lenders may consider borrowers with poor credit more likely to default on a mortgage loan. To account for this risk, borrowers with lower credit scores usually face higher interest rates.

A modest increase in the mortgage interest rate can bump up your monthly payment and translate to much more interest paid over the life of the loan. For example, a borrower with a 30-year fixed-rate loan of $250,000 at 8.00% interest would pay $61,621 more over those three decades than a borrower with a 7.00% interest rate.

Paying a higher interest rate may be an unavoidable part of buying a house when your credit is not optimal. One option is to refinance your mortgage later to secure a lower rate and save on interest, especially if you make timely payments and improve your credit over time.

3. Pay Your Other Debts

How much debt you have and your ability to pay it are other factors lenders weigh when approving mortgage loans. This is captured through your debt-to-income ratio. Your DTI ratio is calculated by dividing your monthly debt obligations by your gross monthly income and then multiplying by 100.

Higher DTI ratios tend to mean that borrowers have less ability to make monthly payments. If you want to get approved for a mortgage, a good DTI ratio is under 36%, but it’s still possible to qualify with a higher ratio. You may just pay more interest and need to fulfill other criteria. DTI limits vary by both lender and mortgage type.

Paying off other debts, such as credit cards and student loans, can improve your DTI ratio and signal to lenders that you can afford mortgage payments. Reducing your debt can also boost your credit score by lowering your credit utilization ratio, which is a measure of the amount of available revolving credit you use.

4. Draw Up a Budget

Buying a home is exciting, and it’s easy to lose sight of the true cost of homeownership when shopping for your dream home. But this puts you at risk of becoming “house poor,” meaning you have to spend a disproportionately high share of your monthly income on housing.

Although buying a home is a way to build wealth, having little left over from your paycheck makes it hard to save for retirement and realize other financial goals.

The dreaded B-word, budgeting, is a useful way to ensure that you can afford a home before you walk away with the keys.

An effective budget accounts for both the upfront costs of buying a home (down payment and closing costs) and the long-term expenditures. Besides the loan principal and interest, it’s important to consider property taxes, homeowners’ insurance, and maintenance. Other items you should also take into account include private mortgage insurance (PMI) if you plan to put less than 20% down on a conventional loan or mortgage insurance premiums (MIP) for an FHA loan, no matter the down payment. They add up, but PMI and MIP allow many people to buy homes when they otherwise wouldn’t be able to.

You can get a sense of how much your monthly mortgage payment might be with SoFi’s home mortgage calculator tool.

Recommended: Homeownership Resources

5. Save Up for a Down Payment

If you’re a buyer with subpar credit, putting more money down on a home can be advantageous. A larger down payment means borrowing less money, making the loan less risky to lenders and improving the chances of qualifying with bad credit. A smaller loan amount also accrues less interest.

But of course, saving up for a down payment can be challenging. If you meet first-time homebuyer qualifications, you may be eligible to receive down payment assistance.

Recommended: First-Time Home Buying Guide

6. Opt for an FHA Loan

Buyers with lower credit scores or less money tucked away for a down payment could benefit from an FHA loan. FHA loans are issued by private lenders but are insured and regulated by the Federal Housing Administration.

Borrowers with credit scores of at least 580 may put just 3.5% down. If your credit score is 500-579, you might still qualify, but you’ll need to make a 10% down payment. Even borrowers who have declared bankruptcy in the past may still qualify for an FHA loan.

Keep in mind that borrowers with higher credit scores who qualify for a conventional (nongovernment) mortgage may put just 3% down.

7. See if You Are Eligible for a VA or USDA Loan

The federal government backs other loan types that can help buyers with fair credit.

Active-duty service members, veterans, or certain surviving spouses may use a VA loan to purchase a primary residence. VA loans usually don’t require a down payment. The U.S. Department of Veterans Affairs does not set a minimum credit score for eligibility, but lenders have their own requirements, so it’s important to compare options. VA loans typically come with a one-time funding fee that varies in amount.

The USDA guarantees mortgages issued to low- and moderate-income homebuyers in eligible rural areas. No down payment is needed, but income limits apply. The USDA does not specify a credit score requirement, but lenders do (minimum credit scores generally start in the lower 600s) and will still evaluate a borrower’s credit history and ability to pay back the loan. You’ll pay a guarantee fee (which is like USDA mortgage insurance) of 1% of the loan amount at closing, then an annual guarantee fee of 0.35%.

8. Build Up Your Credit Scores

Raising your credit scores can increase your chances of qualifying and securing better loan terms, but it takes time. Negative marks usually stay on your credit reports for seven years.

Paying bills on time, every time, can gradually build up your credit scores. And, if possible, it’s a good idea to stay below your credit limits and avoid applying for several credit cards within a short amount of time.

Soft credit inquiries do not affect credit scores, no matter how often they take place. Multiple hard inquiries if you’re rate shopping for an auto loan, mortgage, or private student loan within a short period of time are typically treated as a single inquiry.

But outside of rate shopping, many hard pulls for new credit can lower your credit scores and indicate distress in a lender’s eyes.

Recommended: What Are Subprime Mortgages?

The Takeaway

Can you buy a house if you have bad credit? Yes, but you may have to put more money down or accept a higher interest rate to qualify. If taking steps to improve your credit isn’t enough, you might consider using a cosigner or exploring federal loan programs.

Knowing how to buy a house with bad credit is a good first step to making it happen. You can check out this home loan help center to continue your homebuyer education.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is a 500 credit score enough to buy a house?

Yes, but the options are limited. Borrowers with a credit score of 500 might be able to qualify for an FHA loan.

How can I buy a house if I have bad credit and lower income?

Lenders look at your full financial picture and not just your credit scores and income when considering a mortgage application. Certain loan types don’t have strict credit or income requirements either.

What is a good down payment for a house if I have bad credit?

A 20% down payment is ideal, but most borrowers aren’t able to put that much down. Any increase in your down payment could improve your loan terms.

How do I know if I’m eligible for an FHA loan?

FHA loan requirements include proof of employment and the necessary down payment based on the borrower’s credit score (those with scores of 580 or above qualify for the 3.5% down payment advantage). The home must be a primary residence, get appraised by an appraiser approved by the Federal Housing Administration, and meet minimum property standards.

Photo credit: iStock/SDI Productions

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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


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



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

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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