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Credit reports contain financial records of debts you owe and ones you’ve paid off. Positive information can remain on your credit reports indefinitely. Most negative information falls off your credit report after seven years, though certain types of bankruptcy filings can remain longer.

Here’s a closer look at how financial records impact your credit reports.

Key Points

How Long Do Inquiries Stay on a Credit Report?

When you apply for a loan, credit card, or line of credit, the lender can perform what’s called a hard inquiry. This simply means that they pull copies of your credit reports, which they’ll use to make an approval decision.

Hard inquiries show up on a credit report, and they’re included in your FICO® credit score calculations. Each new inquiry remains on your credit report for two years, according to FICO. However, they’re only considered in credit score calculations for the first 12 months.

Soft inquiries occur when you check your credit reports yourself or a company pulls your credit for the purposes of prequalifying or preapproving you for a loan. These inquiries won’t show up on a credit report, and they don’t have any impact on your credit score.

That distinction is important if you’re learning how to build credit.

Recommended: How Long Does It Take to Build Credit?

How Long Does Negative Information Remain on Your Credit Report?

Negative information on a credit report is any information that’s harmful to your credit score. What affects your credit score negatively? The list includes:

•   Late or missed payments

•   Collection accounts

•   Charge-offs

•   Judgments

•   Foreclosures

•   Bankruptcies

Generally, negative information can stay on your credit report for up to seven years. Bankruptcies, however, can stick around on your credit report for 10 years.

In terms of how negative items impact your credit score, time matters, according to FICO. Newer negative items, such as collections or late payments, have a more immediate impact on your scores than negative items that are several years old. A money tracker app makes it easy to track your credit and your money in real time so you can get ahead financially.

How Long Does Positive Information Remain on Your Credit Report?

Positive information can remain on credit reports indefinitely. Credit bureaus do not have to remove this information, though they may do so at the seven-year mark. Examples of positive information that can stay on a credit report indefinitely include:

•   On-time payments

•   Open accounts that have a $0 balance or a low balance, relative to your credit limit

•   Closed accounts that you’ve paid in full

Positive items on a credit report are a good thing, since they help your credit score. On-time payments and low balances on credit accounts have the biggest impact overall. Making biweekly payments or increasing your credit limits are two helpful ideas for how to lower credit utilization. Using a spending app to manage your budget and expenses can also help keep credit card balances low.

How to Remove Negative Information From Your Credit Report

Credit bureaus cannot remove accurate negative information from a credit report. For example, if you miss several payments on a loan but get caught up later, those late payments will stay on your credit reports until you hit the seven-year mark.

However, you can have inaccurate information removed through the dispute process. Examples of inaccurate items you could dispute on a credit report include:

•   On-time payments that were not properly attributed to your account

•   Credit accounts that don’t belong to you

•   Paid-in-full accounts that still show a balance on your credit reports

•   Account activity relating to fraudulent activity or identity theft

You’ll need to dispute the inaccurate information with the credit bureau that reports it. All three credit bureaus — Equifax, Experian, and TransUnion — allow you to initiate credit report disputes online. You’ll need to fill out a dispute form and provide some details about the dispute.

Once the credit bureau receives the dispute, it’s required to investigate your claim and return a decision to you promptly. If the credit bureau finds an error on your reports, it is legally required to remove or update the information.

Your credit score updates monthly for the most part. Enrolling in credit score monitoring can make it easier to track changes, including changes to your score following a dispute.

Recommended: Why Did My Credit Score Drop After a Dispute?

Do You Still Have to Pay a Debt if It Fell Off Your Credit Report?

A debt can fall off your credit report if enough time passes. However, the amount owed doesn’t go away. Creditors and debt collectors could still attempt to get you to pay if the statute of limitations hasn’t passed.

The statute of limitations on debt allows creditors and debt collectors a set window of time in which to sue you for an unpaid balance. Each state determines how long the statute of limitations applies, but, in all states, its expiration doesn’t remove your legal obligation to pay what you owe.

Should you pay old debts? Ethically, yes. But if a debt falls off your credit report and the statute of limitations has expired, it would be very difficult for a creditor to force you to pay via a lawsuit.

The Takeaway

Reviewing your credit reports regularly is a good way to see what’s helping or hurting your score at any given time. If you have negative items on your credit report, you might see your score drop, but you can rebuild your credit score over time.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What stays on a credit report forever?

Positive information can stay on a credit report indefinitely, as credit bureaus do not have to remove any items that help your credit score. However, credit bureaus can decide to remove positive information after seven years.

Can credit information stay on my credit report for over seven years?

Credit information can stay on your credit report for over seven years if it’s positive. Generally, negative information cannot stay on your report for more than seven years, unless you file for Chapter 7 or Chapter 11 bankruptcy. In that case, the bankruptcy filing could stay on your report for up to 10 years.

Do old accounts fall off a credit report?

Old accounts can fall off your credit report after seven years if they have negative information. Positive information from old or new accounts can stay on your credit reports indefinitely.

Can I remove negative items from my credit report early?

Credit bureaus usually cannot remove accurate negative information before the reporting period ends, but you can dispute errors with them. If you successfully dispute the information, the credit bureau will correct or delete the item.

How long do late payments stay on a credit report?

Late payments generally remain on your credit report for seven years from the date of the first missed payment that led to the delinquency. Their impact on your credit score typically decreases over time, especially if you build a positive payment history afterward.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/PeopleImages

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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

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.

SORL-Q126-023

Rising prices are driving worries that money doesn’t go as far as it used to. But rest assured, $120,000 is considered a good salary, especially if you’re single and have no dependents. And by developing sound money habits now, you can help make the most of your income.

Here’s a closer look at what an annual salary of $120,000 means.

Is $120K a Good Salary?

A salary of $120,000 is nearly double the national average, which is about $70,000 based on the latest data from the Social Security Administration. The average salary by state. also varies. Whether you can live comfortably on $120K a year depends on a number of factors, including how much debt you have, your family size, and how much your lifestyle costs in the area you live in.

A money tracker can help you with budgeting, monitoring spending, and keeping tabs on your credit score.

Average Median Income in the US by State

Median household income is arrived at by dividing the income distribution of all U.S. households into two halves — meaning half of households earn more than that amount, and half earn less. As of 2024 — the most recent data available from the U.S. Census Bureau — the median annual household income in the U.S. was $81,604. Individuals may make more or less depending on where they live, their age, the type of work they do, and other factors.

For reference, here’s a chart of the median household income in each state, based on U.S. Census Bureau data.

Related: Highest Paying Jobs by State

Average Cost of Living in the US by State

The average cost of living where you live will affect how you feel about your $120,000 salary. Similar to salaries, it varies by state. Here’s a look at what a typical resident in each state spends per year on basic necessities, such as housing, food, and transportation, according to the U.S. Bureau of Economic Analysis.

How to Live on a $120K Salary

Chances are that $120,000 can easily cover your basic expenses, leaving you with money for entertainment and savings. But if you live in a pricey area or are trying to pay down debt, you may need to be more mindful of how you manage your money. The following tips can help.

Live Below Your Means

You‘ve heard it before, but the most important part of living well on your salary is to make sure your expenses are less than your salary. Try to find housing and transportation that fit within your budget, put together a plan for expenses, and manage lifestyle creep as much as you can.

Have a Contingency Fund

Be sure you’re planning for the unexpected. Building an emergency fund can go a long way toward preserving your finances when the going gets tough.

Make a Plan for Your Money

Making a budget — yes, even on a $120,000 annual salary — can help you use your money more effectively and make progress toward financial goals.

How to Budget for a $120K Salary

There are a number of budgeting methods you may want to try:

•   50/30/20 method: With a 50/30/20 budget, 50% of your money should go toward needs (housing, transportation, food, etc.); 30% to wants (spending money, self-care, eating out, and vacations); and 20% to savings and debt payments.

•   Zero-based budgeting: In this type of budgeting, you give a job to every dollar you earn so that your income minus your expenses leaves you with zero.

•   Envelope method: You specify how much money is allotted to a specific category. For example, $300 for gas for the month. You can spend the designated funds until they’re gone. If you’re really disciplined, you won’t spend in that category again until the next month, when the money in the envelope is refreshed.

Of course, the optimal budget is the one you should follow. A budget planner app can help you stay on track and reach your goals.

Maximizing a $120K Salary

Making the most of a $120,000 salary depends on what your financial goals are and your stage of life. Do you want to:

•   Save more money?

•   Grow your net worth?

•   Provide for a family?

•   Enjoy eating out and/or nightlife?

•   Afford a nice car and house?

To maximize a $120,000 salary, invest in the areas of your life that are important to you. Make a plan to spend money according to your values and be more frugal in the areas that are not as important to you.

Quality of Life With a $120K Salary

According to the World Health Organization, quality of life is about a person’s perception of their culture and value systems in relation to their goals, concerns, expectations, or standards. Your quality of life on a $120,000 salary may depend, in large part, on your perception of how good it is. If you feel optimistic about the amount of money you’re making, you’ll likely have a good quality of life.

Is $120,000 a Year Considered Rich?

A $120,000 annual income is a six-figure salary — and a good one for a single person — but is it enough to qualify you as “rich”? The truth is, rich is a relative term. Living well depends on how satisfied you are with your lifestyle and how much you’re able to save for your future.

Recommended: How to Calculate Your Net Worth and Wealth

Is $120K a Year Considered Middle Class?

Middle-class status is determined by incomes that range from two-thirds to double the median income. It’s also adjusted for family size. In the U.S., the median income is $81,604, which puts the range for the middle class between $54,403 and $163,208.

However, when adjusting for family size, a $120,000 salary for a single person typically puts you in the upper-middle class in several metro areas in the United States.

Example Jobs That Make About $120,000 a Year Salary

According to data from the U.S. Bureau of Labor Statistics, there are a number of occupations that pay $120,000 or more — some of which could be a good fit for introverts.

Some examples include:

•   Software Developer: $131,450

•   Physician Assistant: $133,260

•   Nurse Practitioner: $132,050

•   Information Security Analyst: $124,910

•   Actuary: $125,770

Recommended: What Is a Good Entry-Level Salary?

The Takeaway

Is $120,000 a good salary for a single person? Generally speaking, yes. It’s more than what a typical American worker earns and, depending on where you live, can provide you with a comfortable life. But even with a six-figure salary, you may want to consider ways to maximize your money. Sound financial habits like building up an emergency fund, saving for short- and long-term goals, and creating a budget are all good places to start.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Can I live comfortably making 120K a year?

Living comfortably on $120K a year depends on various factors, such as where you live, how much debt you have, your family size, and how you live. Many singles will find $120K enough to live on in many areas of the country, but they may need to be more mindful about their spending if they live in pricier areas such as Los Angeles or New York City.

What can I afford with a $120K salary?

If you’re looking to buy a home with a $120K salary, consider talking to a lender and running some numbers. Many lenders use the 28/36 rule to help borrowers understand how much to use to repay a mortgage and other debts. Experts suggest spending no more than 28% of your income on housing expenses and no more than 36% on total debt payments. Consider using this rule as you make decisions about how large a house to purchase or how much debt you’re willing to take on.

How much is $120K a year hourly?

A $120K salary comes out to approximately $57.69 per hour. This assumes a 40-hour work week.

How much is $120K a year monthly?

A salary of $120,000 per year works out to roughly $7,770 per month. This is the net amount after deducting federal income taxes.

How much is $120K a year daily?

If you earn $120,000 per year, you would be paid around $462 per day. This assumes you work five days a week.

Photo credit: iStock/Delmaine Donson

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

SORL-Q126-032

Borrowing against home equity can put cash in your hands when you need it. But how soon can you pull equity out of your home after purchasing it?

You might be surprised to learn that there’s often no minimum waiting period to access your home equity. You’ll need to meet a lender’s other conditions and requirements to qualify for a loan against your equity, but you can decide when it makes sense to borrow against your home.

What Is Home Equity?

How is home equity explained? Equity is the difference between your home’s value and the remaining amount due on the mortgage. In simpler terms, equity represents the portion of the home that you own.

Home equity accumulates as your mortgage balance goes down and your property’s value goes up. As of December 2025, the average equity value among U.S. homeowners with mortgages was $299,000, according to Cotality’s Homeowner Equity Report.

It’s possible to have negative equity in a home. That scenario can occur when you owe more on the mortgage than the home is worth. This is also referred to as being upside down or underwater on the mortgage. That’s important to know if you’re calculating how home equity counts in your net worth.

Ways to Access Home Equity

There are several options for borrowing against your equity. The most common are a home equity loan, a home equity line of credit, and a cash-out refinance.

Home Equity Loan

A home equity loan allows you to withdraw your equity in a lump sum. Home equity loans typically have fixed interest rates, and your repayment term may last up to 30 years. A home equity loan is a type of second mortgage that doesn’t affect the terms of the loan you took out to purchase the property. Your home serves as collateral for the loan. If you default on the payments, the lender could initiate a foreclosure proceeding against you.

Home equity loans offer flexibility since you can use the money any way you like. Some of the most common uses for home equity loans include:

•   Home repairs and maintenance

•   Home improvements

•   Debt consolidation

•   Medical bills

•   Large purchases

Interest on a home equity loan may be tax deductible if the proceeds are used to “buy, build, or substantially improve the residence,” according to IRS tax rules. This rule has been made law as of July 4, 2025..

Home Equity Line of Credit

A home equity line of credit (HELOC) is a revolving line of credit that you can draw against as needed. HELOCs tend to have variable interest rates, though some lenders offer a fixed-rate option. When you take out a HELOC, you have a draw period in which you can access your line of credit and a repayment period when you pay it back. You pay interest only on the portion of your credit line that you use.

HELOCs can be used for the same purposes as a home equity loan. A HELOC may offer a lower interest rate than a home equity loan, depending on the overall rate environment. However, your payment isn’t always predictable if you have a variable interest rate.

Cash-Out Refinance

Cash-out refinancing replaces your existing mortgage loan with a new one while allowing you to withdraw some of your equity in cash at closing. A cash-out refinance loan isn’t a second mortgage; it takes the place of your original purchase loan. The balance due is higher to account for the amount of equity you withdraw in cash.

A cash-out refinance loan may have a fixed rate or an adjustable rate. Fixed-rate loans typically have repayment terms extending from 10 to 30 years. If you choose an adjustable-rate mortgage (ARM), you might be able to select a 3/1 ARM, 5/1 ARM, 7/1 ARM, or 10/1 ARM.

The first number represents how long you have to enjoy a fixed rate on the loan; the second number is how often the rate adjusts annually. So, a 10/1 ARM would have a fixed rate for the first 10 years. Then the rate would either increase or decrease once a year for the remainder of the loan term.

Requirements to Tap Home Equity

Qualification requirements for a home equity loan, HELOC, or cash-out refinance loan vary by lender. In most instances, you’ll need to have:

•   A credit score of 660 or better

•   At least 20% equity, though some lenders may go as low as 15%

•   A debt-to-income (DTI) ratio below 43%

Essentially, lenders want to make sure that you have sufficient income to make the payments on the loan and that you’re likely to pay on time.

Lenders use your combined loan-to-value (CLTV) ratio to measure your equity. Your loan-to-value (LTV) ratio measures your home’s mortgage value against the property’s appraised value. The current loan balance divided by the appraised value equals your LTV. Combined LTV uses the balance of all loans, including first and second mortgages, to measure equity. This number can tell you how much of your equity you can borrow. Most lenders look for a CLTV in the 80% to 85% range, though it’s possible to find lenders that allow 100% financing.

Recommended: Understanding Mortgage Basics

Factors That Impact Timing

How soon can you get a home equity loan? Technically, right away. But the more important question to ask is whether it makes sense to access your equity sooner or later.

If you’ve just purchased a home, you may not have much equity built up yet. You may need to wait a few months for some equity to build up before borrowing against it. Your choice of lender could also make a difference. If a lender requires a home equity waiting period, you might have to wait until it ends to borrow.

Here are some questions to ask when deciding if the time is right to withdraw equity:

•   What will you use the money for?

•   How much do you need to borrow?

•   Which borrowing option makes the most sense?

•   How much can you afford in additional monthly mortgage payments?

Risks of Borrowing Too Soon

Just because you can get a home equity loan or HELOC right away doesn’t mean you should. There are some risk factors to consider if you’re thinking about an equity withdrawal.

•   Having less equity in the home can mean a higher LTV, which could make it harder to qualify.

•   Should your home’s value drop after borrowing, you could end up underwater on the mortgage.

•   If you only recently bought the home, you may not have a firm idea of your maintenance and utility costs, which could make it difficult to estimate how much you can afford in additional mortgage payments.

•   Your credit score may need time to recover so you can qualify for the best rates if you just signed off on a purchase mortgage loan.

Using a home equity loan or HELOC calculator can help you estimate what your payments might be. You can then add that to your existing mortgage payment to get an idea of what you’ll pay overall and what’s affordable for your budget.

Alternative Options

If you need to borrow money for home repairs, home improvements, or any other purpose, your equity isn’t the only option. You might consider these alternatives instead.

•   Personal loan: A personal loan allows you to borrow a lump sum and repay it with interest over time. Personal loans are typically unsecured, meaning you don’t need collateral and your home isn’t at risk if you’re unable to pay for any reason.

•   Credit card: Credit cards can be a convenient way to pay for large purchases, home improvements, or emergency expenses. Choosing a card with a 0% introductory APR on purchases can give you time to pay them off interest-free.

•   401(k) loan: If you have a retirement plan at work, you might be able to borrow against it. However, that’s usually not ideal since any money you take out won’t benefit from compounding interest, which could shortchange your retirement.

•   Home equity conversion mortgage (HECM): Eligible seniors 62 and older can get a home equity conversion mortgage to withdraw equity. You can also use an HECM for Purchase loan to buy a home. A home equity conversion mortgage requires no payments as long as the homeowner lives in the property, with the balance due when they sell the home or die. Compare an HECM vs. reverse mortgage to see if you’re eligible.

You might also ask friends and family for a loan or sell things you don’t need to raise funds. Taking on a side hustle or part-time job could also bring in extra income, so you don’t need to borrow.

Recommended: Reverse Mortgage Interest Rates

The Takeaway

Withdrawing equity from your home can give you access to cash when you need it. In addition to getting the timing right, it’s also important to shop around and find your ideal lender. Comparing rates, terms, credit score requirements, and CLTV requirements can help you find the best loan for your needs.

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

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

FAQ

How long after purchasing a home can you pull out equity?

There’s generally no set period for how soon you can take equity out of your home after purchasing it. Your ability to borrow can depend on your credit scores, debt-to-income ratio, and how much equity you’ve accumulated in the home.

Are there fees to tap home equity?

Home equity loans, HELOCs, and cash-out refinance loans can all have closing costs just like a purchase loan. Some of the fees you’ll pay can include appraisal fees, inspection fees if an inspection is required, attorney’s fees, and recording fees. You’ll need to pay certain fees out of pocket, but your lender may allow you to roll other closing costs into the loan.

How fast can I get a home equity loan?

It’s possible to get a home equity loan as soon as you purchase your home. You’ll need to meet a lender’s minimum requirements to qualify for home equity financing. Getting approved may be challenging if you have a low credit score or only a small amount of equity in the home.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/DjelicS

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SOHL-Q126-142

Most people in the market for a new dwelling will buy an existing home that somewhat fits their needs. Newly built homes, on the other hand, don’t come with the problems that old homes might, such as lead paint or a kitchen crying out for remodeling. Building a house from scratch might also seem attractive because you can construct it to fit your specifications, from the number of bathrooms to creating an outdoor kitchen.

If you’re considering building your own home, here are the steps to take.

10 Steps to Building Your Own Home

Condo. Townhouse. Single-family home. Modular or manufactured home. Cabin or even a houseboat. A house hunter has all of those types of homes to choose from, as well as the location. Here are the steps to building your own home.

1. Find a Location

The first thing you’ll need to do is find a site that’s zoned for a residential property. Look into local building regulations to see how much of the site you’re allowed to build on and how far the building must be from property lines. Check ordinances that might limit size or height. Is there a homeowners’ association? Scour the rules.

It’s generally suggested that you spend no more than 20% of your total budget on the building site. When you purchase the land, you will receive a property deed, which will also serve as the house deed.

2. Obtain Permits

Before a shovelful of earth is turned, the local building department must OK the plans and provide permits for the whole shebang: grading, zoning, construction, electrical work, plumbing, and more. When the permits are in hand, construction can start.

On a related note, your home will need to be inspected for code compliance at various points during construction. If you are using a loan for new construction, your lender may also send an inspector to keep track of construction status before releasing payments from a construction loan.

3. Prep the Site and Your Finances

Site Prep

Before you start building, you’ll need to prepare the building site. You’ll want to be sure that soil conditions are stable. You may want to engage a civil engineer to take a look at the site. A site surveyor can stake the property boundaries. Then, you’ll need to clear brush and debris around the planned perimeter of the house.

Size and Cost

The cost of building a house averaged $323,077 in 2025, according to HomeAdvisor, but it can range from $139,000 to $531,000. Location, materials, and level of detail all affect the bottom line.

But size is the biggest consideration. The larger the build, the more labor and material costs you should expect. The average new home in the country has about 2,400 square feet at $150-$200 per square foot.

In the early 2020s, there were months-long delays to receive materials, from appliances to garage doors, and construction costs increased. Oil prices significantly increased transportation expenses. Rising inflation left its mark, but prices leveled off in 2023. All of which is to say that costs are a moving target.

Finance Options

When you build a home, you may need a loan that covers the purchase of land, materials, and labor. In this case, you may want to look into a construction loan. Unlike mortgage loans, construction loans are not secured by an existing home, so approval might be tricky and take a bit longer.

The money is paid to your builder in installments. You’ll often only pay interest on the portion of the loan that has been withdrawn. After the typical 12 to 18 months of a construction-only loan, the usual route is to take out a mortgage and pay off the construction loan.

Other financing options include a home equity loan if you already own a home.

A personal loan of up to $100,000 can pay for part of the construction (or maybe all, for a modest build).

If you’re buying the land, FHA one-time close loans cover the lot purchase, construction, and permanent mortgage. But the loans can be hard to find and are tougher to qualify for than traditional FHA loans.

Check out these additional resources for homeowners.

Choosing Materials

An experienced, highly organized person may want to act as their own general contractor for a new house build. However, most people will put the job in a contractor’s hands, and add 20% to 30% for the cost of materials and labor.

General contractors have already priced and sourced many of the materials when making a bid. They usually have relationships with wholesale distributors, lumberyards, and retailers.

That said, you may have some skills that you could apply to cut costs. For example, you could look into how much it costs to paint a house and determine if painting the home’s interior could help you save.

Building a Work Team

If you choose to fly solo, you’ll be on the hook for finding subcontractors yourself.

A general contractor will hire all the team members needed to complete the project and charge 20% to 30% of the home’s overall cost. However, they also typically have regular relationships with subcontractors, who may charge them less than they would a person who hires them on a one-off basis.

As a result, you may not save much (or any) money by finding subcontractors yourself.

4. Pour the Foundation

Once the building site is cleared, construction can begin, starting with the foundation. Some houses are built on level concrete slabs poured on the ground, leaving space for utilities such as plumbing and electrical.

A home with a full basement requires digging a hole and then forming and pouring footings and foundation walls. The concrete will need time to cure, and no construction will take place until it has set properly.

5. Set Up Plumbing

Once the concrete has set, crews install drains, water taps, the sewer system, and any plumbing going into the first-floor slab or basement floor and then backfill dirt into the gap around the foundation wall.

6. Assemble the Frame, Walls, and Roof

With the foundation complete, framing carpenters will build out the shell of the house, including floors, walls, and the roof. Windows and exterior doors are installed, and the house is wrapped in a plastic sheathing that protects the interior from outside moisture while allowing water vapor from inside the home to escape.

7. Install Insulation, Complete Electric and Plumbing Installs

Now plumbers can install water supply lines and pipes to carry water through the floors and walls. Bathtubs and showers may be added at this time.

Electricians will wire the house for outlets, light fixtures, and major appliances. Ductwork and HVAC systems can be installed.

8. Hang Drywall and Install Interior Fixtures and Trim

With plumbing and electrical complete, the house can be insulated, and drywall can be hung. A primary coat of paint goes on, and the house will start to look relatively finished.

Light fixtures and outlets can be installed, as can bathroom and kitchen fixtures, such as sinks and toilets. Interior doors, baseboards, door casings, windowsills, cabinets, built-ins, and decorative trim go in next. The final coat of paint is then applied.

9. Install Exterior Fixtures

Crews begin exterior finishes such as brick, stone, stucco, or siding. Some builders pour the driveway when the foundation is complete, but many opt to do so toward home completion, along with walkways and patios.

10. Install the Flooring

Wood, ceramic tile, vinyl floors, and/or carpet can be installed at this point.

Recommended: First-Time Homebuyer Guide

Is It Cheaper to Buy or Build a New House?

There are so many variables that it’s hard to say.

The median sales price for new construction in December 2025 was $414,400, according to Federal Reserve Economic Data. Can you beat that price with a DIY build? Maybe, if you act as the general contractor and choose cheaper materials.

Keep in mind that HomeAdvisor’s average of $323,077 to build a house does not include the land.

Ultimately, the price of your dream home hinges on location, the cost of labor and materials, and your taste.

3 Home Loan Tips

1.    Since lenders will do what’s called a hard pull on an applicant’s credit, and too many hard pulls in a short period can affect your application, it’s a good idea to know what interest rate a lender will offer you before applying for a personal loan. Viewing your rate with SoFi involves only a soft credit pull and takes one minute.

2.    Before agreeing to take out a personal loan from a lender, you should know if there are origination, prepayment, or other kinds of fees.

3.    Traditionally, mortgage lenders like to see a 20% down payment. But some lenders allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.

The Takeaway

Building your own home will allow you maximum flexibility in terms of your choices of everything from floor plan to finishes. But it is a complex process that you’ll want to take step by step, carefully considering your budget and how you plan to finance what you build.

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

FAQ

How long can you expect to live in a self-built home?

A well-built home can last for several decades or even more if maintained properly. However, its life expectancy will depend on many factors, such as the foundation and structure, the construction materials used, and environmental impact.

How long will it take to build a home?

The average time it takes to build a home from start to finish is just over six months for a contractor build and 14 months for an owner build. This is based on data collected by the U.S. Census Bureau.

Is it dangerous to build a home yourself?

If the question means completely DIY, i.e., clearing a lot, pouring a foundation, framing, installing electrical, and so on, the answer is it can be, especially if you lack professional experience in construction. The dangers range from physical injury on the construction site to exposure to materials such as asbestos, lead, or volatile organic compounds.

Are there safe financing options for self-build projects?

DIY builders and remodelers may use a construction loan, personal loan, home equity loan, or an FHA one-time close loan. If you do use a construction-only loan, shop for a mortgage that makes sense once you stand there admiring the finished product.

Photo credit: iStock/Giselleflissak

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

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SOHL-Q126-144

While the government has paused granting first-time DACA requests, current recipients can still renew their status and take advantage of benefits. Deferred Action for Childhood Arrivals (DACA) recipients who are planning to go to college and need financial assistance can apply for certain types of student loans. DACA provided undocumented citizens who came to the U.S. as children with protections and opportunities, such as applying to colleges and taking out specific types of student loans.

Learn more about the loans DACA recipients may be eligible for (sometimes referred to as DACA student loans), and discover other types of financial aid that could help make college more affordable.

Overview of DACA and Student Aid

There are more than 140,000 DACA-approved and eligible college students in the U.S., according to the most recent data from the American Immigration Council. The majority of these students are enrolled in public colleges and universities.

DACA recipients aren’t eligible for federal student loans or other federal aid, but they may be able to take out private student loans as long as they meet the eligibility requirements. DACA recipients may also qualify for scholarships and grants, financial aid from their state, and aid from the school they’re attending.

Currently, four states provide access to in-state tuition to DACA recipients. These students qualify for in-state tuition rates, which are typically much less expensive than out-of-state tuition rates.

Nine states block in-state tuition access for all undocumented students, including DACA recipients, and three states prohibit undocumented students from enrolling in some or all public colleges.

Federal Student Loan Eligibility for DACA

DACA recipients can’t take out federal student loans offered by the Department of Education. To qualify for federal student loans, an individual must be a U.S. citizen, a legal permanent resident, or meet special criteria that classifies them as a member of a small group of eligible noncitizens (residents of American Samoa, for example).

However, there are other kinds of financial assistance for college that DACA recipients can pursue. They may be eligible for certain types of financial aid, including funding or scholarship programs from their college and state of residence. And there are some student loans for DACA recipients, such as private student loans, these students can explore.

FAFSA and DACA Students

To be considered for aid from their state or school, it’s generally recommended that DACA recipients fill out and submit the Free Application for Federal Student Aid (FAFSA) as long as they have a Social Security number (SSN), which is required for the form. If they opt to fill out the FAFSA online, they’ll also need their SSN to set up an account at studentaid.gov.

When they get to the section of the form that asks about citizenship status, DACA recipients must choose the “neither U.S. citizen nor eligible noncitizen” answer. State of residence is the state where they have their permanent home.

The FAFSA will typically be processed within three days if it’s submitted electronically and within 10 days if submitted on paper. Once the Education Department has processed the form, the information will be sent to their school, which will then determine what kind of student aid they might be eligible for.

Private Student Loan Options for DACA

DACA students may be able to take out private student loans. These loans are offered by banks, credit unions, and private lenders. Private student loans have fixed or variable rates, and the rate an individual might qualify for depends on their credit history, among other factors. This guide to private student loans provides more information on how these loans work.

In order to qualify for private student loans, DACA recipients may need a student loan cosigner who is a U.S. citizen or permanent resident. The cosigner agrees to repay the loan if the borrower defaults or is unable to pay their debt.

If an applicant doesn’t have a cosigner, it might be possible to find some private student loans for DACA students without a cosigner. As with any loan, it’s important for the borrower to make sure they’re comfortable with the rates and terms. And keep in mind that, as a borrower, you could choose to refinance student loans at some point in the future to obtain a lower rate or better terms at that time.

Finally, it’s important to note that with private student loans, a borrower doesn’t have access to the same federal protections and programs borrowers with federal student loans have. This includes federal forgiveness programs and income-driven repayment plans. Some private loans do offer private student loan forgiveness, so it can be wise to ask a lender if that’s an option.

Recommended: Student Loan Refinancing Eligibility Criteria

Institutional and State Aid for DACA

Student loans aren’t your only option for paying for college as a DACA recipient. Eighteen states plus the District of Columbia offer some financial aid or scholarships for DACA recipients. The states are:

•  California

•  Colorado

•  Connecticut

•  Hawaii

•  Illinois

•  Maryland

•  Massachusetts

•  Minnesota

•  Nevada

•  New Jersey

•  New Mexico

•  New York

•  Oregon

•  Rhode Island

•  Utah

•  Vermont

•  Virginia

•  Washington

These same states also provide access to in-state tuition for DACA recipients. As mentioned, in-state tuition rates are typically much less expensive than out-of-state tuition rates.

Four other states give DACA recipients and undocumented students access to in-state tuition. These states are:

•  Arizona

•  Kansas

•  Kentucky

•  Nebraska

Many schools also offer institutional aid to DACA recipients. For instance, Bates College in Maine and Occidental College in Los Angeles are just a couple of the schools across the country that meet 100% of the demonstrated need for undergraduate DACA recipients. Check with prospective colleges to find out what their policies are.

DACA recipients may also apply for scholarships through such programs as Golden Door Scholars, which provides scholarships for undocumented students studying for careers in STEM, nursing, and business, and TheDream.US Scholarship Program, which covers tuition and fees at partner colleges in the award recipients’ states of residence.

The Takeaway

DACA recipients may have options to help them afford college. Although federal student loans aren’t an option, there are scholarship programs for current DACA students, as well as state-based and institutional aid they may qualify for, depending on the state they live in and the college they attend.

As a DACA recipient, you can also take out private student loans to help pay for school. And there’s the possibility to refinance your student loans in the future for better rates and terms if you choose to, as long as you meet the student loan refinancing eligibility criteria.

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.

FAQ

What documents are required for DACA students to get loans?

DACA students aren’t eligible for federal student loans, but they may be able to take out private student loans (in some situations, these may be called DACA student loans). In order to qualify, they might need a cosigner who is a U.S. citizen or permanent resident.

DACA recipients can also fill out the FAFSA to see what financial aid they may qualify for from their college or state. To complete the FAFSA, they’ll need a SSN.

Can DACA students qualify for federal work-study?

DACA students aren’t eligible for federal student aid, including federal work-study. However, they may be able to get other jobs on campus that aren’t part of the work-study program.

Are there scholarships specifically for DACA recipients?

Yes, there are a number of scholarships specifically for DACA recipients. For instance, Golden Door Scholars provides scholarships for undocumented students studying for careers in STEM, nursing, and business, and TheDream.US Scholarship Program covers tuition and fees at partner colleges in the award recipients’ state of residence.

Photo credit: iStock/Eduard Figueres

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.