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There are many steps to the home-buying process. If you’re taking out an FHA loan (a loan backed by the Federal Housing Authority) to buy a property, you’ll most likely need to get an appraisal to verify the value and condition of the home. Let’s take a closer look at how FHA appraisals work, what to expect from FHA loan inspection requirements, and how to prepare, particularly if you’re a first-time homebuyer and have never been through the process before.

Understanding FHA Appraisals and Inspections

An FHA loan appraisal is an in-person assessment performed by an accredited appraiser. The purpose of the appraisal is to evaluate how much a house is worth and determine if it meets minimum safety and livability standards. The appraisal is sent to the lender for further evaluation before a FHA loan can be approved. FHA appraisals are typically required whether the borrower is buying or refinancing a home with an FHA loan. A buyer might meet all the other FHA loan requirements but an FHA appraisal is still needed in order for a loan to get the green light.

FHA Inspections vs. Appraisals

The appraiser only factors in readily observable conditions. A home inspection, by comparison, is much more in-depth in its assessment of a property’s need for repairs. Does the FHA require inspection of the home by a home inspector? No. An FHA appraisal may pick up some problems an inspector might see. But many homebuyers still order a traditional home inspection alongside their FHA appraisal.

Besides the property value, the FHA appraisal requirements evaluated during an FHA appraisal include the safety, security, and soundness of a home. In other words, the home should be safe for occupants to inhabit, protect the security of the property, and not have physical deficiencies or conditions impacting the structural integrity and ability to market it for future sale.

Appraisers are required to describe the property conditions, including any renovations, necessary repairs, or deterioration. Minor issues, such as missing handrails, cracked windows, or worn countertops, do not require automatic repair.

Differences Between FHA and Conventional Appraisal

Whether a borrower is seeking an FHA loan or a conventional loan, a home appraisal estimates the fair market value of a home based on the property condition and nearby home values. But FHA loans must meet the minimum standards set by the U.S. Department of Housing and Urban Development (HUD). This means that FHA appraisal requirements also consider the health and safety of the property, while conventional appraisals focus on the property’s value and condition. So in a sense, while the process is technically an appraisal, there are FHA loan inspection requirements that must be met. FHA lenders may require that any health and safety hazards be addressed before approving the mortgage.

FHA appraisers follow HUD guidelines for minimum property standards. During the appraisal, they analyze and report a property’s physical and economic characteristics to provide an opinion of its value. HUD requires FHA appraisers to have state certification and meet the minimum certification criteria issued by the Appraiser Qualification Board.

How Do FHA Appraisals Work?

An FHA loan appraisal involves two steps. The appraiser will complete a site visit to inspect the property condition and perform market research for comparable homes in the area to estimate the market value of the home.

The appraiser will inspect the home’s interior and exterior to determine the property’s safety and soundness. The appraiser’s findings, plus information on the home like square footage and the year it was built, are cataloged in HUD’s Uniform Residential Appraisal Report.

To estimate the property’s value, the appraiser evaluates the selling prices for comparable homes in the same area that were recently sold. This information, combined with the property’s condition and characteristics, is used to estimate the market value.

Recommended: The Ultimate Home Inspection Checklist

What’s the Purpose of an FHA Appraisal?

FHA appraisals are required by lenders to ensure that the loan amount doesn’t exceed the market value of the property. The appraisal process is also used to determine that a property meets FHA standards for health and safety.

Safety and Structural Standards

In terms of occupant health and safety, the FHA appraisal looks out for exposure to hazardous materials, such as lead paint and asbestos. Mold, radon gas, and poor insulation are other potential safety risks that would be flagged in an appraisal. The overall property structure needs to be in sufficient condition to keep occupants safe. This means that damage to the foundation, structural decay, or anything that impacts the long-term integrity of the home would not meet FHA requirements.

Compliance with Minimum Property Standards (MPS)

FHA appraisals follow the Minimum Property Standards (MPS) set by HUD. The MPS establishes baseline conditions to cover aspects of a property that aren’t met by model building codes. For example, the MPS covers doors, gutters, and wall coverings to ensure the property value is not impacted by the quality of these components.

What to Expect from an FHA Appraisal

Being prepared for an FHA appraisal can help streamline the loan application and homebuying process. Here’s what to expect from FHA appraisal guidelines:

Appraisal Timeline and Duration

The duration of an FHA appraisal site visit varies by property size and condition, but plan for it to take between one and several hours to complete. The full appraisal report is usually complete within a week.

Common Issues That Can Affect the Appraisal Outcome

There are a number of issues and property conditions that the FHA requires to be remedied for loan approval. Some common FHA loan appraisal requirements that could trigger problems include:

•   Roof condition or damage

•   Exposed wires

•   Water heater temperature and pressure relief valve

•   Damaged foundation

•   Peeling paint (for homes built before 1978)

Conditions That Won’t Pass FHA Inspection

It’s important to know what won’t meet FHA loan inspection requirements. Any property conditions that impact the safety and health of occupants could need to be addressed in order to get FHA loan approval. Besides the common issues outlined above, hazards, nuisances, and obstructions to property access could fail to pass FHA inspection. For example, the level of traffic or proximity to a hazardous waste site could violate FHA standards.

Ultimately, the property valuation accounts for the home condition, square footage, any renovations, and the number of bedrooms and bathrooms. The appraiser must observe neighborhood characteristics and surrounding properties to make determinations that will be incorporated into the valuation of the property.

FHA Inspection Requirements Checklist

Sellers can plan ahead and fix what won’t pass FHA inspection to avoid delays and improve the marketability of their home. Here’s how to address some common issues that could cause a property to fail an FHA appraisal.

•   Roof repair: Fix leaks and consider a new roof if life expectancy is less than three years.

•   Chipped or peeling paint: Scrape and repaint peeling surfaces if property was built prior to 1978.

•   Water heater: Ensure the water heater has a pressure and temperature relief valve and sufficient piping.

•   Plumbing: Repair all toilets, showers, and sinks that aren’t in working order as leaky plumbing won’t pass FHA inspection.

Both the inspection and the home’s appraised value are critical to FHA loan approval. Sellers and their real estate agents are permitted to communicate with an appraiser to offer additional property information that can contribute to the valuation of the home. Gathering documentation beforehand on any home improvements can ensure the appraiser has everything needed for an accurate valuation.

Recommended: What Are the Most Common Home Repair Costs?

What Happens After an FHA Appraisal?

The FHA appraisal report will provide the estimated market value and outline any required repairs or alterations that need to be completed for FHA loan approval.

What to Do if the Home Sale Appraisal Comes Back Low

If an FHA appraisal comes back low, there are several possible scenarios. The seller can lower the sale price to accommodate the appraised value. Alternatively, the buyer can renegotiate to lower the price and potentially contribute a larger down payment to cover the portion of the home price that is not covered by the FHA loan. As a last resort, a buyer would be permitted to walk away from the deal if the FHA lender’s requirements can’t be met.

What to Do if the Refinance Appraisal Comes Back Low

If refinancing with a FHA loan and the appraisal comes back low, there are a few courses of action available to borrowers. First, review the appraisal report to see if an appraiser missed anything important. If so, providing the correct information to get another appraisal could result in a higher appraised value.

If disputing the appraisal isn’t an option or successful, borrowers can consider restructuring the loan to take less cash out. Finally, the loan can be denied if the terms are not beneficial to the borrower.

What to Do if the Appraiser Requests Further Repairs

The appraisal may identify repairs that need to be completed to close on the loan. Unless otherwise outlined in the purchase and sale agreement, sellers are typically on the hook for repairs. The sellers have up to 120 days to make necessary repairs and meet FHA standards if required by a lender.

Alternatively, buyers can pay for the repairs themselves. If the issues impact the health, safety, and livability of the property, they’ll need to be completed prior to closing. Other non-safety repairs can be completed after closing. Note that delayed repairs may require an extra escrow holdback for the estimated costs.

Once repairs and issues have been addressed, the property can be reassessed. Borrowers can consider a FHA 203(k) loan to finance both the purchase and rehabilitation costs through a single loan if the repairs are an obstacle to closing. Buyers might consider renegotiating their offer to reflect the repair costs being financed.

If appraisal-related issues are delaying closing, buyers can consider a mortgage rate lock to secure their interest rate for a set period. This can help buy more time for repairs to be made without losing out on favorable loan terms.

What to Do if the Appraisal Comes Back at or Higher Than the Expected Amount

The loan simply moves forward if the appraisal comes back at or higher than the expected amount, barring any request for further repairs.

FHA appraisals are valid for 180 days unless it’s updated. If updated, an appraisal can be good for up to one year.

Recommended: FHA Loan Closing Cost Calculator

Impact of FHA Appraisal on Loan Approval

The FHA appraisal influences loan approval in two key ways. First, the appraisal evaluates the property condition and identifies if any repairs or further inspections are required for loan approval. Second, the appraised value determines the total loan amount a buyer is approved for. If the appraised value is lower than the purchase price on the contract, either a price reduction or larger down payment could fill the gap to get loan approval.

Repairs aside, how long can you wait after the appraisal to close on an FHA loan? It helps to understand how long an FHA appraisal is good for. Once the borrower and lender receive a copy of the FHA appraisal, it’s valid for 180 days.

A conditional approval from the lender will outline the required repairs to be made in order to close. After the appraisal is approved in underwriting, the loan will most likely be cleared to close. Prior to closing, borrowers will receive a mortgage closing disclosure which outlines the total funds needed to close.

💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

The Takeaway

FHA appraisals estimate a property’s value and assess its condition to determine if it meets safety and livability standards set by HUD. Understanding the conditions and issues that won’t pass FHA inspection is important for buyers and sellers alike.

SoFi offers a wide range of FHA loan options that are easier to qualify for and may have a lower interest rate than a conventional mortgage. You can put down as little as 3.5%, making an FHA loan a great option for first-time homebuyers.

FAQ

How does the appraised value affect the loan amount?

With FHA loans, the appraised value of the property determines the loan amount a borrower can qualify for.

Can you contest an FHA appraisal?

Yes, you can contest an FHA appraisal and provide additional information to inform the property valuation. However, there’s no guarantee that the appraiser will change the valuation.

What happens if the property doesn’t meet FHA requirements?

If a property doesn’t meet FHA requirements, buyers can ask the seller to make the necessary repairs. Alternatively, buyers can consider other types of home loans, such as a conventional mortgage.

How do FHA appraisals impact refinance applications?

If a home appraises for less than its owner thought it was worth, this could affect the ability to refinance, or the available loan amount for the refinance. Ultimately, a refi plan could be thrown off course by an unexpectedly low appraisal.

Is an FHA appraisal different for a new-construction home?

A new-construction home still has to meet the FHA’s requirements and standards. A key difference in the FHA appraisal process for new homes: If the home is 90% or less completed, the lender must provide the appraiser with a copy of the floor plan and other documents necessary to determine the size and quality level of the house. If construction is more than 90% complete, the lender must provide a list of what will be installed or completed after the inspection date.

How long is an FHA appraisal good for?

An FHA appraisal is valid for 180 days unless it’s updated. If updated, an appraisal can be good for up to one year.

Can an FHA appraisal affect interest rates?

An FHA appraisal won’t directly affect the interest rate you are offered for an FHA loan; however, if the home you wish to purchase appraises for less than the sale price, then the appraisal may affect your ability to obtain an FHA loan.

How long do you have after appraisal to close an FHA loan?

An FHA appraisal is good for 180 days and can be extended under certain conditions. But buyers typically close within 30 to 45 days after the appraisal.

Photo credit: iStock/valentinrussanov

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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-Q425-201

Personal loans can be an appealing way to access cash partly due to their flexibility. They can be used for almost any purpose, whether to fix up a home or consolidate credit card debt. Borrowers can receive anywhere from $1,000 to $100,000, choose a fixed or variable interest rate, and even select the length of the loan.

Read on to find out more about how personal loans work, how to qualify, their advantages and disadvantages, and whether a $15,000 personal loan is right for you.

Understanding $15,000 Personal Loans

A $15,000 personal loan is a sizable amount that can serve many purposes. Common personal loan uses include making large purchases (including travel financing), covering living expenses for a defined period, consolidating debt, and making home improvements.

Here are some factors to consider before applying for a $15,000 loan:

•   Interest rate. Interest rates can be fixed or variable. The interest rate that a lender charges will depend on your credit rating and the length of the loan among other factors, but rates can be lower than, say, credit cards. Generally, the better your credit score, the lower your interest rates will be.

•   Repayment term. This is how long you have to pay off a loan for $15,000. You may pay less in interest over the life of the loan if you choose a loan with a shorter repayment term.

•   Monthly payments. Most personal loans have fixed monthly payments based on the amount borrowed, the interest rate, and the term. This makes budgeting easier because the borrower knows how much they must pay each month.

•   Fees. Charges vary by lender but may include late penalties, an origination fee, returned check fee, and prepayment penalties if you pay off your loan early.

•   Collateral. Personal loans are typically unsecured, which means no collateral is required. If you don’t qualify only for an unsecured loan, you may select a loan cosigner with a stronger credit rating to help you get approved.

Recommended: Guarantor vs Cosigner

Pros and Cons of Taking Out a $15,000 Loan

Here are some upsides and downsides of a $15K personal loan to consider. In terms of positives:

•   Access to a lump sum of cash that can be used for almost any legal purpose, though typically not for business expenses or tuition

•   Potentially lower interest rates than credit cards

•   Quick application, approval, and funding processes

•   Timely payments can help build credit scores

•   Usually fixed-rate for predictable payments

•   Typically no collateral required

Next, consider the downsides, which include:

•   Locks you into a lump sum disbursement, which can be less flexible than a line of credit

•   May have higher interest rates than secured funding options, such as home equity loans and lines of credit (HELOCs)

•   Additional fees can be assessed, such as origination fees and prepayment penalties

•   Can negatively impact your credit profile, from the initial hard credit inquiry when you apply and increasing your debt-to-income ratio to triggering damage if you make a payment late or miss it altogether

•   Could open the door to a debt spiral if the loan is used for debt consolidation and you keep making purchases you can’t really afford

•   Overall costs can be high, even if not as costly as, say, using your credit card

Here is the same information in chart form:

Qualification Requirements for a $15,000 Personal Loan

In terms of requirements for a personal loan of this size, consider these points.

Income and Employment Verification

When deciding whether to approve your loan application and, if so, what interest rate and terms to offer, lenders usually want to see that you are employed and have sufficient income to repay the loan. You may be asked to show proof of income and employment, often with pay stubs, W2s and/or a signed letter from your employer. Self-employed? You could be required to share copies of your latest tax returns or bank deposit information.

Debt-to-Income Ratio Guidelines

Another important personal loan qualification is debt-to-income ratio (DTI), which compares your gross monthly income to the monthly payments you make on your debts. In general, the lower your DTI, the more desirable you are as a borrower for a lender. A good rule of thumb is to maintain a DTI ratio of 36% or less.

In addition, you will likely need a credit score at least in the good range for a $15,000 personal loan at a favorable rate. However, many lenders don’t state a minimum required credit score because they will vary the terms for each borrower depending on their credit history.

Exploring Lenders for $15,000 Personal Loans

Online lenders, traditional banks, credit unions, and peer-to-peer lending platforms may all provide $15,000 personal loans.

Online Lenders vs Traditional Banks

Some online lenders prequalify borrowers so they can see the terms, and many will deposit funds into a bank account within one to two days.

Traditional banks may offer better terms to their members because there is a pre-existing relationship. But they may also want to meet with a borrower in person to negotiate the loan.

Loan amounts can range from $1,000 up to $100,000. The average personal loan interest rate is 12.25% as of October 2025. However, the rate you receive will depend in part on your credit score, loan amount, and length of the loan.

Credit Unions and Peer-to-Peer Platforms

Other options for loans include credit unions. You typically need to meet eligibility criteria to belong to a credit union, which could depend upon where you live, your career, or other criteria. Credit unions are often known for having affordable rates, so they may be worth investigating.

Peer-to-peer platforms bypass traditional lenders and provide loans from an individual or company that invests in your loan. It’s important to understand the loan terms and fees with this and other options.

A personal loan calculator can help you determine borrowing costs. In the example below, notice how different loan terms and interest rates impact the total cost of a $15,000 loan.

Tips for a Successful $15,000 Personal Loan Application

The steps to getting approved for a personal loan are typically the same regardless of the lender. The first step, before you even apply, is to review your credit history. You can pull a credit report for free from each of the three major credit bureaus — Equifax®, Experian®, and TransUnion® — from the website AnnualCreditReport.com. Then you can file a dispute online to have any inaccuracies removed. This can boost your credit rating and ensure you get the best terms from a lender.

Here are the basic application steps you’ll need to be prepared for:

1. Check Your Eligibility

Shop around for the best loan terms and find out if you qualify. Check both online lenders and traditional lenders, paying special attention to origination fees and prepayment penalties.

2. Get Prequalified

Getting prequalified will show you what terms the lender is offering based on your credit history. Fill out the online form, including how much you want to borrow and your desired payoff time frame.

Lenders will pull your credit report to prequalify you, which may ding your credit score. Focus on lenders who will perform a “soft inquiry” for prequalification, which will not affect your credit rating.

Recommended: What’s the Difference Between a Hard and Soft Credit Check?

3. Check the Terms

Once you are prequalified, review the preapproval letter and check the loan amount. Check whether it is an unsecured or secured loan, the annual percentage rate (APR), and whether the interest rate is fixed or variable. Pay attention to the monthly payment and the payback term. Also look for fees, penalties, and other potential charges.

4. Apply for the Loan

Gather the documents that you will need to apply for the loan. Borrowers typically need to upload a pay stub, mortgage or rent agreement, debt documentation, proof of identity, and their social security number.

Managing and Repaying Your $15,000 Personal Loan

It’s understandable if your focus is mostly on how to get approved for a personal loan. But just as important is figuring out how you’ll pay it back.

Setting Up Automatic Payments

It can be hard to juggle multiple payments such as a personal loan, home mortgage, and credit cards. Even a single monthly payment can be challenging to manage if you’ve got a busy life. That’s why it’s wise to set up automatic payments for your personal loan. That way, you don’t need to worry about paying a bill late or missing a payment for a cycle.

Your lender likely offers tools to automate the process, which can simplify your life.

Avoiding Late Fees and Penalties

If you choose not to automate payments, you may want to set up recurring reminders in your mobile device’s calendar to keep you on track. There is often a grace period of 10 to 15 after the due date in which you can pay the loan, but after that, either a flat fee or percentage of the monthly payment (say, 3% to 5%) is typically assessed. If you don’t pay the lender at all for 90 to 180 days, you risk having your loan put into collection, which can severely damage your credit and lead to legal action.

By the way, it’s not only late payments that can trigger fees. Paying off a loan early can lead to prepayment penalties. That’s because the lender is losing out on future interest payments and wants to be compensated. Check the fine print before agreeing to a personal loan so you fully understand if this is a condition of your loan offer.

Building Your Credit Score for Future Loan Opportunities

One effective way to position yourself for better loan rates and terms is to work on building your credit score. As mentioned, lenders usually prefer to see a credit score at least in the good range (670-739) to qualify for a $10,000 or $15,000 personal loan, though credit requirements vary.

If your credit isn’t where you want it to be, there are several ways to build (or rebuild) it. Here are some steps you can take:

•   Pay your bills on time, every time. Lenders like to see a history of on-time payments, plus it can positively impact your credit profile.

•   Pay down debts. Besides showing lenders that you can manage your credit responsibly, paying off debts can lower your credit utilization ratio, which contributes 30% of your FICO® Score. Aim for a ratio of 30% or under.

•   Don’t close older accounts. Doing so can bring down the length of your credit history, which makes up 15% of your credit score.

•   Diversify your credit mix. Having a mix of credit products can positively impact your credit (credit mix accounts for 10% of your score). Examples run the gamut from credit cards to personal loans to student loan refinancing.

Recommended: Personal Loan Alteratives

The Takeaway

Personal loan interest rates are determined by a borrower’s credit rating and financial history, among other factors. Typically, the higher the credit rating, the lower the interest rate. For consumers with good credit, a $15,000 personal loan can be a more affordable form of debt than credit cards. For consumers with bad credit, the higher interest rate may make a $15,000 personal loan less attractive.

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

FAQ

What credit score is needed for a personal loan for $15,000?

A credit score in the good, very good, or exceptional range is typically required for a $15,000 personal loan. Some lenders that cater to people with poor credit will charge higher interest rates and fees to cover their elevated risk.

How long can I get a $15,000 personal loan for?

Personal loans typically have terms between two and seven years. The shorter the repayment period, the less interest you will pay over the life of the loan. That said, your monthly payments will likely be higher.

What would payments be on a $15,000 personal loan?

The monthly payments on a $15,000 loan depend on the interest rate and repayment terms. For a 5-year loan at 12.00% interest, you’ll pay about $334 a month. If you know how much you want to borrow, over what period, and at what interest rate, an online loan calculator can tell you what your payments will be.

Can I get a $15,000 personal loan with bad credit?

If you have bad credit, you may indeed find a lender who will give you a $15K personal loan. However, it is likely that the interest rate and fees will be considerably higher than what is offered to those with higher credit scores, and the terms may be less favorable as well.

Is it better to get a personal loan from a bank or online lender?

When looking for a personal loan, it’s not a matter of a bank or online lender being the better choice. Rather, it’s which one suits your needs and financial profile best. If, for example, you already have a relationship with a bank, you may find benefits to keeping your business there. Some online lenders, however, may offer more options for those with fair or poor credit.

Photo credit: iStock/fizkes

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

SOPL-Q425-060

Personal loans are useful tools because you can use them for just about any purpose. From covering emergency car repairs to paying for home renovations to consolidating high-interest credit card debt, personal loans can be a game-changer for your finances. But, as with any kind of loan, personal loans typically come with fees.

Here, you’ll learn about personal loan options and the impact each can make on your finances so you can decide what suits you best.

Personal Loan Origination Fees, Explained

Personal loan origination fees serve as startup costs for initiating a loan. These are one-time fees that lenders charge to cover costs such as applications and underwriting. These fees often range from 1% to 6% but may go as high as 10%.

Not every personal loan has an origination fee, however. Often, borrowers with an excellent credit score can qualify for personal loans without origination fees (or at least much lower fees).

Some lenders make origination fees optional. At first glance, this might seem like a no-brainer. You might think, “Why should I pay a loan fee if I don’t have to?” But often, lenders may offer you a lower interest rate if you pay an origination fee upfront. This can save you money on your personal loan in the long run.

•  A smart strategy: Look at the loan annual percentage rate (APR), which represents the true cost of the loan. The origination fee and interest rate are both bundled into this rate. This makes it easier to compare loans with and without origination fees to determine which is actually the better deal.

Personal Loan Origination Fee Example

To see how an origination fee affects your loan, here’s an example — one loan with an origination fee and one without.

In this scenario, here’s how your personal loan works:

•  Amount borrowed: $50,000

•  Interest rate: 10%

•  Loan term: 5 years

With an origination fee of 0%, you’d pay a total of $63,741.13 over the next 60 months, which is the term of the loan.

But what if there’s a 5% origination fee? You’ll still pay $63,741.13, but you’ll either pay $2,500 out of pocket upfront or have $2,500 deducted from the loan amount — borrowing only $47,500.

But remember, some lenders may offer you a lower interest rate in exchange for paying an origination fee. In this instance, in the scenario above, the lender may drop the interest rate from 10% to 7%. In that case, your total loan would look like:

•  Amount borrowed: $50,000

•  Interest rate: 7%

•  Loan term: 5 years

The total payments over 60 months would be $59,403.60, or $4,337.53 less by paying the $2,500 origination fee. So that equals a savings of $1,837.53 once you deduct the fee. In this way, you can see why loan fees are not necessarily bad.

Recommended: Personal Loan Terminology

How Are Loan Fees Determined?

Lenders consider a number of factors when calculating origination fees for personal loans, including:

•  Credit score: Unsurprisingly, your credit score plays a big role in determining your origination fee. Lenders see borrowers with strong credit as less of a risk, so fees are generally lower.

•  Debt-to-income ratio: The amount of debt you have compared to the amount of money you make is your debt-to-income ratio (DTI). This helps lenders determine how capable you are of meeting your monthly loan repayment commitment. The higher your DTI, the larger risk you are perceived to be — and that may be reflected in your origination fees.

•  Cosigner: Even if your credit isn’t in great shape, you can still potentially lower your origination fee (and interest rate) by having a cosigner with stronger credit.

•  Loan details: The amount you’re borrowing and the length of the loan can also impact personal loan origination fees.

How Are Loan Fees Paid?

If you choose a personal loan with an origination fee, you usually pay in one of two ways:

Taken Out of the Funds You Receive

In this scenario, you pay the whole amount of the origination fee at the start of the loan. Rather than dig in your pockets to come up with the cash, it’s usually subtracted from the amount you borrow.

For instance, if you borrow $20,000 and there’s a 5% origination fee, you’d owe $1,000. Lenders will typically instead give you $19,000, because they’ve taken the fee out of the funds they are lending you. However, you’ll have to pay back the full $20,000, plus interest.

Keep this in mind when taking out the loan. If you need the full $20,000, you should actually request a slightly larger loan so that, after the origination fee, you walk away with $20K.

Note: In some instances, a lender may require an out-of-pocket payment for the origination fee.

Rolled Into the Loan

Alternatively, lenders may simply roll the origination fee into the loan. In the example above, you’d receive $20,000 at the start of the loan, but with a 5% origination fee built into the loan, the personal loan principal (the amount you have to pay back) is $21,000.

Recommended: Where to Get a Personal Loan

How to Compare Loan Terms

No matter what you plan to use a personal loan for, it’s wise to comparison-shop carefully. Simply because one loan comes with an origination fee and another one doesn’t, that doesn’t mean you should go with the fee-free option. In fact, in the long run, a personal loan with an origination fee could be cheaper. Here’s how to find the best personal loan offer for you:

1. Shop Around

First and foremost, it’s a good idea to get quotes from multiple lenders. Most lenders allow you to get prequalified online, without impacting your credit score. Having a handful of offers allows you to weigh your options and make an informed decision.

2. Compare APRs

It can be tempting to see that one loan has a high origination fee, one has a moderate fee, and one has no fee at all — and simply choose the loan without the fee. However, origination fees are a part of a loan’s APR, which also includes the interest rate and gives you a better idea of the true cost of the loan.

To truly compare apples to apples, focusing on APR is your best bet.

3. Think About Loan Length

Shorter loan terms tend to have lower interest rates, but because you’re paying off the loan in a shorter amount of time, monthly payments will be higher. Conversely, you may find a lower monthly payment with an extended term, but then you’ll likely be paying more interest over the life of the loan.

It’s a good idea to play around with each loan you’re considering to see how various loan lengths will affect your monthly payments and the total amount you’ll spend over the life of the loan.

Other Types of Loan Fees

Origination fees may be the most common type of personal loan fee we consider, but there are other fees to review in the terms and conditions from a lender before signing on the dotted line. These fees may include:

•  Prepayment penalties: Some lenders charge you for paying off the loan early. Why? When you pay it off early, the lender makes less money from interest, so it’s in their best interest to keep the loan active as long as possible. Many lenders, however, do not charge prepayment penalties, so shop around.

•  Late fees: You have a monthly obligation to make your fixed payment on a personal loan. Just as with credit cards and student loans, you may be charged a late fee if you miss your payment date.

•  Monthly service fee: Some lenders charge a service or payment processing fee, depending on how you pay each month.

The Takeaway

While the thought of paying fees on top of interest when borrowing money can be overwhelming, personal loan origination fees aren’t always a bad thing. In fact, many lenders with origination fees can offer you lower interest rates, meaning you may spend less money in the long run by choosing a personal loan with an origination fee. Compare options carefully to find the best loan for your needs.

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

FAQ

What is a no-fee personal loan?

A no-fee personal loan is typically a personal loan with no origination, prepayment penalty, or late fees. Other variations may exist, depending on the lender.

Do personal loans have fees?

Personal loans often have origination fees, which can range anywhere from 1% to 10% of the loan amount. There may also be applicable prepayment, late, and other fees assessed.

How much would a $10,000 personal loan cost over 5 years?

The amount that a personal loan will cost depends on the principal, the term, and the interest rate. Once you know what interest rate you are likely to qualify for, you can use a personal loan calculator to assess the overall cost.

Photo credit: iStock/milorad kravic

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

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If you want to borrow a large amount of cash but need to prove additional household income, your spouse may be able to help. You cannot simply list a spouse’s income with, or instead of, your own if you apply in your name alone. However, you can list their income if your spouse agrees to become a “co-borrower” on the loan.

Here’s a closer look at when and how you can use your spouse’s income on a loan application.

What Is a Personal Loan?

A personal loan is a type of installment loan that is paid back with interest in equal monthly payments over a set term, which can range from one to seven years. Personal loan interest rates tend to be lower than for credit cards, making them a popular option for consumers who need to borrow a large amount. Common uses for personal loans include major home or car repairs, medical bills, and debt consolidation.

There are different types of personal loans. Unsecured personal loans are the most common. These are not backed by collateral, such as your car or home.

Recommended: What Is a Personal Loan?

Checking Your Credit

Before you decide whether to include your spouse’s income, gather this information to assess your own financial standing.

Credit Report

Lenders will look at your full credit history to evaluate your creditworthiness, so it’s smart to review your credit reports before applying for a loan. You can request a free credit report once per week from each of the three major credit bureaus — Equifax®, Experian®, and TransUnion® — through AnnualCreditReport.com.

When you receive your reports, review them closely and make a note of any incorrect information. If you see any mistakes or outdated information (more than seven years old), you can file a dispute with the credit bureau(s) reporting the error.

If you have a limited or no credit history, consider taking some time to build your credit before applying for a loan.

Credit Score

Next, take a look at your credit score. You can often get your credit score for free through your bank or credit card company. The minimum credit score requirement for a personal loan varies from lender to lender. Broadly speaking, many lenders consider a score of 670 or above to indicate solid creditworthiness.

While there are personal loan products on the market designed for applicants with bad credit, they typically come with higher interest rates.

Debt-to-Income Ratio (DTI)

Your debt-to-income ratio (DTI) is the amount of debt you have in relation to your income, expressed as a percentage. Although some personal loan lenders may be willing to work with borrowers with DTIs as high as 50%, your chances of being approved for a personal loan and getting a good rate are higher if your DTI is below 30%. If your DTI is too high, you have two options: pay down your debt, or increase your income.

Shop Around Online

Shop around and “prequalify” with different lenders to compare the interest rates and monthly payments you’re offered with your income alone. When you’re comparing lenders, keep an eye out for any hidden fees, such as origination fees, prepayment penalties, and late fees. A personal loan calculator shows exactly how much interest you can save by paying off your existing loan or credit card with a new personal loan.

Now that you have a firm grasp of your financial standing, you can assess whether you need to include your partner’s income as part of your application.

Using Your Spouse’s Income

You may be wondering, “Can I use household income for a personal loan?” First, the bad news. You cannot simply use your spouse’s income or your combined household income, even with their permission, when applying for a personal loan in your own name.

Now for the good news. If your partner has a strong credit history and income, they can become a secondary “co-borrower” on the loan. A co-borrower can help improve your chances of approval, along with the interest rates and terms you’re offered.

What Is a Co-Borrower?

A co-borrower applies for the loan alongside you. Both of your financial information is taken into consideration, and both of you are responsible for paying back the loan and its interest.

Let’s look at the pros and cons of this arrangement.

Pros of Using a Co-Borrower

Because co-borrowers have equal rights, the arrangement is well-suited for people who already have joint finances or own assets together. Using a co-borrower allows you to present a higher total income than you can alone. A higher income signals to lenders that it’s more likely you’ll be able to make the monthly loan payments.

Plus, if you manage your loan well, both your credit histories will get a boost over time.

Cons of Using a Co-Borrower

Each borrower is equally responsible for repayment over the entire life of the loan. If the primary borrower cannot make the payments, that could negatively impact the credit of both parties. It’s important to have confidence in a co-borrower’s ability to repay the loan.

The loan will appear on both of your credit reports as a debt, which can affect the ability of one or both of you to get approved for another loan down the line.

Co-borrowers also have equal ownership rights to the loan funds or what the loan funds purchased, so trust is a big factor in choosing a co-borrower.

Applying for a Personal Loan with a Co-Borrower

The basic process of applying for a personal loan is the same no matter the number of applicants. The lender will likely ask both of you to provide certain information up front:

•   Personal info: Photo IDs, Social Security numbers, dates of birth

•   Proof of employment, and your employment histories

•   Proof of income

The lender will then run a hard inquiry of your credit reports, which might temporarily ding your credit score by a few points. Depending on the complexity of your application, you can expect to get your personal loan approved in one to ten days.

Recommended: What’s the Difference Between a Hard and Soft Credit Check?

Alternatives If You Don’t Qualify

If your loan application is rejected, take heart: You still have options. Let’s take a closer look at three avenues you may want to explore.

Consider a Joint Credit Card or Line of Credit

With a joint credit card or joint line of credit, you and your fellow account-holder equally share the spending and repayment responsibility. And because the account is in both of your names, it impacts both of your credit scores. Regular, on-time payments and low credit utilization can help build up your scores, while late payments and accumulated debt may bring it down.

Improve Your Credit and Reapply

This strategy will take some time and patience, but building your credit can help you and your spouse secure better loan terms down the road. There are several steps you can take, including paying your bills on time, paying down debt, and reviewing your credit reports regularly and disputing inaccuracies.

“One way to build credit is to display a history of responsible borrowing,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “For that reason, you may want to place monthly bills and other expenses on your credit card. Just be sure to pay the bill in full each month by the due date.”

Explore Secured Personal Loans

With a secured personal loan, you put up collateral that the lender can take possession of if you fail to repay the loan. While that prospect can be a drawback, this type of loan does have its share of benefits. For starters, it can be a good way to build credit, provided you make regular, on-time payments. And secured personal loans also tend to have a lower interest rate than unsecured loans. (Note: SoFi does not offer secured personal loans. However, we do offer home equity loans, which are secured by your home, and offer lower interest rates than unsecured personal loans.)

The Takeaway

You cannot simply list your partner’s income along with, or instead of, your own when applying for a personal loan in your own name. However, if your spouse agrees to become a co-borrower on the loan, both your incomes and credit histories will be considered. This can increase your chances of getting approved, qualify you for a larger loan, and/or give you access to better loan rates and terms. The catch is that both parties have equal responsibility for paying back the loan, and any late or missed payments can negatively affect both your credit scores.

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

FAQ

Can I use my husband’s income for a personal loan?

You can use your spouse’s income for a personal loan only if they agree to become a co-borrower on the loan application. That gives you equal ownership of the funds, but also equal responsibility for paying back the loan. How you manage your loan payments can affect both your credit scores — for better or worse.

Can you use someone else’s income for a loan?

You can use someone else’s income for a loan only if they agree to become a co-borrower on the loan. That gives them equal ownership of the funds, and also equal responsibility for paying back the loan. This is a common arrangement between spouses, and between a parent and child.

Can a stay-at-home parent get a personal loan?

Loans for stay-at-home moms or dads are possible if the borrower has a strong credit history and can provide proof of income to show they can make the payments. Without that, they may need to find a co-borrower. A co-borrower’s credit and income can be used to help the primary borrower qualify for a loan, or access better interest rates and loan terms. However, a co-borrower will have equal ownership of the funds, and equal responsibility for repaying the loan. Using a spouse or parent as a co-borrower is a common arrangement when a stay-at-home parent cannot qualify on their own.

How does applying with a co-borrower affect your loan terms?

If you apply with a co-borrower, you may be able to secure better loan terms because the lender considers both applicants’ financial profiles. But remember, you and your co-borrower are also on the hook for paying back the loan.

What are the risks of being a co-borrower on a personal loan?

When you’re a co-borrower on a personal loan, you’re essentially assuming the same financial obligation and risk as if you had taken out the loan yourself. This means if the primary borrower defaults on the loan, the debt is as much your responsibility as it is theirs. And any late or missing payments will negatively impact your credit.

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

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Borrowing money online has become one of the fastest and most convenient ways to access funds when you need them — but it’s not something to jump into without understanding how it works. From choosing a reputable lender to comparing interest rates, fees, and repayment terms, there are several important factors that can impact both your wallet and your peace of mind.

Keep reading to learn how to borrow money safely, how to avoid common pitfalls, and what to look for so you can make a confident, informed financial decision.

Why Have Online Lenders Grown in Popularity?

Online lenders have surged in popularity because they offer a faster, more convenient borrowing experience than many traditional banks. Instead of visiting a branch or dealing with long processing times, borrowers can apply, upload documents, and receive decisions entirely online — often within minutes. Here’s what online lenders may offer:

Familiarity, for Some Customers

A growing proportion of consumers is accustomed to using computers for many aspects of daily life, and making online financial transactions is no different. More people may be looking for things like:

•   Online applications

•   Streamlined underwriting processes

•   Automated funds transfers

A Different Kind of Personal Service

Personalization in the past meant having a face-to-face relationship with a banker. Personalization in today’s world can mean information that is relevant to an individual’s financial needs. This might look like:

•   Personalized financial trends in a portfolio so they can make informed decisions about their financial goals

•   Insights about their spending and saving so they can budget monthly income and expenses to meet their needs

Time Saving

Customers may also want an experience that saves time. Automating tasks is a timesaver that can easily be done with online financial tools. In the case of online lending, the option to set up automatic bill payments and automate other tasks are likely to be considerations when a customer is choosing an online financial company.

💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

Where to Borrow Money Online

When looking for an online lender, you should consider the reputation of the lender, safety precautions the lender has in place, and types of loan products offered. In addition, each person should determine their individual comfort level of doing business with or without personal interaction. Here’s where you can borrow money online:

Banks

Borrowing money online from a bank typically involves a streamlined digital application that allows you to complete the entire process from your computer or phone. Most banks offer online personal loans, where you provide basic information such as your income, employment details, and desired loan amount. The bank then performs a credit check and may request additional documentation, like pay stubs or bank statements, which you can upload directly through a secure portal.

If approved, you’ll receive the loan terms electronically and can sign the agreement using e-signature. Funds are usually deposited directly into your bank account within a few business days.

Recommended: How to Apply for a Personal Loan

Credit Unions

Credit unions generally have physical locations, but may also have online services. Financial services offered by credit unions are similar to banks and other financial institutions, but there are usually specific requirements to be a member of a credit union, such as employment-related or residence in a particular region. Credit unions may offer member benefits such as low fees, high savings rates, and low loan rates.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending is a type of online borrowing where individuals can obtain loans directly from other individual investors rather than from a traditional bank or credit union. Through a digital platform, borrowers submit an application, and investors choose to fund all or part of the loan in exchange for earning interest on the repayments.

Online Lenders

You can borrow money from online lenders by completing a fully digital application that typically takes just a few minutes. These lenders allow you to upload documents, verify your identity, and receive approval without visiting a branch. Many use automated underwriting systems that review your credit, income, and banking activity quickly, which can speed up the approval process.

Once approved, funds are usually deposited directly into your bank account, sometimes as fast as the same day or the next business day.

Options to Think Twice About

Along with favorable options for lending that are available, there are some that may not bring about the best financial outcomes.

Credit Cards

At its core, a credit card is a short-term loan — specifically, a line of credit. If the account balance is paid in full before each month’s due date, it’s a no-interest loan. Financial drawbacks arise, however, when that balance is not paid in full each month, carrying over a balance due.

Credit card interest rates tend to be high, and they accrue on any unpaid balance, compounding what is owed in the next billing cycle. The average credit card annual percentage rate (APR) is currently 24.04% for new credit card offers. It’s easy to see how this can lead to a cycle of debt. Paying off a loan over time is probably more efficiently done with other financial tools.

Recommended: Personal Loan Calculator

Predatory Lenders

It’s important to be aware of predatory lending, which is the practice of offering loans with unfair, deceptive, or abusive terms that exploit borrowers and make repayment difficult or impossible. Both payday loans and title loans are a type of predatory lending. Repeat borrowing is common with these types of loans.

•   Payday loans are short-term loans, typically to be paid off in the borrower’s next payday. Interest rates are extremely high, often 400% or more.

•   Title loans, or pawn loans, use a borrower’s vehicle or other item of value as collateral. The APR on a title loan can be as much as 300%, and lenders often charge additional fees.

💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

Borrowing money online has never been more accessible, but it’s important to approach the process with clarity and caution. By understanding the different types of ways to borrow money online, comparing interest rates and terms, and checking for reputable, transparent practices, borrowers can confidently choose the option that best aligns with their financial situation.

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

FAQ

Can I borrow money online instantly?

Yes, you can borrow money online instantly through various lenders offering quick loans. These include payday loans, personal loans, and credit card cash advances. However, be cautious of high interest rates and fees, and ensure the lender is reputable and licensed. Always read the terms and conditions carefully.

How can you protect yourself when borrowing money online?

To protect yourself when borrowing money online, verify the lender’s legitimacy, check for a secure website (https), read the terms and conditions, and understand fees and interest rates. Use reputable credit reporting agencies to check the lender’s history and consider consulting a financial advisor.

Why have online lenders become more popular?

Online lenders have become more popular due to their convenience, quick approval processes, and accessibility. They often offer a wider range of loan products and can be more flexible with credit requirements. Additionally, the ability to compare multiple lenders easily and apply from anywhere has attracted many borrowers.

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

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