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One rule of thumb when buying a home is to not spend more than three times your annual salary. If you earn $36K a year, that means you can afford to spend around $108,000 on a house. This assumes you have no other debts you’re paying off, but also that you haven’t been able to save much for a down payment.

Of course, you’ll want to talk to a lender for your individual situation, which could qualify you for more (or less). If it sounds overwhelming, don’t worry. We’ll walk you through what it takes to qualify for a home, no matter what your income level is.

What Kind of House Can I Afford With $36K a Year?

At a $36,000 annual income, you may need some help affording a home in today’s market. You’ll need to eliminate debt and make sure you have a good credit score, as well as find programs and lenders that can help. In addition to income and debt, your lender will take into account:

•   Your down payment

•   What taxes and insurance will cost

•   What interest rate you qualify for

•   The type of loan you’re applying for

•   Whether or not they can let your debt run up to 50% of your income

Understanding Debt-to-income Ratio

Beyond interest rates, debt is your biggest enemy to home affordability. The more debt you have to pay on a monthly basis, the less you’re able to pay toward a mortgage. In other words, your $200 monthly credit card payment could cost you thousands on the purchase price of a home.

To understand the debt-to-income (DTI) ratio, add all of your debts together and then divide that number by your monthly income. Your lender calculates your DTI ratio to determine how much you can afford as a monthly payment on a mortgage. The guideline is 36%, but some lenders can go higher on a home mortgage loan.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

How to Factor in Your Down Payment

A down payment increases how much home you’ll be able to qualify for. The more you’re able to put down, the more home you’ll be able to afford.

You’ll also want to consider whether you can put down a deposit of more than 20% so you don’t have to buy mortgage insurance. This may help you qualify for a higher mortgage. Use a mortgage calculator to see how a down payment affects home affordability.

Factors That Affect Home Affordability

Home affordability goes beyond your down payment and DTI ratio. You also want to look at:

•   Interest rates: When interest rates are high, borrowers qualify for a lower mortgage. When they’re low, it may be possible to qualify for a higher mortgage.

•   Credit history and score: Your credit score is a reflection of your credit habits, and with a higher credit score, you’ll qualify for the best interest rates, giving you more buying power.

•   Taxes and insurance: If you live in an area with higher taxes, insurance, or homeowners association dues, these will be taken into account by your lender. You’ll qualify for a lower mortgage amount when these numbers are high.

•   Loan type: Depending on the type of loan you get, your interest rate, credit score, and down payment amount can affect how much house you can afford.

•   Lender: Lenders have the final say when it comes to approving you for a mortgage. In special circumstances, you may be able to qualify for more than a 36% DTI ratio. Some lenders approve borrowers with a DTI ratio around 50%.

•   Location: If you’re shopping in a state with a high cost of living, you’ll have a hard time qualifying for a mortgage no matter what your income level is. You may want to consider moving to a more affordable area, if possible.

Recommended: Best Affordable Places to Live in the U.S.

How to Afford More House With Down Payment Assistance

Down payment assistance programs can help you qualify for a larger mortgage. These types of programs have money to help with down payment or closing costs. They are usually offered at the state or local level with both grant and second mortgage programs.

They may limit participation to first-time homebuyers or borrowers with lower incomes, but you should still look into these programs and see if you can qualify.

Examples include CalHFA MyHome Assistance Program and the “Home Sweet Texas” Home Loan Program. You can look for programs in your own state, county, and city.

Recommended: Tips to Qualify for a Mortgage

How to Calculate How Much House You Can Afford

Knowing how much home you are likely to qualify for doesn’t have to be a mystery. While your lender may have flexibility, they generally follow these guidelines:

The 28/36 Rule: Lenders will look for housing payments (including mortgage, taxes, and insurance) to be no more than 28% of your income and total debt payments (including mortgage, car loan, student loan, etc.) to be no more than 36% of your income.

The 35/45 Rule: Some lenders allow for higher debt levels. This rule says the housing payment can be up to 35% of your income and total debt can be up to 45%.

An easy way to calculate how much home you can afford is with a home affordability calculator.

Home Affordability Examples

On a $36,000 annual salary, you’ll have $3,000 each month for expenses. Using the 36% debt-to-income ratio, you can have a maximum debt payments of $1,080 ($3,000 * .36). In the two examples below, taxes ($2,500), insurance ($1,000), and interest (6%) are the same for a 30-year loan term.

Example #1: Significant debt, large down payment

Monthly credit card debt: $100

Monthly car payment: $500

Student loan payment: $100

Total debt = $700

Down payment = $20,000

Maximum DTI ratio = $3,000 * .36 = $1,080

Maximum mortgage payment = $380 ($1,080 – $700)

Home budget = $34,733

Example #2: No down payment, little debt

Monthly credit card debt: $0

Monthly car payment: $0

Student loan payment: $100

Total debt = $100

Down payment: $0

Maximum DTI ratio = $3,000 * .36 = $1,080

Maximum mortgage payment = $980 ($1,080 – $100)

Home budget = $96,314

How Your Monthly Payment Affects Your Price Range

The amount you’re able to pay toward a mortgage each month determines how much home you’ll be able to afford. Any monthly payments you have, such as debt, can take away from how much you’re able to pay for a mortgage. Conversely, how much income you earn in a month can improve how much mortgage you can qualify for.

Interest rates also play a huge role in your monthly payment. Higher interest rates mean you’ll qualify for a lower mortgage while lower interest rates improve home affordability. That’s why homeowners get a mortgage refinance when interest rates drop.

Types of Home Loans Available to $36K Households

The different types of mortgage loans also affect home affordability. Some have a zero down payment option, flexible credit requirements, less expensive mortgage insurance, and varying interest rates. The different types of mortgage loans include:

•   FHA loans: Loans backed by the Federal Housing Administration are great for buyers with unique credit situations that can’t get approved for conventional financing. It can be more expensive to go with an FHA loan, but there are low down payment options and flexible credit requirements for those with a score as low as 500.

•   USDA loans: United States Department of Agriculture mortgages, available in rural areas, offer great interest rates, zero down payment options, and competitive mortgage insurance rates. Some USDA mortgages are directly serviced by USDA, and have a subsidized interest rate.

•   Conventional loans: Many borrowers opt for conventional financing if they qualify. Over the course of a mortgage, this is one of the least expensive types due to competitive interest rates and mortgage insurance premiums that drop off after you pay down the loan past 80%.

•   VA loans: A loan from the U.S. Department of Veterans Affairs is hard to beat for service members, veterans, and others who qualify. You may be able to qualify for a home purchase price with no down payment. VA loans may have great interest rates and flexible credit requirements (depending on the lender).

💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.

The Takeaway

Purchasing a home on a $36,000 salary is a feat you’ll need help with in a market where the U.S. median sale price is $410,800. Whether it’s down payment assistance, paying down debt, nurturing your credit score, or adding income, there are moves you can make to bolster your home budget. In the end, when you move into a place that’s all yours, the hard work will be worth it.

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

FAQ

Is $36K a good salary for a single person?

A single person can afford to live on $36,000 a year in more affordable places in the U.S., but it could still be difficult to afford to buy a home in today’s real estate market.

What is a comfortable income for a single person?

Generally, an income of $40,000 to $60,000 per year is considered comfortable in many U.S. cities. This range allows for a decent standard of living, covering basic needs, some savings, and occasional luxuries. Adjustments may be needed based on cost of living and personal financial goals.

What is a liveable wage in 2025?

A “livable wage” in the U.S. in 2025 typically ranges from about $21 to $30 per hour for a single adult, depending heavily on local housing, childcare, and cost-of-living factors.

What salary is considered rich for a single person?

A salary of $400,000 per year would put you in the top 2% of earners in 2025. However, the definition of “rich” varies by person. One person may feel rich earning $100,000 per year, whereas for another, it may take $750,000 per year.

Photo credit: iStock/mapodile

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

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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.

SOHL-Q425-178

Both personal loans and credit cards provide access to extra funds and can be used to consolidate debt. However, these two lending products work in very different ways.

A credit card credit is a type of revolving credit. You have access to a line of credit and your balance fluctuates with your spending. A personal loan, by contrast, provides a lump sum of money you pay back in regular installments over time. Generally, personal loans work better for large purchases, while credit cards are better for day-to-day spending, especially if you are able to pay off the balance in full each month.

Here’s a closer look at how credit cards and personal loans compare, their advantages and disadvantages, and when to choose one over the other.

Personal Loans, Defined

Personal loans are loans available through banks, credit unions, and online lenders that can be used for virtually any purpose. Some of the most common uses include debt consolidation, home improvements, and large purchases.

Lenders generally offer loans from $1,000 to $50,000 or $100,000, with repayment terms of two to seven years. You receive the loan proceeds in one lump sum and then repay the loan, plus interest, in regular monthly payments over the loan’s term.

Personal loans are typically unsecured, meaning you don’t have to provide collateral (an asset of value) to guarantee the loan. Instead, lenders look at factors like credit score, debt-to-income ratio, and cash flow when assessing a borrower’s application.

Unsecured personal loans typically come with fixed interest rates, which means your payments will be the same over the life of the loan. Some lenders offer variable rate personal loans, which means the rate, and your payments, can fluctuate depending on market conditions.

Personal loans generally work best when they are used to reach a specific, longer-term financial goal. For example, you might use a personal loan to finance a home improvement project that increases the value of your home. Or, you might consider a debt consolidation loan to help you pay down high-interest credit card debt at a lower interest rate.

Recommended: Personal Loan Calculator

Key Differences: Credit Card vs Personal Loan

Both credit cards and personal loans offer a borrower access to funds that they promise to pay back later, and are both typically unsecured. However, there are some key differences that may have major financial ramifications for borrowers down the line.

•   Unlike a personal loan, a credit card is a form of revolving debt. Instead of getting a lump sum of money that you pay back over time, you get access to a credit line that you tap as needed. You can borrow what you need (up to your credit limit), and only pay interest on what you actually borrow.

•   Interest rates for personal loans are typically fixed for the life of the loan, whereas credit cards generally have variable interest rates. Credit cards also generally charge higher interest rates than personal loans, making it an expensive form of debt. However, you won’t owe any interest if you pay the balance in full each month.

•   Credit cards are also unique in that they can offer rewards and, in some cases, may come with a 0% introductory offer on purchases and/or balance transfers (though there is often a fee for a balance transfer).

Line of Credit vs Loan

A line of credit, such as a personal line of credit or home equity line of credit (HELOC), is a type of revolving credit. Similar to a credit card, you can draw from a line of credit and repay the funds during what’s referred to as the draw period. When the draw period ends, you’re no longer allowed to make withdrawals and would need to reapply to keep the line of credit open.

Loans, such as personal loans and home equity loans, have what’s called a non-revolving credit limit. This means the borrower has access to the funds only once, and then they make principal and interest payments until the debt is paid off.

Consolidating Debt? Personal Loan vs Credit Card

Using a new loan or credit credit card to pay off existing debt is known as debt consolidation, and it can potentially save you money in interest.

Two popular ways to consolidate debt are taking out an unsecured personal loan (often referred to as a debt or credit card consolidation loan) or opening a 0% interest balance transfer credit card. These two approaches have some similarities as well as key differences that can impact your financial wellness over time.

Using a Credit Card to Consolidate Debt

Credit card refinancing generally works by opening a new credit card with a high enough limit to cover whatever balance you already have. Some credit cards offer a 0% interest rate on a temporary, promotional basis — sometimes for 18 months or longer.

If you are able to transfer your credit card balance to a 0% balance transfer card and pay it off before the promotional period ends, it can be a great opportunity to save money on interest. However, if you don’t pay off the balance in that time frame, you’ll be charged the card’s regular interest rate, which could be as high (or possibly higher) than what you were paying before.

Another potential hitch is that credit cards with promotional 0% rate typically charge balance transfer fees, which can range from 3% to 5% of the amount being transferred. Before pulling the trigger on a transfer, consider whether the amount you’ll save on interest will be enough to make up for any transfer fee.

Using a Personal Loan to Consolidate Debt

Debt consolidation is a common reason why people take out personal loans. Credit card consolidation loans offer a fixed interest rate and provide a lump sum of money, which you would use to pay off your existing debt.

If you have solid credit, a personal loan for debt consolidation may come with a lower annual percentage rate (APR) than what you have on your current credit cards. For example, the average personal loan interest rate as of late 2025 is 12.25% percent, while the average credit card interest rate is now 20.03%. That difference should allow you to pay the balance down faster and pay less interest in total.

Rolling multiple debts into one loan can also simplify your finances. Instead of keeping track of several payment due dates and minimum amounts due, you end up with one loan and one payment each month. This can make it less likely that you’ll miss a payment and have to pay a late fee or penalty.

Both 0% balance transfer cards and debt consolidation loans have benefits and drawbacks, though credit cards can be riskier than personal loans over the long term — even when they have a 0% promotional interest rate.

Is a Credit Card Ever a Good Option?

Credit cards can work well for smaller, day-to-day expenses that you can pay off, ideally, in full when you get your bill. Credit card companies only charge you interest if you carry a balance from month to month. Thus, if you pay your balance in full each month, you’re essentially getting an interest-free, short-term loan. If you have a rewards credit card, you can also rack up cash back or rewards points at the same time, for a win-win.

If you can qualify for a 0% balance transfer card, credit cards can also be a good way to consolidate high interest credit card debt, provided you don’t have to pay a high balance transfer fee and you can pay the card off before the higher interest rate kicks in.

With credit cards, however, discipline is key. It’s all too easy to charge more than you can pay off. If you do, credit cards can be an expensive way to borrow money. Generally, any rewards you can earn won’t make up for the interest you’ll owe. If all you pay is the minimum balance each month, you could be paying off that same balance for years — and that’s assuming you don’t put any more charges on the card.

When Is a Personal Loan a Good Option?

Personal loans can be a good option for covering a large, one-off expense, such as a car repair, home improvement project, large purchase, or wedding. They can also be useful for consolidating high-interest debt into a single loan with a lower interest rate.

Personal loans usually offer a lower interest rate than credit cards. In addition, they offer steady, predictable payments until you pay the debt off. This predictability makes it easier to budget for your payments. Plus, you know exactly when you’ll be out of debt.

Because personal loans are usually not secured by collateral, however, the lender is taking a greater risk and will most likely charge a higher interest rate compared to a secured loan. Just how high your rate will be can depend on a number of factors, including your credit score and debt-to-income ratio.

Recommended: Using a Personal Loan to Pay Off Credit Card Debt

The Takeaway

When comparing personal loans vs. credit cards, keep in mind that personal loans usually have lower interest rates (unless you have poor credit) than credit cards, making it a better choice if you need a few years to pay off the debt. Credit cards, on the other hand, can be a better option for day-to-day purchases that you can pay off relatively quickly.

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

Is it better to have a personal loan than a credit card?

Typically, credit cards carry a higher interest rate than personal loans, but each financial product has its pros and cons. Consider your situation and the particular use you have in mind for the funds to make the right decision or your needs.

Is it better to apply for a personal loan or a credit card?

Whether a personal loan or a credit card is best for you depends on your needs and your financial situation. Typically, personal loans have lower interest rates and can be appropriate for large expenditures. Credit cards can be convenient for daily spending, but it’s best to pay your balance in full every month to avoid high interest charges.

What are the cons of personal loans?

The downsides of personal loans can include possible high fees and interest rates (which usually depend on your credit score). In addition, if not managed responsibly, a personal loan could damage your credit score.

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-Q425-019

A negative balance can happen all too easily: You might forget to note a purchase you made with your debit card or an automatic payment you set up. Or maybe you had an emergency pop up that required you to spend more than usual…and more than the money you had in your checking account.

The resulting negative bank balance can have a serious impact, leading to overdraft fees, declined transactions, or worse — account closure. Read on to learn more about negative bank account balances, including ways to avoid the problem, and what to do if you wind up with one.

What Is a Negative Bank Account Balance?

A negative account balance, also known as an overdraft, occurs when you spend more money than you have in your bank account. This happens when a bank allows a transaction to go through even though there are insufficient funds, effectively lending you money to cover the difference, often at the cost of an overdraft fee. The bank may also charge other fees until the balance is restored to zero or positive.

To help you visualize this, here’s an example:

•   Imagine you have $500 in your account, and you write a check for $515, because you thought you had a balance of $600.

•   If the bank pays the $515, you end up with an account balance of minus $15. That’s the difference between how much money you had in the account and how much the bank paid the person that cashed your check. The bank did you a favor by making up the difference.

What Makes a Bank Balance Negative?

Your balance goes negative when you have withdrawn more than you have in your account. This can happen if you make a transaction — such as ATM withdrawal, automatic bill payment, or debit card purchase — in an amount that exceeds the balance in your checking account. This is when overdraft protection kicks in. Instead of rejecting the transaction, the bank will cover the overage, allowing your account to go negative. Typically, you repay a negative balance with the next deposit of funds.

Here’s a closer look at how a negative bank balance can occur.

Miscalculation/Mistakes

Overdrafts can happen easily with miscalculations and mistakes. These are the most basic errors — say, getting the math wrong on how much is in your account, or forgetting about an automatic dedication that hits and takes your balance down lower than you believed it to be.

Multiple Ways to Withdraw From an Account

With all that’s going on in your life, it’s possible you’re not exactly sure what checks you’ve written have been cashed and what incoming checks have cleared. You may unwittingly make a payment or ATM withdrawal thinking you’re good, but discover you’re certainly not. Or perhaps when you’re calculating in your head how much you have, you forget about the money taken out through one of your monthly automatic bill payments.

What Happens if Your Bank Account Remains Negative?

Here are some of the issues a negative bank account can trigger.

Overdraft Fee

If your bank covers a transaction that puts your account in negative territory, it will typically charge a fee. It may charge that fee every time you make a transaction. If you make multiple transactions before you realize you have a negative balance, these can add up to a significant sum.

Account Closure

What happens if you don’t pay an overdrawn account? If you don’t fix your negative balance by depositing money into your account, or if you overdraw your account so often the powers that be at the bank raise their eyebrows, your days as a bank customer may come to a close. They can opt to shutter the account, and it can be difficult to reopen a closed bank account.

Credit Impact and Debt Collection

If the bank closes your account due to an ongoing negative bank account balance, it will likely report the closure to a banking reporting company (like ChexSystems). This negative information will stay on your record for up to five years, which could make it difficult for you to open a new bank account.

Also, a bank that closed your account due to unpaid overdrafts might sell your debt to a collection company, which could negatively impact your credit profile.

Differences Between Overdraft and Non-sufficient Funds

An overdraft fee is not the same thing as a non-sufficient funds (NSF) fee. Here’s a look at the difference:

•   An overdraft fee is what a bank or credit union charges you when they have to cover your transaction when you don’t have enough funds available in your account. It’s typically about $27

•   When a financial institution returns a check or electronic transaction without paying it, they may charge a non-sufficient funds fee. It’s usually about $18. The difference is, with a non-sufficient funds fee, the bank is not covering the shortfall; they are essentially rejecting the transaction.

What to Do With a Negative Bank Balance

Fortunately, a negative bank balance is not a problem without solutions. You can take steps to get back on track.

Check Your Recent Activity and Balance

Determine what went wrong and triggered the overdraft. Check your bank’s app (or go online) and also see what charges haven’t been paid or received. Do the math. This will give you an idea of where you stand and how soon you may be back in the positive zone for your balance.

Evaluate Upcoming Automatic Payments

Automating your finances can be a convenient tool, but if you are in overdraft, automatic payments could pop up and derail your efforts. Make sure to account for recurring payments when figuring out how to get your account out of a negative balance.

Deposit Money Into the Account

Once you understand your situation, take action. Deposit enough money to ensure that you won’t overdraw again. Remember to include not only the money you need to bring your balance back into positive territory, but ideally put in enough to give yourself some cushion.

Request a Waived Fee

Your bank or credit union may have a sympathetic ear. Make a request to have your fee waived. They may be feeling generous, particularly if this is your first offense.

Pay the Fees

If you knock on the door of fee forgiveness and you get a no, pay what you owe. If you don’t, you’ll just make your situation worse, meaning the bank could close your account and turn the matter over to debt collection. While the bank may not close your account right away, taking action sooner rather than later is usually best.

Recommended: 10 Tips for Avoiding Overdraft Fees

Tips for Avoiding a Negative Bank Balance

There are ways to steer clear of a negative bank account balance. Try these tips:

•   Set up account alerts to let you know when your account balance reaches a certain number. If you know your account is getting low, you can take steps to avoid going into the negative balance zone.

•   Check your balance regularly. “Waiting until the end of the month to check in on accounts leaves you at risk of excess spending and potentially overdrawing your checking account, “ says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Checking in once a week leaves time to self correct and adjust your budget to help balance the numbers.”

•   Consider setting alerts to notify you before automatic deductions are made (many banks offer this option). That way, you can monitor your bank account and its balance to make sure you can cover the debit.

•   Explore what overdraft protection your bank offers. You may be able to link a savings account to your checking which can be tapped to cover overdrafts. It may cost you a fee for that transfer, but it’s likely not as steep as an overdraft fee. Your bank might also allow you to link a credit card (watch out for high interest rates here) to your checking account or to borrow from a line of credit. Know your options. While you don’t want overdrafts to be a regular occurrence, you do want to be protected in case they crop up.

The Takeaway

Having a negative bank balance means you overdrafted your account. This often triggers pricey overdraft fees , and can lead to other financial issues if this situation occurs often or isn’t remedied. It’s wise to keep tabs on your money and use tools that a bank may offer to help you avoid a negative bank account balance or resolve it quickly if it occurs.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can I still use my debit card if my account is negative?

If your account is negative, you can only use your debit card if you’ve opted into your bank’s overdraft coverage program. Even with this coverage, using your card while your account is negative will likely lead to fees for each transaction.

How are non-sufficient funds different from an overdraft?

The key difference lies in what the bank does. With an overdraft fee, the bank covers your transaction even though you don’t have enough funds, then charges you a fee (typically around $27). With a non-sufficient funds (NSF) fee, the bank rejects the transaction and charges you a fee for doing so (usually around $18).

How do I avoid having a negative bank account?

You can avoid a negative bank account by regularly monitoring your balance, setting up account alerts for low funds or upcoming automatic payments, and exploring overdraft protection options like linking a savings account.

Can you go to jail for a negative bank balance?

Typically, no. A negative bank balance is a civil matter between you and your bank, not a criminal one. However, repeatedly writing bad checks with the intent to defraud, especially in large amounts, could potentially lead to criminal charges in some jurisdictions. This is rare and typically involves more than just a simple overdraft.

How long can you have a negative bank balance?

Each bank has its own policy. While your bank account won’t be closed immediately if you have a negative bank balance, it’s important to resolve the issue as soon as possible.

Photo credit: iStock/kupicoo

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

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SOBNK-Q425-029

Uninsured motorist coverage shields you from having to pay for injuries and property damage in accidents that weren’t your fault and were caused by an uninsured driver.

According to the Insurance Research Council, 15.4% of motorists on the road are uninsured. Purchasing uninsured motorist coverage reduces the likelihood that you’ll have to pay out of pocket if you’re involved in an accident caused by one of these irresponsible drivers.

It’s generally a good idea to add uninsured motorist coverage to your auto insurance policy, as it’s fairly inexpensive, usually only costing an extra $5 – $10 a month, per vehicle, for policyholders with clean driving histories. Below, we give you the scoop on the different kinds of uninsured motorist coverage and what these policies entail.

Breaking Down Uninsured Motorist Coverage Variations

There are two main kinds of uninsured motorist coverage. Similar to your standard auto insurance policy’s collision and bodily injury coverage, this kind of policy breaks down into uninsured motorist bodily injury coverage and uninsured motorist property damage coverage.

•   Uninsured motorist bodily injury coverage: Covers your party’s medical expenses and related costs in accidents caused by uninsured drivers.

•   Uninsured motorist property damage coverage: Covers your repair bills and related costs in accidents caused by uninsured drivers.

Bodily injury and property damage coverage for uninsured motorists are sometimes packaged and sold together when you purchase uninsured motorist insurance. However, this isn’t the case with all policies; check with your insurance provider to know for sure. Now, let’s take a closer look at each of these kinds of coverage.

Uninsured Motorist Bodily Injury Coverage (UMBI)

Uninsured motorist bodily injury coverage (UMBI) pays for the cost of medical bills, lost wages, pain and suffering, and funeral costs (though we hope that is never needed) in the event an uninsured driver causes an accident in which you’re the victim.

In some instances, this policy may pay out if you, as a pedestrian or bicyclist, are involved in an accident caused by an uninsured driver. Check with your car insurance provider to confirm whether this might be covered.

UMBI typically does not have a deductible to meet; you would get full reimbursement of the costs.

Uninsured Motorist Property Damage Coverage (UMPD)

Uninsured motorist property damage coverage (UMPD) pays for the cost of repair bills for either your vehicle or property in the event either is involved in an accident caused by an uninsured driver.

Unlike bodily injury coverage, UMPD often requires the payment of a deductible when used. This is usually set by state law and typically is between $100 and $1,000.

Recommended: How Does Car Insurance Work?

Uninsured vs Underinsured Motorist Coverage

Here’s another kind of coverage you should know about: underinsured motorist coverage, which helps cover your costs if you’re involved in an accident where the party at fault has insufficient insurance coverage to pay for your medical costs.

Underinsured motorist coverage differs from uninsured motorist coverage in that it’s designed to cover any shortfalls in your costs due to the underinsured motorist’s inadequate insurance policy. By contrast, uninsured motorist coverage covers your bills due to the uninsured driver’s failure to purchase insurance.

Similar to uninsured motorist coverage, underinsured motorist coverage also comes in bodily injury and property damage variants. Both bodily injury and property damage coverage is usually packaged and sold together, though insurance policies may vary.

Underinsured motorist coverage is sold separately from uninsured motorist coverage, and states can have different coverage requirements for each. Check with your insurance provider to verify whether you need to purchase these separately.

Uninsured Motorist Coverage Limits

Your auto insurance quote will typically break down your uninsured motorist coverage limits into two numbers: a smaller dollar figure followed by a larger dollar figure, separated by a slash. For example, $100,000/$300,000.

This can also be expressed as follows:

•   $100,000 per person

•   $300,000 per accident

These two numbers represent the per person and per accident coverage limits of your uninsured motorist insurance. The per person limit is the maximum your insurance company will pay for any single individual injured in a covered accident. Conversely, the per accident limit is the maximum your insurance company will pay for a covered accident, regardless of how many injured people are in your party.

How Uninsured Motorist Coverage Limits Work

If you’re thinking, “But what exactly does that mean?” we hear you. Let’s spell out how this coverage would work using the $100,000/$300,000 example above. If you have a family of five that’s riding in a car that gets hit by an uninsured driver, the maximum amount your insurance company will pay for their cumulative medical bills is $300,000, despite each individual’s coverage limit being $100,000.

If you’re ever involved in an accident caused by an uninsured driver where your costs exceed your coverage limits, in most cases, your health insurance policy will usually kick in to cover the balance. Consult your insurance providers for the specifics on your policies.

Recommended: How Much Auto Insurance Do I Really Need?

How Much Uninsured Motorist Coverage Do I Need?

The answer depends on whether your state requires uninsured motorist coverage. If it does, you must buy at least the state’s minimum (for more details, see below). Typically, this amount will match your liability coverage amounts. If your state does not require this kind of coverage, consider variables like the healthcare costs in your state and how much your vehicle is worth. Generally, uninsured motorist coverage is fairly affordable and is a worthy investment for some peace of mind.

According to the Insurance Research Council, more than one in seven drivers on the road are uninsured. This figure is even higher in states like Mississippi, where over 28% of drivers on the road are estimated to be uninsured.

Based on those figures, residents of higher-risk states may be well served by purchasing uninsured motorist coverage. Conversely, it might not be as high of a priority for residents of lower-risk states, like Maine and Utah, where 5.7% and 6.2% of drivers respectively are estimated to be uninsured.

Now, let’s circle back to the states that do require this kind of policy. The table below lists the regulations regarding the minimum required uninsured and underinsured motorist coverage for each state.

Recommended: What Does Liability Auto Insurance Typically Cover?

Uninsured/Underinsured Motorist Coverage Requirements by State

Let’s take a look at the guidelines in every state, so you can see how much coverage may be required where you live. In each category, the amount shown is per person/per accident. When there is not a figure in an area of the chart, that means the insurance isn’t required.

^*New Hampshire does not require drivers to purchase auto insurance, but drivers who do choose to purchase auto insurance must have at least the minimum uninsured/underinsured motorist coverage amounts listed. ** In January 2026, New Jersey’s minimum limits for uninsured/underinsured motorist coverage will increase to $35,000/$70,0000.

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How Much Does Uninsured Motorist Coverage Cost?

Depending on how much uninsured motorist coverage you choose to purchase and your personal driving habits, your costs could be as little as $5 to $10 per month. This figure also tends to vary widely based on the overall percentage of uninsured motorists in your area, according to national insurance data.

Insurance premiums vary widely across drivers, states, and even insurance providers, so make sure you check around for a personalized quote.


💡 Quick Tip: Saving money on your fixed costs isn’t always easy. One exception is auto insurance. Shopping around for a better deal really can pay off.

The Takeaway

The prospect of being in an accident caused by an uninsured driver is a real concern, given the number of these motorists on the road. Adding uninsured motorist coverage to your auto insurance policy may be a good idea. In some states, it may even be required by law. For a relatively low cost, you can protect yourself from the possibility of being left with bills because another driver didn’t have enough insurance. The right package of car insurance policies is one way to protect yourself from unexpected circumstances.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

Photo credit: iStock/RyanJLane

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

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Starting a residency can be an exciting and rewarding next step in your medical training. But because residencies are spread across the country, there’s a good chance that you’ll not only be starting an intense new job; you will also be moving and getting settled in a brand new town.

Moving can mean major stress on its own, but moving at the very end of medical school can heighten that. After all, medical school graduates typically have almost $250,000 in debt according to the Education Data Initiative, and moving can cost money. Learn about how to finance this important next step here.

Residency Relocation Costs

There’s no way around it: Moving is expensive, and residency relocation costs can add up.

•   There’s the move itself. Even if you’re moving to a new house in the same city to be closer to your work, you may need to hire movers or rent a truck, buy boxes, and get help packing. Plus there are those unexpected moving costs, such as replacing little things like shower curtains and cleaning products that seem to always get lost in the move.

The average cost of moving is $1,710 in 2025, according to Angi, and a long-distance move can cost significantly more. That’s a significant chunk of change.

•   Even if you follow moving tips to economize during the process, guess what? The expense of settling into a new city can be even higher. You will likely need to put down a security deposit if you are renting, as well as possibly update your furniture and equip your new place with essentials like trash cans, towels, and cooking supplies.

•   Another thing to include in your budget: the costs of exploring a new city and eating out while you set up your kitchen. And don’t forget any expenses you may have to incur for your new job, like clothes, or potentially even transportation costs.

Plus the cost of living may be higher than what you are used to. Those little expenses can add up to a major headache if you’re not prepared.

If you’re feeling the pinch, there are a few loans specially designed for medical residents that may be worth considering. They could help make your transition a lot smoother.


💡 Quick Tip: Some personal loan lenders can release your funds as quickly as the same day your loan is approved.

Medical Residency Relocation Loans

Here are some options that can help you out financially when you relocate for a residency:

•   One loan new doctors may choose to take out is a medical residency relocation loan. You can take out a residency loan from a private lender — for example, a Sallie Mae Medical Residency and Relocation Loan.

•   Or it could be as simple as taking out a personal loan. Some private lenders may offer student loan-type benefits for loans to be used for medical residency relocation, such as a longer loan payoff term (though you may pay more in interest over the life of the loan if you opt for an extended term).

Residency loans may be specifically geared toward new doctors who are beginning their residencies and need to pay for essentials while settling into a new job and a new city. These loans can allow medical residents to fill the financial gap between graduation and your first residency paycheck.

These personal loans can help new residents cover the cost of moving and getting settled in a new city, including providing for your family while you adjust to a new job. For instance, if you’re making a move for residency and bringing your family along, it is likely that your spouse will also need to look for a job in your new city, which means that they may be giving up a paycheck temporarily as well.

Recommended: How to Qualify for a Personal Loan

Home Loans for Medical Residents

Another aspect of your finances to consider is whether you rent or buy the next place you live. Here are a few important points to consider as you embark on your career.

•   As a medical resident, you might qualify for a home loan designed specifically for doctors. These loans can have some big benefits, like low down payments, no requirement for private mortgage insurance, and no rate increases on jumbo loans. It’s important to do some research to see how you can qualify for these loans.

•   Of course, there are things to consider before buying a home during your residency. Even if you qualify for a home loan for medical residents, you might not be ready to buy a home just yet. This is especially true if you’re moving to a new city or state and you want to settle in, find your favorite neighborhood, and make sure you really like the city before deciding to buy a home.

•   If you do decide to start the home buying process, it’s probably a good idea to check out both traditional mortgages and loans designed specifically for doctors. You won’t know which one is right for you until you compare the benefits of each.

When both partners transition to new jobs at the same time, there can be a significant gap in income. A medical residency relocation loan can help you maintain your lifestyle while you and your spouse acclimate to new jobs.

Getting Ready to Get a Loan

If you’re thinking of getting a loan for relocation costs or to purchase a home, you may want to do some financial housekeeping. Here are a few moves to make:

•   Check your credit score, and see if there may be ways to build it, if necessary. A higher score can earn you the best (meaning lower) interest rates.

•   Determine exactly how much money you may need to borrow. Like all loans, consider only borrowing the amount you actually need to tide you over until your residency starts paying.

You can get a good idea of how much you may need to borrow by taking a look at your monthly expenses and then adding any additional cost-of-living increases based on your new city and the cost of moving. Don’t forget to list one-time expenses like a security deposit for a new apartment.

•   When you’ve figured out how much you want to borrow, take some time to shop around for a loan whose terms work for you. Each lender has different terms and benefits, so make sure to understand them fully before making a decision on if a personal loan is right for you.

Recommended: Can I Take Out a Personal Loan When Unemployed?

The Takeaway

Becoming a doctor can be a challenging and rewarding path. As you embark on your residency, you may find that there are significant relocation and housing expenses. Depending on your situation, you may want to review your loan options to see if there’s a good fit. For instance, a personal loan might allow you to cover the cost of setting yourself up in a new place for your medical residency.

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 you use a personal loan for residency relocation costs?

Yes, a personal loan can be used to finance residency relocation costs like interview expenses, moving, and setting up a new home, and it offers a lump sum with fixed payments. However, it is important to compare personal loans options to find the right rate and terms to suit your unique situation.

What are typical residency relocation costs?

The typical residency relocation costs include moving expenses like hiring movers (which can total in the thousands of dollars), housing costs such as security deposits and first and last month’s rent, and travel expenses. Professional costs like licensing and exams may be covered by these loans, too.

What is a residency relocation loan?

A residency relocation loan is a kind of personal loan that is designed to help finance the cost of interviewing for a residency and then paying moving expenses and the cost of setting up a home in your new town.

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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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