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If you carry some debt, you’re not alone. The total household debt in the U.S. rose to $18.59 trillion in the third quarter of 2025, according to the latest statistics from the Federal Reserve Bank of New York.That includes everything from mortgages to credit card balances to student loans.

If you’re among the ranks of those with outstanding debt and want to pay it off, here are strategies to help you do just that.

What Is Considered Outstanding Debt?

Outstanding debt refers to any balance on a debt that has yet to be paid in full. It is money that is owed to a bank or other creditor.

When calculating debt that’s outstanding, you simply add all debt balances together. This could include credit cards, student loans, mortgage loans, payday loans, personal loans, home equity lines of credit, auto loans, and others. You should be able to find outstanding balance information on your statements.

Types of Outstanding Debt

Outstanding debt can take a few different forms. Here are some key types to know about:

•   Secured debt: This is debt that’s backed by an asset or collateral. For instance, with a mortgage, your home is the collateral; with an auto loan, your car secures the loan. If you default on your loan, the lender may seize your collateral.

•   Unsecured debt: This is a debt that is not backed by collateral. The lender offers you money, to be paid back with interest, based on their evaluation of your creditworthiness. Examples of this kind of debt include most personal loans as well as credit card balances.

•   Revolving debt: With this kind of debt, you can borrow up to a certain limit. Credit cards and HELOCs (home equity lines of credit) are examples of this kind of debt. If, say, you have a $10,000 limit and you spend $9,000 of it, you only have $1,000 remaining to access. But if you make a payment of $3,000 toward your debt, you’ll have $4,000 available to spend.

•   Installment debt: With installment debt, the lender disburses a lump sum, which the borrower pays back over time with interest. Examples of this kind of outstanding debt include mortgages and personal loans.

Recommended: What Is the Average Debt by Age?

How to Find Outstanding Debt

When paying off outstanding debt, a good first step is to track it all down and account for it to understand the total.

As you move through your debt payoff journey, you may find it helpful to start a file (hard copies or digital) for your statements and correspondence. Also, you could create a list or input information into a spreadsheet. Organizing your information is necessary for building a debt payoff strategy.

It can be a good idea to build a list of all debts with the most useful information, such as the outstanding balance, the interest rate, the monthly payment, the type of debt, and the creditor. If you have an installment loan, such as a personal loan, the principal amount of the loan is another helpful piece of information.

What If I Can’t Find All My Outstanding Debts?

If you feel as though you’ve lost track of some debts, you may want to start by requesting a credit report.

Checking Credit Reports and Account Statements

In this case, you’ll want to get your credit report from at least one of the three major reporting agencies, Experian®, TransUnion®, or Equifax®. You are currently legally entitled to one free copy of your credit report from each of the three agencies per week. It’s easy to request a credit report from AnnualCreditReport.com.

(If you’re curious about just your score, you might also see if your financial institution offers credit score monitoring. This could be an easy way to keep tabs on your creditworthiness.)

A credit report includes information about each account that has been reported to that particular agency, including the name of the creditor and the outstanding debt balance.

It is possible that some outstanding debts may have been sold to a collection agency. The name of the original creditor may be included on the credit report. Some outstanding debts, however, may not appear on a credit report. Creditors are not required to report to the agencies, but most major creditors do. That said, a creditor could choose to report to none, one, two, or all three of the agencies. If you’re in information-collecting mode, you may want to consider requesting reports from more than one agency or from all three.

Another step in accounting for outstanding debt is to review all the account statements that may come your way, scan your checking account statements for automatic withdrawals (for example, for any payment plans you may have forgotten about), and review payment apps. This can help you see what debt you are carrying.

Outstanding Debt Amounts

Aside from how a debt is structured — revolving or installment debt; installment or lump sum — it can also be thought of as “good” debt or “bad” debt.

•   Good debt: Generally, if borrowing money (and thus incurring debt) enhances your net worth, it’s considered good debt. A mortgage is one example of this. Even though you might incur debt to purchase a home, the value of the home will likely increase. As it does, and as you pay down the mortgage balance, your net worth has the potential to increase.

•   Bad debt: On the other hand, if debt taken on to purchase something that will depreciate, or lose value, over time, that is considered bad debt. Going into debt to purchase consumer goods, such as cars or clothing, will not enhance your net worth.

In terms of how much outstanding debt is too much, know this: Each person has a unique financial situation, level of comfort with debt, and ability to repay debt. What one person may be able to justify may be completely unacceptable to another.

How Does an Outstanding Debt Impact Your Credit?

Outstanding debt can impact your credit in a few ways. Here’s a closer look.

Debt-to-Income Ratio (DTI)

During loan processing, lenders may consider the applicant’s debt-to-income ratio (DTI), which compares how much you owe each month to how much you earn. Lenders will often look at this number to determine their potential risk of lending. Different lenders have different stipulations about this ratio, so asking a potential lender about theirs is a good idea.

Calculating DTI is done by dividing monthly debt payments by gross monthly income.

•   Monthly debt payments can include rent or mortgage payment, homeowners association fee, car payment, student loan payment, and other monthly payments. (Typically, monthly expenses such as utilities, food, or auto expenses other than a car loan payment are not included in this calculation.)

•   Gross income is the amount of money you earn before taxes and other deductions are taken out of your paycheck.

Someone with monthly debt payments of $2,000 and a gross monthly income of $8,000 would have a DTI of 25% ($2,000 divided by $8,000 is 25%).

Generally, a DTI of 35% or less is considered a healthy balance of debt to income.

Credit Utilization Ratio

Another way that debt impacts your credit: your credit utilization ratio. This ratio expresses how much of your revolving credit limit you are using. For instance, if your credit limit on your two credit cards totals $40,000 and you are carrying a balance of $10,000, your ratio is 25%. You are using a quarter of what is available.

Ideally, a person’s credit utilization would be 10% of less, but up to 30% is considered acceptable. Go over that amount, and lenders may see you as financially unstable and living beyond your means. This can negatively impact their willingness to extend more credit at a favorable rate.

Payment History and Delinquencies

Whether you pay your bills on time also impacts your credit. Making payments on time is the single most important factor when it comes to your credit score. It accounts for 35% of your rating. In fact, late (or delinquent) payments that are reported to the credit bureaus can stay on your report for seven years, although their impact can diminish over time if you make timely payments.

It can be wise to use autopay or set up reminders to ensure you don’t pay your creditors late or skip payments entirely.

Should I Pay Down Outstanding Debt?

Barring extenuating circumstances, it’s a good idea to make regular, consistent payments on your debt. Whether or not you decide to pay the debt back on an expedited schedule is up to you.

Some may not feel the need to aggressively tackle their outstanding debt. They may be just fine to continue paying off a balance until the loan’s maturity date. This may apply to people with manageable debt payments, those who have debts with lower interest rates, or those focusing on other financial goals.

For example, someone with a low-interest-rate mortgage loan may not feel the need to pay it down faster than the agreed-upon schedule. So they continue to make regular, scheduled payments that make up a manageable percentage of their monthly budget. Therefore, they are able to work on other financial goals in tandem, such as saving for retirement or starting a fund for a child’s college.

Other scenarios may call for a more aggressive strategy to pay down debt. Some reasons to consider an expedited plan:

•   Your debt levels, and therefore monthly payments, feel unmanageable.

•   You’re carrying debts with higher interest rates, like credit cards.

•   You want to avoid missed payments and added fees.

•   You simply want to have zero debt.

You’ll also want to keep in mind that carrying a large debt load could negatively affect your credit. One factor in a credit score calculation is the ratio between outstanding debt balances and available credit on revolving debt, like a credit card — the credit utilization rate.

Using no more than 30% of your available credit is recommended. So, if a person has a $5,000 credit limit on a card, that would mean using no more than $1,500 at any given time throughout the month. Using more could result in a ding on their credit score.

Carrying debt also means paying interest. While some interest may not be avoidable, it’s generally a sound financial strategy to pay as little in interest as possible.

Credit cards tend to have some of the highest interest rates on unsecured debt. The average interest rate on a credit card was almost 22% according to Experian as of November 2025. With high rates, it’s worth seriously considering paring back debt balances.

Outstanding Debt Management Strategies

The next step is to pick a debt reduction plan.

Two popular strategies for paying off debt are called the debt snowball and the debt avalanche. Both ask that you isolate one source of debt to focus on first.

Simply put, you’ll make extra payments or payments larger than the minimum monthly payment on that debt until the outstanding balance is eliminated. You’ll continue making the minimum monthly payment on all your other debts.

Debt Snowball

A debt snowball payoff plan involves listing all of your debt in order of size, from smallest to largest, ignoring interest rate. You then put extra funds towards the debt with the smallest balance, while making the minimum required payments on the rest. Once that debt is paid off, you put extra money towards the next-smallest debt, and so on.

The idea here is that there’s a psychological boost when a card is paid off, so it makes sense to go after the smallest first. That way, when a person works up to the card with the next highest balance, they can focus singularly on it, without a bunch of annoying, smaller payments getting in the way of the ultimate goal.

It’s called a snowball because the strategy starts small, gaining momentum as it goes.

Debt Avalanche

Alternatively, the debt avalanche method starts by listing debt in order of interest rate, from highest to lowest. You then put extra money towards the debt with the highest interest rate. Because this source of debt costs the most to maintain, it is a natural place to focus. Once that debt is paid off, you focus your extra payments towards the debt with the next-highest interest rate.

The debt avalanche is the debt payoff strategy of choice for those who prefer to look at things from a purely mathematical standpoint. For example, if a person has one credit card with a 27% annual percentage rate (APR) and another with a 22% APR, they’d focus on that 27% card with any extra payments, no matter the balance.

Of course, it is also possible to modify these strategies to suit personal preferences and needs. For example, if one source of debt has a prepayment penalty, maybe it drops to the bottom of the list. If there’s a particular credit card you tend to overspend with, perhaps that’s a good one to focus on.

Debt Consolidation Strategy

The two methods described above aren’t your only options. You might also pursue debt consolidation, in which you combine multiple debts into a single, more convenient loan, possibly with a lower interest rate.

For example, if you are carrying a balance on two or three credit cards, you might apply for a personal loan to pay off credit card debt. In this case, the debt consolidation loan, if approved, would be used to pay off the credit card balances. Then, instead of making monthly payments to the credit card companies, you would pay just your personal loan. This can simplify your financial life, and the new loan could offer a lower interest rate vs. credit cards.

Outstanding Debt Payoff Methods

Once you decide on a strategy, whether it’s one discussed above or something that works better for your financial situation, you’ll need to figure out where the money will come from to pay down outstanding debt.

A good first step is to simply list your monthly income and expenses. If you find that you have enough money to begin making extra payments toward your outstanding debt balances, then you might choose to start right away.

Some people choose to keep a 30-day spending diary to get a clear picture of what they spend their money on. This can be a good way to pinpoint areas you might be able to cut back on to have more money to apply to outstanding debt.

If your existing budget is already tight and won’t accommodate extra payments, you might consider looking for some other financial strategies.

Increasing Income

Sometimes the answer is to make more money. Granted, this can be easier said than done. But some people can get a part-time job, start a side hustle, or sell things they no longer need or want to raise cash. You might also think about looking for a new, higher-paying job or asking for a raise at your current job.

Using Personal Savings

Tapping into money you’ve saved can be another way to pay down outstanding debt. Savings account interest rates, even high-yield savings accounts, generally pay much less interest than you’re paying on your outstanding debts. Keeping enough money in a savings account as an emergency fund is recommended, but if you have a surplus in your personal savings, putting that money toward your debt balances is a good way to make headway on outstanding debt.

Consolidating With a Credit Card

Using a credit card to pay off debt may seem like an unwise choice, but it can make sense in some situations. If your credit score is healthy enough to qualify for a credit card with a zero- or low-interest promotional rate, you might consider transferring a higher-rate balance to a card like this.

The benefit of this strategy is having a lower interest rate during the promotional period, potentially resulting in savings on the overall debt.

There are some drawbacks to credit card balance transfers though. One is that promotional periods are limited, and if you don’t pay the balance in full during this period, the remaining debt will revert to the card’s regular rate. Also, it’s typical for a promotional-rate card to charge a balance transfer fee, which can range from 3% to 5%, or more, of the balance transferred. This fee will increase the amount you will have to repay.

Consolidating With a Personal Loan

As noted above, using one new loan to pay off multiple outstanding debt balances is another debt payoff method. A personal loan with a lower overall rate of interest and a straightforward repayment plan can be a good way to do this.

In addition to one fixed monthly payment, a debt consolidation loan provides another benefit — the balance cannot easily be increased, as with a credit card. It’s easy to swipe a credit card for an additional purchase, potentially undoing the progress you’ve made on your debt repayment plan.

To consolidate your outstanding debt with a personal loan, you might want to look around at different lenders to get a sense of what interest rates they might offer for you. Typically, lenders will provide a few options, including loans of different lengths.

Negotiating With Creditors

One other alternative is to reach out to creditors and try to negotiate with them. Some lenders may be interested in negotiating with borrowers who are struggling with debt. Doing so can help them recoup some if not all of the money they are owed. You might call your creditor, explain your situation, and see if they will reduce your interest rate, shift your loan terms, pause payments for a time, or otherwise help you pay what you can.

There are also debt settlement companies that are third parties. These offer to negotiate with creditors on your behalf, often advising clients to withhold payments for a period of time, which can cause their credit score to drop. Proceed with caution as these companies can charge high fees and results are not guaranteed.

When to Seek Professional Help

In some situations, you may want to get professional help with your debt. Perhaps you are feeling overwhelmed, barely able to make minimum payments, dealing with collections agencies, and finding the amount you owe rising. When this kind of stressful scenario occurs, you may find relief by reaching out for qualified assistance.

There are several types of professionals who might help. You could reach out to a nonprofit credit counseling agency (NFCC and FCAA are two to consider) for guidance on managing your debt. You could consult a financial advisor or financial therapist for advice and insights into how you can avoid future debts. If you are facing legal action, such as foreclosure, a debt attorney could be your best resource.

Do check references and make sure you are working with a well-regarded professional or organization so this difficult situation doesn’t become more challenging.

The Takeaway

Outstanding debt can be a heavy burden. Many people owe large amounts of debt but don’t know how to start making a dent in their balances. A good place to begin is by identifying your current income and expenses to see your overall financial picture. From there, you may decide to focus on paying down certain debts over others. You can then choose the best paydown method for your financial situation, whether that means using the debt avalanche technique or taking out a personal loan.

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.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is the best method to pay off outstanding debt?

There is no single best method to pay off outstanding debt. Much depends on an individual’s unique situation and financial profile. For some, a debt snowball or avalanche method works well; others will prefer a debt consolidation loan, balance transfer card, or a consultation with a credit counseling agency. Research your options to find the best fit.

Can outstanding debt be negotiated or settled?

Yes, you may be able to negotiate or settle outstanding debt. You can contact your creditors directly yourself, or work with a debt settlement company (but be sure you understand the fees involved and that they may not be successful). In these situations, you can expect your credit score to be significantly lowered.

Does paying off outstanding debt build your credit score?

Yes, paying off outstanding debt typically has a positive impact on your credit score. This happens because you are lowering your credit utilization, meaning you are not owing as much vs. your credit limits. However, paying off debt could trigger a small decrease in your score as well, since it might reduce your credit history and mix, which contribute to your score.

How long does outstanding debt stay on your credit report?

Negative debt information can stay on your credit report for up to seven years and, in the case of bankruptcies, up to 10 years.

What happens if you ignore outstanding debt?

Ignoring outstanding debt can lead to serious financial and legal consequences. For instance, your credit score could drop significantly, collection agencies could pursue payment, you might have your salary garnished, and/or you could face the loss of an asset used as collateral on a loan.

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College cost of attendance is an estimate of the total cost of attending college for one academic year. It includes the cost of fall and spring tuition, books, supplies, room and board, transportation, loan fees, and other miscellaneous expenses.

Here’s how to calculate the cost of attendance, why it matters, and how it can affect financing an education.

The Cost of Attendance for College

The cost of attendance (COA) for college is an estimate of the total cost of attending a college for one year, and is often referred to as the “sticker price.” It includes both direct expenses (those billed by the university like tuition, fees, and on-campus housing) and indirect expenses (those not billed by the school such as books, supplies, transportation, and personal expenses).

Cost of attendance is used to help colleges determine the amount of financial aid a student is eligible for, including grants, scholarships, and federal student loans.

💡 Quick Tip: You can fund your education with a competitive-rate, no-fees-required private student loan that covers up to 100% of school-certified costs.

The Difference Between Cost of Attendance and Tuition

Tuition covers the actual cost of academic instruction. COA, on the other hand, includes other expenses the student will likely incur while attending college. COA includes things like room and board, books and supplies, and transportation costs.

Schools are required to publish the COA on their website so the information is readily accessible to students. Schools also generally publish more than one COA. For example, state universities may list a COA for in-state vs. out-of-state students. Most colleges will provide multiple COAs based on different student scenarios, such as living on or off campus.

The COA is calculated by financial aid offices using previous student spending, surveys, and local cost data. Your actual costs may be different than the COA.

What Is the Average College Cost of Attendance?

According to the College Board, the average cost of attendance at public four-year institutions in 2025-2026 was $30,990 for in-state students and $50,920 for out-of-state students. The average cost of attendance at private nonprofit four-year institutions in 2025-2026 was $65,470.

Think of COA as a rough budget for the year. It includes tuition and fees, along with expenses outside the classroom like food, transportation, and supplies.

According to The College Board, the average published cost for tuition and fees for the 2023-24 school year was $11,260 for students at public four-year institutions with in-state tuition and was $41,540 for students at private nonprofit four-year universities.

Recommended: What is the Average Cost of College Tuition?

What Does Cost of Attendance Include?

A college or university’s COA includes:

•  Tuition (the amount you owe to attend college for classes and instruction)

•  Fees (additional charges to cover the costs of certain services)

•  Housing (the cost of living on campus)

•  Meal plans (the cost to dine on campus)

•  Institutional health insurance (if required)

•  Indirect expenses (textbooks, a reasonable amount for a laptop, local transportation, and other personal expenses).

Recommended: Ways to Cut Costs on College Textbooks

Finding a School’s Cost of Attendance

Hunting down a university’s COA is an important first step in calculating the expenses around college and how to pay for it. Since legislation passed in 2011, it’s mandatory for U.S. two-year and four-year institutes to share the COA on their websites. However, that doesn’t mean it’s always easy to find.

One way to look for the COA online is to simply put “[NAME OF SCHOOL] + COST OF ATTENDANCE” into a search engine.

Or anyone can go the old-school route and call a college’s financial aid office to get the information over the phone.

A school will also include its cost of attendance on a student’s financial award letter.

College Cost of Attendance List

The COA for colleges can vary widely depending on a school’s location, whether it is private or public, and other factors. Some programs may have additional fees and costs (like lab fees) which could increase the cost of attendance for certain majors or programs.

The following table provides an overview of the published COA for undergraduate students living on-campus at several schools around the country during the 2025-2026 school year. Costs are for first-year undergraduates and assume the student will be living on campus.

School	Type	Cost of Attendance
Cornell University (Ithaca, NY)	Private	$96,268
Dartmouth College (Hanover, NH)	Private	$95,490
Rice University (Houston, TX)	Private	$91,562
Vanderbilt (Nashville, TN)	Private	$97,374
University of Chicago (Chicago, IL)	Private	$98,301
California Institute of Technology (Pasadena, CA)	Private	$93,912
Gonzaga University (Spokane, WA)	Private	$79,798
University of California (Los Angeles)	Public	In-state: $43,137 Out-of-state: $80,739
University of North Carolina (Chapel Hill)	Public	In-state: $27,766 Out-of-state: $64,846
University of Massachusetts (Amherst)	Public	In-state: $38,455 Out-of-state: $61,727
University of Oregon (Eugene)	Public	In-state: $38,607 Out-of-state: $68,931
Oklahoma State University (Stillwater)	Public	In-state: $33,700 Out-of-state: $49,220
University of Alabama (Tuscaloosa)	Public	In-state: $34,608 Out-of-state: $58,530
University of Michigan (Ann Arbor)	Public	In-state: $38,548 Out-of-state: $84,164

*2022-2023 school year COA.

Can I Borrow More Than the Cost of Attendance?

No, you typically cannot borrow more than the cost of attendance (COA) because student loans are generally capped at the COA, minus any other financial aid you receive. This limit ensures you don’t borrow more than you need for your educational expenses.

💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

Cost of Attendance and Net Price

Net price is the actual amount a student is expected to pay after grants and scholarships have been deducted from the cost of attendance. It represents the “real” cost to the student because it subtracts gift aid, which doesn’t need to be repaid, from the total cost.

Colleges typically have a net price calculator on their websites. You enter your information into the calculator and it will show you what students like you currently pay to attend the college. This number isn’t binding but can give you an idea of what types of aid are available at that school. The numbers you get from the net price calculator isn’t binding on the college, but it can give you a good idea of what types of aid you’ll be eligible for at that school.

Paying for College

While net price may be lower than COA, it may still be shockingly high. The question remains, how will you pay for college?

Students often rely on a variety of financing options. A great first step is to fill out the FAFSA®. This is how students can apply for all forms of federal aid, including federal grants, scholarships, work-study, and federal student loans. If your financial aid package isn’t enough to cover the cost of attending your chosen college, there are other funding options to consider. Here are some to keep in mind:

Private Student Loan

Private student loans are available through banks, credit unions, and online lenders. Interest rates and loan terms are generally determined by an applicant’s personal financial factors such as credit score and income. Consider shopping around at a few different lenders to find the best rate and terms for your personal situation.

Applicants without an extensive credit history or a relatively low credit score may find that adding a cosigner to their application can help them qualify for a loan or qualify for more competitive rates and terms.

For those interested in pursuing a graduate degree, there are student loans for graduate programs available, too.

Credit Card

Schools may allow students to pay for their tuition with a credit card. Most schools do charge a fee (often between 2% to 3%) for this convenience, which can offset any rewards you may be earning on your credit card. In addition, credit cards have fairly substantial interest rates. Therefore, paying for tuition with a credit card may not make the most financial sense.

On the other hand, when credit cards are used responsibly, they can be helpful tools to help students establish and build their credit history. Students could use credit cards to pay for books, food, gas, or other transportation costs. Be sure to pay attention to interest rates and pay off your credit card each month to avoid credit card debt.

Personal Savings

If you have been saving for college, using those funds to pay for tuition or other college costs can help you avoid borrowing for college. When you borrow student loans to pay for college, you’ll end up paying interest, which increases the total cost of your education. By paying for some expenses with savings, you may be able to reduce the overall bill.

Scholarships

Often awarded based on merit or other personal criteria (like gender, ethnicity, hobbies, or academic interest), scholarships are available from a variety of sources, including employers, individuals, private companies, nonprofits, communities, religious groups, and professional and social organizations. You can find out about opportunities through your high school guidance office, the financial aid office of your chosen college, and by using an online scholarship search tool.

The Takeaway

The cost of attendance (COA) is a vital metric for anyone planning to attend college. It represents the estimated total yearly cost including both direct costs like tuition and fees, and indirect costs such as housing, books, and personal expenses.

While the COA can seem daunting, it’s important to remember that the “net price” — what you actually pay after grants and scholarships are applied — is often much lower. By thoroughly researching a school’s COA, using net price calculators, and exploring all available funding options, including federal aid, scholarships, savings, and private student loans, you can make informed decisions to cover your education costs responsibly.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What does cost of attendance mean for college?

The cost of attendance (COA) is an estimate for the total cost of attending a college for a single year. The COA includes tuition, room and board, books and supplies, transportation, and other miscellaneous personal costs. The items required for inclusion in the COA are outlined by federal law and each college or university is required to publish the details for the college’s COA on the school website.

What is the difference between cost of attendance and tuition?

A school’s tuition is the price for academic instruction. The cost of attendance includes the cost of tuition in addition to other expenses including room and board, books and supplies, transportation, and more.

How much does college cost per year?

The cost of college can vary based on many factors including your location, whether you attend a private or public university, if you receive in-state vs. out-of-state tuition, and the type of program you are enrolled in. According to the College Board, the average cost of attending a four-year nonprofit private institution was $65,470 during the 2025-26 school year. During the same time period, the average cost for tuition and fees at public four-year institutions with in-state tuition was $30,990.

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

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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.

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

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Before most house hunters can close the deal, they need to qualify for a mortgage. Learning how to apply for a mortgage in advance — and breaking the process down into digestible steps — can help applicants feel better prepared and avoid any unpleasant surprises during the process. (Good news: The mortgage application process is one of those things that is more complicated to explain than to experience!)

Ready to learn how to apply for a home loan? Here are the seven steps in the mortgage process, including moves you can make that may expedite your approval.

Table of Contents

1. Submit Your Mortgage Application

You’ve found the ideal property, made an offer on the house, and put your down payment into escrow. If you didn’t already get preapproved for a mortgage online, it’s time to apply for a mortgage. There are many different mortgage types, and choosing one will depend on your income, down payment, location, financial approach, and lifestyle. Some choices you’ll need to make at this stage of the mortgage process are:

•   A conventional home loan or a government-insured loan, such as an FHA loan backed by the Federal Housing Administration or a VA loan backed by the U.S. Department of Veterans Affairs)

•   A fixed-rate or an adjustable-rate mortgage

•   Your repayment term: typically 15, 20, or 30 years

A good lender will walk you through your options, whether you’re looking at a home requiring an FHA mortgage or a high-priced home with a jumbo loan.

Your lender will have the required forms for your mortgage loan application, and you can often submit everything online, but you’ll want to have the following at hand:

•   Proof of identity.

•   Documentation of income: W-2s or 1099s, your most recent income tax filing, profit-and-loss statements if self-employed, pay stubs, Social Security and retirement account info, information on alimony and child support, etc.

•   Documentation of assets: bank accounts, real estate, investment accounts, etc. If you received help from a family member to fund your down payment, a gift letter will be necessary.

•   Documentation of debts: any current mortgage you might have, car loans, credit cards, student loans, etc.

•   Information on property: street address, sale price, property size, property taxes, etc.

•   Employment documentation: current employer information, salary information, position/title, length of time at employer, etc. In general, lenders like to see two years of employment on a loan application. Self-employed individuals will generally submit two years of tax returns.

2. Schedule Your Home Inspection and Appraisal

It can take a little time to get your inspection and appraisal on the calendar, and then you can expect to wait at least a few days to get the reports. So now’s the time to make sure these two important aspects of the home-buying process are moving along.

A home inspection may not be required, but it’s a good idea to hire an inspector (your real estate agent may have recommendations, but you can shop around) to thoroughly check the property inside and out for undisclosed problems. If the inspector uncovers expensive issues, you may negotiate for a price reduction, which could affect your mortgage principal amount. If the problem is a dealbreaker, the inspector’s report could help you back out of the deal without penalty.

Review this home inspection checklist to make sure your inspector will cover all the bases. In some cases, a general home inspector may find an issue that requires a more specific expert to take a look (and yes, that’ll cost more money — but it may be worth the cost).

Don’t let the infatuation with a seemingly perfect property blind you. If there are serious issues that come up during the inspection and the sellers won’t budge on price (or agree to fix them before closing), seriously consider walking away. You won’t recoup the money you paid for the inspection — a home inspection costs between $300 and $500 — but if it keeps you from investing in a money pit, it’s money well spent.

An appraisal will be necessary as part of the mortgage underwriting process. It’s an independent evaluation of a home’s value. It will describe the property and what makes it valuable. Factors that affect the appraisal value include the location, condition, amenities and features, and market conditions in the area.

A lender requires a home appraisal to ensure that it isn’t lending more than the property is worth. If the appraisal comes in too low, the lender won’t lend extra money to cover the gap. Buyers will need to cover the difference with their own money or renegotiate the price with the seller to match the appraisal.

Recommended: Local Housing Market Trends

3. Secure Homeowners Insurance

You’ll need to buy homeowners insurance before you can close on your new home, so now’s the time to scout around for a policy that provides the coverage you need at the price you feel is right. Thanks to the appraisal, you can feel confident in the value of the home, which will help in the insurance process.

Before you commit, get quotes from a few different companies. Taking the time to do so at this step of the mortgage process will ensure your coverage is shipshape when you reach your closing. Your prospective lender will want to know the home is covered and many homeowners make their insurance premium payments as part of their monthly mortgage bill.

4. Undergo Loan Processing and Review

While you are taking care of your insurance coverage, the lender will be processing and reviewing your loan application to make sure you meet all the mortgage loan requirements. A major part of the mortgage loan process is the underwriting phase. The underwriting process begins after you complete your mortgage application, ends after all the documentation has been completed, and includes the appraisal.

During the process, the underwriter examines the borrower’s financials, as well as the appraisal, title search, and proof of homeowners insurance. The lender will perform a hard credit inquiry. In general, the better your credit score, the better the mortgage rate you’ll be approved for. If your score is above 740, you’ll qualify for the best rates. But in general, you’ll need a minimum 620 credit score to buy a house. Lenders are required to do a second credit check before final mortgage loan approval and may likely ask for further documentation.

The average time between submitting a mortgage application and closing is about 50 days, so if you’re wondering how long does the underwriting process take for a mortgage, you can expect things to take a little under two months, start to finish. During this period, it’s wise to observe a self-imposed “credit freeze.” That is, don’t run up your credit cards beyond what you usually spend each month. Put off major purchases. Don’t apply for new credit cards, take out auto loans, or take on any other new debt. And, of course, make sure to pay all your bills on time. If there’s any significant change in your credit history, your closing may be delayed or even derailed. Should something major come up (like an expensive medical emergency), call your lender to let it know.

Responding quickly to any questions or requests from your lender can help keep your application on track.

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

5. Receive Your Approval and Closing Disclosure

It can be tough feeling like your life is on hold while you’re waiting for the mortgage underwriting process to be completed. Try to be patient and let things play out. Now is a good time to reach out to friends and family who have been through the mortgage loan process before and commiserate. Consider this your orientation into the homeownership club.

Once the appraisal is complete and all documentation has been reviewed and verified, the underwriter will complete the mortgage underwriting process and recommend approval, denial, or pending. A pending decision is given when information is incomplete. You may still be able to get the loan by providing the documentation asked for.

It’s a happy day when your lender officially notifies you that you have been approved for your home loan. After underwriting approval with a “clear to close,” you’re set to close on your loan. The mortgage closing disclosure you receive from the lender is a required document. This five-page form from your lender will outline the home mortgage loan terms, including the loan principal, interest rate, and estimated monthly payment. It also lays out how much money is owed for closing costs and the down payment.

Lenders are required by federal law to provide the mortgage closing disclosure at least three business days ahead of the closing date. Make sure you read it immediately and thoroughly.

6. Do A Final Walk-Through of the Home

Before arriving at closing, you’ll want to do a final walk-through of the property you’re purchasing. During this walk-through, confirm that the sellers have made any repairs that were agreed to — and that they haven’t removed anything, such as an appliance or light fixture, that was meant to be left, per the purchase agreement.

7. Attend the Closing Meeting

Closing day comes after the mortgage loan approval process is completed. All parties will sign the final documents and ownership is legally transferred from the sellers. In the days prior to your close, the lender should provide a final list of closing costs. Closing costs are typically 2% to 5% of the mortgage principal and may include items like:

•   Lender fees

•   Appraisal and survey fees

•   Title search/title insurance fees

•   Recording fees

•   First year of private mortgage insurance (PMI) premiums, if required

You can pay closing costs by wire transfer a day or two before, or by cashier’s check or certified check the day of closing.

In the past, buyers and sellers, their agents, and lawyers would gather in the same room to sign the paperwork at closing. In recent years, remote online closings have become more common. The closing may be virtual, but the feelings of relief and happiness that typically result are very real.

The Takeaway

Applying for and securing a home mortgage loan follows a simple process that can seem complicated the first time you do it. But if you reply to questions promptly and are organized with your documents, it’s actually pretty simple — even if it does involve a little waiting time.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How long is a mortgage loan in processing?

It takes a little under two months from the date you submit your mortgage application to closing on the house — the average timeline is about 50 days. In some scenarios, you may be able to close in as little as 30 days.

How do you know when your mortgage loan is approved?

Your mortgage loan officer will contact you when your loan is approved. They may call you to give you the good news, but you’ll want to see it in writing so watch for an email as well.

What should I avoid after applying for a mortgage?

You want to keep your financial situation as stable as possible during the mortgage application process. That means don’t open new credit accounts, and keep your credit utilization down (no extra swipes on those credit cards). Don’t fall behind on any bill, either

What looks bad on a mortgage application?

Key red flags on a mortgage application include a high level of debt relative to your income, a low credit score, or a history of late or missed debt payments. A lender might also be concerned about any large, unexplained influx of cash into your bank account in the months leading up to your application. A history of gambling or repeated use of payday loans might also be cause for concern from a lender’s perspective.

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Photo credit: iStock/MicroStockHub

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

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

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency. ^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency. Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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