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Getting a mortgage can be one of life’s biggest financial undertakings. What’s more, it also unlocks the path to what is typically the biggest asset and wealth builder out there: a home of your own.

Whether you’re dreaming of a center hall Colonial or a cool, loft-style condo, you will likely need a mortgage to make homeownership happen. And if you want to qualify for the best possible interest rate, it helps to have a little more knowledge and preparation when you seek a home loan.

This guide will teach you how to get a home mortgage and arrive expeditiously at the closing. Read on to learn how to get a mortgage right now, what matters most to lenders when you’re getting a mortgage, and the seven steps necessary to get a mortgage on your new home.

Step 1: Prepare Your Finances and Determine Your Budget

Now is the time to develop a budget for buying a house. Use a mortgage calculator to see what your monthly payment might be depending on the home price, down payment amount, and mortgage type. But don’t overlook these other costs:

•   Closing costs and related expenses (typically 2% to 5% of the loan amount)

•   Funds to make any repairs/renovations required

•   Moving expenses

•   Home insurance premium

•   Property taxes

•   Utilities (especially important if you are moving from a rental where your landlord paid some of these costs)

•   Maintenance (landscaping, HVAC service, etc.)

Another good first step to getting a mortgage is to understand how you will be evaluated by lenders so you can put your best foot (or financial profile) forward. Here are the key mortgage loan requirements:

Your Credit Score

Your credit score is an important number: It tells lenders how well you have managed debt in the past. Typically, you will need a credit score of 620 or higher to qualify for a conventional home loan. However, those with scores of 740 or higher may snag lower interest rates. So as you’re learning how to get a house loan, make sure you are also taking good care of your credit score.

If your score is at least 580, you may qualify for a government-backed loan (more on those below). And even those with a credit score of 500 to 579 may be eligible in some cases. If you’d like to build your credit score, make every payment on time and pay any unpaid bill. Avoid opening new credit accounts or closing old ones in the months leading up to your mortgage application.

Your Debt-to-Income Ratio

Another number that lenders will be interested in is your debt-to-income (DTI) ratio — in other words, how much debt you are carrying relative to your income. To compute your DTI ratio, total your monthly minimum debt payments, such as student loans, car loans, credit-card bills, current rent or mortgage and property taxes, and the like. Divide the total by your gross monthly income. The resulting number is your DTI.

The DTI figure that lenders look for may vary. Some lenders want to see 36%; others will be comfortable with up to 45%. Government-backed loans are likely to accept higher DTI’s than other lenders. You can use a home affordability calculator to compute what price home you might be able to afford based on your income and debts.

Other factors lenders will consider are your income history and assets. Lenders like to see signs of a positive, stable income. Ideally, you have been employed for at least two years. If you have been out of work or have job-hopped recently, it might be wise to wait a bit before applying for a mortgage.

Lenders will also want to see that you have some assets available, such as cash in the bank or other fairly accessible funds. This is where a healthy emergency fund and money saved for a down payment can be a real boost.

Speaking of your down payment: A down payment for a conventional loan has traditionally been 20% of a home’s cost, but there is some flexibility. A recent survey by the National Association of Realtors® found that first-time homebuyers typically put down 10% on a home purchase. And some loans are available with as little as 3% down or even (for certain government-backed ones) zero money down.

Keep in mind that if you put down less than 20%, you will likely have to pay for private mortgage insurance (PMI), or in the case of a Federal Housing Administration (FHA) loan, a mortgage insurance premium.

💡 Quick Tip: Don’t overpay for your mortgage. Get your dream home or investment property and a competitive rate with SoFi Mortgage Loans.

Step 2: Research Mortgage Loan Types and Find a Lender

It’s worth reviewing some of the different types of mortgage loans that you may qualify for.

•   Conventional vs. government-backed loans. Conventional loans typically have stricter income, credit score, and other qualifying factors, while government-backed loans may be easier to obtain. Government-backed loans may have lower (or even no) down payment requirements. Examples of these government loans are FHA, VA, and USDA loans.

•   Type of rate: For some borrowers, a fixed-rate loan, with its never-varying monthly payment, may be best. For others, an adjustable-rate one that fluctuates may be more appealing. The payments tend to start out low, which can be attractive for those who may sell their home within a few years’ time. You may also look into mortgage points, which involve paying more upfront to shave down your rate over the life of the loan.

•   Mortgage loan term: Many loans last 30 years, but there are other options, such as 5, 10, 15, or 20 years. The shorter the term, the higher your payment is likely to be.

Next, it’s wise to review different mortgage lenders and see what kind of rates and terms are quoted. For example, your own bank may offer mortgages and could give you a good rate in an effort to keep your business. Or you might look into online lenders, where the process can be more streamlined and the rates possibly better than traditional options.

Step 3: Get Preapproved for a Mortgage

It can be wise to get preapproved by more than one lender. This can help you evaluate different offers and broaden your options when it’s time to apply for a loan. When you apply for preapproval, you can expect the lender to do a credit check, verify your income and assets, and consider your DTI ratio.

It’s often possible to get preapproved for a mortgage online. If all goes well, the lender will provide you with a preapproval letter, and you can shop for a home in the designated price range.

While not a guarantee of a mortgage, it shows you are serious about buying and are on the path to securing your funding, and it reflects that the lender found you qualified for a mortgage. Having this letter can be especially helpful when you are competing for a home in a seller’s market.

You might also decide to work with a mortgage broker to get help learning about your alternatives.

💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.

Step 4: Find a Home and Make an Offer

With your preapproval letter in hand, you are ready to go home shopping. As you tour properties, you’ll likely refer back to your budget and down payment plans again and again as you get to an accepted offer. Don’t be surprised if you find yourself having agonized discussions about whether a home is truly affordable. Try to avoid pushing yourself beyond what you can comfortably afford.

Once you find a suitable property and your offer is accepted (a big moment!), you will hopefully be on the path to home ownership. If contract negotiations and the inspection goes well, you will move along to the final steps.

Step 5: Submit Your Mortgage Loan Application

Once you have an accepted offer and know how much you need to borrow, you’ll submit a full-fledged mortgage application. Expect to submit the following, and possibly more:

•   Two years’ worth of W-2 forms or other income verification

•   A month’s worth of pay stubs

•   Two years’ worth of federal tax returns

•   Proof of other income sources

•   Recent bank statements and documentation of possibly recent sources of deposits

•   Documentation of funds/gifts of money to be used as your down payment

•   ID and Social Security number

•   Details on debt, such as student loans and car payments

These forms allow a lender to consider your level of financial security and whether you are a good risk to offer a mortgage loan.

Step 6: Go Through the Underwriting Process

As you wait for your mortgage approval and a closing date, the underwriting process is happening. You’ll need a home appraisal and title search, and an underwriter will verify your income, evaluate your credit history, and assess your financial readiness to take on the loan. It’s not unusual for the lender to reach out with questions or to ask for more documentation during underwriting. Respond promptly to keep things on track.

If things progress smoothly, your loan will be approved and you will be ready to close on your home. You’ll do a final walk-through of the home to make sure everything is in order and any repairs that the seller agreed to make have been addressed.

Three days before your closing date, your lender will provide you with a closing disclosure that outlines the final closing costs and terms of your home loan. You can compare this five-page form with the loan estimate you received initially. If everything looks to be in order, get ready to close.

Step 7: Close on Your New Home

You may wish to bring your real estate agent and/or attorney with you to your closing meeting, which might be in-person or virtual. They can help explain everything — especially valuable if you are a first-time homebuyer. At the closing you will sign all your forms and submit your down payment and closing costs (or provide proof of wire transfer). The closing attorney, escrow officer, or title company representative will record the deed, and you will be given the house keys. Congratulations — you’re a homeowner!

The Takeaway

The path to homeownership can be a long and winding road, but worth it as you gain what could be your biggest financial asset. By learning how to get a mortgage, preparing to present a creditworthy file, and following the steps needed to apply for a home mortgage, you can be on your way to owning your new home.

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

FAQ

How do you improve your chances of getting approved for a mortgage loan?

You can improve your chances of getting approved for a mortgage by checking on your credit score (and improving it, if necessary), showing a debt-to-income ratio of ideally 36% or lower, and having two years’ of a steady job history.

What is the lowest income to qualify for a mortgage?

There is no one set income required to qualify for a mortgage. Much will depend on how much you want to borrow versus your income, how much debt you are carrying, and your credit score. For those who have a lower income, there are government-backed loans that may be suitable; it can be worthwhile to look into FHA, USDA, and VA loans to see what you might qualify for.

What credit score is needed to get a mortgage?

Typically, a credit score of at least 620 is required for a conventional loan, and the higher your score (say, in the 700s or higher still), the more loan options and lower rates you may find. For those with a credit score of at least 500, there may be government-backed loan products available.

How long does the mortgage approval process take?

The full approval process for a mortgage can take 30 to 60 days. If you have a closing date or range of dates specified in your agreement with the seller, it’s important to let your prospective lender know.

What documents are needed for a mortgage application?

Documents needed for a mortgage application include proof of identity and at least two years’ worth of W-2 forms and tax filings. You can also expect to need your most recent pay stubs, bank statements, and proof of other income sources. If you are self-employed, be prepared to be asked for more details about your income, including, potentially, a profit-and-loss statement for your business.

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While there’s no universally required credit score needed to rent an apartment, having a solid credit score can certainly help your chances of a landlord handing you a set of keys. In general, a landlord will look for a credit score that is at least “good,” which is generally in the range of 670 to 739. However, that can vary by landlord or property manager, as well as the location in which you’re renting.

Read on to learn more about how your credit score can affect renting an apartment — and how you can approach renting if you have a lower credit score.

What Credit Score Do I Need to Rent an Apartment?

Truth is, the answer to what credit score you need to rent an apartment is a bit squishy. In general, you’ll have a better chance of approval if your credit score is at least deemed “good.”

What’s considered good? Credit scores are generally classified as follows per FICO® (keep in mind that different scoring models may vary):

•   Exceptional: 800-850

•   Very good: 740-799

•   Good: 670-739

•   Fair: 580-669

•   Very poor: 300-579

There also are variables that can affect whether your credit score qualifies you to rent an apartment. For example, if you live in a city where there is huge demand for apartments, landlords may give preference to those with higher credit scores.

Can You Get an Apartment if One Person Has Bad Credit?

If one person has bad credit, know that it will likely make it tougher for you to get an apartment. Landlords have a lot of leeway and can follow criteria of their choosing.

Still, it’s not impossible even if it is trickier. One smart strategy in this situation is to put the lease in the name of the person whose credit and income is best. You could also offer to show your income or provide a reference.

What Landlords Look at on Your Credit Report

When your landlord reads your credit report, they will be looking for clues about your financial health and habits.

Of much importance is your debt-to-income ratio. In a nutshell, this is the amount of your monthly pre-tax income that gets spent on debt payments. It’s certainly not news to you that filing for bankruptcy can have a negative impact on one’s credit. A landlord also may be spooked if you have hefty credit card balances.

Your credit history disclosed on your credit report also may include your rental history, since some landlords and rental property managers share your data with the credit bureaus. This can be a plus if you’ve been doing the right thing; if not, this can work against you.

Too many hard inquiries also can raise red flags for a landlord. This is because frequently applying for different types of credit could suggest financial instability, which increases risk in the eyes of lenders — as well as landlords.

How to Rent an Apartment with a Lower Credit Score

Just because your credit score isn’t stellar doesn’t mean you’re resigned to sleeping on a friend’s couch or living with your parents. There are ways to rent an apartment even with a lower credit score.

Pay a Higher Security Deposit

One way to show that your credit history is just history is by offering to make a higher security deposit. Say you are required to pay first and last month’s rent upfront. To sweeten the deal, maybe you tack on a couple additional months of rent.

If you want to instill confidence in your potential new landlord, this might do it. Just make sure you actually have the room in your budget to offer up the cash.

Recommended: What Is The Difference Between Transunion and Equifax?

Get a Cosigner

While getting a cosigner may put a damper on feeling like you’re finally a grownup, it may be worth sucking it up and getting a creditworthy parent or other trusted individual to cosign for your apartment. This can give your landlord peace of mind if someone is willing to pay the rent on your behalf if you’re unable to.

Just keep in mind that your cosigner will be on the hook if you miss a payment, and that cosigners generally must meet even steeper credit score and income requirements.

Play Up Your Income

Maybe your credit score is nothing to brag about, but you’ve worked hard and now have your finances in order, with solid savings and a good income. If you could show that you earn three or four times your rent on a monthly basis, that might divert attention from your lousy credit score. Additionally, if you have a solid stash in your savings account, that can also give your landlord assurance that you have the funds to cover your monthly rent.

Consider Getting a Roommate

Adding a roommate to your lease or rental agreement can increase your creditworthiness and your qualifying income. This is especially the case if you can find a roommate with good credit — and get your landlord to pull their credit first.

Benefits of Good Credit When Renting an Apartment

A landlord needs more than their gut instinct to help them determine who to rent to, which is why a credit score carries a lot of weight when it comes to getting your rental application approved. A good or — better still — an excellent score can give landlords the confidence to consider you for the apartment, especially if all other signals they get when checking on your background indicate they should give you the green light.

Having a solid credit score can help you to snag the apartment you want, and avoid the hassles associated with trying to secure an apartment when your credit isn’t as great, such as getting a roommate or a cosigner. Especially if you live in a city with a competitive rental market, a good credit score can be a serious edge.

How to Monitor Your Credit Score

Ideally, you want to monitor your credit and get a copy of your credit report before you start apartment hunting. It’s important to know where you stand, and if there are any errors, you want to fix them right away.

You can get free weekly credit reports from the three national credit reporting agencies: Equifax, Experian and TransUnion via AnnualCreditReport.com.

While your credit report provides information on your various credit accounts and their balances and your payment history, it does not include your credit score. You can check your credit score by looking at a loan or credit card statement or through an online credit score checker. You can also buy a score directly through credit reporting companies. Even if you might have checked your credit score not that long ago, don’t skip doing so again — your credit score updates every 30 to 45 days.

If your score is low, consider taking steps to improve it before jumping into your apartment search. Actions like paying down credit card balances and making sure you don’t have any more late or missed payments for a stretch can show progress.

Recommended: What Credit Score Is Needed to Buy a Car?

What to Expect in 2025

According to Zillow, a surge in apartment construction in 2024 is finally catching up with demand. As a result, rental affordability is at its best level in four years, and landlords are offering record-high concessions.

But that doesn’t mean housing prices are cheap. Apartment rents have risen 36.1% since the start of the pandemic. As of September 2025, the typical asking rent is $1,979.

The Takeaway

You’ll want to shoot for having a good credit score — generally in the range of 570-739 — to get an apartment. While you may be able to still get an apartment if you don’t have solid credit, it will make it more challenging with the competition you’re likely to face.

If you have the luxury of time, do what’s necessary to improve your score so that when you begin your search, you’ll be an ideal candidate. An online credit monitoring tool can make it easier.

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

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

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

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

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Curious about your financial health? A good first step is to calculate your net worth and your liquid net worth. These two numbers can give you a snapshot of where you stand financially by comparing what you own (your assets) to what you owe (your liabilities). They can also offer insight into how your personal wealth is growing over time.

While your net worth gives a broad overview of your total assets minus your total liabilities, liquid net worth zooms in cash and other assets that you could convert to cash quickly in an emergency.

Liquid net worth is a valuable number to know, since it measures your financial safety net, which is your capacity to manage both anticipated and unexpected financial events effectively. Below, we’ll walk you through how to calculate your liquid net worth, along with ways to improve it over time.

What Is Liquid Net Worth?

Liquid net worth is a subset of net worth, which is your total assets minus your total liabilities. The meaning of liquid net worth is similar to net worth except that it only includes liquid assets, which are holdings that are in cash or can be converted into cash quickly.

When calculating liquid net worth, you would exclude the value of your home or car (since you likely can’t sell them quickly for cash), as well as your retirement accounts (as there is typically a penalty for withdrawing retirement funds before age 59½). However, you would include money you have in your bank accounts and any brokerage accounts.

What Counts for Liquid Net Worth Calculations?

Here are some assets that can count when calculating liquid net worth:

•   Cash

•   Money in a checking account

•   Money in a savings or money market account

•   Mutual funds, stocks, and bonds

•   Possibly jewelry and watches that could be quickly sold (and without much or any loss in value), if need be.

Mutual funds, stocks, and bonds are typically considered liquid, since you can usually sell these investments and have the transaction settled within two business days. That said, if the quick sale of an investment would significantly decrease its value, it is not considered a liquid asset. Also any asset you need to hold for a period of time before it can be issued as cash is not considered liquid.

Net Worth vs Liquid Net Worth

As mentioned, your total net worth is all of your assets (what you own) minus your liabilities (what you owe). When you determine your net worth, you add up all your assets, including non-liquid assets (such as your house, car, and retirement accounts), and then subtract all of your liabilities. The resulting number is your total net worth.

Your liquid net worth is the amount of money you have in cash or cash equivalents (assets that can be easily converted into cash) after you’ve deducted all of your liabilities. It’s similar to net worth, except that it doesn’t account for nonliquid assets such as real estate or retirement accounts.

Your total net worth gives you a picture of your overall financial strength and balance sheet, while liquid net worth shows how much money you have available that is quickly accessible in case of emergency or other financial hardship.

Both measures of net worth can give you a useful snapshot of your financial wellness, since they consider both assets and debts. Looking at your assets without considering your debts can give you a false picture of your financial situation.

Knowing and tracking these numbers can also tell you if you are moving in the right or wrong financial direction. If your net worth or liquid net worth is in negative territory or the numbers are declining over time, it can be a sign you need to make some changes and/or may want to put off making a major purchase such as a home or a car.

Why Liquid Net Worth Matters

Your liquid net worth is a measure of your ability to weather a financial storm. Imagine you need money for something important — a major home or car repair, a trip to the ER, or starting your own business after getting laid off.

You need it now… or, at least, within the next few weeks or months. Where are you going to get the money?

You might not want to look at cashing in things like your home, your car, your retirement savings, your baseball card collection, or Grandma’s wedding ring unless it’s absolutely necessary.

Those kinds of assets can be difficult to convert to cash in a hurry — and there could be consequences if you did decide to go that route.

Instead, it may be easier to tap your more liquid assets, such as cash from a checking, savings, or money market account, or cash equivalents, like stocks and bonds, mutual funds, or money market funds.

Liquid net worth is often considered a true measure of how financially stable you are because it tells you what you can rely on to cover expenses. In addition, your liquid net worth acts as an overall emergency fund.

Recommended: Emergency Fund Calculator

Calculating Your Liquid Net Worth

The difference in calculating net worth and liquid net worth is understanding which of your financial assets are liquid assets.

As mentioned, liquid assets are cash and assets that could be converted to cash quickly. The following are considered liquid assets.

•   Cash: This includes the money that is in your wallet, as well as the cash you have in any savings, checking, and money market accounts.

•   Stocks: Any equities in a brokerage account, such as stocks, index funds, mutual funds, and exchange-traded funds (ETFs), are typically considered liquid assets. While you might have to pay taxes and other fees if you sell equities to convert to cash, you could liquidate these assets fairly quickly.

•   Bonds: Like equities, any bonds or bond funds are also liquid assets. Again, you may have to pay taxes on your profits when you sell, but the translation is relatively quick.

Nonliquid assets include anything that cannot be converted to cash quickly or for their full value, such as:

•   Retirement accounts, such as 401(k)s and IRAs.

•   A house or other real estate holding (which could take a while to sell and the actual sales price is not known).

•   Cars (while you may be able to liquidate a car relatively quickly, cars generally don’t hold their original value; they depreciate).

Liquid Net Worth Formula

For a liquid net worth calculation, here are the steps to follow:

•   List all of your liquid assets: The cash and cash equivalents you could easily and quickly get your hands on if you need money.

•   Next, list your current liabilities, including credit card debt, student loan balance, unsecured loans, medical debt, a car loan, and any other debt.

•   Subtract your liabilities from your liquid assets. The result is your liquid net worth.

4 Tips for Improving Liquid Net Worth

If your liquid net worth is too low to cover at least three to six months’ worth of living expenses or is in negative territory, you may want to take some steps to bolster this number. Here are some strategies that can help boost liquid net worth.

1. Building an Emergency Fund

If you don’t already have a solid contingency fund set aside in a liquid account, you may want to start building one. Having enough cash on hand to cover three to six months’ worth of expenses can be a great place to start building your liquid net worth.

An emergency fund can help keep you from getting behind on your bills and running up high interest credit card debt in the event of an unexpected expense, job loss, or reduction in work hours.

It’s fine to build towards this slowly. Automating your savings to deposit, say, $25 per paycheck into an emergency fund can be a good starting point if money is tight.

2. Reducing Expenses

For every dollar you save each month, you are potentially increasing your liquid net worth by that amount. One way to cut spending is to take a close look at your monthly expenses and to then try to find places where you may be able to cut back, such as saving on streaming services, lowering your food bills, or shopping around for a better deal on home and car insurance.

3. Lowering High-Interest Debt

Debts add to your liabilities and therefore lowers your liquid net worth. Expensive debt also increases your monthly expenses in the form of interest. This gives you less money to put in the bank each month, making it harder to build your liquid net worth.

If you’re carrying credit card debt, you may want to start a debt reduction plan (such as the “debt snowball” or “debt avalanche” method) to get it paid down faster.

4. Increasing Investments

Investing money in the market for longer-term savings goals can increase your liquid net worth. While there is risk involved, you’ll have more time to ride out the ups and downs of the securities markets when saving for the longer term.

Recommended: Average Net Worth by Age

The Takeaway

Liquid net worth is the portion of your net worth that is readily accessible as cash or can be quickly converted to cash without significant loss of value. You calculate it by subtracting your total liabilities from your total liquid assets.

Your liquid net worth can be a valuable measure of your financial health and stability because it shows how prepared you are to handle a change in plans, an unexpected expense, or a true emergency.

One easy way to boost your liquid net worth is to start building an emergency fund. If you’re looking for a good place to start saving, you may want to consider opening a high-interest bank account.

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

Does a 401(k) count as liquid net worth?

A 401(k) typically does not count as part of your liquid net worth because it generally isn’t easily accessible without penalties before age 59 ½. Liquid net worth refers to assets that can be quickly converted to cash without significant loss of value. However, your 401(k) does hold value and contributes to your overall net worth.

How do you calculate liquid net worth?

To calculate your liquid net worth, add up your liquid assets (cash, money in the bank, stocks, bonds, and the like) and subtract your liabilities (credit card debt, student loans, car loan, etc.). When adding up your assets, do not include real estate or retirement accounts.

What is the average liquid net worth by age?

The government tracks total net worth (not liquid net worth). According to the most recent Federal Reserve’s “Survey of Consumer Finances” (2022), the average net worth is $183,500 for those younger than 35; $549,600 for those 35 to 44; $975,800 for those 45 to 54; $1,566,900 for those 55 to 64; and $1,794,600 for those 65 to 74.

It’s important to keep in mind that outliers can skew average numbers. Median (the middle value in a set of numbers when those numbers are arranged in order from least to greatest) can be more accurate at representing the typical net worth by age.

About the author

Kelly Boyer Sagert

Kelly Boyer Sagert is a full-time freelance writer who specializes in SEO-optimized blog and website copy: both B2B and B2C for companies ranging from one-person shops to Fortune 500 companies. Read full bio.

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Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

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.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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If you’re in a bind to make a credit card payment, you may wonder if you can use another card to make your minimum payment. Typically, that’s not possible, or at least you can’t make the payment directly.

There may be workarounds that allow you to pull it off indirectly, such as cash advances and balance transfers.

Here, learn the details on these options, as well as some alternatives to help out when you are short on cash and have a credit card payment due.

Avoiding the Issue in the First Place

The best way to avoid a situation in which you are considering using one credit card to pay another is by paying your entire credit card statement balance every month.

Making credit card payments in full and on time will allow you to avoid paying interest.

Paying the statement balance in full each billing cycle also reduces the chance of accumulating debt that is hard to pay off.

At the very least it is important to make minimum payments to avoid negative effects on your credit score.

Of course, many people face situations in which it becomes hard to pay bills on time. Finding a budget system that works for you is one way to manage; there are many different budgeting methods out there, and it’s like one or more will suit you.

You might also consider doing some of your spending with a debit card or cash to avoid carrying so much credit card debt.

Paying a Credit Card With Another Credit Card

Most credit card rules don’t allow you to directly pay one card with another. It’s considered too expensive to process these kinds of transactions. But that said, there may be some workarounds that could allow you to use one card to pay another.

Taking a Cash Advance

You can’t pay one credit card with another directly, but you might be able to pay a credit card with a cash advance from another credit card.

Say you have two credit cards: Card A and Card B. You can’t afford to make your minimum payment on Card A, so you’re looking to Card B for a little help. You have the option to take a cash advance from Card B.

You could use Card B to withdraw cash at an ATM. Then you’d deposit that money into your checking account and make an online payment from your bank account or with a debit card.

Pros of a Cash Advance

The pros of using a cash advance to pay another credit card aren’t numerous. Basically, you are just accessing cash when it’s urgently needed.

•   Taking out a cash advance may be the right option if your situation meets three criteria: You’re trying to pay a small amount on Card A, you already have a second credit card (Card B) to use for this transaction, and Card B has a lower interest rate than Card A.

•   Most credit card companies limit how much cash you can withdraw with your credit card per month. If your withdrawal limit from Card B is $5,000, though, and you want to make a payment of $500 on Card A, things shouldn’t get too sticky.

In this way, you can make a payment, whether the minimum or more, to the credit card that is due. By using this process, the answer to “Can I pay a credit card with a credit card?” can be yes.

Cons of a Cash Advance

While a cash advance may get the money you need into your hands, consider the cons:

•   Your credit card company might not allow you to withdraw enough money per month to pay off your other credit card. Your cash advance limit isn’t necessarily the same as your monthly spending limit. Before you take a cash advance, you may want to contact the company that issued your second card to inquire. Or check a statement.

•   Also, interest usually starts accruing on the amount you withdraw from the moment you take the cash advance. The annual percentage rate (APR) for a cash advance will typically be higher than the purchasing APR on the card. As a result, it’s possible to go even further into debt.

•   What’s more, you’ll likely pay a fee to take a cash advance. The amount will depend on the credit card company, but you can usually expect to pay the greater of $10 or up to 6% of the amount you withdraw.

Completing a Balance Transfer

If you don’t have another credit card, or your cash advance allowance is too low, you might consider a balance transfer, which would allow you to transfer the balance on Card A to Card B.

Ideally, Card B would have a lower interest rate or none at all. You could potentially pay off the total balance more quickly because more of the money you used to pay in interest is going to pay off the principal, or you’re not accruing interest at all.

You may complete a balance transfer only by using a designated balance transfer credit card.

Pros of a Balance Transfer

The benefit of a balance transfer is getting a reprieve on paying the high interest rates that credit cards can charge.

•   Certain credit card companies offer balance transfer credit cards with no interest for the first six months or more. When you shop around for a new card, you’ll typically hear the grace period referred to as an “introductory balance transfer APR period” or “promotional period.”

•   During this period, you can work on paying off your debt without paying any interest. This can help you manage your finances and debt better.

Cons of a Balance Transfer

While balance transfers may be a godsend for paying off your balance in a set amount of time, what if you can’t nibble away at the total balance quickly? Keep these drawbacks in mind:

•   Once the introductory balance transfer APR period ends, the interest rate will shoot up, and the balance transfer card may not seem so magical anymore.

•   If you miss a payment, most companies will suspend the introductory APR period on your new card, or Card B, and you’ll have to pay what’s known as a default rate, which could end up being even higher than the rate on your previous Card A. Even if you consider yourself responsible enough to make all your payments on time, a financial emergency could throw you off track.

•   There are also generally fees associated with balance transfers, though they’re often lower than cash advance fees.

•   It’s worth mentioning that you usually can’t use balance transfers or cash advances to get credit card points or miles.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

What If I Can’t Pay My Minimum?

Now you have some answers to why you can’t pay a credit card with a credit card directly. And you know the ways to get around that situation and still use plastic.

If, for whatever reason, a cash advance or balance transfer isn’t available to you, you may still have trouble making your minimum payments. If this is the case, stay calm, and assess your situation. Here are some options for a credit card debt elimination plan.

•   You may want to gather your credit card statements and put your debts in order, either from largest to smallest or from highest interest rate to lowest. This step can help you understand how much debt you’re in and how to prioritize your bills.

•   You may decide to tackle the largest debts first or even your smallest to gain momentum. Or you may decide to save money on interest by focusing on credit cards with the highest interest rate first. You may see these tactics referred to by such names as the debt avalanche or snowball repayment methods.

•   You may consider talking to your creditors to see if they can help. A credit hardship program could give you more time to pay off your balance or adjust your terms.

What About a Personal Loan?

Taking out a personal loan is an option for paying off a large credit card bill. A personal loan may come with a lower interest rate than a credit card, and may be more manageable in the long run.

Pros of a Personal Loan

Here are some of the pluses of using a personal loan to pay off credit card debt:

•   If you have a good credit score, your rate for a personal loan could potentially be lower than your credit card rate. If that is the case, you could take out a kind of personal loan called a credit card consolidation loan, and then make payments on the loan at the lower interest rate. You’d likely end up paying less in interest over time and might be able to pay back the loan more quickly than you’d be able to pay off the credit card.

•   Most credit cards come with variable interest rates, meaning the rate can change over time with shifts in the economy. An unsecured personal loan usually has a fixed rate. (Unsecured means the loan isn’t secured by collateral, like your home or car.) This can help you budget better, since you know what you owe every month.

•   Taking out a personal loan also could help your credit utilization ratio, the amount of available revolving credit you’re using. Credit utilization affects your credit score. You can build your credit score by lowering your credit utilization ratio. Your score can also be favorably affected when you consistently pay bills on time.

Cons of a Personal Loan

Taking out a personal loan to pay off a credit card isn’t for everyone. Here are some downsides to think over.

•   It might not help you take control of your finances. Maybe you have trouble controlling your spending, and that’s why you have credit card debt to begin with. Having a personal loan to fall back on could tempt you to spend even more with your credit card.

•   Also, a lower interest rate isn’t guaranteed. If you discover that your loan rate could be higher than your card’s rate after inquiring with a lender, taking out a loan may not be the best choice.

•   No matter how low your personal loan interest rate is, it will still be higher than the rate during an introductory APR period for a balance transfer.

The Takeaway

You may be able to pay a credit card with a credit card, albeit indirectly, with a balance transfer or cash advance. While those moves can work in a pinch, each has potential drawbacks.

Taking out a fixed-rate personal loan with a clearly defined payment schedule may be the better long-term option.

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 pay a credit card with another credit card?

You generally cannot pay a credit card with another credit card. That said, you might indirectly pay a credit card by getting, say, a cash advance from another card to use as cash.

How can I pay a credit card with another credit card?

You cannot directly pay a credit card with another card. You could, however, indirectly do so via a cash advance or a balance transfer offer.

Can I pay rent with a credit card?

It depends. Typically, you cannot pay rent with a credit card because the landlord would then usually pay fees to accept that form of payment, raising their costs. However, there are specialized credit cards for this purpose as well as third-party platforms that may make it possible to pay rent with a credit card.

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

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Savings accounts can be a good place to stow extra cash and build wealth, but unlike checking accounts, you usually can’t spend straight from a savings account. What’s more, you may find that there are limitations on the number of withdrawals or transfers you can make from out of your savings account.

If you want to avoid getting entangled with savings account rules and restrictions or triggering fees, here’s advice on spending money from a savings account.

How Does a Savings Account Differ From a Checking Account?

You might think the main difference between a checking account and a savings account is how you view them — namely, one is for spending now, and one is for using later. But the bank also views these two accounts very differently. Here’s a closer look at how savings accounts work vs. checking accounts.

•  Savings accounts typically earn interest while checking accounts generally earn zero or very little interest.

•  Savings accounts may come with cash transfer and withdrawal limits. A federal rule called Regulation D used to limit certain types of transactions from a savings account to no more than six per month. While this rule was lifted during the pandemic, some banks still enforce the six-per-month cap on savings account transactions.

•  Savings accounts don’t usually come with debit cards that can be used to make purchases with money from that savings account. Only a few banks offer this service.

Can You Write a Check From a Savings Account?

Typically, you can’t write checks from a savings account. Of course, it’s always possible to transfer money from a savings account to a checking account and then write a check from there.

If you want to save money and have the ability to write a check with the money you save, you may want to consider opening up a money market account.

Money market accounts are a type of savings account that often pay a higher interest rate than traditional savings accounts and generally include check-writing and debit card privileges.

However these accounts often come with minimum monthly balances, and falling below the minimum can trigger fees. Like other savings accounts, money market accounts may limit transactions to six per month (which includes writing checks and debit card payments).

How to Spend (and Save) With a Savings Account

To take advantage of the interest you’re earning on your savings and avoid triggering penalty fees or the closure of your account, you may want to keep these savings account spending tips in mind.

Keeping Track of Your Withdrawals

It can be a good idea to find out what your bank’s policy is regarding monthly transactions from savings. Many institutions are sticking with the standard limit of six “convenient transactions” per month, while some are allowing more, such as nine transactions per month.

Convenient transactions include money transfers you make online, by phone, or through bill pay. Transactions, including ATM withdrawals and those that you make in person at the bank, do not typically count towards the monthly cap.

Paying Bills From Your Checking Account

Scheduling automatic bill payments from your savings account may put you over the savings withdrawal limit. It can be a better idea to have automatic bill payments or recurring transfers come out of your checking account.

Withdrawing Money Only for Large Expenses

If you withdraw money from your savings account for everyday spending, it can reduce the amount of interest you earn and make it harder to reach your savings goals.

It can be wiser to only touch your savings when it’s necessary to cover an emergency expense or a large purchase (ideally, one you’ve been saving up for).

Building Your Savings

A savings account can help you work towards your financial goals, such as creating an emergency fund, making a downpayment on a home, or going on a great vacation. In some cases, you may even want to have different savings accounts for different goals. High-yield savings accounts can be especially useful for this purpose, especially if you establish them at online banks, which often have no or low fees.

To help achieve those goals faster, you may want to set up an automatic transfer from your checking account into your savings account on the same day each month (perhaps after your paycheck gets deposited). It’s perfectly fine to start slowly. Even small monthly deposits will add up over time.

Maximizing the Interest You Earn

The higher the interest rate, the faster your savings will grow. That’s why it can be worthwhile to do some research into which institutions and which types of savings accounts are paying the highest rates.

Some options you may want to look into include: A high-interest savings account, money market account, certificate of deposit (CD), checking and savings account, or an online savings account.

Recommended: Savings Account Interest Calculator

The Takeaway

Savings accounts generally aren’t designed for making frequent transactions. Instead, their main purpose is to provide a safe place to store money and grow wealth via the interest earned. To make the most out of your savings account, you may want to look for a high-yield savings account which offers higher interest than standard accounts.

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 you spend directly from your savings account?

You usually can’t spend directly from a savings account. Savings accounts are a secure place to keep money and earn interest, while checking accounts are designed for spending.

Can I use my savings account to pay for things?

Usually, you use your checking account to pay for things. That’s why checking accounts typically come with a debit card and checks. In order to pay for things with funds in your savings account, you may have to transfer the money into your checking account first.

Is there a limit on transactions from my savings account?

Some banks may limit how many transactions you can complete each month from a savings account. There used to be a six transaction limit but, during the pandemic, this guideline was lifted, but some financial institutions still enforce it. Check with your bank to learn if your account has a cap on monthly transactions.

About the author

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.

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