Current Mortgage Rates in North Dakota Today
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Compare mortgage rates in North Dakota.
Key Points
• Mortgage rates in North Dakota have tended to fall below the national average.
• The cost of living in North Dakota is one of the lowest in the country.
• Mortgage rates are influenced by economic factors (inflation, unemployment, Federal Reserve policy) and consumer factors (such as credit score and down payment amount).
• North Dakota offers various mortgage types, including fixed-rate mortgages, ARMs, FHA loans, VA loans, USDA loans, and jumbo loans.
• Tips for securing a competitive mortgage rate: Compare interest rates and fees, get preapproved, lock in a good rate, explore available funding resources.
Introduction to Mortgage Interest Rates
Securing a home loan is a crucial step in the homebuying process in North Dakota. Mortgage interest rates are influenced by both the state of the economy and the borrower’s credit score, down payment, income, and assets. This guide explores factors that influence mortgage rates, popular mortgage types, and strategies for securing the best possible rate.
Where Mortgage Rates Come From
The Federal Reserve, also known as the Fed, plays a key role in shaping mortgage rates. The Fed sets the short-term interest rates that banks use as a benchmark for their lending rates. Although mortgage rates are not directly tied to Fed rates, they generally follow the same economic trends. When the Fed lowers interest rates, mortgage rates typically decrease, creating a more favorable environment for homebuyers.
An individual lender might fine-tune the rate a given homebuyer is offered based on several financial metrics, including the buyer’s credit score, income, assets, and more.
How Interest Rates Affect Home Affordability
Mortgage rates play a crucial role in determining home affordability. Even a seemingly small difference in interest rate can have a substantial impact on the affordability of a home. For instance, a 1% increase in interest rate on a $300,000 mortgage over 30 years can result in more than $70,000 in additional interest paid over the life of the loan.
Rising interest rates can contribute to middle-income Americans being priced out of the housing market. A modest increase in interest rates can make it challenging for families to qualify for a mortgage or afford the monthly payments, limiting their ability to purchase a home.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers grapple with the dilemma of whether to purchase a home immediately or delay in hope that mortgage rates will decrease. Those who qualify as a first-time homebuyer might be especially likely to hesitate because they typically have tighter budgets.
The bottom line? It is impossible to predict future interest rate movements with certainty, and there are several factors to consider when making this decision. First, delaying might give home prices time to rise. Second, postponing ownership also postpones your ability to build equity in a home.
Remember that you always have the option to undertake a mortgage refinance in the future if interest rates decline significantly or if your financial profile improves to the degree that you might qualify for a better rate.
North Dakota Mortgage Rate Trends
Understanding historical mortgage rate trends in North Dakota can provide valuable insights, especially if you have never shopped for a home in North Dakota before. Current mortgage rates in North Dakota remain below historical highs. The cost of living in the state is one of the lowest in the U.S., and average mortgage rates in the state have tended to fall below the U.S. average too.
| Year | North Dakota Rate | U.S. Rate |
|---|---|---|
| 2000 | 8.04 | 8.14 |
| 2001 | 6.88 | 7.03 |
| 2002 | 6.44 | 6.62 |
| 2003 | 5.58 | 5.83 |
| 2004 | 5.58 | 5.95 |
| 2005 | 5.55 | 6.00 |
| 2006 | 6.12 | 6.60 |
| 2007 | 5.97 | 6.44 |
| 2008 | 5.63 | 6.09 |
| 2009 | 4.79 | 5.06 |
| 2010 | 4.58 | 4.84 |
| 2011 | 4.29 | 4.66 |
| 2012 | 3.63 | 3.74 |
| 2013 | 3.87 | 3.92 |
| 2014 | 4.21 | 4.24 |
| 2015 | 3.89 | 3.91 |
| 2016 | 3.70 | 3.72 |
| 2017 | 3.91 | 4.03 |
| 2018 | 4.32 | 4.57 |
Historical U.S. Mortgage Rates
To gain an even broader perspective, it is beneficial to examine historical U.S. mortgage rates. Whatever a homebuyer might hear about current mortgage rates in North Dakota, they are still far below the double-digit numbers of the 1980s.
Factors Affecting Mortgage Rates in North Dakota
Numerous factors influence mortgage rates in North Dakota and across the nation. These factors can be broadly categorized into economic factors and consumer factors, each playing a role in shaping the mortgage rate landscape.
Economic Factors
• The Fed: As noted above, the federal funds rate, set by the Federal Reserve, serves as a benchmark for other interest rates, including mortgage rates. When the federal funds rate increases, consumers may see higher mortgage rates.
• Inflation: An increase in the general price level of goods and services impacts mortgage rates. When the purchasing power of money decreases it becomes more expensive for lenders to lend money and they may increase interest rates to maintain profit margins.
• Unemployment: A high unemployment rate may prompt the Fed to lower its rate, so unemployment has an indirect effect on mortgage rates.
Consumer Factors
• Credit score: Lenders view borrowers with higher credit scores as less likely to default on their loans, making a lender more willing to offer lower interest rates.
• Down payment: Lenders may offer lower interest rates to borrowers who make larger down payments. These buyers have a greater ownership stake in their home from Day One, lowering risk for the lender.
• Income and assets: A steady income and sufficient assets provide assurance to lenders that the borrower has the financial capacity to repay the loan.
• Type of mortgage loan: The type of mortgage loan selected can also impact the interest rate. For example, adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate mortgages. Additionally, government-backed loans, such as VA mortgages, may offer more favorable rates.
Recommended: Average Monthly Expenses for One Person
Types of Mortgages Available in North Dakota
North Dakota offers a diverse range of mortgage types to cater to the varying needs of homebuyers. These include fixed-rate mortgages, adjustable-rate mortgages, FHA loans, VA loans, USDA loans, and jumbo loans. Would-be homeowners in North Dakota might want to take a close look at their options.
Fixed-Rate Mortgage
Fixed-rate mortgages offer stability and predictability by locking in the interest rate for the entire loan term. This ensures that the principal and interest payments remain constant throughout the life of the loan. Fixed-rate mortgages are commonly available in terms of 10, 15, 20, or 30 years. The choice of loan term depends on the borrower’s financial situation and preferences. Shorter loan terms generally come with lower interest rates but higher monthly payments, while longer loan terms offer lower monthly payments but higher overall interest costs.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) provide initial lower interest rates compared to fixed-rate mortgages. However, these rates can adjust periodically after a fixed introductory period, based on prevailing market conditions.
The initial lower interest rate of ARMs can provide significant savings for borrowers who plan to sell their property or refinance before the fixed introductory period concludes. However, borrowers should carefully consider the potential for future interest rate increases and ensure that the long-term financial implications align with their plans.
FHA Loans
FHA loans, insured by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with limited financial resources. They typically have more lenient eligibility requirements and allow for lower down payments compared to conventional loans. The federal government’s backing of the loans provides lenders with a safety net in case of borrower default. This allows lenders to offer more flexible eligibility criteria.
VA Loans
VA loans are exclusively available to eligible veterans, active-duty military members, Reserve and National Guard members, and surviving spouses. These loans offer competitive interest rates and do not require a down payment, making them an attractive option for borrowers who request the VA’s certificate of eligibility and qualify for the loan.
USDA Loans
USDA loans are specifically designed for borrowers whose income falls beneath a certain ceiling to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture (USDA) and offer favorable terms, including no down payment requirement and competitive interest rates.
Jumbo Loan
A jumbo loan is designed for borrowers seeking to finance a home that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac for its specific geographic location. These loans typically require a larger down payment and may have stricter credit score requirements compared to conventional loans. In most places in the U.S., and throughout North Dakota, the conforming loan limit for a single-family home is $806,500.
Current mortgage rates by state.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
Popular Places to Get a Mortgage in North Dakota
Securing a mortgage often hinges on choosing the right location, where home prices are affordable. Here are some popular places in North Dakota to obtain a mortgage.
Least Expensive Locations
The following locations in North Dakota are some of the least expensive places to obtain a mortgage, based on how local costs compare to the cost of living in the U.S. See more options in SoFi’s list of best affordable places in the U.S.:
• Bismarck: This is one of the state’s larger cities and has a cost of living slightly below the state average which, as noted above, is already one of the lower cost of living ratings for the U.S.
• Valley City: This small city of fewer than 10,000 people has a cost of living profile similar to that of Bismarck. It’s about an hour’s drive from Fargo.
• West Fargo: This is an especially family-friendly city and has a cost of living rating that is five points lower than the overall North Dakota number.
Most Expensive Locations
North Dakota is so relatively affordable overall that even Williston, one of its more expensive cities based on cost of living, is still seven points below the U.S. average.
Tips for Securing a Competitive Mortgage Rate in North Dakota
Obtaining a competitive mortgage rate can lead to significant savings over the life of a loan. Take these steps for best results.
Compare Interest Rates and Fees
Shopping around and comparing interest rates from multiple lenders is essential to securing the best mortgage deal. It is also important to inquire about any upfront costs or closing fees associated with the loan. It may take some time to compare interest rates and fees from various lenders to reveal the full picture, but it can yield significant savings.
Get Preapproved
Obtaining preapproval for a mortgage strengthens your position with sellers as a serious buyer. Going through the mortgage preapproval process means sharing fairly comprehensive financial information with a potential lender, but once you’ve done so and been preapproved, you can take swift action when you find your dream home. Additionally, some lenders offer the option to lock in the interest rate for a certain period, providing protection against possible rate increases.
Recommended: Mortgage Prequalification vs. Preapproval
North Dakota Mortgage Resources
North Dakota has several programs to assist homebuyers, particularly if you are buying your first home, have limited financial resources, or both.
First-Time Homebuyer Programs
The state’s FirstHome program is for those who have not owned a principal residence in the last three years (a common way that programs in many states define first-time homebuyers). There are both income and home purchase price limits for eligibility. Other programs are directed at single parents with at least one dependent living at home, military members, or people with a permanent disability. Find all the details on the North Dakota Housing Finance Agency (NDHFA) site .
Down Payment Assistance
A down payment assistance program can make all the difference for homebuyers who have limited funds. Through its DCA (Down Payment and Closing Cost Assistance) program, NDHFA provides low-income buyers with mortgage loans to cover down payment and closing costs up to three percent of the first mortgage loan amount. The funds come in the form of a credit toward the homebuyer’s out-of-pocket cash needs. Again, there is an income ceiling. The home must also be a primary residence.
Tools & Calculators
Online tools and calculators can help would-be homeowners in North Dakota run the numbers on mortgage scenarios, home prices, and see how different down payment amounts might affect their costs.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in North Dakota
Homeowners in North Dakota, like others nationwide, can seek out a refinance of their mortgage from a bank or other mortgage lender. Those with certain government-backed loans also have the opportunity to refinance their existing mortgage. The FHA Streamline Refinance program, for example, is designed for homeowners with FHA-insured mortgages. It offers a simplified refinancing process with minimal documentation requirements, making it easier for homeowners to obtain a lower interest rate.
VA Interest-Rate Reduction Refinance Loans (IRRRL) provide an opportunity for veterans and other VA loan holders to refinance their loans and potentially lower their monthly payments. This program allows for a streamlined refinancing process without the need for a new appraisal.
Closing Costs, Taxes, and Fees in North Dakota
Closing costs and fees are additional expenses associated with purchasing a home. In North Dakota, buyers can expect to pay between 3% and 6% of the home’s purchase price in closing costs. Higher-priced homes and properties in certain areas may incur higher closing costs.
The Takeaway
North Dakota’s mortgage landscape offers any option a would-be homebuyer might need. By staying informed about current mortgage rates, exploring the state’s assistance programs, and paying close attention to personal financial metrics such as credit score, individuals can make the right moves and achieve successful homeownership in North Dakota.
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
This section addresses frequently asked questions related to mortgage rates in North Dakota.
Will mortgage rates drop in North Dakota?
It’s hard to say with certainty if mortgage rates will drop in North Dakota because there are so many things that contribute to rate increases and decreases.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates can vary greatly over time. Mortgage rates are influenced by a complex interplay of economic factors and personal financial metrics, and one generation’s normal might be another generation’s high or low.
Will North Dakota home prices ever drop?
Real estate market trends are influenced by supply and demand, economic conditions, and local market dynamics. Predicting future home price movements with certainty is challenging, and your best bet for insight is to ask a real estate professional who specializes in the specific market area you’re wondering about.
Is it a good time to buy a house in North Dakota?
The decision of whether it is a good time to buy a house in North Dakota depends on individual circumstances, financial readiness, and market conditions. Using a home affordability calculator to determine what your budget would be, and then looking at real estate web sites to see if any homes in your chosen area fit that budget, would be a good way to assess whether it might be time to buy.
How do I lock in a mortgage rate?
Some lenders offer the option to lock in the interest rate for a certain period, typically ranging from 30 to 90 days. This often requires paying a fee to the lender. Locking in the interest rate provides protection against potential rate increases during the property search and purchase process.
How do mortgage interest rates work?
Mortgage interest rates are determined by a combination of factors, including the prevailing federal funds rate set by the Federal Reserve, inflation, and unemployment rate, as well as the borrower’s credit score, down payment amount, income, assets, and type of mortgage loan.
SoFi Mortgages
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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 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.
†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.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.
HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.
SoFi Bank, N.A. (NMLS #696891) does not perform any activity that is or could be construed as unlicensed real estate activity, and SoFi is not licensed as a real estate broker. Agents of SoFi are not authorized to perform real estate activity.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process
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Current Mortgage Rates in Maine Today
Preparing to buy a house? Call us for a complimentary mortgage consultation.
Compare mortgage rates in Maine.
Key Points
• Maine’s average mortgage rate tends to follow national averages, though the cost of living here is on the higher side.
• Mortgage rates in Maine are influenced by economic factors such as inflation, unemployment, and the Federal Reserve’s monetary policy.
• A higher credit score and larger down payment can result in a lower mortgage interest rate.
• Maine offers various mortgage types, including fixed-rate, adjustable-rate, FHA, VA, and USDA loans, each with its own benefits and requirements.
• The Maine State Housing Authority provides help for first-time homebuyers and first-generation buyers to make a home purchase.
Introduction to Mortgage Interest Rates
Securing a home loan is a crucial step in the homebuying process in Maine, and understanding mortgage interest rates is essential for making an informed financial decision. Mortgage rates dictate the interest fees charged by lenders for borrowing money to purchase a home. You may be focused on prevailing interest rates as you think about purchasing a home, but your credit score and the type of mortgage loan you choose will play a significant role in determining the interest rate you’re offered. Let’s look at how all of this plays out in the Pine Tree State.
Where Mortgage Rates Come From
The Federal Reserve plays a crucial role in setting short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates. While mortgage rates are not directly tied to Fed rates, they tend to follow similar economic trends. When the Fed’s interest rate is high, mortgage rates are likely to be higher as well. Lenders then adjust the specific rate they offer an individual borrower up or down based on the person’s financial data: credit score, income and asset levels, even how much of a deposit they plan to put down on a given property.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability. A seemingly small difference in mortgage rates can have a significant impact on average monthly expenses and home affordability. For instance, a one percentage point increase in interest rate on a $200,000 mortgage can result in an increase of over $120 in monthly payments. For a family on a tight budget, this could create a noticeable pinch. Moreover, in the 30 years it would take to pay off the loan, the borrower would spend more than $45,000 on additional interest.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers wonder if it is smarter to purchase a home immediately or wait for mortgage rates to decrease. This may be an especially challenging question if you are buying your first home and don’t have proceeds from the sale of a first residence to use as a deposit.
While waiting for lower interest rates may seem like a prudent strategy, it is essential to consider that interest rates are unpredictable. Delaying a home purchase also delays building equity in a home. And home prices could rise while you are waiting for interest rates to drop.
Remember that homeowners do have the option to refinance a mortgage if interest rates drop meaningfully after they make a home purchase. (It’s also worth looking into a refinance if your personal financial situation changes significantly — for example if your credit score increases.)
Maine Mortgage Rate Trends
Understanding historical mortgage rate trends in Maine can put current rates into context. Maine’s average mortgage rate tends to hover close to the national average. Take a look at how this plays out over almost two decades (2018 was the last year state averages were tracked).
| Year | Maine Rate | U.S. Rate |
|---|---|---|
| 2000 | 8.23 | 8.14 |
| 2001 | 7.01 | 7.03 |
| 2002 | 6.58 | 6.62 |
| 2003 | 5.72 | 5.83 |
| 2004 | 5.80 | 5.95 |
| 2005 | 5.95 | 6.00 |
| 2006 | 6.53 | 6.60 |
| 2007 | 6.38 | 6.44 |
| 2008 | 5.95 | 6.09 |
| 2009 | 5.00 | 5.06 |
| 2010 | 4.80 | 4.84 |
| 2011 | 4.51 | 4.66 |
| 2012 | 3.68 | 3.74 |
| 2013 | 3.76 | 3.92 |
| 2014 | 4.17 | 4.24 |
| 2015 | 3.88 | 3.91 |
| 2016 | 3.73 | 3.72 |
| 2017 | 4.06 | 4.03 |
| 2018 | 4.65 | 4.57 |
Historical U.S. Mortgage Rates
Homebuyers following current mortgage rates in Maine could also look at average U.S. mortgage rates over several decades to gain some perspective. Rates may feel high in the present, but they are still well below the numbers seen in the 1980s.
Factors Affecting Mortgage Rates in Maine
Numerous factors influence mortgage rates in Maine and nationwide. Some of these factors are economic, while others are entirely within the homebuyer’s control.
Economic Factors
• The Fed: As noted previously, the Federal Reserve’s federal funds rate serves as a benchmark for other interest rates, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates. Conversely, a decrease in the federal funds rate can result in lower mortgage rates.
• Inflation: Inflation, or the general increase in prices, also affects mortgage rates. As inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. To compensate for this, lenders may increase interest rates.
• Unemployment: The unemployment rate is a metric the Fed watches closely. If unemployment rises, the Fed may lower interest rates to prompt an upswing in the job market.
Consumer Factors
• Credit score: A higher credit score indicates a lower risk of default for the borrower. As a result, lenders are more likely to offer lower mortgage interest rates to borrowers with good credit scores.
• Down payment: A larger down payment reduces the loan amount, which lowers the risk for the lender. Consequently, lenders may offer lower mortgage interest rates to borrowers who make larger down payments.
• Income and assets: Lenders consider employment history, salary, investments, and emergency savings when assessing the borrower’s ability to repay the loan. Borrowers with a stable income and sufficient assets are more likely to secure lower mortgage interest rates.
• Type of mortgage loan: Adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate mortgages. Government-backed loans, such as VA mortgages, may also offer lower rates.
Types of Mortgages Available in Maine
Homebuyers in Maine have access to any type of mortgage they might need to suit their specific financial situation. Conventional loans are a popular choice and are offered by banks, credit unions, and other lenders. They can be fixed-rate or adjustable-rate. Conventional loans do not have a maximum allowable amount, although borrowers in Maine who need a loan for more than $806,500 will require a jumbo loan (more on that below).
Fixed-Rate Mortgage
With a fixed-rate mortgage, the interest rate remains the same for the entire loan term, typically 10 to 30 years. This provides peace of mind to borrowers, as they can accurately budget their monthly mortgage payments without worrying about fluctuations in interest rates. The choice of loan term does affect the monthly payment amount and the total interest paid over the life of the loan. Shorter loan terms result in higher monthly payments but lower total interest paid, while longer loan terms have lower monthly payments but higher total interest paid.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages offer lower interest rates than fixed-rate loans for an initial period, but after that time the interest rate can adjust periodically based on market conditions. This arrangement can be advantageous for homebuyers who feel fairly certain they will sell or refinance their home before the initial fixed-rate period ends. However, it is essential to be prepared for the interest rate to adjust upward after the fixed-rate period, and to have a plan for paying the bigger bill.
FHA Loans
FHA loans, backed by the Federal Housing Administration, offer more flexible eligibility criteria compared to conventional loans. They have more lenient credit score and down payment requirements, making them an especially attractive option for first-time homebuyers and those with less-than-perfect credit.
VA Loans
VA loans, offered by the Department of Veterans Affairs, are a unique mortgage option available to eligible veterans, active-duty military personnel, Reserve and National Guard members, and surviving spouses. These loans offer several advantages, including no down payment requirement and competitive interest rates. To determine eligibility, would-be borrowers need to apply to the VA for a Certificate of Eligibility. With that in hand, they can work with a participating lender to apply for the loan.
USDA Loans
USDA loans, backed by the U.S. Department of Agriculture, are for borrowers whose income falls below a maximum ceiling and who are seeking to purchase a home in a rural area. Favorable terms include no down payment requirement and competitive interest rates.
Jumbo Loans
Jumbo loans cater to borrowers seeking a mortgage that exceeds the conventional loan limit of $806,500 for a single-family property. The maximum conventional loan amount is set by the Federal Housing Finance Agency (FHFA) and changes annually. Jumbo loans, which are larger than this limit, are also called nonconforming loans.
Current mortgage rates by state.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
Popular Places to Get a Mortgage in Maine
Securing a mortgage often depends on choosing the right location. The cost of living and housing prices vary across different locations in Maine, but the state as a whole is the 14th most expensive one in the U.S. with a cost of living that is 8 points above the national average. Here are some of the least (and most) costly places you might go home-shopping in Maine.
Least Expensive Locations
When compiling a list of the best affordable places in the U.S., SoFi looked at cost-of-living data and average home values, among other factors. Here are the Maine cities that ranked as least-expensive locations:
• Presque Isle: Set east of the North Maine Woods, this town of fewer than 10,000 people is known for year-round recreation in the beautiful outdoors. It’s also one of the less costly places to live in Maine.
• Gardiner: A small, historic community, Gardiner is attractive in part because it is within commuting distance of the state capital, Augusta.
• Waterville: Home to Colby and Thomas colleges, Waterville is also 11 points below average on cost-of-living rankings in Maine.
• Auburn: Half an hour north of Portland, Auburn is one of Maine’s more populous cities, but still small at around 25,000 people.
Most Expensive Locations
Easy waterfront access (whether ocean or a lake) is a hallmark of Maine’s most-expensive towns. Southport, Kennebunkport, Mount Desert, Brooklin, and South Bristol all boast beautiful views and average home selling prices north of $1 million.
Recommended: The Cost of Living in the U.S.
Tips for Securing a Competitive Mortgage Rate in Maine
Obtaining a competitive mortgage rate can save borrowers thousands of dollars over the life of the loan. Take these steps to get the best possible rate:
Compare Interest Rates and Fees
Shopping around and looking closely not only at interest rates but also at fees from multiple lenders is crucial for securing a good mortgage deal. It’s essential to inquire about both upfront costs and closing fees associated with the mortgage loan. These fees can vary among lenders and can impact the overall cost of the loan.
Get Preapproved
Having a mortgage preappproval demonstrates to sellers that the homebuyer is a serious and qualified buyer. It also enables homebuyers to move swiftly when they find a suitable property, as they have already completed a significant portion of the mortgage application process.
If you’re worried that interest rates may drift northward, consider locking in your mortgage rate. By paying a fee to the lender, you can secure the current interest rate for a specified period, typically ranging from 30 to 90 days. This provides peace of mind and protection against potential interest rate increases.
Maine Mortgage Resources
The state of Maine recognizes the challenges faced by homebuyers and provides several resources and programs to facilitate homeownership.
First-Time Homebuyer Programs
The Maine State Housing Authority First Home Loan program offers low fixed-rate mortgages with little or no down payment required. Homebuyers can apply through a participating lender.
Down Payment Assistance
Down payment assistance programs provide financial support to help homebuyers overcome the challenge of saving for a down payment. In Maine, the Maine State Housing Authority’s First Generation Program provides up to $10,000 for qualified homebuyers who have never lived in a home owned by their biological parents or legal guardians. The program is also available to borrowers who have been in foster care at some point in their childhood. Attendance at financial and homebuyer education programs are required to qualify.
Tools & Calculators
Maine offers a mortgage calculator to help homebuyers estimate their mortgage payments including insurance and property taxes. Or use one of these helpful calculators:
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Maine
Homeowners in Maine have the opportunity to refinance their existing mortgage through a conventional bank or other lender. A mortgage refinance can help owners to secure lower interest rates and potentially save money. There are also government-backed refinance options for eligible borrowers:
FHA-insured homeowners can take advantage of the FHA Streamline Refinance program, which allows them to refinance with minimal documentation and without the need for a new appraisal. This simplified process enables homeowners to obtain lower interest rates and reduce their monthly mortgage payments.
VA loan holders have the option to pursue an Interest-Rate Reduction Refinance Loan (IRRRL) to lower their monthly mortgage payments. This program allows eligible veterans and military personnel to refinance their VA loans and secure a lower interest rate, potentially resulting in significant savings over the life of the loan.
Recommended: Do You Qualify as a First-Time Homebuyer?
Closing Costs, Taxes, and Fees in Maine
Homebuyers in Maine should be aware of the associated closing costs, taxes, and fees when purchasing a home. Closing costs in Maine typically range from 3% to 6% of the home’s purchase price. These costs cover various expenses related to the home purchase, including title insurance, appraisal fees, loan origination fees, and recording fees. The specific closing costs associated with a home purchase in Maine can vary depending on the property value and location.
The Takeaway
Maine’s mortgage landscape offers a range of options for homebuyers, catering to different financial situations and needs. Each loan type has its own advantages and disadvantages, and homebuyers should carefully consider their financial circumstances and long-term goals when selecting the most suitable mortgage option. Knowing current mortgage rates and exploring available assistance programs can help homebuyers make smart decisions in the land of lobster and lighthouses.
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
What is a mortgage rate?
A mortgage rate is the interest rate charged on a mortgage loan. It determines the amount of interest paid over the life of the loan and directly affects the size of the monthly mortgage payment.
Will mortgage rates drop in Maine?
Predicting future mortgage rate movements is challenging, and there is no guarantee that rates will drop. Economic conditions, inflation, and the Federal Reserve’s monetary policy influence mortgage rates.
Will mortgage rates ever go back to normal?
There isn’t really a “normal” where mortgage rates are concerned. They have fluctuated throughout history.
Will Maine home prices ever drop?
Real estate market conditions, including home prices, are influenced by supply and demand, economic factors, and local market dynamics. Predicting future home price movements is uncertain but a local-market expert (in the form of a local real estate agent) might give you some insight into what the future holds.
Is it a good time to buy a house in Maine?
The decision of whether it is a good time to buy a house depends on your personal financial circumstances and market conditions. Factors such as mortgage rates, home prices, and your long-term goals (both residential and financial) should be carefully considered.
How do I lock in a mortgage rate?
Borrowers can lock in a mortgage rate by paying a fee to the lender, which guarantees the interest rate for a specific period, such as 30 or 90 days. This can provide protection against potential rate increases.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including the prevailing economic conditions, inflation, unemployment, and the Federal Reserve’s monetary policy. Lenders use these factors — as well as each borrower’s individual financial metrics — to assess the risk associated with lending money and set interest rates accordingly.
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 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 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.
†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.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.
HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.
SoFi Bank, N.A. (NMLS #696891) does not perform any activity that is or could be construed as unlicensed real estate activity, and SoFi is not licensed as a real estate broker. Agents of SoFi are not authorized to perform real estate activity.
If your property is currently listed with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®.
Reward is valid for 18 months from date of enrollment. After 18 months, you must re-enroll to be eligible for a reward.
SoFi loans subject to credit approval. Offer subject to change or cancellation without notice.
The trademarks, logos and names of other companies, products and services are the property of their respective owners.
SOHL-Q324-074
More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process
Preparing to buy a house? Call us for a complimentary mortgage consultation.
SoFi Plus 1% Invest Match
Get a 1% match on
recurring invest deposits.1
SoFi Plus members earn an unlimited 1% match on all recurring deposits to their SoFi Invest® account, paid in cash rewards.
Get SoFi Plus
What a 1% match on recurring deposits could do for you.
Build healthy habits.
Investing regular, fixed amounts is a great way to build an investing discipline and stay on top of long-term goals. When you make recurring deposits to your investment account, we’ll reward you with a 1% match.
Earn an unlimited match.
There’s no cap on the 1% match—the sky’s the limit! Simply set your recurring deposit when you want and how you want for any SoFi Invest account.
Manage risk with automated investments.
Open an auto invest account through SoFi Wealth LLC and start trading at regular intervals. If you’re taking advantage of dollar-cost averaging, you could lower your average cost per share and reduce the impact of market volatility on your portfolio.
How to start earning a 1% match with recurring deposits to SoFi Invest®.
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Join SoFi Plus.
Two ways to join: Pay just $10/month2 or set up direct deposit to a SoFi Checking and Savings account. Subscribe to SoFi Plus now.
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Open a SoFi Invest® account.
Open an active SoFi Invest account. through SoFi Securities LLC or an automated invest account with SoFi Wealth LLC.
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Set up a recurring deposit to SoFi Invest.
Now, as a SoFi Plus member, you’re eligible for a 1% match on recurring SoFi Invest deposits. Set up your deposit to start earning.
NOTE: If you set up a recurring deposit to an active Invest account, you’ll need to place a trade to invest the cash.There are two ways to set up a recurring deposit. See our FAQs to learn more.
Unlock additional benefits with SoFi Plus.
Earn 3.60% APY3 on savings balances.
Receive double rewards points on qualifying activities4.
Get a 10% boost on SoFi Credit Card rewards—that’s up to 3.3% cash back rewards5.
3% cash back rewards on select hotels booked through SoFi Travel with any card6.
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FAQs
1. Set up a weekly, biweekly, or monthly ACH transfer into your SoFi Invest® account. You can do this by adding cash to your Invest account and changing the frequency from “one-time, today” to recurring on a weekly, bi-weekly, or monthly cadence.
2. If you have Autopilot through a SoFi Checking & Savings account from SoFi Bank, N.A, you can use it to set up a recurring deposit into your Automated Invest (SoFi Wealth, LLC ) account. Afterwards, click the “Set up Autopilot” button to start your recurring investment. Next, select the dollar amount or percentage you want to invest from each paycheck, and we’ll automatically transfer it into your new account.
Remember that deposits to your Active Invest (SoFi Securities, LLC) account aren’t automatically invested. You’ll need to make a trade for those funds to be invested in the market. However, deposits to your Automated Invest (SoFi Wealth, LLC) account will be traded automatically based on your pre-set investing strategy..
The 1% match is paid out in cash into the same account receiving the scheduled recurring deposit. For a limited time, some members may receive their bonus in the form of SoFi Rewards points instead of cash. The rewards points are equal in value to the cash and can be redeemed for their cash value. You can learn more about how to redeem your rewards points here.
Enrolling is simple:
1. Log in to your SoFi account
2. Once you’re logged in, select the gem icon above your account details
3. Select “Join for free”
And that’s it!
Please note that the points will expire within 90 days of earning them if you don’t enroll in the SoFi Member Rewards Program. For more details, please see the SoFi Member Rewards terms.
Examples:
Scenario 1: If you deposit $1,000 into a SoFi Invest account, you’ll earn a $10 match. If you withdraw $600 less than 5 years from the deposit date, you’ll incur an early withdrawal fee of $5.94.
Scenario 2: If you deposit $1,000 into a SoFi Invest account, you’ll earn a $10 match. Your account balance then increases to $1,310 due to investment gains. If you withdraw $250 less than 5 years from the deposit date, you’ll incur an early withdrawal fee of $0 because your equity balance remains above the pre-promotion equity in the account, plus the qualifying deposit and match amount.
Scenario 3: If you deposit $1,000 into a SoFi Invest account, you’ll earn a $10 match. Your account balance then decreases to $950 due to investment losses. If you withdraw $250 less than 5 years from the deposit date, you’ll incur an early withdrawal fee of $3.07 because your equity balance fell below the pre-promotion equity in the account, plus the qualifying deposit and match amount.
At Work Employees
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Want your employer to help you with your student loan debt?
Did you know that employees with the heaviest student debt are 2.4x more likely to be looking to leave their current job?1 If your company isn’t offering student debt benefits yet, we have some good news. SoFi can help your employer offer these benefits so you can reach your life’s ambitions.
Refer your employer
1Hayes, Mary, Ph.D., “Employers and student debt.” ADP Research Institute, 14 November 2023,
https://www.adpri.org/employers-and-student-debt/
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Looking for your SoFi at Work
benefits or discounts?
Visit your employer’s or association’s
SoFi at Work Portal.
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Looking for your SoFi at Work
benefits or discounts?
Visit your employer’s or association’s
SoFi at Work Portal.
Get help
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Employees get exclusive access to special rate discounts and bonuses.
SoFi offers employees the kind of perks and valuable incentives they care about most.
Student loan refinancing welcome bonus
Exclusive welcome bonuses on competitive, fixed-rate refinancing—with no fees.
Mortgage loans
Competitive rates, terms, and member bonuses—with loans requiring as little as 3%–5% down.3
Student loan refinancing rate discount
Exclusive rate discount on a competitive, fixed-rate refinancing—with no fees.
Checking and savings
With direct deposit, employees can get paid up to two days early4, plus earn up to 3.60% APY, which is highly competitive.5
Personal loans
Exclusive discounts and no fees required on low fixed-rate loans from $5K up to $100K, with same-day funding.2
Credit score monitoring and insights
Employees earn rewards points6 just for using SoFi tools to monitor their credit scores, manage spending, and track accounts.
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How employer contributions can make a big difference.
See how just $100 a month really adds up. Employers can decide how much they’d like to contribute to employee student loans each month—up to $5,250 per employee, per year. Employees who receive just $100 per month can save up to $17,076 over the lifetime of their loan and pay the loan off one year and eight months faster.7
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Get a full year of financial well-being content.
Our annual SoFi at Work Financial Empowerment Calendar—available through the SoFi at Work Portal—gives you a snapshot of the great content coming your way. Here are examples of some of our previous campaigns so you can see how it all comes to life.
Women’s financial empowerment
Learn more
First-time home buying
Download guide
Parents of college-bound students
See webinar
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SoFi at Work has everything you need right here.
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Helping employees get critical answers to financial well-being questions.
How to use the SoFi at Work Employee Communication Resource Center.
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Refer your employer.
We’re happy to reach out to your employer on your behalf. Just tell us who to contact at your company—we won’t say you referred them unless you want us to.
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Refer your employer.
We’re happy to reach out to your employer on your behalf. Just tell us who to contact at your company—we won’t say you referred them unless you want us to.
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Want to take matters into your own hands?
Here’s an email you can send to your HR team.
Subject Line: Here’s why offering student loan benefits is good for everyone.
Hi there,
Many of us have student loans today, over 43 million actually! It’s a big bill to pay each month. Some of us are now facing these bills again with the ending of the student loan repayment pause—and, to be totally transparent, it’s stressful. This kind of stress can show up at work in the form of distraction, depression, and decreased productivity.
I do have some great news, though. I recently discovered that SoFi can help employers offer student loan benefits to their employees. SoFi makes it easy to offer them and they’re tax free up to $5,250 per employee, per year. They can even help employees get ahead on their retirement with new provisions under the SECURE 2.0 Act.
SoFi’s 1,100+ partners are already offering student loan benefits and have seen them make a positive difference in their employees’ lives. These benefits are also helping them recruit and retain great employees. You can learn more at SoFiatWork.com, call 855-456-SOFI, or download this PDF.
Thank you so much for your time and consideration!
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Still have questions?
Our team can help you find your way.
SoFi at Work employee support
For employee questions about their financial well-being benefits, our support team is ready to help. Employees can call us at 833-277-SOFI.
Visit portal
SoFi at Work HR team support
For questions about financial well-being benefits or SoFi products, our support team is here for you. Call us at 855-456-SOFI.
Contact us
Home Affordability Calculator
Home Affordability Calculator
How Much House Can I Afford?
House hunting can be stressful. That’s why we are bringing you the “Houseculator.” Just input three quick numbers, and we’ll tell you how much house you could really afford. This is just one example of SoFi’s suite of financial tools working better together to help you achieve your home goals.
Preparing to buy a house? Call us for a complimentary mortgage consultation or get pre-qualified online.
How Much Mortgage Can I Afford?
The size of the mortgage you may be offered depends on your income, debts, credit history, assets, and down payment.
Fortunately, you can get an idea of how much of a mortgage you can afford by using calculators (like the one above) and prequalifying with lenders.
An old standard, the 28/36 rule, says that your mortgage payment shouldn’t be more than 28% of your monthly gross income and 36% of your total debt.
Mortgage lenders may run your financial information through a few different calculations when determining how much house you can afford based on income. You can do the math as well for a sense of how much house you can afford.
Ways to Calculate How Much House You Can Afford
Mortgage lenders may run your financials through a few different calculations when determining how much house you can afford based on income.
1. Debt-to-Income Ratio
Debt-to-income ratio is simply your total debt divided by your total income, shown as a percentage. Lenders use the ratio to help determine how much mortgage you can afford.
Generally, 43% is the highest acceptable ratio a buyer can have and still obtain a Qualified Mortgage (a category of lower risk loans). To assess your ratio, plug your numbers into a home affordability calculator.
Example of DTI: To compute your DTI, simply add up all your monthly debts and divide by your gross monthly income, as in this sample:
• Auto loan: $320
• Student loans: $400
• Credit cards: $250
• Rent payment: $1,200
That’s $2,170 in monthly obligations. Now let’s say gross monthly income is $7,500.
$2,170 / $7,500 = 0.289
Multiply the result by 100 for a DTI ratio of nearly 29%, meaning 29% of gross monthly income is going toward debt repayment.
2. The 28/36 Rule
The 28/36 rule combines two ratios that lenders use to determine home affordability based on income and debt. The first number sets 28% of gross income as the maximum total mortgage payment, including principal, interest, taxes, and insurance. The second number sets the limit on your mortgage payment plus any other debts you owe at no more than 36% of your gross income.
Example of the 28/36 rule: If your gross income is $6,000 per month, your magic numbers work out to be $1,680 and $2,160. According to this rule, you should aim for a monthly mortgage payment of $1,680, as long as your total debt (including credit cards, car payment, etc) doesn’t exceed $2,160.
You can try to follow the 28/36 in your household budget to get your finances in order prior to applying for a mortgage.
3. The 35/45 Rule
Another option is to use the 35/45 method, which recommends that you spend no more than 35% of your gross income on your mortgage, and no more than 45% of your after-tax income to pay for all debt, including your mortgage.
Example of the 35/45 rule: Let’s say your gross monthly pay is $5,000 and your take-home income is $4,000. In this scenario, you should spend between $1,750 (5,000 x .35) and $1,800 (4,000 x .45) on your debt payments.
This model gives you a little more flexibility. However, if a large portion of your income already goes toward debt, other methods might be more suitable.
4. The 25% After-Tax Rule
With the 25% method, you spend no more than 25% of your after-tax income on your mortgage. If you make $4,000 monthly after taxes, you should spend no more than $1,000 per month on your mortgage. Because you are using a lower percentage with this method, it gives you less spending power than the other methods above. It’s a more conservative financial choice, and would allow room in your budget if, say, you were planning to have your first child or take on a new car payment after purchasing a home.
Example of the 25% after-tax rule: If you make $4,000 monthly after taxes, you should spend no more than $1,000 per month on your mortgage (4,000 x .25).
Remember, all of these methods are just benchmarks to help you decide how much you can afford. You’ll also need to consider your monthly budget and other financial goals (saving for a wedding, buying a second car, putting aside money for your children’s college) when determining a feasible mortgage amount. Using a home affordability calculator can help you refine and customize your estimate so you can see how different factors influence the price of the home you can afford.
Factors That Affect How Much House You Can Afford
Beyond the amount of debt and income you have, there are several factors that will affect how much house you can afford — primarily your down payment and credit score.
Your Down Payment
The larger the down payment you have saved, the more house you can afford. If you can manage at least a 20% down payment, you can avoid mortgage insurance, which will save you hundreds every month.
That said, you can get a mortgage with a smaller down payment — sometimes as little as 3% — through both conventional lenders or government-sponsored programs. And many homebuyers do: In an April 2024 SoFi survey of 500 would-be buyers, more than 60% of people said they were planning to put down 20% or less. Seven percent of buyers were planning zero-down-payment purchases.
If you’re selling your current home before buying a new one, the value of your home will ultimately determine your down payment. Be modest in your appraisal, or get the help of an experienced real-estate agent.
💡 Recommended: What Is the Average Down Payment On a House?
Interest Rate
Another factor that will determine how much house you can afford is the interest rate of your loan. Usually, the lower your interest rate, the lower your monthly payment. To qualify for the most favorable interest rates, you must have a strong credit score and a good financial standing.
While it’s easy to assume that a slight interest rate increase won’t impact your loan that much, this is far from the truth. Even an increase of two percentage points can cost you thousands of dollars over the term of your loan and add hundreds of dollars to your monthly mortgage payment.
Additionally, did you know mortgage rates may vary by state?
Current Mortgage Rates by State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Your Credit Score
Your credit score tells lenders the probability of timely loan repayment. A higher credit score demonstrates to lenders that you manage money responsibly. Since lenders don’t want to give funds to those who lack financial responsibility or likely won’t repay the debt, they set credit score guidelines. (In SoFi’s recent survey, more than one in 10 homebuyers (11%) said an insufficient credit score was one of the challenges they were facing.) Credit score guidelines help determine if they will approve a home loan.
Conventional mortgage loans typically require a credit score of 620 or higher. Jumbo loans may require a minimum score of 700. FHA loans allow a credit score as low as 500, while USDA loans set the bar at 580.
Let’s say you apply for an FHA loan, a mortgage insured by the U.S. Federal Housing Authority. You’ll need a credit score of 580 or above to be eligible for 3.5% down payment. If you have a credit score below 500, you will need at least a 10% down payment.
Applying for a prequalification or preapproval will help you pinpoint how your credit score will impact the kind of house you can afford. Basically, a preapproval estimates the loan terms and loan amount you may qualify for, making it easier to determine the mortgage payment you can afford.
Debt-to-Income Ratio
A debt-to-income (DTI) ratio is the percentage of your income that goes toward paying off your debt each month. Credit card, car, and student loan payments all go into your total DTI. The more debt you have, the higher your DTI will be. In addition to your credit score and salary, lenders look at your DTI to assess how much house you can afford.
Generally, lenders use a 36% DTI as a good benchmark for loan approval. However, some lenders will approve a loan if you have a higher DTI.
Annual Salary
When you apply for a mortgage, lenders use your salary as one of the determining factors of mortgage payment affordability. Lenders do this because they don’t want to shell out funds to borrowers who can’t afford the monthly payments. Thus, taking a look at your salary will help the lender assess if the payment works within your budget.
Unlike your credit score, lenders don’t have salary parameters for approving a mortgage. However, you must provide documentation to support how much you make. Lenders will usually want to review your W-2s and pay stubs (or 1099s for self-employed folks). If your income isn’t consistent throughout the year, either due to self-employment or seasonal work, your lender will typically want an explanation of the variations in the income stream.
💡 Never purchased a home? Check out our First-Time Homebuyer Guide to help you through the process.
How Much House Can I Afford With an FHA Loan?
Mortgages insured by the Federal Housing Administration are issued by private lenders like banks, credit unions, and mortgage companies that offer them, which factor an applicant’s credit score (sometimes as low as 500) and two ratios into an offer of an FHA loan:
• DTI ratio. Up to 50%, if the credit score is at least 580 and other qualifications are in place.
• Front-end ratio, or the ratio of proposed monthly mortgage payments to monthly income. Can be as high as 40% if the credit score is at least 580.
If your credit score is from 500 to 579, you may be able to get an FHA loan and put 10% down. If your score is 580 or higher, you may put as little as 3.5% down.If you have a credit score below 500, you will need at least a 10% down payment.
Home loan limits vary by area for traditional FHA loans, which may be used for up to four units as long as the buyer lives in one unit. An upfront mortgage insurance payment of 1.75% of the purchase price and annual mortgage insurance premiums (MIP) apply.
How Much House Can I Afford With a VA Loan?
The Department of Veterans Affairs issues some home loans directly, but most VA loans are guaranteed in part by the VA and procured from private lenders.
VA loans are for active-duty service members, veterans, and some surviving spouses. Lenders often look for a minimum credit score in the low to mid-600s and a DTI of 41% or under, but those figures are not set in stone.
There is no home purchase limit if a borrower has never used a VA loan, has paid off a VA loan and sold the property, or has had a foreclosure or short sale but repaid the VA in full.
No down payment is required as long as the sales price of the one- to four-unit owner-occupied property or VA-approved condo does not exceed the appraised value. Most borrowers will pay a one-time funding fee of 1.4% to 3.6% of the amount being borrowed.
Ready to start your home buying journey?
Get in touch with a Mortgage Loan Officer for a complimentary mortgage consultation. If you’re ready to jump in, get pre-qualified online in minutes.
How Much House You Can Afford Based on Annual Income
By now, you have a good idea of how much home you can afford. However, the chart below might help you visualize the type of home you’ll be able to buy based on your income.
Using a consistent interest rate helps you see the difference clearly; in the real world, of course, your interest rate may vary based on lender, your credit rating, your down payment and more. The chart assumes:
• 10% of monthly income going toward debt payments
• 30 year mortgage term
• 6.29% interest rate
• 25% of salary used for a down payment
| 28% = Home Price | 36% = Total Debt | |
|---|---|---|
| What kind of house can I afford making 40K a year? | $97,141 | $136,261 |
| What kind of house can I afford making 50K a year? | $121,463 | $170,363 |
| What kind of house can I afford making 60K a year? | $145,638 | $204,319 |
| What kind of house can I afford making 70K a year? | $169,960 | $238,421 |
| What kind of house can I afford making 80K a year? | $194,282 | $272,523 |
| What kind of house can I afford making 90K a year? | $218,457 | $306,478 |
| What kind of house can I afford making 100K a year? | $242,779 | $340,580 |
Expenses That May Change How Much House You Can Afford
By now, you have a good indication of how much house you can afford based on income, debt, down payment, and credit score. If you’re ready for the next level of detail, keep these expenses in mind to help you avoid any budget-busting surprises.
Insurance
The cost of homeowners insurance varies dramatically by area — it’s no wonder that 39% of would-be buyers in SoFi’s survey said home insurance costs were a top concern for them. Oklahoma and Texas have the highest average homeowners insurance cost at around $3,700 per year. That’s because homes there have a higher chance of being destroyed by a tornado. Areas with fewer natural disasters cost around $900. Homeowners insurance is a part of your 28% mentioned above. If your premium is especially high, you may need to pick a home at a lower price point.
Homeowners Association (HOA)
In some neighborhoods and apartment buildings, a monthly homeowners association (HOA) fee helps pay for communal services like landscaping and elevator maintenance. A higher HOA fee will reduce how much you can afford to a surprising degree. Be sure to factor in the HOA fee when calculating your mortgage payment, and remember that HOA fees aren’t fixed — they can change from year to year, and they rarely go down. Fully 26% of homebuyers said HOA fees were a top concern for them in SoFi’s survey.
💡 Recommended: A Beginner’s Guide to Homeowners Associations (HOA)
Mortgage Insurance
When homeowners have less than a 20% down payment, they are required to carry something called mortgage insurance, or private mortgage insurance (PMI). The amount is a percentage of your loan, so the larger your mortgage, the larger mortgage insurance payment you’ll have.
Other Expenses
But wait, there’s more! These expenses won’t affect your loan but can still have a major impact on your budget.
• Closing costs. Expect to pay between 3% and 5% of the loan amount in closing costs (lawyer fees, home inspection, etc). For the average $450,000 home in the U.S., that’s at least $13,500. Sometimes you can roll your closing costs into your loan, but that’s more common with a refinance.
• Maintenance. The costs of homeownership can be quite hefty no matter how old your home is. If you’re not used to paying for repairs, it can be a real shock how much you’ll need to pay to repair plumbing, HVAC, roofing, and other issues that will naturally come up as the home ages. Experts advise to plan for spending 1% to 4% of the value of your home each year in maintenance costs.
• Commuting costs. If you’re moving to the suburbs or an area where public transportation isn’t readily available, your commuting costs may increase substantially. Be sure to factor these into your budget before taking on a mortgage payment.
• Appraisal fee. The lender will assess the value of the new property for a fee, usually between $300 and $500.
💡 Recommended: Home Appraisals 101: What You Need to Know
• Home inspection fee. Home inspections ensure properties are structurally sound and there are no underlying issues with the home that might deter a potential buyer. Home inspections cost between $250 and $400 on average.
Tips When You Can’t Afford the House You Want
Let’s say you don’t qualify for a mortgage sufficient to buy a home in your desired area. Don’t give up: There are some things you can do to keep moving toward homeownership.
Look for Programs Specifically for Low-Income Households
You may qualify for down payment assistance, grants, or programs designed for low-income households. Self-help build programs, which allow you to build equity by making improvements to the house, also subsidize the interest rate on your mortgage or offer a longer term on your loan. This can help make the monthly payment match your budget. A Housing and Urban Development (HUD) counselor may be able to point you in the direction of programs in your area.
💡 For additional help, check out these first-time homebuyer programs.
Consider a Cosigner
It’s not uncommon to see a cosigner alongside a mortgage applicant. A cosigner is responsible for the mortgage if the primary borrower is unable to pay. They must have a credit score above 670 and show they have sufficient income to make payments on the loan if the original borrower defaults. If you’re sure you’re able to make the mortgage payment, a cosigner could be just what you need to become qualified.
Increase Your Income
Sure, it’s easier said than done to increase your income. However, negotiating a pay raise, finding higher-paying work, or taking on a side hustle could help the income equation on your mortgage application.
Consider a Different Area
Rural locations tend to be much more affordable. Choose a qualified rural area, and you could finance a home with a zero-down United States Department of Agriculture (USDA) loan. You’ll have to weigh the benefits of cheaper housing against living farther from family support and possibly fewer available job opportunities. If rural life isn’t for you, explore local housing market trends in cities if you are considering an out-of-state move.
Reduce Your Debt
If debt is preventing you from qualifying for a mortgage and your top goal is to get into a home, a laser-like focus on paying off your debt can help. Try using any “bonus” money — your tax refund, birthday cash — to pay it down. Above all, make a solid, strategic plan to pay off debt (and get your partner on board).
Look for Low-Down-Payment Mortgages
Many conventional lenders (banks, credit unions, etc.) accept a 3% down payment if you meet specific requirements. Some requirements include a DTI of less than 43% and a credit score of 640 or above. FHA loans require as little as 3.5% down, whereas VA loans have no down-payment requirements. If you haven’t saved much cash, a loan with lower down-payment requirements can help you qualify for a mortgage.
Ask for Down Payment Gifts
Requesting down payment gifts from close relatives may ease the financial burden of buying a home. However, conventional loans may require you to use some of your own funds to qualify for a mortgage. Remember, you can also use some gift money to pay for closing costs or other housing expenses.
Take a Retirement Account Withdrawal or Loan
If you need extra cash for a down payment, consider taking a traditional IRA withdrawal or a 401(k) loan. Traditional and Roth IRA rules state that those who haven’t owned a primary home in the previous two years can withdraw up to $10,000 for a down payment without paying the 10% early distribution penalty. And if you have a 401(k), your employer may allow loans. This means that you can borrow money against your 401(k) for a home. However, you must pay interest and usually pay back the principal within five years.
Consider Whether Buying a Home Makes Sense
If you’ve exhausted your options and still can’t seem to make the numbers work on a home purchase, it’s time to refresh your memory as to the advantages of renting. Focus on paying down debt and stop trolling real estate websites for a while. You’ll emerge from your home-buying hiatus refreshed and ready to make the next move.
The Takeaway
Once you have a good sense of how much house you can afford, the next step is to start the process of securing a home mortgage loan. Getting prequalified for a loan will help you understand if your vision of what you might borrow aligns with a lender’s assessment.
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
Why use a home affordability calculator?
A home affordability calculator can help you identify how much house you can afford, and determine a mortgage payment that fits within your budget. This way, you can be confident that you won’t ever feel “house poor.”
How much do I need to make to buy a $450K house?
A salary between $135,000 and $140,000 will help you afford a 450k home. But of course, affordability will also depend on your down payment and other financial factors like your credit score and debt-to-income ratio.
Is $50,000 enough for a down payment on a house?
Yes. Generally, you need a 3% to 20% down payment to purchase a home, depending on the type of loan. So, if your lender requires a 20% down payment, $50,000 will help you qualify for up to a $250,000 loan.
How many times my income can I afford in a house?
Aim to buy a house that equals about three times your yearly income. If you have no other debts, you can probably spend more than this. This calculation may not work for every situation and housing market. A mortgage lender can help with your unique situation.
What is the mortgage on a $500K house?
For a conventional loan with a 20% down payment and an interest rate of 5%, the payment for a $500K house would be $2,147 for principal and interest. What you may actually pay would depend on your specific interest rate, down payment, and loan type.
How much house can I afford if I make $100,000?
Assuming you’ve set aside $20,000 for a down payment and don’t have a lot of other debts to pay, you should be able to afford a house that costs around $200,000. Your monthly mortgage payment on a loan with an interest rate of 5% would be about $1,350. A mortgage calculator can help you get closer to your specific house budget.
How much money do you need to save for a house?
The typical first-time homebuyer makes a down payment of seven percent of the purchase price, according to the National Association of Realtors. So if you were buying a $250,000 home, you would need to have $17,500 saved. You’ll also want a cushion of money to cover closing costs, moving expenses, new furniture, or other one-time costs associated with your move.
Is it worth saving 20% for a house?
Being able to put down 20% will help you qualify for a favorable mortgage rate and loan terms, but if you don’t have 20% and can still make the monthly mortgage payments, many lenders will help you finance your purchase for less than 20% down — some as low as 3%.
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.
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