HELOC Requirements: HELOCs Explained
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HELOC Requirements: HELOCs Explained
By Kim Franke-Folstad | Updated November 21, 2025
Over time, the equity you’ve built up in your home can turn into a sizable asset — one that you can borrow against to help finance home improvements, consolidate debt, or even pay for unexpected expenses, such as car repairs or medical bills.
One of the most popular ways to access that equity is through a home equity line of credit (HELOC), a revolving line of credit that’s secured with your home.
You’ve probably heard that a HELOC works kind of like a home equity loan and kind of like a credit card. And that’s true. But there are some important differences in the requirements for getting a HELOC — and in how you’ll pay it back.
Turn your home equity into cash with a HELOC
Key Points
• If you have enough equity built up in your home (at least 15% to 20%), you may qualify for a home equity line of credit (HELOC) or a home equity loan.
• Because borrowers use their home as collateral to secure a HELOC or home equity loan, lenders tend to offer lower interest rates than for some other types of financing.
• A HELOC usually has a variable rate vs. the fixed rate that typically comes with a home equity loan.
• You might hear the phrase “HELOC loans” but unlike a home equity loan, which is borrowed as a lump sum, a HELOC is actually a revolving line of credit with two main phases: the draw period and the repayment period.
• During the HELOC’s draw period (usually 10 years), you can withdraw money up to your credit limit, make payments to replenish the account, and borrow the money again.
• During the repayment period (typically 10 to 20 years), borrowing ends and the principal is paid back.
• You may be able to borrow up to 85% of the value of your home, minus the amount you owe on your first mortgage.
What Are HELOCS and Home Equity Loans?
HELOCs and home equity loans are two types of financing that allow borrowers to use their home as collateral to get the money they need.
Because the financing is secured and lenders are taking less risk, borrowers typically can find more competitive terms with these financing options than they might get with an unsecured personal loan or credit card. Interest rates are often more competitive, for example, and you may be able to borrow more.
Both HELOCs and home equity loans can be good choices for homeowners who are looking to access some cash, but each works a bit differently.
A HELOC is a revolving line of credit, which means you can borrow and make payments on an ongoing basis. With this type of financing, you’ll pay interest (usually at a variable rate) only on the amount you’ve actually borrowed, not the entire amount available to you.
In contrast, a home equity loan, sometimes called a second mortgage, is a lump-sum, fixed-rate loan that is repaid in regular installments over a specific length of time.
HELOC and Home Equity Loan Requirements
The eligibility requirements for HELOCs and home equity loans vary by lender, but they share some common criteria, including:
Sufficient Equity in Your Home
Lenders generally want borrowers to have a minimum of 15% to 20% equity in their home.
What is home equity? Your equity is the difference between your home’s current value and what you still owe on the mortgage, expressed as a percentage. So, for example, if your home is worth $300,000 and you still owe $200,000, you have $100,000, or 33%, equity in your home.
If you’re trying to determine if you can qualify for a HELOC and you aren’t sure what your home is worth, you can get an estimate using online tools. But when you actually apply for the HELOC, your lender will likely require that you get a home appraisal.
Good Credit
Expect scrutiny similar to what you likely experienced in the mortgage preapproval process: A credit score in the upper-600s is usually the minimum that’s necessary to get this type of financing. (This puts you in what is typically considered the “good” credit score range.) If your score is lower, but your application is strong in other areas, you may still qualify with some lenders. But the higher your credit score, the better the chances that you’ll be approved and get a lower interest rate.
Low Debt-to-Income (DTI) Ratio and Income Documentation
Don’t be surprised if applying for home equity financing gives you flashbacks to when you were trying to qualify as a first-time homebuyer. Lenders will want to know that you can afford to add another monthly payment to your current debt load, so they’ll calculate your DTI ratio (how much you owe in monthly debt payments compared to your monthly income). Home equity lenders generally look for a DTI that’s below 50%, but the lower your DTI, the better.
Lenders also will ask for income documentation, including recent W-2 statements, pay stubs, and/or income tax returns, to ensure you have enough income to manage your payments
How does a HELOC Work
HELOCs typically have two phases:
The Draw Period
Once a borrower is approved for a HELOC, the draw period begins. During this phase, the borrower can withdraw funds from the account at any time and in whatever amount is needed (up to the approved credit limit). The borrower usually is required to make interest payments during the draw period, but payments toward the principal may be optional.
The Repayment Period
When the draw period ends — usually after about 10 years — access to the line of credit ends and a new repayment schedule will be established based on the balance the borrower still owes. The repayment period typically lasts 10 to 20 years, and borrowers should be prepared for their variable interest rate to fluctuate during this time.
How Is a HELOC Calculated?
Here’s how you can get a general idea of what your HELOC might look like, based on your home equity.
• Start by estimating how much your home is worth.
• Next, multiply your home’s value by the percentage your lender will allow you to borrow.
• Then, subtract what you currently owe on your home loan from the amount you’re qualified to borrow.
Let’s say, for example, that your home is worth $300,000, you still owe $200,000 on your mortgage, and your lender says you qualify to borrow up to 80% of your home’s value.
First, you’d multiply your home’s value by the percentage your lender will allow you to borrow.
$300,000 x 0.8 = $240,000
Then, you would subtract the amount you owe on your mortgage from the amount you qualify to borrow:
$240,000 – $200,000 = $40,000
In this example, your HELOC limit would be $40,000.
How Much Can You Borrow with a HELOC?
Depending on your credit, DTI, and other factors, you may be able to borrow up to 85% (or, in some cases, even more) of the value of your home, minus the amount you owe on your first mortgage.
If you’re wondering if that will be enough for your needs, remember that your home may be worth more than you think. Rising prices have made it tough for first-time homebuyers to get into the housing market in recent years, but thanks to those rising costs, current homeowners have seen a spike in their home equity. Even if you’ve only had your home for a few years, you may have enough equity built up to pay for a kitchen remodel or a new pool and patio out back.
That doesn’t mean you have to or should borrow the largest amount possible, however. To be safe, you may find it makes sense to hold onto a chunk of your equity (20% or more), just in case home prices fall.
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How to Apply for a HELOC
If you want to avoid potential delays and get the best possible loan terms for your financial situation, it can help to do your homework before applying for a HELOC. Here are some steps to consider:
1. Check Your Financial Health
If you aren’t sure where you stand financially, it can be a good idea to check your credit scores, calculate your DTI, and get a good estimate of your home equity before you apply for a HELOC. That way there won’t be any surprises.
2. Compare Lenders
Loans can vary significantly from one lender to the next, so don’t hesitate to do some online comparison shopping. It’s important to see what offers you might qualify for when it comes to interest rates, but also how much you can borrow, repayment terms, eligibility requirements, and fees.
3. Gather Your Documentation
Making sure you have the documents you need (proof of income, recent tax returns, mortgage info, etc.) all in one place can make the application process go more smoothly.
4. Submit Your Application
When you’ve settled on the lender you think has the best terms for you, it’s time to submit your application. You can do this from home with an online application. Or, if you prefer and your lender has a brick-and-mortar location near you, you can go in person.
5. Get a Home Appraisal
Your lender will likely require a home valuation as part of the application process. If you haven’t already, you may want to set aside some time to clean up and fix things that might hurt your home appraisal.
6. Prepare for Closing
If your lender approves your application, the next step is the closing process, which will include signing documents and paying any necessary closing costs.
HELOCs vs Home Equity Loans
There’s no one-size-fits-all answer when choosing between a HELOC and a home equity loan. Ultimately, it’ll be up to you to decide which type of financing is the best fit for your finances, your needs and goals, and your comfort level. Here’s a quick breakdown of some of the differences between these two types of financing that you may want to keep in mind:
|
|
|
|---|---|---|
| Disbursement of funds | Revolving credit line with a preapproved limit; timeline for using funds (draw period) is usually 10 years | Apply directly through the credit card issuer; hard pull on your credit |
| Repaying borrowed funds | Minimum (often interest-only) payments required during draw period; monthly payments of principal and interest during repayment period | Equal monthly installments for a predetermined length of time |
| Interest rate | Usually variable; interest paid only on what you owe and not the entire credit limit for which you are approved | Usually fixed; interest paid on the entire loan amount from Day One |
| Loan length | Draw period typically lasts 10 years; repayment period may last 10 to 20 years | Can range from five to 30 years |
| Closing costs | Varies by lender | Typically range from 2% to 5% of the loan amount |
Pros and Cons of a HELOC vs a Home Equity Loan
Understanding the advantages and downsides of each type of financing can also help borrowers decide between a HELOC and home equity loan. Here are some points to consider:
Pros and Cons of a HELOC
What sets a HELOC apart from a home equity loan is that you pay interest only on the funds you’ve drawn, not the entire line of credit that’s available, which can keep your monthly costs down. And as you make payments, the line of credit is replenished, so you can borrow repeatedly during the draw period.
A potential downside of a HELOC vs. a home equity loan, however, is that a HELOC’s interest rate is usually variable. So if rates go up, it could make paying back what you borrowed more expensive than you planned. Here’s a summary of a HELOC’s pros and cons.
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Pros:
• Flexibility in how much you can borrow, when, and how you use the funds.
• Interest is charged only on the amount borrowed during the draw period.
• Generally lower interest rates than credit cards or other types of unsecured borrowing.
• Interest paid may be tax deductible if funds are used to “buy, build, or substantially improve” the property securing the HELOC.
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Cons:
• Your home may be at risk of foreclosure if you default.
• Variable interest rates can make repayment unpredictable and potentially expensive.
• A decline in property value could affect your credit limit.
• Tempting to overspend during the draw period, when payments may be interest-only.
Pros and Cons of a Home Equity Loan
A lump-sum, fixed-rate home equity loan can be a good fit for borrowers who need all their money upfront, and for those who like to plan and want to know exactly what their monthly payments will be. But the costs associated with a home equity loan may be higher than with a HELOC. Here’s a summary of some of the pros and cons of a home equity loan:
Pros:
• Fixed payments can make planning easier for borrowers on a budget.
• Unlike some other types of fixed-rate loans, funds can be used for almost any purpose.
• May be able to borrow a larger amount than with an unsecured loan.
• Interest paid may be tax deductible if funds are used to “buy, build, or substantially improve” the property securing the loan.
Cons:
• Payments, including interest, on the full loan amount begin right away, whether you use the money or not.
• You can’t reborrow from the loan as you pay down the balance.
• Your home may be at risk of foreclosure if you default.
• Costs and fees may, over time, offset the benefits of a lower interest rate.
• If property value declines, you could end up owing more than your home is worth.
Who Should Get a HELOC?
Because you can draw just what you need at any one time, and pay interest only on the amount you borrow, a HELOC can be a useful tool for those whose cost of living is unpredictable (so they aren’t sure how much they’ll need) or those who don’t need all their money upfront.
Who Should Get a Home Equity Loan?
A lump-sum home equity loan may be a better choice for borrowers who know exactly how much they need and expect to use most of the money right away. Borrowers who prefer a structured loan with regular payments also might prefer this type of financing.
How to Use a HELOC
You can use a HELOC for just about anything, but this type of financing can be especially useful for borrowers who expect their costs will be spread out over time. A HELOC can be a good way to pay for home improvement costs or educational expenses, for example, or to cover ongoing medical or dental treatments. It also can be used as a “rainy day” fund when emergency expenses come up.
HELOC Examples
Here are a couple of examples of how a HELOC might work for some hypothetical homeowners:
Example 1: Joe and Jane Johnson want to renovate their kitchen. They expect to spend $50,000 or more, but they don’t need the entire amount upfront, so they choose a HELOC to help finance the project. The Johnsons’ house is worth $450,000, and they owe $300,000 on their mortgage, so they have home equity valued at $150,000 to use as collateral.
Their lender will allow a total debt of $382,500 (85% of $450,000) to be attached to the property, which means the maximum HELOC they can get is $82,500.
$450,000 x 0.85 = $382,500
v$382,500 – $300,000 = $82,500
Example 2: Cindy Smith’s daughter needs braces, and the orthodontist says it will cost $7,000. Cindy’s house is worth $200,000, and she still owes $150,000 on her mortgage, so she has $50,000 in collateral to use toward a HELOC.
Cindy’s lender will allow a total debt of $160,000 (80% of $200,000) to be attached to her property, so she gets a HELOC for $10,000.
$200,000 x .8 = $160,000
$160,000 – $150,000 = $10,000
Cindy makes payments toward both the interest and principal every month to keep her balance down. And when she’s done paying for her daughter’s braces, she uses the replenished account to help her daughter pay some college expenses.
How Much Does It Cost to Get a HELOC?
Closing costs for HELOCs are generally lower than the typical homebuying closing costs or a cash-out refinance (which can range between 2% to 5% of the loan amount). But you still may encounter some fees when opening a HELOC.
The appraisal fee, which could be $150 to $500 or more, will likely be the highest expense. But other costs may include an application fee (paid when you apply), a loan origination fee, and administrative fees that cover the lender’s costs for opening your line of credit. You also may be charged a maintenance fee each year that your account is open.
Some lenders also may charge a transaction fee any time you make a withdrawal from your HELOC, an inactivity fee if you don’t use the account for a while, or an early termination fee if you close the account shortly after you open it.
These fees can add up over the years, so it’s important to be clear on what you’ll be charged before you sign on the dotted line.
How to Find Competitive HELOC Interest Rates
Because lenders’ rates and other terms can vary, it can make sense to shop around for the best offer you can get on a HELOC.
You don’t have to limit your list of contenders to just your current home mortgage lender. These days, it’s easy to hop online and get estimates from a variety of lenders, including large and small banks, credit unions, and online lenders. And while you’re there, you can look at more than just their rates. You may want to compare their qualification requirements, loan minimums and maximums, fees, the length of the draw and repayment periods they’re offering, and other factors.
What are Home Equity Rates Expected to Do in 2025?
As inflation has cooled and the Federal Reserve has signaled a rate drop on the horizon, many economists expect borrowing costs on home equity loans and HELOCs will likely fall.
HELOCs could become the more attractive financing option, because they typically come with a variable rate that may go down in a changing rate environment. Still, it’s important to weigh every factor and how it pertains to your individual situation before making a choice between a HELOC and a home equity loan.
Home Equity Loans and HELOCs vs Refinancing
Of course, there’s one more way you might be able to extract some money from your home (without selling it): A cash-out refinance is another option for homeowners who need funds for a major home project or other expense.
While a home equity loan or HELOC provides borrowers with a loan or line of credit that’s separate from their mortgage, a cash-out refinance involves taking out a completely new mortgage loan that will allow you to pay off your old mortgage plus receive a lump sum of cash.
The lender will decide how much more you can borrow based on your home’s value and other factors, then add that to the balance owed on your old mortgage to determine the amount of your new mortgage.
If you need a lump sum for a large expense, a cash-out refi might be something to look at — especially if you can get a lower interest rate or better loan terms. You’ll only have one payment to make, and one creditor to keep track of. But the requirements for getting a cash-out refinance can be stricter than those for a HELOC or home equity loan, and the costs may be higher.
Other Alternatives to a HELOC
Besides a home equity loan or cash-out refinance, other funding options you may want to compare to a HELOC include:
An Unsecured Personal Loan or Line of Credit
If you can qualify for an unsecured personal loan or personal line of credit in the amount you need, you could keep building equity in your home and avoid putting your home at risk of foreclosure. The interest rate with unsecured financing will likely be higher, though.
Credit Cards
Credit cards typically come with higher interest rates than HELOCs, which can make them much more expensive if you carry a large balance from month to month. But if you don’t need to borrow a lot at one time or carry a balance, a credit card can provide quick, convenient, and collateral-free access to funds. You also may be able to find a card that rewards you with cash back or credit card points you can use for travel or other purposes.
The Takeaway
If you’re looking for an affordable way to get the money you need for home projects, unexpected bills, or just about any other important expense, a home equity line of credit, or HELOC, may be your answer.
With a HELOC, you can turn your home equity into cash using a revolving line of credit that’s secured with your home. But unlike a home equity loan, you’ll pay interest (usually at a variable rate) only on what you actually borrow, not the entire amount available to you.
SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
FAQ
What disqualifies you for a HELOC?
If you don’t own a home or you don’t have enough equity in your home (usually at least 15% or 20%), you can’t expect to qualify for a HELOC.
How do you qualify for a HELOC?
Lenders will look at your credit scores, your income, and your debt-to-income (DTI) ratio when determining whether you qualify for a HELOC. They’ll also calculate how much you can borrow based on what your home is worth and what you still owe on your mortgage.
What is the monthly payment on a $50,000 HELOC?
Unlike a home equity loan, which has a fixed monthly payment, the monthly payment on a HELOC can vary depending on how much of the borrower’s credit limit has actually been used, the interest rate (which, if it’s a variable rate, may change over time), and whether the HELOC is in the draw or repayment period.
Can I sell my house if I have a HELOC?
You can sell your house while you have a HELOC (or a home equity loan), but you should be prepared to pay off the remainder of your balance when you close on the sale.
Is it difficult to get approved for a HELOC?
If your credit is in good shape and you have sufficient equity in your home to borrow the amount you need, you should be able to find lenders that will approve your HELOC application.
What credit score is needed for a HELOC?
A credit score in the upper 600s is usually the minimum that’s necessary to get a HELOC. The higher your score, the better the chances are that you’ll be approved and get a lower interest rate.
Does a HELOC require an appraisal?
An appraisal isn’t always required, but because borrowers are using their home as collateral to secure their HELOC, lenders usually will ask for an appraisal to establish the home’s value and its condition.
Can a HELOC be paid off early?
Yes, you can pay off your HELOC early, though some lenders charge a prepayment penalty if you do.
Turn your home equity into cash with a HELOC
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Current Mortgage Rates in Louisiana Today
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Compare mortgage rates in Louisiana.
Key Points
• Mortgage rates in Louisiana are rarely far from the national average.
• Economic factors (inflation, unemployment, Federal Reserve policy) and consumer factors (such as credit score and down payment) influence what rate a homebuyer is offered.
• Louisiana offers a full range of mortgage types, including fixed-rate, adjustable-rate, FHA, VA, USDA, and jumbo loans.
• It’s important to examine not only interest rates but also lender fees before deciding on a loan.
• There are many cities in Louisiana where home prices are well below the national average.
Introduction to Mortgage Rates
Louisiana’s mortgage rates are influenced by various economic and consumer factors. Understanding these factors and comparing interest rates and fees from multiple lenders is crucial for securing a competitive mortgage rate and saving money over the life of a loan.
Mortgage interest rates are calculated using a complex combination of factors, which can be broadly categorized into two buckets: the state of the economy and the state of the borrower’s personal finances. Economic factors include the Federal Reserve’s interest rates, while consumer factors include credit score, down payment, income and assets, and the type of mortgage loan a borrower chooses.
Where Mortgage Rates come From
The Federal Reserve, also known as the Fed, sets the short-term interest rates that banks use as a benchmark for their own lending rates. Although home loan rates are not directly governed by the Fed, they generally follow the same trends.
How Interest Rates Affect Home Affordability
When the Fed’s interest rate is high, chances are mortgage rates will be too. However, it’s important to note that mortgage rates are influenced by a multitude of factors, and the Fed’s decisions are just one piece of the puzzle.
Mortgage rates have a significant impact on home affordability, often more than people realize. Even small changes in interest rates can make a big difference in monthly mortgage payments and the overall cost of a home. For example, a 1% increase in interest rate on a $360,000 mortgage can add $231 to the monthly payment and more than $80,000 to the total interest paid over the life of the loan.
As a result, it’s crucial for homebuyers to carefully consider current mortgage rates and their impact on affordability when making a home purchase decision.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers — and especially those buying a first home — wonder if they should buy now or wait for interest rates to come down. While it’s impossible to predict the future, there are a few factors to consider when making this decision.
First, it’s important to remember that mortgage rates are cyclical and have historically fluctuated over time. But home prices fluctuate too. Waiting for rates to drop may mean missing out on the opportunity to purchase a home at a favorable price. Delaying the purchase also delays building equity in a home.
Another factor: Homeowners can always refinance their mortgage after rates come down, allowing them to take advantage of lower rates in the future. By carefully evaluating their financial situation and considering the current market conditions, homebuyers can make an informed decision about whether to purchase a home now or wait for interest rates to drop.
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Louisiana Mortgage Rate Trends
Understanding historical mortgage rates can provide some insight into the current mortgage rates in Louisiana. The chart below suggests that current rates may be similar to those seen in the past (the Federal Housing Finance Agency stopped tracking these state rates in 2018).
| Year | Louisiana Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.89 | 7.86 |
| 2001 | 6.86 | 7.03 |
| 2002 | 6.43 | 6.62 |
| 2003 | 5.65 | 5.83 |
| 2004 | 5.75 | 5.95 |
| 2005 | 5.94 | 6.00 |
| 2006 | 6.54 | 6.60 |
| 2007 | 6.51 | 6.44 |
| 2008 | 6.10 | 6.09 |
| 2009 | 4.99 | 5.06 |
| 2010 | 4.81 | 4.84 |
| 2011 | 4.46 | 4.66 |
| 2012 | 3.67 | 3.74 |
| 2013 | 3.84 | 3.92 |
| 2014 | 4.13 | 4.24 |
| 2015 | 3.89 | 3.91 |
| 2016 | 3.72 | 3.72 |
| 2017 | 4.12 | 4.03 |
| 2018 | 4.55 | 4.57 |
Historical U.S. Mortgage Rates
Looking at several decades of historical mortgage rates shows that rates fluctuate, but have generally declined from a peak in the 1980s. So if you’re feeling like rates are higher than ever, taking a closer look can give you a different perspective.
Factors Affecting Mortgage Rates in Louisiana
Numerous factors influence mortgage rates in Louisiana and nationwide. Some of these factors are economic, while others are entirely within the homebuyer’s control.
By understanding these factors, homebuyers can take steps to improve their chances of securing a competitive mortgage rate.
As noted above, economic factors include the Federal Reserve’s interest rate and consumer factors include credit score, down payment, income and assets, and type of mortgage loan. Let’s take a closer look.
Economic Factors
In addition to economic factors, several consumer factors also affect mortgage rates. These factors include:
• The Fed: The Federal Reserve sets the federal funds rate, which 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, which in turn leads to higher mortgage rates.
• Inflation: When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. Lenders may increase interest rates to compensate.
• Unemployment rate:A high unemployment rate typically signals the Fed to notch interest rates down in an effort to prompt job creation. Mortgage rates then tend to fall.
Consumer Factors
• Credit score:A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. Borrowers with higher scores typically receive lower mortgage interest rates.
• Down payment:The amount of down payment a borrower makes can also impact the mortgage interest rate. A larger down payment reduces the loan amount, which in turn curbs the risk for the lender. This is why borrowers who make a larger down payment often receive lower mortgage interest rates.
• Income and assets: A steady income and sufficient assets, which serve as a safety net in case of financial trouble, are also important factors that lenders consider.
• Type of mortgage loan: Certain types of loans, such as adjustable-rate mortgages (ARMs) and government-backed loans, often have lower interest rates compared to conventional fixed-rate mortgages.
Types of Mortgages Available in Louisiana
Homebuyers in Louisiana have access to a variety of mortgage types, each with its own unique features and benefits. These include:
Fixed-Rate Mortgage
A fixed-rate mortgage offers stability and predictability, in the form of a constant interest rate throughout the entire loan term. This type of mortgage is ideal for borrowers who prefer a predictable payment and want to lock in a favorable interest rate.
Most people who choose a fixed-rate mortgage opt for a 30-year term, although shorter terms are available. The longer the loan term, the lower the monthly payments, but the more interest paid over the life of the loan.
Adjustable-Rate Mortgage (ARM)
An ARM offers flexibility with an initial lower interest rate that can adjust periodically based on market conditions. This type of mortgage can be beneficial for borrowers who plan to sell or refinance their home before the initial fixed-rate period ends. Not knowing what the rate will adjust to might be stressful for homebuyers who don’t thrill to unpredictability.
FHA Loan
An FHA loan, backed by the Federal Housing Administration, offers more flexible eligibility requirements compared to conventional loans. This type of loan is ideal for those who qualify as a first-time homebuyer or borrowers with less-than-perfect credit, because FHA loans allow for a smaller down payment and lower credit scores. However, FHA loans do come with mortgage insurance, which adds to the overall cost of the loan.
VA Loans
VA loans, offered by the Department of Veterans Affairs, provide excellent benefits to eligible veterans, active-duty military members, and certain surviving spouses. These loans offer competitive interest rates and do not require a down payment.
VA loans do have specific eligibility requirements, such as a minimum length of military service. That’s why the first step if you’re interested in exploring a VA loan is to apply for a Certificate of Eligibility (COE).
USDA Loans
USDA loans, backed by the U.S. Department of Agriculture, are designed to assist borrowers whose incomes fall below specific limits in purchasing homes in rural areas. These loans offer competitive interest rates and do not require a down payment.
Jumbo Loan
Jumbo loans are conventional loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). In Louisiana, if you’re buying a single-family home and need a loan that exceeds $806,500, you’ll be applying for a jumbo loan. Jumbo loans offer competitive interest rates and flexible terms, but they may require a larger down payment and have stricter credit requirements compared to conventional loans.
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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 Louisiana
Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. When considering different locations, it’s important to evaluate factors such as cost of living, job opportunities, and the local housing market.
Cost of living plays a significant role in determining mortgage affordability. Louisiana offers a relatively low cost of living compared to many other states, making it an attractive option for homebuyers seeking affordability.
Here are some popular places to get a mortgage in Louisiana:
Least Expensive Locations
Some of the least expensive places to get a mortgage in Louisiana, according to SoFi’s list of best affordable places in the U.S., include:
• Abbeville: The average Abbeville home value is $136,696, according to Zillow, and has been declining in the last year.
• Zachary: The average Zachary home value is $266,451, more than Abbeville but well under the U.S. national average of $361,282.
• Jennings: An average home value of $117,682 makes Jennings an affordable place to buy.
• Bastrop: It’s rare to find a market with homes at an average value below $100,000, but Bastrop comes in at $82,545.
• Monroe: Homes here are valued at an average of $140,495.
Most Expensive Locations
Some of Louisiana’s higher-priced homes are found in its larger cities, New Orleans and Metairie. The cost of living in New Orleans is the highest of any city in the state, at 24% above the state average. The average home value here is $237,512, and has dropped 7% over the past year, according to Zillow — so homes in New Orleans are still, on average, relatively affordable. In the upscale suburban area of Metairie, where the cost of living is 16% above the state average, the average home value is $282,001.
Tips for Securing a Competitive Mortgage Rate in Louisiana
As we’ve seen, securing a competitive mortgage rate can save you thousands of dollars over the life of your loan. Here are some tips to help you get the best possible mortgage rate in Louisiana:
Compare Interest Rates and Fees
Don’t settle for the first mortgage offer you receive. Take the time to compare interest rates and fees from multiple lenders (fees can vary significantly between lenders).
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. It also gives you a better idea of how much you can afford to borrow.
When you go through the mortgage preapproval process and emerge with an approval letter, the lender has verified your income, assets, and credit history, making the mortgage process more efficient and reducing the risk of delays.
Louisiana Mortgage Resources: Assistance for Homebuyers
Louisiana offers resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. Programs often come with counseling and education to help buyers achieve their homeownership goals.
First-Time Homebuyer Programs
Louisiana’s DDelta 100 program provides up to 100% financing and up to 3% closing cost and prepayment assistance to eligible homebuyers who lack traditional credit.
Down Payment Assistance
Down payment assistance programs can help homebuyers overcome the challenge of saving for a down payment. In Louisiana, the Mortgage Revenue Bond program helps first-time homebuyers with a credit score of at least 640, and others who buy within targeted areas, to fund a down payment and closing costs.
Tools & Calculators
SoFi provides online tools and calculators to help homebuyers estimate their monthly mortgage payments, resources to determine their eligibility for assistance programs and compare different loan options. These resources can empower homebuyers to make informed decisions throughout the homebuying process.
Run the numbers on your home loan.
-
Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
-
Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
-
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 Louisiana
Homeowners in Louisiana have options for a mortgage refinance. These include:
• The FHA Streamline Refinance program allows homeowners with FHA-insured loans to refinance into lower interest rates without the need for a new credit check or appraisal. This can be a convenient and cost-effective way to reduce monthly mortgage payments.
• The Interest-Rate Reduction Refinance Loan (IRRRL) program allows veterans and active-duty military members with VA loans to refinance into lower interest rates. This program offers streamlined refinancing with minimal documentation and may not even require an appraisal.
• A Cash-out Refinance allows homeowners who have built up substantial equity to refinance and take out cash to use for another project, such as a kitchen remodel or a child’s college education.
Closing Costs, Taxes, and Fees in Louisiana
Purchasing a home in Louisiana means paying closing costs, taxes, and fees associated with the transaction. These costs can vary depending on the purchase price of the home and the lender.
Closing costs typically include loan origination fees, appraisal fees, title insurance, and other administrative fees. It’s important to factor these costs into your budget when planning for a home purchase
The Takeaway
Louisiana’s mortgage landscape offers many options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, you can make strategic decisions that align with your financial goals and be a happy homeowner in Louisiana.
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
Will mortgage rates drop in Louisiana?
It is difficult to predict future mortgage rate trends with certainty. Mortgage rates are influenced by several economic factors, including the Federal Reserve’s interest rates, inflation, and unemployment rates.
Will mortgage rates ever go back to normal?
There isn’t really a “normal” for mortgage rates, which can vary over time and are influenced to a great deal by each person’s own financial picture.
Will Louisiana home prices ever drop?
Predicting future home price trends is uncertain. Home prices are influenced by various factors such as supply and demand, economic conditions, and local market dynamics. While home prices have experienced fluctuations in the past, there is no guarantee that they will drop in Louisiana.
Is it a good time to buy a house in Louisiana?
A good time to buy in Louisiana is when you need to move. Maybe your apartment lease is up. Or a new baby is on the way. Focus on what is right for your personal situation. Consult with a local real estate professional who has their finger on the pulse of the market to gain valuable insights.
How do I lock in a mortgage rate?
Your lender can help you lock in an attractive mortgage rate, typically for a small cost based on your overall loan amount. This can provide peace of mind and protect you from potential rate increases for a period of 30, 60, or even 120 days.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including the Federal Reserve’s interest rates, inflation, unemployment rates, and the borrower’s credit score, down payment, income, and type of mortgage loan. Lenders use the personal financial factors 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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
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-Q324-073
More home loan resources.
-
First-Time Homebuyer Guide
-
First-Time Homebuyer Programs and Loans
-
Mortgage Preapproval Process
Preparing to buy a house? Call us for a complimentary mortgage consultation.
Current Mortgage Rates in Nebraska Today
Preparing to buy a house? Call us for a complimentary mortgage consultation.
Compare mortgage rates in Nebraska.
Key Points
• Mortgage rates in Nebraska are sometimes slightly higher and sometimes slightly lower than the national average but the overall cost of living in the state is relatively low.
• Factors affecting mortgage rates in Nebraska include economic factors (inflation, unemployment rate, overall economy), consumer factors (credit score, down payment amount), and type of mortgage (fixed-rate or adjustable-rate).
• Nebraska offers various government-backed mortgage types, including FHA, VA, and USDA loans, each with its own benefits and requirements.
• To secure a competitive mortgage rate in Nebraska, compare interest rates and fees from multiple lenders and explore first-time homebuyer programs and down payment assistance programs.
Introduction to Mortgage Rates
Nebraska’s mortgage landscape offers a range of options for homebuyers in search of a home loan. By staying informed about current mortgage rates, taking good care of their personal finances, and exploring homebuyer assistance programs, would-be homeowners can achieve successful homeownership in this friendly Midwestern state.
Where Mortgage Rates Come From
Mortgage rates are not set in stone but rather calculated using a complex combination of factors drawn from the state of the general economy and the borrower’s personal financial status.
How Interest Rates Affect Home Affordability
Mortgage rates have a noticeable impact on home affordability. For example, let’s say you’re looking to buy a $425,000 home with a 30-year fixed-rate mortgage and a down payment of 20%. If the interest rate is 5.50%, your monthly payment will be $1,930. But if the interest rate rises to 6.00%, your monthly payment will jump to $2,038. Over the life of the loan, you’ll pay almost $39,000 more interest for that half-percentage-point increase. That’s a significant amount of money that could be used for other things.
Should Homebuyers Wait for Interest Rates to Drop?
Particularly if you’re buying your first home, you may be wondering if you should buy now or wait for interest rates to come down. There’s no easy answer to this question. If you’re not in a hurry to buy a home, it may make sense to wait and see if interest rates drop. However, there’s no guarantee that rates will go down, and either interest rates or home prices (or both!) could even go up in the meantime.
If you’ve found a home that you love, it may be best to go ahead and buy it, even if the interest rate is a little higher than you’d like. You can always do a mortgage refinance later if rates come down.
Nebraska Mortgage Rate Trends
Understanding historical mortgage rates in the Cornhusker state can provide valuable insights. While rates nationwide have risen in recent years, they remain below historical highs. The average rate in Nebraska is sometimes slightly above the national average and sometimes below it, but it rarely deviates far from the national number. (The Federal Housing Finance Agency stopped tracking the state averages after 2018.)
Historical Interest Rates in Nebraska
| Year | Nebraska Rate | U.S. Rate |
|---|---|---|
| 2000 | 8.07 | 8.14 |
| 2001 | 6.96 | 7.03 |
| 2002 | 6.57 | 6.62 |
| 2003 | 5.79 | 5.83 |
| 2004 | 5.82 | 5.95 |
| 2005 | 5.91 | 6.00 |
| 2006 | 6.47 | 6.60 |
| 2007 | 6.35 | 6.44 |
| 2008 | 6.08 | 6.09 |
| 2009 | 5.14 | 5.06 |
| 2010 | 4.95 | 4.84 |
| 2011 | 4.62 | 4.66 |
| 2012 | 3.68 | 3.74 |
| 2013 | 3.83 | 3.92 |
| 2014 | 4.24 | 4.24 |
| 2015 | 3.92 | 3.91 |
| 2016 | 3.78 | 3.72 |
| 2017 | 3.98 | 4.03 |
| 2018 | 4.61 | 4.57 |
Historical U.S. Mortgage Rates
For a broader perspective, it’s beneficial to examine historical U.S. mortgage rates. Over the past several decades, mortgage rates have experienced periods of both highs and lows, influenced by the various economic factors we explained above.
Factors Affecting Mortgage Rates in Nebraska
Economic Factors
• The Federal Reserve:. The federal funds rate, governed by “the Fed”, serves as a benchmark for other interest rates, including mortgage rates. When the Fed’s interest rate is high, chances are mortgage rates will be too, as banks and other lenders use the federal funds rate as a benchmark when setting their own interest rates.
• Inflation: When inflation rises, the Fed purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate.
• Unemployment: When unemployment is low, the Fed might raise its benchmark rate to help prevent inflation. Mortgage rates then tend to rise. (A low unemployment rate may also lead to increased demand for housing, which puts upward pressure on home prices, further complicating things for buyers.)
Consumer Factors
• Credit score: A higher credit score generally results in a lower mortgage interest rate.
• Down payment: Increasing the down payment can reduce the mortgage interest rate.
• Income and assets: A steady income is important to lenders, who will check your employment history as well as your salary. Assets like investments and emergency savings also reassure lenders that you could still pay your mortgage in the case of a job loss or other financial setback. To secure a borrower with solid income and assets, a lender might offer its most attractive rate.
• Type of mortgage loan: Certain types of mortgages tend to have lower rates. For instance, adjustable-rate mortgages typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. And shorter loan terms usually come with lower rates than longer terms (although the monthly payment may be higher with a shorter term).
Recommended: Average Monthly Expenses for One Person
Types of Mortgages Available in Nebraska
Various mortgage types — including fixed-rate, adjustable-rate, and government-backed loans — are available to meet the needs of different homebuyers in Nebraska.
Fixed-Rate Mortgage
Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) initially tend to offer a lower rate than fixed-rate loans. This can be beneficial if you’re planning to sell before the fixed-rate period ends, or if you can handle the uncertainty associated with a rate that might rise after the first few years.
An ARM is labeled with two numbers, such as a 5/1 ARM. The first is the number of the years in the introductory period (5, 7, and 10 year ARMS are the most common). The second is the period when the interest rate will reset. So a 5/1 ARM has a 5-year introductory period, followed by one adjustment per year. A 7/6 ARM has a 7-year introductory period, followed by interest rate adjustments every 6 months.
FHA Loan
Backed by the Federal Housing Administration, FHA loans typically have more lenient eligibility requirements than conventional loans because the FHA’s backing helps reduce the risk to lenders.
VA Loan
VA loans, backed by the U.S. Department of Veterans affairs, are available to qualifying veterans, active-duty military members, Reserve and National Guard members, as well as surviving spouses. One of the most attractive things about VA loans is that they do not require a down payment.
USDA Loan
USDA loans are designed for borrowers who earn below a specific income limit and who are looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture. If you are eligible, one perk of these mortgages is that private mortgage insurance (PMI) is not required.
Jumbo Loan
Conventional mortgage loans have a cap of $806,500 for a single-family home. Jumbo loans are conventional loans that exceed this amount. In very expensive markets, such as Hawaii, the conventional loan cap is higher than $806,500 but throughout Nebraska it 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 Nebraska
Securing a mortgage often depends on choosing the right location, where home prices are affordable, the cost of living is low, mortgage terms are favorable — or all of the above. In recent years, Nebraska has seen a growing population in the “exurbs” of large cities such as Omaha and Lincoln. Population growth was significant in Plattsmouth, Valley, Fremont, and Ashland, for example. Here are some of the least and most expensive places to get a mortgage in the state:
Least Expensive Locations
Nebraska’s place in the cost of living in the U.S. rankings is on the affordable side. The following are some of the least expensive places to get a mortgage in Nebraska:
• Kearney, with a cost of living 14 points below the national average, is also a good choice for those looking for an affordable home purchase.
• Lexington is not far from Kearney and is one of the most affordable places in the state, with a cost of living 20 points below the U.S. average.
Small cities tend to offer lower home prices and more affordable mortgage rates than the larger cities in Nebraska. However, they may have fewer housing options and less diverse economies.
Most Expensive Locations
The following are some of the most expensive places to get a mortgage in Nebraska:
• Omaha ranks near the top of priciest cities in Nebraska but it is still below the U.S. national average cost of living.
• Lincoln, like Omaha, is more expensive by Nebraska standards but cheaper than the national average.
• Bellevue is the most expensive city in Nebraska.
These cities offer higher home prices and more expensive mortgage rates than the rest of the state. However, they also have strong economies and job markets, which makes them attractive places to live and work.
Recommended: Best Affordable Places in the U.S.
Tips for Securing a Competitive Mortgage Rate in Nebraska
A competitive mortgage rate is crucial for saving money over the life of a loan. Here are a few tips for securing a competitive mortgage rate in Nebraska:
Compare Interest Rates and Fees
Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs or closing fees associated with the loan and factor those into your calculations.
Get Preapproved
Going through the mortgage preapproval process and getting an approval letter from a lender strengthens your position as a buyer and allows you to move quickly when you find the right property. If you’re worried about interest rates rising, you can pay a fee to the lender to lock in your rate for up to 90 days.
Nebraska Mortgage Resources
Nebraska offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources.
First-Time Homebuyer Programs
The First Home
program can help those who qualify as a first-time homebuyer in Nebraska. The state’s Welcome Home program can help both first-time and repeat buyers who fall within certain income limits. First-timers will be required to take a homebuyer education program before the closing.
Down Payment Assistance
Down-payment assistance programs can give homebuyers in Nebraska a leg up as well. Check into the Nebraska Homebuyer Assistance Program
.
Tools & Calculators
The following tools and calculators can help homebuyers in Nebraska:
Run the numbers on your home loan.
-
Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
-
Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
-
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 Nebraska
A mortgage refinance can be a smart way to lower your interest rate, reduce your monthly payments, or cash out some of your home equity. Here are a few refinancing options available in Nebraska:
FHA Streamline Refinance
The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. This type of refinance does not require a new appraisal or credit check, making it a quick and easy way to lower your interest rate.
VA Streamline Refinance
This interest-rate reduction refinance loan (IRRRL) can reduce the monthly payments on VA loans by adjusting the APR. IRRRLs do not require a new appraisal or credit check, making them a convenient option for VA loan holders looking to lower their interest rate.
Cash-Out Refinance
With a cash-out refi, you take out a new mortgage for a larger amount than what you have left on your current mortgage and receive the excess as cash. You can use the cash for remodeling, debt consolidation, or paying for college costs.
Closing Costs, Taxes, and Fees in Nebraska
Buyers in Nebraska can expect to pay between 2%-6% of the home’s purchase price in closing costs. Closing costs include a variety of fees, such as the loan origination fee, appraisal fee, title insurance, and recording fees. These costs vary depending on the lender, the loan amount, and the property location.
The Takeaway
Nebraska’s mortgage landscape offers a range of options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make informed decisions that align with their goals and feel comfortable about their finances while settling into a 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
Will mortgage rates drop in Nebraska?
It is difficult to predict whether mortgage rates will drop in Nebraska. Mortgage rates are influenced by a variety of factors, including the federal funds rate, inflation, and the unemployment rate — not to mention a borrower’s personal financial profile.
Will mortgage rates ever go back to normal?
Don’t focus on “normal” — just look for a home and a mortgage you can afford. Normal is a relative term, and mortgage rates have fluctuated significantly over the years.
Will Nebraska home prices ever drop?
It is difficult to predict whether Nebraska home prices will drop — so much depends on the local housing market, both supply and demand. If you truly need to move and you feel prices are high, search out a trusted real estate agent to ask for the inside scoop on the market you’re interested in.
Is it a good time to buy a house in Nebraska?
Whether it is a good time to buy a house in Nebraska depends on your individual circumstances. If you are financially stable and have a good credit score, you may be able to get a good interest rate on a mortgage. However, if you are not sure about your financial future, it may be best to wait before buying a house.
How do I lock in a mortgage rate?
You can lock in a mortgage rate by getting a mortgage rate lock from a lender. A mortgage rate lock guarantees that you will get a specific interest rate on your mortgage for a certain period of time. This can protect you from rising interest rates.
How do mortgage interest rates work?
Mortgage interest rates are determined by a variety of factors, including the federal funds rate, inflation, and the unemployment rate. When these factors change, mortgage interest rates could also change. Mortgage interest rates are also affected by the borrower’s credit score, down payment, and loan amount, among other personal factors.
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.
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-Q324-082
More home loan resources.
-
First-Time Homebuyer Guide
-
First-Time Homebuyer Programs and Loans
-
Mortgage Preapproval Process
Preparing to buy a house? Call us for a complimentary mortgage consultation.
Current Mortgage Rates in South Carolina Today
Preparing to buy a house? Call us for a complimentary mortgage consultation.
Compare mortgage rates in South Carolina.
Key Points
• Mortgage rates in South Carolina are typically right around the national average.
• Mortgage interest rates are influenced by various economic factors such as inflation, unemployment rates, and the Federal Reserve’s monetary policy.
• Personal financial factors, such as credit score and down payment amount, also have a significant impact on mortgage rates.
• South Carolina offers a full range of mortgage types including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and USDA loans.
• It’s important to consider not just mortgage rates but also fees and closing costs when choosing a mortgage.
Introduction to Mortgage Rates
If you’re on the hunt for a home loan in South Carolina, you’ll have a range of options. Making the smartest pick requires an understanding of current mortgage rates and available homebuyer assistance programs. This comprehensive guide delves into the factors influencing mortgage rates in South Carolina, explores various mortgage types, and provides tips for securing a competitive mortgage rate in the Palmetto State.
Mortgage rates are determined by both your personal financial status and larger economic factors. Economic factors that influence mortgage rates include the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate. On the borrower’s side, credit score, down payment, income and assets, and the type of mortgage loan all play a role in determining the interest rate offered.
Where Mortgage Rates Come From
The Fed, formally known as The Federal Reserve, sets short-term interest rates that serve as benchmarks for other interest rates, including mortgage rates. When the Fed lowers interest rates, mortgage rates typically follow suit, making it more affordable for homebuyers to borrow money. And when the Fed raises rates, you can probably guess what happens next.
How Interest Rates Affect Home Affordability
If you’re buying your first home and it feels like a lot is riding on mortgage interest rates, you’re not wrong. A small interest rate shift can significantly affect the monthly mortgage payment and the overall cost of a home loan. For instance, a $200,000 loan with a 30-year term and a 4.00% interest rate would result in a monthly payment of $954. If the interest rate increases by just 1% to 5.00%, the monthly payment jumps to $1,073, adding an extra $42,774 in interest paid over the life of the loan.
Should Homebuyers Wait for Interest Rates to Drop?
First-time homebuyers, especially, often face the dilemma of whether or not to wait for interest rates to drop before purchasing a home. Rates can fluctuate, but waiting too long may result in missing out on a desirable property or facing rising home costs (or rising rents). If it feels like the time is right to buy and you can afford to do so, remember that you can explore a mortgage refinance if rates drop in the future.
South Carolina Mortgage Rate Trends
Looking at historical mortgage rate trends in South Carolina, shown below, might give prospective homeowners a sense of what’s in store. While rates have experienced fluctuations over the years, they currently hover around the 50-year average. (The Federal Housing Finance Agency stopped reporting state averages in 2018.)
| Year | South Carolina Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.98 | 8.14 |
| 2001 | 6.84 | 7.03 |
| 2002 | 6.43 | 6.62 |
| 2003 | 5.67 | 5.83 |
| 2004 | 5.71 | 5.95 |
| 2005 | 5.95 | 6.00 |
| 2006 | 6.59 | 6.60 |
| 2007 | 6.42 | 6.44 |
| 2008 | 6.06 | 6.09 |
| 2009 | 4.93 | 5.06 |
| 2010 | 4.68 | 4.84 |
| 2011 | 4.48 | 4.66 |
| 2012 | 3.62 | 3.74 |
| 2013 | 3.85 | 3.92 |
| 2014 | 4.19 | 4.24 |
| 2015 | 3.93 | 3.91 |
| 2016 | 3.74 | 3.72 |
| 2017 | 4.04 | 4.03 |
| 2018 | 4.59 | 4.57 |
Historical U.S. Mortgage Rates
As you’ll see below, rates have generally trended downward since the early 1980s. Although today’s homebuyers may be concerned about interest rates, the current rates are relatively low compared to historical averages.
Factors Affecting Mortgage Rates in South Carolina
As noted above, some of these factors affecting mortgage rates are economic, while others are wholly within the homebuyer’s control. Let’s have a closer look:
Economic Factors
• The benchmark rateset by the Federal Reserve has an impact on other interest rates, including those charged by companies offering mortgages. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates.
• Inflation, which increases the cost of living, can make it more expensive for lenders to lend money and devalue the money they do lend. To make up for this, lenders may increase interest rates.
• The unemployment rate, in turn, is a factor that may indirectly affect mortgage rates because when unemployment is high, the Fed often reduces its benchmark rate to try to spark job creation. Mortgage rates then tend to fall.
Consumer Factors
• Credit score is a numerical representation of an individual’s creditworthiness and one of the things a lender will examine during the mortgage preapproval process. Your score is based on factors such as payment history, credit utilization, and length of credit history. A higher credit score indicates a lower risk of default, and individuals with higher credit scores typically qualify for lower mortgage interest rates.
• The down payment is the upfront payment made by the homebuyer. A larger down payment reduces the loan amount that the borrower needs to secure, making the loan less risky for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.
• Income and assets are other factors lenders examine to determine your ability to repay the mortgage. Borrowers with stable employment and a healthy financial cushion are more likely to secure favorable mortgage rates.
• The type of mortgage loanyou select can impact the interest rate offered. Adjustable-rate mortgages (ARMs) often start with lower initial rates compared to fixed-rate mortgages, for example. The Consumer Financial Protection Bureau notes that shorter loan terms typically have lower interest rates, although the monthly payment amounts may be higher.
Recommended: Average Monthly Expenses for One Person
Types of Mortgages Available in South Carolina
South Carolina offers a diverse range of conventional and government-backed mortgages to cater to the needs of different homebuyers. Here are the most common types of mortgage loan:
Fixed Rate Mortgage
Fixed-rate mortgages provide peace of mind with a consistent interest rate throughout the entire loan term. This stability allows homebuyers to accurately budget their monthly mortgage payments and plan for the future without worrying about fluctuating rates.
Most people sign up for a 30-year loan term, although shorter terms are available. A 10- or 15-year term will result in higher monthly payments than a 30-year loan, but allow for faster payoff of the loan and lower total interest paid.
Adjustable Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) are characterized by an initial period of lower interest rates, followed by periodic adjustments based on a predetermined index. This initial period, known as the fixed-rate period, can range from one to 10 years.
The lower initial interest rate of ARMs can be advantageous for homebuyers who plan to sell their property before the fixed-rate period ends. However, it’s important to carefully consider the potential for future rate increases and ensure that the ARM aligns with long-term financial goals.
FHA Loans
FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with less-than-perfect credit or limited down payment funds. FHA loans typically have more lenient eligibility requirements compared to conventional loans, making them a viable option for first-time homebuyers or underwhelming credit scores.
The Federal Housing Administration insures FHA loans, providing lenders with a safety net in case of borrower default. This insurance reduces the risk for lenders and allows them to offer FHA loans with more favorable terms, such as lower down payment requirements and potentially lower interest rates.
VA Loans
One of the most significant advantages of VA loans is the elimination of the down payment requirement. This feature makes homeownership more attainable for those who may not have the funds for a substantial down payment. USDA loans, provided by the United States Department of Agriculture, are tailored to borrowers whose household income falls below a certain level and who are seeking to purchase a home in a rural area. These loans offer favorable terms, including no down payment requirement, competitive interest rates, and flexible credit guidelines.
Conventional mortgage loans typically have a maximum lending limit set by the Federal Housing Finance Agency (FHFA). For 2025, the conforming loan limit for a single-family home in most parts of the country (and all of South Carolina) is $806,500. Loans that exceed this amount are considered jumbo loans.
Recommended: The Best Affordable Places in the U.S. Compare current home interest rates by state and find a mortgage rate that suits your financial goals. Select a state to view current rates: When searching for a home, location plays a crucial role in the cost of living in the U.S. — including home prices and mortgage costs. South Carolina offers a diverse range of cities and towns that cater to different budgets and preferences. The cost of living in an area significantly impacts housing affordability. The Cost of Living Index (COLI) provides a comparison of the cost of living in different states relative to the national average. South Carolina has a relatively low COLI, making it an attractive option for homebuyers seeking affordability. Some of the most affordable places to purchase a home in South Carolina include:
• Spartanburg: The average home value here is $221,227, according to Zillow, well below the national average, which tops $360,000. • Beaufort: Homes average $401,750 in this island locale near Charleston. • Fountain Inn: A historic town not far from the larger Columbia, Fountain Inn has an average home value of $291,785. • Batesburg-Leesville: Average home value here is just over $155,000, very reasonable — especially given the proximity to the larger city of Columbia. • Georgetown: This is a welcoming beach community with an average home value of $263,243. The most expensive places to purchase a home in South Carolina tend to be beach communities, including Kiawah Island, where the average home value is $1,943,246 and Hilton Head, where homes average $765,077. Obtaining a competitive mortgage rate can significantly reduce the overall cost of borrowing. As we’ve seen, even a small difference in interest rate can result in substantial savings over the life of the loan.
Shopping around for mortgage rates is essential to ensure you’re getting the best deal. Don’t settle for the first offer you receive. Compare multiple lenders to find the most competitive option, and make sure to include upfront costs and closing fees in your comparison.USDA Loans
Jumbo Loans
Current mortgage rates by state.
Popular Places to Get a Mortgage in South Carolina
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Tips for Securing a Competitive Mortgage Rate in South Carolina
Compare Interest Rates and Fees
Get Preapproved
Obtaining preapproval for a mortgage puts you in a stronger position when making an offer on a property. It demonstrates to sellers that you’re a serious buyer and can secure financing. Preapproval (not to be confused with prequalification, an earlier step in the process) also allows you to move quickly when you find the right property, as you’ll already have a clear understanding of your borrowing power.
Take Advantage of South Carolina Mortgage Resources
South Carolina provides a range of programs to support homebuyers, especially first-time buyers and those facing financial constraints. These resources include:
First-Time Homebuyer Programs
South Carolina offers several programs tailored to first-time homebuyers, including:
• The South Carolina Housing Finance and Development Authority (SCHFADA) offers a variety of loan programs, including the First-Time Homebuyer Program, which provides low-interest loans and down payment assistance.
• The USDA Rural Development Guaranteed Rural Housing Loan Program provides no-down-payment loans to eligible borrowers in rural areas.
• The Federal Housing Administration (FHA) offers FHA loans with flexible credit requirements and low down payment options.
Down Payment Assistance Programs
South Carolina offers forgivable down payment assistance to all qualified homebuyers. The home must be occupied for 15 years before the payment is fully forgiven.
Tools & Calculators
Before you get serious about a home search in South Carolina, take advantage of these helpful tools to help set your home-buying budget, determine your down payment amount, and get a sense of what your monthly mortgage payment might be.
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 South Carolina
In addition to conventional refinancing options, homeowners with FHA-insured loans may benefit from the FHA Streamline Refinance program. This program allows borrowers to refinance their existing FHA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.
VA loan holders may consider the Interest-Rate Reduction Refinance Loan (IRRRL) to lower their monthly payments. This program allows eligible borrowers to refinance their VA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.
Closing Costs, Taxes, and Fees in South Carolina
Closing costs associated with purchasing a home in South Carolina typically range between 3% and 6% of the purchase price. These costs may include loan origination fees, appraisal fees, title insurance, and other administrative charges.
The specific closing costs in South Carolina can vary depending on the value of the property and its location. Higher-priced properties and those located in certain areas may incur higher closing costs.
The Takeaway
South Carolina’s mortgage market provides a diverse range of options for homebuyers, catering to different financial situations and preferences. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve their dream of homeownership in the Palmetto State.
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
Will mortgage rates drop in South Carolina?
Predicting future mortgage rate movements is challenging. Your best bet is to keep in close contact with a mortgage lender you trust, who is likely to be watching the rates even more closely than you are.
Will mortgage rates ever go back to normal?
The only thing “normal” about mortgage rates is that they are ever-changing. Mortgage rates have fluctuated throughout history because they are influenced by economic factors, and there isn’t really a specific level considered normal.
Will South Carolina home prices ever drop?
Real estate markets are subject to many factors that influence home prices. While prices in South Carolina have generally appreciated over time, there can be periods of market fluctuation or correction. Predicting future price movements is difficult, however.
Is it a good time to buy a house in South Carolina?
The best time to buy a home is when it feels right for you. There is no one-size-fits-all answer. Examine the inventory (and prices) of available homes, consider your personal financial situation, and weigh your long-term goals to make an informed decision.
How do I lock in a mortgage rate?
Locking in a mortgage rate involves securing a commitment from a lender to provide a specific interest rate for a certain period. This can be done by obtaining a rate lock agreement, which sometimes means paying a fee. The length of the rate lock can vary and should be discussed with the lender.
How do mortgage interest rates work?
Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. Lenders determine interest rates based on various factors, including the borrower’s credit score and loan term; however, rates are also guided by prevailing economic conditions. Your interest rate governs both your monthly mortgage payment amount and the total amount of interest you’ll pay over the life of the loan.
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.
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.
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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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