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By Derek Stratton |
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$18 an Hour Is How Much a Year?
If you’re making $18 an hour, over the course of a year, you’d be making $37,440 before taxes. This calculator makes it easy to convert your hourly rate into yearly, monthly, and weekly earnings, helping you better understand your pay.
*The information provided by this calculator is for illustrative purposes only. These figures assume full-time employment and do not include deductions like taxes.
FAQ
How much is $18 an hour weekly, monthly, and annually before taxes?
Before taxes, if you make $18 an hour and work a 40-hour week, your weekly pay would be $720. Over a month, that adds up to around $3,120, assuming you work 52 weeks a year with no unpaid time off. Annually, this totals to about $37,440 for a full-time schedule.
What is the annual take-home pay for someone earning $18 an hour after taxes?
Your take-home pay depends on your tax bracket, state taxes, and deductions. On average, after federal taxes and other common deductions, you might take home between $28,000 and $32,000 per year. The exact amount will vary based on your location and financial situation.
How does the yearly salary from $18 an hour compare to the average salary in the U.S.?
A salary of $37,440 (at $18 an hour) is below the national average salary of $63,795 and the median salary of $59,384. This puts you in the lower income range, though your salary’s value will vary based on where you live and the industry you work in.
How does $18 an hour compare to minimum wage?
The federal minimum wage in the U.S. is $7.25 an hour, though many states have higher minimums. Earning $18 an hour is more than double the federal minimum wage, and in most cases, above state minimum wages, which typically range from $8 to $15 an hour.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
1
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
† †
Who is eligible for a Direct Deposit Bonus?
New and existing SoFi members who have never set up direct deposit with SoFi are eligible for the Direct Deposit Bonus. Bonuses are limited to one bonus per SoFi member. In the case of a joint account, direct deposit activity will only be counted towards the primary account holder’s eligibility for the bonus (the primary account holder is the member who opened the joint account first).
How do I earn the Direct Deposit Bonus?
1. Set up your first Eligible Direct Deposit. SoFi must receive it on or before 1/31/26.
2. Once SoFi receives and recognizes your first Eligible Direct Deposit, we will add up the Total Eligible Direct Deposits received over the next 25 calendar days. This total will determine the bonus amount.
Total Eligible Direct Deposit
Bonus Amount
Timing
$1.00 - $999.99
$0
To determine your bonus amount, SoFi will add up all your Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit.
$1,000.00 - $4,999.99
$50
$5,000.00 or more
$300
3. You will receive the bonus amount in your SoFi Checking account within 7 business days of completing all requirements listed above. You are only eligible to receive one bonus amount. You must have an open SoFi Checking account in good standing at the time of the bonus payment.
What is an Eligible Direct Deposit? Eligible: Recurring ACH deposit of regular income to your SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by your employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”)
Not Eligible Deposits that are not from an employer, payroll or benefits provider or government agency and deposits that are non-recurring in nature are not eligible. Examples of deposits that are not eligible include check deposits, peer-to-peer transfers (e.g., transfers from Zelle, PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), bank ACH funds transfers, wire transfers from external accounts, and IRS tax refunds. SoFi Bank shall, in its sole discretion, assess your Eligible Direct Deposit activity to determine eligibility and may require additional documentation to complete this verification.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your initial Eligible Direct Deposit. After SoFi validates the details of your Eligible Direct Deposit, your Direct Deposit Bonus will be based on the date we received your initial Eligible Direct Deposit.
What else is important to know?
•This promotion is available between 12/7/2023 at 12:01AM ET and 1/31/2026 at 11:59PM ET. SoFi reserves the right to modify or end the promotion at any time without notice. The terms of this promotion take precedence over the terms of any prior Direct Deposit promotion.
•SoFi reserves the right to exclude any members from participating in this promotion for any reason, such as suspected fraud, misuse, or suspicious activity.
•SoFi members with Eligible Direct Deposit activity can earn 3.60% annual percentage yield (APY) on savings balances. Interest rates are variable and subject to change at any time. These rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://www.sofi.com/legal/banking-rate-sheet.
•Bonuses are considered miscellaneous income, and may be reportable to the IRS on Form 1099-MISC (or Form 1042-S, if applicable). SoFi is required to do this reporting in compliance with the applicable federal and state reporting requirements. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult with your tax advisor to determine applicable tax consequences.
•This promotion is offered by SoFi Bank, N.A, Member FDIC (“SoFi”)
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.
By Derek Stratton |
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Comments Off on $20 an hour converter
$20 an Hour Is How Much a Year?
If you’re earning $20 an hour, you’d be making $41,600 a year before taxes. Use this calculator to quickly break down down your earnings into weekly and monthly amounts, giving you a clearer view of your pay.
*The information provided by this calculator is for illustrative purposes only. These figures assume full-time employment and do not include deductions like taxes.
FAQ
What is $20 an hour weekly, monthly, and annually before taxes?
Before taxes, if you make $20 an hour and work a 40 hour week, your weekly pay would be $800. For a month, that’s $3,467 assuming 52 weeks a year with no unpaid time off. Annually, that’s $41,600 assuming full time.
What is the annual take home pay for someone making $20 an hour after taxes?
Take home pay will depend on your tax bracket, state taxes and deductions. On average, after federal taxes and other typical deductions you might take home around $32,000 to $35,000 a year. This is just an estimate and will vary based on your location and financial situation.
How does the annual salary of $20 an hour compare to the average salary in the US?
A salary of $41,600 (at $20 an hour) is below the US national average salary which is around $63,795. But it’s close to the median salary which is around $59,384. Salaries can vary greatly based on the cost of living in different states and industries.
How does $20 an hour compare to minimum wage?
The federal minimum wage in the US is $7.25 an hour, though many states have higher minimums. $20 an hour is above the federal minimum and in most cases above the state minimums which range from $8 to $15 an hour depending on the state.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
1
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
† †
Who is eligible for a Direct Deposit Bonus?
New and existing SoFi members who have never set up direct deposit with SoFi are eligible for the Direct Deposit Bonus. Bonuses are limited to one bonus per SoFi member. In the case of a joint account, direct deposit activity will only be counted towards the primary account holder’s eligibility for the bonus (the primary account holder is the member who opened the joint account first).
How do I earn the Direct Deposit Bonus?
1. Set up your first Eligible Direct Deposit. SoFi must receive it on or before 1/31/26.
2. Once SoFi receives and recognizes your first Eligible Direct Deposit, we will add up the Total Eligible Direct Deposits received over the next 25 calendar days. This total will determine the bonus amount.
Total Eligible Direct Deposit
Bonus Amount
Timing
$1.00 - $999.99
$0
To determine your bonus amount, SoFi will add up all your Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit.
$1,000.00 - $4,999.99
$50
$5,000.00 or more
$300
3. You will receive the bonus amount in your SoFi Checking account within 7 business days of completing all requirements listed above. You are only eligible to receive one bonus amount. You must have an open SoFi Checking account in good standing at the time of the bonus payment.
What is an Eligible Direct Deposit? Eligible: Recurring ACH deposit of regular income to your SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by your employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”)
Not Eligible Deposits that are not from an employer, payroll or benefits provider or government agency and deposits that are non-recurring in nature are not eligible. Examples of deposits that are not eligible include check deposits, peer-to-peer transfers (e.g., transfers from Zelle, PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), bank ACH funds transfers, wire transfers from external accounts, and IRS tax refunds. SoFi Bank shall, in its sole discretion, assess your Eligible Direct Deposit activity to determine eligibility and may require additional documentation to complete this verification.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your initial Eligible Direct Deposit. After SoFi validates the details of your Eligible Direct Deposit, your Direct Deposit Bonus will be based on the date we received your initial Eligible Direct Deposit.
What else is important to know?
•This promotion is available between 12/7/2023 at 12:01AM ET and 1/31/2026 at 11:59PM ET. SoFi reserves the right to modify or end the promotion at any time without notice. The terms of this promotion take precedence over the terms of any prior Direct Deposit promotion.
•SoFi reserves the right to exclude any members from participating in this promotion for any reason, such as suspected fraud, misuse, or suspicious activity.
•SoFi members with Eligible Direct Deposit activity can earn 3.60% annual percentage yield (APY) on savings balances. Interest rates are variable and subject to change at any time. These rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at http://www.sofi.com/legal/banking-rate-sheet.
•Bonuses are considered miscellaneous income, and may be reportable to the IRS on Form 1099-MISC (or Form 1042-S, if applicable). SoFi is required to do this reporting in compliance with the applicable federal and state reporting requirements. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the bonus offer; consult with your tax advisor to determine applicable tax consequences.
•This promotion is offered by SoFi Bank, N.A, Member FDIC (“SoFi”)
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.
• Mortgage rates in Maryland have ranged from 7.79% in 2000 to a low of 3.70% in 2012 and 2016 — slightly below the average U.S. mortgage rate.
• Economic factors, consumer factors, and the type of mortgage you choose all affect mortgage rates in Maryland.
• Maryland offers many mortgage types, including fixed-rate, adjustable-rate, FHA, VA, USDA, and jumbo loans.
• First-time homebuyer programs, down payment assistance, and refinancing options are available in Maryland.
Introduction to Mortgage Interest Rates
Securing a favorable mortgage rate puts you one giant step closer to closing the deal on your new home. In Maryland, mortgage rates are determined by a complex interplay of economic factors and each individual borrower’s financial standing. Let’s look more closely at mortgage rates in Maryland, including historical trends, factors affecting rates, types of mortgages available, and strategies for securing a competitive mortgage rate.
Where Mortgage Rates Come From
The Federal Reserve, often referred to as the Fed, has a significant influence on mortgage rates. The Fed sets the short-term interest rates that banks use as a benchmark for their own lending rates. Home loans tend to follow the same economic trend, so when the Fed lowers its interest rate, mortgage rates tend to decrease, making it more affordable for individuals to borrow money for home purchases.
But your own personal financial numbers also factor into the specific rate a lender might offer you. Your credit scores, down payment amount, debts, loan amount, loan term, and property type can all play a role.
How Interest Rates Affect Home Affordability
Why does the mortgage rate in Maryland matter so much to homebuyers? While many homebuyers focus on the purchase price of a property, mortgage rates play a huge part in determining the overall cost of homeownership. Even a small difference in the interest rate can significantly impact the monthly mortgage payments and the total amount of interest paid over the life of the loan.
For instance, a $280,000 loan with a 30-year term and a 4% interest rate would result in monthly payments of $1,336. However, if the interest rate increases by just 1 percentage point to 5%, the monthly payments would jump to $1,503. That might not seem like a dealbreaker, but consider that this increases the total interest paid over the life of the loan by $59,881.
Should Homebuyers Wait for Interest Rates to Drop?
Homebuyers often face the dilemma of whether to purchase a home immediately or wait for mortgage rates to drop. While it is true that rates can fluctuate, it is important to consider the opportunity cost of waiting. Home prices also tend to rise over time, potentially offsetting any savings gained by waiting for lower interest rates.
Homeowners who are concerned about rising interest rates can consider refinancing their mortgage in the future if rates drop (or if their credit score or other personal financial stats become rosier). Refinancing allows homeowners to obtain a new mortgage, potentially reducing their monthly payments and saving money over the long term.
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Examining historical mortgage rate trends can put current mortgage rates in Maryland into perspective. While rates in Maryland have experienced fluctuations over the years, they tend to hover just slightly above the national average. (The Federal Housing Finance Agency stopped tracking specific state trends in 2018.)
Year
Maryland Rate
U.S. Rate
2000
8.00
8.14
2001
7.05
7.03
2002
6.58
6.62
2003
5.91
5.83
2004
5.81
5.95
2005
6.05
6.00
2006
6.67
6.60
2007
6.49
6.44
2008
6.12
6.09
2009
5.03
5.06
2010
4.97
4.84
2010
4.72
4.84
2011
4.55
4.66
2012
3.65
3.74
2013
3.91
3.92
2014
4.14
4.24
2015
3.98
3.91
2016
3.79
3.72
2017
4.15
4.03
2018
4.66
4.57
Source: Federal House Finance Agency
Historical U.S. Mortgage Rates
Seeing the average 30-year mortgage rate plotted on a chart shows that, although mortgage rates did increase in recent years, they are still significantly lower compared to historical peaks. In the early 1980s, mortgage rates reached double-digit figures, making homeownership a challenge for many Americans.
Factors Affecting Mortgage Rates in Maryland
Numerous factors influence mortgage rates in Maryland and across the United States. These factors can be broadly categorized into two groups: economic factors and consumer factors. Let’s look at each more closely:
Economic Factors
• The Federal Reserve plays a pivotal role in shaping mortgage rates through its monetary policy decisions. The federal funds rate, which is the interest rate that banks charge each other for overnight loans, serves as a benchmark for other interest rates, including mortgage rates. When the Fed raises the federal funds rate, higher mortgage rates typically follow.
• Inflation can also impact mortgage rates. When 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 influences mortgage rates indirectly. When unemployment is high, the Fed often reduces its benchmark rate to encourage job creation. Mortgage rates often fall in response.
Consumer Factors
• A borrowers credit scoreis a crucial factor in determining mortgage rates. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders and qualifying them for lower rates.
• The down payment a borrower makes also factors in. A larger down payment reduces the loan amount, which reduces the risk for the lender. Borrowers who make a larger down payment often receive lower mortgage interest rates.
• A steady income and sufficient assets send a lender reassuring signals about a borrower’s financial stability. The lender typically rewards that with lower rates.
• The type of mortgage loan a borrower chooses is important. Adjustable-rate mortgages (ARMs) often offer lower initial rates compared to fixed-rate mortgages. Additionally, government-backed loans, such as VA loans, may have lower interest rates. And a shorter loan term typically comes with a lower interest rate than a longer loan term.
In Maryland, homebuyers have access to a variety of mortgage types to suit their individual needs and financial situations. These include fixed-rate mortgages, adjustable-rate mortgages (ARMs), Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, and U.S. Department of Agriculture (USDA) loans.
Fixed-Rate Mortgages
A fixed-rate mortgage offers stability and predictability in monthly payments. The interest rate remains the same throughout the entire loan term, typically ranging from 10 to 30 years. This type of mortgage is ideal for borrowers who prefer a consistent monthly housing expense and want to lock in a favorable interest rate.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) provide an initial interest rate that is lower than fixed-rate mortgages. This lower rate is typically fixed for a specific period, such as 5 or 10 years, after which the interest rate can fluctuate based on market conditions. ARMs can be a good option for borrowers who plan to sell or refinance their home before the fixed-rate period ends. However, it is important to carefully consider the potential for interest rate increases and ensure that you can afford higher monthly payments if the interest rate adjusts.
FHA Loan
FHA loans are government-backed mortgages that offer more lenient eligibility requirements compared to conventional loans. FHA loans are insured by the FHA, which reduces the risk to lenders and allows borrowers with lower credit scores and smaller down payments to obtain a mortgage.
VA Loans
VA loans are government-backed mortgages available to qualifying veterans, active-duty military members, and certain members of the Reserve and National Guard, as well as surviving spouses. VA loans offer competitive interest rates and do not require a down payment, making them an attractive option for eligible borrowers.
The key word is “eligible” and borrowers interested in a VA loan will need to get a Certificate of Eligibility from the U.S. Department of Veterans Affairs as a first step toward borrowing.
USDA Loans
USDA loans are government-backed mortgages designed for borrowers whose income falls below a certain level and who are looking to purchase a home in a rural area. (The income level varies by location as it is pegged to the area’s median household income.)
USDA partner lenders offer competitive interest rates and do not require a down payment, making them an excellent option for eligible borrowers.
Jumbo Loans
Conventional mortgage loans have a maximum loan amount, known as the conforming loan 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 is $806,500. In some higher-cost areas of Maryland, including Montgomery County and Prince George’s County, the limit is higher: $1,209,750. Jumbo loans are conventional loans that exceed the conforming loan limit. Jumbo loans have attractive interest rates but may have more stringent credit-score and other borrower requirements.
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 Maryland
When it comes to securing a mortgage, location plays a significant role. Homebuyers should consider areas where home prices are affordable and mortgage terms are favorable. Various online resources and real estate professionals can provide valuable insights into the best places to get a mortgage in Maryland.
The cost of living in an area can significantly impact mortgage affordability. The Cost of Living Index (COLI) is a useful tool that compares the cost of living in different states against the national average. By considering the COLI, homebuyers can assess whether their income can support a comfortable lifestyle in a particular location.
• Hagerstown In Western Maryland, near the Appalachian trail, Hagerstown offers natural beauty and nice prices. The average home value here is $276,271.
• Salisbury The largest city on Maryland’s Eastern Shore, Salisbury has an average home value of $255,904.
• Havre de Grace Proximity to Baltimore means prices are higher here, but $391,874 is still below the average for the state as a whole.
• Aberdeen An average value of $324,459 and a 30-minute commute to Baltimore make this town an attractive choice.
Most Expensive Locations
Calvert County, Charles County, and Frederick County — like St. George’s County and Montgomery County, mentioned above — are some of the most expensive locations to get a mortgage in Maryland. Many of Maryland’s priciest locations boast easy access to Washington, D.C.
Tips for Securing a Competitive Mortgage Rate in Maryland
Securing a competitive mortgage rate can significantly reduce the overall cost of homeownership. While prospective homebuyers have no say in the rates set by the Federal Reserve, there are plenty of areas where you do exert some control:
Compare Interest Rates and Fees
Don’t settle for the first offer you receive from a lender. By shopping around, you can potentially save thousands of dollars over the life of your loan. When comparing offers, it is important to consider any upfront costs or closing fees associated with the loan.
Get Preapproved
Getting preapproved for a mortgage is a crucial step in the homebuying process. It gives you a clear understanding of your borrowing power and strengthens your position when making an offer on a property. Going through the mortgage preapproval process also allows you to move quickly when you find the right home, as you will already have a lender ready to provide financing.
Maryland offers several programs specifically designed to assist first-time homebuyers:
• Maryland Mortgage Program (MMP) 1st Time Advantage offers low-interest mortgages to qualified first-time homebuyers.
• The SmartBuy Program provides loans to those with student loan debt.
• HomeAbility is designed for homebuyers with disabilities.
Down Payment Assistance
In addition to first-time homebuyer programs, Maryland offers down-payment assistance to help borrowers overcome the challenge of saving for a down payment:
• The PartnerMatch program offers a no-interest, deferred loan that may be used for down payment and closing costs.
Tools & Calculators
Running numbers through a calculator tool can help you determine how much house you can afford or what kind of mortgage you might be qualified for. You can even see how your down payment might affect the interest you’ll pay over the life of a loan.
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 Maryland
Homeowners in Maryland who have an existing FHA-insured mortgage may be eligible for the FHA Streamline Refinance program. This program allows homeowners to complete a mortgage refinance with minimal hassle and paperwork.
Veterans and active-duty military members who have a VA loan may be eligible for an Interest-Rate Reduction Refinance Loan (IRRRL). This program allows borrowers to reduce their monthly payments by refinancing their VA loan at a lower interest rate.
Closing Costs, Taxes, and Fees in Maryland
Closing costs are associated with the purchase of a home and typically range from 3% to 6% of the purchase price. These costs may include loan origination fees, appraisal fees, title insurance, and other administrative fees.
The specific closing costs you will incur will depend on the value of the property you are purchasing and the location. It is important to factor these costs into your overall budget when planning for homeownership.
The Takeaway
Maryland’s mortgage landscape offers a diverse range of options for homebuyers. By staying informed about current mortgage rates and exploring assistance programs, those who live in the state famous for its blue crabs and beautiful Chesapeake Bay (or who dream of living there) can make decisions that align with their financial goals.
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.
Predicting future mortgage rate trends is challenging, as they are influenced by various economic factors. Following economic news is one way to stay informed about potential changes in mortgage rates.
Will mortgage rates ever go back to normal?
There isn’t really a “normal” where mortgage rates are concerned. Rates fluctuate over time and it is difficult to predict when they might return to any specific level.
Will Maryland home prices ever drop?
Home prices are influenced by various factors such as supply and demand, economic conditions, and local market dynamics. Consult with a real estate professional who specializes in the market you’re interested in for a sense of where local prices are headed.
Is it a good time to buy a house in Maryland?
A good time to buy a house is when you need a place to live (maybe you’ve outgrown your current home, or your apartment lease is up) and you feel ready to take on the financial responsibility of a mortgage. Then whether it is a good time to buy will depend on whether or not you can find a house you love.
How do I lock in a mortgage rate?
To lock in a mortgage rate, you can work with a lender to secure a specific interest rate for a certain period, typically ranging from 30 to 120 days. This usually involves paying a fee to the lender, known as a rate lock fee. Locking the rate will protect you from potential interest rate increases during the specified period.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate. But your personal stats are also important, including your credit score, down payment amount, loan amount, loan term, and type of mortgage loan. Lenders use these 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.
†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.
‡Up to $9,500 cash back: HomeStory Rewards is offered by HomeStory Real Estate Services, a licensed real estate broker. HomeStory Real Estate Services is not affiliated with SoFi Bank, N.A. (SoFi). SoFi is not responsible for the program provided by HomeStory Real Estate Services. Obtaining a mortgage from SoFi is optional and not required to participate in the program offered by HomeStory Real Estate Services. The borrower may arrange for financing with any lender. Rebate amount based on home sale price, see table for details.
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.
• Mortgage rates in Illinois have ranged from 7.79% in 2000 to a low of 3.70% in 2012 and 2016 — slightly below the average U.S. mortgage rate.
• Mortgage rates are influenced by various factors including the federal funds rate, inflation, unemployment rates, and global market conditions.
• Higher interest rates lead to increased monthly mortgage payments, making it more challenging for individuals to purchase homes within their budget.
• Illinois offers a diverse range of mortgage options including fixed-rate, adjustable-rate (ARMs), FHA, VA, and USDA loans.
• Seasonal trends show that mortgage rates in Illinois tend to rise in the spring and summer months and decline in the fall and winter.
Introduction to Mortgage Interest Rates
Finding the best mortgage rate is crucial for saving money over the life of a loan. Mortgage interest rates are calculated using a complex combination of factors, which can be divided into two categories: the state of the economy and the borrower’s financial status.
Whether or not you’re buying your first home, understanding these factors can help you make informed decisions about the best time to apply for a mortgage and the type of mortgage that best suits your financial situation.
This comprehensive guide provides an overview of mortgage rates in Illinois, including historical trends, economic factors, consumer considerations, and popular mortgage types.
Where Mortgage Rates Come From
The Federal Reserve, aka the Fed, sets the short-term interest rates that banks use. Although home loan rates aren’t directly tied to Fed rates, they follow the same economic trends.
When the Fed’s interest rate is high, chances are mortgage rates will be too. And when the Fed cuts its rate, mortgage rates will likely follow suit.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability, with even small interest rate increases potentially putting homeownership out of reach for middle-income Americans.
For instance, a 1% increase in interest rate on a $300,000 loan can add almost $200 to the monthly mortgage payment, making a significant difference in affordability. Over the course of 30 years, however, that $200 difference adds up to almost $70,000 in additional interest paid!
Therefore, it’s crucial for homebuyers to carefully consider current mortgage rates and their impact on affordability when making homeownership decisions.
Should Homebuyers Wait for Interest Rates to Drop?
Many first-time homebuyers wonder if they should buy now or wait for interest rates to come down by a certain amount. While it’s possible that rates will continue to decrease into 2025, there are several factors to consider before delaying a home purchase.
First, it’s important to remember that mortgage rates are cyclical and fluctuate over time. Trying to “time the market” is challenging even for the experts, and waiting too long could mean missing out on a suitable property or facing even higher rates — and higher home prices — in the future.
Additionally, homeowners can always help themselves to a mortgage refinance after rates come down, lowering their interest rate and their monthly payment. Therefore, buying a home when it’s the right time for you financially may be a better decision than waiting for an uncertain drop in interest rates.
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Understanding historical mortgage rates can provide valuable insights into where rates are headed. While rates have risen in recent years, they remain below historical highs. In fact, they are currently around the 50-year average.
This suggests that current mortgage rates are relatively favorable compared to long-term trends. However, it’s important to note that rates can fluctuate and there are no guarantees about future trends.
Historical Illinois Mortgage Rates
Illinois mortgage rates have ranged in recent years from a high of 7.79% in 2000 to a low of 3.70% in 2012 and 2016. This is slightly below the average U.S. mortgage rate.
Year
Illinois Rate
U.S. Rate
2000
7.79
8.14
2001
6.97
7.03
2002
6.36
6.62
2003
5.54
5.83
2004
5.56
5.95
2005
5.78
6.00
2006
6.54
6.60
2007
6.56
6.44
2008
6.09
6.09
2009
5.20
5.06
2010
4.97
4.84
2011
4.69
4.66
2012
3.70
3.74
2013
3.87
3.92
2014
4.13
4.24
2015
3.86
3.91
2016
3.70
3.72
2017
4.03
4.03
2018
4.66
4.57
Source: Federal House Finance Agency
Historical U.S. Mortgage Rates
For context, the average 30-year fixed mortgage rate in the U.S. has fluctuated from incredible lows in 2012 to a high of 18.63% in 1981. The current rate of around 6.00% falls within this historical range, indicating that rates are still relatively moderate compared to the past.
Factors Affecting Mortgage Rates in Illinois
Many factors influence mortgage rates in Illinois and nationwide. Some of these are economic, while others are within the homebuyer’s control.
Understanding these factors can help homebuyers make informed decisions about their mortgage options.
Economic Factors
Economic factors that influence mortgage rates in Illinois include the federal funds rate, inflation, and unemployment.
• The Fed: The federal funds rate is the interest rate that banks charge each other for overnight loans, and banks use it as a reference point when setting their own lending rates. When the federal funds rate is cut, mortgage rates tend to dip.
• Inflation: Inflation is the rate at which the cost of living, or the general level of prices for goods and services, increases over time. When inflation rises, the value of money decreases, making it more expensive for lenders to lend money. As a result, lenders may increase interest rates to compensate for the loss in purchasing power.
• Unemployment rate: The unemployment rate measures the percentage of the labor force that is unemployed. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, not surprisingly, mortgage interest rates.
Consumer Factors
Consumer factors that influence mortgage rates in Illinois include credit score, down payment, income and assets, and the type of mortgage loan.
• Credit score: A credit score is a representation of a person’s creditworthiness. It is based on factors such as payment history, debt-to-income ratio, and length of credit history. A higher credit score indicates a lower risk of default, which makes lenders more likely to offer lower interest rates.
• Down payment: A down payment is the amount of money paid upfront for a property purchase. Increasing the down payment reduces the amount of money that needs to be borrowed, which lowers the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.
• Income and assets: Lenders consider a steady income and sufficient assets as indicators of a borrower’s ability to repay the loan. A steady income demonstrates the borrower’s earning potential, while assets provide a financial cushion in case of unexpected events. Borrowers with higher incomes and more assets are generally considered lower-risk and may be offered lower interest rates.
• Mortgage type The type of mortgage loan chosen can also impact the interest rate. Adjustable-rate mortgages (ARMs) typically offer lower initial rates than fixed-rate mortgages, but the rate can adjust over time. Government-backed loans, such as VA loans, may have lower rates compared to conventional loans. Additionally, shorter loan terms generally come with lower interest rates than longer terms.
Types of Mortgages Available in Illinois
Various mortgage types — including fixed-rate, adjustable-rate, FHA, VA, and USDA loans — are available to meet the needs of different homebuyers.
Each type of mortgage has its own unique characteristics, advantages, and disadvantages. It’s important for homebuyers to carefully consider their individual circumstances and financial goals when choosing a mortgage type.
Conventional loans are not backed by the government and are offered by banks and credit unions. They can be fixed-rate or adjustable-rate. Conventional loans may have stricter credit and income requirements compared to government-backed loans.
Fixed-Rate mortgages
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 provide stability and predictability in monthly payments, making them a good option for borrowers who prefer a consistent housing expense.
Fixed-rate mortgages are typically available in terms of 10, 15, 20, or 30 years. The loan term affects the monthly payment amount and the total interest paid over the life of the loan.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) initially offer a lower rate than fixed-rate loans. However, the interest rate adjusts periodically, typically after an initial fixed-rate period of three to ten years
ARMs can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends or who are comfortable with the potential for interest rate fluctuations.
However, it’s important to carefully consider the potential risks and understand how interest rate adjustments could impact monthly payments before choosing an ARM.
FHA Loan
FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible to borrowers with lower credit scores and/or smaller down payments.
FHA loans have more flexible credit and income requirements compared to conventional loans, making them a good option for first-time homebuyers and those with less-than-perfect credit.
VA Loan
VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members. They offer competitive interest rates and do not require a down payment.
Even though the VA sets the basic eligibility requirements and guarantees the loan, borrowers actually apply to private lenders for these loans, after first obtaining a certificate of eligibility from the VA.
USDA Loan
USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. They offer competitive interest rates and do not require a down payment. USDA loans are backed by the U.S. Department of Agriculture, which reduces the risk to lenders and allows them to offer more favorable terms to borrowers.
Jumbo Loans
Jumbo loans are conventional loans that exceed the conforming loan limits set by Fannie Mae and Freddie Mac. They are typically used to finance high-value properties.
Conforming loan limits vary depending on the location and type of property. For 2025, the conforming loan limit for a single-family home in Illinois is $806,500. Jumbo loans are required for properties that exceed this limit.
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 Illinois
Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable.
Some popular places to get a mortgage in Illinois include Chicago, Aurora, Naperville, Joliet, and Springfield. These areas offer a range of housing options and competitive mortgage rates.
When considering different locations, it’s important to factor in the cost of living. This refers to the amount of money needed to cover basic expenses such as housing, food, transportation, and healthcare. The Cost of Living Index (COLI) provides a comparison of the cost of living in different areas relative to the average cost of living in the U.S.
Least Expensive Locations
Some of the least expensive places to live in Illinois include:
The most expensive places to live in Illinois all have a COLI of 105.7. To help distinguish these areas, we checked out the average home price in each and discovered some big differences:
Tips for Securing a Competitive Mortgage Rate in Illinois
Securing a competitive mortgage rate can save you many thousands of dollars over the life of your loan. Here are some tips to help you get the best possible rate:
Compare Interest Rates and Fees
Take the time to compare interest rates and fees from multiple lenders. But don’t just focus on the interest rate – consider the total cost of the loan, including any fees and closing costs. Some lenders may offer a lower interest rate but charge higher fees, so it’s important to compare the overall package.
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. You can even lock in your rate for a certain period of time, typically 30 to 90 days. This can give you peace of mind knowing that your interest rate won’t increase before you close on the loan.
The Illinois Housing Development Authority (IHDA) offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. As with any mortgage, participants may have to meet requirements regarding income, credit scores, and debt-to-income ratio to qualify.
These resources can provide information, counseling, and financial assistance to help make home ownership more affordable in the Prairie State.
First-Time Homebuyer Programs
Illinois offers several programs to help anyone who qualifies as a first-time homebuyer overcome the challenges of saving for a down payment and qualifying for a mortgage.
• The IHDA Access Forgivable program offers qualifying buyers a 30-year, fixed-rate mortgage along with a forgivable second loan they can put toward their down payment, closing costs, or both.
• The IHDA Access Deferred offers a 30-year, fixed-rate mortgage, with a second interest-free loan that is referred for the life of the mortgage.
• The IHDA Access Repayable offers the same first mortgage with an interest-free second loan that can be used for a down payment and closing costs; the second loan is repaid in monthly installments over a 10-year period.
Down payment assistance programs can provide financial assistance to help homebuyers make a down payment on a home. These programs may offer grants, loans, and other forms of assistance.
The Federal Home Loan Bank of Chicago offers two down payment and closing cost programs: Downpayment Plus provides eligible bank customers with a matching grant that is forgiven on a monthly basis over a 5-year period.
Downpayment Plus Advantage is similar, but the grants are limited to homebuyers who are participating in a homeownership program offered by a nonprofit organization that provides mortgage financing directly to the homebuyer. To apply, contact a nonprofit, such as Habitat for Humanity, that originates first mortgages.
Tools & Calculators
SoFi online tools and calculators are available to help homebuyers estimate their monthly mortgage payments, compare interest rates, and determine how much they can afford to borrow.
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 Illinois
Refinancing a mortgage can be a good way to lower your interest rate, reduce your monthly payments, or cash out some of your home equity.
• The FHA Streamline refinance is a simplified refinancing option available to FHA-insured homeowners. It allows you to refinance into current mortgage rates with minimal hassle and paperwork.
• The Interest-Rate Reduction Refinance Loan (IRRRL) is a refinancing option available to VA loan borrowers. It allows you to reduce their monthly payments by adjusting the annual percentage rate (APR) on your existing VA loan.
Closing Costs, Taxes, and Fees in Illinois
Buyers in Illinois can expect to pay between 2% and 5% of the home’s purchase price in closing costs. For the average home value in Illinois of $267,365, that comes to around $5,300 to $13,400.
Closing costs include various fees and charges associated with buying a home, such as appraisal fees, title insurance, loan origination fees, and transfer taxes.
The amount of closing costs vary depending on the value of the property and the location. It’s important to factor closing costs into your budget when buying a home.
The Takeaway
Illinois’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 strategic decisions that align with their financial goals and achieve successful homeownership in Illinois.
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.
A mortgage rate is the interest rate charged on a mortgage loan. It determines the amount of interest paid on the borrowed amount over the life of the loan.
Will mortgage rates drop in Illinois?
Predicting future mortgage rate movements is challenging. While rates may decrease in the future, there is no guarantee of when or by how much. Homebuyers should make decisions based on their current financial situation and housing needs rather than solely relying on potential future rate changes.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates is subjective and can vary over time. Mortgage rates are influenced by many economic factors and market conditions, and they fluctuate over time. It is difficult to predict when or if rates will return to a specific level.
Will Illinois home prices ever drop?
Housing prices are influenced by numerous factors, including supply and demand, economic conditions, and local market dynamics. Predicting future home price movements is challenging and uncertain. While prices may fluctuate over time, there is no guarantee that they will drop significantly or remain stable.
Is it a good time to buy a house in Illinois?
The decision of whether it is a good time to buy a house in Illinois depends on individual circumstances and preferences. Factors such as financial readiness, housing needs, and long-term plans should be considered. Market conditions, including mortgage rates and home prices, can also influence the decision-making process.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including economic conditions, Federal Reserve policies, and market forces. Lenders consider many elements when setting mortgage rates, including the prevailing interest rate environment and the level of risk associated with 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.
†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.
‡Up to $9,500 cash back: HomeStory Rewards is offered by HomeStory Real Estate Services, a licensed real estate broker. HomeStory Real Estate Services is not affiliated with SoFi Bank, N.A. (SoFi). SoFi is not responsible for the program provided by HomeStory Real Estate Services. Obtaining a mortgage from SoFi is optional and not required to participate in the program offered by HomeStory Real Estate Services. The borrower may arrange for financing with any lender. Rebate amount based on home sale price, see table for details.
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.
Qualifying for a home loan backed by the U.S. Department of Veterans Affairs can make the homebuying process a lot easier. Not only do VA loans come with great interest rates, but they have a lot of other perks as well. The only real downside to this type of mortgage is that VA loan eligibility requirements can be difficult to meet. If you qualify, however, you may see little reason to consider other loan types.
Key Points
• VA loans are a type of mortgage loan for active and retired military and reserve members and surviving spouses.
• VA loans don’t require a down payment or mortgage insurance.
• These loans are guaranteed by the U.S. government, allowing private lenders to offer lower rates.
• The U.S. Department of Veterans Affairs determines eligibility for VA loans.
• The home purchased must meet certain standards and be safe and sound to live in.
What are VA Loans?
VA loans are a type of mortgage loan for active and retired military members, including qualifying reserve members, and they can also be used by surviving spouses.
VA loans come with many features that make them appealing to homebuyers. One is that they don’t require a down payment. Another is that they don’t require mortgage insurance. Because VA loans are guaranteed by the U.S. government, private lenders are able to offer lower rates than they would with many other home loans.
VA Loan Requirements
If you’re hoping to qualify for a VA loan, the full list of VA home loan requirements will be important to you.
The U.S. Department of Veteran Affairs determines whether a service member qualifies for the VA home loan. However, Chapter 7 of the M26-1 Guaranteed Loan Processing Manual goes into extensive detail about who does and does not qualify. You can also check out the VA’s Eligibility for VA Home Loan Programs article.
Here are a few quick bullet points:
• For veterans: The length of service required depends on when you served.
• For current service members: You must have served at least 90 continuous days.
• For reserve members:
◦ 6 years in the Selected Reserve, or
◦ At least 90 days of active duty service
Also, in addition to meeting VA loan eligibility requirements as an applicant, the home you purchase must also meet certain standards. There are a lot of specifications a home must meet or exceed, but in short, it needs to be safe and sound to live in.
You can read more about the qualifications a home must meet in Chapter 12
of the VA Loan Property Requirements.
VA Loan Limits
Borrowers eligible to receive a VA home loan no longer have any home loan limits if they have full entitlement. (Full entitlement means that the VA will pay lenders up to 25% of the loan amount should you default on the loan.) There used to be limits on how much of the loan the VA would guarantee over $144,000, but that changed with the Blue Water Navy Vietnam Act of 2019. Now, VA loans can even be a jumbo loan if you need them to be.
However, one thing to remember is that, even though the VA doesn’t place limits on how much qualified buyers can borrow with a VA home loan, your personal credit score, income, and debt to income ratio determine how much a private lender is willing to loan to you.
The first step in getting a VA loan is to seek a certificate of eligibility (COE) from the VA, indicating that you have met the VA home loan requirements noted above. Once you have a COE, provide it to your lender during the application process.
Keep in mind that you still need to have a strong credit score, income, and a low debt-to-income ratio.
Currently, the VA doesn’t have a credit score requirement, but the lender you choose to work with may have their own eligibility requirements you’ll have to meet.
Types of VA Loans
The Department of Veterans Affairs offers two types of purchase VA loans: the VA-backed purchase loan and the Native American Direct Loan Program. Let’s break down the difference between them:
How a VA Loan Works
With a VA-backed home loan, the government guarantees the loan when the lender uses the VA’s qualification rules and terms. That makes lenders more likely to offer the loan since they’re guaranteed for at least a portion of the principal. Once you qualify, a VA home loan works much the same way as other home loans. You go through the mortgage preapproval process, make an offer, finalize the mortgage, and close on a house. Then you make monthly payments until the home is paid off.
How a VA Direct Home Loan Works
Called the Native American Direct Loan Program, this loan is designed to promote homeownership on federal trust land (usually reservations). In this case, you get a mortgage directly through the Department of Veteran Affairs vs. from a private lender. If you’re wondering how do you qualify for a VA loan of this type, it probably won’t surprise you to hear that this program is reserved for Native American veterans or a Native American person whose spouse is a veteran.
VA Loan Terms
You can get a VA loan with the same loan terms as you would any other mortgage, which allows you to choose from a 15-, 20-, or 30-year term. Just be mindful that with longer loan terms you’ll have lower monthly payments but will pay more in interest over the life of the loan. For shorter loan terms, the opposite is true — less in interest but higher monthly payments.
How Is a VA Loan Calculated?
Like any other mortgage, your monthly principal and interest payment is calculated based on the home purchase price, down payment, and interest rate. You may also roll your funding fee into the loan amount, which will make your payments slightly higher.
In addition to your principal and interest, your monthly payment will also include your homeowners insurance premiums, property taxes (unless you’re exempt), and any homeowners association fees.
How Much Can You Borrow With a VA Loan?
VA loans don’t have limits on the amount you can borrow. Because the U.S. government secures a large percentage of the loan, lenders consider VA loans less of a risk than others. As long as you can qualify for the loan and make the monthly payments, there’s no limit to the amount of house you can buy with a VA loan.
VA loan requirements mandate that applicants first meet service requirements. If you think you qualify, your next step is to obtain a certificate of eligibility.
Once you have your COE, you’ll need to find a VA-approved lender. The U.S. government secures VA loans, but it doesn’t disburse them (with the exception of the Native American Direct loans). So once you find a lender and are approved for a mortgage, it’s business as usual.
However, the home will need to go through a VA appraisal, and you have to pay the VA funding fee at closing.
Pros and Cons of an VA Loan
There are several VA loan benefits
to consider, but there are some drawbacks as well. Here are some things to keep in mind:
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Pros:
• No down payment required
• No mortgage insurance
• Low interest rate
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Cons:
• One-time funding fee (the amount varies; consult the chart below)
• Home must meet certain requirements
• Must meet eligibility requirements
• Longer underwriting process
Additional Benefits for Disabled Veterans
Veterans with service-related disabilities may qualify for a Specially Adapted Housing grant that allows you to buy, build, or change your home to help you live more independently. You may also qualify to have the VA funding fee waived.
In some locales, you may qualify for a property tax exemption as a disabled veteran. This varies in each state and county, so it’s worth checking during your home search.
Who Should Get a VA Loan
VA loan eligibility requirements can be difficult to meet, but if you qualify for one, you should definitely put it on your short list. If you’re serving, or previously served in one of the United States’ military branches, you may save the most money by using a VA loan.
How to Use a VA Loan
Once you’re approved for a VA loan, you use it the same as you would any mortgage. You’ll pay closing costs, the one-time VA funding fee, and your down payment (if you choose). From there, simply make your monthly payments to your lender until the loan matures, you sell, or you choose to refinance.
VA Loan Examples
If you buy a $300,000 house, and you make a down payment of 5%, your down payment amount would be $15,000. Your one-time funding fee would be $6,128 (based on the rates listed below).
If you made a zero down payment on that same $300,000 house, the funding fee would be $6,450.
Lastly, if you made a 10% down payment, your down payment would be $30,000, and your funding fee would be $3,375.
To determine how much a VA loan will cost you, use a VA loan calculator.
How Much Does It Cost to Get a VA Loan?
Apart from closing costs and appraisal fees, the cost of a VA loan largely depends on the size of your down payment, if you make one. This determines the size of the VA funding fee, which helps the U.S. government secure VA loans.
Here’s the fee structure:
Down payment amount
Funding fee (based on loan amount)
First time VA loan
Less than 5%
2.15%
5% or more
1.50%
10% or more
1.25%
After first time
Less than 5%
3.30%
5% or more
1.50%
10% or more
1.25%
How to Find the Best VA Loan Rates
To find the best VA loan rates, it’s always a good idea to apply to a few different lenders. If you’re buying your first home, this is one of the key lessons to learn: Not every lender is able to offer the same rates as others. It’s very possible to get a better rate if you shop around.
While there’s no way to predict the future trajectory of mortgage rates, some industry experts anticipate a drop. Freddie Mac, for instance, forecasts a gradual decline in rates into 2025.
VA Loans vs Conventional Loans vs FHA Loans
VA loans don’t require a down payment, nor do they require any type of mortgage insurance.
Conventional loans, on the other hand, typically require a 3% down payment for first-time homebuyers, while FHA loans require 3.5% down payment.
Private mortgage insurance (PMI) is required on conventional loans until 20% equity is reached. For FHA loans, a mortgage insurance premium (MIP) is required for the life of the loan unless you make a down payment of 10% or more. If you do, then it’s removed after 11 years.
The only unusual fee you have to pay with a VA loan is the VA funding fee.
Alternatives to a VA Loan
If a VA loan is appealing to you because of the zero down payment option but doesn’t suit you for other reasons, you may sidestep having to come up with a down payment by qualifying for a down payment assistance program. If you qualify as a first-time homebuyer, you may be eligible to receive aid in the form of a grant, low interest loan, or a forgivable loan.
The Takeaway
For those who can qualify for a VA loan due to military service, there are many advantages to financing your home purchase in this way. VA loans don’t require a down payment and there are no limits to the amount of the loan, as long as your financial situation can accommodate the payments. There is a one-time VA funding fee at closing, but overall, VA loans have many benefits and are a strong option for anyone who qualifies.
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FAQ
What is the advantage of using a VA loan?
There are many advantages to using a VA loan, but the big three are: no down payment, lower interest rate, and no private mortgage insurance.
What are the basics of a VA loan?
Here are the basics of a VA loan: They’re designed for qualified veterans, active military personnel, and spouses. No down payment is required, and there is no limit to the amount you can borrow as long you have full entitlement.
Who pays closing costs on a VA loan?
Typically, borrowers pay the cost of closing on a VA loan. However, it’s possible to negotiate with sellers to pay a portion of the closing costs. Under VA rules, sellers can pay up to 4% of the total home loan in concessions.
How much proof of income do I need for a VA loan?
To show proof of income, lenders typically require bank statements. This is true regardless of the type of mortgage you’re applying for. It’s recommended to have two years in a current job and employment gaps addressed in writing.
Do you need 2 years work history for a VA home loan?
Some lenders require this if you are self employed, but two years of work history is not a specific requirement for VA home loan buyers. You may, however, be asked to provide a written statement about recent gaps in your job history.
How does a 0 down VA loan work?
A zero down VA loan means that if you qualify for a VA loan and meet credit score, income, and debt-to-income requirements, then you do not need to make a down payment at closing. You do, however, still need to pay closing costs — unless you negotiated for the seller to pay those costs on your behalf.
What is the VA 1% rule?
The VA 1% rule governs how much lenders can charge borrowers for the cost of originating and processing the loan: a flat fee of up to 1% of the loan amount.
What are the requirements to assume a VA loan?
To assume a VA loan, the interested party must meet the lender’s requirements to assume a mortgage of that loan amount. It is not necessary that the interested party qualify for a VA loan — meaning, they don’t have to have served in the U.S. military.
How hard is it to get a VA loan?
To get a VA loan you need to provide a certificate of eligibility (COE) to your lender. Your income, credit score, and debt-to-income ratio must also meet the private lender’s requirements.
