Current Home Equity Loan Rates in San Diego, CA Today
SAN DIEGO HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in San Diego, CA.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
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Compare home equity loan rates in San Diego.
Key Points
• Home equity loan rates are influenced by a borrower’s credit score, debt-to-income ratio, and home equity.
• In recent years, the prime rate has been as low as 3.25% in 2020, and as high as 8.50% in 2023.
• With a fixed interest rate, you can enjoy the stability of predictable monthly payments.
• Property insurance is often required and can impact loan approval and rates.
• The interest on home equity loans might be tax-deductible if you use the funds for home improvements.
• Online tools and calculators can help you estimate your potential savings and monthly payments.
Introduction to Home Equity Loan Rates
Home equity loans can be a fantastic financial resource for homeowners, providing the opportunity to borrow against the equity in your home. In this article, we’ll explore the current home equity loan interest rates in San Diego, California, and discuss the various factors that influence these rates. We’ll also cover the potential benefits and risks of home equity loans, how to qualify for the best rates, and alternative financing options. Whether you’re looking to finance home improvements, consolidate debt, or cover other significant expenses, we’re here to guide you through the process and empower you to make a well-informed decision.
First up, what is a home equity loan?
How Home Equity Loans Work?
A home equity loan is a second mortgage that uses your home as collateral and provides you with a lump sum of money for a variety of uses. The loan is disbursed in one lump sum and repaid in equal monthly installments over a fixed term, typically five to 30 years. Because the loan is secured by your home, interest rates are usually lower than with unsecured loans. The interest rate is usually fixed, so you know exactly what your monthly payment will be.
To qualify for a home equity loan, most lenders require you to have at least 20% equity in your home. For example, if you have a home valued at $1 million and a mortgage balance of $750,000, you have $250,000 of equity, or 25%. Many lenders will allow you to borrow up to 85% of your available equity.
If you’re wondering how to get equity out of your home, a home equity loan is a strong contender.
Recommended: Cash-Out Refinance vs. Home Equity Line of Credit
Where Do Home Equity Loan Interest Rates Originate?
Interest rates for all kinds of home loans are influenced by a variety of economic and personal factors. Federal Reserve policy, particularly the federal funds rate, has a significant impact on lending rates. Lenders base home equity interest rates on the prime rate, which is closely tied to Fed policy. But that’s not the whole story.
A borrower’s credit score and debt-to-income ratio are also important factors in the interest rates they’re offered. Your loan amount and repayment term can also impact rates; larger loans and longer terms often mean higher rates due to the increased risk for lenders.
Understanding these factors can help you predict rate changes and make informed decisions about the best time to take out a home equity loan.
How Interest Rates Impact Home Equity Loan Affordability
Interest rates play a pivotal role in the affordability of a home equity loan over time. Even a seemingly minor difference in interest rate can lead to significant sum in total interest.
For instance, a $100,000 loan with a 15-year repayment period at 8.50% interest would mean a monthly payment of $985 and total interest of $77,253. Now, if that rate were 9.50%, the monthly payment would rise to $1,044 — not a big deal, right? But the total interest paid would climb to $87,960. That’s an additional $10,700 over the life of the loan. By being mindful of the total cost of different types of home equity loans, you can make a more informed and cost-effective choice.
Home Equity Loan Rate Trends
Predicting the movement of home equity loan rates can be a bit like forecasting the weather. However, we can look at the prime rate to get a sense of what might happen. The prime rate, which many loan products are tied to, was as low as 3.25% in 2020 before steadily climbing to 8.50% in 2023. While it’s true that timing your application to coincide with favorable economic conditions can pay off in a big way, most people can’t wait that long. Instead, your best bet is to shop around and compare offers from multiple lenders to ensure you get the best rate possible.
Source: TradingView.com
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Fluctuations like these strongly impact San Diego’s home equity loan rates, so it’s a good idea to stay on top of economic trends. Even if you can’t predict the future perfectly, you may be able to time your loan strategically if you have a sense of the market.
How to Qualify for the Lowest Rates
As we mentioned earlier, a borrower’s financial profile influences the interest rates they’re offered by lenders. To secure the most favorable home equity loan rates, you’ll want to present yourself as a low-risk borrower. That means shining up your credit score, keeping your debt-to-income ratio in check, and ensuring a healthy amount of equity in your home. Focus on these factors, and you’ll be well on your way to getting the best available deal.
Maintain Sufficient Home Equity
To be eligible for a home equity loan, you need to have at least 20% equity in your home. Here’s how you calculate that: Subtract your mortgage balance from your home’s current value. For example, if your mortgage balance is $750,000 and your home is worth $1 million, you have $250,000 in home equity, or 25%. A home equity loan calculator can help you estimate your equity level.
Build a Strong Credit Score
Most home equity lenders are on the lookout for a 700 or higher, but some are willing to work with 680+. A sparkling credit score speaks volumes about your financial acumen and can open doors to friendlier loan terms and lower interest rates. Keep your eye on the prize by making bill payments on time, chipping away at credit card balances, and steering clear of new debt. And here’s a tip: Give your credit report a once-over for any errors and dispute them pronto. Some corrections could result in a slightly higher score.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is an important number when considering a home equity loan. Most lenders require a DTI ratio that’s under 50%, with preferred treatment given to borrowers with a DTI below 36%. To calculate this, you divide your total monthly debt payments (student loans, auto loan, etc) by your gross monthly income. The lower your DTI, the better your chances of securing a loan with competitive rates. To boost your DTI, think about paying down existing debts or finding ways to increase your income.
Obtain Adequate Property Insurance
Property insurance is a must-have for home equity loans, especially in areas susceptible to natural calamities. Lenders need the assurance that the property underpinning the loan is safeguarded. In San Diego, with the looming threats of wildfires, landslides, and earthquakes, having the right insurance can make all the difference in your loan’s green light. The right coverage not only secures better rates but also shields your investment.
Tools & Calculators
Using online calculators can help you compare home equity loan offers and their total costs. That can save you time and money, ensuring you choose the best home equity loan deal for your needs.
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
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.
Closing Costs and Fees
Closing costs for home equity loans typically fall between 2% and 5% of the loan amount. These fees cover a range of services, from appraisals to credit reports and document preparation. For example, appraisals can cost anywhere from $300 to $500, while origination fees usually amount to 0.5% to 1% of the loan. Title insurance and search fees can add another 0.5% to 1% of the loan balance. Credit reports, which are essential for lenders, can cost $50 to $100, and document/attorney fees can range from $500 to $2,000. While no-closing-cost loans are available, they often come with higher rates.
Tax Deductibility of Home Equity Loan Interest
The interest on home equity loans may be tax-deductible if you use the funds to improve your home. Married couples filing jointly can deduct interest on up to $750,000 of qualified home equity loans, and single filers can deduct interest on up to $375,000.
This tax benefit can make home equity loans more attractive, potentially offsetting some of the costs associated with higher home equity loan rates. But remember, you can only take advantage of this if you itemize deductions on your tax return. Consult a tax advisor to see how this might apply to your specific financial situation.
Alternatives to Home Equity Loans
While home equity loans are a great choice, there are other options to consider. A home equity line of credit (HELOC) and a cash-out refinance, a type of mortgage refinance, are two popular alternatives. Each has its own benefits and eligibility criteria, and the right choice for you depends on your financial goals and situation. Here’s a bit more information to help you decide.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC is a bit like a credit card. It allows you to borrow up to a certain limit based on your home equity. Unlike a home equity loan, which gives you a lump sum all at once, you’ll only pay interest on the amount you’ve borrowed. HELOC rates are variable, which means they can increase over time.
During the draw period, which often lasts 10 years, you can make interest-only payments. (Use a HELOC interest-only calculator to estimate your monthly bills.) After that, the repayment period lasts 10-20 years; that’s when you’ll start repaying both the principal and interest. (A HELOC repayment calculator can help you determine how much you’ll owe.)
Cash-Out Refinance
A cash-out refinance is a strategic move that could replace your existing mortgage with a larger one, giving you up to 80% of your home’s value in cash. You can choose between fixed or variable rates, with the latter potentially unlocking more equity. Typically, a 620+ credit score and a 43% or lower DTI are what you need to qualify. The beauty of a cash-out refinance is that it consolidates your debts into a single monthly payment, streamlining your financial landscape.
The chart below layouts out the three main ways to borrow against your home equity in an at-a-glance format:
The chart below layouts out the three main ways to borrow against your home equity in an at-a-glance format:
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| Borrowing Limit | Up to 85% of borrower’s equity | Up to 90% of borrower’s equity | 80% of borrower’s equity for most loans |
| Interest Rate | Fixed | Generally variable | May be fixed or variable |
| Type of Credit | Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments. | Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest (a HELOC interest-only calculator is useful then). Then there is a repayment period (10-20 years) to repay the principal plus interest. | Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms. |
| Repayment Term | Generally 5-30 years | A draw period of 5-10 years, followed by a repayment period of 10-20 years | Generally 15-30 years |
| Fees | Closing costs (typically 2-5% of the loan amount) | Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees) | Closing costs (typically 2-5% of the loan amount) |
The Takeaway
When you’re considering a home equity loan in San Diego, remember to bolster your credit score, keep your debt-to-income ratio in check, and ensure your property is well-insured. These elements can influence the rates you’re offered, ensuring you get the best interest rate possible. Use the tools at your disposal to estimate payments and compare lenders. Keep an eye out for closing costs and fees, and don’t forget to consider the tax implications of the interest you’ll be paying. And, of course, look into alternatives like HELOCs and cash-out refinances to find the best fit for your financial needs. Armed with this knowledge, you’ll be well-equipped to make savvy decisions and secure the most favorable terms for your home equity loan.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
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FAQ
What can you do with a home equity loan?
A home equity loan is a good option for large purchases, home renovations, and consolidating high-interest debt. The flexibility of these loans makes them a popular choice for homeowners. However, it’s important to use the funds responsibly and consider the long-term financial impact, since your home is at risk should you fail to make the payments.
What would the monthly payments be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan is determined by the interest rate and the loan term. Let’s break it down: At a 7.00% interest rate over a 15-year term, your monthly payment would be about $449. If the interest rate were 8.00%, you’d be looking at approximately $478 per month. Keep in mind, these payment amounts don’t include closing costs, which can run 2% to 5% of the loan amount and are typically due upfront.
What would you pay monthly on a $100,000 HELOC?
A $100,000 home equity line of credit (HELOC) typically has a variable interest rate, along with a 10-year draw period and a 20-year repayment period. During the draw period, you often repay only the interest, which would run you $667 per month at 8.00%. After that, during the repayment period, you’ll pay back both principal and interest. At 9.00%, the monthly payment would be around $1,650. Due to the fluctuating interest rate, it’s impossible to predict what your exact payments will be.
What could prevent you from securing a home equity loan?
There are a few things that could keep you from getting a home equity loan. Not having enough equity in your home, a low credit score, and a high debt-to-income (DTI) ratio are the most common. Most lenders require at least 20% equity in your home. To get the best rates, you’ll typically need a credit score of 700 or higher. And a DTI ratio over 50% can make it hard to qualify. You might also be disqualified if you don’t have adequate property insurance, especially if you live in an area prone to natural disasters.
What are the perks of a home equity loan?
Home equity loans are a smart choice for several reasons. They come with fixed interest rates and predictable monthly payments, which can help you manage your finances. The interest rates are generally lower than on unsecured loans, making it a cost-effective solution for big expenses or consolidating debt. And here’s a bonus: The interest you pay on a home equity loan could be tax-deductible if it’s used for home improvements. Be sure to shop around for the best rates and terms, as they can vary widely from lender to lender.
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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.
SOHL-Q225-273
More home equity resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare
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Decoding Markets: June Inflation
Tariff Bite Incoming
The stakes are high. Tariffs are the highest they’ve been in 100 years, President Trump is clamoring for rate cuts, and Federal Reserve officials are in wait-and-see mode until they get more clarity. Fed officials have said that they expect tariff impacts to become increasingly apparent as summer moves along, and investors will be scrutinizing every data point anxiously.
Which brings us to this week’s major inflation data. The Consumer Price Index (CPI) increased by a seasonally adjusted 0.3% month-over-month, a step up from the more benign 0.1% rise recorded in May. This monthly acceleration pushed the year-over-year inflation rate to 2.7%, up from the prior month’s 2.4%.
While core CPI, which excludes the volatile food and energy components, came in below consensus estimates at 0.2% month-over-month, things were less rosy under the hood.
For example, the core goods component rose 0.2% in June. That might not sound like a big deal, but it’s noteworthy because it occurred despite new and used cars falling 0.3% and 0.7%, respectively. Those items represent 35% of the entire core goods basket, which suggests that inflation in core goods minus cars was hot.
Core Goods CPI Month-over-Month
Spoiler alert: That’s exactly what it was, as apparel, recreation, and household furnishings inflation all accelerated meaningfully. Overall, core goods (excluding cars) inflation was nearly 0.6% month-over-month, the highest since November 2021. And it’s not like the distribution of these price increases were random — they align pretty closely with recent tariffs. For the last few months, the tariff bark had been louder than its bite, but that might be changing now.
Looking Upstream for Clues
Consumer inflation isn’t the only data we got, however, as the Producer Price Index (PPI) dropped a day after CPI. In simple terms, the PPI measures the prices companies receive for their goods and services at the wholesale level, while the CPI measures the prices consumers ultimately pay at the retail level. Importantly, PPI also tends to reflect the input costs businesses face further up the supply chain.
Headline PPI, often called the Final Demand figure, was flat month-over-month versus expectations for a 0.2% increase. On its face that is a downside surprise, but the prior month was actually revised up by 0.2 percentage points, so net-net it’s a bit of a wash.
An investor’s first instinct might be to look at PPI Final Demand being lower than CPI and assume that this would help corporate profit margins (and possibly stocks as a result), but the historical relationship isn’t straightforward.
The back story: The Final Demand figure wasn’t always what was interpreted as the headline PPI figure. In fact, we only have data for it going back to 2009. Up until recently, the headline figure was the PPI Finished Goods series (which actually dates back to the 19th century!). The reasons for the switch are convoluted, but the idea is Final Demand more thoroughly measures all aspects of wholesale inflation.
A larger sample size is advantageous when analyzing relationships, however, so let’s look at the PPI Finished Goods series when looking at CPI and corporate profit margins. In June 2025, the PPI measure was up 0.4% month-over-month and 1.9% year-over-year. While it l might seem that a lower PPI should be good for margins, history actually tells us the exact opposite.
PPI-CPI Tracks Forward Earnings Growth
A possible explanation is that periods of higher wholesale inflation reflect strong corporate pricing power that will be passed through to consumers, boosting the bottom line. However, this time may be different, given that the nature of the cost shock isn’t just shifting supply and demand but the introduction of a new tax. So, if PPI moves higher relative to CPI in coming months, that might not suggest profit expansion like it otherwise would have.
Testing the Rotation
After a first half of 2025 where international equities dramatically outperformed their U.S. counterparts, July has ushered in a more complex and volatile environment. That’s testing the durability of the nascent idea that international markets may outperform after a decade plus of U.S. dominance.
The S&P 500 is +0.6% month-to-date, mostly due to mega-cap tech stocks — the Magnificent Seven is +1.8%, while the equal-weight S&P 500 is flat. Meanwhile, the powerful outperformance of international stocks that defined the first half of the year has also stalled in July. Through July 16, the MSCI ACWI ex-US Index was down 0.3% after returning 18.1% in H1, a notable reversal of the H1 trend.
2025 Total Returns
This pause has been driven by a confluence of factors, including a potential short-term bounce in the U.S. dollar or some profit taking after the strong start to the year.
Of course, fundamental differences between the U.S. and international markets remain. The big one is the valuation disparity between domestic and international stocks, as the S&P 500 trades at a forward P/E ratio of 22.1x while the MSCI ACWI ex-US trades at a 14.4x P/E. For U.S. investors, investing in international stocks also introduces a currency component. That boosted international stock returns by 10-15 percentage points in H1, as the dollar had its worst first half of a year since 1973, but could turn into a drag if the dollar rebounds.
The choppy start to the second half serves as a crucial reminder that major market shifts are rarely linear. For investors, this reinforces the importance of a truly diversified portfolio, not just geographically, but also in terms of style and sector. You never really know how things are going to go, but you can be prepared.
Want more insights from SoFi’s Investment Strategy team? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.
SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Mario Ismailanji is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.
Read moreCurrent Home Equity Loan Rates in Austin, TX Today
AUSTIN HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Austin, TX.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Austin.
Key Points
• Your credit score, debt-to-income ratio, and market conditions all play a part in the interest rate you’re offered.
• Fixed interest rates result in predictable monthly payments, while adjustable rates tend to start a bit lower.
• To be eligible for a home equity loan, you’ll need to maintain at least 20% equity in your home.
• The interest on home equity loans may be tax-deductible if you use it for home improvements.
• Alternatives to home equity loans include home equity lines of credit (HELOC) and cash-out mortgage refinances.
Introduction to Home Equity Loan Rates
Home equity loans are a popular way to access cash for a variety of big expenses. Getting the best available home equity loan rates in Austin, Texas, starts with understanding how rates are influenced by economic and personal factors. We’ll also discuss how a home equity loan works — along with alternatives like the home equity line of credit (HELOC) and the cash-out mortgage refinance.
Whichever financing tool you choose, your prep work will be similar, and we’ll explain the steps to present yourself as a stellar candidate. The payoff could be thousands of dollars saved on interest and fees.
How Do Home Equity Loans Work?
What is a home equity loan? In short, it’s a second mortgage that uses your home as collateral. The loan is disbursed in one lump sum and repaid in equal monthly installments over five to 30 years. Because the loan is secured by your home equity, it typically offers lower interest rates than unsecured personal loans. Most home equity loans have fixed interest rates, which can provide peace of mind if you like predictable payments. To qualify, you’ll generally need to have at least 20% equity in your home.
How Are Home Equity Loan Interest Rates Determined?
The interest rates on all kinds of home loans are influenced by a multitude of factors, from the economy to your own financial standing. The Federal Reserve’s policies, particularly the federal funds rate, have a significant impact on lending. Lenders typically peg their rates to the prime rate, which in turn is influenced by the Fed. Keeping an eye on the prime rate can give you a good view of where home equity loan rates are headed.
Your credit score and debt-to-income ratio also factor in, with higher scores and lower ratios often translating to better rates. Loan size and repayment term come into play, with larger loans and longer terms carrying increased risk and, consequently, higher rates.
How Interest Rates Impact Affordability
Your interest rate helps determine the affordability of different types of home equity loans. Even a seemingly small difference in interest rate can add up to significant savings or costs over the life of your loan. For example, a $100,000 home equity loan with a 15-year term would have a monthly payment of $985 at 8.50% interest, and $1,044 at 9.50% interest.
But the real story is in the total interest paid: The 8.50% rate adds up to $77,253 in interest over the life of the loan. Compare that to $87,960 with the 9.50% rate. That means securing the lower rate would save you $10,700 — well worth the time and effort you spend shopping around.
The chart below gives you a broader view of how small changes in interest rate alter your monthly payment and total interest for a $100K loan repaid over 15 years.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 9.00% | $1,014 | $82,568 |
| 8.875% | $1,007 | $81,232 |
| 8.75% | $999 | $79,901 |
| 8.625% | $992 | $78,574 |
| 8.50% | $985 | $77,253 |
| 8.375% | $977 | $75,937 |
| 8.25% | $970 | $74,625 |
| 8.125% | $963 | $73,319 |
| 8.00% | $956 | $72,017 |
Home Equity Loan Rate Trends
The trends in home equity loan rates can be a bit like the weather—unpredictable. Interest rates on home equity loans are influenced by a number of factors, including the prime rate, which is closely related to the federal funds rate set by the Federal Reserve. The prime rate has fluctuated significantly in recent years, ranging from 3.25% in 2020 to 8.50% in 2023. These changes can have a direct impact on the rates offered to you.
While it’s impossible to predict future movements with certainty, staying informed about economic conditions and what the prime rate is up to can help you time your application for the best possible rate. Comparing rates from multiple lenders and considering the broader market context can also provide valuable insights.
Source: TradingView.com
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
How to Qualify for the Lowest Rates
Most of us can’t wait around long for interest rates to drop. All we can do is set ourselves up for success. Lenders will scrutinize your credit score, debt-to-income (DTI) ratio, and the equity in your home. You can bolster your chances of qualifying for a lower rate by enhancing your credit score, reducing your debt, and ensuring your home’s value is accurately appraised.
Maintain Sufficient Home Equity
To be eligible for a home equity loan, you need to maintain at least 20% equity in your home. Calculating your equity is straightforward: Just subtract your mortgage balance from your current home value. For instance, if you owe $400,000 on your mortgage and your home is valued at $550,000, your equity is $150,000, or 27%. Lenders typically allow you to borrow up to 85% of your equity, which means in this example, you could potentially access $127,500.
Keeping a healthy amount of equity in your home is not only a smart financial move, but it also ensures you can secure favorable loan rates and manage the loan effectively, even in the face of financial challenges. A home equity loan calculator can help you calculate your equity level.
Build a Strong Credit Score
To get the most competitive home equity loan rates, set your sights on a credit score of 700 or higher. A robust credit score is a testament to your financial acumen and can lead to more favorable loan terms. Lenders scrutinize your payment track record, credit utilization, and the length of your credit history. By paying your bills on time and keeping credit card balances in check, you can give your score a boost. Steer clear of opening new accounts or closing old ones before applying, as this can dent your score.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a big deal when it comes to qualifying for a home equity loan and getting lower rates. Lenders typically look for a DTI ratio below 50%, and ideally below 36%. To calculate your DTI, divide your total monthly debt payments (student loans, auto loan, mortgage payment) by your gross monthly income. Let’s say your student loan payment is $300 a month, your auto loan is $400, your mortgage is $1,600, and your monthly income before taxes is $7,000. Your DTI ratio is 33%. ($300 + $400 + $1,600 = $2,300 / $7,000 = 33%)
A lower DTI can help you qualify for a loan and show lenders that you have a manageable debt load, which can reduce the risk of default. To improve your DTI, consider paying down existing debts, increasing your income, or both. Keeping your DTI in check can help you qualify for better loan terms and lower interest rates, which can make your home equity loan more affordable.
Obtain Adequate Property Insurance
Property insurance is a must-have for home equity loans, especially in flood-prone areas. This insurance is a safety net for both you and the lender. It’s a smart move to review your current policy and consider beefing it up if needed. Getting the right coverage not only meets your lender’s requirements but also safeguards your investment, making the road to your home equity loan smoother and more secure.
Tools & Calculators
Using these resources can be a game-changer. They can help you get a handle on the numbers, compare rates, and find the loan that fits your financial situation like a glove.
Run the numbers on your home equity loan.
-
Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment
CalculatorPunch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
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.
Closing Costs and Fees
Closing costs for home equity loans generally range from 2% to 5% of the loan amount. Here’s a quick breakdown: There’s the appraisal, which can set you back $300 to $500, and the credit report, which typically costs $50 to $100. Title insurance (0.5% to 1% of the loan) and the title search ($100 to $250) make sure everything’s shipshape with your property title. Origination fees (0.5% to 1% or a flat fee) cover the lender’s costs for getting you set up. And don’t forget about the document preparation/attorney fees, which can range from $500 to $2,000.
Tax Deductibility of Home Equity Loan Interest
The interest on home equity loans may be tax-deductible if the funds are used to improve your home. If you’re married and filing jointly, you can deduct the interest on up to $750,000 of qualified home equity loans. If you’re single, the limit is $375,000. To claim the deduction, you’ll need to itemize your tax return. A tax advisor can help you understand how this deduction applies to your specific financial situation and how you can maximize your potential tax savings.
Alternatives to Home Equity Loans
Home equity loans are just one of the many financial tools at your disposal. You might also consider a home equity line of credit (HELOC) or a cash-out mortgage refinance. Both options allow you to tap into the equity in your home, but they work a little differently. Both options can be helpful for big expenses or debt consolidation, but it’s important to compare the terms and fees to find the best fit for your financial goals.
First, let’s get into what is a home equity line of credit..
Home Equity Line of Credit (HELOC)
A HELOC is akin to a credit card, granting you the flexibility to borrow up to a set limit and pay interest solely on what you use. While the interest rates for HELOCs are variable, they can be a cost-effective solution. Typically, a 680 credit score (700 is even better) and a debt-to-income ratio under 50% (ideally under 36%) are what lenders look for. HELOCs are particularly handy if you’re uncertain about the total amount you need to borrow or anticipate expenses over time.
During the initial draw period, which often lasts 10 years, you typically make interest-only payments. (Use a HELOC interest-only calculator to estimate your monthly bills.) After that, the repayment period lasts 10-20 years; that’s when you’ll start repaying both the principal and interest. (A HELOC repayment calculator can help you determine how much you’ll owe.)
If you’re debating a HELOC vs. a home equity loan, this chart shows you their main differences at a glance.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow plus interest; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need | Lump sum |
Cash-Out Refinance
This option replaces your current mortgage with a larger one, giving you a lump sum to work with. The amount you can borrow is tied to your home’s equity, with most lenders allowing borrowing up to 80% of your property’s value. To qualify, you need a credit score of 620 or above and a debt-to-income ratio under 43%. You can choose between fixed or variable interest rates, with the latter potentially offering more financial flexibility.
If you’re on the fence about a cash-out refinance vs. a hoem equity line of credit, consider that a cash-out refinance consolidates your debts into a single monthly payment, streamlining your financial landscape.
The Takeaway
When you’re ready to take the next step, keep in mind that a strong credit score, a manageable debt-to-income ratio, and the right property insurance can all play a part in securing favorable terms for your home equity loan. Leverage the tools and calculators at your disposal to estimate monthly payments and compare lenders. And don’t forget to account for closing costs and fees, which typically range from 2% to 5% of the loan amount. We hope this information makes your decision a bit easier — and maybe saves you some serious money.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What can a home equity loan help you with?
Home equity loans are a great way to finance big expenses or consolidate high-interest debt. They can also be a smart option for home improvements since they can be tax-deductible. Just be sure to use the money wisely and make sure you can afford the monthly payments.
What’s the monthly payment on a $50,000 home equity loan?
The monthly payment for a $50,000 home equity loan depends on the loan term and interest rate. For instance, with a 7.00% rate across a 20-year term, your monthly payment would be around $388. Shorten the term to 10 years, and your payment rises to $581. The longer term eases your monthly budget, but remember you’ll pay more in interest over a longer repayment term. Before you decide, compare rates and terms from different lenders to find the best fit for your financial situation.
What’s the monthly payment on a $100,000 HELOC?
The payment on a $100,000 HELOC depends on the interest rate and the payment period you’re in. There are two phases to a HELOC: the draw period and the repayment period. During the draw period, which is typically 10 years, you usually can make interest-only payments on the amount you’re using. If you draw $50,000 and your rate is 8.00%, your interest-only payment would be $333 per month. Once the draw period ends, the repayment period begins, and you’ll start paying both principal and interest. If you draw the full $100,000 at the same 8.00% rate over a 20-year repayment period, the monthly payment would increase to around $1,503. Keep in mind that HELOCs have variable interest rates, and your actual payment could be higher or lower depending on the rate and how much you borrow.
What might prevent you from securing a home equity loan?
There are a few things that might prevent you from qualifying for a home equity loan, such as not having enough equity in your home, a low credit score, and a high debt-to-income (DTI) ratio. Lenders usually require at least 20% equity in your home and a credit score of 680 or higher, although some prefer a score over 700. A DTI ratio of 43% or less is also typically required. Additionally, not having adequate property insurance, particularly in flood-prone areas, can also disqualify you. To improve your chances, consider increasing your credit score, paying down your current debts, and making sure your property is well-insured.
What are the benefits of a home equity loan?
Home equity loans are a smart choice for many reasons. They come with fixed interest rates and predictable monthly payments, which makes budgeting easier. If you’re thinking about a major expense like home renovations, college tuition, or consolidating debt, a home equity loan could be just what you need. The best part? The interest rates are usually lower than unsecured loans because your home is the collateral. And there’s a potential tax perk: The interest you pay on home equity loans used for home improvements might be tax-deductible (up to certain limits). Just remember to consider the risks, like the potential for foreclosure, before you take the leap.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
SOHL-Q324-283
More home equity resources.
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What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Mortgage Preapproval Calculator
Mortgage Preapproval Calculator
By Timothy Moore | Updated July 1, 2025
A mortgage preapproval calculator is a helpful tool for understanding how much money a lender is likely to allow you to borrow when you’re buying a house. This can give you a good frame of reference in the early stages of house shopping, when you’re not quite ready to submit to a hard credit check with a lender and get a preapproval letter.
Use our mortgage preapproval calculator to get a better idea of how much of a mortgage you can get based on your income and debts.
Key Points
• A mortgage preapproval calculator estimates borrowing power for a home purchase.
• Using a preapproval calculator doesn’t require a credit check. It’s fast and easy to get results.
• Preapproval amounts depend on the borrower’s income and debt levels.
• Tips for getting a formal preapproval letter from a lender include checking your credit and comparing different lenders’ rates.
• A preapproval calculator helps borrowers understand home affordability and monthly payment amounts.
*Actual preapproval amount may vary from the estimated preapproval amount noted in the calculator.
Calculator Definitions
Before you dive into using our mortgage preapproval calculator, it’s important to understand the terms involved:
• Mortgage preapproval: The mortgage preapproval process is a formal step in home-buying wherein a lender reviews your credit and financial history to determine the maximum amount it is willing to loan you. If you’re preapproved, you’ll receive a mortgage preapproval letter with the loan amount and interest rate. It’s not a guarantee, but it’s a solid sign that you can qualify for the loan.
• Annual income: Your annual income refers to the amount of money you make in a year before taxes. If you have multiple sources of income, you should add these together, including salary, hourly pay from a part-time job, income as a self-employed contractor, or government benefits. If you’re buying the house with a second person, such as your spouse, you can combine your income.
• Loan term: This refers to the length of the mortgage. Typically, a conventional mortgage lasts 30 years, but some buyers may get a 15-year mortgage. Though less common, borrowers can also get 5-, 10-, 20-, and 25-year mortgages.
• Interest rate: While you won’t know the exact interest rate you’ll be offered until you move forward with an official preapproval, you can estimate based on current rates.
• Monthly debt payments: The home loan preapproval calculator asks you to input monthly debt payments, because this is something a lender will review. Add up all your monthly obligations, including credit card payments, personal loan payments, car payments, student loan payments, and payments from any existing mortgages.
How to Use the Mortgage Preapproval Calculator
Using the mortgage preapproval calculator is easy. Here’s how:
1. Calculate and enter your annual income: Add up all your relevant sources of income (pre-tax), including your own income and that of any other applicants. Insert that number in the first field.
2. Calculate and enter your monthly debt payments: Sit down with your bank statement or budget to figure out your monthly debt obligations (how much you spend each month on your debts). Add these together and type the number in the second field.
3. Determine the term of the loan: Use the slider to indicate the ideal mortgage term length (between five and 30 years). Remember that 30 years is the standard; a shorter loan term length can result in significantly higher monthly payments — but less interest paid over the life of the loan.
4. Research current interest rates: Look at the current mortgage rates and input the rate you’re most likely to be offered based on the loan term you’re considering.
5. Look at your results: Based on the information you provide, you’ll be able to see the estimated maximum monthly mortgage payment you should consider, as well as the estimated preapproval amount.
Remember: The mortgage preapproval calculator is an estimate only, intended to help you get a sense of how much house you might be able to afford as you begin to shop. If you live somewhere with a high cost of living, your personal budget may vary accordingly. When you’re getting closer to the offer stage, you’ll want to get a real preapproval letter for a home loan.
Recommended: Finding Down Payment Assistance
What Is a Mortgage Preapproval Calculator?
A mortgage preapproval calculator is an online tool that gives you an idea of what size loan a lender is likely to approve you for when buying a house. It can also show you the highest monthly payment you can likely afford. It’s a useful tool, especially if you are buying your first home and haven’t been through the process before.
The calculator is only an estimate. Before you officially make an offer on a house, you may want to get a mortgage preapproval letter from a lender. The letter shows buyers that you’re serious about your offer and you have taken steps to secure financing.
Benefits of Using a Mortgage Preapproval Calculator
• Fast and easy: You can use a preapproval calculator from the comfort of your couch. One minute, you’re using the calculator and the next, you can be scrolling for house listings.
• No credit check: When the time comes, you’ll need to get an official preapproval, which will require a hard credit check. But if you’re not yet serious about making an offer on a house, a mortgage preapproval calculator sets a good frame of reference as you start saving for a down payment and eyeing the market — without requiring a credit check.
• No expiration: An official mortgage preapproval lasts only 30 to 90 days, depending on the lender. That means you shouldn’t get one until you’re sure you’ll be making an offer in the coming weeks or months. The estimate provided by a mortgage preapproval calculator, however, has no expiration date.
Types of Mortgage Preapproval
People throw around the term “mortgage preapproval” quite freely, but it’s actually a distinct term from “mortgage prequalification” and “fully underwritten,” which are different stages in the process. Here’s a look at mortgage prequalification vs. mortgage prequalification vs. fully underwritten:
• Mortgage prequalification: Getting prequalified with a mortgage lender is a less formal process than getting preapproved or underwritten. You provide a few details (your estimated income, debts, and credit score), and the lender will let you know how large a loan you’d likely be approved for, if you did apply. This is just an estimate, but it’s enough to help you start thinking about the home-buying process.
• Mortgage preapproval: When you’re more serious about making an offer, you’ll want a mortgage preapproval. You’ll consider different types of loans and think about the term of your mortgage. The lender will check your credit and require documentation to verify all the information you provided. Once your stats are reviewed, the lender can offer a preapproval letter with the amount of money you can likely borrow and at what interest rate.
• Fully underwritten: Once you make an offer on a house — and that offer is accepted — you can apply for the mortgage. At that point, the lender reviews your application more thoroughly (this is the underwriting process) and, assuming everything is as it should be, approves you for the mortgage, pending an appraisal.
Examples of Mortgage Preapproval
The table below shows various mortgage preapproval examples for a 30-year fixed-rate loan at 6.50%. You can see how big an impact annual income and monthly debt payments have on estimated preapproval amounts by putting your own numbers into the mortgage preapproval calculator.
| Annual Income | Monthly Debt Payments | Estimated Preapproval Amount |
|---|---|---|
| $50,000 | $0 | $187,580 |
| $50,000 | $600 | $89,653 |
| $50,000 | $1,200 | Cannot be preapproved |
| $75,000 | $0 | $276,869 |
| $75,000 | $600 | $181,943 |
| $75,000 | $1,200 | $87,016 |
| $100,000 | $0 | $369,159 |
| $100,000 | $600 | $274,233 |
| $100,000 | $1,200 | $179,306 |
| $150,000 | $0 | $553,738 |
| $150,000 | $600 | $458,812 |
| $150,000 | $1,200 | $363,885 |
| $200,000 | $0 | $738,318 |
| $200,000 | $600 | $643,391 |
| $200,000 | $1,200 | $548,465 |
Mortgage Preapproval Tips
Here are some quick tips for a successful mortgage preapproval process:
• Check your credit score and save for a down payment: Before focusing on preapproval, make sure your credit score is strong enough to qualify for a loan. (Here are the basic credit score requirements for a mortgage.) You should also figure out how much money you are willing to put down at signing and start saving, as needed.
• Use a calculator or get prequalified: Before requesting a preapproval, get a general idea of what you can expect to borrow. You can obtain an estimate from a mortgage preapproval calculator or get one by prequalifying with a lender.
• Shop around: Just because a seller accepts your offer with a preapproval letter from a specific lender doesn’t mean you have to apply for the mortgage with that lender. You’re free to seek multiple offers to find the lowest rate and fees.
Recommended: Do You Qualify as a First-Time Homebuyer
The Takeaway
Using a mortgage preapproval calculator can give you a good idea of what size loan you could be approved for. While it’s not a guarantee of approval, the estimate can be quite accurate, as long as you input all the correct information. When you’re ready to buy a house, however, you should get a true preapproval letter from a mortgage lender.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
What salary do you need for a $500,000 mortgage?
The income needed for a $500,000 mortgage is around $150,000 a year. However, if you have a fair amount of debt, you may need to make even more money to afford a $500,000 home. Remember, a lender may approve you for a $500,000 mortgage based on your income, but you need to look at the estimated monthly payments to make sure you’re comfortable spending that much each month for the next three decades.
How much mortgage can I get with $70,000 salary?
The amount of house you can afford on $70,000 a year is around $200,000, but much of that depends on the size of your down payment, the length of the loan, and your monthly debt obligations. If you make $70,000 and have no monthly debt payments, you could afford a $250,000+ house with a 6.5% interest rate. But if you pay $1,000 a month between student loans and a car loan, you should aim for a house closer to $100,000.
How much income do you need to be approved for a $400,000 mortgage?
The income needed for a $400,000 mortgage is at least $130,000 a year, but much of that depends on your debt obligations and the size of your down payment. Interest rates, property taxes, homeowners insurance costs, and loan term length can all impact salary requirements for affordability.
How much income do you need to be approved for a $400,000 mortgage?
The income needed to be approved for a $300,000 mortgage is around $90,000. This estimate assumes you don’t have other sources of significant debt. Other factors, like how much you have saved for a down payment and your credit history, will also impact how much money you should make to get a $300,000 mortgage.
Can I afford a $250k house on a $50k salary?
You probably can’t afford a $250,000 house on a $50,000 salary. Though it depends on other factors, including your monthly debts and your credit score, the typical income needed for a $250,000 mortgage is $76,000. That said, if you have no monthly debt obligations (no student loans, no car loans, etc.) and have saved up a significant down payment (like $50,000 or $100,000), you may be more likely to be approved for a $250,000 house.
What is the 28/36 rule?
The 28/36 rule is a simple tool to use to determine how much house you can afford. While everyone’s situation is unique, conventional wisdom states that total housing costs should not account for more than 28% of your monthly gross income, and your overall debts (car, house, personal loan, student loans, credit cards, etc.) should not account for more than 36% of your takehome pay.
SoFi Mortgages
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*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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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