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If you’re one of the millions of Americans working remotely, you might be tempted to buy a house out of state. Or maybe you just need a change of scenery.

Buying a house long distance can be a challenge, but it’s doable with a plan in place.

Why Buy a House in Another State?

There are multiple reasons to consider a house in a different state. Here are some.

Affordability

People may be lured by the cost of living of a state and its quality of life.

More than 350,000 people left California from April 2020 to January 2022 for Arizona, Texas, Florida, Washington, and other states. In the first half of 2022, New York City, Chicago, and Washington, D.C., saw more people exit than move in.

Job Relocation

Some companies move personnel out of state, and some employees are good with that. A recent Graebel report exploring the Great Resignation found that 70% of knowledge workers who resigned in the past two years may have stayed if they’d been offered the same role in a different region of the country.

Family Reasons

Some folks choose to buy a house out of state to be closer to parents, children, or grandchildren. And people in their 40s may have aging parents and financial concerns on their minds.

Retirement

Americans entering retirement may want to buy a home in a state where the weather and lifestyle are more appealing. When it comes to a home, some may want to downsize.

How to Purchase a Home in Another State

Buying a house from out of state may be a challenge, but people do do it.

It can be tough to buy a house if you have a house and a mortgage. Homeowners have been known to use a home equity loan or bridge loan to fund the down payment on another house.

A personal loan can fund travel and moving costs.

If you’re ready to move on, it might be a good idea to sell and maybe ask for a leaseback. If you’re in a hurry, learn how to sell a house fast.

1. Virtually Explore

It’s easy to research cities, states, and communities online. There’s a listicle for almost everything. And data is everything, some say. There’s probably a listicle about why data is everything.

Anyway, maybe you’re interested in the safest cities in the U.S.

Or the 50 most popular suburbs.

It can be helpful to explore housing market trends by city.

Areavibes, BestPlaces, and HomeSnacks provide rankings or information. Coldwell Banker introduced Move Meter, to compare locations across the country. Or you could use Google Maps or Google Earth to study an out-of-state home’s proximity to schools, medical centers, law enforcement agencies, parks, and restaurants.

2. Link Up to Social Media

Social media platforms like Facebook Groups and Nextdoor can provide a personal sense of home buying and community.

These groups are user-friendly to newcomers, and many group members are happy to answer questions about life in their city or town.

3. Ask Co-Workers, Friends, or Family

If you’re moving out of state for a job, check in with future co-workers for advice about the homes and neighborhoods. If you’re moving near friends or family members, pick their brains. Is this going to be a good spot for you?

Moving is stressful enough. If you’re one of the growing number of people interested in financially downsizing, you may want to just exhale and enjoy when you land.

4. Consider Talking to a Relocation Specialist

Yes, home relocation professionals exist. And they do everything from connecting clients with a real estate agent to finding a long-distance moving company, scouring school districts, securing a storage space, and supervising a contractor’s work if the client is buying or building a house.

Relocation companies can also suggest local service providers and transport pets and vehicles across state lines.
Relocation services are often free of charge because the specialists earn their money from third-party vendors like real estate firms and employers transferring employees.

If you’re not inclined to hire a relocation specialist, here’s some helpful reading before making a big move:

•   7 common moving expenses

•   How to move across the country

•   How to move to another state

•   The ultimate moving checklist

You can look into the safety record of carriers on the U.S. Department of Transportation website.

5. Find a Reliable Real Estate Agent

A brave few who are interested in buying a house out of state opt to go without an agent.

It’s true that you can buy a house without a Realtor® — but even a local home sale may be challenging without a buyer’s agent in your corner.

Partnering with an experienced real estate agent who is based in the area where you hope to move could be highly beneficial.

Besides familiarity with neighborhoods, schools, and vibe, a buyer’s agent can walk a future homebuyer through local zoning regulations and the permit process.

6. Consider Visiting IRL

It’s not that rare to buy a house sight unseen. That can work out.

But someone looking to buy a house in a new state may want a real visit. You may receive short notice on a viewing date, so it could be helpful to budget for out-of-state travel as part of the buildup to buying a home in another state.

While a real estate agent can act as a proxy for homebuyers, there may be nothing like being onsite during the home inspection of a property you’ve made an offer on.

Then again, if you adore a property and must have it, you might waive some contingencies in the case of multiple offers.

7. Get Preapproved for a Mortgage

It can be easier to find a real estate agent or relocation specialist with a mortgage preapproval letter in hand.

When a lender preapproves a mortgage (a credit check and a review of financial assets is typical), it is tentatively greenlighting a specific home loan amount at a particular interest rate, which is not locked unless the lender offers a lock.

Obtaining preapproval tells home sellers that you’re qualified for a home loan up to a certain amount.

8. Handle the Closing Online?

Get ready, because closing on a house may take only 20 or 30 days.

In some cases, everyone huddles to sign closing paperwork. Other times, buyers and sellers sign separately.

But most states have approved remote online notarization, when buyers join a video call, present their government-issued IDs to a title company rep and a notary, and sign all paperwork electronically.

The Takeaway on Buying a Home in a New State

Buying a house out of state requires investigation and probably a good real estate agent. Getting preapproved for a mortgage can ease the path to a new address.

Transferred workers or people with mere wanderlust will want to see the financing options SoFi offers. With SoFi, you can look into a fixed-rate mortgage loan or a home equity loan to buy a house out of state, and a personal loan to make the move.

Get prequalified for a mortgage quickly and see your rate.

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility 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.

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

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

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A mortgage preapproval letter is usually good for 30 to 90 days, and some lenders will lock the rate for that time.

Having a letter of preapproval from a financial institution can help ensure that you’re ready to snap up a home you love.

What Is Mortgage Preapproval?

Mortgage preapproval has become an essential part of the home-buying process. Real estate agents often want to see a preapproval letter before showing houses.

And a letter shows sellers that you are serious about buying their home — even if you’re a first-time homebuyer — and that a mortgage lender is likely to give you a home loan of a specific amount quickly.

The lender will review your credit history, credit score, income, debts, and assets to determine the amount you tentatively qualify for.

Preapproval will help you focus on homes that are in your price range. Knowing how much of a mortgage you can afford is important when you can’t afford to waste time reviewing homes outside your range.

Mortgage Preapproval Process

The mortgage process starts informally for many would-be homebuyers.

Some buy into the 28% rule — spend no more than 28% of gross monthly income on a mortgage payment — and play with calculators like this home affordability calculator or the one later in this article.

Seeking mortgage preapproval means you’re getting serious. First, you’ll need to understand the different types of mortgage loans — fixed rate, adjustable rate, conventional, government insured (FHA, VA, USDA), jumbo — and what you can qualify for.

Then you’ll need to apply for a loan from one to several lenders and provide a good deal of documentation. Each lender will perform a hard credit inquiry, and you’ll receive a loan estimate within three business days.

If you’re shopping for a home loan, allowing multiple mortgage companies to check your credit within 14 or 45 days, depending on the credit scoring model being used, will minimize the hit to your credit scores.

How Long Does It Take to Get Preapproved?

It usually takes seven to 10 business days to receive a preapproval letter after submitting all the requested information.

Mortgage Preapproval Letter

Other than stating the specific amount you’re preapproved for, a mortgage preapproval letter may outline stipulations to gain the loan, such as maintaining your employment or not taking on any additional debt.

How Long Does Mortgage Preapproval Last?

Some lenders will make a commitment of 60 or 90 days. That time frame tends to work, since homebuyers typically shop for a home for eight weeks, according to the National Association of Realtors®.

Other lenders will issue preapproval for only 30 or 45 days.

Recommended: How Mortgage APR Works

Mortgage Prequalification vs. Mortgage Preapproval

Since they sound similar, it’s worth mapping out the difference between prequalification and preapproval.
Prequalification is a key first step, when borrowers tell lenders about their income, assets, and debts. Lenders use that unverified information, and usually a soft credit inquiry, to give a ballpark estimate of how much they might be willing to lend.

The response is quick: You can often get prequalified immediately or within a day or two. Just realize that prequalification does not mean that a lender is guaranteeing a loan.

The mortgage preapproval process is a deeper dive and requires documentation.

To gauge whether you qualify for a mortgage, lenders will scrutinize:

•   Income: Employees will need to provide pay stubs, W-2s, and tax returns from the past two years, as well as documentation of any additional income, such as work bonuses. Self-employed workers often need two years’ worth of records and a year-to-date profit and loss statement, although many lenders and loan programs are flexible.

•   Assets and liabilities: You’ll need to provide proof of savings, investment accounts, and any properties. Lenders view assets as proof that you can afford your down payment and closing costs and still have cash reserves.

Lenders also look at monthly debt obligations to calculate your debt-to-income ratio.

•   Credit score: Your credit score is a three-digit representation of your credit history.

Recommended: What Is Considered a Bad Credit Score?

Once your lender has reviewed the information, it may offer a preapproval letter. Importantly, receiving preapproval from a lender does not obligate you to use them.

Estimate Your Mortgage Payment

Before you seek prequalification or preapproval, you might want to get an idea of how much your monthly mortgage payment could be. Use the mortgage calculator below to quickly see the difference in mortgage payments based on down payment, interest rate, and a 15- or 30-year term.

What Should I Do If My Mortgage Preapproval Expires?

Lenders put an expiration date on preapproval letters because they need to have your most up-to-date financial information on hand. The credit, income, debt, and asset items they reviewed for your preapproval typically need to be updated after the letter expires, and your credit may be checked again.

You can minimize the effect of “hard pulls” on your credit score by avoiding seeking a renewal when you’re not actively shopping for a home.

If your finances have mostly stayed the same, your lender is likely to renew your preapproval.

Finalizing Your Mortgage

If you find a house while your mortgage preapproval is still valid, you can choose a lender and move on to finalizing your mortgage application. At this point, in many cases, the lender will check again to see if there have been any changes in your financial situation.

The mortgage underwriter will review all the information, order an appraisal of the chosen property and a title report, and consider your down payment. Then comes the verdict: approved, suspended (more documentation is needed), or denied.

Your mortgage is officially approved when you receive a final commitment letter. A closing date can be scheduled. It generally takes 48 days to close on a house, but it could happen in as little as 20 days.

Buyers may want to minimize changes, like applying for other loans or credit, when a home loan is in underwriting.

The Takeaway

How long is mortgage preapproval good for? Often 30 to 90 days. Getting prequalified is a good precursor to getting preapproved for a mortgage.

If you’re ready to start house hunting, check out the fixed-rate mortgages SoFi offers and the current deals.

Get prequalified for a SoFi Mortgage in minutes.

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility 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.

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

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

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If the kitchen is the heart of the home, what does it say when yours is falling apart? Shabby fixtures, failing appliances, or a dysfunctional layout might have you daydreaming about a full gut reno — but how much does an average kitchen remodel cost? A minor kitchen update by DIY-savvy homeowners may come in at $4,000, while a major remodel can balloon to $50,000, or even $100,000+.

Before you begin your kitchen update, it helps to consider why you’re remodeling and whether it will add value to your home. We’ll help you scope out the average cost of a kitchen remodel — including cabinetry, countertops, appliances, and labor — and where you can save money without sacrificing function or design.

Kitchen Remodel Cost Overview

Homeowners remodel for different reasons: better functionality, entertaining, to update dated fixtures, or to prep for a home sale. It’s important to consider both what you want to get out of the remodel and what your return on investment (ROI) might be before diving into hiring contractors and purchasing appliances.

Do you plan to live in your place a few more years and enjoy your new kitchen? Or will you strategically upgrade for a home sale in the near future? The answer will influence where and how you spend money.

The truth is you probably won’t recoup the total cost of a kitchen remodel in a home sale.
According to Remodeling Magazine’s Cost vs. Value Report 2022, the national average ROI for a minor remodel with mid-range materials is 71%. A major remodel with upscale materials, on the other hand, yields just a 52.5% ROI.

Clearly, the best bang for your buck will be less costly but visually impactful minor updates: replacing cabinets fronts, countertops, faucets, and lights, plus painting and perhaps new flooring. But if you want to change the layout or add all-new appliances, you’re looking at five figures. (You may be interested in this story on the difference between a renovation vs. remodel.)

Average Kitchen Remodeling Costs by Feature

The average kitchen remodel cost can vary a lot depending on a few key items: cabinetry, countertops, and appliances. We’ll review your options and typical costs for low-, middle-, and high-end updates.

Kitchen Cabinetry Cost

Cabinetry typically eats up 25% of a kitchen budget. There are three types of kitchen cabinet construction, each priced per linear foot:

•   Stock cabinets, the least expensive, run $60-$200 per linear foot, or $1,250-$2,500.

•   Semi-custom are $100-$650 per linear foot, or $1,875-$10,000.

•   Custom will set you back $500-$1,200 per linear foot, or $7,500-$18,750.

Custom cabinets are made to order, based on your kitchen’s precise measurements, and made of solid wood. Stock are ready-made and mostly constructed of engineered wood, and semi-custom are a hybrid of stock and custom.

Countertop Cost

The cost of countertops is determined by the material. Typical materials include granite, marble, quartz, stainless steel, and butcher block wood. Granite, stainless steel, and butcher block are good budget options, ranging from $850 to $4,000 depending on the size of your kitchen. Marble and quartz command $2,000-$10,000.

Appliances Cost

The number of different appliances in the typical kitchen sets this home reno apart from, say, a bathroom remodel. Appliances generally account for 20% of your overall budget. Replacing all your appliances at once — fridge, stove, oven, dishwasher — can be quite pricey.

Discount shoppers might be able to find a full suite of lower end appliances for as little as $1,500. Midrange appliances can run about $5,500 all in, and higher end models can come to $17,000. Double wall ovens, a favorite of serious cooks, can cost $1,800-$6,500 on their own. And some homeowners may decide to annex a closet for a mini laundry room.

Installation and Labor Costs

Labor is another major cost that can be hard to predict. But count on spending 30%-35% of your budget on contractors and installers. Your price will depend on where you live, how large your space is, and the features being installed. Read more about these factors below.

Where You Live Matters

Bargain hunters should be aware that some factors influencing budget are not within their control — like where in the U.S. you live. Homeowners on the West coast and in the Northeast generally pay more for materials and labor than in the South. Prices also run higher in and around major cities.

Midrange vs Upscale Models

It may shock you to learn that upscale materials and appliances can cost you twice as much as midrange models. If a major midrange kitchen remodel comes to $50,000, a high-end remodel of the same kitchen might be $100,000.

Many homeowners pick and choose a combination of inexpensive, midrange, and higher end options.

Personal Budgeting for Your Remodel

HGTV recommends spending between 6% and 10% of the value of your home to get the best ROI. A major reno for a $400,000 home, then, would cost between $24,000 and $40,000. If your kitchen budget goes considerably higher, you risk making the rest of the house look mediocre by comparison. Aim too low, and your kitchen might not live up to the quality of similar homes in your neighborhood. Either way, your new kitchen may raise a red flag with home buyers.

It can be tempting to throw all your kitchen purchases on a credit card, but keep in mind that high-interest rates can inflate your renovation costs. These days, many homeowners are turning to a flexible personal loan to fund home renovations and remodels.

With this type of loan, you receive a lump sum payment to cover your kitchen remodel cost. You can pay back the loan over a term of your choosing in equal monthly installments. The interest rate is determined by your credit history and credit score, but is typically lower than credit card interest. Our Home Improvement Cost Calculator can give you an idea of how much you’ll need to borrow.

What Costs the Most?

What costs the most depends in part on the design decisions you make. Semi-custom cabinets will take up a larger part of your budget than stock will. Higher end brands, as we noted above, can double your appliance costs compared to mid-range. And with large kitchens or complex remodels, labor and installation can make up a third of your overall budget.

How To Save Money

In a full-scale kitchen remodel, new kitchen cabinets are typically the biggest expense, accounting for 20%-40% percent of the project budget. If your cabinets are in good shape and fulfill your storage needs, refacing them can slash your bill. Refacing can mean either stripping and repainting or staining existing doors, adding stick-on veneers, or replacing the doors while preserving the cabinet shelves. Add new hardware for a more modern look.

The next biggest line item in your kitchen remodel budget might be labor for installation. When you’re starting the home remodel process, find a contractor you can trust. That means doing your research, speaking with and getting quotes from multiple contractors, and reaching out to their previous clients for referrals. When entertaining bids, remember that an experienced, in-demand contractor will likely charge more than less capable competitors, but will almost certainly be worth it.

Finally, you may be able to trim some installation costs by doing simple things yourself: picking up items instead of paying for delivery, painting walls instead of paying contractors for the labor, or replacing your backsplash. Learn more DIY tricks in our guide on how to remodel a kitchen.

For more ideas, check out this roundup of ways to fight inflation’s effect on your kitchen remodel.

Cushion Your Budget

For any home remodeling project, financial experts and DIYers both recommend padding your budget by 20%. That means assuming you’ll spend 20% more than your projected total for materials and labor. Not only does that cover all the little things that can add up, it also accommodates pricier issues that may be uncovered, like necessary electrical or plumbing updates.

Stick to Your Budget

Experts recommend that homeowners fully commit to a plan and budget before undertaking a major remodel. Too many last-minute changes won’t endear you to your contractors and can inflate your costs as one small change can lead to other unforeseen adjustments.

House Exterior Style Quiz

The Takeaway

The average kitchen remodel cost can vary widely from $4,000 to $50,000 or more, or between 6% and 10% of your home’s value. Your cost will depend on a number of factors such as kitchen size and whether you choose bargain, midrange, or high end materials and appliances. The major kitchen remodel cost drivers are cabinets, countertops, appliances, and labor. The good news is that the ROI for a smart, mid-range remodel is 71%.

Home improvement loans from SoFi have low-interest rates available for those who qualify and offer fixed monthly payments. These 100% no-fee unsecured loans might be just the recipe to getting your perfect kitchen.

Find out more about using a SoFi personal loan to update your kitchen.

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

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.

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Conventional loans — mortgages that are not insured by the federal government — are the most popular type of mortgage and offer affordability to homebuyers.

Private mortgage lenders originate and fund conventional loans, which are then often bought by Fannie Mae and Freddie Mac, publicly traded companies that are run under a congressional charter.

By buying and selling conventional conforming mortgages, Fannie and Freddie help to ensure a reliable flow of mortgage funding.

Requirements for Conventional Loans

It can be confusing to know how to qualify for a mortgage.

Just realize, for one thing, that a higher credit score is usually required for a conventional loan than an FHA loan, popular among first-time buyers.

Here are factors a lender will consider when sizing you up for a conventional loan.

Your Credit Score

You’ll usually need a FICO® credit score of at least 620 for a fixed-rate or adjustable-rate mortgage.

The FICO score range of 300 to 850 is carved into these categories:

•   Exceptional: 800 to 850

•   Very Good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Poor: 300 to 579

In general, the higher your credit score, the better the interest rates you’re offered.

Down Payment

Putting 20% down is desirable because it means you can avoid paying PMI, or private mortgage insurance, which covers the lender in case of loan default.

But many buyers don’t put 20% down. The median down payment on a home is 13%, according to a recent study by the National Association of Realtors®.

Conventional loans require as little as 3% down, and the down payment can be funded by a gift from a close relative; a spouse, fiancé or domestic partner; a buyer’s employer or church; or a nonprofit or public agency. The gift may require a gift letter for the mortgage.

Just keep in mind that the smaller the down payment, the higher your monthly payments are likely to be, and PMI may come along for the ride until you reach 20% equity.

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) helps a lender understand your ongoing monthly debt obligations relative to your gross monthly income.

To calculate back-end DTI:

1.    Add up your monthly bills (but do not include groceries, utilities, cellphone bill, car insurance, and health insurance).

2.    Divide the total by your pretax monthly income.

3.    Multiply by 100 to convert the number to a percentage.

In general, lenders like to see a DTI ratio of 36% but will accept 43%.

The Fannie Mae HomeReady® loan, for lower-income borrowers, may allow a DTI ratio of up to 50%.

In any case, the lower your DTI ratio, the more likely you are to qualify for a mortgage and possibly better terms.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is the amount of the mortgage you are applying for compared with the home value. The higher the down payment, the lower the LTV ratio.

Fannie Mae typically sets LTV limits at 97% for a fixed-rate mortgage for a principal residence (think: 3% down) and 85% for a fixed or adjustable loan for a one-unit investment property.

When LTV exceeds 80% on a conforming loan, PMI will likely apply, although some borrowers employ a piggyback loan to avoid mortgage insurance.

Conventional Conforming Loan Limits

Many loans are both conventional and conforming — meaning they meet the guidelines of secondary mortgage market powerhouses Fannie Mae and Freddie Mac, which buy such mortgages and often package them into securities for investors.

Conventional conforming loans fall below limits set by the Federal Housing Finance Agency (FHFA) every year.
Staying under a conforming loan limit often equates to a lower-cost mortgage because the loan can be acquired by Fannie and Freddie.

The conforming loan limits for 2022 in many counties in the contiguous states, Washington, D.C., and Puerto Rico rose with market prices:

•   One unit: $647,200

•   Two units: $828,700

•   Three units: $1,001,650

•   Four units: $1,244,850

In high-cost areas like Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the 2022 conforming loan limits were:

•   One unit: $970,800

•   Two units: $1,243,050

•   Three units: $1,502,475

•   Four units: $1,867,275

Nonconforming Loans

Word games, anyone? Nonconforming loans are simply mortgages that do not meet Fannie and Freddie standards for purchase. They usually take the form of jumbo loans and government-backed loans.

A homebuyer or refinancer who needs a mortgage beyond the FHFA limits can seek a jumbo mortgage loan. A jumbo loan is still a conventional loan if it’s not backed by a government agency; it’s just considered a “nonconforming” loan.

FHA, VA, and USDA mortgages — those backed by the Federal Housing Administration, Department of Veterans Affairs, and the U.S. Department of Agriculture — are also nonconforming loans.

Nonconforming mortgage rates may be higher because the loans carry greater risk for lenders, but at times the rates might skew lower than conventional conforming rates.

The Takeaway

Conventional loan requirements are good to know when you’re looking at the most popular type of mortgage around. Then again, a jumbo loan may sound pretty good.

SoFi offers both, each with special features. Check out the advantages of SoFi mortgage loans. And then, within minutes…

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility 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.

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

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

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Millennials continue to make up the biggest share of homebuyers, at 43%, according to a 2022 National Association of Realtors® report.

And Gen Y is the most educated group of buyers, so if you’re a millennial, you’re smart; you already know a few things about home buying.

But if you’re part of the generation of people born between 1981 and 1996, you may still have questions. Here are eight tips to buy a house.

Smart Homebuying Tips for Millennials

1. Pay Down Debt First

The average millennial had about $28,300 in nonmortgage debt in 2021, according to Experian’s latest State of Credit Report. The average balance on retail credit cards was over $1,800.

Gen Y’s credit utilization rate — the percentage of available credit you’re using on your revolving credit accounts — was 30.2% on average. That’s the top end that’s generally advised, but lower is considered better.

As many millennials know, savvy credit card users maximize the rewards they earn or take advantage of interest-free offers. But carrying a revolving credit card balance can add up.

Clearing out at least some debts may be a great place to start on a millennial homeownership journey. You’ll likely need to take out a mortgage to purchase a new house, which will account for an even larger portion of personal debt.

There are several strategies to pay off debt, including the snowball and avalanche methods.

Those methods are part of six ways to become debt free.

Recommended: How Many Credit Cards Should I Have?

2. Start Saving for a Down Payment

After whittling down at least some debt, it’s time to think about how to afford a down payment.

Though a 20% down payment may allow you to avoid paying private mortgage insurance on a conventional (nongovernment) loan and get a better rate, borrowers often are able to put down as little as 3%.

The down payment on a house can be as low as 3.5% for an FHA loan if you have a FICO® score of at least 580 (but mortgage insurance always comes along for the ride with an FHA loan and will not drop off unless you’re putting at least 10% down).

USDA and VA loans usually do not require any down payment, but the eligibility for those loans is pretty narrow.

Many lenders give first-time homebuyers a break, and income-qualifying first-time buyers may be able to get down payment assistance from state or city programs.

Younger millennials use a gift or loan from friends and family to help fund the purchase more than any other generation, the National Association of Realtors has found. A gift will need to be documented in a gift letter for the mortgage.

Recommended: 31 Ways to Save for a House

3. Determine Your Must-Haves

Here’s one of the most fun parts about purchasing a home: plotting a dream space.

Before starting your home search, it’s helpful to take some time and think about what you really want. Do you want an open-concept home, or need a minimum number of bedrooms and bathrooms?

Are you considering a condo or townhouse? The maintenance will be minimized, but regular fees are usually part of the deal.

Or is your heart set on buying a single-family home? You’ll usually be responsible for maintaining everything from the roof to the yard (hope you don’t mind mowing, blowing, and edging or paying to have that done).

Maybe you’re open to a frumpy house because you know you can easily upgrade your home with a smart front door, outdoor lighting, paint, and more.

Or maybe new construction — everything shiny and new — is calling your name.

To narrow the search, think about everything on your must-have vs. like-to-have list.

Recommended: How Do Home Improvement Loans Work?

4. Find a Real Estate Agent

Though you don’t have to use a real estate agent to purchase a home, a buyer’s agent can be your guide from the first viewing to the closing.

Real estate agents have access to a multiple listing service (MLS), which allows them to sift through every home in your area at once. They may also have pocket listings, or whisper listings, few others know about.

A real estate agent is also well versed in what needs to take place before a buyer can take ownership of a home, including making an offer, scheduling a home inspection, and obtaining homeowners insurance.

They know how to handle counteroffers, contingencies, and putting an offer on a house that’s contingent.

They may also have a list of trusted inspectors, lawyers, contractors, and insurance agents a buyer may need along the way.

Recommended: Guide to Buying, Selling, and Updating Your Home

5. Set Up Real Estate Alerts

Millennials are digital natives, so this part is cake.

Once your list of must-haves is complete and you’ve picked a real estate agent to assist you, it could be a good idea to set up alerts across listing sites such as the MLS, Zillow, and Redfin. You’ll be notified whenever a home in your chosen area, price range, and desires comes onto the market.

These websites also typically allow users to save favorites and gather intel on a specific home, such as its tax and sales history. They also allow users to book viewing appointments.

6. Think About Long-Term Value

While viewing homes, it may be easy to fall in love with fresh subway tiles, staged furniture, and the simple shine of a brand-new spot. However, it helps to take a beat and a breath and think about the long-term value of the home.

Are you buying this home as a spot to raise a family? Then make sure the schools are a good fit and it’s a walkable neighborhood. Looking at purchasing a home to rent out short term? Check local laws to ensure you’re zoned properly.

Are you buying a house from a family member? A gift of equity is a lovely thing for a buyer indeed.

Recommended: Local Housing Market Trends by City

7. Consider a ‘Love Letter’ and Incentives

Once you’ve found a home in your price range that comes with all your must-haves, it’s time to put in an offer. There is something you can add to your offer to stand out from the crowd: a personal real estate offer letter, or so-called love letter.

If you choose this route, write a letter to the current homeowner expressing how much you love the space and why you feel you’d make the next great owner. You may also want to point out all the things you love about the home design.

To make your offer stand out, you could also provide a quick closing date, suggest paying for things like a termite inspection, and offer a leaseback to the owners until they are ready to move out.

8. Shop for a Mortgage

With any luck, you’ve gotten prequalified or preapproved and know how much of a mortgage you can afford.
Now it’s time to look for a home loan.

When shopping for a mortgage, realize that advertised rates may differ from what you’re offered. Multiple factors determine your rate.

You can apply for a mortgage online with any number of direct lenders and mortgage brokers. Just try to do so within 14 days to protect your credit score.

Then you can compare all the details of the mortgage offers in the loan estimates you’ll receive after applying with each.

The Takeaway

As multitudes of millennials suit up to take the homebuying plunge, they will benefit by getting their finances in order, hiring an agent, setting up real estate alerts, and shopping for a mortgage.

SoFi is there for Gen Y with competitive rates, a variety of terms, and low down payments.

Look into the advantages of SoFi mortgage loans and get a quick rate quote.

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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.

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

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

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