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Heard of a no-closing-cost mortgage or refinance? Sounds divine, but mortgage closing costs are almost as certain as death and taxes. They must be accounted for, one way or the other.

You may be spared the pain of paying closing costs upfront, depending on the type of loan and the lender’s criteria, but they won’t just magically disappear. Instead, you’ll either be given a higher interest rate on the mortgage to cover those costs or see the costs added to your principal balance.

If you’re thinking about what’s needed to buy a house, keep closing costs in mind and understand the pros and cons of rolling these costs into your loan.

What Are Closing Costs?

A flock of fees known as closing costs on a new home are part and parcel of a sale. They typically range from 2% to 5% of the home’s purchase price. Closing costs include origination fees, recording fees, title insurance, the appraisal fee, property taxes, homeowners insurance, and possibly mortgage points. Some of the costs are unavoidable; lender fees are negotiable.

Closing costs come into play when acquiring a mortgage and when refinancing an existing home loan.

You may cover closing costs with a cash payment at closing, with your down payment, or by tacking them on to your monthly loan payments. You may also be able to negotiate with the sellers to have them cover some or all of the closing costs.

💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Can Closing Costs Be Rolled Into a Loan?

If you’re buying a home and taking out a new mortgage, your lender may allow you to roll your closing costs into the loan, depending on:

•   the type of home loan

•   the loan-to-value ratio

•   your debt-to-income (DTI) ratio

Rolling closing costs into your new mortgage can raise the DTI and loan-to-value ratios above a lender’s acceptable level. If this is the case, you may not be able to roll your closing costs into your loan. It’s also possible that if you roll in your closing costs, your loan-to-value ratio will become high enough that you will be forced to pay for private mortgage insurance. In that case, it may be worth it to pay your closing costs upfront if you can.

If you hear of someone who’s taken out a mortgage and says they rolled their closing costs into their loan, they may have actually acquired a lender credit — the lender agreed to pay the closing costs in exchange for a higher interest rate in a “no-closing-cost mortgage.” A no-closing-cost refinance works similarly.

Not all closing costs can be financed. For example, you can’t roll in the cost of homeowners insurance or prepaid property tax. Some of the costs that may be included are the origination fees, title fees and title insurance, appraisal fees, discount points, and the credit report fee.

What about government-backed mortgages? Most closing costs for FHA loans (backed by the Federal Housing Administration) can be financed. And VA loans usually require a one-time U.S. Department of Veterans Affairs “funding fee,” which can be rolled into the mortgage.

USDA loans (from the U.S. Department of Agriculture) will allow borrowers to roll closing costs into their loan if the home they are buying appraises for more than the sales price. Buyers can then use the extra loan amount to pay the closing costs.

Finally, for FHA and USDA loans, the seller may contribute up to 6% of the home value as a seller concession for closing costs.

How to Roll Closing Costs Into an Existing Home Loan

When you’re refinancing an existing mortgage and you roll in closing costs, you add the cost to the balance of your new mortgage. This is also known as financing your closing costs. Instead of paying for them up front, you’ll be paying a small portion of the costs each month, plus interest.

Pros of Rolling Closing Costs Into Home Loans

If you don’t have the cash on hand to pay your closing costs, rolling them into your mortgage could be advantageous, especially if you’re a first-time homebuyer or short-term homeowner.

Even if you do have the cash, rolling closing costs into your loan allows you to keep that cash on hand to use for other purposes that may be more important to you at the time.

Cons of Rolling Closing Costs Into Home Loans

Rolling closing costs into a home loan can be expensive. By tacking on money to your loan principal, you’ll be increasing how much you spend each month on interest payments.

You’ll also increase your DTI ratio, which may make it more difficult for you to secure other loans if you need them.

By adding closing costs to your loan, you are also increasing your loan to value ratio, which means less equity and, often, private mortgage insurance.

Here are pros and cons of rolling closing costs into your loan at a glance:

Is It Smart to Roll Closing Costs Into Home Loans?

Whether or not rolling closing costs into a home loan is the right choice for you will depend largely on your personal circumstances. If you don’t have the money to cover closing costs now, rolling them in may be a worthwhile option.

However, if you have the cash on hand, it may be better to pay the closing costs upfront. In most cases, paying closing costs upfront will result in paying less for the loan overall.

No matter which option you choose, you may want to do what you can to reduce closing costs, such as negotiating fees with lenders and trying to negotiate a concession with the sellers in which they pay some or all of your costs. That said, a seller concession will be difficult to obtain if your local housing market is competitive.


💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.

The Takeaway

Closing costs are an inevitable part of taking out a home loan or refinancing one. Rolling closing costs into the loan may be an option, but it pays to carefully consider the long-term costs of avoiding paying closing costs up front before you commit to your mortgage.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What is a no-closing-cost mortgage?

The term “no-closing-cost mortgage” is a bit misleading. Closing costs are in play, but the lender agrees to cover them in exchange for a higher interest rate or adds them to the loan balance.

How much are home closing costs?

Closing costs are usually 2% to 5% of the purchase price of a home.

Can you waive closing costs on a home?

Some closing costs must be paid, no matter what. But you can try to negotiate origination and application fees with your lender. You may even be able to get your lender to waive certain fees entirely.

Photo credit: iStock/kate_sept2004

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

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

SOHL-Q425-170

Whether a layoff, inflation, or other bugaboo is causing you to struggle with your mortgage payments, life rafts are available. Options for people who need mortgage relief include forbearance, loan modification, and refinancing. Here’s a closer look at each option.

What Are Mortgage Relief Programs?

Relief programs don’t magically make monthly mortgage payments disappear, but they can pause or lower those payments.

Through a perennial form of mortgage relief, mortgage forbearance, borrowers facing financial troubles may be able to defer or trim payments short term.

It’s important to know that if you even anticipate a problem making a payment, it would be smart to contact your mortgage servicer (the company you send your mortgage payments to) immediately to talk about your options.

Tardy payments damage credit scores, and late payments stay on a credit report for seven years.

Catching a Break Through Mortgage Relief

The remedies for mortgage payment anguish come in several forms.

Forbearance at Any Time

While pandemic-related laws that required lenders to provide mortgage forbearance relief to struggling homeowners expired in April 2023, many lenders offer forbearance programs to borrowers on a case-by-case basis. If you’re dealing with a short-term crisis, you can reach out to your lender and ask for mortgage forbearance, to temporarily pause or lower your mortgage payments.

Many lenders will ask for documentation to prove the hardship. They also will want to know whether the hardship is expected to last for six months or less or 12 months.

During forbearance, interest accrues and is added to the loan balance. All suspended or reduced payments will need to be paid back.

Refinancing

Homeowners coming out of forbearance may find that it’s a good time for a mortgage refinance, aiming for a lower rate and possibly different repayment term.

When choosing a mortgage term, know that the longer the term, the lower the payments, in general.

It’s generally thought that you should have at least 20% equity in your home to refinance. Your debt-to-income ratio and credit will be assessed if you apply.

There are two refi options for low- to moderate-income homeowners whose current mortgage is owned by Fannie Mae or Freddie Mac. Fannie Mae’s RefiNow and Freddie Mac’s Refi Possible are designed to help those homeowners get better mortgage rates and reduce upfront costs.

Someone with a VA loan can look into an interest rate reduction refinance loan, and an FHA loan borrower may look into an FHA Streamline Refinance or standard conventional refi.

💡 Quick Tip: Lowering your monthly payments with a mortgage refinance from SoFi can help you find money to pay down other debt, build your rainy-day fund, or put more into your 401(k).

Loan Modification

Homeowners who expect a permanent change in finances, or who are exiting forbearance but don’t qualify for refinancing, can ask for a loan modification.

Loan modification may result in a lower interest rate, a lower principal balance, an extension of the repayment term, or a combination.

You might have to prove the hardship to be approved.

Recommended: Loan Modification vs. Refinancing

Applying for Mortgage Relief

Again, when homeowners realize that they might have trouble making their monthly mortgage payment, they would be doing themselves a favor by contacting their loan servicer.

This applies to primary homes, multifamily properties, and vacation homes.

Suffering in silence does no good. Working with your mortgage servicer could lead to one of the mortgage relief options described above or an agreement to try a short sale to avoid foreclosure.

A deed in lieu (an arrangement where you give your mortgage lender the deed to your home) is also sometimes used to avoid foreclosure.

Recommended: 6 Ways to Lower Your Mortgage Payment

What to Do During Forbearance

A homeowner in mortgage forbearance might want to keep track of the following:

•   Automatic payments. Any automatic payments or transfers to mortgage accounts should be paused by the borrower during the forbearance period. It’s unlikely the payments will be paused automatically, so it might be best to double-check.

•   Credit scores. On any loan, deferring payments shouldn’t affect credit scores, but homeowners might want to keep an eye on their scores in the event of an error.

•   Savings account. Now might be a good time to set aside any extra income to pay for the mortgage once forbearance ends.

•   Any changes to income. If a borrower’s income is restored during forbearance, they might need to contact their lender.

•   Property taxes and insurance payments. If homeowners insurance and taxes are paid through an escrow account, it should go into forbearance along with the mortgage. Homeowners who do not have an escrow account may be on the hook for those payments.

Homeowners interested in an extension of a forbearance period need to ask their mortgage servicer.

💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

How to Repay Forbearance

Homeowners who received Covid hardship forbearance are not required to repay their paused payments in a lump sum when the forbearance period ends.

For those with Fannie Mae and Freddie Mac loans, options include a repayment plan with higher mortgage payments, putting the missed payments at the end of the loan, and a loan modification.

Borrowers with FHA loans can put the money owed into a no-interest lien that comes payable if they sell the home or refinance the mortgage. Or they can negotiate to lower their mortgage payments with a loan modification.

Options for USDA and VA loan repayment include adding the missed payments to the end of the loan, and loan modification.

In general, a homeowner can expect one of the following scenarios:

•   Repaying the forbearance amount in a lump sum.

•   An amount is added to the borrower’s monthly payment until the forbearance amount is repaid in full.

•   The forbearance amount is added to the end of the loan.

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

The Takeaway

Federal mortgage relief programs help homeowners who are experiencing hardship. General mortgage forbearance is possible during most any household setback. Refinancing could be an answer for some borrowers who are coming out of forbearance.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

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

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

SOHL-Q425-182

Both co-ops and condos give a resident the right to use certain common areas, such as pools, gyms, roof decks, and courtyards. But there are big differences when it comes to what you actually own when you purchase a condo vs a co-op.

It’s easy to get confused about the difference between the two properties. If you pulled up pictures of co-ops and condos during a home search, they might seem exactly the same. But if you’re in the market for a home — especially in a large city where both housing types are popular — you’ll learn quickly that the terms are not interchangeable.

You might have wondered if you’d prefer a house or a condo. But if you’re moving in the direction of co-op vs. condo, it’s important to understand their many distinct features. You’ve done the work of budgeting for a home. Now, before you spend that budget, let’s get a handle on the difference between a condo and a co-op.

What Is a Condo?

With a condominium, you own your home, but you don’t solely own anything outside your unit — not even the exterior walls. Common areas of the complex are owned and shared by all the condo owners collectively.

Buying a condo is not all that different from securing any other type of real estate. Typically, the complex will be managed by an association that is responsible for maintaining the property and enforcing any covenants, conditions, and restrictions that govern property usage. The association sets the regular fees owners pay to cover repairs, landscaping, other services, and insurance for the shared parts of the property. Special assessments also might be levied to pay for unexpected repairs and needed improvements that aren’t in the normal operating budget.

What Is a Co-op?

In the co-op vs. condo debate, it’s key to know that with a housing cooperative, residents don’t own their units. Instead, they hold shares in a nonprofit corporation that has the title to the property and grants proprietary leases to residents. The lease grants you the right to live in your specific unit and use the common elements of the co-op according to its bylaws and regulations. A co-op manager usually collects monthly maintenance fees; enforces covenants, conditions and restrictions; and makes sure the property is well kept.

As a shareholder, you become a voting manager of the building, and as such have a say in how the co-op is run and maintained. Residents generally vote on any decision that affects the building. Should a resident wish to sell their shares, members of the board of directors will have to approve the new buyer. They will be much more involved than would be the case with a condo. That can make it a lengthy process.

Co-ops and condos are both common-interest communities, but their governing documents have different legal mechanisms that determine how they operate and can affect residents’ costs, control over their units, and even the feeling of community. (If you’re curious about another option, there’s always a townhouse, so read up on the difference between a condo and a townhouse as well.)


💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

Some Pros & Cons of Co-Ops vs. Condos

Financing

It’s important to drill down on the details of buying an apartment. Because you aren’t actually buying any real estate with a co-op, the price per square foot is usually lower than it would be for a condo. Eligibility for a home loan may depend on credit score, down payment, minimum square footage of a unit, and more.

However, it might be somewhat harder to get a mortgage for a co-op than a condo, even if the bottom-line price is less. It might not have all that much to do with you. Some lenders are reluctant to underwrite a loan for shares in a corporation vs. real property. Most condo associations don’t restrict lending or financing in the building. If you can get a mortgage loan, the condo association will usually let you buy a place.

Fees

Because a co-op’s monthly fee can include payments for the building’s underlying mortgage and property taxes as well as amenities, maintenance, security, and utilities, it’s usually higher than the monthly fee for a condo. Either way, though, generally the more perks that come with your unit, the more there is to maintain and in turn, the more you’re likely to pay.

If you’re concerned about an increase in fees, you might want to ask the association or board about any improvements that may lead to an increase in the future — and what the rules are for those who do not pay their assessed dues. All of these factors are important to weigh when you’re making a home-buying checklist, which includes figuring out how much money you’ll need and the best financing strategy.

Taxes

If you itemize on your income tax return, you may be able to deduct the portion of a co-op’s monthly fee that goes to property taxes and mortgage interest. However, none of a condo’s monthly maintenance fee is tax deductible. You might want to consult a tax professional about these nuances before moving forward with a co-op or condo purchase.

Privacy vs. Community

If you’ve ever lived in one of those neighborhoods where the only time you saw your fellow residents was just before they pulled their cars into their garages, it could take you a while to adjust to cooperative or association living. Because you share ownership with your neighbors, you may be more likely to see them at meetings and other events. And you can trust that they’ll know who you are.

Co-op boards often require prospective buyers — who are potential shareholders — to provide substantial personal information before a purchase is approved, including personal tax returns, personal and business references. Many require in-person interviews. You may find that you like the sense of community and that everyone knows and looks out for each other. Or you may not. Again, you might want to ask some questions about socialization and privacy while checking out a particular co-op or an active condo community.

Restrictions

In a co-op, you might run into more rules regarding how you can renovate or even decorate your unit. And don’t forget: You’ll also have to deal with that rigorous application approval process if you ever decide to sell.

Both condos and co-ops frequently have restrictions on renting out extra rooms (or renting the entire unit), as well as on how many people can stay overnight or park in the parking lot, the type of pets you can have and their size, and more. Before you look at a unit, you may want to ask your agent about covenants, conditions, and restrictions that could be difficult to handle.

The Takeaway

Whether you end up buying a co-op or a condo, ownership offers many benefits you won’t find in a rental. When you’re ready to start a serious search, take the time to look for a lender that will work with you on whatever type of loan you might require. In the co-op vs. condo terrain, there are specialists for both sides.

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

Is a co-op better than a condo?

A co-op isn’t better than a condo. Which is best really depends on your lifestyle and needs. Co-ops can be a little harder to finance, and board approval of a prospective co-op buyer is often needed. But a plus for co-ops is that the portion of your maintenance fee that goes toward property taxes may be tax deductible.

What’s the downside to owning a co-op?

Some co-op owners who are selling their unit find that the screening of a prospective buyer by the co-ops management board can slow down the sale process. Co-ops may also be less flexible when it comes to decorating or renovating the unit.

Is a co-op the same as a condo?

Both co-ops and condos are often apartments, but that’s where the similarity ends. When you purchase a co-op, you technically aren’t buying the apartment itself, but rather shares in the corporation that owns the building. When you buy a condo, you are buying your unit and you share ownership of the common areas of the building with your neighbors. Co-ops usually involve a screening process in which buyers are reviewed and approved by their prospective neighbors. Condos don’t usually require this.

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

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

SOHL-Q425-166

On a salary of $50,000 per year, you can afford a house priced at around $150,000 — that is, as long as you have relatively little debt. However, not everyone earning $50,000 will see this number in response to a loan application. The figure could change significantly depending on where you want to live, interest rates, and how much debt you’re carrying.

Understanding how these factors play into home affordability can get you closer to finding a home you can afford on your $50,000 salary.

What Kind of House Can I Afford With $50K a Year?

A $50,000 per year salary is solid, but there’s no denying today’s real estate market is tough. When buying a home, one rule of thumb is to not spend more than three times your annual salary. If you earn $50K a year, that means you can afford to spend around $150,000 on a house.

You’ll need to know the full picture of home affordability to get you into the house you want, starting with your debt-to-income (DTI) ratio.

Understanding Debt-to-Income Ratio

Your debt-to-income (DTI) ratio may be one of your biggest challenges to home affordability. Each debt you have a monthly payment for takes away from what you could be paying on a mortgage, lowering the mortgage amount you can qualify for.

To calculate your DTI ratio, combine your monthly debt payments — such as credit card debts, student loan payments, and car payments — and then divide the total by your monthly income. This will give you a percentage (or ratio) of how much you’re spending on debt each month. Lenders look for 36% or less for most home mortgage loans.

For example, on a $50,000 annual salary and a $4,166 monthly income, your maximum DTI ratio of 36% would be $1,500. This is the maximum amount of debt lenders want to see on a $50,000 salary.

💡 Quick Tip: Lowering your monthly payments with a mortgage refinance from SoFi can help you find money to pay down other debt, build your rainy-day fund, or put more into your 401(k).

How to Factor in Your Down Payment

A down payment increases how much home you can afford. The more you’re able to put down, the more home you’ll be able to afford. Borrowers who put down more than 20% also avoid having to buy mortgage insurance. When you don’t have to pay mortgage insurance every month, you can qualify for a higher mortgage — but you do need to consider if putting down 20% is worth it to you.

A mortgage calculator can help you see how much your down payment affects the mortgage you can qualify for.

Factors That Affect Home Affordability

In addition to the debt-to-income ratio and down payment, there are a handful of other variables that affect home affordability. These are:

•   Interest rates: When your interest rate is lower, you’ll either have a lower monthly mortgage payment or qualify for a higher mortgage. With higher interest rates, you’ll have a higher monthly mortgage payment and/or qualify for a lower home purchase amount.

•   Credit history and score: Your credit score affects what interest rate you’ll be able to get, which is a huge factor in determining your monthly mortgage payment and home affordability.

•   Taxes and insurance: Higher taxes, insurance, or homeowners association dues can bite into your house budget. Each of these factors has to be accounted for by your lender.

•   Loan type: Different loan types have varying interest rates, down payments, credit requirements, and mortgage insurance requirements which can affect how much house you can afford.

•   Lender: You may be able to find a lender that allows for a DTI ratio that is higher than the standard 36%. (Some lenders allow a DTI as high as 50%.)

•   Location: Where you buy affects the type of house you can afford. This is one area that you can’t control, unless you move. If you are considering this option, take a look at the best affordable places to live in the U.S.

Recommended: The Cost of Living by State

How to Afford More House With Down Payment Assistance

If you want to be able to afford a more costly house, you may want to look into a down payment assistance program. These programs can help you with funding for a down payment on a mortgage. You can look for programs with your state or local housing authority.

Preference may be given to first-time homebuyers or lower-income families, but there are programs available for a wide variety of situations and incomes.

How to Calculate How Much House You Can Afford

If you want to know how much mortgage you’ll likely be able to qualify for, you’ll want to take a look at these guidelines.

The 28/36 Rule: Lenders look for home payments to be at or below 28% of your gross monthly income. Total debt payments should be less than 36% of your income. These are the front-end and back-end ratios you may hear your mortgage lender talking about.

•   Front-end ratio (28%): At 28% or your income, a monthly housing payment from a monthly income of $4,166 should be no more than $1,166.

•   Back-end ratio (36%): To calculate the back-end, or debt-to-income ratio, add your debt together and divide it by your income. This includes the new mortgage payment. With monthly income at $4,166, your debts should be no more than $1,500 ($4,166*.36).

The 35/45 Rule: The 35/45 rule is a higher debt level your lender can elect to follow. It’s riskier for them and may come at a higher interest rate for you. This rule allows you housing payment to be 35% of your monthly income and 45% of your total debt-to-income ratio. With a monthly income of $4,166, the housing allowance (35% of your income) increases to $1,458 and the total monthly debt (45% of your income) increases to $1,875.

An easier way to calculate how much home you can afford is with a home affordability calculator.

Home Affordability Examples

Making $50,000 a year gives you around $4,166 to work with each month. Using the 36% debt-to-income ratio, you can have maximum debt payments of $1,500 ($4,166 * .36). In the examples below, taxes ($2,500), insurance ($1,000), and interest rate (6%) remain the same for a 30-year loan term.

Example #1: High-debt borrower

Monthly credit card debt: $200

Monthly car payment: $400

Student loan payment: $200

Total debt = $800

Down payment = $20,000

Maximum DTI ratio = $4,166 * .36 = $1,500

Maximum mortgage payment = $700 ($1,500 – $800)

Home budget = $88,107

Example #2: The super saver

Monthly credit card debt: $0

Monthly car payment: $200

Student loan payment: $0

Total debt = $200

Down payment: $20,000

Maximum DTI ratio = $4,166 * .36 = $1,500

Maximum mortgage payment = $1,300 ($1,500 – $200)

Home budget = $171,925

How Your Monthly Payment Affects Your Price Range

Your monthly payment directly affects the mortgage you’re able to qualify for. The more monthly debts you have, the lower the mortgage you’ll be able to qualify for. That’s why it’s so important to take care of debts as soon as you can.

It’s also important to get the best interest rate you can. Shopping around for lenders and building your credit score can both save you money and improve home affordability. A home loan help center is a good place to start the process of looking for a mortgage.

Recommended: 10 Strategies for Building Credit Over Time

Types of Home Loans Available to $50K Households

How much home you can afford also comes down to the different types of mortgage loans. Here are some common options:

•   FHA loans: If your credit isn’t ideal, you may be able to secure a Federal Housing Administration mortgage. Though FHA loans are more costly, you can still be considered with a credit score as low as 500. FHA mortgage insurance, however, makes them more expensive than their alternatives.

•   USDA loans: If you’re in a rural area that is covered by United States Department of Agriculture loans, you’ll want to consider whether the low interest, no-down-loan will make sense for you.

•   Conventional loans: Conventional financing offers the most competitive interest rates and terms for mortgage applicants who qualify.

•   VA loans: If you have the option of financing with a U.S. Department of Veterans Affairs loan, with few exceptions, you’ll generally want to take it. It offers some of the most competitive rates, even for zero-down-payment loans. It also comes with no minimum credit score requirement, though the final say on whether or not you can get a loan with a low credit score is up to the individual lender.

💡 Quick Tip: Don’t have a lot of cash on hand for a down payment? The minimum down payment for an FHA mortgage loan is as low as 3.5%.

The Takeaway

Your $50,000 salary is the first step in qualifying for the home mortgage loan you need to buy a house. To position yourself for the best possible borrowing scenario, consider paying down debt, working on your credit score, applying for down payment assistance, adding a co-borrower, or some combination of the above. With these moves, home affordability improves a great deal.

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

Is $50K a good salary for a single person?

A $50,000 salary is good in terms of covering the cost of living in many parts of the U.S. With proper budgeting, it can even put you on the path to affording to purchase your own home.

What is a comfortable income for a single person?

Generally, an income of $40,000 to $60,000 per year is considered comfortable in many U.S. cities. This range allows for a decent standard of living, covering basic needs, some savings, and occasional luxuries. Adjustments may be needed based on cost of living and personal financial goals.

What is a livable wage in 2025?

A livable wage varies widely depending on where you live. According to the Living Wage Institute at the Massachusetts Institute of Technology, for a family with two adults and two kids, a livable wage in 2025 might range from around $85,000 annually in Alabama or Kentucky to more than $146,000 in Massachusetts.

What salary is considered rich for a single person?

A salary of $400,000 per year would put you in the top 2% of earners in 2025. However, the definition of “rich” varies by person. One person may feel rich earning $100,000 per year, whereas for another, it may take $750,000 per year.

Photo credit: iStock/Tirachard

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.

SOHL-Q425-179

One rule of thumb when buying a home is to not spend more than three times your annual salary. If you earn $36K a year, that means you can afford to spend around $108,000 on a house. This assumes you have no other debts you’re paying off, but also that you haven’t been able to save much for a down payment.

Of course, you’ll want to talk to a lender for your individual situation, which could qualify you for more (or less). If it sounds overwhelming, don’t worry. We’ll walk you through what it takes to qualify for a home, no matter what your income level is.

What Kind of House Can I Afford With $36K a Year?

At a $36,000 annual income, you may need some help affording a home in today’s market. You’ll need to eliminate debt and make sure you have a good credit score, as well as find programs and lenders that can help. In addition to income and debt, your lender will take into account:

•   Your down payment

•   What taxes and insurance will cost

•   What interest rate you qualify for

•   The type of loan you’re applying for

•   Whether or not they can let your debt run up to 50% of your income

Understanding Debt-to-income Ratio

Beyond interest rates, debt is your biggest enemy to home affordability. The more debt you have to pay on a monthly basis, the less you’re able to pay toward a mortgage. In other words, your $200 monthly credit card payment could cost you thousands on the purchase price of a home.

To understand the debt-to-income (DTI) ratio, add all of your debts together and then divide that number by your monthly income. Your lender calculates your DTI ratio to determine how much you can afford as a monthly payment on a mortgage. The guideline is 36%, but some lenders can go higher on a home mortgage loan.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

How to Factor in Your Down Payment

A down payment increases how much home you’ll be able to qualify for. The more you’re able to put down, the more home you’ll be able to afford.

You’ll also want to consider whether you can put down a deposit of more than 20% so you don’t have to buy mortgage insurance. This may help you qualify for a higher mortgage. Use a mortgage calculator to see how a down payment affects home affordability.

Factors That Affect Home Affordability

Home affordability goes beyond your down payment and DTI ratio. You also want to look at:

•   Interest rates: When interest rates are high, borrowers qualify for a lower mortgage. When they’re low, it may be possible to qualify for a higher mortgage.

•   Credit history and score: Your credit score is a reflection of your credit habits, and with a higher credit score, you’ll qualify for the best interest rates, giving you more buying power.

•   Taxes and insurance: If you live in an area with higher taxes, insurance, or homeowners association dues, these will be taken into account by your lender. You’ll qualify for a lower mortgage amount when these numbers are high.

•   Loan type: Depending on the type of loan you get, your interest rate, credit score, and down payment amount can affect how much house you can afford.

•   Lender: Lenders have the final say when it comes to approving you for a mortgage. In special circumstances, you may be able to qualify for more than a 36% DTI ratio. Some lenders approve borrowers with a DTI ratio around 50%.

•   Location: If you’re shopping in a state with a high cost of living, you’ll have a hard time qualifying for a mortgage no matter what your income level is. You may want to consider moving to a more affordable area, if possible.

Recommended: Best Affordable Places to Live in the U.S.

How to Afford More House With Down Payment Assistance

Down payment assistance programs can help you qualify for a larger mortgage. These types of programs have money to help with down payment or closing costs. They are usually offered at the state or local level with both grant and second mortgage programs.

They may limit participation to first-time homebuyers or borrowers with lower incomes, but you should still look into these programs and see if you can qualify.

Examples include CalHFA MyHome Assistance Program and the “Home Sweet Texas” Home Loan Program. You can look for programs in your own state, county, and city.

Recommended: Tips to Qualify for a Mortgage

How to Calculate How Much House You Can Afford

Knowing how much home you are likely to qualify for doesn’t have to be a mystery. While your lender may have flexibility, they generally follow these guidelines:

The 28/36 Rule: Lenders will look for housing payments (including mortgage, taxes, and insurance) to be no more than 28% of your income and total debt payments (including mortgage, car loan, student loan, etc.) to be no more than 36% of your income.

The 35/45 Rule: Some lenders allow for higher debt levels. This rule says the housing payment can be up to 35% of your income and total debt can be up to 45%.

An easy way to calculate how much home you can afford is with a home affordability calculator.

Home Affordability Examples

On a $36,000 annual salary, you’ll have $3,000 each month for expenses. Using the 36% debt-to-income ratio, you can have a maximum debt payments of $1,080 ($3,000 * .36). In the two examples below, taxes ($2,500), insurance ($1,000), and interest (6%) are the same for a 30-year loan term.

Example #1: Significant debt, large down payment

Monthly credit card debt: $100

Monthly car payment: $500

Student loan payment: $100

Total debt = $700

Down payment = $20,000

Maximum DTI ratio = $3,000 * .36 = $1,080

Maximum mortgage payment = $380 ($1,080 – $700)

Home budget = $34,733

Example #2: No down payment, little debt

Monthly credit card debt: $0

Monthly car payment: $0

Student loan payment: $100

Total debt = $100

Down payment: $0

Maximum DTI ratio = $3,000 * .36 = $1,080

Maximum mortgage payment = $980 ($1,080 – $100)

Home budget = $96,314

How Your Monthly Payment Affects Your Price Range

The amount you’re able to pay toward a mortgage each month determines how much home you’ll be able to afford. Any monthly payments you have, such as debt, can take away from how much you’re able to pay for a mortgage. Conversely, how much income you earn in a month can improve how much mortgage you can qualify for.

Interest rates also play a huge role in your monthly payment. Higher interest rates mean you’ll qualify for a lower mortgage while lower interest rates improve home affordability. That’s why homeowners get a mortgage refinance when interest rates drop.

Types of Home Loans Available to $36K Households

The different types of mortgage loans also affect home affordability. Some have a zero down payment option, flexible credit requirements, less expensive mortgage insurance, and varying interest rates. The different types of mortgage loans include:

•   FHA loans: Loans backed by the Federal Housing Administration are great for buyers with unique credit situations that can’t get approved for conventional financing. It can be more expensive to go with an FHA loan, but there are low down payment options and flexible credit requirements for those with a score as low as 500.

•   USDA loans: United States Department of Agriculture mortgages, available in rural areas, offer great interest rates, zero down payment options, and competitive mortgage insurance rates. Some USDA mortgages are directly serviced by USDA, and have a subsidized interest rate.

•   Conventional loans: Many borrowers opt for conventional financing if they qualify. Over the course of a mortgage, this is one of the least expensive types due to competitive interest rates and mortgage insurance premiums that drop off after you pay down the loan past 80%.

•   VA loans: A loan from the U.S. Department of Veterans Affairs is hard to beat for service members, veterans, and others who qualify. You may be able to qualify for a home purchase price with no down payment. VA loans may have great interest rates and flexible credit requirements (depending on the lender).

💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.

The Takeaway

Purchasing a home on a $36,000 salary is a feat you’ll need help with in a market where the U.S. median sale price is $410,800. Whether it’s down payment assistance, paying down debt, nurturing your credit score, or adding income, there are moves you can make to bolster your home budget. In the end, when you move into a place that’s all yours, the hard work will be worth it.

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

Is $36K a good salary for a single person?

A single person can afford to live on $36,000 a year in more affordable places in the U.S., but it could still be difficult to afford to buy a home in today’s real estate market.

What is a comfortable income for a single person?

Generally, an income of $40,000 to $60,000 per year is considered comfortable in many U.S. cities. This range allows for a decent standard of living, covering basic needs, some savings, and occasional luxuries. Adjustments may be needed based on cost of living and personal financial goals.

What is a liveable wage in 2025?

A “livable wage” in the U.S. in 2025 typically ranges from about $21 to $30 per hour for a single adult, depending heavily on local housing, childcare, and cost-of-living factors.

What salary is considered rich for a single person?

A salary of $400,000 per year would put you in the top 2% of earners in 2025. However, the definition of “rich” varies by person. One person may feel rich earning $100,000 per year, whereas for another, it may take $750,000 per year.

Photo credit: iStock/mapodile

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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.

SOHL-Q425-178