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It’s not your imagination: Buying a home has gotten more expensive over the last couple of years. In the fall of 2021, the Case-Shiller U.S. National Home Price index rose a stunning 18.6% in a single year. Adding to the high cost of homeownership is the fact that home loan rates also soared. In the fall of 2022, the average interest rate on 30-year mortgages was 6.12%, while a year earlier, it was a super low 3.03%. In other words, you’re going to pay a lot more for both a house and the money you borrow to fund the purchase.

These economic fluctuations are among the reasons that many people are contemplating buying a fixer-upper. They hope to find a lower-priced house that they can rehab (or pay someone else to renovate) in order to own a piece of the American Dream for less.

However, though buying a fixer-upper home may seem like an enticingly affordable option, the cost of remodeling it could wind up being more than you’d planned.

Just how much does it cost to fix up a house? Let’s break down the most common costs associated with gutting a house and remodeling, so you can make an informed buying decision. Read on to learn:

•   What’s a fixer-upper?

•   What are the pros vs. cons of buying a fixer-upper?

•   How can you plan to renovate a home?

•   How much will a fixer-upper really cost?

•   How can you fund fixing up a home?

What Is a Fixer-Upper?

What exactly is a fixer-upper? It’s a home that’s in need of significant work. In many cases, these are older houses with much deferred maintenance or simply a lot of dated, well-worn features.

A fixer-upper might be a home from 100 years ago with an insufficient electrical and heating system, as well as a roof in need of replacement. Or it could be an apartment with a very old and dated kitchen and bathrooms. These residences might be livable, but they require an infusion of cash and work to make them comfortable by today’s standards.

Pros and Cons of Buying a Fixer-Upper

Buying a fixer-upper home has upsides and downsides. For some people, a fixer-upper can be a terrific way to enter the ranks of homeownership. For others, it could wind up being a frustrating source of bills and stress.

First, let’s consider the pros of buying a fixer-upper:

•   Lower price. This can make it easier to become a homeowner.

•   Lesser competition. Many home-shoppers may shy away from taking on this kind of project.

•   Control. The ability to renovate a home to suit your taste.

•   Profit. The opportunity to flip, or resell, the home and make money by doing so.

In terms of negatives, consider these points:

•   Money required to renovate. Although you may be able to buy a fixer-upper at a bargain price, you’ll have to come up with funds for the renovation.

•   Going over budget. Often, when renovations get underway, you’ll hit unexpected situations that require more money to properly complete the job.

•   Taking longer than expected. Closely related to the point above about going over budget financially is the fact that remodeling may take longer than anticipated, which can create issues.

•   Living in a construction site. If you occupy the home as work is done, it can be an uncomfortable experience.

Recommended: Things to Budget for After Buying a Home

Decide If This Is Your Home or a Flip

Many times, people looking to buy a fixer-upper home are in it for the short game of a flip. This means they are hoping to purchase a home well under market value, make a few renovations, and then quickly sell the home for a profit. And that’s all good—you just need to decide which camp you’re in.

If you are hoping to flip a house and make some money, know what you are getting into. As mentioned above, renovations can run over budget and take longer than scheduled. If all you are planning on doing to a house is refresh the paint and flooring and stage it beautifully, things may work out fine. But if you get started on structural work and discover a bigger issue than anticipated, it could wreck your budget for reselling the property. That’s why it’s vital to get a thorough home inspection before you buy a fixer-upper. It’s also wise to walk through with a contractor (if you plan on hiring one) before purchase to size up costs; you’ll learn more about the potential price tag of renovations in a minute.

If you’re planning on buying a fixer-upper home and making it your forever home, you might have a longer timeline to make upgrades. You could tackle the kitchen one year; then redo the bathrooms the next. This could be easier on your budget, but it might mean living amid construction for a while.

And, of course, you don’t get the potential cash infusion by selling the home at a profit, which is the goal of many people who are searching for a fixer-upper. You do get a lovingly restored home to call your own, quite likely at a good price, which can be an excellent reward.

Recommended: How Much House Can I Afford Based on My Income?

Do Your Homework Before You Buy

It’s crucial to add up all the costs of potential renovations before you buy a fixer-upper house. You don’t want the dream of wanting your own home to cloud your judgment about the work that’s needed. If you don’t do a deep dive on pricing before you buy, you may end up in your own version of “The Money Pit” movie.

Consider the following:

•   Assess the upfront cost of the home and add up all potential material and labor needs — think both big and small, like plumbers, electricians, carpenters, all the way down to any new doorknobs you’ll buy along the way. Then, subtract that from the home’s renovated market value. Would this still be a profitable venture?

•   Keep in mind that inflation is currently running high so prices could get higher than what you believe they will cost during the time you are renovating.

•   It’s important to allow room in your budget and your timeline for overages. It’s not uncommon for home renovations to cost more and take longer than anticipated. It’s wise to have at least 3% to 5% extra in your budget (if not more) to cover additional costs, and wiggle room in your timing, too.

Recommended: How Do Home Improvement Loans Work?

Preparing to Invest in Home Renovations

Each home renovation is unique. If you buy a fixer-upper house, the price of rehabbing it can vary tremendously. One house might need new appliances, the walls painted, and the floors sanded. Another might need a new roof and a cracked foundation fixed…plus an electrical upgrade. The size of the home, its age, its location, and condition will all impact how much you’ll need to spend.

But, to give you a ballpark on costs, here are some statistics from Angi, the home renovation and repair site:

•   Renovating a three-bedroom home can cost between $20,000 and $100,000 on average.

•   Renovation costs are typically between $15 and $60 per square foot overall.

•   Remodeling a kitchen or bathroom can cost $100 to $250 per square foot.

•   A kitchen renovation costs $25,000 on average, and a bathroom remodel runs $10,000, but costs can run significantly higher depending on choice of materials, fixtures, and the like. renovation will be different, Realtor.com provides a general cost breakdown for different remodel hypotheticals.

Keep in mind that pricing may be higher if you live in or near a major city, as well.

Recommended: 6 Tips for Doing Home Addition Projects the Right Way

Common Fixer Upper Project Costs

Kitchen Remodels

According to HomeAdvisor’s 2022 data, the average cost of a kitchen remodel currently sits at $25,000, but costs can range from $5,000 to $65,000 or more.

The three elements that contribute most to cost are the countertops, cabinets, and flooring. The more you lean into custom and luxury options, the higher the price will go.

Bathroom Renovation

The average bathroom renovation ranges from $3,000 for small cosmetic updates to $30,000 for a complete gut do-over, with the average price tag coming in at $11,000. A big expense is moving the plumbing lines. If you can keep the layout as-is, you’ll save up to 50%.

Roof Installation

A roof should typically last two to three decades on a home — or longer if you choose the right material. The average cost for replacing a roof is about $8,000, but that will vary with the size of the home and the material you choose.

For instance, if you opt for a premium product, like slate, you’ll find that the average costs for a 3,000-square-foot roof can be $30,000.

Recommended: How to Buy Homeowners Insurance

How to Handle the Cost of a Fixer Upper

These numbers can seem overwhelming, but remember, you’re bringing out your home’s maximum potential, whether for you to enjoy or to capitalize on via a future sale.

You have a few options for how to finance the renovation of a fixer-upper:

•   You could put less money down and take out a larger mortgage. This would allow you to have some cash on hand to pay for the remodeling.

•   You can buy the house and then take out a home improvement loan, which is a kind of personal loan used to finance your home projects.

•   You could purchase the fixer-upper and then apply for a home equity line of credit, or HELOC. These are revolving lines of credit that may offer attractive terms (low interest, long repayment) but keep in mind you are using your home’s equity as collateral. You typically need 15% to 20% equity in your home to qualify.

•   Another option that’s similar to a HELOC is a home equity loan. The difference is that a home equity loan typically distributes a sum of money, which is repaid in installments over a period of time.

The Takeaway

A fixer-upper can be a good investment for some home shoppers, whether they want to renovate the home and live in it or sell it at a profit. However, it’s important to evaluate your costs up front, before signing a contract, to make sure you don’t wind up with a money pit and can make your renovation dreams come true.

One thing that can help you afford your fix-it-up plans is a SoFi home improvement loan. What’s more, these are unsecured loans, meaning you’re not required to put up collateral against the loan. And with fixed monthly payments, you can better plan for the road ahead. Now, all you need is a hammer and you’re ready to go.

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.

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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Whether you’ve just moved into a new home or want to breathe new life into your current one, refacing cabinets in your kitchen could really transform the space.

Cabinet refacing involves changing the cabinet exterior surfaces only, and can cost significantly less than a full cabinet replacement. How much will it set you back? The cost to reface kitchen or bathroom cabinets ranges from roughly $4,000 to $10,000, with the national average coming in at around $7,000.

Read on to learn what factors affect refacing costs, how to keep a cabinet makeover project within your budget, and how to get started.

Average Cost of Cabinet Refacing

Cabinet refacing allows you to give your kitchen a refresh at a significantly lower price tag than a full kitchen remodel. The exact cost will depend on the materials you choose, the size of the room, labor costs, and where you live. However, the cost typically runs between $4,273 and $10,056, or an average of $7,158.

If you have a small kitchen, DIY the project, and choose budget-friendly materials, you could spend a lot less than the average cabinet refacing cost. On the other hand, if you have a large kitchen, hire a contractor, and go with top-of-the-line materials, you could spend significantly more.

Recommended: 20 Small Kitchen Remodel Ideas & Designs

Cabinet Makeover Costs by Budget

The good news is that you can give your cabinets a refresh on virtually any budget. Here’s a look at what you can accomplish at different price points.

Budget: Under $1,000
If you’re looking to spend less than $1,000, you can likely reface the cabinets in a small kitchen yourself using laminate veneers. However, you may need to keep the original hardware.

Budget: $1,000 to $5,000
With more wiggle room in your budget, you may be able to hire a contractor to reface your cabinets using laminate or wood veneer, and also replace the hardware. However, you may not be able to add accessories like a built-in wine rack or under-cabinet lighting.

Budget: $5,000 to $10,000
With this budget, you can likely hire a contractor to install high-end wood veneer and hardware, plus add cabinet accessories, even for a large kitchen. With a smaller space, you may be able to reface your cabinets with solid wood.

Budget: $10,000 to $15,000
If you can spend $10,000-plus on the project, you should be able to hire a contractor to install new solid wood doors and drawer fronts, choose luxurious hardware, and add fancy accessories. You might also be able to add a couple of custom cabinets to match your newly upgraded cabinets.

Recommended: 9 Ways to Keep Inflation From Ruining Your Kitchen Reno Budget

Reasons to Reface

Refacing old cabinets can give your kitchen an updated look for 30% to 50% less than a full cabinet replacement. This makes it an appealing option for homeowners looking to do a kitchen renovation on a budget. What’s more, there are a wide range of resurfacing options to choose from, so you can likely find a look that fits your kitchen design vision. The process is also faster and more environmentally friendly than a remodel.

Keep in mind, however, that refacing might not be the best option if the existing cabinets are damaged or you need a better kitchen layout. While refacing can make your kitchen look and feel brand new, it won’t change its layout or functionality.

Standard Options for Refacing

When you reface cabinets, there are four common types of finishes you can choose from. Here’s a look at each option.

Plastic Laminates

You can also reface cabinets with plastic laminate. The laminate is cut to size and applied to the cabinet boxes and doors using a special adhesive. This is one of most budget-friendly refacing options, ringing in between $1,000 and $3,000. However, plastic laminate is not as resistant to chipping and cracking as other refacing materials.

Wood Veneer

Wood veneers give you the look of wood cabinets without the high cost. They come in thin sheets designed to mimic standard species of wood, such as oak, cherry, maple, and ash, and run between $2,500 and $6,000. While wood veneer is stronger than laminate, it’s not as durable as real wood.

Rigid Thermofoil (RTF)

Rigid thermofoil laminate is another budget-friendly refacing choice. It’s made of plastic (Formica or melamine) but looks like wood and requires little care. Just keep in mind that the melamine version of RTF is not recommended for hot or humid environments. Refacing with RTS can run roughly $1,000 to $3,000.

Solid Wood

Solid wood refacing material is the priciest option but also the longest-lasting and easiest to repair. A solid wood refacing project can run anywhere from $5,000 to $10,000. However, the cabinets will look high-end and the doors and drawers will be extremely durable.

Other Factors that Affect the Cost of Refacing

When coming up with your budget for a cabinet makeover, there are some other costs and upgrades you may want to factor in. Here’s a look at add-ons that can level up your kitchen refresh.

•   Hardware replacements Replacing all the hardware on your cabinets can cost anywhere from $100 and $1,000, depending on the material and style.

•   Crown molding Depending on the materials used and the labor involved, installing crown molding can run around $700 to $2,100.

•   Under-cabinet lighting Having strip, built-in, or puck lights installed under your cabinets can run $200 to $300 per light. If your budget is tight, you can get peel-and-stick lights for as little as $20 to $30.

•   Glass If you want to add glass inserts to some, or all, of your kitchen cabinets, plan on spending an extra $100 to $300 per linear foot of glass you add.

•   Handy accessories If you’re interested in adding some extras, such as a built-in spice rack, built-in wine rack, pull-out trash can, or a lazy Susan, you’ll need to add some additional funds to your refacing budget.

Getting Started

If you are ready to move forward with refacing, it can be a good idea to shop around and get estimates from at least three contractors.

As you interview potential installers, be sure to ask about their experience with cabinet refacing and if they’re insured and licensed. You may also want to ask the following questions:

•   What kind of refacing material do you recommend for this area?

•   How long will this project take?

•   Can I use my cabinets as soon as you’re done?

•   How long will the refacing last?

•   Do you make any changes to the interior of the cabinets?

•   Does the estimate include handles and drawer pulls?

•   Will you remove the doors and drawers to work on them at your shop or do all the work at my home?

•   Can you use hardware that I’ve already purchased?

•   Can you add features like crown molding, under-the-cabinet lighting, or glass inserts?

•   Do you offer a warranty, and if so, what does it include?

Recommended: 10 Steps for the Perfect Bathroom Remodel

Financing Your Home Improvement

While a cabinet makeover can give your kitchen a face-lift for an affordable price, you’ll still need to come up with a significant sum of cash to cover the cost of materials and labor. If you’re eager to get going but don’t have enough money on hand, you may be able to finance the project using a home improvement loan.

A home improvement loan is essentially a personal loan designed to be used to pay for home upgrades and renovations. Available through banks, online lenders, and credit unions, these loans are typically unsecured (meaning your home isn’t used as collateral to secure the loan). You also don’t need to have any equity built up in your home to be approved. Instead, the lender decides how much to lend to you and at what rate based on your financial credentials, such as your credit score, income, and how much other debt you have.

Once approved, you receive a lump sum of cash up front you can then use to cover the cost of refacing your cabinets. You repay the loan (plus interest) in regular installments over the term of the loan, which can range from five to seven years.

If you think a personal loan might work well for your cabinet makeover project, SoFi could help. SoFi’s home improvement loans offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.

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.

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.

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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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 these 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 home loan than an FHA loan backed by the Federal Housing Administration, a type 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 15%, according to a recent study by the National Association of Realtors®.

Conventional loans require as little as 3% down for first-time homebuyers, 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 2025 in many counties in the contiguous states, Washington, D.C., and Puerto Rico rose with market prices:

•   One unit: $806,500

•   Two units: $981,500

•   Three units: $1,186,350

•   Four units: $1,474,400

In high-cost areas like Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the 2025 conforming loan limits are:

•   One unit: $1,209,750

•   Two units: $1,472,250

•   Three units: $1,779,525

•   Four units: $2,211,600

If you’re curious about your county’s specific conforming loan limits are, you can check out this FHFA guide.

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 for jumbo loans may be higher because the loans carry greater risk for lenders, but when the nonconforming loan is backed by the government, its rate 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. Would-be homebuyers will want to make sure their credit score, debt-to-income ratio, and down payment numbers are lined up as favorably as possible before pursuing their dream property.

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

Are there any drawbacks to a conventional loan?

The main drawback to a conventional loan is that you will need to make some type of down payment on the property. It doesn’t need to be the 20% down payment that was common in decades past. But even a low down payment of, say, 3.5% could add up to tens of thousands of dollars given today’s home prices.

What’s the main reason I might not qualify for a conventional loan?

The most common reason someone might not qualify for a conventional home loan is usually related to credit — perhaps the applicant has a credit score below 620, or maybe there is some other significant warning sign on the credit report, such as a history of delinquencies or bankruptcy.

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.

*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.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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For a conventional mortgage loan, you typically need a credit score of 620 or higher to indicate that you are likely to repay your debt on time and get approved. However, there are other types of loans that may be available for people with lower scores. In addition, with a higher score, you may qualify for more favorable rates and terms.

For many, buying a home is a huge financial step, representing the biggest purchase they’ll ever make in their life. Read on to learn more about how your credit score impacts your ability to access a home loan and which terms are available to you.

Average Credit Score to Buy a House

About 70% of mortgages are conventional loans, making these far and away those most common mortgage type. For a conventional mortgage, lenders will typically require a minimum credit score of 620. That said, on average, homebuyers had a credit score of 758 in 2024, considerably higher than the required minimum.

On the topic of credit scores, here’s how the FICO® Score, a popular credit-scoring model, arranges its credit score ranges:

•   300-579: Poor

•   580-669: Fair

•   679-739: Good

•   740-799: Very good

•   800-850: Exceptional or excellent

Recommended: What Is the Starting Credit Score?

What Credit Score Do I Need to Buy a House?

As mentioned above, the credit score you need to buy a house will vary depending on the loan type you apply for. In general, necessary credit scores will range from 500 to 700. The higher the score, the easier it generally is to secure credit and qualify for favorable terms and interest rates.

Minimum Credit Scores by Home Loan Type

There are several different types of home loans you may apply for depending on your circumstances, including conventional loans, jumbo loans, FHA loans, VA loans, and USDA loans. Each type of loan has a different minimum credit score requirement.

Conventional Loans Minimum Credit Score

A conventional loan is a home loan that is backed by private lenders. It is not backed or insured by the government. This is the most common type of home loan and usually requires a minimum credit score of 620. If your credit score is higher than that (say, in the very good or excellent ranges), you may qualify for lower interest rates and better terms.

Jumbo Loans Minimum Credit Score

Jumbo loans are loans that are too big to be covered by conventional loans as determined by the Federal Housing Finance Agency (FHFA). According to the FHFA, in 2025, loans bigger than $806,500 require a jumbo loan in most counties. Jumbo loans usually have a minimum credit score of 700, one of the highest credit score thresholds among mortgage options.

FHA Loans Minimum Credit Score

A Federal Housing Administration, or FHA, loan is one that is backed by the federal government. This program helps make buying a house more affordable for families with low or moderate incomes. Government backing means these loans may be extended to individuals who would otherwise likely be seen as risky by conventional lenders. FHA loans typically have a low minimum credit score requirement of 500 with a 10% down payment and a 580 credit score with a 3.5% down payment.

VA Loans Minimum Credit Score

A VA loan is partially guaranteed by the Department of Veterans Affairs. They are available to veterans, service members, and their families, and some lenders will require a minimum credit score of 620. That said, there is no official minimum credit score requirement, so you may be able to access a VA loan with a lower score. If that is your situation, you may have to provide additional documentation in order to be approved.

USDA Loans Minimum Credit Score

USDA loans are guaranteed by the U.S. Department of Agriculture and are available in certain individuals in rural areas. They often look for a minimum credit score of 580, but as with VA loans, there isn’t a strict requirement. You might qualify for a USDA loan with a lower score if a lender reviews your financials and determines you are creditworthy.

Related: The 52 Week Savings Challenge

How Your Credit Score Affects Mortgage Rates

Your credit score is a three-digit representation of your credit history. Higher scores demonstrate that you have been responsible with your credit, paying bills on time and avoiding taking on more debt than you can manage. Lenders see potential borrowers with high scores as being less risky than those with lower scores. If you’ve managed credit wisely in the past, you may well do so again in the future.

As a result, lenders may offer borrowers with high scores credit with better terms and lower interest rates. Lenders may also extend credit to borrowers with lower scores. However, to compensate for the extra risk they are taking on, they may charge higher interest rates, which increases the overall cost of borrowing.

Here’s an example of mortgage interest rates for conventional loans by credit score as of mid-2024:

•   Those with a credit score of 760-850 would have a 6.976% APR

•   Those with a credit score of 660-679 would have a 7.589% APR

•   Those with a credit score of 620-639 would have an 8.565% APR

While these differences among rates may not sound huge, over the life of a loan, an additional percent or so in interest can really add up.

Other Factors Mortgage Lenders Consider

In addition to your credit score, lenders will also likely look at some other factors:

•   Your employment status and income. They may want to see that you have a steady stream of cash to pay your monthly mortgage bill.

•   How much money you have for a down payment. The more money you put down, the less risk the lender has to take on. As a result, higher down payments may help you qualify for loans and lower interest rates.

•   Other assets you have that could be used to make debt payments in case you don’t have enough income.

•   The value of any other property you own.

•   Your debt-to-income ratio (DTI). This is a comparison of how much debt you owe versus how much money you have coming in. It’s a quick way to let lenders know whether you have enough income to cover your liabilities.

Can You Get a Mortgage With a Bad Credit Score?

The lowest credit score category is poor, which ranges from 300 to 579. With a score in this range, you may not qualify for a conventional loan.

However, you can get a mortgage with a low credit score as long as it meets minimum score requirements. A government-backed loan may be your best bet, since some lenders may approve a borrower with a credit score below 580 (say, 500 and up). That said, you may pay more in interest than those with higher scores. You might prefer to wait and build your score before applying for a home loan.

How to Build Your Credit Before Getting a Mortgage

It may be worthwhile to build your credit before you apply for a loan. There are several factors that affect your credit score.

One of the best ways to build your credit score can be to always pay your bills on time. This is the number-one factor in determining the most common credit scores, including FICO and VantageScore.

The second biggest factor is your credit utilization rate, or how much of your available credit you’re using. In general, the less the better. Lenders typically prefer that you use no more than 30% of your available credit. Pay down debt to lower your utilization rate and raise your score.

Recommended: How Long Does It Take to Build Credit?

Factors in Mortgage Preapproval

A mortgage preapproval is a statement from a lender that you are likely to qualify for a mortgage. It can be a helpful document to show sellers as it can demonstrate that you are serious about making a purchase and likely to receive financing.

For a preapproval, lenders typically look at such factors as credit score, income, assets, DTI, and employment verification. Thanks to this financial review, being preapproved can give you a sense of confidence about your ability to go house shopping.

Credit Score Tips

Your credit score is not static. It changes over time, and your score may vary depending on the scoring system used.

The credit reporting bureaus update your score after anything happens that affects your credit. So if you are late with a payment or if your credit utilization climbs higher, you may see your score drop. On the other hand, if you were to lower your credit utilization, you might positively impact your score. These actions can all help build your score: paying your bills on time, every time; managing your credit utilization; not applying for too much credit in a short period of time; having a good mix of credit; and maintaining a longer credit history.

It’s also important to monitor your credit score and regularly examine your credit report for errors. (You can check your credit report without paying each week from each of the credit reporting bureaus: Experian®, Equifax®, and TransUnion®.)

If you catch a mistake, dispute the error with the credit reporting bureau immediately to prevent it from dinging your score.

You may be able to build a stronger credit score with the help of healthy financial habits, such as budgeting and saving regularly, which can help you stay out of debt and manage payments. You might use spending apps and money tracker apps in this pursuit. A good place to start: See what your financial institution offers. You can also search online for third-party tools.

Recommended: Why Did My Credit Score Drop After a Dispute?

The Takeaway

Your credit score can impact the type of loans you qualify for, as well as the terms and interest rates lenders may offer. For a conventional home loan, you will typically need a score of 620 or higher, and a score of 700 and up for a jumbo loan. Government-backed loans, such as FHA, VA, and USDA loans, however, may accept credit scores in the 500s. Those with lower scores will typically pay higher interest rates.

While you may qualify for a loan with the minimum required credit score, it may be beneficial to monitor and build your score before taking out a loan to reduce the overall cost of borrowing.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is a decent credit score for buying a house?

On average, homebuyers had a credit score of 758 in 2024, but you may be able to qualify for a loan with a lower score. Typically, conventional loans are available to those with scores of 620 and up. Usually, higher scores can give access to more favorable rates and terms.

Can you buy a house with a 600 credit score?

With a credit score of 600, you may be able to qualify for a government backed loan, such as an FHA, VA, or USDA loan. Or you might choose to wait and build your score to 620 or higher, which could then give you access to a conventional home loan.

How much house can I afford if I make $70,000 a year?

There are several rules of thumb about how much to spend on housing each year. One common one is that you shouldn’t spend more than 30% of your gross income each month on housing costs including your mortgage and property taxes. That works out to a mortgage payment of about $1,650 each month. You can then use online mortgage calculators to explore how much you can borrow to fit this monthly budget. In some tight housing markets, people may spend more. In fact, one recent study found that more than 20% of homeowners indeed exceeded this amount.

What credit score is needed to buy a $400,000 house?

Securing a mortgage isn’t just a matter of your credit score versus how much the prospective home costs. Several factors will be evaluated by lenders in addition, such as down payment amount, income, and more. For a conventional loan, you likely need a credit score of 620 or higher, while you may access a government-backed loan with a lower score (say, 500 and above) if you meet certain criteria.

Is a 580 credit score good enough to buy a house?

With a credit score of 580, you may qualify for an FHA, VA, or USDA loan. You can work with online tools and specific lenders to see what your odds of qualifying are or seek out preapproval.

How much income do I need for a 300K FHA loan?

The income you need will vary depending on the lender guidelines and other factors, such as down payment funds you may have available, your credit score, and more. It could be helpful to discuss your qualifications with a lender or use an online calculator to see what you could qualify for.

Photo credit: iStock/angkhan

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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If you’re looking to buy a condo or townhome, understanding the distinctions may help you home in on the choice that better suits your lifestyle and needs. Read on to learn the major differences between these two kinds of property.

What Is a Condo?

A condominium is a private property within a larger property, whether that be a single building or a complex. Residents share amenities like clubhouses, gyms, pools, parking, and the common grounds, and pay homeowners association (HOA) dues to support those shared assets. If you buy a condo, you’ll own your interior space only.

What Is a Townhouse?

A townhouse is a single-family unit that shares one or more walls with another home, usually has two or more floors, and may have a small backyard or patio. If you buy a townhouse, you’ll own the interior and exterior of the unit and the land on which it sits. Upkeep of the exterior could be split between you and the homeowners association (HOA).


💡 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.

Condo vs Townhouse: Differences

Both are part of a larger structure, unlike some other house types, and both usually share one or more walls, but some similarities end there. Here are the key differences.

1. Construction

In the condo vs. townhouse debate, construction differs. A townhouse will share at least one wall with a property next door. A condo could have another unit below and above it, in addition to neighbors on either side. That could mean sharing all surrounding walls and floors/ceilings.

2. Actual Ownership

If you’re considering townhouse vs. condo, what would you actually own? With townhomes, the buyer owns the land and the structure. That could mean some creativity with decorating the lot or the home’s exterior. With condos, the buyer owns the interior of the unit and an “interest” (along with all of the other owners) in the common elements of the condominium project.

3. Community

With both condos and townhouses, residents will have fairly close contact with their neighbors. With shared walls and spaces, residents may have more social relationships with their community than they would with a single-family home. That means it’s important for buyers to research the community when condo shopping. Is the condo social? Does it plan a lot of events, or do people generally keep to themselves? Since there are many shared spaces, understanding how the community functions could directly affect living there.

If a townhome isn’t part of an HOA, living in the complex could feel similar to living in a single-family home. In that case, it could be up to the buyer to create a sense of community.

4. Homeowners Associations

Condos come with an HOA, a resident-led board that collects ongoing fees that can range from $200 to thousands of dollars, and mandates any special assessments. The HOA also enforces its covenants, conditions, and restrictions (CC&Rs).

Not all townhouse communities have an HOA, but if they do, townhouse owners usually pay lower monthly fees than condo owners because they pay for much of their own upkeep.

5. Obligations and Regulations

What’s the difference between a townhouse and a condo when it comes to rules and regulations? Condo owners will be required to meet all HOA standards. That could dictate anything from what residents want to hang on their front door to whether they can have pets, how many, and whether Biff needs to be registered as a service animal or emotional support animal. If an owner wants to renovate their condo, they may have to get the work approved by the HOA.

If a townhome is part of an HOA, many of the above restrictions could apply. However, if it’s not an HOA community, townhouse owners have more freedom to decorate the exterior of their home or maintain their landscape as they see fit.

6. Insurance

Condos have their own form of property insurance. HO-6 provides coverage for the interior of a condo and the owner’s personal belongings. In addition, the entire building needs to be insured, which is paid for with HOA dues.

If a townhouse is part of an HOA community, each property requires HO-6 insurance and coverage for the community through HOA dues. When a townhouse isn’t part of an HOA, buyers are typically required to have homeowners insurance.

7. Fees and Expenses

HOA fees for condos are usually higher than for townhouses because they cover exterior maintenance and shared amenities. If townhouse owners are part of an HOA, they’ll usually pay lower monthly fees because they pay for much of their own upkeep.

Condo owners don’t have to worry about repairing the roof or replacing siding. Everything exterior-facing is managed collectively and paid for with HOA dues, but those fees may be high and are periodically reevaluated, and so may rise over time.

8. Financing

It can be harder to obtain financing for a condo than for a townhouse. Condos may be eligible for conventional mortgage loans and government-insured loans. (Study the mortgage basics to learn more about the difference between these types.) Lenders of conventional loans will review the financial health of an HOA, whether most of the units are owner-occupied, and ownership distribution. Interested in an FHA loan or a VA loan? Both agencies maintain respective lists of approved condos.

In the case of a townhouse, the financing process is similar to that of a traditional mortgage because a townhouse includes the land it’s built on. Its value is factored into the process.

9. Resale Value

A large factor in a condo holding value is the management, which isn’t always in the hands of the owner. Strong management can help a condo maintain or grow in value. Additionally, where the condo is located will influence resale value. Condos generally hold value but don’t see the boost in resale expected with single-family homes. Similarly, buying a townhouse may not usher in the appreciation of most single-family homes.


💡 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.

Condo vs Townhouse: Which May Be Right for You?

Condos and townhomes have their fair share of differences, as well as some similarities. Overall, condos can offer a low-maintenance property where owners simply look after their condo interior. With condo ownership comes the added perk of shared amenities. But condos come with monthly HOA fees, which must be factored into any purchase. Additionally, the community association and its management of the property will likely have a large impact on what life is like in a particular condo complex. Condo buyers may be more community-minded, as they share space with their neighbors. (If a condo feels like the right choice, read a guide to buying a condo as you embark on your search.)

Townhouses offer more freedom and privacy than condos. Owners may have the option of personalizing their exterior and enjoying outdoor space if the property has a patio or backyard. Townhomes generally require more responsibility and upkeep than a condo, even if there’s an HOA involved. Exterior maintenance will be required. If this sounds like a good fit, dig deeper by reading a guide to buying a townhouse.

Of course, you may be better suited to a different living situation altogether. House or condo? Take a quiz to learn which of these options might be best for you.

The Takeaway

When it comes to finding a home, the perfect fit is up to the individual, but buyers may want to take a hard look at monthly fees, community rules, how social they intend to be, and precisely what they own and must maintain.

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

Between condos and townhouses, which is cheaper to buy?

The cost of a condo and townhome will vary based on location and size, but condos are often less expensive than townhouses because they come with no land.

Do you own the land around a condo if you buy it?

No. The purchase of a condo only includes the interior.

Is the resale value higher for a condo or townhouse?

In general, condos and townhomes don’t appreciate as quickly as single-family homes. The value will vary based on area, upkeep, and other conditions.

Between condos and townhouses, which has better financing options?

Financing a townhome is like financing a single-family home. A buyer can choose from multiple types of mortgages.

Financing a condo, on the other hand, involves a lender review of the community or inclusion on a list of approved condominium communities. Because a private lender could see a condo as a riskier purchase, the interest rate could be higher unless a large down payment was made.

Photo credit: iStock/Inhabitant

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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.

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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