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If you’re thinking about tapping the equity in your home, you’re looking at either a home equity loan or a home equity line of credit, better known as a HELOC. Both may allow you to borrow a large sum at a relatively low interest rate and with lower fees than a mortgage refinance.

Either a home equity loan or a HELOC is a second mortgage, so you’re betting the house: Your home can be foreclosed on if you cannot make payments. But for homeowners who have a secure income, good credit, and a substantial amount of equity, either one can be an excellent way to fund big expenses like renovations and debt consolidation.

When looking at a HELOC vs. a home equity loan side by side, there are differences that mean one type of loan may make more sense than the other to you. Let’s take a deep dive into the two to help you decide.

What’s the Difference Between a HELOC and Home Equity Loan?

A HELOC is a revolving line of credit. You can take out money as you need it, up to your approved limit, during the draw period. You may be able to make interest-only payments on the amount you withdraw during that time, typically 10 years.

After the draw period comes the repayment period, usually 20 years, when you must repay any principal balance with interest.

Most HELOCs have a variable interest rate. Some have a low introductory rate, and some require minimum withdrawal amounts.

A home equity loan is another type of second mortgage that uses your home as collateral, but in this case, the funds are disbursed all at once and repayment starts immediately. It is usually a fixed-rate loan of five to 30 years, and monthly payments remain the same until the loan is paid off.

The main differences between the two are how the money is disbursed, how it is repaid, and how the interest rate works.

Key Differences

	HELOC	Home equity loan
APR	Typically variable	Typically fixed
Repayment	Repay only the amount borrowed, and may have the option to pay interest only in the draw period	Repayment starts immediately at a set monthly payment
When are funds disbursed?	Funds are disbursed as you need them	Funds are disbursed all at once
Loan type	Revolving line of credit	Installment loan

Comparing HELOCs and Home Equity Loans

Homeowners usually will need to have 15% to 20% equity in their home — the home’s market value minus what is owed — to apply for a home equity line of credit or home equity loan.

If you do, then how much home equity can you tap? Most lenders will require your combined loan-to-value ratio — combined loan balance / appraised home value — to be 90% or less, although some will allow you to borrow 100% of your home’s value.

Here’s what to look for when comparing a HELOC with a home equity loan.

Interest Rate

The interest rate for a home equity loan is typically fixed, while the interest rate for a HELOC is usually variable.

HELOC rates tend to be a little higher than home equity loan rates (but keep in mind that you may pay interest only on what you borrow from the credit line). The exception is a low teaser rate that may be offered for six months to a year before converting to a variable rate.

Keep in mind that Federal Reserve decisions affect the rates for both products. The prime rate, the rate given to low-risk borrowers for prime loans, is based on the federal funds rate set by the Fed.

Even as home equity loan rates rise, though, the rate for these secured loans will be lower than that of almost all unsecured personal loans and credit cards.

Recommended: What to Learn From Historical Mortgage Rate Fluctuations

Costs

Closing costs are essentially the same for a HELOC and a home equity loan — 2% to 5% of the total loan amount — but many lenders offer to reduce or waive them.

Lenders may have already baked their costs into your rate quote.

You’ll want to shop for the best deal, comparing rates, upfront costs, closing costs, and fees. Bear in mind that advertised rates are often reserved for well-qualified borrowers, so read the fine print.

Requirements

To qualify for a HELOC or home equity loan, lenders will look at your employment and credit history, income, and the appraised value of your home. In other words, you must:

•   Have enough equity in your home

•   Have enough income to cover the monthly payment on the home equity loan

•   Have a good credit score (typically 680 or over, though many lenders prefer 700-plus)

•   Have a debt-to-income ratio of 36% to 50%

Repayment

When it comes to repayment, HELOCs and home equity loans are very different.

With a home equity loan, the entire loan amount is deposited into your account at once. This also means you’ll start paying on the loan immediately.

With a HELOC, you use funds as you need them, up to the limit, during the draw period. Your payment may be just the interest charge for the amount borrowed. The revolving credit line means you can withdraw money, repay it, and repeat before the repayment period, when the draw period ends and principal and interest payments begin.

Money Disbursement

Funds for a home equity loan are disbursed immediately. Sums from a HELOC are withdrawn as needed.

Payments

Payments on a home equity loan begin immediately. Payments on a HELOC aren’t required until you start borrowing money from your credit line.

HELOC vs Home Equity Loan: Pros and Cons

HELOC Pros and Cons

Pros:

•   Access up to 90% of your home equity and sometimes more

•   Flexible use

•   Only borrow what you need

•   Lower interest rate than most unsecured loans or credit cards

•   Some have low introductory APR offers

•   Loan interest may be tax deductible if the borrowed money was used to buy, build, or substantially improve your primary home (also true of home equity loans)

Cons:

•   May have a slightly higher interest rate than a home equity loan

•   Variable interest rate means your rate and monthly payment can change throughout the repayment period

•   Home is at risk of foreclosure if you’re unable to make payments

•   The repayment period could bring sticker shock

•   Paying off a loan balance early could trigger a prepayment penalty, and closing a credit line within a predetermined period — usually three years — could negate the waiving of closing costs

•   In a small number of cases, a balloon payment could be required at the end of the draw period
May include annual or inactivity fees

Home Equity Loan Pros and Cons

Pros:

•   Access up to 90% of your home equity and sometimes more

•   Funds disbursed at once

•   Fixed interest rate

•   Predictable monthly payments

•   Lower interest rate than unsecured loans

Cons:

•   Home is at risk of foreclosure if you’re unable to make payments

•   No flexibility in the amount of money you get

•   Limited to fixed installment payments

Which Is Better, HELOC or Home Equity Loan?

The better loan is the one that fits your life circumstances. A home equity line or loan can be used to buy a second home or investment property, pay medical bills, pay off higher-interest credit card debt, fund home improvements, and pay for other big-ticket items.

When a HELOC Is a Better Fit

HELOCs are more flexible than home equity loans. If you’re unsure how much money you need, don’t need to borrow immediately, or want flexible repayment options, you might want to think about applying for a HELOC over a home equity loan.

When a Home Equity Loan Is a Better Fit

A home equity loan is great for people who know how much they need to borrow and want the regularity of an installment loan with a fixed interest rate and fixed payments.

The Takeaway

Deciding on a home equity loan vs. a HELOC can depend on what you’re planning to use the money for. If you need a certain amount of money all at once, a home equity loan may be a good fit. If you want the flexibility to take out money as you need it, a HELOC may work better.

A HELOC brokered by SoFi may be just the right thing, right now for your situation. Access up to 90%, or $500,000, of your home equity for almost any need.

Say hello to a HELOC and start funding your dreams.

FAQ

Which is faster, a HELOC or home equity loan?

They’re tied, on average. It could take two to six weeks to get a HELOC or home equity loan.

HELOC or home equity loan for an investment property?

Investors may like the flexibility of a HELOC. A lump-sum home equity loan, however, could also be advantageous for renovating or buying properties.

HELOC or home equity loan for a home remodel?

If you know exactly how much you’re going to be spending on a home remodel and you’d like predictable payments, you can use a home equity loan. If you want more flexibility or are less certain about your costs, you may like the flexibility of a HELOC.

Can you have both a HELOC and home equity loan?

It is rare to have both a HELOC and a home equity loan. One would be a second mortgage and the other would be a third mortgage. Few banks are willing to lend money on a third mortgage, and for any that do, the interest rate would be high.

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Photo credit: iStock/Hispanolistic

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Modular homes are increasingly capturing interest as a fast and affordable housing option. The global market for modular homes is forecast to grow from $82 billion in 2022 to $139 billion in 2029. These houses are built from factory-made components and are then constructed on a permanent foundation on a building site. They must meet the Department of Housing and Urban Development standards, as well as local guidelines.

Not to be confused with manufactured homes (previously called mobile homes), which can be moved from location to location, a modular home can be a good option to what are known as stick-built or traditionally constructed homes.

Could one be right for you? Here are the pros and cons of these structures, to help you decide if this might be your next home sweet home.

What Are Modular Homes?

Modular homes are constructed in a way that differs from a traditionally built home. Many of the components are made in a factory and then shipped to the property, where they are assembled on a permanent foundation.

The process is typically less expensive and faster than a stick-built home (meaning ones that are assembled piece by piece at the site).

As briefly noted above, modular homes are permanent structures and are subject to local and federal standards.

Recommended: Mobile vs. Modular vs. Manufactured Homes

How Are Modular Homes Constructed?

One of the biggest differences from a traditional home is the way modular homes are constructed. The house’s components are assembled in a factory and delivered to the homesite in one or more trips. The modules may be akin to three-dimensional boxes that are connected to one another and the foundation at the job site.

The benefit of constructing modular home components in a factory is the controlled environment. Because the parts are assembled under ideal conditions (perfect temperature, humidity, etc.), buyers can usually expect a consistent, high-quality build.

In addition, the actual build can move more quickly. Estimates of the time to build a modular home range from 16 to 32 weeks, depending on how customized the plans are and other variables.


💡 Quick Tip: Don’t overpay for your mortgage. Get your dream home or investment property and a great rate with SoFi Mortgage Loans.

The Pros and Cons of Modular Homes

As with most things in life, there are pluses and minuses to modular homes. Consider these points to decide if one could be right for you. First, the upsides:

•  Modular homes are typically 10% to 20% less expensive than traditionally built homes.

•  They can be built up to 30% to 60% faster than stick-built homes.

•  Depending on the builder, they may be customized to suit your needs, both in terms of layout/square footage and finishes. You can get a very basic home or a truly luxe, mansion-like one.

•  They can be more energy-efficient than traditionally built houses, and the materials and building process may be more environmentally friendly as well.

•  They are considered better able to withstand environmental threats (flooding, hurricanes) than traditionally built homes.

That said, there are some disadvantages to modular homes to consider:

•  You need to add in some costs to your home-buying budget: the cost of the land, the foundation, and other related expenses. Yes, you are paying for those things when you buy a stick-built house, but it’s already rolled into the price.

•  You will need to investigate how to finance your home. If it’s an already built home, then a home loan will work. But if you are building from the ground up? Rather than getting a mortgage (since you aren’t buying an existing home from a seller), you may want to look into construction loans. Some modular home companies offer their own financing and lending programs.

•  Depending on the modular home company, you may not be able to get every last detail you want. Shopping around can help you find the top features you want in your home.

Modular Home Risks

There are a couple of considerations prospective modular homeowners should be aware of:

•  Finding land can be difficult in some areas. If you love modular homes but want to live in a suburb that has a hot housing market, you may be hard pressed to find a lot that works for you.
(You also may need a land loan to purchase your property if you do find a lot you love.)

•  It may be difficult to make changes once construction has started because so much of the home is pre-built.

•  Bias exists. Some people confuse modular homes with manufactured or mobile homes, which don’t have a foundation, and may therefore avoid them. This could mean a real estate agent might not show buyers a modular home that’s for sale, for example, due to this misperception.

How to Find Modular Homes for Sale

You can shop for pre-existing modular homes on major real estate websites like Realtor.com and also on specialized sites that list this type of home.

To construct a modular home, you can look at such sites as modularhome.org and modularhomeowners.com. Also, with the growing popularity of modular homes, you may well be able to get a word-of-mouth referral from someone in your circle.

How to Choose a Modular Home

When considering a modular home builder, much will depend on the following factors:

•  Do you like the style of the houses they build? The floorplans?

•  Are their prices lining up with your budget? Do they offer financing, if you need it?

•  Where are they located? If their factory is somewhat close to you, which can help reduce transportation expenses?

•  Are you impressed with the quality of their work? Their customer service?

•  Which brands do they partner with? Many manufacturers work with certain vendors for windows, doors, appliances, etc.

💡 Quick Tip: A home equity line of credit brokered by SoFi gives you the flexibility to spend what you need when you need it — you only pay interest on the amount that you spend. And the interest rate is lower than most credit cards.²

How to Finance a Modular Home

Financing a modular home will take different paths depending on whether the house is already constructed or you’re building it.

•  For already built homes, you may look into conventional mortgage loans, FHA, USDA, and VA loans, just as you would for any other property you are interested in.

•  If you are building your own modular home, then you will probably need to apply for a construction loan to have the funds to get your house over the finish line.

•  Some modular home companies offer financing options.

•  You might also see if a personal loan could help you afford a modular home. Some lenders will allow you to buy a property with the funds; check with your lender, and understand the interest rate you will be charged.

Are Modular Homes Worth It?

Whether a modular home is worth it is a very personal decision.

For some people, there may be no greater satisfaction than working with a modular builder to specify their dream home and seeing their home come together, usually more quickly and less expensively than other building methods. They can collaborate with their builder and find a house plan that checks off all (or most) of the items on their home wish list.

Many people are thrilled with the eco-friendly aspects of these homes as well.

However, there are also people who find a vintage home more appealing or who would rather walk through an already built home and know exactly what they are buying.

Recommended: How Much Does It Cost to Build a House?

Modular Home Tips

If you’re set on buying a modular home, here are things to consider:

•  Style of home. Modular homes come in various styles, from contemporary to log cabins. It can be wise for buyers to shop around and work with a modular home manufacturer that suits their taste.

•  Manufacturer location. The cost of transporting a modular home can be high. It may be essential for the budget-conscious modular homebuyer to work with a manufacturer close to the home’s final destination.

•  Custom builds. Some modular home manufacturers may offer more customizable options, from floor plans and finishes. Do your research, and find a builder who can check off most of the priorities on your wish list.

•  Timeline. Some modular homes go up relatively quickly, while other manufacturers could be dealing with back orders. If time is of the essence, choose your builder carefully.

The Takeaway

Modular homes are growing in popularity. Components (modules) are factory-built and then assembled on a foundation; this process can be faster and more affordable than buying a traditionally built home. They also often have environmental benefits.

However, they aren’t for everyone: Building your own home is very different than hitting the open houses, and financing a modular home likely takes you on a path that involves a construction loan. If, however, you fall in love with an already built modular home, then you can usually apply for a mortgage from a number of lenders.

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.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is a modular home a good investment?

A modular home can be a good investment. They often offer energy efficiency which is a selling point. However, a modular home’s value will be dependent on the housing market in your area, just as it would be with any other kind of home.

Are modular homes dangerous?

The dangers of modular homes are minimal. As long as the assembly of the modular home complies with local building codes, modular homes are as safe as a traditionally built home.

Is the value of modular homes decreasing?

Modular homes appreciate and depreciate in a way that’s similar to traditional builds.

Where can you get financing for modular homes?

Among the possibilities from various lenders are a construction loan, financing from your builder, or a personal loan.

How long will a modular home last?

With proper maintenance and high-quality materials, a modular home should last as long as, or longer than, any traditionally built home. Some of the first modular homes, built in the early 1900s, are still standing today.

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Photo credit: iStock/turk_stock_photographer

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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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Buying a home is exciting, but coughing up the down payment can be a downer. That’s where down payment assistance enters the picture. Government and nonprofit programs help unlock the door to homeownership for qualified buyers.

It makes sense to put down as much as you can comfortably afford on a down payment. The more you put down, the less you’ll be borrowing, which translates to lower monthly payments and less interest paid over the life of the loan. But many people put down less — in some cases far less — than 20% of the home’s purchase price, the amount often recommended to buyers.

In an April 2024 SoFi survey of 500 people intending to purchase a home, almost a third of respondents (30%) said they were planning to put down between 11% and 20%. Almost one in five (19%) said they would put down 6% to 10%. Ten percent of buyers were aiming for a 5% down payment or less, and fully 7% of people were exploring no-down-payment options. First-time buyers who finance their home are especially likely to have a lower down payment, according to data from the National Association of Realtors®.

Down Payment Defined

Depending on their financial situation, homebuyers may qualify for down payment assistance from the government or a private entity.

Down payment assistance programs come in several forms. Some offer homebuyers loans and grants that can be applied directly to down payments and, in some cases, help with closing costs, too.

The down payment — which covers the upfront “out of pocket” cost of getting a mortgage — is usually made at the mortgage closing and can be paid with a check, cashier’s check, or electronic payment.

The down payment covers a reasonable percentage of the total home purchase price, with the mortgage covering the remainder. Lenders typically won’t approve a mortgage loan unless the borrower pays upfront cash — anywhere from 3.5% to 20% in most cases — against the total price of the property.

💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

Homebuyer Assistance Programs and Qualifications

If a first-time homebuyer can’t afford a down payment, that opens the possibility of financial assistance.

The programs that tend to provide the most financial assistance to homebuyers — state and federal governments and local, regional, and national nonprofits — will likely need an applicant to clear hurdles in order to qualify for down payment help.

These criteria usually lead that list:

•   The three-year rule. The buyer must not have owned a home in the past three years. In most scenarios, government agencies and private charities deem anyone who hasn’t owned a home in the previous three years, even a repeat buyer, a “first-time home buyer.”

•   Must be for a primary home. Homebuyers should be clear if the money is going to the purchase of a primary residence. If the home is an investment property designed to draw rent, financial assistance providers usually won’t issue a green light on funding.

•   Income limits. First-time homebuyers may have to meet income limits. The buyer may also have to keep the home price below a specified limit.

•   Funding caveats. Depending on the funder, the first-time homebuyer may have to take a homebuyer education course and may be asked to contribute some money to the down payment.

New homebuyers looking for financial help — and who qualify for that help — can get financial aid from a variety of sources, both public and private.

The help can be substantial.

According to a report from the Urban Institute, up to 51% of potential homebuyers residing in the report’s U.S. metropolitan areas studied would qualify for some form of home down payment assistance. Upon applying, those homebuyers would be in line to receive between $2,000 and $39,000.

Yet in SoFi’s recent survey, only 38% of potential homebuyers who said not having an adequate down payment was their biggest challenge had explored down payment assistance programs. Actively looking for down payment assistance could be a good move. When that search begins, the following funding sources may be a good place for homebuyers to start.

Recommended: First Time Homebuyer Guide for 2023

HUD, the Gatekeeper

A good source for state and nonprofit home down payment assistance is the Department of Housing and Urban Development, or HUD.

HUD is a federal gatekeeper, steering homebuyers to various state and nonprofit programs and offering home buying and down payment advice from HUD home assistance counselors.

Each state may have different rules and requirements, so it’s a good idea to talk to either the state agency directly or to a qualified advisor through the HUD housing counselor portal.

Federal, State, and Local Government Grants

Government grants might be the optimal form of down payment assistance, as it’s free money. Grants usually come from federal, state, or local governments and nonprofit groups.

Each government agency or charitable group has its own rules for down payment assistance grants, but in general, you have to pass an eligibility test (the common criteria are listed above) to qualify.

Again, HUD does not offer direct grants to individuals but works through local governments and nonprofit organizations to make financial assistance and counseling available.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Federal Government Loans

While technically not deemed direct down payment assistance, U.S. government-insured housing loans consist of low-interest loans to new homebuyers that enable them to make lower down payments, thus making it easier to afford both a home loan and a down payment.

Federal home loans usually come from three agencies:

The Federal Housing Administration. The FHA provides loans from private lenders to qualified homebuyers. The primary qualifier is a FICO® credit score of 580 or above. A borrower with a credit score of 500 to 579 who brings a 10% down payment to the table may also qualify for an FHA loan. In SoFi’s survey, only 49% of homebuyers had heard of FHA loans, yet these can be a great solution for buyers.

U.S. Department of Agriculture. The USDA offers direct home-buying assistance to rural homebuyers. Loans enable qualified homebuyers to purchase a home with no down payment. The home must be in a qualified rural area, and borrowers’ adjusted annual income cannot exceed 115% of the median income in the area, among other criteria. These loans, too, can fly under the radar with shoppers. In SoFi’s survey, only 4 in 10 buyers (41%) had heard of USDA loans.

There is no minimum credit requirement for a USDA loan, but applicants with a credit score below 640 are subject to more stringent guidelines to qualify.

Department of Veterans Affairs. The VA provides home purchasing assistance to current members of the armed forces, military veterans, and eligible spouses of deceased U.S. military members. Similar to a USDA home loan, a VA loan requires no down payment.

Applicants must meet the VA’s — and the lender’s — standards for credit and income, and be purchasing a primary home.

Forgivable Loans

These loans come from lenders, usually in two forms: deferred payments and forgivable loans.

Forgivable loans are basically second mortgages that borrowers don’t have to repay if they remain in the primary home for a specific time period (for example, 10 years).

Forgivable loans usually have a 0% interest rate, making it easier to afford a home down payment.

State Down Payment Assistance

Assistance programs vary by state. Still, some commonalities exist — especially the urgency to help economically struggling homebuyers afford a home down payment.

These states are examples of that:

Arizona. By and large, homebuyers in most Arizona counties can apply for home down payment assistance through the state’s Department of Housing Home Plus Program.

Homebuyers will need a FICO® credit score of 640 or higher and an annual income of $126,351 or less. Additionally, the purchase price of the home can’t be higher than $371,936.

Florida. The Sunshine State offers home down payment assistance programs via Florida Housing Finance Corp.

•   HFA Preferred and HFA Advantage PLUS Second Mortgage. These down payment and closing cost programs offer 3%, 4%, or 5% of the total loan amount in a forgivable five-year second mortgage.

•   Florida Assist. Eligible homebuyers receive up to $10,000 through an interest-free second mortgage. The money doesn’t have to be paid back unless the homeowner sells or refinances the property.

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

The Takeaway

Government and nonprofit funding are the primary vehicles for down payment assistance, but homebuyers may also seek down payment help from family and friends, retirement and investment funds, or even microlenders.

However a buyer approaches home down payment assistance, the keys are planning, research on available programs, and a disciplined approach to budgeting.

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.

SoFi Mortgages: simple, smart, and so affordable.

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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.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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

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.

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An FHA loan is a type of government home loan program that the Federal Housing Administration insures. It’s a popular mortgage choice, especially for first-time homebuyers, because an FHA loan has lower down payment requirements than conventional loans.

But there are extra costs related to these loans that you might not be aware of. You can use an FHA loan calculator. to help figure out what your monthly mortgage payment and total cost might be.

Why Use a FHA Loan Mortgage Calculator Table

An FHA loan mortgage calculator table has several benefits for homebuyers. These include:

•   Cost estimations: The calculator table can provide estimates of monthly mortgage payments. It helps borrowers plan their budget by showing the expenses involved in buying a home.

•   Time-saving: Mortgage calculations can be confusing and complicated for first-time homebuyers. The calculator table helps simplify and speed up this process.

•   Comparison tool: Buyers can compare options by entering different scenarios into the calculator table. A different interest rate or purchase price will change the monthly payment amounts. A buyer can compare homes and even different types of mortgage loans to help decide which property and loan to move forward with.

•   Informed decision-making: An aspiring homebuyer can use the table to determine the various costs involved in an FHA loan. They can plug in different numbers, such as a lower or higher down payment or a different loan term to see how that might change their monthly payments.

•   Financial planning: Overall, the calculator could help borrowers figure out what they can afford now and how to plan for future payments.

💡 Quick Tip: With SoFi, it takes just minutes to view your rate for a home loan online.

How to Calculate Your FHA Loan Mortgage Costs

Calculating a government home loan like an FHA loan mortgage involves several steps. These include:

1.    Determining the loan’s principal amount and interest. The principal is the amount of money the homebuyer borrows from the lender. The interest is the cost of borrowing the money.

2.    Adding property taxes and homeowners insurance. Homebuyers typically pay state and local property taxes. And you’ll also need homeowner’s insurance to insure the house against theft, damage, or loss, among other things.

3.    Including the Mortgage Insurance Premium (MIP). The MIP protects lenders in case the borrower defaults on their mortgage payments. Borrowers pay an upfront MIP of 1.75% of the loan amount, and then they pay an annual MIP that’s typically charged in monthly installments as part of the mortgage payment.

4.    Adding the loan term. This is the length of the loan, which is usually 15 to 30 years for an FHA loan.

5.    Finally, plugging all the information listed above into an FHA mortgage loan calculator table to estimate the total monthly mortgage cost.

This is what the table for a mortgage calculator for an FHA loan might look like. You can use the table as a template or starting point to fill in the information, adjusting as needed, and then make your calculations.

2024 FHA Loan Mortgage Calculator Table
Purchase Price
Down Payment
Interest Rates
Property Tax
MIP
30-year vs 15-year Term
Total Interest Paid

Recommended: How do FHA 203(k) Home Loans Work?

Examples of FHA Loan Mortgage Calculations

Here are two examples of FHA loan calculations to give you an idea of how the process works. Keep in mind that there might be additional costs to consider, such as closing costs.

Example #1

•   Loan amount: $200,000

•   Interest rate: 3.5%

•   Loan term: 30 years

•   Annual property taxes: $2,500

•   Annual homeowners insurance: $800

•   Mortgage Insurance Premium (MIP) rate: 0.85%

First, calculate the monthly interest rate:
Monthly Interest Rate = 3.5% / 12 = 0.0029167

Next, calculate the monthly principal and interest:
Monthly Payment = ($200,000 * 0.0029167) / (1 – (1 + 0.0029167)^(-360)) Monthly Payment = $898.09

Then, calculate the annual and monthly Mortgage Insurance Premium (MIP):
Annual MIP = $200,000 * 0.0085 = $1,700. Monthly MIP = $1,700 / 12 = $141.67

Add property taxes and homeowners insurance:
Monthly Property Taxes = $2,500 / 12 = $208.33
Monthly Homeowners Insurance = $800 / 12 = $66.67

Calculate the total monthly mortgage costs:
Total Monthly Mortgage Costs = $898.09 (Principal & Interest) + $141.67 (MIP) + $208.33 (Property Taxes) + $66.67 (Homeowners Insurance) = $1,314.76


The total monthly mortgage cost per month is $1,314.76.

Example #2

•   Loan amount: $150,000

•   Interest rate: 4.0%

•   Loan term: 15 years

•   Annual property taxes: $3,000

•   Annual homeowners insurance: $900

•   Mortgage Insurance Premium (MIP) rate: 0.75%

First, calculate the monthly interest rate:
Monthly Interest Rate = 4.0% / 12 = 0.0033333

Next, calculate the monthly principal and interest:
Monthly Payment = ($150,000 * 0.0033333) / (1 – (1 + 0.0033333)^(-180)) Monthly Payment = $1,081.03

Then, calculate the annual and monthly Mortgage Insurance Premium (MIP):
Annual MIP = $150,000 * 0.0075 = $1,125. Monthly MIP = $1,125 / 12 = $93.75

Add property taxes and homeowners insurance:
Monthly Property Taxes = $3,000 / 12 = $250
Monthly Homeowners Insurance = $900 / 12 = $75

Calculate the total monthly mortgage costs:
Total Monthly Mortgage Costs = $1,081.03 (Principal & Interest) + $93.75 (MIP) + $250 (Property Taxes) + $75 (Homeowners Insurance) = $1,500.78


The total monthly mortgage cost per month is $1,500.78.

💡 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 just 3.5%.

Reasons to Calculate Your FHA Loan Mortgage First

There are a number of reasons why it makes sense to calculate an FHA mortgage before you move forward with such a mortgage. Here are five ways calculating your mortgage can be helpful.

•   Determining what’s affordable: Determining the cost of the mortgage can help borrowers search for a home within their price range.

•   Financial preparation: Buyers can see how much money they should plan to spend each month. They can then create a budget and financial plan in order to be prepared to meet the monthly payments.

•   Comparing loan options: Buyers can look at different loan options to choose the one that works best for them. They can also see how a different interest rate, home price, or down payment amount will affect their monthly cost.

•   Preventing surprises: Using the calculator helps borrowers understand what the loan costs will be so they don’t get hit with expenses they weren’t expecting.

•   Helping with negotiation: The more informed a buyer is about the various costs associated with the loan and the terms, the better they may be at negotiating the best terms.

Recommended: Home Loan Help Center

Tips on How to Save on Your FHA Loan Mortgage

If you’re interested in getting an FHA mortgage, there are a few things you can do to help get the best deal for your situation.

Build your credit score. This is one of the tips to qualify for a mortgage that it’s good to know. Strengthening your credit may help you get better interest rate terms. Pay off your debts if you can, and pay your bills on time to help build your score.

Shop around for the best interest rate. Different lenders offer varying interest rates for FHA loans. See what you may qualify for. A higher credit score may help you get a better rate.

Consider making a higher down payment. This could potentially help make your overall mortgage amount and monthly payments lower.

Negotiate closing costs. Closing costs are typically 4% to 5% of the home’s purchase price. You may be able to negotiate with the lender to try to lower some of those costs.

Take advantage of down payment assistance programs. Many states and cities offer down payment assistance programs for first-time homebuyers.

Consider mortgage refinance when interest rates drop. If you get a lower rate when you refinance, you can typically reduce your monthly mortgage monthly payments.

The Takeaway

If you’re interested in an FHA loan, an FHA loan calculator can help you figure out the total costs of your loan and your monthly loan payments, which in turn can help you budget and plan for them. For instance, you’ll factor in such costs as homeowner’s insurance and Mortgage Insurance Premium.

Shopping around for the best interest rate and comparing different loan options may also help you save money on an FHA loan.

SoFi offers a wide range of FHA loan options that are easier to qualify for and may have a lower interest rate than a conventional mortgage. You can down as little as 3.5%. Plus, the Biden-Harris Administration has reduced monthly mortgage insurance premiums for new homebuyers to help offset higher interest rates.

Another perk: FHA loans are assumable mortgages!

FAQ

What are the new FHA limits for 2023?

The FHA’s nationwide limit “floor” and “ceiling” for a one-unit property in 2023 are $472,030 and $1,089,300, respectively.

What is the minimum credit score for FHA in 2023?

For an FHA loan, a minimum credit score of 580 and a down payment of 3.5 percent are required. You can still qualify with a credit score as low as 500 if you can increase your down payment to at least 10%.

How is an FHA loan amount calculated?

The FHA loan amount is calculated by determining the maximum loan size that a borrower qualifies for, which is typically based on the borrower’s income, creditworthiness, and the specific FHA loan program’s guidelines. The loan amount is further influenced by factors such as the property’s appraised value and the FHA’s required loan-to-value ratio.

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Photo credit: iStock/ridvan_celik

^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.
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.

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.

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.

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.

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There are many steps in the homebuying process, not least of which is deciding what type of mortgage to use. Comparing two common mortgage categories — a loan backed by the Federal Housing Administration (FHA) vs a conventional loan — is a smart place to start. This may be especially true for first-time homebuyers, who often find it challenging to save a substantial amount of money for a down payment.

Understanding FHA Loans and Conventional Mortgages

Buying a home is often the largest investment of a lifetime. It’s important for borrowers to understand how the FHA loan vs conventional loan decision could impact their interest rate, loan terms, and minimum down payment. Eligibility requirements also vary between different types of home mortgages. Let’s examine how each loan type works, plus the factors to consider when deciding between an FHA vs a conventional loan.

💡 Quick Tip: SoFi’s Lock and Look ⁺ feature allows you to lock in a low mortgage financing rate for 90 days while you search for the perfect place to call home.

What Is an FHA Loan?

An FHA loan is a government-backed loan that’s issued by a lender, such as a bank or credit union, but insured by the Federal Housing Authority (FHA). FHA loans offer low down payment options, as well as flexible income and credit guidelines. For a first-time homebuyer, it may be easier to secure an FHA loan than a conventional mortgage, although it’s always worth exploring both options.

What Is a Conventional Mortgage?

Conventional loans are not insured by the government. They typically have stricter borrower requirements than FHA loans but can cost less over the life of the loan.

Basic Eligibility and Application Process for Each

There are some key differences in eligibility requirements between these two popular mortgage types. Eligibility for FHA and conventional loans is based in part on financial factors like credit score and debt-to-income ratio (DTI). Additionally, FHA loans can only be used for a primary residence and require borrowers to occupy the property within 60 days. Buyers can typically have only one FHA loan at a time, unless they meet specific exceptions.

Applying for either type of home loan involves many of the same steps of the mortgage preapproval process. With either mortgage type, lenders may ask borrowers to submit information on the property they’re purchasing and documentation of income, assets, debts, and employment.

Recommended: The Mortgage Loan Process Explained in 9 Steps

FHA vs. Conventional Loans: Key Distinctions

In a head-to-head FHA vs conventional loan comparison, it’s worth noting some key distinctions. The minimum down payment, credit requirements, insurance, loan limit, and property eligibility varies between each loan type. Here’s how it looks:

Down Payment Requirements and Differences

Pitting an conventional loan vs. an FHA loan will show you how much money you need to put down on a house. (To get a good sense of how much home you are prepared to buy, use a home affordability calculator.) The minimum down payment for FHA loans is 3.5% for borrowers with at least a 580 credit score and 10% for borrowers with credit scores between 500-579. Meanwhile, conventional loans can offer down payments as low as 3% for a fixed-rate loan, or 5% for an adjustable-rate mortgage.

Credit Score Requirements and Impact on Approval

Lenders will look at your credit score with either loan type. Borrowers can secure an FHA loan with a credit score of 500, though as noted above, this requires a down payment of 10% versus just 3.5% with a credit score of 580 or higher. Conventional loans have stricter credit requirements — borrowers will typically need a credit score of at least 620 to qualify.

Mortgage Insurance: PMI vs. MIP

Mortgage insurance premiums (MIPs) are required with an FHA loan. This includes an upfront payment equivalent to 1.75% of the loan and an annual premium that’s spread across monthly mortgage payments. MIP runs for the full loan term or for 11 years if a borrower puts 10% or more down. With a conventional loan, buyers who put less than 20% down will need private mortgage insurance (PMI), which is paid monthly with the mortgage payment.

Loan Limits and Property Eligibility

The amount you can borrow and the condition and intended use of the property are key factors when deciding between an FHA vs. conventional loan. FHA loan limits are set annually by the U.S. Department of Housing and Urban Development (HUD). For 2025, the limit for single-family residences is $524,225 for low-cost areas and $1,209,750 for high-cost areas. The limits increase for two-, three-, and four-unit properties. In 2025, the conventional loan limit for single-family properties is $806,500 in low-cost areas and $1,209,750 in high-cost areas.

Property eligibility also differs by loan type. FHA loans involve stricter appraisals that consider safety and building codes, not just the home’s value. Additionally, conventional loans can be used for a second home while FHA loans are limited to primary residences.

Interest Rate Variations

Interest rates are influenced by several factors, including a borrower’s income, credit score, down payment amount, and the overall state of the economy. Because FHA loans are backed by the government, they generally have more competitive interest rates compared to conventional mortgages.

Benefits and Drawbacks of FHA Loans

Lower Down Payment but with Mortgage Insurance Premium

For borrowers with credit scores of 580 or higher, the ability to put as little as 3.5% down is a key reason for choosing an FHA loan. But FHA borrowers pay MIP, regardless of the down payment amount.

Recommended: Private Mortgage Insurance (PMI) versus Mortgage Insurance Premium (MIP)

Flexible Credit Requirements

In terms of credit score, FHA loans are easier to qualify for than conventional loans. FHA loans require a credit score of 580 to put 3.5% down or 500 to put 10% down.

Property Eligibility and Restrictions

FHA loans are intended for primary residences, so they can’t be used for vacation homes or investment properties. The appraisal process for FHA loans is also more strict than for conventional loans. The FHA appraisal assesses the property value and the home condition to ensure it meets minimum property standards set by HUD. These extensive standards cover design, as well as building materials such as insulation.

Interest Rate Variability

FHA loans usually have lower interest rates since lenders incur less risk with government-backed loans. Interest rates vary by lender, so it’s worth shopping around to compare options, whether you are considering an FHA or a conventional mortgage.

Advantages and Disadvantages of Conventional Mortgages

Opting for a conventional loan vs FHA loan comes with a mix of potential benefits and drawbacks.

Higher Down Payment but No Upfront Mortgage Insurance

Though borrowers could qualify for a conventional loan with a 3% down payment, a higher down payment is more common. The average down payment on a house is 13%, although younger borrowers and first-time buyers often put down less than this. Borrowers can choose to put 20% down on a conventional loan to avoid the cost of private mortgage insurance.

Stricter Credit Score Requirements

The minimum credit score to qualify for a conventional loan is 620, though this can vary by lender.

Property Eligibility and Restrictions

Conventional loans don’t have the same occupancy requirements as FHA Loans. This allows borrowers to purchase a variety of property types, including primary residences, vacation homes, and investment properties.

Interest Rate Stability and Flexibility

There are two types of conventional loans: fixed-rate and adjustable-rate. The former has the same interest rate for the loan term, offering predictability and stability. Adjustable-rate mortgages, on the other hand, tend to have a lower introductory rate for several years before the rate fluctuates based on market conditions. This can provide upfront savings at the onset of the mortgage.

FHA Loan vs. Conventional: Costs Comparison

When comparing FHA loans vs conventional loans, it’s worth considering the monthly payment and overall cost over the life of the loan with each option. For home buyers with a good credit score, a conventional loan may be more attractive. That’s because conventional loan costs are more dependent on your credit score and down payment amount than FHA loan costs. And as a result, your monthly payments and PMI are lower when your credit score is higher. This is a key difference from how FHA loans work.

Upfront and Monthly Costs for Mortgage Insurance

FHA loans require paying MIP for 11 years or the life of the loan depending on the down payment amount. MIP also involves an upfront cost that’s equal to 1.75% of the loan amount. The ongoing cost of MIP is between 0.45% and 1.05% annually, divided across monthly payments.

With a conventional loan, borrowers pay PMI, which typically ranges from 0.5% to 2% of the total loan amount annually. The cost of PMI depends on the borrower’s credit score, loan-to-value (LTV) ratio, and other factors. Borrowers can stop paying PMI once the mortgage balance is at 78% of the home’s original value or current value following an appraisal. For borrowers with stronger credit, PMI with a conventional loan can cost less than MIP with an FHA loan

Interest Rates and Overall Loan Costs

Though FHA loans can offer more competitive rates and be less expensive in the short-term, borrowers with strong credit could save in the long-term with a conventional loan. Once borrowers get out of PMI on a conventional loan, the annual percentage rate (APR) — the annual cost of the loan — may be lower than an FHA loan.

Down Payment Impact on Immediate and Long-Term Finances

If you can afford to put 20% down on a conventional loan, you’ll avoid the upfront and ongoing cost of PMI. Putting more money down could translate to a lower interest rate, providing further savings on monthly payments and long-term finances.

Increasing your down payment on an FHA loan to 10% can reduce the duration of paying MIP to 11 years and potentially lower the interest rate. However, borrowers who can afford a higher down payment may save more with a conventional loan since PMI can be canceled sooner.

FHA vs. Conventional Loans: Eligibility and Qualification Criteria

Borrowers have to meet certain eligibility requirements to qualify for either an FHA or a conventional loan. Generally, FHA loans are easier to qualify for, but they have stricter property eligibility requirements than conventional loans.

Qualifying Credit Scores for FHA and Conventional Loans

To qualify for a conventional loan, borrowers typically need a credit score of 620 or higher. Meanwhile, borrowers could qualify for an FHA loan with a credit score of 500 if they put 10% down. Borrowers with a 580 credit score can put just 3.5% down.

Down Payment Requirements for Both Loan Types

The minimum down payment for a conventional loan is typically 3% if it’s a fixed-rate mortgage or 5% if it’s an adjustable-rate mortgage. However, the down payment requirement can vary based on a borrower’s financial situation, loan amount, and type of property. FHA loans require either a 3.5% or 10% down payment depending on a borrower’s credit score.

Property Eligibility and Loan Limits

FHA loans can only be used for primary residences, while conventional loans apply to a primary residence, vacation home, or investment property. For 2025, FHA loan limits for single-family homes are $524,225 (in low-cost areas of the U.S.) and $1,209,750 (in high-cost areas). Conventional loan limits for single-family properties are $806,500 in low-cost areas and $1,209,750 in high-cost areas. Buyers who want to purchase a property that exceeds these limits will need to consider a jumbo mortgage loan.

FHA Loan vs. Conventional: Which Is Right for You?

There’s no one-size-fits all solution for buying a house. When deciding between FHA vs conventional loans, the right choice depends on your finances, your long-term financial goals, and the property type you wish to purchase.

Factors Influencing the Choice

Your credit score and ability to make a down payment are key considerations when weighing conventional loan vs FHA loan. If you have a lower credit score or a higher debt-to-income (DTI) ratio, an FHA loan could be a better bet for its flexible credit requirements and more competitive interest rate. However, borrowers with strong credit could qualify for a conventional loan with a down payment of just 3%.

Long-Term Financial Considerations

FHA loans can be more affordable upfront due to lower interest rates and down payment requirements. But borrowers will be on the hook for paying mortgage insurance for the full loan term unless they put 10% down or refinance later on.

If you’re able to qualify for a conventional loan and put 20% down on a house, not having to pay private mortgage insurance can save money in the long run. Conventional loans also offer more flexible repayment terms, whereas FHA loans are either 15- or 30-year mortgages.

Flexibility in Property Choices

FHA loans require occupancy within 60 days and the property must be the borrower’s primary residence. These loans also have strict rules for property conditions. For instance, a manufactured home built prior to 1976 is not eligible for an FHA loan. On the other hand, conventional loans can be used for second homes and a greater range of property types.

💡 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

Deciding between an FHA loan vs a conventional loan depends on your specific financial situation and the property type. An FHA loan could be a better option if you have a higher DTI ratio, lower credit score, or less money to put toward a down payment. Whereas a conventional loan could be a better fit if you have strong credit and can afford a larger down payment.

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.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What are the main differences between FHA and conventional mortgages?

FHA loans are insured by the Federal Housing Administration, whereas the lender assumes the risk for a conventional loan. For the borrower, an FHA mortgage typically has a lower credit-score requirement. It may also allow a lower down payment than some conventional loans.

Can I qualify for both an FHA loan and a conventional mortgage simultaneously?

It is possible to qualify for both an FHA loan and a conventional mortgage simultaneously. Note that lenders will look at your finances closely to ensure you can afford both loans.

How does property type affect the choice between FHA and conventional loans?

FHA loans are restricted to primary residences, while conventional loans can be used for second homes, such as investment properties or vacation homes. FHA loans also have stricter property condition requirements compared to conventional loans.

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Photo credit: iStock/FotoDuets

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.

⁺Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 91 calendar days at the time of preapproval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

^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.
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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