SoFi

A home inspection costs $300 to $425, and while it may not be required by law or your lender, if you’re purchasing a home, you’ll likely want to consider having a professional take a close look. You may even choose to make your contract contingent on the results. Here’s what you can expect to get for your money.

What Do Home Inspectors Do?

The goal of a professional inspection is to help you avoid being surprised by structural defects, plumbing and electrical issues, or other significant problems when buying a home. In highly competitive local real estate markets, some buyers take the risk of waiving the home inspection (some even go so far as to buy a house sight unseen). But certified home inspectors are trained to find the problems you might not see when you walk through a home that’s for sale (even if you’ve seen the property multiple times).

Many states require inspectors to be licensed, and there are several professional organizations that require their members to follow certain standards of practice. Two of the largest national organizations for certified inspectors are the International Association of Certified Home Inspectors (InterNACHI) and the American Society of Home Inspectors (ASHI), but there are also many state associations.

Below is a list of some of the things on a home inspection checklist that an inspector will look at.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Roof Condition

Inspectors aren’t required to stand on a roof to inspect its condition, but they will review the materials used to cover the roof; the gutters and downspouts; any vents, flashing, skylights, etc.; and the general structure of the roof. They’ll also report any evidence of active leaks.

Exterior

This part of the inspection will generally include the exterior walls; the eaves, soffits, and fascia; windows and doors (including garage doors); walkways and driveways; stairs, steps, and ramps; porches, patios, decks, and the like; railings; and any issues that could cause problems with water intrusion.

Structural Soundness

This typically includes looking for cracks or other problems with the home’s foundation, the basement or crawlspace, and other structural components.

Heating and Cooling

The inspector will report on the types of systems used to heat and cool the home and if they are in working order.

Plumbing

This may include checking the main water supply shut-off valve and water heater; running the faucets and flushing all toilets; and reporting drainage problems for sinks, tubs, and showers. The inspector will look for damage, loose connections, leaks, and equipment that wasn’t properly installed.

Electrical

Besides checking a representative number of switches, light fixtures, and receptacles, the inspector will look at the type of wiring used in the home, the electrical panel, the main service disconnect, and any equipment that wasn’t properly installed or repaired. The absence of smoke detectors and carbon monoxide detectors also will be noted.

Insulation and Ventilation

The inspector may note any issues with the insulation used in the home, including the depth and type, and the exhaust systems in the kitchen, bathrooms, and laundry room.

Recommended: First-Time Homebuyer Guide

What Isn’t Included in a Basic Home Inspection?

A basic inspection is a noninvasive, visual assessment of accessible areas of the property, so inspectors may not move rugs, furniture, or other items that block their view. If there’s a problem behind a wall or under the floors, the inspector may not catch it. And you shouldn’t expect the inspector to predict how long the roof, appliances, or HVAC system might last.

You may have to hire specialists as you’re preparing to buy a house, and that could add to your overall costs. Specialized inspections might include looking at the swimming pool, fireplace chimney and flue, a well and/or septic tank, and detached sheds and garages. You also may choose to get separate inspections to search for mold, termites, asbestos, lead paint, or radon gas, and to check for municipal code compliance.

While the cost of a single-family home inspection normally ranges from $300 to $425, the price can go significantly higher depending on the home’s square footage and the addition of specialized inspections.

You’ve probably already looked at numbers with a mortgage calculator or plan to. That’s more money you’ll need to come up with before or during your closing.

Why Get a Home Inspection?

A home inspection can cost hundreds of dollars, but getting one could save you thousands. After all, the home you’re buying could be the biggest investment you’ve ever made.

Once you receive your inspection report, it will be up to you to decide if and how you want to move forward with the purchase. As a buyer, you may have a few options, including:

•   If there are problems, you can give the seller a list of requested repairs (based on the inspection, not your taste) that must be completed and paid for as a condition of the sale.

•   You may request a credit, or a seller concession, that gives you enough to pay for the necessary repairs yourself.

•   You could back out of the deal altogether.

You don’t have to do anything, by the way. If you want the home and you think the price is fair, you can proceed with the transaction even if the report lists major issues. And you’ll know what renovations you should prepare for financially if you move forward with the home purchase. It might even prompt you to begin saving for that work.

Home Inspection Pros and Cons

Is an Inspection Necessary for a New or Renovated Home?

Given the lengthy list of things you have to do when buying a home — everything from researching mortgage rates to getting mortgage preapproval to hiring movers — it might be tempting to waive the inspection. This is particularly true if you’re buying new construction or a home that looks new thanks to a remodel. Fresh paint, that “new home smell,” and some professional staging can be a distraction for eager buyers. But even new construction can have problems, and an inspection can help find red flags. And even if you waive inspection, an insurer may still require a four-point inspection before agreeing to issue an insurance policy on the home.

Recommended: Tips to Qualify for a Mortgage

What Factors Into the Price of a Home Inspection?

When you’re shopping for an inspector, you may want to ask for a written estimate of how much does an inspection cost and a breakdown of line items. Here are some things that could affect the price:

Size

The larger the home, the longer it could take to complete the inspection and the inspection report. Here’s a breakdown of approximate costs based on square footage:

Home Size	Approximate Cost
Under 1,500 sq. ft.	$250
1,500 to 2,500 sq. ft.	$325
2,500 to 3,000 sq. ft.	$380
3,000 to 4,000 sq. ft.	$420
Over 4,000 sq. ft.	$500-plus

Age

Because it may take more time — depending on the condition of the home and the design — the inspection for an older home may cost more than for a newer build of the same approximate size.

Location

If the inspector must travel a long distance to get to the home, the cost estimate may be higher. (The inspector may charge by the mile or a negotiated amount.)

The Inspector

How much experience does the inspector have? Are they licensed by your state and/or certified by a professional association like ASHI or InterNACHI? You may have to pay extra for this expertise.

Additional Costs

The first price you’re quoted may not be the final price you’ll pay for an inspection. If you want additional inspections that require more expertise or specialized equipment, you can expect to pay much more. Inspecting detached structures on the property also may increase the price. Ask about those separate costs and if they’ll be listed on your written estimate.

💡 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.

Average Cost of a Home Inspection by Region

The part of the country where the property is located could also have an impact on the cost of a home inspection. If the cost of living is high in an area, it may have an impact on the cost of home inspections.

National Cost Range

As noted above, the national range for a basic home inspection is $300 to $425. This doesn’t include specialized services such as radon or water testing, for example.

But inspections in some areas can be much more expensive.

Regional Price Differences and Trends

The part of the country where a property is located is another potential factor in cost. Spectora, which makes home-inspection software, compiled inspection data from its users to get to the bottom of the question “how much does a house inspection cost by region?” The company reported that the Northeastern U.S. had the highest inspection costs, with the average being $575. Inspectors in certain Zip codes in Florida and Texas reported the highest overall inspection costs, with West Palm Beach County, Florida, weighing in at an average of more than $1,500. Generally speaking, though, the South is the area with the least expensive home inspections, according to the Spectora report.

How Long Does an Inspection Take?

A home inspection typically takes two to three hours onsite, and you may have to wait one or two days to get your inspection report. You may find it helps to research inspectors even before you find a home so you can move quickly when you’re ready to buy. That way you’ll have plenty of time to read the report and decide what you want to do about any points of concern.

What Happens After the Home Inspection?

As soon as you receive the home inspection report, you’ll want to review it thoroughly. Home inspection contingencies, which can allow buyers to get out of the contract if they find something they don’t like, usually have a tight deadline. You may have to send formal notice to the seller that you’re canceling the contract within seven days after signing the purchase agreement. This means the inspection, the report, and any notice to the buyer will all have to happen in a tight window of time. And even if you don’t have an inspection contingency, you’ll no doubt be eager to see if the inspector found anything concerning.

Reviewing the Inspection Report

Your first step in reviewing the inspection report is to study the summary. This will highlight any specific issues that the inspector felt were cause for concern, and may include page numbers where you can find detailed information about any red-flag issues. After you’ve reviewed the major concerns, if any, it’s a good idea to read the inspection report from cover to cover. Problem spots include structural concerns, a deteriorated roof (since a roof can be quite expensive to replace), and water or mold inside the building. Take notes on any issues raised by the inspector that you feel would be costly or otherwise difficult to address — these may be issues to bring up with the seller.

Also keep in mind that there are things the inspector cannot see and won’t address in the report. You may want to schedule an inspection of a septic system, for example, or testing of well water or testing for radon.

Negotiating Repairs or Price Adjustments

Once you’ve made a list of any concerns, you’ll want to call your real estate agent to discuss approaching the seller. If the home wasn’t advertised to buyers “as-is,” you may be able to request that certain repairs be made before closing, or negotiate a lower selling price or a rebate from the seller to allow you headroom in your budget to cover the repair costs. And of course, if severe problems are identified, you may want to move on — that’s where the contingency clause comes into play. Especially in a hot market, you may not be able to use the report as a negotiation tool to lower the price or get the seller to pay for repairs. Still, you’ll have the information you need to make the best decision for your personal needs and goals.

Are Any Fixes Mandatory After an Inspection?

A home inspector’s report isn’t a list of “must-dos.” Most repairs are negotiable. And you may decide not to press the seller for any fixes. But it’s important to be aware of the cost of home repairs that may be needed down the line.

In some cases, a buyer may be denied financing or insurance if the bank or insurer isn’t satisfied with the results of an inspection and the planned repairs. Those items likely would include dangerous structural or electrical defects and/or building code violations.

Tips on Choosing an Inspector

Word-of-mouth references can be a great place to start when you’re looking for a home inspector. There are also plenty of online sites that can help you find local inspectors. And real estate agents often know inspectors whom they have found to be reliable and thorough in the past. Once you have a few names, you can:

Look for Online Reviews

There are several sites that list inspectors, and some offer reviews. You also can ask the inspector for references.

Check Credentials

Is the inspector a member of a professional organization? You may want to ask to see a membership card. And don’t forget to ask for proof of licensing if it’s required in your state.

Ask About Experience

How long has the inspector been in the business? Experienced inspectors likely will have seen several types of homes and know where to look for problems.

Get Pricing Information

You can start by asking about the cost of a basic inspection and what it includes, then go from there. If the inspector does specialized tests you’re interested in (for mold, radon, asbestos, etc.), you can request to have those costs included in the estimate.

Compare Sample Reports

One way to gauge an inspector’s work may be to look at a past report and compare it to other companies’ reports.

Set the Date

Keep your timeline in mind as you consider whom to hire. Things can move quickly in the mortgage process, and you don’t want your inspection to hold up the deal.

Try to be there when the inspector is working, so you can see the home through an unbiased lens. If you can’t be there, you may want to ask your real estate agent to attend.

The Takeaway

It might be tempting to skip the home inspection to save money or time, or to make your offer more appealing. After all, the average home inspection cost is $300 to $425 and could go higher. But a home inspection can provide an important layer of protection and reassurance that the money you’ve budgeted for your new home will be well spent.

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

Does the buyer or seller pay for a home inspection?

The homebuyer typically pays for a home inspection and hires the inspector.

What’s the biggest warning sign on a home inspection?

There are many issues that can be red flags on a home inspection, but the most serious include structural or foundation problems, significant water damage or an active leak, or bad or outdated electrical wiring. All of these can be very costly to repair and can create safety or health hazards.

Can I back out of a home purchase after a bad inspection report?

Homebuyers may be able to back out of a home purchase if an inspection turns up significant problems, but whether or not you can do so will depend on your contract with the seller. An inspection contingency in your purchase contract could allow you to back out under certain circumstances and retain your deposit. If you aren’t protected by this contingency, you might forfeit your deposit by backing out.

How much should I budget for a home inspection?

The typical home inspection cost averages $300 to $425, but you may want to budget extra if the property being inspected is particularly large or old. You’ll also want to factor in extra funds for any specialized testing or inspection — for example, if the property has a well or septic system or a swimming pool.

Are specialized inspections (e.g., mold, radon) worth the extra cost?

Specialized inspections are generally worth the cost, particularly if they have the potential to uncover an issue, such as mold or radon, that can be invisible to the untrained eye but harmful to human health. Inspections that examine areas of the home that may be especially costly to repair, such as a septic system or well, can also be worthwhile. When in doubt, ask yourself if finding out about a major issue after the fact would be potentially catastrophic, either to your health or to your budget. When you think of the house inspector cost that way, the decision is clear.

Photo credit: iStock/Altayb

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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

This article is not intended to be legal advice. Please consult an attorney for advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q126-003

Read more

You’ve been getting up early every weekend to go to open houses and have spent hours looking at online listings. You’ve finally found a place that you like, but before you make an offer, an important part of the home-buying process is to learn what problems to watch out for.

Most people don’t want to buy a home that is going to require a lot of work or be difficult to finance because it’s structurally unsound or unsafe. A home might look great on the surface, but a smart buyer will order the proper home inspection(s) to see if the house actually measures up prior to lifting any property contingencies.

It can be stressful or even derail the purchase to find out that you’ll need to do all sorts of costly renovations. After you’ve worked hard to find that dream home, you could find out at the last minute that necessary repairs will make you go over budget and find yourself looking for renovation financing vs. traditional financing.

How to Spot Red Flags During a Home Tour

It’s easy to be distracted by a gorgeous wall of windows, a sweet child’s bedroom, or an in-ground pool. But you’ll need to tune in to other aspects of a home with all your senses if you hope to see any of the home-buying red flags on this list during a home tour.

Use your eyes: You’re looking for cracks in foundation or walls, or window or door frames that are askew. Also listen, particularly for the sound of water dripping or wind whistling through problem window frames. Sniff the air too. If you smell anything dank or moldy, that’s a warning sign for sure. But the smell of air freshener or a burning candle could also signal that the homeowner or sales agent is attempting to conceal an unpleasant odor.

Signs Your Dream Home Could Be a Nightmare

Below are 10 common home inspection red flags that would put a home on the buyer-beware list because of the home repair costs and stress involved in fixing the issues. Consider these factors as you continue your search for your new nest, and especially if you’re a first-time homebuyer, lean on professional inspectors for help.

1. Structural Problems

If there is a problem with the foundation or load-bearing walls in the new home that raises a potential health and safety issue, structural repairs could derail your home loan by making the property ineligible for financing, or could wind up costing thousands of dollars. Structural problems aren’t just expensive to fix, they could also be considered unsafe — which is why they should be at the top of any list of things to check when buying a home.

Look for major cracks in the foundation, problems with doors closing, door frames not being perfectly rectangular, or walls or floors that seem to sag. You’ll want to spend the money for a professional home inspection. If the inspection reveals there is a larger issue, a structural engineer’s report may be able to provide additional insight.

💡 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.

2. Water-Damage Woes

The biggest cause of rot and mold is moisture. So if your potential new home has leaking pipes or a roof that lets in water, it won’t just be expensive to replace your roof or find where the leak is coming from — the leak could have already created other problems.

Water stains and mold are red flags when buying a home. Not only can mold have implications for your health, it could indicate a bigger problem with the house. If you see either of them, look into the cause of the stain, because a new roof or new plumbing could set you back a significant amount of money. Dry rot and related problems like mold can also fall under health and safety issues and, as a result, affect the home’s eligibility for most types of home mortgage loans.

3. Poor Drainage

Poor grading and drainage can potentially cause huge problems with the foundation or basement of your home, so it should be high on your list of home inspection red flags. When it comes to bad drainage, things to look for when buying a home can include but are not limited to: pooling water around the foundation; leaking in the basement; gutters that are blocked or overflowing; and soil being moved by water in any flower beds around the home. While there are ways to fix poor drainage and improper grading if it’s minor, you might struggle with larger drainage problems if the home is in a low-lying area.

4. Bad Plumbing

The last thing you want is for your sink to spring a leak. Plumbing problems could have an array of causes, including improper installation or older pipes that need to be replaced or are leaching metals into your drinking water. Plumbing that regularly leaks could cause water damage, which, as noted previously, could have some pretty serious consequences (like mold and rot). The home inspector will generally test the plumbing system, but as you look at houses, be observant and try running all the faucets and flushing the toilets. Keep an eye out for any signs of possible water damage and be aware of any funky smells.

5. Pests

There are a few ways to avoid buying a pest-infested home, including having a basic home inspection, for starters. If the general home inspection calls out pest issues, it is recommended to go a step further and request a pest inspection report from a licensed pest inspector.

If the inspector finds signs of bugs, it might be possible to request that the seller fix the infestation before you close on the house. Sometimes, pest infestation can mean a significant discount, which may be appealing to some buyers. But getting rid of certain kinds of insects (or bats) can be very costly, complicated, toxic, and even require you to leave your home while the work takes place. So the discount may not actually be as rosy as it seems. Lenders do not usually close on a traditional home loan with a serious pest issue because it may present a health and safety problem.

6. Electrical Problems

A general home inspection will cover basic electrical items, but some buyers opt for an additional electrical inspection. Depending on when the home was built, there could be improper or even dangerous wiring throughout the house. That could affect eligibility for home financing due to health and safety issues, increase the fire risk in your home, or affect how you budget for buying the house.

7. Neighborhood Troubles

You might have found a beautiful home, but what if the location isn’t ideal? If your home is in a neighborhood that has a high number of vacant properties, a high crime rate, or a poorly rated school system, your investment might not pay off. Ask your real estate agent and neighbors about the neighborhood, stop by at different times, search online for the area’s crime statistics, and check out the reputation of local schools.

💡 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.

8. Homeowners Association Problems

If you’re moving into a development with membership dues, you’ll want to know more about the homeowners association (HOA). Your lender will likely require you to obtain a completed Homeowners Association Questionnaire, and once this form is completed, it could answer many of the questions you may have, such as: How much are the HOA fees? What are the rules around making changes to your property? Is there any pending litigation against the condo association? Can you rent out your place or use it as an Airbnb when you go on vacation? Before you put in an offer, it’s a good idea to find out the answer to these or any other issues of importance to you and your family.

9. DIY Improvements

Watch out for shoddy renovations. If the house looks like it has undergone a recent facelift, have a close look at the workmanship. If there are visible shortcuts, there may be other areas of the house that weren’t properly renovated that could cause you headaches in the future. Check them carefully and make sure the major improvements or additions were done with the proper permits.

10. Older Windows

Older windows could translate into higher heating and cooling costs for your home. Moisture leakage can cause mold issues over time. Those costs add up, so you’ll want to add windows to your list of things to look at when buying a home. On your house tour, look for windows that stick, have discoloration around the indoor casing, or are warping. Updating windows (or replacing them completely) could be costly.

Questions to Ask the Seller or Agent

Real-estate listings will often tout newer mechanicals or a recently renovated kitchen or resurfaced roof. But as you’re preparing to buy a house, it’s always a good idea to ask how recently major repairs have been made on the home. It’s always a good idea to try to gain insight into the age of the major mechanicals, including the roof, HVAC system, and water heater. And if you can get the owner to note any major (or minor) issues with the house, that’s even better.

Sometimes it’s just a matter of getting a heads-up on something the next owner should be aware of, such as the fact that the whole-house water filter needs replacing, or the ice builds up on a particular spot in the driveway in the winter. It’s helpful to know, but not a deal-breaker. If you’re from out of town, asking the owner or agent about their neighborhood might yield some important facts that aren’t obvious to the eye, such as that truck traffic has increased significantly since the new logistics center was built on this side of town, or that utility prices in the area have risen significantly.

The Role of a Home Inspector

Your own efforts to spot warning signs when touring a home likely won’t be enough if you decide to put down an offer on the property. In that case, most buyers want a professional home inspector’s report. Identifying an inspector to report on the property, like checking mortgage rates or getting mortgage preapproval, is another one of those to-dos that you’ll need to tackle on your way to the fun stuff, like figuring out what color to paint your new bedroom. Passing the home inspection will also be an important part of getting through the real-estate purchase contract process.

What is the biggest red flag in a home inspection? A home inspector would likely be looking for the issues on the list above, with structural issues or water damage being two giant warning signs. But home inspectors are trained to see the problems you might not recognize when walking quickly through a property. Many states require inspectors to be licensed, and there are several professional organizations that require their members to follow certain standards of practice. Some buyers, particularly those in very competitive housing markets, will choose to waive inspection. But in general, it’s a good idea to have a property inspected.

If you are financing your home with an FHA loan, there will be specific mortgage loan requirements from the Federal Housing Administration. Your lender will help guide you through this process.

How Inspections Identify Major Issues

An inspector will do a visual examination of the property and will generally be looking for the same problems a potential homebuyer might look for. But with training and experience, an inspector might be more likely to spot a problem. If you hire an inspector, it’s important to understand what isn’t going to be included in a standard inspection, so that you can hire a specialized inspector if necessary. For example, a standard inspection might not reveal issues with well water quality or a septic system. There are separate inspection processes for termites, asbestos, lead paint, and specialized testing for radon gas, for example. A standard inspection also won’t tell you if any improvements in the property were made in compliance with municipal code.

When to Walk Away From a Deal

If a home inspection turns up a serious problem with a property, you’ll need to ask yourself whether you want to press on and purchase the home anyway. If so, you can start by asking the buyer to repair the home, lower the price, or provide a rebate at closing to cover the cost of the repairs, which you would then be responsible for making. If none of these solutions satisfies you, then you may have no choice but to walk away from the deal — and potentially risk losing your earnest money. But if the cost of fixing the issue is beyond what you can afford or want to spend, you may have no other choice.

The Takeaway

In certain situations, a buyer may consider making an offer on a house even with one or two of the home inspection red flags on this list. But before committing to a property that needs TLC, you’ll want to add up what the potential repairs may cost. Doing the math now could mean fewer financial surprises when you move in. And in some cases, it may be possible to negotiate with the seller so that major issues are addressed before the closing.

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’s the biggest red flag on a home inspection?

There are many issues that can be red flags on a home inspection, but the most serious include structural or foundation problems, major water damage or an active leak, or problematic electrical wiring. All of these can be very costly to repair and can create safety or health hazards.

How often do homebuyers pull out of the deal?

According to the National Association of Realtors®, 5% of would-be buyers pull out of a deal before reaching the closing.

When buying a house, how do I protect myself in case the home inspection finds a problem?

An inspection contingency clause in the contract could allow you to pull out of the deal without losing your deposit if an inspection finds a significant flaw in the home you’re hoping to buy. You and the seller might also come to an agreement whereby the seller repairs the problem or credits you for the cost of repairing it. But with an inspection contingency, you can also walk away.

Can I still negotiate the price after a home inspection?

It’s always possible to try to negotiate a lower price after receiving bad news on a home inspection. But whether or not you will be successful will rely on how eager the seller is to move forward, which can in turn depend on the current market conditions in the area where the property is located. If it’s a seller’s market or the seller already has other offers, you may find there’s no wiggle room.

What happens if red flags are found after closing?

Whether or not the buyer of a home has any recourse if a major defect is found in the property after they take possession will depend in part on whether the seller knew that the defect was present. Evidence that the seller tried to conceal a flaw (by, say, constructing a wall or paving over a leaking oil tank) will be a factor. If neighbors tell the buyer that the seller was aware of a problem, that could also work in the buyer’s favor. Filing a lawsuit to try to recoup the price of repairs can itself be a costly solution, so consider first reaching out to the seller to explore compensation.

Photo credit: iStock/Jitalia17

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.
^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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
⁺Lock and Look program: Terms and conditions apply. Applies to conforming, FHA, and VA purchase loans only. Rate will lock for 91 calendar days at the time of pre-approval. 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.
This article is not intended to be legal advice. Please consult an attorney for advice.

SOHL-Q126-004

Read more

Before buying a house, applying for refinancing, or listing your house on the market, you’ll need to get a home appraisal. This is an important independent assessment of a property’s value, which matters to all parties involved: you, your buyer (if you’re selling), and a lender.

Here, learn the ins and outs of home appraisals so you understand the process and can manage it successfully. You’ll find out:

•  What is a home appraisal?

•  How long does a home appraisal take?

•  How can you prepare for a home appraisal?

•  What can you do if a home appraisal comes in low?

What Is a Home Appraisal?

A home appraisal is an objective and professional analysis of a home’s value. An appraisal aggregates an array of information, including details on the home itself (the floor plan, amenities, and property size), a visual examination, real estate trends in the area, and how much nearby homes sold for.

Generally, an appraisal will be completed when someone is buying, selling, or refinancing a home. It will tell a homeowner whether or not the price they’re putting on the home is fair based on the condition of the home, its amenities, and its location. It’s important to understand that there’s a difference between a home’s assessed value vs. its appraised value. An assessment is used for tax purposes. Having an assessment is not adequate when you are buying, selling, or refinancing a home — you’ll need a formal record of the appraised value.

Home appraisals will let those buying a home know if a home is a good price. (This can be especially reassuring for first-time homebuyers, who are new to the whole process.) An appraisal won’t, however, assure a buyer that a home’s mechanicals are in good working order. For that, a home inspection will be needed, and most buyers have both of these services before they arrive at the closing stage of a home purchase.

According to a National Association of Realtors® study from June 2024, appraisal issues led to delays in 7% of home transactions, so getting the appraisal right the first time around is an important step in buying or selling a home fast. Let’s take a closer look at the process.

When Is a Home Appraisal Required?

A home appraisal is necessary whenever a homebuyer is financing a home purchase. Having an appraisal helps assure the mortgage lender that the property is worth what the buyer has agreed to pay for it. Once a buyer has reached the appraisal stage, the lender will help guide them through how to get a home appraisal by connecting them with its chosen appraisal firm. Buyers financing the purchase with an FHA loan will need to use an appraiser who is specially qualified to do FHA home appraisals.

If you are already a homeowner and are borrowing money with a home equity loan or home equity line of credit (HELOC) using your home as collateral, the lender may require an appraisal in this scenario as well.

Some lenders will accept a desktop appraisal in place of an in-person examination by an appraiser. The appraisal is done remotely using software that analyzes available property data. In this case, the homebuyer will need to obtain an appraisal waiver. But for a home purchase, lenders typically require a visit to the property by an appraiser. So buyers need to put “schedule home appraisal” on their to-do list along with other home-buying tasks, like “figure out down payment amount” and “check mortgage rates.”

Buying, Refinancing, and Selling Scenarios

Here are a few examples of how home appraisals factor into the process of buying, refinancing, or selling a home so that you can see more clearly what is a home appraisal in home buying.

Buying A couple looking for their first home is excited to find a property that ticks all the boxes. The two have already obtained mortgage preapproval from a lender, so they know what they can afford to spend. They make an offer, which the seller accepts. The couple puts down a deposit and signs a contract with the seller. At that point, they need to finalize their home loan. The lender connects them with an appraiser and they schedule a visit to the property via the seller’s real estate agent. When the appraisal comes in, the home appraises for the agreed-upon purchase price. The deal moves forward.

Refinancing A homeowner notices that mortgage rates have declined significantly since their home purchase and decides it’s time to refinance. After seeking out rates and loan terms from a few possible lenders, they choose a lender. As part of the refinance process, the home mortgage lender requests an appraisal to ensure that the borrower is requesting financing that is appropriate based on what the home is actually worth. Only once the appraisal is completed can the homeowner close on the new loan.

Selling The appraisal value of a home helps a seller and their real estate agent determine how to price the property for sale. In this case, the seller hires the appraiser and pays for the appraisal before the home ever goes to market. (Note that once a buyer agrees to purchase the property, the buyer’s lender may still request another appraisal of the home. This time, the buyer will pay the appraiser.)

Recommended: Refinance Your Mortgage and Save

How Much Does a Home Appraisal Cost?

Most people can expect to pay between $300 to $600 for a home appraisal, but it could be higher depending on the specific property. The cost of a home appraisal covers things like the appraiser’s training, licensing, insurance, and expertise. It also covers the time it takes for the appraiser to assess nearby sales and market trends as well as conduct an in-person visual examination of the property.

You’re paying for the appraisal report (more on that in a minute), which will show how the appraiser came to their conclusion on the price and information about your home.

Factors That Influence Appraisal Costs

Some properties have costlier home appraisals. You can generally expect an appraisal to be more expensive if the property being examined contains a pond or lake, or if accessing the property is time-consuming due to a remote location. And if the appraiser is inspecting a larger home or a bigger overall property, then the home appraisal cost will go up. This is often the case with properties that require a jumbo loan, which is usually needed by borrowers purchasing homes priced in the upper six-figure and $1 million-plus range.

Who Pays for the Appraisal?

In a home purchase, the homebuyer will pay for the appraiser. However there are a few other situations in which the homeowner will cover the cost:

•  When the homeowner is refinancing, as noted above, or is obtaining a home equity loan or HELOC, an appraisal is often required by a prospective lender.

•  Sometimes a homeowner wants to get an appraisal and see what modifications they can then make to increase their home value when they’re ready to sell the property.

•  If a homeowner is going to sell their home to a family member or friend, an appraisal can help ensure that the parties involved are getting a fair price.

What Is the Home Appraisal Process?

The appraisal process may seem complicated, and you may wonder about how long a home appraisal will take and how deeply a home will be scrutinized. Fortunately, trained appraisers will be able to explain and guide you through every step. Some points to know in advance:

•  Generally, if a home is being sold, the appraisal happens after an offer on a house is accepted and within a week after an inspector has toured the home. (As noted above, sellers sometimes do a pre-listing appraisal.)

•  In most cases, the mortgage lender will seek out a third-party appraisal company as part of the mortgage loan process. The appraiser will come up with an objective analysis of the home and deliver an appraisal estimate.

Next, how long does a home appraisal take? The actual on-premises appraisal can take between one and three hours, depending on how big and complex the home is. Here’s how it typically goes:

•  The appraiser will usually bring a form to collect information about the home including things like measurements, nearby housing trends, the demographics of the neighborhood, the condition of your home, and how it compares to other properties in your area. (Some of this is research the appraiser will do back at their desk.)

•  The appraiser will also review things like the home’s location, quality of construction, parking situation, exterior condition, its age, its structure, the quality of the siding and gutters, and the square footage.

•  They will also research the appliances and mechanical systems, health and safety factors, the number of bedrooms and bathrooms, and the code compliance throughout.

•  The appraiser will usually take photos of the home as well as make notes. If you are the homeowner, try to avoid getting in the way when the appraiser is taking photos or interrupting them while they’re working.

•  The appraiser may ask questions about what has been done with the home to get a more accurate report. If the homeowner doesn’t want to be there for the appraisal, the real estate agent you’re working with can fill in to answer questions that may come up during the appraisal.

After the appraiser finishes, they’ll put together a report reflecting the visit and research into home values in your area and prevailing market trends. The appraiser may need to check that you had permits to make upgrades, which could delay the process. Typically, however, the finished product is delivered within a week to 10 days.

The report is usually about 10 pages long, but it could be longer if a property is large or complex. It will show details about the home as well as local properties that are similar to it. If the appraised value is around the same price as listed, then the sale could close shortly after that.

What If an Appraisal Comes in Low?

If a property appraises for less than the agreed-upon purchase price, buyer and seller have what’s known as an appraisal gap. There are several ways to proceed: The most obvious avenue is for the buyer to appeal to the seller to lower the asking price. If the seller won’t budge on the price (which can easily happen in a hot housing market), the buyer could make up the difference by increasing the down payment amount. Another possible route is to request a second look by the appraiser.

Challenging a Low Appraisal

Each lender may have different criteria for formally disputing an appraisal, so should there be an issue, it’s a good idea to contact the lender to review its policies. In most cases, only the lender can request a second appraisal.

Should the reevaluation move forward, one option could be to print out a list of similar homes in the community and show that they were valued at a higher price than the property in question. If you are the seller or buyer working with a real estate agent, the agent may be able to provide examples of comparable homes being of higher value.

Recommended: Track the Value of Your Home

Home Appraisal Checklist

One way to avoid facing the appraisal gap if you are the seller is to take steps to help the process go smoothly from start to finish.

What Appraisers Look for Inside and Out

You’ll want to be aware of what hurts a home appraisal. A homeowner can’t control all of these factors, of course. A home may appraise poorly if the neighborhood is undesirable, if the street is busy or noisy, or if other comparable homes in the area have sold at low prices. But if a homeowner has neglected to make needed repairs or updates, that is an appraisal red flag. This might be something as basic as a badly outdated kitchen, or it could be as severe as a leak that has led to water damage that caused mold to fester.

Tips for Improving the Appraisal Outcome

There are a few things an owner can do before the appraiser visits to help encourage a good outcome.

1.   Declutter. While messiness shouldn’t impact the value of your home, if you get rid of clutter (perhaps donate to a local thrift shop), the appraiser can do their job more easily and quickly.

2.   Clean. Thoroughly clean the inside and outside of the home, including the yard. Break out the cleaning supplies or hire a professional cleaning team. It can improve the overall impression of a home’s condition.

3.   Make minor repairs. It’s also a good idea to repair any cracks in the wall, paint over paint that is peeling, and make any other visual repairs that may need attention. Making some common home repairs may cost a little money, but it’s preferable to having a long list of things flagged in the appraiser’s report.

4.   Check fixtures and appliances. Test the lights, faucets, ceiling fans, and security system, as well as confirming that the windows and doors open and close easily. Run appliances like the oven and dishwasher as well to guarantee there are no problems.

5.   Think curb appeal. The exterior of your home is among the factors that affect property value. Consider trimming hedges, getting rid of cobwebs, cleaning the gutters, pulling weeds, and mowing the lawn. Adding plants or flowers could help, too. (Worth noting: Since the appraiser will be walking outside, avoid watering the grass on the day of the appraisal. This can help avoid mud or dirt being tracked through the house.)

6.   Plan for pets. If you have pets, consider putting them in a designated room or taking them to a family member or friend’s home during the appraisal.

7.   Wrangle upgrade info. If possible, make a list of all the upgrades that have been completed on the home and attach permits and receipts detailing how much it all cost.

With proper preparation on the seller’s end, and prompt scheduling on the homebuyer’s side, an appraisal can come off without a hitch and everyone can move on to the closing.

The Takeaway

Whether you’re buying, selling, or refinancing a home, a home appraisal is a key part of the experience. Knowing what to expect can help ensure the process goes as smoothly as possible. It’s also a good idea to understand the factors that go into an appraisal so you can be prepared if the results are not in the range expected.

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 will fail a home appraisal?

Deferred maintenance is one major factor that can cause a home appraisal to fail to come in at the desired value. The longer the list of outdated or broken systems or appliances, the more likely the appraiser is to consider the house of lesser value. Or it could be due to the local market: If home sales are declining in value in your area, that could cause your number to go down as well.

How should I prepare for a home appraisal?

If you’re hoping to buy the house, you simply sit back and let the appraiser do their job. If you are the seller, you can prepare for a home appraisal by cleaning up your property and making whatever repairs are required. These moves can both make the process go more smoothly and possibly enhance the home’s value.

Does messiness affect a home appraisal?

A messy or cluttered house should not impact a home appraisal. Licensed appraisers are trained to look past such issues and focus on the house, not its contents. That said, if your property is untended and in rough condition, with peeling paint or overgrown landscaping, for example, that can take the home’s value down a notch.

How long is a home appraisal valid?

A home appraisal is generally considered up to date if the property was appraised in the past 120 days. However it’s ultimately up to the lender to determine whether or not to accept an appraisal based on its date.

What’s the difference between an appraisal and an inspection?

Put simply, a home appraisal tells you what a property is worth, while a home inspection tells you what repairs and updates are needed. Both processes usually include a visual examination of the property. But the appraiser will also be looking at the neighborhood and comparable home sale prices in the area, while a home inspector will be scrutinizing the home’s mechanicals and structural components — such as the HVAC system and roof — and looking for red flags such as rotting window frames or poor drainage.

---

About the author

---

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.
^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. ^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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q126-001

Read more

What is the monthly payment on a $1 million mortgage at recent interest rates? If we remove property taxes, property insurance, and mortgage insurance from the equation, you can expect to spend between $6,653 and $8,988 a month on principal and interest alone, depending on which loan term you choose. But that’s not the whole story. There’s more you’ll need to know about a $1 million mortgage payment.

Cost of a $1 Million Mortgage

The cost of a $1 million mortgage varies depending on which home mortgage loan you choose and a few other factors, such as interest rate and property taxes. As you may know, different types of mortgage loans have different expenses, such as mortgage insurance, which can change your monthly payment.

Monthly Payments for a $1 Million Mortgage

The monthly payment on a $1 million mortgage is influenced by a variety of factors, which include:

•   Interest rate

•   Fixed vs. variable interest rate

•   Mortgage insurance

•   Property insurance

•   Loan term

•   Type of loan

•   Property taxes

Removing all variables except a 7.00% interest rate, a $1 million mortgage payment would be between $6,653 and $8,988 per month. If you’re a first time homebuyer considering a $1 million mortgage, make sure you understand the true cost of buying and owning a home. Remember that your property taxes and some insurance costs may be dictated by your home’s location. (You may want to analyze the cost of living by state. Some of the best affordable places to live in the U.S. may surprise you.)

If these variables are new to you, a home loan help center may smooth out any confusion you may have.

Where to Get a $1 Million Mortgage

You can get a $1 million mortgage with mortgage lenders such as banks, credit unions, and online lenders. However, they’ll need to offer jumbo home loans since $1 million exceeds the conventional loan limit of $832,750 in most areas. When comparing lenders, look at both interest rates and fees. Loan origination fees, in particular, can vary greatly between lenders.

💡 Quick Tip: A major home purchase may mean a jumbo loan, but it doesn’t have to mean a jumbo down payment. Apply for a jumbo mortgage with SoFi, and you could put down as little as 10%.

What to Consider Before Applying for a $1 Million Mortgage

The monthly payment for a $1 million mortgage isn’t the only thing you should consider. Also keep in mind the total amount you’ll spend on interest for each loan term. For a 30-year loan with a 7.00% interest rate, you’ll spend $1,395,086 on interest. If you opt for a 15-year loan, you’ll spend just $617,890. This means if you can afford a 15-year loan, you’ll save $777,196.

While you’re home shopping, use a mortgage calculator to see the amount of money you’ll spend monthly and over the life of the loan. You may also want to use a home affordability calculator to incorporate your monthly debts and spending habits into the equation. While you may be able to technically afford a large monthly payment, would the expense leave room for dining out, vacations, and retirement contributions?

During the early years of your mortgage loan, more of your monthly payment typically goes toward paying off the interest on the loan, with a smaller proportion paying down the principal you owe. An amortization schedule shows how the proportions shift, and you build equity more quickly in the second half of the loan term. Here are sample schedules for 30-year and 15-year loan terms:

Amortization Schedule, 30-year, 7.00%

Year	Beginning Balance	Monthly Payment	Total Interest Paid	Total Principal Paid	Remaining Balance
1	$1,000,000	$6,653.02	$69,678.20	$10,158.10	$989,841.90
2	$989,841.90	$6,653.02	$68,943.87	$10,892.43	$978,949.47
3	$978,949.47	$6,653.02	$68,156.46	$11,679.84	$967,269.63
4	$967,269.63	$6,653.02	$67,312.12	$12,524.18	$954,745.45
5	$954,745.45	$6,653.02	$66,406.75	$13,429.55	$941,315.90
6	$941,315.90	$6,653.02	$65,435.92	$14,400.38	$926,915.52
7	$926,915.52	$6,653.02	$64,394.92	$15,441.38	$911,474.14
8	$911,474.14	$6,653.02	$63,278.66	$16,557.64	$894,916.50
9	$894,916.50	$6,653.02	$62,081.71	$17,754.59	$877,161.91
10	$877,161.91	$6,653.02	$60,798.23	$19,038.07	$858,123.83
11	$858,123.83	$6,653.02	$59,421.96	$20,414.34	$837,709.50
12	$837,709.50	$6,653.02	$57,946.21	$21,890.09	$815,819.40
13	$815,819.40	$6,653.02	$56,363.77	$23,472.53	$792,346.88
14	$792,346.88	$6,653.02	$54,666.94	$25,169.36	$767,177.52
15	$767,177.52	$6,653.02	$52,847.44	$26,988.85	$740,188.66
16	$740,188.66	$6,653.02	$50,896.42	$28,939.88	$711,248.78
17	$711,248.78	$6,653.02	$48,804.35	$31,031.95	$680,216.83
18	$680,216.83	$6,653.02	$46,561.05	$33,275.25	$646,941.58
19	$646,941.58	$6,653.02	$44,155.58	$35,680.72	$611,260.86
20	$611,260.86	$6,653.02	$41,576.22	$38,260.08	$573,000.78
21	$573,000.78	$6,653.02	$38,810.39	$41,025.91	$531,974.88
22	$531,974.88	$6,653.02	$35,844.63	$43,991.67	$487,983.20
23	$487,983.20	$6,653.02	$32,664.47	$47,171.83	$440,811.37
24	$440,811.37	$6,653.02	$29,254.41	$50,581.89	$390,229.48
25	$390,229.48	$6,653.02	$25,597.84	$54,238.46	$335,991.02
26	$335,991.02	$6,653.02	$21,676.94	$58,159.36	$277,831.66
27	$277,831.66	$6,653.02	$17,472.59	$62,363.71	$215,467.96
28	$215,467.96	$6,653.02	$12,964.32	$66,871.98	$148,595.97
29	$148,595.97	$6,653.02	$8,130.14	$71,706.16	$76,889.81
30	$76,889.81	$6,653.02	$2,946.49	$76,889.81	$0

Amortization Schedule, 15-year, 7.00%

Year	Beginning Balance	Monthly Payment	Total Interest Paid	Total Principal Paid	Remaining Balance
1	$1,000,000	$8,988.28	$68,761.41	$39,097.98	$960,902.02
2	$960,902.02	$8,988.28	$65,935.02	$41,924.38	$918,977.65
3	$918,977.65	$8,988.28	$62,904.30	$44,955.09	$874,022.55
4	$874,022.55	$8,988.28	$59,654.49	$48,204.90	$825,817.65
5	$825,817.65	$8,988.28	$56,169.76	$51,689.64	$774,128.02
6	$774,128.02	$8,988.28	$52,433.11	$55,426.28	$718,701.74
7	$718,701.74	$8,988.28	$48,426.34	$59,433.05	$659,268.68
8	$659,268.68	$8,988.28	$44,129.92	$63,729.47	$595,539.21
9	$595,539.21	$8,988.28	$39,522.91	$68,336.48	$527,202.73
10	$527,202.73	$8,988.28	$34,582.86	$73,276.53	$453,926.19
11	$453,926.19	$8,988.28	$29,285.69	$78,573.70	$375,352.50
12	$375,352.50	$8,988.28	$23,605.59	$84,253.80	$291,098.70
13	$291,098.70	$8,988.28	$17,514.88	$90,344.51	$200,754.19
14	$200,754.19	$8,988.28	$10,938.87	$96,875.52	$103,878.66
15	$103,878.66	$8,988.28	$3,980.73	$103,878.66	$0

How to Get a $1 Million Mortgage

Anyone who has ever bought a home will tell you there are tips to qualify for a mortgage. The biggest ones include saving up for a large down payment, paying down your debts, and working on your credit score before applying for a mortgage. Paying off balances lowers your debt to income (DTI) ratio and helps you qualify for better mortgage terms. The maximum DTI is usually around 43%, but it can vary with each lender and borrower.

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

The Takeaway

If you need to borrow $1 million to buy a home, a 15-year mortgage will require around a $9,000 a month mortgage payment, whereas a 30-year mortgage requires around $6,650. Assuming a 7.00% interest rate, homebuyers can expect to spend between $617,890 and $1,395,086 on interest alone.

Keep in mind that property taxes, home insurance, and mortgage insurance may increase your monthly payment. If you’re in the market to buy a $1 million house, principal and interest will comprise a majority of your monthly costs.

When you’re ready to take the next step, consider what SoFi Home Loans have to offer. Jumbo loans are offered with competitive interest rates, no private mortgage insurance, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.

FAQ

How much is a $1,000,000 mortgage a month?

You can expect to spend around $6,653 a month with a 30-year mortgage term and $8,988 a month with a 15-year term. This assumes you have a 7.00% interest rate (and doesn’t take into account property taxes, mortgage insurance, and property insurance).

How much income is required for a $1,000,000 mortgage?

Housing costs should be at or below 30% of your income. If you were to choose a 30-year mortgage, this suggests that your income should be around $265,000 a year. Choose a 15-year mortgage, and your income should be around $360,000.

How much is a down payment on a $1,000,000 mortgage?

Because a $1,000,000 mortgage typically means a jumbo loan, you may need to make a down payment of at least 10%. That means your minimum down payment would be $111,112 on a home priced around $1,112,000.

Can I afford a $1,000,000 house with a $70K salary?

No, a $70,000 annual salary would not be enough to cover the cost of a mortgage on a $1,000,000 house. This salary assumes about $5,833 gross a month (before taxes and deductions), which is not enough to cover the minimum payment required of either loan term.

---

Photo credit: iStock/Paul Bradbury

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.
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.

SOHL-Q425-184

Read more

This just in: Houses are expensive. But some houses are really expensive. If you have your heart set on a luxurious oceanside mansion (or just a modest home in an ultra-high-cost city like New York or San Francisco), you may need to seek out a jumbo mortgage: one whose dollar amount surpasses the conforming loan limits set by the Federal Housing Finance Administration (FHFA) each year. In 2026, that limit is $832,750 in most cases, though in some high-cost areas the limit can range up to $1,249,125, and in two counties in Hawaii the limit is $1,299,500. Any mortgage that exceeds those amounts is considered a jumbo loan.

What Are Jumbo Loans?

Jumbo loans are those in which the mortgage total surpasses the conforming loan limits set by the FHFA. The conforming loan limits change annually. As noted above, in 2026, a jumbo loan is one whose total is more than $832,750 in most areas, though in select high-cost areas, the limit goes up to $1,249,125.

Your mortgage total is the amount of money you borrow in order to purchase a house — an amount that can be calculated by subtracting your down payment from the agreed home purchase price. (Keep in mind, though, that this figure isn’t the same as how much you’ll pay in full over the lifetime of the loan, since you’ll also owe interest to the bank that provides the loan. Still have questions? Check out our mortgage payment calculator with interest.)

Jumbo vs. Conventional Loan

Conventional loans are offered privately through banks, credit unions, and other financial institutions, unlike other loans which are supported by a government agency such as the USDA (U.S. Department of Agriculture). Conventional loans are easily the most common type of home loan.

If you’re wondering about jumbo loans vs. conventional loans, it’s important to understand that jumbo loans are a type of conventional loan. But whereas most conventional loans are also conforming loans and are available with a minimum down payment as low as 3% for qualified first-time homebuyers, jumbo loans are considered nonconforming and typically require a larger down payment — usually at least 10%. You’ll also likely need a very high credit score in order to be eligible to take out a jumbo loan.

Like other conventional loans, jumbo loans can be either fixed-rate loans or adjustable-rate mortgages (ARMs).

How Jumbo Loan Limits Are Calculated

As we’ve seen above, the specific jumbo loan limits where you live (or where you’re planning to buy a home) will vary depending on the area’s cost of living. The FHFA offers a convenient conforming loan limit map that allows you to see what the conforming loan limits (otherwise known as jumbo loan limits) are in your area, broken down by county.

The jumbo loan limit is determined each year by the FHFA using current housing price data. That way, the limits are tied to real information in the world about how much it actually costs to buy a home in a given area. Conforming loan limits — also known as the jumbo loan limits — change each year; new limits for the coming year are typically announced in late November.

What Is the Jumbo Loan Limit in 2026?

As mentioned above, in 2026, the jumbo loan limit for the vast majority of the U.S. is $832,750, and the highest conforming loan limit, in the most expensive places to live, is $1,299,500. To see exactly what the jumbo loan limits are in your area, visit the FHFA’s map.

2026 Conforming Loan Limits by Region

Conforming loan limits are not established by region but rather according to the county where a property is located. However counties with higher conforming loan limits tend to cluster in certain parts of the country, including the Pacific coast of California, parts of Colorado and Idaho, the Nashville area, and parts of Massachusetts, New York, New Jersey, and the Washington, D.C. area. Alaska and Hawaii also have especially high conforming loan limits. The FHFA conforming loan limit map shows these regions clearly.

High-Cost Area Considerations

Why do some counties have especially high conforming loan limits? The FHFA is required to adjust its conforming loan limits each year to reflect the change in the average U.S. home price. Some areas have especially high-priced homes. For areas in which 115% of the local median home value exceeds the baseline conforming loan limit value, the applicable loan limit will be higher than the baseline loan limit. No surprise, then, that counties such as New York County have higher conforming loan limits (in this case $1,209,750).

Jumbo Loan Requirements

Jumbo loans are, well, big — which means the qualification metrics for getting a home loan are pretty strict. (After all, that’s a whole lot of money the lender stands to lose if you default.) While every lender has its own specific algorithm for qualifying potential borrowers, here are some rules of thumb when it comes to jumbo loan requirements:

Credit Score Requirements

While there’s no specific credit score that guarantees you’ll qualify for a jumbo loan, most lenders will likely require a high one — after all, it’s a fairly risky prospect to lend that much money to someone. Credit scores range from 300 to 850. Scores of 670 to 739 are considered good; scores of 740 to 799 are considered very good, and scores of 800 and above are considered exceptional. You’ll likely need a score of at least 700 or 720 to qualify for a jumbo loan.

Down Payment Requirements

We touched on this briefly, but jumbo loan lenders often require their borrowers to provide a more substantial down payment than conventional loan lenders do. While a minimum of 10% is a good rule of thumb, some lenders may ratchet up the minimum to 25% or 30%.

Considering how large jumbo loans are already, that means you’ll probably need a significant amount of cash lying around in order to successfully apply for one — 10% of $900,000, a relatively small jumbo loan, is already $90,000.

Debt-to-Income Ratio Requirements

Your debt-to-income (DTI) ratio is a measurement of your existing debt burden expressed as a percentage. It’s calculated by totalling all your monthly debt payments and dividing that figure by your gross monthly income.

Conventional loans usually required a DTI ratio of 45% or lower. (Many lenders cut off qualification at lower percentages.) Again, while there’s no one advertised maximum DTI ratio for a jumbo loan, you’ll likely want to have as little debt as possible in order to qualify — not to mention in order to have the money on hand each month to make that massive mortgage payment.

Income and Asset Documentation

Jumbo loan lenders are, of course, primarily concerned with your ability to repay the loan. That means that, along with the above-mentioned factors, they’ll also want proof that you earn a reliable and high income — and in some cases that you’ve already stockpiled enough wealth that you’ll be able to make your payments for several months even if you lose your job. For this reason, qualifying for a jumbo loan can be especially challenging for a self-employed worker.

Advantages and Disadvantages of Jumbo Loans

So, now that you understand them better, is a jumbo loan right for you? Like any financial decision, taking out a jumbo loan has both benefits and drawbacks to carefully consider. Here are some of the pros and cons of jumbo loans.

Alternatives to Jumbo Loans

If you find yourself having trouble qualifying for a jumbo loan, you could look into other nonqualifying mortgages, such as bank statement loans — or potentially borrow a significant amount of money from family or friends. There is another alternative as well.

Piggyback Loans

One way to avoid taking out a jumbo loan is to borrow an amount below the conforming loan threshold (in most places, that would be less than $832,750 in 2026).

Then the borrower would take out a second “piggyback loan” to fund the rest of the purchase. These are often home equity loans and might have higher interest rates than a home mortgage loan. So being able to execute this strategy would depend on the borrower having another property to borrow against, such as a second home. Note: SoFi does not offer piggyback loans at this time.

If you know that you are coming into a large infusion of cash, such as from a bonus, inheritance, or the sale of another property that you own, the piggyback strategy might work because you will have funds to start paying off the second loan in the near future. However, if the home you’re vying for is that much of a stretch, it may make more financial sense to find something a bit more modest and apply for a conforming loan instead.

The Takeaway

Jumbo loans are large mortgages that don’t conform to the limits set by the FHFA — and therefore come with stricter qualification requirements. While jumbo loans can help those who qualify to access a high-value house, they can also be hard to keep up with unless your income is correspondingly high.

When you’re ready to take the next step, consider what SoFi Home Loans have to offer. Jumbo loans are offered with competitive interest rates, no private mortgage insurance, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.

FAQ

How do I find my local jumbo mortgage limit?

Jumbo loan limits are set by the Federal Housing Finance Agency (FHFA) each year and are determined by county. The FHFA Conforming Loan Limit Values map shows every county in the U.S. and its limits for single-family and multi-unit properties.

What is the FHA jumbo loan limit?

The Federal Housing Administration (FHA) guarantees loans made by private lenders, and each year it sets maximum FHA loan amounts based on the median home prices for an area. Technically, the FHA does not have a “jumbo loan” designation, but would-be FHA loan borrowers can look up FHA mortgage limits on the U.S. Department of Housing and Urban Development site.

Why are jumbo loan limits necessary?

Most mortgage loans issued in the U.S. are guaranteed by Fannie Mae and Freddie Mac, which helps reduce risk for lenders and ensure that loans are affordable and available to homebuyers. But the guarantee has to stop somewhere, and conforming loan limits draw that line. This is why jumbo loans have more stringent borrower requirements than conforming loans — lenders who make jumbo loans don’t have Fannie Mae and Freddie Mac to fall back on if a jumbo borrower defaults.

What credit score do you need for a jumbo loan?

A jumbo loan will typically require a credit score of at least 700 or even 720, however this is only one of several requirements for this large loan, so a high score is no guarantee that a borrower will qualify.

Can jumbo loan limits change every year?

Conforming loan limits (also known as “jumbo loan limits”) do change annually. The Federal Housing Finance Agency typically releases new limits for the coming year each November.

---

Photo credit: iStock/Wirestock

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.
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. 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.
^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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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.

SOHL-Q425-199

Read more