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If you’re scrolling through home listings and dreaming of a place to call your own, you probably know that mortgage lenders traditionally have wanted to see borrowers put down 20% of a home’s purchase price. But what are the benefits and challenges of a down payment that’s less than 20%? And can you purchase a home with a lot less money down (even nothing) in today’s economy?

Learn the answers to these questions and more here. This insight could help you qualify for a mortgage, and ultimately turn your dream house into a reality.

What is a Down Payment?

A down payment is an initial, upfront cash payment for some portion of the cost of the home you are purchasing. It is usually paid at the closing, with the remainder of the balance on the home paid in the form of a home mortgage loan. What portion of the home’s cost a buyer pays as a down payment can have a big impact on the mortgage loan amount, rate, and terms.

What is the Typical Down Payment on a House?

Conventional wisdom says you should buy a house with a 20% down payment. But the national average down payment on a house is actually less than 20% and it is even possible to buy a home with no money down or considerably less than 20%, as you’ll see below. First-time homebuyers are especially likely to put down less than 20%.

How Much Do I Need to Put Down on a House?

Mortgage programs that will finance your purchase with as little as 3% down can make homeownership possible even for those with smaller nest eggs. Mortgages like these can be either government-backed or offered by commercial lenders. You may also find offers that require 5% or 10% down.

When accessing these loans, it’s typically a requirement that you use the home as a primary residence. You may also encounter minimum credit score requirements to qualify; one in the 500s might qualify you for one program, while a score of 680 or higher could open other opportunities.

Of course, keep in mind that the more you pay upfront toward the cost of your home, the lower your monthly costs will likely be.

Consider Your Budget

The question of how much should you put down on a house is really a subset of a bigger home-buying question: how much house can you afford?

Many house hunters use a popular formula to determine how much to spend. They take their household gross annual income (before taxes) and multiply it by 2.5. They could also use a home affordability calculator to get a more precise estimation.

So, if your household income is $150,000, the maximum purchase price, using this formula, would be $375,000. Note that this isn’t a formula used by a lender; it’s a general rule of thumb.

A lender often wants your total housing expense — monthly principal, interest, property taxes, and insurance, plus any homeowners association fee or private mortgage insurance — to be, at most, 28% of your gross monthly income.

So, using the figure of $150,000, that would equal a maximum housing expense of $3,500 per month ($150,000/12 x 28%).

Your estimated housing payment will depend on how much of a down payment you make. Let’s say the house you want costs $329,000. If you wanted to put down 20%, you would need $65,800, plus closing costs, to swing the deal. So the first question is whether you have or can get those funds easily enough.

What if you don’t have that kind of cash for the down payment? If you could afford a smaller down payment plus closing costs and still meet the income requirements, your next step would be to see which lenders offer home loans for less than 20% down.

Understand How Your Down Payment Impacts Your Mortgage Payment

Making a down payment of less than 20% can affect your monthly mortgage costs. Private lenders that provide conventional loans to homebuyers who put down less than 20% almost always require the purchase of private mortgage insurance (PMI).

PMI, which insures the lender, adds a fee to the monthly mortgage payment.

Borrowers usually choose to pay PMI monthly, and it is included in the monthly mortgage payment. Expect to pay about $30 to $70 per month for every $100,000 borrowed, Freddie Mac says.

Once you have accumulated 20% equity in your home, you may be able to get rid of PMI as long as you have a good payment record, the property has held its value, and there are no liens on the property. This applies to borrower-paid mortgage insurance. You can’t cancel lender-paid mortgage insurance because it is built into the loan.

Estimate Your Monthly House Payment

The amount of your down payment also affects how much money you borrow to fund the total cost of a house. Plus, with a lower mortgage amount, you’ll pay back less interest over the life of the loan. Use the calculator below to test different down payment amounts and see how they would change the estimated mortgage payment.

Do I Have to Put 20% Down on a Home?

By now you’ve probably realized that you don’t have to have a 20% deposit on hand in order to buy a home. But what are the minimum down payment requirements? That depends on the type of loan you have. For those who need a boost to enter the ranks of homeownership or have an opportunity to get a dream house before they have saved 20%, lower down-payment options can be invaluable.

Conventional Loans

A conventional, fixed-rate home mortgage loan is accessible with a down payment as low as 3% – 5% for certain homebuyers. These loans typically have a term of 10, 15, 20, or 30 years.

Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage, combined with a down payment of 5% or more, can make homeownership possible for those with more limited savings and incomes, but it is important to plan for future cost increases. How it works: The ARM typically has a lower initial interest rate than a comparable fixed-rate mortgage. After anywhere from 3 to 10 years, the rate “resets” up (or down) based on current market rates, with caps dictating how much the rate can change in any adjustment.

Because borrowers may see their rate rise, they need to be sure they can afford the larger payments that come after the introductory years if they don’t plan to sell their house, pay off the loan, or refinance the loan.

Can You Buy a House With No Money Down?

The truth is, it is possible to become a homeowner with zero or very little money down. If you want to get a mortgage with no money down, a government-backed loan is likely your best bet.

These loans are insured by the federal government, so your lender doesn’t assume the risk of loaning money to someone who might default. They know Uncle Sam is standing behind the loan. These mortgages can be a win-win. They encourage citizens to become homeowners even if they don’t have a down payment, and they make banks more likely to lend under these no-down-payment conditions.

💡 Recommended: How to Buy a House With No Money Down

FHA Loans: 3.5% – 10% Down

Another home loan option is a Federal Housing Administration (FHA) loan. The FHA doesn’t directly make mortgage loans. Instead, certain lenders offer FHA loans that are backed by a government guarantee. Because of this guarantee, lenders will typically offer more flexible guidelines for mortgage approvals, including lower down payments.

In general, if you have a credit score of 500 to 579, the minimum down payment required for FHA loans is 10%. If your credit score is 580 or above, the minimum down payment is 3.5%.

FHA loans require an annual mortgage insurance premium (MIP) and an upfront MIP of 1.75% of the base loan amount. You can estimate the upfront and ongoing MIP with an FHA Mortgage Calculator.

VA Loans: 0% Down

If you’re a military veteran, active service member, or, in some cases, a surviving military spouse, you may qualify for a U.S Department of Veterans Affairs (VA) mortgage loan without any down payment required.

This program was created by the U.S. government in 1944 to help people returning from military service purchase homes.

Monthly mortgage insurance is not required, but some borrowers pay a one-time funding fee. For a first VA-backed purchase or construction loan, the fee is 2.3% of the total loan amount if you put less than 5% down. It’s 1.65% of the loan amount if you put 5% to 10% down.

What is the Minimum Down Payment on a House?

The average down payment falls below 20%, so if you can’t cough up 20%, you’re in good company. Use this handy reference to see which opportunity might be a good fit for your budget and lifestyle.

In general, it makes sense to put down as much as you can comfortably afford. The more you put down, the less you’ll be borrowing, which translates into more equity in the house and lower monthly payments.

On the other hand, it doesn’t always make sense to empty the bank in order to put down the largest down payment possible. That’s because you’ll likely have moving expenses, plus you’ll need to pay closing costs, which can vary by purchase price, state in which the property is located, interest rate chosen, lender processing fees, and more.

Furthermore, the home you’re moving into may need cosmetic repairs, or you may want to redecorate, add new landscaping, and so forth. Plus, you’ll probably want to keep an emergency fund to pay for unexpected costs.
If this doesn’t all seem doable, you may want to look for a more affordable house for now and save up for your dream house. Or, if you can wait a while before buying, then you can create a savings plan to build up a down payment.

Tips to Help You Save for a Down Payment

For 47% of recent buyers, their down payment came from savings (a fortunate 22% of first-time buyers used a gift or loan from a friend or relative toward the down payment), according to a 2022 National Association of Realtors® report.

Saving can be difficult, especially for first-time homebuyers. But if you are ready to be a homeowner, now is the time to get serious about saving for a down payment on your first home.

Here are steps to consider taking:

1.    Track your spending, including fixed expenses (rent, utilities, student loan and car payments, and so forth) and variable ones (like dining out, clothes shopping, and hobbies). Add expenses that you pay annually or semiannually, breaking those down into monthly amounts.

2.    Make a budget that helps you to trim unnecessary expenses. (As you do this, you might consider if it makes sense to refinance student loans or consolidate credit card debt into a personal loan.)

3.    Brainstorm ways to boost your income. Asking for a raise may be an option, or you might start a side hustle to bring in additional cash.

4.    Figure out what you can save each month, both for your down payment and to build up how much you should have in your emergency fund.

5.    Set a timetable for your plan.

💡 Recommended: First-Time Homebuyer’s Guide

The Takeaway

If you can manage a down payment but it’s south of 20%, know that you’re in good company. Finding a mortgage with less than 20% down is often doable, though fees usually come along for the ride.

Still, if you’d like to hear the jingle of house keys instead of apartment keys in your pocket, give SoFi Mortgage Loans a look.

SoFi offers a range of mortgage loans with as little as 3% to 5% down. And you can get prequalified with no obligation.

Ready to get started? It’s easy to check your rate.

FAQs

Is 10% down payment on a house enough?

For some buyers, especially first-time buyers, a 10% down payment is adequate to purchase a home. The amount a buyer pays upfront does affect their mortgage amount, rate, and fees.

Do I have to put 20% down on a house?

Many buyers purchase a home without putting down 20% of the cost upfront.

Does the down payment reduce the loan amount?

Yes, the more money you put toward a down payment, the less you need to borrow.

What is the optimal down payment for a house?

The optimal down payment for a house depends on your personal finances, the location where you are buying, and what mortgage programs you qualify for. A mortgage calculator can help you see how different down payment amounts affect a mortgage.

How would a 20% down payment affect a home loan?

Putting down 20% will help you avoid the added expense of private mortgage insurance, and, of course, the less you borrow to fund your purchase, the lower your monthly payments will be.

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

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

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

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.

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Buyers who learn how to negotiate house prices lay the foundation for a mutually acceptable deal. Whether you’re a first-time homebuyer or not, these strategies to negotiate home prices may help you score a property at the price that works best for you.

Why You Should Negotiate House Prices

While negotiating the price of a home as a buyer can seem intimidating, the benefits often outweigh the fear. For starters, negotiating lets the seller know you’re serious about the home. And if the asking price is over what you feel comfortable with, negotiating can help you see if there is any wiggle room.

A successful negotiation gives you the opportunity to create a concise offer that you’re happy with and that helps you stay within your budget. It feels great to get the house you want without putting yourself in a stressful financial situation.

Things to Know Before Negotiating Home Prices

Know Your Market

The market will dictate how much leverage you have to negotiate a home price. So start by determining whether it’s a hot seller’s market or a buyer’s market.

The power is typically in your hands if the number of homes for sale exceeds the number of willing buyers. Markets can vary from city to city and neighborhood to neighborhood. So check with your real estate professional to be certain what type of market you’re working with.

Know the Value of an Agent

Can you buy a house without a real estate agent? Sure, but it’s not a decision to make lightly.

Besides the fact that real estate agents know what’s reasonable for the current market conditions, they have valuable experience that can help you navigate offers and counteroffers. And because they aren’t emotionally attached to the outcome, they are better set up to get the best deal without making ​​excessive concessions.

But you don’t want to work with just any agent. You want to work with someone who is a buying and selling expert, has connections with other agents in the area, and is knowledgeable about the community you’re interested in.

Got your eye on a house for sale by owner? You can find a real estate agent or go it alone.

Recommended: Finding a Good Real Estate Agent When Buying a House

How Much Can You Negotiate on Average?

One of the best ways to get an idea of how much you can negotiate is to research the prices of “comps,” recently sold homes in your target area that are similar to the property you’re trying to buy.

A real estate agent will have access to market trends. But you can obtain the information yourself on sites like Zillow, Realtor.com, Redfin, and Trulia. If you’re moving from out of state, this guide to the cost of living by state can give you a sense of what housing expenses to expect. In a large state such as California, it’s helpful to consider the cost-of-living breakdown for individual cities.

Zillow also lists how long for-sale properties have been on the market, which can give you some insight into how negotiable a list price may be.

Unless you’re in a hot seller’s market, you may be able to offer 10% under the asking price and even ask the seller to pay closing costs or certain other concessions.

How to Negotiate a House Price as a Buyer

Once you have a sense of the market and an agent to help you negotiate, the next step is to get your finances in order so you’ll be in a strong position to negotiate. Sellers are apt to be most enthusiastic about buyers who have been preapproved, as opposed to prequalified, for a mortgage.

While both involve a lender taking a peek at your financial information, such as income, credit history, debts, and assets, preapproval involves an in-depth application and verification process. It’s a great way to send your offer to the front of the pile.

If you already own a home, selling it ahead of time could also put you in a better position to negotiate: It means you won’t have to wait until your home is sold to go forward with the buying process.

This “chain-free” approach requires careful timing and possibly setting up a temporary living space. While it’s not feasible for everyone, it is an option to keep in mind if you’re hoping to increase your odds of success in a competitive market.

Recommended: How Long Does a Mortgage Preapproval Last?

Now it’s time to make a smart offer.

Tips on Negotiating House Prices

Keep Your Cool

From the first time you walk through the home, it’s a good idea not to show all your cards by appearing overeager, even if you’re totally in love with the place. If you come across as desperate for the house, sellers may feel they can expect a higher offer from you.

Don’t be afraid to point out any drawbacks that give you pause, and give yourself time to shop around before you get serious about putting money on the table.

Get an Inspection

Found a property you love? While your mortgage lender might not require a home inspection — and while forgoing one may make your offer more appealing to the seller — it’s probably in your best interests to have one.

Without a home inspection, the only information you have about the house comes from what the seller is able (or willing) to disclose and what you observe during your tour. Home inspections can reveal hidden issues like cracks in the foundation or plumbing problems.

Along with helping you plan for unforeseen repair costs ahead of time, the inspection can also give you leverage to ask the sellers to knock down their price a bit, offer you a credit for closing costs, or fix the problem themselves. Your real estate agent can help you decide how to negotiate the house price after the inspection.

Put Your Offer in Writing

Many experts recommend putting your offer in writing and adding as much detail as possible. That way you avoid any disagreements on what was said and can negotiate on factors beyond price.

When competing against multiple offers on a house, buyers may waive one or all contingencies to sweeten their offer. Contingencies are simply conditions that must be met in order to close the deal.

An appraisal contingency can be an opportunity to negotiate the home price or back out if the property does not appraise at the price in the purchase contract.

A clear title contingency also gives the buyer a way out if liens or disputes are associated with the property.

And it can’t hurt to ask for help with closing costs.

Plead Your Case

In a competitive market, you might also consider adding a personalized letter to your offer. It might sound cheesy, but selling a home can be just as emotionally fraught as buying one. Describing why you love the house or how you imagine your family growing with the property can help your offer stand out from others, even if you aren’t the highest bidder.

Avoid offending a seller with a lowball offer, particularly if you’re negotiating in a seller’s market or purchasing a beloved property that’s been in the family for years. If you do decide to bid around 20 percent under the asking price, make sure you’re willing to walk away.

When it comes time to make an offer, consider not only the list price but closing costs and any repair or renovation expenses.

Knowing When to Walk Away From an Offer

Although you’ll generally hear back on (realistic) offers within a few business days, sellers aren’t legally obligated to respond to your offer at all. Including an expiration date in your offer will give you a firm calendar date on which you’ll know for a fact you didn’t get the home, which means you’ll be able to redirect your efforts.

Purchasing a home can take a long time. There’s no reason to waste your energy when it’s a moot point.

A seller who responds to your offer but who isn’t inclined to move on the price of the house might be willing to instead make repairs that are needed and that are identified during the inspection of the property. And consider asking the seller to throw in items like furniture or play equipment that they might be planning to take with them. If they decline and you still don’t feel good about the price, it’s time to walk away.

The Takeaway

Negotiation goes on in love and war, in a salary decision, with parents and toddlers, and in real estate. If you’re a buyer, the more you know about negotiating home prices, the better.

As important as it is to shop around for the right home — and negotiate for the right price — it’s also important to find the right home mortgage loan. SoFi offers competitive fixed-rate mortgage loans, and qualified buyers can put down as little as 3%.

FAQ

How do you politely ask for a lower price?

Rely on your real estate agent to help you determine a good offer price. Then consider writing a personal letter to accompany the offer, addressing the seller by name if possible and conveying, in a friendly tone, a sincere message about what you like about the house or how you can imagine your family living there.

How much can you negotiate when buying a house?

How much you can negotiate depends on how “hot” the market is. In a competitive seller’s market you may not be able to negotiate at all. Rely on your real estate agent to guide you. A property that has been on the market for a long time may provide more opportunity for negotiation.

What is not a smart way to negotiate when buying a home?

Avoid making a very low initial offer — you risk offending the seller. And don’t criticize the seller’s taste by, say, pointing out that the kitchen decor isn’t to your liking. Finally, if you are preapproved for a mortgage that is greater than your offer price, don’t tip your hand; instead, ask your lender to tailor the preapproval letter to the amount you are offering.

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 for more information.

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

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

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If you have your heart set on buying a fixer-upper, a 203(k) loan can help. Repair work requires energy and money, and it can be difficult to secure a loan to cover both the value of the home and the cost of repairs — especially if the home is currently uninhabitable. With a 203(k) loan, the Federal Housing Administration (FHA) insures loans for the purchase and substantial rehab of homes. It is also possible to take out an FHA 203(k) loan for home repairs only, which could prove helpful given how costly this work can be.

Read on for more information about FHA 203(k) loans and the FHA 203(k) process, as well as your other home improvement loan options.

What Is an FHA 203(k) Home Loan?

Section 203(k) insurance lets buyers finance both the purchase of a house and its rehabilitation costs through a single long-term, fixed-rate or adjustable-rate loan. Before the availability of FHA 203(k) loans, borrowers often had to secure multiple loans to obtain both a home mortgage and a home improvement loan.

The loans are provided through mortgage lenders approved by the U.S. Department of Housing and Urban Development (HUD) and insured by the FHA. This government loan helps to rejuvenate neighborhoods and expand homeownership opportunities. Some buyers use FHA loans to purchase and rehabilitate a HUD Home, a property that is in the government’s possession. These loans are also popular with first-time homebuyers thanks to lenient credit requirements and a low minimum down payment.

Because 203(k) FHA loans are backed by the federal government, you may be able to secure one even if you don’t have stellar credit. Rates are generally competitive but may not be the best, because a home with major flaws is a risk to the lender.

The FHA 203(k) process also requires more coordination, paperwork, and work on behalf of the lender, which can drive the interest rate up slightly. Lenders also may charge a supplemental origination fee, fees to cover the review of the rehabilitation plan, and a higher appraisal fee.

Additionally, the loan will require an upfront mortgage insurance payment of 1.75% of the total loan amount (it can be wrapped into the financing) and then a monthly mortgage insurance premium.

How an FHA 203(k) Loan Works

As mentioned above, you can take out a 15- or 30-year fixed-rate mortgage or an adjustable rate mortgage through an FHA-approved lender. The amount for which you’re approved will depend on how much your home is expected to be worth after all of the renovations are completed, as well as the cost of the work.

Additionally, the amount you’re approved for will depend on which type of FHA 203(k) loan you get — either the limited (also called streamline) or the standard. (Note that both of these options also have a 203(k) refinance option for current homeowners.)

Types of FHA 203(k) Loans

Streamlined or Limited 203(k) Loan

The limited 203(k) FHA loan allows you to finance up to $35,000 into your mortgage for any repairs or home improvements, including emergency home repairs such as replacing a roof or flooring. There is no minimum repair amount. However, the streamlined 203(k) loan does not cover major structural work.

Standard 203(k) Loan

If you’re buying a real fixer-upper and looking to tackle larger jobs or major structural repairs, you’ll likely want to go for the standard 203(k) loan. A minimum repair cost of $5,000 is required, and you must use a 203(k) consultant, a HUD-certified professional who will oversee the project and make sure FHA standards are met.

What Can FHA 203(k) Loans Be Used For?

Purchase and Repairs

For a standard FHA 203(k) loan, other than the cost of acquiring a property, rehabilitation may range from minor repairs (though exceeding $5,000 in worth) to virtual reconstruction. If a home needs a new bathroom or new siding, for example, the loan will include the projected cost of those renovations in addition to the value of the existing home.

You could do either a remodel or a renovation with the funds, the former of which is making updates to an existing room or structure, while the latter is more extensive and can include changing the function or partially the structure of a home. An FHA 203(k) loan, however, will not cover “luxury” upgrades like a pool, tennis court, or gazebo.

If you’re buying a condo, 203(k) loans are generally only issued for interior improvements. However, you can use a 203(k) loan to convert a property into a two- to four-unit dwelling.

Project estimates done by the lender or the FHA will determine your loan amount. The loan process is paperwork-heavy. Working with contractors who are familiar with the way the program works and will not underbid will be important.

Contractors will also need to be efficient: The work must begin within 30 days of closing and be finished within six months.

Temporary Housing

If the home is indeed unlivable, the standard 203(k) loan can include a provision to provide you with up to six months of temporary housing costs or existing mortgage payments.

Who Is Eligible for an FHA 203(k) Loan?

Individuals and nonprofit organizations looking for a home mortgage loan can use an FHA 203(k) loan, but investors usually cannot. (The only way to use a 203(k) loan to finance an investment property is to buy a property with multiple units and live in one of the units.)

FHA 203(k) Loan Qualification Requirements

Most of the eligibility guidelines for regular FHA loans apply to 203(k) loans. They include a minimum credit score of 580 and at least a 3.5% down payment. Applicants with a score as low as 500 will typically need to put 10% down. Those with credit scores of less than 500 are not eligible for FHA-insured loans.

Your debt-to-income ratio typically can’t exceed 43%. Additionally, you must be able to qualify for the costs of the renovations and the purchase price.

Recommended: How to Qualify for a Mortgage

How to Apply for a 203(k) Loan

To apply for any FHA loan, you have to use an approved lender, a list of which you can find on HUD.gov. It’s a good idea to get multiple quotes.

Once you have a lender, they will assign you a 203(k) consultant who will help you to plan the work that needs to be done on the property you’ve selected and determine how much it will cost. To do so, the consultant will perform a home inspection to identify necessary repairs and improvements, including any health or safety issues.

After that, you will need to find a contractor to write out an estimate for the cost of the labor and materials. Once the lender approves that estimate, they will appraise your home. Your loan can then close and work on your home can begin.

Pros and Cons of 203(k) Rehab Loans

Before you move forward with 203(k) rehab loans, it’s important to understand the benefits as well as the downsides. Here are the major pros and cons to consider:

How Much Can You Borrow with an FHA 203(k) Loan?

The maximum amount you can borrow with a standard FHA 203(k) loan is 110% of the home’s proposed future value or the purchase price plus your anticipated renovation costs, whichever is less. The total value of the home must still fall within the FHA’s mortgage limits for your area, however. (As noted above, the most you can borrow with a limited FHA 203(k) loan is $35,000.

203(k) Loans vs Conventional Home Rehab Loans

As you consider whether an FHA 203(k) loan may be your best bet from among the many types of mortgage loans, you may be wondering how it compares to a conventional home rehab loan. Both can provide financing to cover the cost of renovating, but there are some key differences to keep in mind — namely, the credit score and down payment requirements as well as what types of improvements can be financed.

Alternatives to 203(k) Rehab Loans

The FHA 203(k) provides the most comprehensive solution for buyers who need a loan for both a home and substantial repairs. However, if you need a loan only for home improvements, there are other options to consider.

Depending on the improvements you have planned, your timeline, and your personal financial situation, one of the following alternatives could be a better fit.

Other Government-Backed Loans

Limited FHA 203(k) Loan: In addition to the standard FHA 203(k) program, there is a limited FHA 203(k) loan of up to $35,000, as mentioned above. Homebuyers and homeowners can use the funding to repair or upgrade a home.

FHA Title 1 Loans: There also are FHA Title 1 loans for improvements that “substantially protect or improve the basic livability or utility of the property.” The fixed-rate loans may be used in tandem with a 203(k) rehabilitation mortgage. The owner of a single-family home can apply to borrow up to $25,000 with a secured Title 1 loan.

Fannie Mae’s HomeStyle® Renovation Mortgage: With Fannie Mae’s HomeStyle® Renovation Mortgage, homebuyers and homeowners can combine their home purchase or refinance with renovation funding in a single mortgage. There’s also a Freddie Mac renovation mortgage, but standard credit score guidelines apply. Need more details? Our complete guide to government home loans can help.

Cash-Out Refinance

If you have an existing mortgage and equity in the home, and want to take out a loan for home improvements, cash-out refinancing from a private lender may be worth looking into.

You usually must have at least 20% equity in your home to be eligible, meaning a maximum 80% loan-to-value (LTV) ratio of the home’s current value. (To calculate LTV, divide your mortgage balance by the home’s appraised value.)

A cash-out refi could also be an opportunity to improve your mortgage interest rate and change the length of the loan. To examine whether this approach is right for you, check out your cash-out refinancing rate.

PACE Loan

For green improvements to your home, such as installing solar panels or an energy-efficient heating system, you might be eligible for a PACE loan .

The nonprofit organization PACENation promotes property-assessed clean energy (or PACE) financing for homeowners and commercial property owners, to be repaid over a period of up to 30 years.

Home Improvement Loan

A home improvement loan is an unsecured personal loan — meaning the house isn’t used as collateral to secure the loan. Approval is based on personal financial factors that will vary from lender to lender.

Lenders offer a wide range of loan sizes, so you can invest in minor updates or major renovations. A home improvement loan of $5,000 to $100,000 may be an option worth considering to turn your home into a haven.

Home Equity Line of Credit

If you need a loan only for repairs but don’t have great credit or wish to fund more than $35,000 in repairs, a HELOC may provide a lower rate. Be aware that if you can’t make payments on the borrowed funding, which is secured by your home, the lender can seize your home.

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

The Takeaway

If you have your eye on a fixer-upper that you just know can be polished into a jewel, an FHA 203(k) loan could be the ticket. However, other loan options may make more sense to other homebuyers and homeowners.

Stop wondering if homeownership is within reach and how to get there. SoFi’s Mortgage Loan Officers can help you navigate the application process from start to finish.

FAQ

Is it hard to qualify for an FHA 203(k) loan?

An FHA 203(k) loan is easier to qualify for than other types of mortgage because you can have a down payment of as little as 3.5% and a credit score of 580. With a higher down payment, a credit score of 500-580 could be adequate.

Who qualifies for FHA 203(k)?

To qualify for an FHA 203(k) loan, you’ll need a credit score of at least 500, a down payment of 3.5% (10% if your credit score is below 580), and you will need to use the property you are buying and renovating as your primary residence. You’ll also need to use a professional contractor to make improvements. (This is not a loan for DIY renovators.)

How much can you borrow on a 203(k) loan?

The most you can borrow with a standard FHA 203(k) loan is the lower of either: 110% of the home’s proposed future value or the purchase price plus expected renovation cost. A limited FHA 203(k) loan has a ceiling of $35,000.

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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.

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

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Today’s burgeoning bathroom trends range from bold color palettes to high-tech functions. Whether you’re gut-renovating a primary bathroom or freshening up a powder room, you’re bound to find plenty of inspiration at all price points and levels of difficulty.

Keep reading to find bathroom remodel ideas for 2022, plus tips on how to budget for the home spa of your dreams.

8 Bathroom Ideas for 2022

The dominant bathroom trends for 2022 skew modern in nature with clean lines, organic materials, and a lot of warm, natural wood. At the same time, some homeowners are taking cues from their grandmothers, incorporating throwbacks to the 1960s with pink tile and patterned wallpaper. Whichever route you take, there’s little denying these bathroom ideas 2022 have a little something for everybody.

For a deeper dive into the topic, check out our guide to bathroom remodels.

1. Opt for an All-in-One Shower and Bath

Price: Moderate
Difficulty: High
Style: Contemporary

Functionality is at the forefront of many homeowners’ minds. And what’s more functional than a bathtub that doubles as a shower? It saves space and can be more economical than adding two separate bathing areas. Prepare to spend $1,100-$5,500 to remodel a shower alone, whereas a shower-tub combo costs around $1,400-$1,600, including fixtures and modifications.

Recommended: The Cost To Repair a Plumbing Leak

2. Choose Earthy, Organic Styles

Price: Low to Moderate
Difficulty: Moderate
Style: Contemporary

Gone are the days when subway tile was the only way to decorate a shower enclosure. In 2022 bathroom trends, tile is more tactile and natural. To mix things up, consider stacking tile vertically during layout, then enclosing it with a horizontal border.

Homeowners are opting for wooden tile for an organic look, often complementing it with white floor tile. Also on the rise: other natural materials in earthy tones that give the bathroom a sense of warmth.

3. Bring the Outdoors In

Price: Low
Difficulty: Easy
Style: Contemporary

In addition to earthy tones, homeowners are adding more plants to their bathroom spaces. Lush greenery is an economical way to mimic the feel of a resort spa. In addition to floor and counter planters, consider hanging plants from the ceiling in locations that enjoy natural light.

If you’ve got the budget to spare, merge indoors and out via a glass wall and outdoor rain shower.

4. Add Twin Showerheads

Price: Low
Difficulty: Moderate
Style: Contemporary

Adding side-by-side showerheads is one of many shower remodel ideas you may choose to add to your bath remodel. Not only does it add symmetry to your shower, but it allows more than one person to shower at a time. That can come in handy if you have children you’re trying to bathe simultaneously, or spouses who get ready for work at the same time.

5. Incorporate Creative Storage Solutions

Price: Moderate
Difficulty: Easy to Moderate
Style: Contemporary

If you live in an apartment or own a home with smaller bathrooms, finding new ways to add storage is at the top of many homeowners’ priority list. Perhaps you have an unused nook where you can add built-ins for toiletries and linens. Or you can replace a floating vanity with one that has under-sink storage. Built-ins and custom cabinetry can cause your bathroom budget to balloon, but they’re often worth the investment if space elsewhere in your home is at a premium.

6. Switch to a Bold Black Palette

Price: Varies
Difficulty: Easy to moderate
Style: Contemporary

Black is back in bathroom trends 2022. Taking a page out of Scandinavian design (which is fond of mixing black with natural wood), interior designers are using black walls, floors, and stone to make a strong statement. Even bathroom fixtures are skewing dark with matte black tubs and faucets.

Love black but don’t want your entire bathroom to be a single color? Use black sparingly instead — on floor tile, a wooden wall covering, or a sink and toilet combo — and incorporating gold fixtures.

7. Go All Out with Color and Pattern

Price: Varies
Difficulty: Moderate
Style: Traditional

On the flip side of the sleek black trend is Grandma’s bubblegum-pink bathroom. Adding a splash of color to your bathroom is one way to up the wow factor. Dare to go all pink — from a clawfoot tub to dusty rose floor tile to a blush-dominant floral wallpaper. Or simply add a pink toilet as a statement piece. Want to test out this bathroom trend but wary of going too pink? Modern wallpaper patterns (think: flamingos and palm leaves) and geometric tile are two ways to walk the line between traditional and modern.

8. Go High-Tech

Price: Moderate
Difficulty: Moderate
Style: Contemporary

As home technology continues to advance, so do homeowners’ desires to operate everything via apps and devices. Many homeowners opt for wall-mounted digital interfaces that operate everything from the shower heads to stereo speakers. Adding heated flooring and high-tech bidets are also among the top bathroom ideas 2022.

Recommended: How To Pay for Emergency Home Repairs

How To Budget for Your Bathroom Reno

When researching materials, start with what you know you need: tile, faucet, paint, etc. For things like tile and paint, plan on purchasing 20% more than your square footage requires. Then consult DIY sites to make sure you include all the necessary incidentals to complete the project. For a DIY tiling project, for example, you’ll need grout, a grout float, thinset, sealant, drop cloths, etc. (Here’s some info on how to keep inflation from blowing your reno budget.)

The most expensive part of a bathroom reno is labor. If you’re hiring a contractor to do the work, expect 75% of your budget to go to the contractor(s). That’s because full bathroom updates require a number of specialists, such as plumbers, electricians, and tile installers. Even for smaller updates, a general contractor can cost $50-$75 an hour. (Learn more about how to find the right contractor.)

Finally, experts recommend adding a 20%-30% cushion to your overall budget to cover any unforeseen issues.

Keep Resale Value in Mind

The good news is that bathroom updates do increase your home’s value — but there are limits. Typical updates recoup about 70% of their cost, while upscale renos have a lower ROI of about 60%, according to the 2022 State of Remodeling in the U.S. survey.

The upshot: You’ll enjoy a better bang for your buck by keeping updates modest and avoiding anything too trendy or unique (ahem, black bathtub).

Consider Your Financing Options

Before you commit to any of these bathroom remodel ideas, you’ll need to figure out how you’re going to finance your home improvement project. A personal loan, credit card, savings, or HELOC are all ways you might finance your bathroom remodel. No matter how you pay for your bathroom upgrades, it’s wise to weigh your options and compare terms, conditions, and interest rates upfront.

The Takeaway

Some bathroom trends for 2022 are on the practical side, such as creative storage and side-by-side showerheads. Others are more daring, like switching to matte black fixtures. Whichever way your tastes lean, make sure you have the budget to do things right. It’s what’s behind the walls that really matters — to your family and potential homebuyers.

Don’t rely on credit cards to fund your reno. With a home improvement loan from SoFi, you can borrow up to $100,000 at a competitive fixed rate, and with no fees. So there’s no need to cut corners on your dream bathroom.

Personal Loan Tips

Tip 1

If you don’t have the cash to renovate or remodel your home, one financing option is a personal or home improvement loan, which can be faster and easier to secure than a construction loan.

Tip 2

In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.

Tip 3

Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

Photo credit: iStock/LeoPatrizi

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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Whether you’re buying a home or shopping for new insurance coverage, it helps to understand basic homeowners insurance terms before you choose a policy.

The jargon used by real estate agents, lenders, and insurance professionals can be mystifying. It doesn’t help that terms for various types of homeowners insurance coverage often sound interchangeable but aren’t. Or that different lenders may have different requirements for the kinds of insurance coverage a borrower must have. Or that homeowners may require various types of coverage, and limits, based on their individual circumstances.

Need some clarity? Consider this homeowners insurance glossary a go-to resource.

Blanket Insurance

Blanket insurance enables a property owner to cover multiple pieces of property with one policy. For example, a landlord who has many rental units might take out a blanket policy to insure them all.

A homeowners insurance policy also may be referred to as blanket insurance coverage because it offers more than one type of protection. (A standard policy may combine dwelling, personal property, and liability coverage, for example.)

Recommended: Homeowners Insurance Coverage Options to Know

Flood Insurance

A standard homeowners policy typically offers some coverage for unexpected water damage due to a plumbing malfunction or broken water pipe. But most standard homeowners policies do not cover damage caused by an overflowing body of water, like a creek, bay, or river. That kind of protection usually requires a separate flood insurance policy.

Some property owners may be required to carry flood insurance, especially if they live in a high-risk area.

Hazard Insurance

When you hear the term “hazard insurance,” it’s typically referring to the portion of a homeowners policy that kicks in when someone suffers a loss caused by certain hazards or “perils,” such as fire, hail, theft, a falling tree, or a broken pipe.

Not every hazard is covered by a standard policy, however. Homeowners usually need separate insurance to cover damage caused by a flood, earthquake, or sinkhole.

Recommended: Hazard Insurance vs. Homeowners Insurance

Homeowners Insurance

A typical homeowners policy covers the physical structure of an insured home and other structures on the property, personal belongings in the home, and additional living expenses if the owner can’t stay in the home after damage. (However, it is usually necessary to purchase separate insurance to cover costs related to an earthquake, flood, or sinkhole.)

A policy also provides liability coverage, which can protect you, as the homeowner, if you’re legally responsible for another person’s injury or property damage when it occurs on your property or from your activities. For example, if someone is injured because you neglected to fix your front porch step, liability insurance may help pay for that person’s medical bills. The liability portion of your policy also may provide protection if your pet bites a person or another animal, whether the bite occurs in your own yard or somewhere else.

There are no federal or state laws that require the purchase of a homeowners policy, but if you have a mortgage, you can expect your lender to require proof that you carry this type of insurance.

Homeowners insurance is not the same thing as mortgage insurance. Homeowners insurance mainly protects the homeowner when something unexpected occurs; mortgage insurance is designed to protect the lender if a borrower can’t make mortgage payments.

Homeowners insurance is also quite different from the protection offered by a home warranty. A home warranty is a service contract that generally covers the cost of repairing or replacing some appliances and major home systems when they malfunction, but home warranties are not required by lenders.

Mortgage Insurance

Mortgage insurance protects lenders against the possibility that a borrower might fail to make the payments on a home loan.

When a homebuyer appears to have a higher risk of defaulting, mortgage insurance can serve as a backup to reassure the lender that if the borrower fails to make the mortgage payments, the loan still will be paid. The lender doesn’t pay for this insurance — the borrower does.

Not everyone has to get mortgage insurance. But if you have a conventional loan and your down payment is less than 20% of the purchase price, you’ll probably be required to get private mortgage insurance, commonly called PMI — at least until you have 20% of the principal balance paid off.

The rules are a bit different for those who have a loan backed by the Federal Housing Administration (FHA) or Department of Agriculture (USDA). With an FHA loan, borrowers are required to pay a qualified mortgage insurance premium each month no matter how much they put down. USDA loans have a similar requirement, but the cost is referred to as a “guarantee fee.”

Renovation Insurance

Homeowners who are planning to make major renovations or repairs to a property may want to check with their insurance company to see what their homeowners policy covers.

Depending on the size of the project, they may decide it makes sense to add “dwelling under renovation,” “dwelling under construction,” or “builder’s risk” insurance to fill any coverage gaps. It can help with costs if the homeowner or someone else is hurt during a renovation, for example, or if the home or a nearby property is damaged.

If professionals will be doing the renovation, it’s also a good idea to ask for proof of their insurance coverage and to make a copy just in case there are problems. Contractors and subcontractors should have liability, property, and worker’s compensation insurance.

If the home will be unoccupied for an extended period while the work is being done, owners may want to consider adding vacant dwelling insurance during that time. (Vacant dwelling coverage also might offer protection for those who have moved into a new home but haven’t yet sold their old home.)

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

Rental Property and Home-Sharing Insurance

Owners who are renting a home to someone else may want to look at the pros and cons of purchasing rental property insurance vs. a standard homeowners insurance policy. Besides covering repairs if the home or other structures on the property are damaged, rental property insurance may cover the owner if a tenant is injured and makes a claim. An owner also might be able to receive reimbursement for lost income if the property is deemed uninhabitable due to a covered loss.

What about insurance for short-term rentals like Airbnb? Business use of a house is usually not included in homeowners insurance coverage. Home-sharing insurance may provide liability coverage but not damage to the home or coverage of personal belongings. You may need an add-on to your homeowner’s insurance.

Renters Insurance

If you’re a renter, renters insurance will cover your possessions if something is stolen or damaged. And it may help with certain costs if someone is injured in the rental home, or help pay for accommodations if the home is damaged and you have to move out temporarily.

Though renters insurance is mostly meant to protect a tenant who is leasing a property, it also can have benefits for the landlord. This is why some landlords require tenants to have renters insurance when they sign a lease. For the landlord, renters insurance can help take care of some of the things a homeowners policy or landlord policy doesn’t, including damage from a renter’s pet.

Title Insurance

When you buy title insurance, the title company searches for any ownership issues that might cause legal problems after you close on the property. It will look for any liens that might remain on the property, for example, or clerical problems that weren’t caught and fixed in the past.

If there aren’t any problems (or the problems are remedied), the title company will insure your claim to the property’s title. And if something does come up later — let’s say there’s a lawsuit because the title search missed something — the policy should cover the costs of resolving the problem.

There are two types of title insurance: Lenders title insurance protects the mortgage company from incurring any costs in a title dispute. Owner’s title insurance protects the homeowner. The mortgage company likely will require that you purchase lenders’ title insurance. Owner’s title insurance is optional, but once you buy it, the coverage lasts as long as you own your home.

Title insurance is not included in a homeowners insurance policy.

Umbrella Insurance

A separate liability insurance policy, umbrella insurance goes beyond the liability coverage provided by a standard homeowners or auto insurance policy.

It’s designed to expand your protection if a claim or lawsuit is filed against you, and it only kicks in if you exceed the liability coverage limit you have with your homeowner’s insurance policy.

If you own rental property, employ a housekeeper or gardener, have a trampoline or pool — or if you have substantial assets you wish to protect — you may want to talk to your insurance company about the added risk and whether umbrella insurance is right for you.

The Takeaway

When you’re buying a home or shopping for a new homeowners insurance policy, there’s a lot to manage. Understanding homeowners insurance terms is key in protecting this major investment.

Shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium. To help simplify the process, SoFi has partnered with Experian to bring customizable and affordable homeowners insurance to our members.

With Experian, you can see personalized quotes from up to 40 top insurance carriers. Match your current coverage to new policy offers with little to no data entry. And easily bundle your home and auto insurance to save money. No fees, no paperwork.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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

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

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