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Half a million dollars may seem like a lot, even for a nice house — but in many American cities these days, it’s close to the norm. For example, in Portland, Oregon in July 2024, the average home value hovered around $540,000. The good news? These days many mortgage programs allow qualified first-time homebuyers to put down as little as 3%, which means your down payment could be a relatively reasonable $15,000 on a $500,000 home.

Below, we’ll dive into the details about how to afford a $500,000 house.

How Much Income Do I Need to Afford a $500K Home?

Before you start to think about saving up a down payment, you may be wondering — do I make enough money to make the mortgage payments in the first place? Spoiler alert: There’s not one easy answer to the question, “How much should I be making to afford a $500,000 house?” But there is some quick math we can do to help figure out your ballpark.

For starters, keep in mind that many financial experts recommend spending no more than 30% of your gross monthly income — the amount you make before taxes are deducted — on housing. That’s about a third.

With that in mind, you can use a mortgage payment calculator to get a sense of what your monthly mortgage payments might look like. If you put $15,000 down on a $500,000 house for a 30-year home loan at a 7% interest rate, you’d pay about $3,200 per month toward your mortgage. That means you’d want to be making about three times that amount, or $9,600 per month, to comfortably afford the mortgage. That’s a yearly income of about $115,000.

Keep in mind that the $3,200 per month figure does not include expenses like mortgage insurance, homeowners insurance, or property taxes. So you would probably need a higher annual income to fully support your home purchase. If you apply the 28/36 rule, which states that your annual housing costs should be no more than 28% of your annual income, you would have about $3,500 to apply to housing. Assuming you don’t have a lot of debt eating away at your paycheck, you would need to earn around $150,000 each year to afford a $485,000 mortgage on a $500,000 home when insurance and taxes are factored in.

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How Much Is the Down Payment for a $500K House?

How much of a down payment you’ll be required to put down on a $500,000 house depends on what kind of mortgage you take out — and your creditworthiness as a borrower. The lowest down payment a first-time homebuyer would likely be able to get away with is 3%, or $15,000, while a full 20% down payment would be $100,000. That’s quite a range!

What Are the Down Payment Options for a Home Worth $500K?

Here’s the breakdown of the various down payment options for a home worth $500,000, depending on the type of mortgage you look into (and qualify for as a first-time homebuyer).

•   Those taking out a conventional home loan and wanting to avoid paying mortgage insurance would need to come up with $100,000 for a 20% down payment.

•   However, these days, qualified borrowers can get a conventional mortgage with a down payment as low as 3%, or $15,000 in this case. Other buyers may need to pony up 5%, or $25,000.

•   Government-backed FHA loans (Federal Housing Administration loans) are specifically designed for first-time homebuyers, and their minimum down payment is 3.5%, which works out to $17,500 for a $500,000 house.

•   Those who qualify for loans backed by the U.S. Department of Veterans Affairs (VA loans) may be able to buy a home without any required down payment at all, though putting down something can help you build equity faster. You can also look into down payment assistance programs.

What Does the Monthly Mortgage Payment Look Like for a $500K Home?

There’s not one set formula for what your specific monthly mortgage payment will look like for a $500,000 home — because each loan is individually written based on your credit score, debt-to-income ratio (DTI), and other pieces of your financial profile. The size of your down payment, the length of the loan’s term, and other factors will also influence the final figure.

That said, if you put down $15,000 toward a $500,000 home on a 30-year fixed-interest home loan at 7.00%, you could expect to make monthly payments of about $3,200. Given that the median household income in the U.S. is just over $75,000, that payment may be tough for many Americans to make. If your income can’t support a $500,000 home, you could consider looking for more affordable places to live in the US.

On the other hand, if you were able to save up the full $100,000 down payment, the $500,000 house would cost closer to $2,700 per month. Or if you could score an interest rate just one percentage point lower, your payments would be $2,900 per month — even if you put down only the same $15,000.

What to Do Before You Apply for a $500K Home Mortgage?

A mortgage on a $500,000 home is a substantial amount of debt to go into. You stand to save a lot of money by ensuring you get the very best loan terms you possibly can.

That’s why it’s a good idea to ensure you’re in the best financial standing possible before you put in your application. That means lowering your overall debt level (focusing especially on high-interest debt like credit card balances), carefully tending your credit score, and ensuring your income is both ample and reliable.

Should I Get Preapproved Before Applying for a Mortgage?

Getting preapproved for a mortgage gives you a leg up in a busy housing market. If you see a home you like and you’ve already got a preapproval letter in hand, you’ll be better able to swoop in before other prospective buyers.

That said, the mortgage preapproval process does usually entail a “hard” credit check (unlike a prequalification), so this step is best left for those who are very serious and ready to move if the right house shows up.

How to Get a $500K Home Mortgage

Applying for a mortgage — even a big one — is easy. Most of it can be done from the comfort of your home, online. You’ll be required to upload documentation proving your income and assets, but once you’ve gathered all the materials, the actual application is unlikely to take more than an hour to complete.

However, given the potential cost of a mortgage on a $500,000 home — whose interest could easily add up to hundreds of thousands of dollars over its three-decade term — it’s worth shopping around to ensure you’re getting the very best deal you can. Even just half a percentage point of interest can make a big difference over such a long span of time.

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The Takeaway

The full 20% down payment for a $500,000 home comes out to $100,000. That said, depending on your creditworthiness, you may be able to get away with putting down a much lower payment — as little as $15,000 if you’re a first-time homebuyer.

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

FAQ

How much should I make to afford a $500,000 house?

You need an income of $115,000 per year to cover the costs of a mortgage and closer to $150,000 to afford a mortgage plus expenses such as mortgage insurance and property taxes on a $500,000 house. The more debt you have, such as a car payment or student loan, the greater your income will need to be. The size of your down payment is also a factor. The greater the down payment, the lower your income would need to be to cover your monthly costs.

What credit score is needed to buy a $500,000 house?

Each mortgage lender has its own algorithm for qualifying borrowers. That said, many mortgage lenders look for a score of at least 620, and if you’re taking out a larger mortgage, the higher your score, the better the terms you’ll likely qualify for.

How much is a $500K mortgage per month?

The answer to this question depends on the loan’s term and the interest rate you qualify for. For those with a lower interest rate, the payment might be about $2,700 per month, while for those with a higher interest rate, the mortgage might top $3,200. Remember this is for principal and interest only. After homeowners insurance, mortgage insurance, and property taxes your expenses will be higher.

Photo Credit: iStock/ Credit:Eleganza

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

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

SOHL-Q324-027

The median price for single-family homes and condos was $360,000 in the second quarter of 2024. So as expensive as it might sound, $300,000 is squarely in the price range of many first-time homebuyers these days.

If you go by the old rule of thumb and save up a 20% down payment, that means forking over $60,000 up front on a $300,000 home sale. However, most contemporary mortgages allow buyers to put down far less — first-time homebuyers can put down as little as 3%, which comes out to $9,000 on a $300,000 home. That said, there will likely be other upfront expenses to contend with, so saving up even more than that is still a good idea.

Let’s take a closer look at how to prepare for a $300,000 home purchase — including not only your down payment but also the amount of income you need to support your purchase.

How Much Income Do I Need to Afford a $300K Home?

There’s not one simple answer to this question — because the real question is, “How much income will it take to afford my mortgage payment?” And that question depends on how much your home loan payment turns out to be, whether you have to pay private mortgage insurance (PMI), and more. However, there is some quick napkin math we can do to help get an estimate.

Many financial experts say you shouldn’t be spending more than about 30% of your gross monthly income on housing. To simplify this even further, let’s just say a third of your gross income.

From here, we can do some reverse engineering and estimating to figure out how much income would likely comfortably support a $300,000 home purchase.

Using a mortgage calculator, supposing you purchase a $300,000 home with a $9,000 down payment and a 7.00% interest rate, you can see that your monthly payments would turn out to be about $1,900 a month. (Note: These figures are only estimates, and your real monthly payment will depend on your creditworthiness, your lender’s unique algorithm, and other factors.)

Using that one-third rule above, you’d need to be earning about $5,700 per month ($1,900 times three) before taxes to make your mortgage payments without overextending yourself financially. That comes out to an annual income of about $68,400.

Using a mortgage calculator with taxes and insurance, will get you even closer to your true monthly number. When you factor in taxes and homeowners insurance, your monthly payment would be closer to $2,300. Returning to the one-third rule, you would need an annual income of $82,800.

Of course, if you have large amounts of existing debt, you may need a higher income to comfortably make your payments. Still, this is a good point of reference to start with.

Recommended:The Cost of Living by State

How Much Is the Down Payment for a $300K House?

As mentioned above, the 20% down payment you’d need to avoid paying PMI is $60,000 for a $300,000 house. But with conventional mortgages that allow qualified first-time homebuyers to put down as little as 3%, your down payment could be just $9,000. (Depending on your credit score and other financial information, you may need to put down 5%, which would come out to $15,000.)

Keep in mind, though, that the down payment isn’t the only upfront expense of homeownership. It doesn’t include closing costs, which could be as much as 3% to 6% of the home purchase price (which means another $9,000 to $18,000, for a $300,000 home). You’ll also need to factor in expenses related to moving, furnishing, repairing, and renovating your new home.

What Are the Down Payment Options for a Home Worth $300K?

Which down payment you’ll qualify for depends on the type of mortgage you take out and your credit history.

•   No matter what type of mortgage you choose, if you put down 20%, or $60,000, you’ll avoid paying mortgage insurance (PMI) as part of your monthly payment.

•   If you qualify for a conventional mortgage, you may be eligible to put down as little as 3%, or $9,000. (Other borrowers may be qualified for 5%, or $15,000.)

•   Those who qualify for an FHA home loan as a first-time homebuyer may put down as little as 3.5%, or $10,500.

•   If you’re an active service member, veteran or surviving spouse, you may qualify for a VA loan. In some cases, you may be able to get a VA loan without any down payment at all.

If even a modest down payment feels out of reach, down payment assistance programs can also help.

What Does the Monthly Mortgage Payment Look Like for a $300K Home?

Again, your monthly mortgage payment will vary depending on your down payment, interest rate, the term of the loan (usually 15 or 30 years), and more. In calculating your specific loan options, your lender will take into consideration your personal credit factors as well as your DTI (debt to income) ratio.

Using a mortgage payment calculator can help. A calculator would show that someone who puts down $9,000 on a $300,000 home for a 30-year fixed-interest mortgage at 7.00% would pay approximately $1,936 per month (not including property taxes, MIP, or homeowners insurance). Note that because of the way loans are amortized, the bulk of your monthly payments will go toward interest, rather than principal, during the first part of the loan’s lifetime.

What to Do Before You Apply for a $300K Mortgage

If you want to maximize your chances for approval when applying for a $300,000 mortgage, consider taking some time to get your financial affairs in order. (Sometimes, life circumstances like a new job or a new baby mean you have to buy a home quickly, so you may not have time to make everything as shiny as you’d like.)

What does this mean? Paying down large existing debts, especially high-interest debt like credit card balances, can lower your DTI and win you more favorable mortgage terms (not to mention making it easier to make ends meet as far as other monthly expenses). Finding ways to increase your income can also improve your application — and make your financial life easier.

Should I Get Preapproved Before Applying for a Mortgage?

Getting preapproved is a great way to understand how much mortgage is available to you based on your current financial standing — and to signal to real estate professionals and sellers that you’re serious. Preapproval differs from prequalification in that it usually does require a “hard” credit check, so you should only do it if you’re truly ready to buy a house when the right one comes along — but if you are, it’ll give you the chance to get your foot in the door quickly.

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How to Get a $300K Mortgage

These days, applying for a mortgage is pretty easy and can usually be done in the comfort of your own home. You’ll likely need to upload documentation proving your income and identity to your lender’s online portal — or if you’re more comfortable doing so, you may be able to apply in person and supply documents on paper or via fax.

The Takeaway

The answer to the question “how much is the down payment for a $300K house?” could be as little as $9,000 or as much as $60,000 — or more. In some cases a zero down payment loan is even possible. It all depends on what kind of mortgage you want and qualify for, as well as how much you can reasonably afford to fork over at the closing table.

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

FAQ

Can I afford a $300K house on a $70K salary?

If you have minimal debts then a $70,000 salary might be enough to afford a $300,000 house. The size of your down payment and your mortgage interest rate will be important variables. Try to keep your monthly house payments below a third of your monthly gross income.

How much do you need to make to afford a $300K house?

There’s not one set answer to this question, because plenty of factors other than income influence your ability to qualify for a mortgage and comfortably make the payments. A good rule of thumb is to ensure you’re paying no more than a third of your gross monthly income toward housing. You would need an annual income of $82,800 to comfortably afford a $300,000 house when you factor in the mortgage payment, homeowners insurance costs, and taxes.

What credit score is needed to buy a $300,000 house?

Each lender has their own qualification schema as far as credit scores and other creditworthiness markers are concerned. That said, generally speaking, a credit score of at least 620 will help you qualify for more types of mortgages and open your options for shopping around.

Photo credit: iStock/undefined undefined

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.

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.

^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.

SOHL-Q324-028

If you’re in the market for a new home, you’re likely no stranger to browsing online listing services. During your search, you may come across a listing that’s marked as active contingent. What does active contingent mean and how does it impact the homebuying process? In this guide, we’ll define active contingent and explore common types of contingencies.

What Is Active Contingent Status?

When a real estate listing has an active with contingency status, it means that the seller has accepted a buyer’s offer, but there are certain conditions (known as contingencies) that have not been addressed yet. These contingencies must be resolved before the sale of the property can be finalized.

Other buyers interested in the property may choose to submit a back-up offer in case the contingencies aren’t met and the deal falls through.

How It Differs from Other Listing Statuses

Every industry has its jargon, including real estate. Active contingent is just one of several statuses buyers might encounter while house hunting.

An active listing, for instance, is currently on the market for sale. Offers on the property may have been submitted, but none have been accepted yet, so buyers have the green light to make an offer.

Under contract is often used interchangeably with active contingent. Both mean that the seller has accepted a buyer’s offer, but the sale still depends on certain circumstances being resolved.

A listing with a pending status is farther along in the transaction process. The key difference between pending and contingent status is that the buyer contingencies have been satisfied when a listing is marked as pending. Alternatively, it could mean a buyer made an offer with no contingencies and the deal is moving toward closing, barring any unexpected issues with an inspection or securing a home loan.

Buyers can make an offer on a property, even if the status is pending, though it’s up to the sellers if they want to continue showing the home.

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Common Types of Active Contingent Scenarios

What does active contingent mean in different scenarios? There are several types of contingencies that can be included when making an offer on a home. Here’s a look at the most common contingencies in real estate transactions.

Home Sale Contingency

A home sale contingency makes an offer on a property conditional on the buyer’s sale of their current home.

There are two types of home sale contingencies that affect active contingent meaning: a sale and settlement contingency and a settlement contingency. With a sale and settlement contingency, the buyer has not yet accepted an offer on their current home. Meanwhile, a settlement contingency involves a buyer with a house under contract, but not yet sold.

According to a National Association of Realtors® study, around 53% of repeat buyers in 2023 used proceeds from their home sale to make a down payment on their new home, meaning buying and selling a house at the same time — and settlement contingencies — are probably quite common.

Financing Contingency

A financing contingency, also known as a mortgage contingency, is just as it sounds: a clause that allows buyers to walk away from a home purchase if they’re unable to secure financing. There’s typically a time frame included with a financing contingency — often 30 to 60 days — that the buyer and seller agree to in the purchase contract.

Either the seller or buyer can exit the agreement during the financing contingency period without penalty, meaning that the buyer can get their deposit back and the seller can accept other offers.

Financing a home purchase isn’t just for first-time homebuyers — around 80% of home buyers used financing in 2023. Getting mortgage preapproval before making an offer on a home can help reduce the risk of not qualifying for financing later on.

Appraisal Contingency

What is active contingent if an appraisal is involved? If a contract has an appraisal contingency in place, the buyer can back out of the deal and get their deposit back if the property doesn’t appraise for the amount they agreed to purchase it for.

Home appraisals are typically required when taking out a mortgage or refinancing to determine the fair market value of a property. If the appraisal comes in lower than the offer, buyers have options to keep the deal alive instead of walking away. Namely, they can renegotiate with the seller or make up the difference in the appraisal gap with a larger down payment.

Inspection Contingency

An inspection contingency gives buyers the option to exit a deal if major defects or structural issues are identified during a home inspection. If making an offer with an inspection contingency, the buyer has a set timeframe (usually 7 days) to hire an inspector. The home inspection cost is paid by the buyer and it may be required by the mortgage lender.

Completing a 4-point inspection provides a review of the property’s major systems, including electrical, HVAC, plumbing, and roofing, and this may be all that a homeowners insurance company requires. But a fuller home inspection might turn up issues a 4-point one would miss so it’s worth getting a full home inspection. Buyers can also hire a specialist to examine any issues identified during an inspection in more detail.

An inspection contingency may include a maximum dollar amount for repairs that allows the buyer to walk away from the contract. If they choose to negotiate instead, there’s typically a timeframe for the seller to make necessary improvements or lower the sales price to match the cost of repairs.

Recommended: 10 Tips for Selling Your Home Fast

Implications for Buyers and Sellers

Contingencies carry implications for both buyers and sellers. For sellers, it’s important to review the terms of any contingencies and assess whether it’s likely they can be resolved for the sale to move forward in a timely fashion.

Suppose an offering includes a home sale contingency. Sellers can practice due diligence by checking if the buyer’s home is currently on the market, and if so, what the listing price is and how long it’s been on the market. This information can help decide if the risk associated with the contingency is worth taking.

Contingencies can provide a safety net for buyers to get their deposit back and exit a deal if their mortgage approval or sale of their current home falls through. While limiting contingencies could potentially make an offer more attractive, it’s similarly important for buyers to exercise due diligence in making sure they’re prepared to move forward with a home purchase. This could mean paying repairs out of pocket or taking out a bridge loan to close on a new home before selling a previous residence.

Impact on Real Estate Markets

Homes with active contingent status are still on the market, meaning buyers can request to view a property and make an offer.

Since contingencies pose risk that a deal will fall through, some sellers include a “kick-out” clause in the agreement to increase their chances of getting a better offer. With a kick-out clause, the buyer can accept a noncontingent second offer while the property is still active contingent. In this scenario, the buyer who made the first offer can either remove their contingencies or back out of the deal.

The Takeaway

What does active contingent mean? Put simply, it means a seller has accepted an offer with contingencies that haven’t been met yet. Active contingency meaning varies from deal to deal and may involve a home inspection, securing financing, or a buyer selling their previous home.

It’s important to have your financial ducks in a row if you’re considering an offer on an active contingent property. That way, you’ll be prepared if the initial deal falls through.

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

FAQ

Can I make an offer on an active contingent property?

Yes, you can make an offer on a property with active contingent status. This will serve as a backup offer in case the initial deal falls through.

How long does active contingent status typically last?

A property has an active contingent status until all contingencies are resolved, but the window for doing so typically spans 30 to 60 days.

Is an active contingent listing still considered “on the market”?

Yes, an active contingent listing is still on the market, meaning it can be shown to interested buyers and the seller can accept backup offers.

How does active contingent differ from a pending sale?

A pending sale is moving forward to closing, whereas active contingent status means that certain contingencies, such as financing or a home sale by the buyer, haven’t been met yet.

Photo Credit: iStock/deliormanli

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.

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.

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

SOHL-Q324-025

Thanks to high demand and inflation, the cost of home repairs has been on the rise in recent years. In 2023, the average household spent $2,458 on maintenance and $1,667 on emergency repairs, according to Angi’s State of Home Spending Report. The report also found that total spending across home improvement, maintenance, and emergency repairs increased 6% compared to 2022.

The most common home repairs include the usual suspects: electrical, plumbing, HVAC, water damage, and termite damage. Keep reading to learn more about these issues and the cost of repair or replacement, so you can be prepared when reality bites.

Estimated Cost of the Most Common Home Repairs

Low-cost preventive measures — like cleaning your gutters or getting your heating and cooling systems serviced annually — can help keep common home repair costs down. But even with the best preparation, surprises (like a busted pipe or roof leak) happen, and when they do, you can be on the hook for thousands of dollars. Whether you’re a new or longtime homeowner, it’s a good idea to plan for — and budget for — home repairs.

Below is a roundup of the most common home repairs and average costs.

Recommended: How to Pay for Emergency Home Repairs

Foundation Repair

A number of different issues can occur with foundations, some of which are more serious (aka, costly) than others. Among the most common problems are foundation cracks, which can be caused by house settling or changes in soil pressure around the home. Cracks can lead to water damage or cause the walls in your foundation or home to bow. Foundations can also begin to sink, due to changing weather patterns, nearby tree roots, or erosion.

Since the foundation is the footprint of your home, repairs can be complicated and expensive. According to Angi, foundation repair costs can range anywhere from $2,196 to $7,921.

Average cost of foundation repair: $5,056

Electrical Issues

While there are many home repairs you can safely DIY, electrical issues and wiring are generally best left to professional electricians. Working with live wires can be dangerous and faulty electrical work can be a significant fire hazard. Some signs you may need to call an electrician include:

•   Burning smell coming from an outlet

•   Buzzing or sizzling noises coming from an outlet

•   Flickering lights

•   Outlets feel hot to the touch

•   You have 2- rather than 3-prong outlets

•   Circuit breaker continually trips

•   Appliances spark when plugged in

Depending on the length and complexity of the job, the cost of hiring an electrician ranges between $163 and $535. Installing a new outlet can run $200 to $300, for example, while replacing a breaker panel can cost anywhere from $520 to $2,120.

Average cost of electrical repairs: $348

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Roof Repair

Your roof protects your home from the elements, so it’s important to keep it in top condition. If you notice any damage or signs of wear and tear, you’ll want to address them sooner rather than later. This can help prevent small problems from becoming serious and expensive. Signs that your roof may be compromised include broken, cracked, curling, or missing shingles, and any interior signs of water damage (such as dark spots or discoloration on walls or ceiling and/or mold or rotting wood in the attic).

The cost of a roof repair will depend on your home’s location, roofing material, size of your home, and the type of roof. On average, costs run between $391 and $1,901. By contrast, a full roof replacement can run between $5,900 to $12,900. Due to the significant price difference, you would generally only invest in a new roof if the damage to your existing roof is extensive or the roof is near the end of its life.

Average cost of roof repairs: $1,133

Repair or Replace a Water Heater

Due to mineral buildup and the routine breakdown of components, water heaters do not last forever. Depending on how extensive the repairs your water heater requires, you can be on the hook for a new unit entirely. And if you’ve ever taken a cold shower in the middle of winter, you know this is one repair that is essential to your quality of life.

On average, homeowners spend anywhere from $221 to $980 on water heater repairs. Your actual bill will depend on the cost of the part needed for the fix, how much your local water heater professional charges for labor, and the length of the job. Where you live and where the water heater is located in your home can also impact costs.

Average cost of water heater repairs: $600

Water Damage

Water damage is fairly common. It can result from a crack in an old pipe, a leaky roof, an unusually strong storm, or sewage backup. To prevent mold growth and further damage, it’s best to fix the issue and clear out moisture as soon as you spot it.

Water damage restoration can involve replacing wallboard, flooring, and/or ceilings, as well as ensuring that no mold spores are left behind to spread once the repairs are complete. Two important factors influencing price are the square footage affected and the type of water (i.e., whether it’s clean or has been contaminated with potentially harmful substances). The cost of water damage restoration generally ranges between $1,300 and $5,600.

Average cost to fix water damage: $3,300

Replacing Pipes

Replacing older pipes is a common home repair often needed after a home inspection. Common problems include dated construction materials with a known problem in their manufacturing, signs of corrosion, clogs, and leaks. And because pipes run behind walls and underground, repair costs often include patching up interior holes and dug-up yards.

The good news is that not all leaks, burst pipes, and signs of corrosion require replacing large amounts of plumbing. Often, a plumber can replace a small section of the pipe affected by the damage. The cost to install pipes for a repair ranges from $370 to $2,108, though it can run higher if the damaged pipes are difficult to access.

Average cost to install pipes: $1,237

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Septic System Repair

A septic tank contains and filters household wastewater. If it is damaged or not functioning properly, it’s important to deal with the problem quickly — otherwise, you could be dealing with a smelly and costly mess. Sewage backups can occur when the septic tank becomes clogged or full, there’s a problem with devices within the tank, or there’s a blockage in the home’s main drain line leading to the tank.

Depending on the type of repair, tank size, permits, and other factors, the cost of a septic tank repair runs, on average, between $630 and $3,035. A small fix like repairing a septic tank lid could cost less ($150 to $500); but if you need to replace the tank, you could be looking at a bill as high as $9,500.

Average cost to repair a septic system: $1,831

Heating or Air Conditioning Repair

Your home’s HVAC (which stands for heating, ventilation, and air conditioning) system plays a key role in keeping your home comfortable to live in. Though there are many different types of HVAC systems, they generally all work by using energy to heat or cool the air to a desired temperature. The system may also add/remove moisture and filter your home’s indoor air.

An HVAC system typically has two main components: a heater (which could be a furnace, boiler, or heat pump) and an air conditioning (AC) unit. The type of system you have and the component that’s broken will significantly influence the cost of repairs. For example, an AC system repair can run anywhere from $450 to $2,000, while a furnace repair tends to run between $130 and $1,200. On average, homeowners spend between $130 and $2,000 on HVAC repairs.

Average cost to fix a heating or air conditioning system: $350

Mold Removal

Mold develops inside homes as a result of moisture and can lead to health problems. Signs that you may have a mold problem include:

•   Musty odor in a specific area

•   Discoloration on the walls

•   Peeling, cracking, or warping of floors or walls

•   Leaks or water damage

•   Darkening around tile grout

•   Worsening of allergy symptoms

While you may be able to remove small amounts of mold yourself (provided you’re certain the mold isn’t toxic), often the best option is to hire a mold remediation professional.

The cost for mold removal will vary widely depending on where it is located in your home. Mold growth in hard-to-reach areas, like drywall or your HVAC system, generally costs more to remediate since it can require more time, materials, and labor. The size of the infestation and the type of mold that is growing also influence costs. On average, mold removal runs between $373 and $7,000.

Average cost of mold removal: $2,362

Termite Damage

The problem with termites is that they literally eat away at your house. They can also eat through your budget: The cost to repair termite damage can range anywhere from $1,000 to $10,000 or even more.

Generally, the longer termites chew on the wooden structure of your home, the more costly the repair will be, so it’s key to recognize — and deal with — any signs of a termite infestation early. If you catch a termite problem early, for example, you may only need to replace a few damaged boards or joists, which can run from $250 to $1,000. If the problem goes on for a while, however, you may need to replace damaged walls, framing, or floors — at a cost of $1,000 to $3,000. Worst-case scenario: Termites do enough damage to your home’s infrastructure (like beams or load-bearing walls) that it becomes structurally unsound. A major termite repair job can run from $3,000 to $10,000-plus.

Average cost to repair termite damage: $3,000

Average Cost of Home Repairs

Trying to predict — and budget for — home repairs can be challenging. However, there are several rules of thumb that can help homeowners:

•   The 1% Rule. One common guideline is to set aside approximately 1% of your home’s value annually for home maintenance. So if your home is worth $500,000, you’d want to have $5,000 tucked away in savings to cover general upkeep and repairs for the year.

•   The Square Foot Rule. Since a larger home typically costs more to maintain than a smaller one, another formula is to use the square footage of your home to estimate maintenance and repair costs. With this approach, you set aside $1 for every square foot of livable space. So if your home is 2,300 square feet, you would want to have $2,300 in savings earmarked for home repair costs.

•   The 10% Rule. With this rule of thumb, you put aside 10% of all your main monthly expenses (such as mortgage, taxes, and insurance) for your monthly home maintenance budget. For example, if your mortgage is $1500/month, taxes are $300/month, and insurance is $150/month (a total of $1950), your budget for home maintenance would be roughly $195 per month or $2,340 a year.

If you don’t have enough savings to cover the cost of a necessary home repair, there are financing options, including home equity lines of credit (HELOC) and credit cards (though this can be an expensive choice).

You can also use a personal loan to cover the cost of home repairs or improvements. Available through banks, credit unions, and online lenders, this type of loan (sometimes called a home improvement loan) typically doesn’t require any type of collateral or home equity. However, you usually need good to excellent credit to qualify.

The Takeaway

It’s tough to predict the cost of home repairs. Different budgeting standards suggest putting aside 1% of your home’s value or $1 per square foot annually. In 2023, the average household spent $2,458 on maintenance costs and $1,667 on emergency repairs. Among the priciest home repairs are major foundation work (up to $7,921), roof replacement (as much as $12,900), and septic tank replacement (which can run $9,500). Even expenses like fixing termite damage or replacing a broken water heater can all but consume your savings.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

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

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.

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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Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scoring models, however, there is a clear winner: FICO® Score is used in roughly 90% of lending decisions.

It’s crucial that consumers understand at least the basics of how credit reports work and credit scores are calculated. After all, a high credit score can get borrowers the best deals on loans and credit cards, potentially saving them many thousands of dollars over a lifetime. Read on to learn how you can build a credit history that lenders will swoon over.

Will My Credit Score Be the Same Across the Board?

In a word, no. Credit scores vary depending on the company providing the score, the data on which the score is based, and the method used to calculate the score.

In an ideal world, all credit bureaus would have the same information. But lenders don’t always report information to every bureau, so there will be variations in your credit file — usually minor — from bureau to bureau.

How Are Credit Scores Calculated?

Regardless of the scoring model used, most credit scores are calculated with a similar set of information. This includes information like how many and what types of accounts you have, the length of your credit history, your payment history, and your credit utilization ratio.

Lenders like to see evidence that you have successfully managed a variety of accounts in the past. This can include credit cards, student loans, personal loans, and mortgages, in addition to other types of debts. As a result, scoring models sometimes include the number of accounts you have and will also note the different types of accounts.

The length of your credit history shows lenders that you have a record of repaying your debts responsibly over time. Scoring models will factor in how recently your accounts have been opened.

Your payment history allows lenders to see how you’ve repaid your debts in the past. It will show details on late or missed payments and any bankruptcies. Scoring models typically look at how late your payments were, the amount you owed, and how often you missed payments.

Each scoring model will place a different weight of importance on each factor. As an example, here are the weighting figures for your base FICO Score:

Recommended: Can You Get a First-Time Personal Loan With No Credit History?

Which Credit Score Matters the Most?

As noted earlier, the credit score that matters the most is generally your FICO Score, since it’s used in the vast majority of lending decisions. There’s really no way to determine which credit score is most accurate, though, because they all use slightly different scoring models to calculate those precious three digits.

Even within your FICO Score, there’s variation. The most widely used FICO Score is FICO 8 (though the company has released a FICO 9 and FICO 10). This differs from previous versions in key ways:

•   Credit utilization is given greater weight.

•   Isolated late payments are given less weight than multiple late payments.

•   Accounts gone to collections for amounts less than $100 are ignored.

In addition, FICO can tweak their algorithm depending on the type of loan you’re applying for. If you’re looking to get an auto loan, your industry-specific FICO Score may emphasize your payment history with auto loans and deemphasize your credit card history.

As you can see, slight differences in method can result in different credit scores even given the same source data.

What Are the Largest Three Credit Bureaus?

The three major credit bureaus are Experian, Equifax, and TransUnion. These bureaus collect and maintain consumer credit information and then resell it to other businesses in the form of a credit report. While the credit bureaus operate outside of the federal government, the Fair Credit Reporting Act allows the government to oversee and regulate the industry.

It’s worth noting that not all lenders report to the credit bureaus. You may have seen advertisements for loans with no credit check. Lenders that offer this type of loan won’t check your credit, and typically don’t report your new loan or your loan payments to the credit bureaus. Because these loans are riskier for the lender, they can justify high interest rates (possibly as much as 1000%) and faster repayment schedules. Consumers should beware of predatory lenders, especially risky payday loans and other fast-cash loans.

How To Find Your Credit Score

Your credit history and score play a large role in your personal finances. They can impact everything from taking out a mortgage or renting an apartment to buying a car and refinancing your student loans. Having an idea of what your credit score is can help you determine what your loan may look like and how much you can afford to borrow.

You can request a free copy of your credit report from each of the major credit bureaus at AnnualCreditReport.com. Typically, your credit reports will not contain your credit scores. However, you may be able to access your FICO Score for free through your bank or credit card company (it may be on your statement or you may be able to see it by logging into your account online). You can also purchase credit scores from one of the three major credit bureaus or FICO. Some credit score services offer free scores to any user, while others only offer sores to customers who pay for credit monitoring services.

Be careful when you pull your free credit reports not to accidentally opt in to an add-on service that will charge you for special tools or credit monitoring.

Building Strong Credit

Credit scores aren’t set in stone. They evolve constantly as new financial information comes in, both positive and negative. Here are some strategic steps to consider for those trying to build a positive credit history:

Make Payments on Time

This includes credit card payments, rent, loans, utilities, and any other monthly bills or payments. Lenders often consider past behavior to be a predictor of future behavior and want to avoid lending money to individuals with a history of missed payments.

Pay Down Revolving Credit

Revolving credit refers to credit cards and credit lines, such as home equity lines of credit (HELOCs). Lenders generally like to see that you use no more than 30% of the total revolving credit available to you. It’s an indicator that you are able to effectively manage your credit.

One popular way to pay down high-interest revolving debt, is to use a debt consolidation loan. These are unsecured personal loans that typically offer lower fixed interest rates compared to credit cards. Getting approved for a personal loan is fairly straightforward, and you can usually shop around for the best personal loan interest rates without it affecting your credit score.

Be Selective About New Accounts

Opening a new credit card or applying for a loan generally involves a hard credit inquiry. Too many hard credit inquiries can have a negative impact on the applicant’s score. So while having a diverse mix of credit is a good thing in the eyes of lenders, opening a number of new accounts at once may be counter-productive.

The Takeaway

All three major credit bureaus — Experian, Equifax, and TransUnion — are more alike than they are different, and any variations in their data are usually minor. Equifax is the largest credit bureau in the U.S., but TransUnion and Equifax are thought to be just as important. When it comes to credit scores, however, lenders prefer FICO Score by a wide margin.

SoFi Personal Loans

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

https://www.sofi.com/signup/pl?appType=pl“>

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

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

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.

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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