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Though there’s no specific income requirement for mortgage approval, a $140,000 mortgage would likely require an income of around $45,000 per year. There are a variety of factors that come into play to qualify for a mortgage, including your credit score and existing debt, as well as an income that allows you to manage monthly mortgage payments.

The income needed for a $140K mortgage also depends on the loan term, interest rate, and down payment. These numbers will differ for everyone, so it’s important to understand the key considerations that impact home affordability to determine your homebuying budget.

Income Needed for a $140,000 Mortgage

Lenders look at your income to assess if you can afford monthly mortgage payments. But the monthly payment on a $140,000 mortgage will vary based on several factors. Different types of mortgage loans may require mortgage insurance, an additional monthly expense homebuyers would need to budget for. Putting more money down (typically 20% or more) is one strategy to avoid paying mortgage insurance and to secure a lower interest rate for a lower monthly payment.

Multiple forms of income can count toward mortgage qualification, including dividends, alimony, and child support. Having your pay stubs, W-2s or 1099s, and tax returns ready will help streamline the mortgage preapproval process and mortgage application.

How Much Do You Need to Make to Get a $140K Mortgage?

How much income is needed for a $140,000 mortgage? Crunching the numbers with a mortgage calculator or home affordability calculator, you’ll need to make more than $40,000 a year to afford a $140K mortgage. This calculation assumes a 20% down payment of $35,000 on a $175,000 property.

If you have less saved for a down payment, you’ll need to make more to afford the higher monthly payments. And if you have existing debt, such as student loans or an auto loan, you’ll likely need to demonstrate higher income to be approved for a mortgage.

Recommended: Tips to Qualify for a Mortgage

What Is a Good Debt-to-Income Ratio?

Your debt-to-income (DTI) ratio is a comparison of how much you pay in debt each month to how much you earn. It’s calculated by dividing all your fixed monthly debts, such as student loans and auto loans, by your gross monthly income. Having a DTI ratio of 36% or less is generally viewed as favorable by lenders, though the maximum DTI ratio depends on the loan type.

If you have a gross monthly income of $5,000 ($60,000 annual income), your total monthly debts, including the mortgage, would need to be $1,800 or less to stay at or below a 36% DTI ratio.

What Determines How Much House You Can Afford?

Calculating your income is an important first step to determine how much house you can afford. Once you have tallied up your total household income, using the 28/36 rule can help ballpark how much house you can afford. The first number suggests a limit of 28% of gross income going toward mortgage payments, including interest, taxes, and insurance. The second number is the recommended threshold for your DTI ratio: 36%.

If you make $4,000 a month, this comes out to $1,120 and $1,440, respectively. In other words, you could afford a monthly mortgage payment of up to $1,120, assuming your total debt doesn’t surpass $1,440 a month.

Personal finances aside, the type of house you can afford is affected by the location where you’re looking to buy. Home prices and the cost of living by state can vary considerably, even down to the neighborhood level. If you’re flexible about where you’ll purchase your home, take a look at a list of best affordable places by state.

What Mortgage Lenders Look For

Mortgage lenders consider a variety of factors when determining a borrower’s eligibility and the loan terms. This includes credit history, existing debt, income, employment, assets, and down payment amount.

$140,000 Mortgage Breakdown Examples

The total cost of a $140,000 mortgage depends on the interest rate, loan term, taxes, and insurance. Here are some examples to better understand what you might pay for a $140,000 mortgage.

For example, suppose you secure a 30-year fixed mortgage with a 6% interest rate. Using a mortgage calculator, the total principal and interest come out to $839 a month. Shortening to a 15-year loan term would increase this payment to $1,181 a month, but reduce the total interest paid over the life of the loan from $162,174 to $72,651.

Using a mortgage calculator with taxes and insurances can give a clearer picture of your mortgage payment if you can plug in the approximate property taxes, property insurance, and any homeowners association fees. You’ll need to factor in private mortgage insurance if putting less than 20% down.

Pros and Cons of a $140,000 Mortgage

For many, a house is the largest purchase they’ll make in their lifetime, so it’s important to weigh the pros and cons of a $140,000 mortgage. This mortgage amount is lower than the average balance in the U.S. ($244,948), meaning less debt and smaller monthly payments than most homeowners currently have.

On the other hand, the median home sale price was $393,500 in March 2024. So being able to borrow only $140,000 would limit your home-buying options, unless you’re using considerable savings and assets for a hefty down payment.

How Much Will You Need for a Down Payment?

Your down payment is an important factor in determining how much house you can afford. A larger down payment means you’ll be borrowing less, which can result in more competitive interest rates and lower monthly mortgage payments.

The down payment required on a $140,000 mortgage is based on the mortgage type and borrower’s qualifications. But to avoid paying private mortgage insurance, you’ll need to put at least 20% down, or $35,000 in the case of a $140K mortgage.

Recommended: How Much Is a Down Payment on a House?

Can You Buy a $140K Home With No Money Down?

Two types of government-backed mortgages — United States Department of Agriculture (USDA) loans and U.S. Department of Veterans Affairs (VA) loans — allow eligible homebuyers to purchase a home with no money down. You must meet income and location eligibility requirements to qualify for a USDA loan. Meanwhile, VA loans are reserved for eligible active-duty servicemembers, veterans, National Guard and Reserves members, and surviving spouses.

Can You Buy a $140K Home With a Small Down Payment?

If you don’t qualify for a USDA or VA loan, you could secure a $140K home with a small down payment. A Federal Housing Administration (FHA) loan allows first-time homebuyers to put 3.5% down if their credit score is 580 or higher. Alternatively, borrowers with a credit score of 500 to 579 will need to make a minimum down payment of 10%.

Conventional, fixed-rate mortgage loans can require a down payment as low as 3% – 5% for certain homebuyers.

Is a $140K Mortgage with No Down Payment a Good Idea?

While putting no money down can make home buying more accessible and help keep cash on hand for renovations, there are some drawbacks to consider. For one, putting less money down means borrowing more. With a larger mortgage, you’ll pay more interest over the life of the loan.

Having no down payment also means you’ll have very little equity in your home in the early years of your loan. If property values decrease, you could end up owing more on your house than it’s worth.

Can’t Afford a $140K Mortgage With No Down Payment?

If you can’t afford the higher monthly payments on a $140K mortgage with no down payment, here are some strategies to improve your qualifications as a borrower.

Pay Off Debt

Your DTI ratio is a key factor lenders consider, so focusing on recurring debt is a useful first step to increase how much house you can afford. Focusing on smaller debts that you can pay off in full, such as credit cards or a personal loan, can immediately reduce your monthly debt burden — and your DTI ratio. Tackle high-interest debt first.

Look into First-Time Homebuyer Programs

If you’re a first-time homebuyer, you can take advantage of more flexible loan terms and down payment assistance to make owning a home a reality. As previously mentioned, FHA loans allow qualified buyers to put just 3.5% down on a home. FHA loans offer additional benefits to make home buying more affordable for first-time buyers, including the option to finance closing costs.

First-time buyers can also explore down payment assistance programs through nonprofits, state and local government, and the federal government.

Build Up Credit

Good credit habits may result in a credit score that could lower your mortgage interest rate and increase the amount you’re approved to borrow. To care for your credit score, ensure you’re making minimum payments every month. Lowering your credit utilization — the percentage of credit you’re using on credit cards and other lines of credit — is another way to cultivate a good credit score.

Start Budgeting

Paying off debt and sticking to your savings goals can be a lot easier (or even automated) when you set up a budget. The budgeting process can also help inform how much you can reasonably afford in monthly mortgage payments.

Recommended: How to Make a Budget in 5 Steps

Alternatives to Conventional Mortgage Loans

Homebuyers can explore other means for buying a home besides conventional mortgages and government-backed loans.

•   Adjustable-rate mortgage: Follows a fixed, often lower interest rate for a set period before being subject to fluctuation based on market conditions.

•   Interest-only mortgages: Allows borrowers to make smaller, interest-only monthly payments for a set period before having to cover principal and interest or consider a mortgage refinance.

•   Balloon mortgage: Involves low monthly payments for a short period of time before the entire loan balance comes due at the end of the term.

Mortgage Tips

Once you have a sense of your home-buying budget, you’ll begin to explore your options for a home mortgage loan. (A home loan help center is a good place to start.) As you do this, make sure you take into consideration all the costs associated with obtaining a mortgage from a lender. Once you’ve gathered several options and their associated costs, you’ll be better equipped to make a decision. There are many other tips for shopping for mortgage rates, so study the landscape before you commit.

The Takeaway

The income needed for a $140,000 mortgage depends on a variety of factors, but if you earn in the neighborhood of $45,000 a year, you can likely afford a mortgage of that size, as long as you don’t have significant debt already. Saving up for a down payment, paying off debt, and boosting your credit score could help you qualify for more competitive loan terms.

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 house can I afford if I make $36,000 a year?

If you make $36,000 a year and have debts of only about $100 per month, you could afford a $137,000 house. But exactly how much house you can afford depends in part on how much you’ve saved toward a down payment.

How much is a house payment for $140,000?

The house payment for a $140K mortgage depends on the loan term, interest rate, taxes, and insurance costs. If you put 20% down and take out a 30-year fixed-rate $140K mortgage, your monthly payment would be around $1,050, including taxes and insurance.

How much is a $140,000 mortgage over 10 years?

If you pay back a $140,000 home mortgage loan over 10 years at a 6.5% interest rate, your total payment will be $190,760.

Photo credit: iStock/PeopleImages

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.

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

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

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

SOHL-Q224-1838452-V1

If you need a $1 million mortgage to buy a house in your area, you want to feel secure that you have the income needed to make your payments, which is about $300,000 per year. Financing a $1 million dollar mortgage means a monthly payment of around $9,000, assuming you have a mortgage interest rate of 7%. (This number includes an estimate by Fannie Mae for the principal amount, interest, taxes, insurance, and HOA fees.)

If your lender follows the conservative 28/36 rule where the maximum amount of household debt you can have is 36% of your gross pay, then the monthly mortgage payment ($9,000) needs to be 36% of your monthly income. $9,000 is 36% of a $25,000 monthly income, or $300,000 per year.

If you’re not quite there or wondering how this number changes with other debt and income levels, we have you covered. We’ll go through everything you need to know about the income you’ll need for a $1 million dollar mortgage.

Income Needed for a $1,000,000 Mortgage

The income you need for a $1,000,000 mortgage depends on how much debt you’re carrying and the amount of your down payment. These two factors affect your monthly payment, which in turn determines how much you’ll need to earn to qualify for the mortgage.

For example, as noted above, a $1,000,000 mortgage works out to about a $9,000 monthly payment including payment, interest, taxes, and insurance on a 7% annual percentage rate (APR). Without debt, you need to make about $300,000 per year to afford the payment.

How debt affects your $1 million mortgage: If you have $1,000 in additional debt you’re carrying each month, you’ll need more income to qualify for the loan.

$9,000 mortgage + $1,000 additional debts = $10,000 in total monthly debts
$10,000 is 36% of $27,778 per month, or $333,336 per year.

In other words, if you have $1,000 in debt and need to qualify for a $1,000,000 mortgage, you’ll need to earn $333,336 per year.

How a down payment affects a $1 million mortgage: A down payment also has an effect on the income you need for a $1 million dollar mortgage. If your down payment is only 10%, your mortgage amount increases because you’ll need to pay a mortgage insurance premium (MIP) on top of your monthly payment. For a mortgage of this size, your monthly payment increases $367 per month.

For the most accurate numbers, try using a mortgage calculator with taxes and insurance.

How Much Do You Need to Make to Get a $1 Million Mortgage

To get a $1 million dollar mortgage, the amount of income you would need is right around $300,000. To arrive at this number, we followed the 28/36 ratio, and assumed a 7% APR, which is close to market rates in 2024. With taxes, insurance, and PMI, your monthly payment will be close to $9,000. Assuming you have no debt, you would need to make $25,000 each month, or $300,000 each year to qualify for the monthly payment on a million-dollar home.

What Is a Good Debt-to-Income Ratio?

A good debt-to-income ratio is as low as you can get it. Lenders love seeing debt levels below 35%. If you have a minimal amount of debt (student loans, credit card debt, car loans, etc.) you may be able to qualify for a bigger loan or better rates. If you have a lot of debt, the amount of mortgage you’ll qualify for will be significantly less. Remember that if you aren’t happy with your mortgage rate you can always consider a mortgage refinance down the line.

What Determines How Much House You Can Afford?

A million-dollar mortgage seems like such a high mark, but if you’re in a high-cost-of-living area, it’s the norm. Qualifying for a mortgage that high involves a look at the following factors:

•   Income Lenders love seeing reliable income and employment history to ensure that you’ll pay the mortgage back.

•   Down payment A higher down payment enables you to look for a higher-priced home. A down payment of 20% or more also allows you to avoid mortgage insurance, which is a payment you’re required to make every month if you have less than 20% equity.

•   Credit history If your credit history is patchy, the lender may hesitate to lend you money, even if you can qualify with your income. A lower credit score means you’ll get a higher interest rate, which translates into a lower mortgage amount.

•   Debt level If your debt is too high, you may not qualify for a $1 million dollar mortgage. Lenders look for a debt-to-income (DTI) ratio of 45% at maximum (and usually lower).

You’ll also likely need a jumbo loan, also called a non-conforming loan, which usually has more stringent requirements.

It may be best to take a look at a mortgage calculator or talk to a lender to take your individual situation into account to get the most accurate number.

What Mortgage Lenders Look For

For the $1 million dollar mortgage, you’ll want to get your finances in tip top shape. Lenders look at a few factors to get you qualified for that price tag.

•   Cash reserves When you’re looking at a million-dollar mortgage with a jumbo loan, the lender is also going to want to see how much money you have in the bank. Cash reserves are more important for a million-dollar mortgage than they are for lower mortgages.

•   Strong credit Your credit score should be in the 700 range if you’re looking for a $1 million dollar mortgage.

•   Appropriate debt You should also have low levels of debt. As mentioned previously, an appropriate DTI ratio is less than 45%.

$1,000,000 Mortgage Breakdown Examples

To help illustrate the income needed for a $1 million mortgage, we’ve put together a few examples with different scenarios using a mortgage calculator. All assume a home purchase price of $1,250,000 and a down payment of 20%, or $250,000. Keep in mind the taxes and insurance numbers may not reflect your area as some states have a higher cost of living than others — and even within a given state, some places are more affordable.

30-Year Loan at 6% Fixed Interest Rate

Total Payment: $8,079
Principal and Interest: $5,996
Other Costs (homeowners insurance and property taxes): $2,083

15-Year Loan at 6% Fixed Interest Rate

Total Payment: $10,522
Principal and Interest: $8,439
Other Costs (homeowners insurance and property taxes): $2,083

30-Year Loan at 7% Fixed Interest Rate

Total Payment: $8,736
Principal and Interest: $6,653
Other Costs (homeowners insurance and property taxes): $2,083

15-Year Loan at 7% Fixed Interest Rate

Total Payment: $11,071
Principal and Interest: $8,988
Other Costs (homeowners insurance and property taxes): $2,083

Recommended: Home Loan Help Center

Pros and Cons of a $1,000,000 Mortgage

When comparing the different types of mortgage loans, there are some benefits and drawbacks to a higher-priced mortgage.

Pros

•   Able to purchase a nice home in most U.S. markets

•   Tax savings on mortgage interest up to the $750,000 mortgage limit

Cons

•   Harder to qualify for

•   May come with higher interest costs

•   High monthly payment

•   Cost of maintaining home may be steep

How Much Will You Need for a Down Payment?

In an ideal world, a 20% down payment on a mortgage loan allows you to get the most bang for your buck. You avoid PMI, which is very costly on a million-dollar home. With few exceptions, you’ll likely need at least 10% to qualify for a million-dollar mortgage.

Can You Buy a $1 Million Home With No Money Down?

There are very rare instances where you can buy a $1 million home with no money down. Some of these may include:

•   Your loan is privately funded

•   You qualify for a VA loan (from the U.S. Department of Veterans Affairs) and live in Hawaii (or another exceptionally high cost area)

Can You Buy a $1 Million Home With a Small Down Payment?

If you’re looking to buy a $1 million home with a small down payment, generally, you’re out of luck. Most lenders look for at least a 10% down payment (and usually more). But there are a few scenarios where it makes sense to look for a million-dollar home with a small down payment.

High-cost-of-living areas If you live in an area that’s defined by the FHFA (Federal Housing Finance Agency) as a high-cost area, you may be able to get a million-dollar mortgage with a small down payment if it falls under the conforming loan requirements.

One of these requirements is the loan limit amount. The FHFA sets the conforming loan limit for mortgages, which is the maximum loan amount it will guarantee. In high-cost-of-living areas, this amount is 150% of the conforming loan limit of $766,550, which works out to be $1,149,825.

So, even though the amount is over a million dollars, it’s still considered a conforming loan and will allow for conforming loan requirements, such as a 3% down payment.

VA Loan With a VA loan, you can qualify for a $0 down payment, and in high-cost-of-living areas, the loan limit may go up to $1,149,825.

Is a $1 Million Mortgage with No Down Payment a Good Idea?

As with all no-down-payment mortgages, your monthly payment will be higher — and the required mortgage insurance premium will drive it still higher. But even if you’re comfortable with those bigger numbers, it’s rare to find a lender that would be comfortable lending you a million dollars without a down payment. The exception? If you qualify for a VA loan and live in Hawaii, you might have a shot at a million-dollar mortgage with no down payment. If you’re wondering what size mortgage you can afford with the down payment amount you’ve set aside, consult a home affordability calculator.

Can’t Afford a $1 Million Mortgage?

If you can’t quite qualify for a $1 million mortgage, you can make plans to help you get there in the future. Here are a few tips to qualify for a mortgage.

Pay Off Debt

With less debt, you’ll qualify for a higher monthly mortgage payment. If you pay off a car and you no longer have a monthly payment of $500, for example, you may be able to qualify for a larger mortgage.

Look into First-Time Homebuyer Programs

First-time homebuyer programs can help with a range of tools, such as down payment assistance, lower interest rates, and lower housing prices. For example, in San Francisco, there are several options to help first-time homebuyers afford a home. If you qualify and if there is a property available, you can put your name in a lottery for a property to be sold below market value. These also may come with down payment assistance. There are also several programs that offer a loan up to $375,000 on properties in the city.

Most cities and states have some type of program to help first-time homebuyers. If you’re in a high-cost-of-living area and will have trouble qualifying for a million-dollar mortgage, a little research can help you find out what is available to get you into a home.

Cultivate Strong Credit

If credit history is your problem, it may take some time to build. Here are a few tips to help get you going.

•   Check your credit report. Pay attention to any negative marks and see if there are any errors that you can fix. Make sure your credit accounts are reported every month and call lenders if they haven’t been reported.

•   Consider opening a credit account. If you don’t have a credit account, take a look at secured credit cards or a credit-builder loan, which are easy to qualify for and can help you build up your credit in a hurry.

•   Automate your payments. Take the effort out of building your credit by setting your account to make a payment each month before the due date.

•   Ask for a credit limit increase. If you have a credit card, consider asking for a credit limit increase. The purpose of asking for a credit limit increase isn’t to use it, it’s to decrease the overall amount of your available credit that you are using.

Start Budgeting

Even on higher incomes, a budget can help you move toward your goal of saving for a down payment on a $1 million dollar mortgage. Put aside money every month or use your discretionary income to pay down debt.

Recommended: The Mortgage Preapproval Process

Alternatives to Conventional Mortgage Loans

If you’re looking for an alternative to a conventional mortgage, there are a handful of options to consider.

•   Private lending Private lenders can help accommodate unique needs for financing, such as a $1 million dollar mortgage. They usually charge higher interest rates, but have less stringent qualifications.

•   Seller financing Seller financing is where you make payments to the seller instead of a bank. There’s a legal contract involved that covers the purchase price, interest rate, term, home maintenance, and other details of the seller-financed mortgage.

•   Rent-to-own It may be possible to arrange for a rent-to-own deal with the seller. You’ll come up with the terms on your own, but the basic agreement allows you to rent the home for a period of time before purchasing it.

•   Borrow from your retirement account Though it’s not often recommended, it may be possible to borrow money from your retirement account for the purchase of a home. Be aware there are tax consequences and penalties if you aren’t able to repay the loan.

Mortgage Tips

At any income, you’ll want to choose the best mortgage possible. Here are a few tips to help you choose the right mortgage.

•   Shop around for a mortgage. You may have fewer options if your $1 million dollar mortgage doesn’t fall under conforming mortgage guidelines, but it’s still important to get firm quotes from multiple lenders.

•   Compare loan estimates. When you’re loan shopping, submit the same information to each lender and obtain a loan estimate. This standardized document can help you compare rates, fees, terms, and other details of the loan. You’ll be comparing “apples to apples” with the loan estimate.

•   Go with a reputable lender. You can check the lender’s rating on Trustpilot or the Better Business Bureau. Avoid a lender who misrepresents costs or wants to push you in the direction of one loan over another.

The Takeaway

Affording a $1 million mortgage does take a higher income. And even then, you’ll need to be prepared for stringent credit requirements, a substantial down payment requirement, and you’ll need to have cash reserves. There are very rare cases where you can get a $1 million mortgage with a low down payment, so you’ll want to plan to save for a down payment to make your house dreams a reality.

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 is a $1 million mortgage over 10 years?

Assuming an interest rate of 7%, you would spend $1,393,301 to pay off a $1 million mortgage with a 10-year term.

What income should you have to buy a million-dollar home?

If you have no debt, a million-dollar home with a 7% interest rate and a 30-year term requires $240,000 to $300,000 in annual income. Exactly how much income you would need is determined in part by how large your down payment is and how much you need to borrow through a home mortgage loan.

How hard is it to get a million-dollar mortgage?

It is harder to get a million-dollar mortgage than a mortgage of a lower amount because you likely need to qualify for a jumbo loan, which requires a higher credit score, a larger down payment, and a large amount of cash reserves. These requirements are on top of the amount of income you need to qualify for a million-dollar mortgage.

Photo credit: iStock/kupicoo

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.

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

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

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

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

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
SOHL-Q224-1839296-V1

If you ever see a bank error made in your favor, you might think, “Free money!” but the truth is, you need to report the error ASAP.

An unfortunate fact of life is that people — and sometimes technology — can make mistakes. Every once in a while, your bank might make an error and deposit cash into your account that wasn’t meant for you. A teller at a bank branch could have entered the wrong digit in an account number as a customer tried to deposit a check or transfer funds, for example. Whatever the reason, you’ll notice that your bank account balance is higher than it ought to be.

While this may seem like a cash windfall and you might be tempted to keep the money, failing to report and return the funds could result in legal consequences. You should report the error to your bank as soon as you notice it. That way, the mistake can be corrected as quickly as possible.

Can I Keep the Money from a Bank Error in My Favor?

So what happens when money is accidentally deposited into your account? You may wonder if it’s a case of “finders, keepers.” The only time that you can keep funds added to your bank account is when the money deposited was legitimately meant for you.

When a bank error occurs in your favor, you cannot keep the money — even if the error seems small and likely to fly under the radar. The money isn’t legally yours, so you must return it.

What’s more, the customer whose money accidentally landed in your account will probably notice the mistake and ask the bank to track down the money. Or, the bank will catch the mistake in one of the regular audits that it makes on accounts and withdraw the money again. If the money isn’t in your account, they may ask you why you didn’t report the mistake earlier.

Recommended: Ways to Deposit Money into a Bank Account

What Is the Penalty for Attempting to Spend or Keep the Money?

Even if you are a person who doesn’t pay much attention to your banking details and assume the money is yours, it is still a big problem if you use it. If you spend the money from a bank error in your favor, move it to another account like your checking account, invest it, or give it away, you could wind up in a lot of trouble.

Failing to return the money may be tantamount to theft, and you could face criminal charges, such as theft of property lost by mistake or receiving stolen property. Criminal charges may be made to get a court order to force you to repay the amount, and in some cases, you could even end up with probation or prison time. That’s a very good reason to contact your bank and return the funds to them as soon as you realize there’s been an error.

A few years ago, a Pennsylvania couple went on a spending spree when their bank accidentally deposited $120,000 in their account instead of a business’ account due to a teller error. The couple bought various vehicles with the money and also gave $15,000 away to friends in need.

The bank requested that the couple return the money and then reversed the transfer, causing an overdraft on the couple’s account of over $100,000. The couple was eventually convicted of theft, sentenced to seven years’ probation, 100 hours of community service, and ordered to repay the money they stole. This is a good example of why there’s no such thing as free money in this situation.

When Should I Report the Error?

If you discover money in your account and can’t explain where it came from, contact your bank right away, and ask them to figure out the origins of the funds. If it turns out the money really was for you — perhaps a relative deposited it in your account as a gift, for example — your bank will let you know that you are free to access the funds and use them for whatever you’d like.

If the funds weren’t originally meant for you, the bank can start the process of reversing the transaction.

To report the error, first call your bank. Take down the name of the person you talked to and make a note of the time and date. Follow up your call with an email that outlines the details of the error. That way, you’ll have a paper trail of your attempts to correct the issue. The time frame in which to report a bank error varies, so check with your particular account’s fine print to find out the specifics.

What Happens if the Bank Does Not Respond?

Generally speaking, banks have 10 days to complete an investigation into an account error. But it is possible the investigation could take as long as 45 days. You can take a look at your deposit account agreement to find out how long it should take your bank.

If nothing has changed after that period of time, contact your bank again to check in on the progress of the investigation. Do not assume the money has somehow become rightfully yours. You don’t want to make a bad situation worse, cause legal action, and wind up eventually having to hire a lawyer to represent you.

What Should I Do So That I Don’t Get in Trouble?

When an erroneous deposit is made to your account, here are the steps you should take to help ensure that you don’t get into any trouble.

Do Not Touch or Transfer Money

First things first, if you notice money in your account that’s not yours, don’t touch it. Don’t spend, don’t give it to someone else, and don’t move it into a different account. Don’t even spend the money if you plan to repay it and report the mistake later. Anything you do to tamper with the money, no matter how benign it seems, could have big consequences later.

Contact Your Bank

As we mentioned above, contact your bank immediately when you notice the error, and keep records of your interactions.

Monitor Your Account

Get in the habit of scoping out your financial accounts regularly, whether it’s checking your credit report or your bank account. The fact that even your bank can accidentally deposit money into your account illustrates the necessity of reviewing your bank account regularly.

If you don’t look at your account statement frequently, you may not notice small errors, and these can have a big impact on your personal finances. How often should you check your bank account? There’s no precise answer, but between once a week and once a month can be a good place to start.

For example, say a small deposit of just a few hundred dollars is accidentally made to your checking account. Say, too, that you don’t notice the deposit and spend some of the funds. When the bank discovers the mistake, they can withdraw the funds without your permission, freeze your account, or put a hold on your funds.

If you’re still operating unaware of the erroneous deposit, this can wreak havoc on your account. It could cause overdrafts or your checks to bounce. It might also mess up any automated bill pay that you may have set up.

As a result, you may be on the hook for overdraft fees, or you may end up paying some bills late.

Keeping careful tabs on your account can help you catch errors so you can avoid these situations and improve your financial health. Consider setting up alerts for deposits in your account. That way you can spot any mistakes as soon as they happen.

In addition, you may want to consider other automatic ways to monitor your finances, such as credit score monitoring and card security and protection, to help keep your accounts safe.

The Takeaway

If a financial institution makes a mistake in your favor, this isn’t the moment to go on a spending spree. The best thing you can do if money is accidentally deposited into your bank account is act quickly to alert your bank. That way, the error can be corrected, the right person can receive the money they need, and you can continue banking as usual. If you fail to do so, you could wind up with overdrafts and other issues when the bank takes the money back. Worse still, you could face legal consequences with far-reaching effects.

So do the right thing, and keep your financial life on the up and up to help your money rightfully grow.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can I keep money credited in error to me?

No, you cannot keep money that is deposited in your account in error. You should alert your bank immediately and have the funds redirected to their rightful owner.

Do I have to report a bank error?

Yes, you should report the error right away. Contact your bank and report the mistaken deposit as soon as you notice it so the problem can be corrected.

What happens if the bank makes a mistake? Who is responsible and why?

If your bank makes a mistake, you should alert them as soon as you notice it. Your bank will also run regular audits of your accounts, which can help them catch errors. When they do catch a mistake, it must be resolved with the funds going back to the correct account. To do so, the bank can reverse transfers, withdraw funds from your account, freeze your account, or place a hold on the funds without your permission. If the money that was mistakenly put into your account is no longer there, you will be asked to repay it, and you may face criminal charges.

Photo credit: iStock/fizkes

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

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4.20% APY
SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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