How to Get Preapproved for a VA Home Loan

The Department of Veterans Affairs sponsors the VA loan program to help military members and surviving spouses become homeowners. If you’re interested in how to get a VA loan, you’ll need to first make sure you meet the government’s requirements and then find a VA-approved lender and seek preapproval for a loan.

Getting preapproved for a home loan can give you an idea of how much you’ll be able to afford. Having a VA loan preapproval letter in hand can also give you some leverage when it’s time to make an offer. Here’s a closer look at how to get preapproved for a VA home loan.

What Is a VA Loan?

A VA loan is a mortgage loan that’s backed by the federal government. The Department of Veterans Affairs works with a network of approved lenders that grant VA loans to military members and surviving spouses. Should a borrower default on a VA loan, the federal government steps in to help the lender recoup some of its losses.

What is a VA loan good for? There are four ways that borrowers can use them.

•   VA purchase loans allow you to buy a home through an approved lender.

•   Native American Direct Loans (NADL) help Native American veterans or veterans married to Native Americans buy, build, or improve a home on federal trust land.

•   Interest Rate Reduction Refinance Loans (IRRRL) can help make existing VA-backed loans more affordable through interest rate reductions.

•   Cash-out mortgage refinance loans can help eligible borrowers tap into their home equity to withdraw cash, while refinancing into a new loan.

In terms of how to get a VA loan, each of these options has different requirements that borrowers need to meet.



💡 Quick Tip: Apply for a VA loan and borrow up to $1.5 million with a fixed- or adjustable-rate mortgage. The flexibility extends to the down payment, too — qualified VA homebuyers don’t even need one!†^

How Does VA Home Loan Preapproval Work?

Mortgage loan preapproval simply means that a lender has reviewed your financial situation and made a tentative offer for a loan. It doesn’t constitute final approval for a mortgage, but getting preapproved is often beneficial, as a mortgage preapproval letter can give you an edge if you’re vying with another buyer for a particular property.

VA home loan preapproval works much the same as any other type of mortgage preapproval, with one extra step: Before you apply for the loan, you’ll need to get a Certificate of Eligibility (COE) from the VA. This document shows your lender that you’re eligible for a VA loan, based on your service history and duty status. The minimum service requirements for a COE depend on when you served. You can request a COE online through the VA website.

After you have the COE, you’ll need to give the lender some basic information about your household income, assets, and how much you’re hoping to borrow in a process called prequalification. This will allow you to see — often in just a few minutes — what kind of mortgage terms you might qualify for. From there, you can choose a lender and go through the next step, preapproval.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


How to Get a VA Home Loan Preapproval Letter

Getting a VA home loan preapproval letter is a relatively straightforward process. Here’s what you’ll need to do.

•   Obtain your COE from the Veterans Administration.

•   Choose a VA-approved lender.

•   Complete the lender’s preapproval application.

Let’s get into the details of securing a VA home loan preapproval. First, you’ll need certain documents on hand to apply for the COE, and those documents are specific to your military status. If you are a veteran, you’ll need a copy of your discharge or separation papers. Active-duty service members will need to furnish a statement of service signed by their commander, adjutant, or personnel officer. This statement needs to include your full name, Social Security number, date of birth, date you entered duty, duration of any lost time, and the name of the command providing the statement. You can find full details and an online COE application on the VA website.

Once you have your COE and have found a prospective lender, the lender will likely ask to see certain documents to verify your income and financial situation, including:

•   Tax returns

•   Pay stubs

•   Bank account statements

•   Investment account statements

You’ll also need to provide a valid photo ID, your date of birth, and Social Security number. This information is needed to process a hard credit check, which can impact your credit score.

After your lender has everything it needs to process your preapproval, it will review your finances and complete a hard check of your credit history. Assuming your credit score and income check out, and there are no issues with your COE, you should be able to get a preapproval decision within a few days.

How to Buy a Home With a VA-Backed Loan

Home mortgage loans offered through the VA are attractive for a few reasons. For one thing, you can buy a home with no down payment required. For another, VA loans can offer more attractive interest rates than other types of mortgage loans.

Now that you know how to get a VA home loan, if you’d like to buy a home with a VA-backed loan, getting preapproved is the first step. Again, VA loan preapproval can give you an idea how much you’ll be able to borrow, which can help you narrow down your search for a property. Once you find a home that you’re interested in, making an offer is the next step.

You can use a VA-backed loan to buy:

•   Single family homes with up to four units

•   Condos in a VA-approved project

•   Manufactured homes

VA loans can also be used to build a home. You’ll need to have the home inspected and appraised to make sure that the property is structurally sound and that its value aligns with the amount you want to borrow. If there are no issues, you can move on to the closing to sign final paperwork and pay the VA loan funding fee.

This fee is a one-time payment VA borrowers are required to make to help cover the costs of the VA loan program. The amount you’ll pay for the funding fee depends on whether you’re a first-time homebuyer and how much money you put down on the home, if any. Some buyers may pay no fee at all, or have it refunded.

Recommended: Cost of Living by State

Who Is Eligible for a VA Loan?

Eligibility for a VA loan is a two-pronged test. You’ll need to be able to obtain a COE from the government on one hand, and on the other, you’ll need to be able to meet the lender’s credit score and income requirements.

COE requirements depend on your duty status and time served. Generally, you’re eligible if you are:

•   An active-duty service member who has served at least 90 days continuously.

•   A veteran who served at least 24 months continuously or 90 days of active duty.

•   A National Guard member who has served at least 90 days of active duty.

•   A Reserve member who has served at least 90 days of active duty.

These requirements assume that you served between August 2, 1990 and the present day. If you’re a veteran, National Guard member, or Reserve member who served before August 2, 1990, the service requirements are different.

You may also be able to get a COE under other conditions. Here are a few examples (find a complete list on the VA website):

•   Are a surviving spouse of an eligible service member

•   Are a Public Health Service officer

•   Served as an officer of the National Oceanic & Atmospheric Administration (NOAA)

•   Served as a midshipman at the United States Naval Academy

If you don’t meet any of the requirements to get a COE for a VA loan, then you’ll need to consider other home loan options.

How to Get Preapproved for a VA Home Loan

VA loans can be attractive to buyers since the VA doesn’t require a down payment or private mortgage insurance. If you’re wondering how to get approved for a VA loan, here are a few tips to qualify for a mortgage.

•   Consider your credit. The VA loan program has no minimum credit score requirement but the higher your score, the better your odds of being approved. A higher credit score can also help you get a lower interest rate on your loan.

•   Know your budget. Estimating how much you can afford when buying a home is important for ensuring that you don’t go over budget. If you know that you’re going to be looking at homes in the $300,000 range, for instance, then you wouldn’t want to ask for $500,000 when you’re trying to get preapproved.

•   Check the lender’s requirements. Researching VA lenders can help you find the one that’s the best fit for your needs and situation. Comparing minimum credit score requirements and income requirements can help you weed out lenders that are less likely to approve you.

Ideally, you should request preapproval from just one lender but that doesn’t mean you can’t shop around first by prequalifying with several lenders to compare rates.



💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

How to Find a VA Lender

The simplest way to find a VA lender is to use the resources available on the Department of Veterans Affairs website. You can also search for VA-approved lenders online. For instance, you might try searching for “VA lender near me” or “VA lender online application” to see what results turn up. If you aren’t sure a VA loan is right for you, check out a home loan help center to get more ideas for how to finance a home purchase.

Recommended: Cost of Living in California

How to Choose the Best VA Lender for You

One of the most important considerations when weighing how to get a VA loan is choosing a lender to work with. Comparing VA lenders is similar to comparing lenders for different types of mortgage loans, including conventional or FHA options. Here are some key things to consider as you shop around:

•   VA loan interest rates

•   Closing costs the lender charges, including origination fees

•   Minimum credit score and income requirements

•   Whether you have the option to buy points if that interests you

•   How long it typically takes for the lender to close a VA loan once you’re approved

It’s also a good idea to check out reviews from previous buyers to see what they have to say about a particular lender. The better the lender’s reputation is overall, the easier they might be to work with.

Tips on the VA Home Loan Preapproval Process

VA home loan preapproval may seem a little tedious with all the information that you need to provide. But it’s important that you don’t skip this step, as preapproval can work in your favor when it’s time to buy a home.

Here are a few tips for ensuring that your VA home loan preapproval goes as smoothly as possible.

•   Carefully read through the instructions for completing the application before you begin.

•   Organize your documents beforehand so that you’re not scrambling to find information later.

•   Review your application before submitting it to make sure you haven’t overlooked anything and there are no errors.

•   Opt for an online application process if possible, which could save you some time.

How long does it take to get a VA loan? While you might be able to get preapproved the same day or the next business day, closing can take anywhere from 30 to 60 days. That’s important to know as you plan out your home purchase.

The Takeaway

VA loans can offer some attractive benefits to homebuyers and getting preapproved is usually to your advantage. It’s important to take your time to find the right lender to work with so you can get the best loan terms possible.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Can you get preapproval for a VA loan?

Yes, it’s possible to get preapproved for a VA home loan. You’ll need to find a VA-approved lender to work with and verify that you’re eligible to get a loan through the VA program. Having VA loan preapproval doesn’t guarantee that you’ll qualify for a mortgage, however.

What do I need to get preapproved for VA loan?

To get preapproved for a VA loan, you’ll need to find a VA-approved lender. Next, you’ll need to provide the lender with some information about your finances, along with a Certificate of Eligibility. You can obtain this document from the Veterans Administration.

How long does it take to get a VA loan preapproval?

Assuming that you have all of the necessary documents and information to process your preapproval application, it may be possible to get a decision the same day. VA loan preapproval shouldn’t take more than a few days to obtain if you’ve checked off all the lender’s requirements.


About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.



Photo credit: iStock/Prostock-Studio

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


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


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

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.
^SoFi VA ARM: At the end of 60 months (5y/1y ARM), the interest rate and monthly payment adjust. At adjustment, the new mortgage rate will be based on the one-year Constant Maturity Treasury (CMT) rate, plus a margin of 2.00% subject to annual and lifetime adjustment caps.

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How Much Will a $700,000 Mortgage Cost per Month?

The monthly amount that you pay on a mortgage for $700,000 covers the principal payment and interest, and your exact payment depends on several variables, including your interest rate. A $700,000, 30-year mortgage with a 6% interest rate, for example, costs around $4,200 monthly. However, there may be additional costs that you have to pay throughout the life of the loan, not to mention upfront costs that you must pay when you first close on the home.

The monthly cost of a mortgage depends on the interest rate, the length of the loan, and any additional costs, such as private mortgage insurance (PMI) charged on some loans. Mortgage loan terms are typically from 15 years to 30 years, and the monthly payments for a 15-year loan can be much higher than the payments for a 30-year loan, although, over its lifetime, the 30-year mortgage is typically more costly because interest costs are higher.

Here’s a look at how much a 700,000 mortgage might cost per month for a 15-year or 30-year loan term with various interest rates.

Key Points

•   The monthly cost of a $700,000 mortgage depends on factors like interest rate, loan term, and down payment.

•   Using a mortgage calculator can help estimate monthly payments and determine affordability.

•   Factors like property taxes, homeowners insurance, and private mortgage insurance (PMI) can also affect the overall cost.

•   It’s important to consider your budget and financial goals when determining the affordability of a mortgage.

•   Working with a lender or mortgage professional can provide personalized guidance and help you understand the costs involved.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


What Is the Total Cost of a $700K Mortgage?

A $700,000 30-year mortgage with a 6% interest rate (which, as noted above, costs around $4,200 monthly) has a total cost of $1,510,867. The same loan over 15 years would have a $5,900 monthly payment and a total cost of $1,063,260. These amounts are simply estimates; exact costs will depend on interest, escrow, taxes, and insurance. A rule of thumb when buying a home is to not pay more than 28% of your gross monthly income. So someone whose monthly mortgage payment is $4,200 would need to take home at least $15,000 a month.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you through the process.

The Upfront Costs of a $700K Mortgage


When you buy a house and take out a mortgage, in addition to your down payment, you will have to pay closing costs. Closing costs are mostly the administrative expenses for closing the deal. They include mortgage lender fees, titling fees, insurance fees, taxes, and appraisal fees. These costs are typically not covered by your down payment. Here’s a closer look at some upfront costs a buyer will face.

Earnest money Also known as a deposit, this is the money you put down to show the seller you’re serious about buying their place.

Down payment The amount you pay as a down payment will depend on the type of home loan. A conventional loan without private mortgage insurance (PMI) may call for a 20% down payment. On the other hand, you might get a conventional loan with mortgage insurance with a 3% down payment. A down payment for a Federal Housing Administration loan is typically around 3.5%, and Veterans Affairs loans or U.S. Department of Agriculture loans have no down payment required.

The more you can afford as a down payment, the less interest you will pay because the lender considers you less risky as a borrower.

Closing costs Your lender will charge you fees for administrative services, such as application, origination, and underwriting fees. And then there are transfer taxes associated with transferring the title from the seller to the buyer.

Recommended: First-Time Homebuyer Guide

The Long-Term Costs of a $700K Mortgage

Your mortgage payments pay down the principal and the interest on your loan. Proportionally, more of your payment will go toward interest rather than the principal at the beginning of the loan term, and at the end of the loan term, more of your payment will go toward paying down the principal.

If you paid less than 20 percent as a down payment, your mortgage lender may also require you to pay private mortgage insurance (PMI) on a monthly basis. However, there are also other long-term costs:

Property taxes These can add up to thousands of dollars a year and can change annually, or as often as your town raises taxes.

Home maintenance One rule of thumb is to set aside 1% of your home’s total value each year for maintenance costs.

HOA, condo, or co-op fees If your home is a condo or part of a homeowners association (HOA) or co-op, you will need to pay a monthly fee. The fee covers services such as grounds maintenance, use of a community center, and snow removal. HOA fees can range anywhere from $100 to $1,000.

Homeowners’ and hazard insurance Some areas are designated “high risk” for natural disasters, such as floods, earthquakes, wildfires, or severe storms. If your home is located in one of these areas, you will need to pay hazard insurance, which could cost between 0.25% to 0.33% of the home’s value paid annually.

Recommended: Home Loan Help Center

Estimated Monthly Payments on a $700K Mortgage

The table below shows the estimated monthly payments for a $700,000 mortgage loan for both a 15-year and a 30-year loan with interest rates varying from 5% to 8%.

Interest rate

15-year term

30-year term

5% $5,567 $3,779
5.5% $5,752 $3,997
6% $5,941 $4,221
6.5% $6,133 $4,450
7% $6,328 $4,684
7.5% $6,526 $4,922
8% $6,728 $5,166

How Much Interest Is Accrued on a $700K Mortgage?

The amount of interest accrued on a $700,000 mortgage will depend on the length of the loan and the interest rate. A shorter loan term will mean less accrued interest. For example, for a 15-year loan for $700,000 with a 6% interest rate, the interest would amount to around $363,259 over the life of the loan. For a 30-year loan with a 6% interest rate, the interest would be more than double at $810,867.

Amortization Breakdown for a $700K Mortgage

An amortization schedule for a mortgage loan tells you when your last payment will be and how much of your monthly payment goes toward paying off the principal and how much goes toward paying off the interest. At the beginning of the loan term, most of your payment will go toward the interest.

Below is the mortgage amortization breakdown for a $700,000 mortgage with a 6% interest rate for a 30-year loan.

Year

Beginning balance

Interest paid

Principal paid

Ending balance

1 $700,000.00 $8,596.08 $41,766.16 $691,403.92
2 $691,403.92 $9,126.27 $41,235.97 $682,277.65
3 $682,277.65 $9,689.16 $40,673.09 $672,588.49
4 $672,588.49 $10,286.76 $40,075.48 $662,301.73
5 $662,301.73 $10,921.23 $39,441.02 $651,380.50
6 $651,380.50 $11,594.83 $38,767.42 $639,785.67
7 $639,785.67 $12,309.97 $38,052.27 $627,475.70
8 $627,475.70 $13,069.22 $37,293.02 $614,406.48
9 $614,406.48 $13,875.30 $36,486.94 $600,531.18
10 $600,531.18 $14,731.10 $35,631.14 $585,800.07
11 $585,800.07 $15,639.68 $34,722.56 $570,160.39
12 $570,160.39 $16,604.30 $33,757.94 $553,556.09
13 $553,556.09 $17,628.42 $32,733.82 $535,927.66
14 $535,927.66 $18,715.70 $31,646.54 $517,211.96
15 $517,211.96 $19,870.05 $30,492.20 $497,341.91
16 $497,341.91 $21,095.59 $29,266.65 $476,246.32
17 $476,246.32 $22,396.72 $27,965.52 $453,849.60
18 $453,849.60 $23,778.10 $26,584.14 $430,071.50
19 $430,071.50 $25,244.68 $25,117.56 $404,826.82
20 $404,826.82 $26,801.72 $23,560.53 $378,025.10
21 $378,025.10 $28,454.79 $21,907.46 $349,570.31
22 $349,570.31 $30,209.82 $20,152.43 $319,360.50
23 $319,360.50 $32,073.09 $18,289.15 $287,287.40
24 $287,287.40 $34,051.29 $16,310.95 $253,236.11
25 $253,236.11 $36,151.50 $14,210.74 $217,084.61
26 $217,084.61 $38,381.25 $11,981.00 $178,703.36
27 $178,703.36 $40,748.52 $9,613.73 $137,954.85
28 $137,954.85 $43,261.80 $7,100.45 $94,693.05
29 $94,693.05 $45,930.09 $4,432.15 $48,762.96
30 $48,762.96 $48,762.96 $1,599.29 $0.00

What Is Required to Get a $700K Mortgage?

Let’s say you want to buy a home for $875,000 with a down payment of 20% or $175,000. To qualify for a 30-year mortgage loan of $700,000 with a 6% interest rate, you would need to earn around $180,000 annually. For a 15-year loan, you would need to earn around $253,000 annually.

This calculator shows you how much of a mortgage you can afford based on your gross annual income, your monthly spending, your down payment, and the interest rate.

How Much House Can You Afford Quiz

The Takeaway

When calculating how much a mortgage loan for $700,000 will cost per month, the principal and interest are two of the biggest components. However, there are other costs that may be included, such as private mortgage insurance. And don’t forget about closing costs as well.

The length of the loan will drastically affect the amount of interest paid over the life of the loan. For example, the interest paid on a 30-year loan versus a 15-year loan with a 6% interest rate could be more than double.

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


SoFi Mortgages: simple, smart, and so affordable.

FAQ

What will the monthly payments be for a $700K mortgage?

The longer your loan term, the lower your monthly payment on a mortgage loan, but you will pay more interest over the life of the loan. The exact monthly payment for a $700,000 mortgage will depend on the interest rate and the loan term. The payment for a $700,000 30-year mortgage with a 6% interest rate is approximately $4,200. For a 15-year loan with the same interest rate, the monthly payment is around $5,900.

How much do I need to earn to afford a $700K mortgage loan?

To buy a home for $875,000 with a down payment of 20% or 175K, and with a 30-year mortgage loan of $700,000 with a 6% interest rate, you would need to earn around $180,000 annually. For a 15-year loan, you would need to earn around $253,000 annually.

How much down payment is required for a $700K mortgage loan?

The down payment you will pay will depend on the type of mortgage and the lender. Some lenders accept 3%, while some expect 20%. If your down payment is less than 20%, you might have to add private mortgage insurance (PMI) to your monthly payments.


Photo credit: iStock/Xacto

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


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



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

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

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What Is a Savings Bond?

Savings Bonds Defined And Explained

The definition of a U.S. Savings Bond is an investment in the federal government that helps to increase your money. By purchasing a savings bond, you are essentially lending money to the government which you will get back in the future, when the bond matures, with interest. Because these financial products are backed by the federal government, they are considered to be extremely low-risk. And, in certain situations, there can be tax advantages.

Key Points

•   U.S. Savings Bonds are low-risk investments that involve lending money to the government, with returns of both principal and interest upon maturity.

•   Two main types of savings bonds, Series EE and Series I, offer different interest structures, with Series I bonds providing inflation protection.

•   Purchasing savings bonds can be done online through TreasuryDirect, with limits on annual purchases set at $10,000 for each series.

•   Investing in savings bonds has pros, such as tax advantages and no fees, but also cons, including low returns and penalties for early redemption.

•   Savings bonds have a maturity period of 30 years, but can be cashed in penalty-free after five years, depending on certain conditions.

Savings Bond Definition

First, to answer the basic question, “What is a savings bond?”: Basically, it is a loan issued by the U.S. Treasury and made to the U.S. government. Purchase a savings bond, and you are loaning that money to the government. At the end of the bond’s 30-year term, you receive your initial investment plus the compounded interest.

You may withdraw funds before then, as long as the bond has been held for at least five years.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

How Do Savings Bonds Work?

Savings bonds are issued by the U.S. Treasury. You can buy one for yourself, or for someone else, even if that person is under age 18. (That’s why, when you clean out your closets, you may find a U.S. Savings Bond that was a birthday present from Grandma a long time ago.)

You buy a savings bond for face value, or the principal, and the bond will then pay interest over a specific period of time. Basically, these savings bonds function the same way that other types of bonds work.

•   You can buy savings bonds electronically from the U.S. Treasury’s website, TreasuryDirect.gov . For the most part, it’s not possible to buy paper bonds anymore but should you run across one, you can still redeem them. (See below). Unlike many other types of bonds, like some high-yield bonds, you can’t sell savings bonds or hold them in brokerage accounts.

How Much Are Your Savings Bonds Worth?

If you have a savings bond that has been tucked away for a while and you are wondering what it’s worth, here are your options:

•   If it’s a paper bond, log onto the Treasury Department’s website and use the calculator there to find out the value.

•   If it’s an electronic bond, you will need to create (if you don’t already have one) and log onto your TreasuryDirect account.

Savings Bonds Interest Payments

For U.S. Savings Bonds, interest is earned monthly. The interest is compounded semiannually. This means that every six months, the government will apply the bond’s interest rate to grow the principal. That new, larger principal then earns interest for the next six months, when the interest is again added to the principal, and so on.

3 Different Types of Savings Bonds

There are two types of U.S. Savings Bonds available for purchase — Series EE and Series I savings bonds. Here are the differences between the two.

1. Series EE Bonds

Introduced in 1980, Series EE Bonds earn interest plus a guaranteed return of double their value when held for 20 years. These bonds continue to pay interest for 30 years.

Series EE Bonds issued after May 2005 earn a fixed rate. The current Series EE interest rate for bonds issued as of November 1, 2024 is 2.60%.

2. Series I Bonds

Series I Bonds pay a combination of two rates. The first is the original fixed interest rate. The second is an inflation-adjusted interest rate, which is calculated twice a year using the consumer price index for urban consumers (CPI-U). This adjusted rate is designed to protect bond buyers from inflation eating into the value of the investment.

When you redeem a Series I Bond, you get back the face value plus the accumulated interest. You know the fixed rate when you buy the bond. But the inflation-adjusted rate will vary depending on the CPI-U during times of adjustment.

The current composite rate for Series I Savings Bonds issued as of November 1, 2024 is 3.11%.

3. Municipal Bonds

Municipal bonds are a somewhat different savings vehicle than Series I and Series EE Bonds. Municipal Bonds are issued by a state, municipality, or country to fund capital expenditures. By offering these bonds, projects like highway or school construction can be funded.

These bonds (sometimes called “munis”) are exempt from federal taxes and the majority of local taxes. The market price of bonds will vary with the market, and they typically require a larger investment of, say, $5,000. Municipal bonds are available in different terms, ranging from relatively short (about two to five years) to longer (the typical 30-year length).

How To Buy Bonds

You can buy Series EE and I Savings Bonds directly through the United States Treasury Department online account system called TreasuryDirect, as noted above. This is a little bit different than the way you might buy other types of bonds. You can open an account at TreasuryDirect just as you would a checking or savings account at your local bank.

You can buy either an EE or I Savings Bond in any amount ranging from a $25 minimum in penny increments per year. So, if the spirit moves you, go ahead and buy a bond for $49.99. The flexible increments allow investors to dollar cost average and make other types of calculated purchases.

That said, there are annual maximums on how much you may purchase in savings bonds. The electronic bond maximum is $10,000 for each type. You can buy up to $5,000 in paper Series I Bonds using a tax refund you are eligible for. Paper EE Series bonds are no longer issued.

If you are due a refund and you want to buy I Bonds, be sure to file IRS form 8888 when you file your federal tax return. On that form you’ll specify how much of your refund you want to use to buy paper Series I bonds, keeping in mind the minimum purchase amount for a paper bond is $50. The IRS will then process your return and send you the bond that you indicate you want to buy.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


The Pros & Cons of Investing in Savings Bonds

Here’s a look at the possible benefits and downsides of investing in savings bonds. This will help you decide if buying these bonds is the right path for you, or if you might prefer to otherwise invest your money or stash it in a high-yield bank account.

The Pros of Investing in Savings Bonds

Here are some of the upsides of investing in savings bonds:

•   Low risk. U.S. Savings Bonds are one of the lower risk investments you could make. You are guaranteed to get back the entire amount you invested, known as principal. You will also receive interest if you keep the bonds until maturity.

•   Tax advantages. Savings bond holders don’t pay state or local taxes on interest at any time. You don’t have to pay federal income tax on the interest until you cash in the bond.

•   Education exception. Eligible taxpayers may qualify for a tax break when they use U.S. Savings Bonds to pay for qualified education expenses.

•   No fees. Unlike just about every other type of security, you won’t pay a fee, markup or commission when you buy savings bonds. They’re sold at face value, directly from the Treasury, so what you pay for is what you get. If you buy a $50 bond, for example, you’ll pay $50.

•   Great gift. Unlike most securities, people under age 18 may hold U.S. Savings bonds in their own names. That’s what makes them a popular birthday and graduation gift.

•   Patriotic gesture. Buying a U.S. Savings Bond helps support the U.S. government. That’s something that was important and appealed to investors when these savings bonds were first introduced in 1935.

The Cons of Investing in Savings Bonds

Next, consider these potential downsides of investing in savings bonds:

•   Low return. The biggest disadvantage of savings bonds is their low rate of return, as noted above. A low risk investment like this often pays low returns. You may find you can invest your money elsewhere for a higher return with only slightly higher risk.

•   Purchase limit. For U.S. Savings Bonds, there’s a purchase limit per year of $10,000 in bonds for each series (meaning you can invest a total of $20,000 per year), plus a $5,000 limit for paper I bonds via tax refunds. For some individuals, this might not align with their investing goals.

•   Tax liability. It’s likely you’ll have to pay federal income tax when you cash in your savings bond, unless you’ve used the proceeds for higher education payments.

•   Penalty for early withdrawal. If you cash in your savings bond before five years have elapsed, you will have to pay the previous three months of interest as a fee. You are typically not allowed to cash in a bond before the one-year mark.

Here, a summary of the pros and cons of investing in savings bonds:

Pros of Savings Bonds

Cons of Savings Bonds

•   Low risk

•   Education exception

•   Possible tax advantages

•   No fees

•   Great gift

•   Patriotic gesture

•   Low returns

•   Purchase limit

•   Possible tax liability

•   Penalty for early withdrawal

When Do Savings Bonds Mature?

You may wonder how long it takes for a savings bond to mature. The EE and I savings bonds earn interest for 30 years, until they reach their maturity date.

Recommended: Bonds or CDs: Which Is Smarter for Your Money?

How to Cash in Savings Bonds

You’ll also need to know how and when to redeem a savings bond. These bonds earn interest for 30 years, but you can cash them in penalty-free after five years.

•   If you have a paper bond, you can cash it in at your bank or credit union. Bring the bond and your ID. Or go to the Treasury’s TreasuryDirect site for details on how to cash it in.

•   For electronic bonds, log into your TreasuryDirect account, click on “confirm redemption,” and follow the instructions to deposit the amount to a linked checking or savings account. You will likely get the money within a few business days.

•   If you inherited or found an old U.S. Savings Bond, you may be able to redeem savings bonds through the TreasuryDirect portal or via Treasury Retail Securities Services.

Early Redemption of Bonds

If you cash in a U.S. Savings Bond after one year but before five years, you’ll pay a penalty that is the equivalent of the previous three months of interest. Keep in mind that for EE bonds, if you cash in before holding for 20 years, you lose the opportunity to receive the doubled value of the bond that accrues after 20 years.

The History of US Savings Bonds

America’s savings bond program began under President Franklin Delano Roosevelt in 1935, during the Great Depression, with what were known as “baby bonds.” This started the tradition of citizens participating in government financing.

The Series E Saving Bond contributed billions of dollars to financing the World War II effort, and in the post-war years, they became a popular savings vehicle. The fact that they are guaranteed by the U.S. government generally makes them a safe place to stash cash and earn interest.

The Takeaway

U.S. Savings Bonds can be one of the safest ways to invest for the future and show your patriotism. While the interest rates are typically low, for some investors, knowing that the money is being securely held for a couple of decades can really enhance their peace of mind.

Another way to help increase your peace of mind and financial well-being is finding the right banking partner for your deposit product needs.

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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What is a $50 savings bond worth?

The value of a $50 savings bond will depend on how long it has been held. You can log onto the TreasuryDirect site and use the calculator there to find out the value. As an example, a $50 Series I bond issued in 2000 would be worth more than $211 today.

How long does it take for a $50 savings bond to mature?

The full maturation date of U.S. savings bonds is 30 years.

What is a savings bond?

A savings bond is a secure way of investing in the U.S. government and earning interest. Basically, when you buy a U.S. Savings Bond, you are loaning the government money, which, upon maturity, they pay back with interest.


Photo credit: iStock/AlexSecret


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.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


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

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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3.80% APY
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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Make an Offer on a House in 6 Steps

Putting an offer on a home involves more than naming a price. Assuming that you’ve been preapproved for a mortgage and that you’ve found a home in your price range, there’s a customary method to follow in submitting an offer that stands out but also protects you.

In a hot market — where you might encounter a bidding war, compete against cash buyers, or be asked to waive a contingency — it can be vital to know the process. But even in a less heated market, it’s important to know what making an offer on a house involves, the steps for making an offer in real estate, and what to do if you change your mind when making offers in real estate (it happens!). Read on for tips that will get you from homebuyer to homeowner.

Making an Offer on a House

So let’s say you’ve found that mid-century marvel or stately townhome of your dreams. You’re ready to go for it. Here’s how the process of making an offer in real estate typically goes.

1. Determine Your Offer Price

A home’s listing price is often set by comparing it to similar homes in the area that are for sale, then adjusting up or down based on additional amenities or detrimental issues. But as the old saying goes, “A home is generally worth what someone is willing to pay for it.”

You might find a property that’s fairly well-priced and consider coming in close to asking, or you may want to adjust your offer if you feel that it’s priced too high or needs a lot of work.

There are lots of things to consider when trying to find the right offer price.

•   A common way to break down a listing amount is by price per square foot, but that often includes only the heated, livable spaces. A home can (and should) be priced higher than average for the area if it includes extra rooms like a garage or attic, outbuildings, or extra land, which add to its value. Superior workmanship or permitting in place for potential changes can also play a role in increasing a price.

•   Check the home’s history on the multiple listing service. It records every transaction related to the house, including previous buy and sell dates, price fluctuations, and how long the home has been on the market. It can give you a good idea of where the sellers are coming from in terms of what they paid for the property.

•   Take a look at other properties in the area that have recently sold. Is the price per square foot more or less than the home you have your eye on? One key to an accurate read on the local market is to ensure that you’re comparing apples to apples when it comes to the number of bedrooms, bathrooms, square footage, garage space, and other amenities. Your broker can likely provide what are known as “comparables” for the area to help with this process.

Recommended: Mortgage Preapproval Need to Knows

2. Incorporate All the Fees

It can also be important to look at factors not directly related to the price of the property that could affect your overall cash flow. One big consideration is closing costs, which typically average 2% to 6% of the total cost of the home. So let’s say you are considering a $400,000 mortgage loan; the closing costs (origination fees, title search, any points, and more) would be between $8,000 and $24,000.

It’s also important to estimate the amount of money you’ll spend making repairs or changes to the property once you move in. As long as the repairs are not related to health or safety issues, which could affect financing, one tactic could be to lower your offer price in order to free up cash for future upgrades.

Or you might plan on getting a home improvement loan after buying the house, provided you have enough equity to access those funds.

3. Determine Your Earnest Money Deposit

The next step in making an offer in real estate is to figure out your earnest money. What’s earnest money? It’s a good-faith deposit that buyers place with the offer up front, usually amounting to around 1% to 3% of the offer price, to show that they are serious, especially when there are multiple offers on a property.

It’s held in escrow by the title company. Showing purchase intent in this way can help a buyer get to the top of the seller’s list.

Customs and laws pertaining to an earnest money deposit can vary from state to state, and even from county to county, so it’s important to understand the rules that determine when the money is (and isn’t) refundable.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


4. Protect Yourself With Contingencies

The time between a signed offer and closing day is called the due diligence period, and it’s when the buyer will normally set up a home inspection and possibly a land survey or other inspections for specialty items, such as a septic system or a pool, and the lender will order an appraisal.

Because the contract is signed before inspections and the appraisal take place, contingencies give you an out if you discover a deal-breaker.

Here are the most common contingencies when making offers in real estate:

•   Financing This lays out the specifics of the financing that will be used by the buyer, which must be fully approved by the lender within the contingency period. This protects the buyer in case financing falls through.

•   Appraisal If the appraisal comes back lower than the agreed-upon price, the seller and buyer may find themselves renegotiating.

•   Inspection The buyer usually has 10 days after signing the contract to order an inspection, and the contingency remains in place until it comes back without uncovering any major issues with the property that were previously unknown. Based on the findings, the buyer can cancel the contract or negotiate repairs or the purchase price. (If the seller agrees to pay, these are called seller concessions.)

•   Title search A preliminary title report shows the home’s past and present owners and any liens or judgments against the property. If any title disputes are unable to be resolved before closing, you have the option to exit the sale.

In some situations, the list of contingencies can be long. But once they’re all satisfied and lifted during the given timeframes, the option to buy turns into a binding commitment to purchase the home.

5. Submit a Written Offer

In real estate, the best way to make an offer official is to put it in writing. If you’re working with a real estate agent, the agent will have a form that you can fill out together that lists the offer price and contingencies and covers all the state rules and regulations.

If you’re flying solo, working with a real estate lawyer or title company can help to ensure that your offer covers all the necessary legal language and is legally valid.

This concept goes both ways. As the buyer, it’s a smart idea to make sure all correspondence, counteroffers, and property disclosures are put in writing by the seller as well.

Recommended: How to Win a Bidding War

6. Move Ahead, Move On, or Move Things Around

Once you submit your written offer, one of three things is likely to happen: The sellers sign the document and enter into a binding contract, they reject the offer outright, or they submit a counteroffer.

In this last case, the sellers might counter back with changes that are better suited to them. (If your offer includes a price reduction to accommodate repair costs, for example, the seller might ask for the full asking price and offer a credit back at closing instead.)

A counteroffer puts the ball back in the buyer’s court for approval, rejection, or another counteroffer, and it can keep going back and forth until both parties agree to the terms and sign the document or one party calls it a day.

What If You Change Your Mind About Buying a House?

Contingencies give you a way out in the event of some unforeseen issue, but what if you just decide you don’t want the house? Cold feet can be a real thing!

Although the laws vary by state on this topic as well, in most instances a buyer is allowed to withdraw an offer until the moment the offer is accepted. However, once the offer document is signed by both parties, it’s considered a binding agreement.

At that point, the sellers may be well within their rights to walk away with your earnest money if you don’t decide to move forward.

The Takeaway

How to make an offer on a house? It pays to understand comps, contingencies, the temperature of the market, earnest money, and counteroffers. You’ll consider your price, keeping track of all fees that will be involved, and make your bid in writing, typically with what’s known as an earnest money deposit. Then sit back and await the seller’s response.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Should I use a real estate agent to buy a house?

An agent familiar with the local market can help you determine the right offer amount and hold your hand during the negotiation process, which is especially helpful in a hot (seller’s) market. An agent can also help coordinate everything leading up to the closing and ensure that you (and your financing) meet critical deadlines.

Is a deposit required when making an offer on a house?

Yes, your offer will come with what is called earnest money, a good-faith deposit of 1% to 3% of the proposed purchase price, which will be held in escrow during negotiations about the house.


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


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


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How Much Will a $250,000 Mortgage Cost per Month?

When buying a house, many of us get caught up in the down payment and other large upfront costs. It’s important to factor in the long-term costs associated with a $250,000 mortgage, which includes the monthly mortgage payment.

Just how much will that payment be each month? Read to learn the monthly cost of a $250K mortgage.

Total Cost of a $250K Mortgage

Homebuyers have some large expenses to deal with before making mortgage payments. Both upfront costs and long-term expenses should factor into figuring out how much house you can afford.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


Upfront Costs

Upfront costs associated with buying a home are more than just the earnest money and down payment. A buyer can expect to pay closing costs, including some or all of the following:

•   Abstract and recording fees associated with the documentation of a property, which can cost from between $200 to $1,200 and $125, respectively.

•   Application fees for a mortgage from the lender, which can cost up to $500.

•   Appraisal fees to estimate the home’s value for the lender, which could cost between $300 to $400.

•   Home inspection fees if the buyer opts for an inspection of the property before buying, can run between $300 to $500 on average.

•   Title search and title insurance fees are required to ensure there are no liens or unexpected claims to the property being purchased. This usually costs between $75 to $200.

These fees before and during closing don’t include the down payment. The median down payment on a house is 13%, but to avoid things like private mortgage insurance, a buyer may have to put down as much as 20% of the home’s purchase price.

A buyer who takes out a $250K mortgage and makes a 20% down payment is likely putting in around $62,500. In addition to the down payment and closing costs, keep in mind expenses around moving and furnishing a new home.


💡 Quick Tip: You deserve a more zen mortgage. SoFi Mortgage Loan Officers are dedicated to closing your loan on time — backed by a $5,000 guarantee offer.

Long-Term Costs

You’ll pay down the principal plus interest on your loan over the long term, with a higher proportion of interest in your monthly payments early in the life of the loan. Near the end of your loan term, you’ll be paying almost entirely principal.

If you put down less than 20% on your home, you may also be paying private mortgage insurance (PMI) each month. Here are some other long-term costs:

•   Maintenance Homeowners should factor in the cost of maintenance and repairs in their long-term housing budget. Many owners default to the 1% rule, setting aside 1% of a home’s purchase price annually for ongoing repair costs.

•   Property taxes These vary based on your location but can be thousands of dollars a year.

•   Homeowners association (HOA), co-op, or condo fees These also vary, but you will know what they are before you close on the property.

•   Insurance Depending on where your home is located, you may need hazard insurance to cover you in the event of a natural disaster, in addition to standard homeowners insurance.

Recommended: First-Time Homebuyer Guide

Estimated Monthly Payments on a $250K Mortgage

The monthly cost of a $250K mortgage payment will vary based on several factors, including:

•   Down payment, or how much a buyer puts down when purchasing a home

•   Length of loan, or the timeline in which a buyer agrees to pay off their mortgage

•   APR, the annual percentage rate of the mortgage

Breaking things down further, the terms can also influence the monthly payments on a $250K mortgage. Buyers can choose between a:

•   Fixed-rate mortgage, where they pay the same APR over the life of the loan.

•   Adjustable-rate mortgage (ARM), where buyers typically pay a lower rate at the beginning of the loan, but the APR will change over the life of the loan.

How you choose from among the different types of home mortgage loans will depend on your financial goals and qualifications.

Monthly Payment Breakdown by APR and Term

What interest rate a buyer will get when applying for a mortgage depends on the market and their financial history. The length of the loan can also impact the estimated monthly mortgage payment. A 30-year loan will have lower monthly payments but you will pay significantly more interest over the life of the loan:

Interest rate

15-year term

30-year term

3.00% $1,726 $1,054
3.5% $1,787 $1,122
4% $1,849 $1,193
4.5% $1,912 $1,266
5% $1,976 $1,342
5.5% $2,043 $1,419
6% $2,110 $1,499
6.5% $2,178 $1,580
7% $2,247 $1,663

As a reminder, these estimates do not include additional costs that might be included in monthly payments, like insurance and property taxes. Consider using a mortgage calculator to figure out monthly payments based on personalized annual percentage rate (APR) and terms.

How Much Interest Is Accrued on a $250K Mortgage?

How much interest a homeowner will accrue on a $250K mortgage depends on the APR and terms of the loan. As a general rule of thumb:

•   The higher the APR, the more interest paid

•   The longer the loan, the more interest paid

In the beginning, monthly mortgage payments will primarily cover the interest on the mortgage, paying only a small portion of the principal. However, over the life of the loan, the homeowner begins to pay more toward the principal and less in interest.

For example, on a $250K mortgage with a 30-year loan term and 4% APR, a buyer can expect to pay $179,673.77 in interest over the life of the loan. For a $250K mortgage with a 15-year loan term and 4% APR, a buyer will pay $82,859.57 in interest.

While the owner will pay less in interest with a shorter loan term, they can expect higher monthly payments than a 30-year loan term.


💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

$250K Mortgage Amortization Breakdown

Suppose a buyer secures a $250K mortgage on a home with a 7% rate and a 15-year term. Their monthly payment on the mortgage, including principal and interest, would be roughly $2,247.

Here’s how those payments would split between interest and principal balance over the life of the loan, otherwise known as an amortization breakdown:

Year

Beginning balance

Annual interest paid

Annual principal paid

Ending balance

1 $250,000 $17,190 $9,774 $240,226
2 $240,226 $16,484 $10,481 $229,744
3 $229,744 $15,726 $11,239 $218,506
4 $218,506 $14,914 $12,051 $206,454
5 $206,454 $14,042 $12,922 $193,532
6 $193,532 $13,108 $13,857 $179,675
7 $179,675 $12,107 $14,858 $164,817
8 $164,817 $11,032 $15,932 $148,885
9 $148,885 $9,881 $17,084 $131,801
10 $131,801 $8,646 $18,319 $113,482
11 $113,482 $7,321 $19,643 $93,838
12 $93,838 $5,901 $21,063 $72,775
13 $72,775 $4,379 $22,586 $50,189
14 $50,189 $2,746 $24,219 $25,970
15 $25,970 $995 $25,970 $0

Keep in mind that this table doesn’t include additional costs that may be rolled into mortgage payments, such as insurance or property taxes.

Amortization tables can be helpful tools for understanding payments across the life of a mortgage.

What Is Required to Get a $250K Mortgage?

The process of getting a $250K mortgage has several requirements, including:

•   You’ll need a credit score of at least 500 for some mortgages, but most lenders require a score of 620 or more

•   You’ll prequalify for a mortgage. You’ll provide a little information about yourself and the lender will perform a soft credit inquiry. This will give you a sense of what the lender might offer in terms of interest rate.

•   You’ll find the right lender. The right lender for a borrower will vary based on the rates they offer, in addition to other fees and features.

•   You’ll fill out a mortgage application and get preapproved for your mortgage. The application may require tax documents, W-2s, and bank account statements. If you’re preapproved, you’ll receive a letter from the lender providing conditional approval for the mortgage within a certain window, typically 60 to 90 days. SoFi’s Help Center can help you start your journey to homeownership today.

The Takeaway

Considering monthly payments on a $250,000 mortgage is an important step in understanding the budget behind buying a home. Multiple factors can impact the monthly cost, including interest rate and loan terms, making it essential to consider all options and make the choice that best suits your budget.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What’s the monthly payment on a $250K mortgage?

The size of your payment will depend primarily on the length of the loan’s term and its interest rate. A 15-year term at 7% would give you a monthly payment of about $2,247, while a 30-year term at 7% would yield a payment of $1,663. Note that although the 30-year term has a lower monthly payment, you’ll pay significantly more in interest over the lifetime of the loan.

How long will it take to pay off a $250K mortgage?

How long it takes to pay off a $250,000 mortgage will depend on the term of your loan and whether you refinance along the way. You might have a loan term of 30, 20, 15, or even 10 years. And remember, you can always pay off your loan sooner if you like, although in rare cases there can be a prepayment penalty.

How much do I need to earn to get a $250K mortgage?

You’d need to earn about $90,000 per year in order to afford a $250,000 mortgage, so that your monthly debt payments don’t cause undue financial stress.


Photo credit: iStock/Worawee Meepian


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

SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.

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.


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

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