Financial Topics Archives

Jun

2025

What Kind of Emergency Funding Is Available for College Students?

By Jennifer Calonia | Going to College, Student Loans, student_loan | Comments Off

Regardless of your age and life stage, unexpected bills can derail someone’s finances. Unforeseen events can be particularly challenging for college students who don’t have much wiggle room in their budgets.

If you’re a student who’s experiencing financial hardship — or you’re just worried about how to prepare for a rainy day — be assured that help is available to students in need. Emergency financial aid grants are designed to keep students in college through financial setbacks.

We’ll review your options, and the pros and cons of each, so you can feel ready to take on any situation.

Key Points

• Emergency grants for college students provide financial relief for unexpected expenses like medical treatments, job loss, or technology replacement.

• Multiple emergency grant programs remain available to support college students facing sudden financial challenges, even though the federal HEERF program has ended.

• Resources like Achieve Atlanta, UNCF, Scholarship America, and various colleges provide targeted financial aid, with grants typically ranging from $500 to $1,000 to help students stay enrolled during times of hardship.

• Colleges and universities may offer additional emergency support such as tuition assistance, food pantries, and temporary housing.

• Private student loans are available if federal aid and emergency grants are insufficient to cover all educational expenses.

Why You Might Urgently Need More Money as a Student

Students are familiar with seeking financial aid to help pay for tuition, school supplies, and other educational costs. However, some expenses aren’t covered by scholarships and student loans.

Emergency financial aid for college students can help cover the cost of:

• Medical treatments

• Job loss

• Rent increases

• Financial hardship due to COVID-19

• Replacement technology, such as a laptop or phone

• Car repairs

• Loss of athletic scholarship due to injury

• Loss of child care services

Some of these costs are fairly common, while others affect only a small percentage of students. The common thread: They’re all unpredictable and financially challenging.

Emergency Grants Available for College Students

Several emergency grant programs are available to assist college students facing unexpected financial hardships. While the federal Higher Education Emergency Relief Fund (HEERF) has concluded, numerous institutions and organizations continue to offer support, including:

• Achieve Atlanta Emergency Grants: Provides financial assistance to students experiencing unforeseen emergencies that could impact their ability to remain enrolled in school.

• UNCF Emergency Student Aid: Offers “just-in-time” grants up to $1,000 for students at risk of dropping out due to financial hardships like medical bills or car repairs.

• Scholarship America Emergency Aid: Administers emergency financial assistance programs in partnership with various organizations to support students facing financial barriers.

• College Success Foundation Emergency Fund: Provides emergency grants up to $500 per academic year to help students overcome unexpected financial challenges.

• Institution-Specific Programs: Many colleges and universities, such as Chattahoochee Technical College and Kennesaw State University, offer emergency assistance funds to support students dealing with unforeseen financial difficulties.

In addition to the above opportunities, students are encouraged to contact their school’s financial aid office or student affairs department to inquire about available emergency grant programs and application procedures.

Financial Support From Your College

Other emergency college grants and support programs can be discovered through your school. These include:

Emergency Tuition Assistance

Emergency tuition assistance is designed to help students stay enrolled in school when they’re suddenly unable to cover the cost of attendance. Assistance might be in the form of a grant, scholarship, voucher, or other relief.

If you’re at risk of dropping out of school because an emergency is making it hard to pay your school bills, ask your financial aid office about emergency tuition assistance.

Emergency Food Options

Inflation is making it harder for everyone to pay for groceries. If you’re experiencing food insecurity, ask your student affairs office about campus food pantries.
This resource can offer non-perishable goods, like dry pasta, legumes, and canned foods, as well as fresh produce and even basic toiletries.

Emergency Housing

Although not many schools have dedicated emergency housing options for their students, it doesn’t hurt to ask. Reach out to your school’s student affairs department to inquire about short-term emergency housing programs that might be available.

If your school doesn’t offer emergency housing, they might point you to external resources, such as local nonprofits and community groups.

Private Student Loans

If you’ve already maximized the federal undergraduate loans or graduate loans you’re eligible for, a private student loan is an alternative financing option. Private student loans are offered by private lenders, like banks, credit unions, and online financial institutions.

This type of student loan can cover an amount up to the certified cost of attendance, minus the financial aid you’ve already received. Private loans can have fixed or variable interest rates, with rates and terms varying by lender. Keep in mind, though, that private student loans don’t have the same borrower benefits as federal student loans, like loan forgiveness and income-driven repayment, so tread carefully.

Recommended: A Complete Guide to Private Student Loans

The Takeaway

If you’re a student who’s struggling financially due to an unexpected expense or event, help is available. Reach out to your school affairs or financial aid office, explain your situation, and learn about emergency financial aid grants.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What are emergency grants for college students

Emergency grants are short-term financial assistance provided to college students facing unexpected expenses that may disrupt their education, such as medical bills, housing insecurity, food shortages, or transportation issues. These grants typically do not need to be repaid.

Who is eligible for emergency grants?

Eligibility varies by program, but most emergency grants are available to currently enrolled students who demonstrate financial hardship due to unforeseen circumstances. Some may require proof of need or enrollment status.

Where can students apply for emergency grants?

Students can apply through their college’s financial aid office or student support services. National organizations like the UNCF, Achieve Atlanta, and Scholarship America also offer emergency grants that students can apply for online.

Photo credit: iStock/photo

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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.

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

SOISL-Q225-034

Jun

2025

What Are the Benefits of Autopay for Student Loans?

By Melissa Brock | Financial Topics, Student Loans | Comments Off

Enrolling in autopay, or automatic bill payments, can make it easier to manage and pay your student loans. Rather than having to make payments every month, autopay does it for you. Your monthly student loan payment comes out of your bank account on time and you don’t even have to think about it.

Autopay has other benefits, too, including potentially saving you money. Read on to learn how automatic repayment plans for student loans work, and why you may want to consider using autopay.

Key Points

• Autopay ensures consistent, on-time student loan payments and reduces the risk of missed payments and late fees.

• Enrolling in autopay can lower interest rates, saving money over time.

• Consider the impact of autopay on monthly budget and cash flow, and ensure bank accounts have enough funds to avoid an overdraft.

• Review accounts regularly to check balances and catch any mistakes.

• Adjust autopay settings as needed to align with financial goals, such as paying more than the minimum due toward student loans.

Understanding Student Loan Autopay

When you sign up for student loan autopay, you are authorizing your lender or loan servicer to automatically deduct your monthly student loan payments from your bank account. You are not responsible for sending the payments yourself. Instead they happen automatically on a recurring basis.

This is how autopay works: Each month, your student loan payments are automatically transferred from your bank account to your loan servicer through an electronic payment system. Typically, your loan servicer will send you a notice of payment in advance of every withdrawal so that you can keep track of them. It’s important to check that you have enough money in your account every month so there isn’t an overdraft.

Recommended: Average Student Loan Debt By Career

Key Benefits of Using Autopay for Student Loans

Besides convenience, there are several other advantages of putting your student loans on autopay.

Interest Rate Reductions

One of the major perks of enrolling in autopay is the potential for an interest rate reduction. Many federal and private student loans offer a discount of about 0.25% just for signing up for autopay.

While the discount may sound small, it can add up over the life of the loan.

Never Miss a Payment

If you miss a federal student loan payment, your loan becomes delinquent the first day after the missed payment. With some private student loans, missed payments may result in late fees. Failing to make payments could also impact your credit, which could make it harder to get a credit card or take out a car loan.

With autopay, your student loan payments will be on time. Just make sure you have enough money in your bank account each month to cover the amount

Potentially Help Build Your Credit Score

Making on-time student loan payments via autopay will be reflected on your credit reports and help you establish a positive payment history. Since payment history accounts for 35% of your credit score, using autopay could help build your credit score over time.

How to Set Up Autopay for Student Loans

Most federal student loans offer autopay, and many private student loans do as well. In fact, as you’re shopping for and comparing private student loans, you can check to see if autopay is an option the lenders offer.

You can set up autopay on your loan servicer’s or lender’s website. Simply confirm that you want to enroll in autopay and provide all the relevant information, including your bank account number and routing number. By default, autopay may be set to pay the minimum amount on your loans. If you’d like to increase the amount paid, you can indicate that during the sign-up process.

If you have federal student loans and you’re not sure who your loan servicer is, sign into your account at StudentAid.gov and scroll to the “My Loan Servicer” section. There, you’ll find your loan servicer’s name and contact information. If you have private student loans, go to your lender’s website to enroll.

You can also set up autopay for student loan refinancing. Simply follow the same instructions as above.

Recommended: Refinancing Private Student Loans

Potential Drawbacks to Consider

While there are benefits to using autopay for student loans, there are also some disadvantages to consider.

• Making just the minimum payment: By default, autopay is often set to deduct the minimum student loan payment each month. If you’d like to pay more every so often to try to repay your debt faster, you’ll need to log into your account and change the payment amount.

• Overdrawing your account: Unless you’re diligent about making sure there are enough funds in your account each month, autopay can make it easier to end up with an overdraft. This could result in your bank charging you overdraft fees.

• Not catching payment mistakes: With automated payments, it’s easier to forget to check your account, which means you may miss errors. For example, your loan servicer might apply a payment incorrectly. Be sure to keep track of your student loans to help ensure that you spot — and correct — any mistakes.

Making the Most of Autopay for Student Loan Management

An automatic repayment plan for student loans can be a great way to stay on top of your student loan debt so that you don’t miss a payment. But don’t just set up autopay and forget it.

Instead, review your account regularly to stay on top of your balance and check for any errors. And increase your payment amount when you can — just log on and change the amount. Making extra payments over time can help you repay your debt faster.

The Takeaway

Whether you have federal or private student loans, or you’re doing a student loan refinance, autopay is an easy and convenient way to make sure your loans are paid on time every month. Autopay is simple to set up and many lenders offer an interest rate discount just for doing so.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How much can I save with an autopay interest rate reduction on my student loans?

Autopay typically allows you to save about 0.25% on your student loan interest rate. The discount may seem small, but over time, it can add up.

Can I change my autopay payment date if needed?

Yes, you can change your auto payment date. To do it, contact your loan servicer’s customer service department by phone or email and be sure to include your account number. Note that this kind of change request may take three to five business days to process. Your new due date will become effective during a future billing cycle, so ask your loan servicer for written notification of the date.

What happens if I don’t have enough funds in my account?

If you don’t have enough funds in your account, you’ll likely face an overdraft fee. Your bank might also decline the transaction and charge you a non sufficient or insufficient funds fee. Try to stay on top of your account to make sure you have enough money in it before your payments are due.

Do all student loan servicers offer interest rate discounts for autopay?

Many student loan servicers offer interest rate discounts for autopay. The discount is typically about 0.25%. Check with your loan servicer or lender for more information.

Can I use autopay for both federal and private student loans through SoFi?

SoFi does offer autopay for private and refinanced student loans. However, things work a little differently with federal loans. Because SoFi is a private lender, a borrower would need to refinance their federal student loans first in order to use autopay. Just be aware that refinancing federal loans makes them ineligible for federal benefits like deferment and income-driven repayment plans. To set up autopay, simply log into your SoFi account and click on “Set Up” on your Loan Summary page.

photo credit: iStock/Igor Alecsander
SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

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

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

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

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

SOSLR-Q225-002

Jun

2025

How to Refinance Student Loans After a Major Life Change

By Jennifer Calonia | Financial Topics, Student Loans | Comments Off

When you refinance student loans, lenders assess your financial situation to determine whether to approve the loan. Because major changes in your personal life, such as divorce or job loss, have a direct impact on your financial outlook, they can affect your ability to qualify.

If you’re contemplating whether to refinance student loans after a life change, here’s what you need to know.

Key Points

• Major life changes can affect student loan refinancing approval and loan terms.

• Refinancing after a positive life event like a salary increase might help borrowers qualify for lower interest rates or more favorable terms.

• Refinancing after a job loss may be difficult because of the lack of a steady income and may require a cosigner for approval.

• Refinancing after divorce is a way to remove an ex-spouse as a cosigner on student loans.

• Borrowers should consider the pros and cons of refinancing after a major life event to see if it makes sense with their current financial situation and goals.

Why Major Life Events Can Trigger the Need to Refinance

If you’ve experienced a major life event like divorce, refinancing your student loans may make sense. For example, if your ex-spouse is a cosigner on your student loans, refinancing makes the new loan yours alone. The same is true if you are a cosigner on your ex-spouse’s loan — with refinancing, you will no longer be responsible for the loan.

Financial changes that result from a major life event may be another reason to think about a student loan refinance. If your income went up due to a big promotion or salary increase, for instance, refinancing might offer better access to competitive student loan refinancing rates.

On the other hand, after a job loss, you may want to explore the option to refinance as a way to lower your monthly payments by choosing a longer loan term. However, be aware that a longer term means you’ll pay more in interest over the life of the loan. Additionally, if you have federal student loans, it’s important to note that refinancing the loans makes them ineligible for federal benefits such as income-driven repayment plans and federal deferment.

💡 Quick Tip: Refinancing comes with a lot of specific terms. If you want a quick refresher, the Student Loan Refinancing Glossary can help you understand the essentials.

Assessing Your Financial Situation After a Major Change

Before you refinance student loans after a life change, think carefully about whether it’s the right choice for your current financial situation.

Consider whether student loan consolidation vs. refinancing is a better option, depending on the type of loan you have and your main objective. If you have federal loans and you want to streamline your payments, consolidation might work for you, though it generally won’t lower your monthly payments.

If you have private student loans, you can explore the repayment options offered by your current lender. They might have repayment relief programs that temporarily make your payments more manageable. If not, refinancing may be a way to get a lower monthly payment, if you qualify. A student loan refinancing calculator can help you see what refinancing might save you.

How to Refinance Student Loans After a Job Loss

Getting approved for a student loan refinance after a job loss can be challenging, but it is possible. There are a few steps you can take that may be helpful.

What Lenders Look for If You’re Unemployed or Low Income

During a student loan refinance, unemployed or low-income applicants may have difficulty qualifying because lenders generally want to know that the borrower has the financial ability to make their payments.

If you recently lost your job, a lender might look for other income sources, such as unemployment benefits or personal savings. Lenders will also examine your debts compared to your income, which is called your debt-to-income (DTI) ratio). Typically, they look for a DTI under 50%. If yours is higher than that, adding a cosigner with a steady income might help your chances for approval.

One of the most important factors a lender considers is your credit score. A borrower’s credit score helps determine whether they will be approved for a loan and the interest rate they get. If your credit score is low, adding a cosigner with strong credit might help your application.

Temporary Alternatives to Refinancing

Refinancing student loans isn’t the only way to help manage student loan payments after a major life change. There are some temporary options you can explore.

For example, if you have federal student loans and you are having trouble making your payments, deferment and forbearance are designed to allow you to apply to postpone payments. The main difference between the two is that interest accrues only on some federal student loans during deferment, but it accrues on nearly all of them in forbearance.

Deferment for up to 12 months at a time, for a maximum of 36 months, may be a better choice than forbearance if you have subsidized federal student loans and you’re dealing with substantial financial hardship.

If you have private student loans, some lenders have options that allow borrowers experiencing financial hardship to temporarily pause or reduce their payments. However, you may end up paying more toward your student loan debt overall under these relief programs since interest can accrue. Reach out to your current lender to find out more about any repayment programs they offer.

How to Refinance After Divorce or Legal Separation

Refinancing student loans after divorce can help ex-spouses untangle themselves from each other’s student debt. But a divorce can also change your refinancing application prospects.

Navigating Credit Score Changes and New Financial Obligations

For many borrowers, a divorce affects their financial resources and brings new financial obligations. Your household income might be lower and you may now be responsible for all of your housing costs, for example. Such changes in your money situation could indicate to a lender that refinancing might overextend your finances.

If you have poor credit you may also find it difficult to qualify for refinancing. You might need a cosigner on the loan to get approved.

Finally, it’s important to be aware that any joint accounts you have with your ex after the divorce can reflect on your credit as well. For example, late or missed payments on joint accounts will appear on your credit reports as well as your ex’s. This could impact your chances of refinancing, especially if your credit score drops. Talk to your creditors about separating the accounts you hold with your ex-spouse or converting them from joint to individual accounts.

Removing a Spouse as a Cosigner or Co-Borrower

If your ex-spouse agreed to cosign your student loan, or you cosigned theirs, a divorce doesn’t absolve the cosigner from being liable for the debt. Refinancing the loan, or getting a cosigner release can remove the other person from the loan agreement and relieve them from the loan obligation.

Refinancing After a Career or Income Change

Switching to a new career or experiencing a change in your income can also make a difference when you’re refinancing student loans after a divorce.

Requalifying with a Different Employer or Industry

If you’ve started a new job in your current field, or you’ve changed fields, it may be wise to wait three months to refinance. This is a standard probationary period for new employees — once you pass the three-month mark, it may demonstrate to lenders that your employment is reliable.

Showing Future Earning Potential to Lenders

If you’re refinancing your student loans after a pay increase or a career change that impacts your earnings, it’s important to make lenders aware of it. For example, moving from a lower-paying career to a higher-earning profession helps to show that you’ll likely have the financial resources to repay the loan.

Pros and Cons of Refinancing After Major Life Events

Like any financial decision, deciding to refinance student loans after a big change in your life like a divorce or job loss has advantages and disadvantages you’ll want to weigh.

Pros:

• Potentially qualify for lower interest rates through refinancing

• Remove an ex-spouse as a cosigner from student loans.

• Change loan terms to lower monthly student loan payments.

• Simplify repayment by combining multiple student loans into one loan with one payment.

Cons:

• Financial instability caused by a major life change can make it more difficult to qualify for refinancing.

• A cosigner may be required to secure the loan.

• Longer loan terms result in paying more interest over time.

• Refinancing federal student loans means losing federal benefits.

The Takeaway

Managing student loan debt while dealing with a major life event can be very stressful. Refinancing student loans might simplify or lower your monthly payments. However, your ability to qualify for a loan could be affected by the changes to your personal life, depending on your credit score, income, and employment.

Consider all the options available to you — including speaking to your current lender to find out about any temporary solutions available for repayment relief, student loan consolidation, and deferment — to help determine which course of action is right for you.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can I refinance my student loans if I’m unemployed?

Unemployed borrowers may have trouble getting approved for student loan refinancing. Without an income to make their monthly loan payments, lenders could consider them too risky. However, there are ways to potentially improve your chances of qualifying for a refinance while unemployed, such as adding a cosigner with strong credit and steady employment to the loan.

How does divorce affect student loan refinancing?

Divorce could affect student loan refinancing if you don’t have strong credit on your own. In that case, you may find it difficult to qualify. And even if you do qualify, you may end up with higher interest rates on the loan. Additionally, your household income may be lower after a divorce and you might have more financial obligations to cover, which could also affect your chances for approval. Adding a cosigner to your loan application might help.

Will a major career switch help or hurt my chances of refinancing?

Refinancing student loans after a major career change likely won’t hurt your ability to refinance as long as your income doesn’t drop significantly. In fact, if the career switch resulted in a paycheck boost, your chances of refinancing might improve.

Should I wait until my financial situation stabilizes to refinance?

Holding off on a student loan refinance until after your financial situation improves could help your chances of approval and potentially getting more favorable loan terms. Financial stability, including a steady income, demonstrates to lenders that you have the means to repay the loan.

Do I need to reapply for refinancing after a divorce or separation?

You should only need to refinance after a divorce or separation if one of you is a cosigner on the other’s student loans. In that case, refinancing after divorce will release the cosigner from the debt. Otherwise, the person who cosigned the loan remains responsible for repaying the debt if the primary borrower misses payments until the loan is repaid in full.

photo credit: iStock/wutwhanfoto
SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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.

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

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

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

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

SOSLR-Q225-001

Jun

2025

How Do FHA 203(k) Loans Work?

By Becca Stanek | Home Ownership, mortgage, Terminology | No Comments

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

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

Note: SoFi does not offer FHA 203(k) loans at this time, but we do offer regular FHA mortgages.

Table of Contents

What Is an FHA 203(k) Home Loan?
How an FHA 203(k) Loan Works
Types of FHA 203(k) Loans
What Can FHA 203(k) Loans Be Used For?
Who Is Eligible for an FHA 203(k) Loan?
FHA 203(k) Loan Qualification Requirements
How to Apply for a 203(k) Loan
Pros and Cons of 203(k) Rehab Loans
How Much Can You Borrow with an FHA 203(k) Loan
203(k) Loans vs Conventional Home Rehab Loans
Alternatives to 203(k) Rehab Loans

Key Points

• FHA 203(k) loans allow buyers to finance both the purchase and rehabilitation of a home through one mortgage.

• These loans are insured by the FHA and aim to revitalize neighborhoods and expand homeownership.

• There are two types of FHA 203(k) loans: the limited 203(k) for minor repairs up to $35,000, and the standard 203(k) for substantial renovations requiring a minimum of $5,000.

• Eligibility for a 203(k) loan requires a minimum credit score of 580 for a 3.5% down payment, or 500 with a 10% down payment.

• The application process involves coordination with a HUD-certified consultant and detailed project estimates from contractors.

What Is an FHA 203(k) Home Loan?

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

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

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

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

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

How an FHA 203(k) Loan Works

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

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

Types of FHA 203(k) Loans

Streamline or Limited 203(k) Loan

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

Standard 203(k) Loan

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

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

Purchase and Repairs

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

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

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

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

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

Note: SoFi does not offer FHA 203(k) loans at this time. However, we do offer other conventional mortgage options.

Temporary Housing

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

Pros and Cons of FHA 203k Loans

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

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

FHA 203(k) Loan Qualification Requirements

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

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

Recommended: How to Qualify for a Mortgage

How to Apply for a 203(k) Loan

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

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

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

Pros and Cons of 203(k) Rehab Loans

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

203(k) Rehab Loans: Pros and Cons
Pros	Cons
• Combines purchase and renovations into one loan • Allows you to borrow more than your home is currently worth • Relatively low credit score and down payment requirements • Can cover temporary housing or mortgage payments if home is uninhabitable	• Application process can be involved • May need to work with a HUD consultant • Cannot be used for investment properties unless you also live in the property • Requires upfront and monthly mortgage insurance premiums

203(k) Rehab Loans: Pros and Cons

Pros

Cons

• Combines purchase and renovations into one loan

• Allows you to borrow more than your home is currently worth

• Relatively low credit score and down payment requirements

• Can cover temporary housing or mortgage payments if home is uninhabitable

• Application process can be involved

• May need to work with a HUD consultant

• Cannot be used for investment properties unless you also live in the property

• Requires upfront and monthly mortgage insurance premiums

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

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

203(k) Loans vs Conventional Home Rehab Loans

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

203(k) Loans vs Conventional Home Rehab Loans: How They Compare
203(k) Loan	Conventional Home Rehab Loan
• Lower credit score and down payment requirements • Requires an intensive application process and possibly a HUD consultant • Has limitations on what improvements can be done	• May require a higher credit score and down payment • Can carry higher interest rates • Allows you to make luxury improvements

203(k) Loans vs Conventional Home Rehab Loans: How They Compare

203(k) Loan

Conventional Home Rehab Loan

• Lower credit score and down payment requirements

• Requires an intensive application process and possibly a HUD consultant

• Has limitations on what improvements can be done

• May require a higher credit score and down payment

• Can carry higher interest rates

• Allows you to make luxury improvements

Alternatives to 203(k) Rehab Loans

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

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

Other Government-Backed Loans

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

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

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

Cash-Out Refinance

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

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

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

PACE Loan

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

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

Home Improvement Loan

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

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

Home Equity Line of Credit

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

The Takeaway

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

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

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

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

Who qualifies for FHA 203(k)?

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

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

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

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.

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

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.

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.

SOHL-Q225-071

Jun

2025

Should You Buy or Rent a Home?

By Jody McMaster | Family Finances, Home Ownership, Life & Career, mortgage | No Comments

For many people, purchasing a home is the very definition of living their best life and achieving the American dream. But it’s not the right choice for everyone, and it might not be the right move to make at a given moment.

Owning a home may be the biggest financial commitment you’ll ever make, so it makes sense to carefully consider the upsides and downsides of buying vs. renting. Sometimes, the flexibility and affordability possible with renting can be a good fit.

Read on for advice that will help you answer, “Should I rent or buy a house?”

• Learn the pros and cons of buying vs. renting a home

• Take a quiz to help you decide if you should buy or rent a home

• Find out the steps to take when you’re ready to start hitting the open houses

Key Points

• Buying a home can build wealth through equity and may offer tax benefits.

• Renting offers flexibility and lower upfront costs, and the landlord handles repairs.

• Homeownership provides you with control over your living space and situates you squarely in a community.

• Renting can put you at the mercy of unexpected rent hikes or changes in building ownership that may require you to move.

• For would-be homebuyers, evaluating their credit score and saving for a down payment are crucial.

Rent or Buy a Home: Pros and Cons

Deciding whether to rent vs. buy is a very individual decision. There’s no rule about which is better; much will depend on your personal goals and your financial situation.

Let’s, take a closer look at whether it is better to buy or rent a house.

Advantages of Renting

Here, the upside of being a renter:

• Low-maintenance lifestyle. Your landlord is typically responsible for repairs and maintenance, so your time and money can be spent elsewhere.

• Potentially lower monthly expenses. Your landlord may also pay some of your monthly utilities, and you aren’t responsible for paying property taxes.

• Flexibility. When your lease is up, you can renegotiate or move…across the street or across the country. If you aren’t ready to lock into a location for at least a few years, renting can be a smart step.

• Low investment. You don’t need to make a big investment (like the down payment and closing costs associated with home buying) when you move into a rental. You might have to put down a security deposit, but that will typically be much less costly.

Disadvantages of Renting

Now, consider the downside of being a renter vs. a homeowner.

• Rules to follow. Your landlord may have restrictions that you don’t like, such as no pets or no remodeling.

• Not building wealth. The rent you pay each month doesn’t give you any equity in a property. It just goes to the owner, unless you set up a rent-to-own agreement.

• Lack of control over your monthly charges. Your rent could spike due to inflation, the housing market heating up in your area, and other factors.

• Uncertainty. If the owners decide to sell the building you live in, you may need to move unexpectedly and quickly, which can also get expensive.

Advantages of Buying

If you decide to buy vs. rent, here are some of the benefits you may enjoy.

• Building wealth. As you make payments on your home loan, you are usually building home equity.

• Tax advantages. Homeowners may be able to deduct both mortgage interest and their property tax payments (plus possibly other related expenses) from their federal income taxes if they choose to itemize their deductions.

• Freedom. You have far fewer restrictions involving remodeling, pet ownership, and so forth. Want to paint a bathroom purple, rip out a wall, or adopt five rescue dogs? Go for it.

• Stability. You can put down roots in a community and school district. When you decide to move, it’s your decision.

• Affordability. Sometimes a mortgage payment can be cheaper than rent, especially if you get a good mortgage rate.

Looking at the price-to-rent ratio of a city helps gauge whether it makes more sense to buy or pay a landlord. The housing market dynamics of your location may determine this aspect of whether to buy or rent a house.

Disadvantages of Buying

Now that you know the potential upsides of owning your own home, take a look at the potential drawbacks.

• High costs. The price of homeownership may be painful in a hot market. Accumulating the cash to make a down payment can be challenging and take years of saving. Plus, the closing costs when securing a home can be considerable.

• Credit score. You typically need to qualify for a mortgage, and your credit score will be a factor. Those with excellent credit scores will get better rates; those with lesser scores may want to wait to build their rating before buying.

• Maintenance. You’re generally responsible for all repairs, maintenance, and utilities, plus homeowners insurance, property taxes, and any homeowner association (HOA) dues. These can not only impact your finances but also your lifestyle. Taking care of a home and property can require an investment of time and energy.

• Locked in place. You probably can’t pick up and move on a whim. If you decide to move, until your home is sold, you’re still responsible for mortgage payments and the expenses attached to your new place.

Take the Rent or Buy Quiz

Are You Really Ready to Buy?

When you’re supposed to be deciding between renting vs. buying a house, the answer may already be clear to you. If you’ve decided to buy, it might make sense to take the following steps.

• Make sure you’re ready for a long-term commitment. If you’ve saved enough for a down payment and know how much house you can afford, those are good signs. Otherwise, create a home-buying budget and saving plan to get started.

• Consider if your line of work allows for job continuity with steady income. Have you had this type of income for the past two years or more? That kind of stability can be important to lenders.

• If your debt-to-income ratio (DTI) appears too high for a loan program you would like to apply for, you may need to consider paying down some debt. To calculate your DTI ratio, divide your monthly debt payments by your monthly gross (pretax) income. The federal Consumer Financial Protection Bureau advises renters to consider keeping a DTI ratio of 15% to 20% or less (rent is not included in this ratio). However, mortgage lenders usually like to see a DTI ratio of no more than 36%, though that is not necessarily the maximum.

• Save money for a down payment, closing costs, and other fees, plus some funds for moving expenses and any remodeling/repairs.

• Check if your credit score is good enough to buy a house, and, if it falls short, work on building it.

• Do a gut check to see if you’re really ready to be your own landlord, meaning being responsible for your own home maintenance, inside and out.

• Get prequalified or preapproved for a mortgage by providing a few financial details to one or more lenders. They will usually do a soft credit check and estimate how much you may be able to borrow and the terms. A prequalification or even a preapproval can also help give you a leg up when you start home shopping.

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

Questions? Call (888)-541-0398.

The Takeaway

Should you buy or rent a home? That will be a personal decision, reflecting your finances, the housing market’s dynamics, your willingness to take on the responsibilities of homeownership, and your inclination to put down roots in a certain location. Both owning and renting have pros and cons, and making the right decision will likely require careful consideration and thorough planning.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is it better to rent or buy a home?

There isn’t a simple yes/no answer to whether it is better to rent or buy a home. Each has its advantages and disadvantages and may or may not suit your needs at a given moment. For instance, owning a home can allow you to build equity and personal wealth, but the maintenance responsibilities and expenses may offset that for you. Renting may be cheaper, but you may not be able to personalize your space the way you’d like or perhaps own pets. Examine the tradeoffs to figure out what’s best for you.

Is renting cheaper than owning a home?

Renting can be cheaper than owning a home, though that can depend upon housing market conditions in a given area and the particulars of the home in question. In general, people who rent don’t have to pay property taxes and they may not be responsible for the cost of improvements and repairs, which can make renting more affordable.

Is homeownership a good investment?

Buying a home can be a good investment. It allows you to build equity and may offer tax deduction opportunities. However, if property taxes rise steeply or major home repairs loom (like a new roof), homeownership could prove financially challenging.

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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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.

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