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Congrats: You did it! You got through some tough training for your career in medicine, and now you are going to find out where you’ll start your career as a full-fledged doctor. It’s an exciting moment as you wait to hear about your residency.

However, because residencies are spread across the country, there’s a good chance that you’ll not only be starting an intense new job; you will also be moving and getting settled in a brand new town.

Moving can mean major stress on its own, but moving at the very end of medical school can heighten that. After all, new doctors have an average of $202,453 in debt from their education, and moving can cost money. Learn about how to finance this important next step here.

Residency Relocation Costs

There’s no way around it: Moving is expensive, and residency relocation costs can add up.

•   There’s the move itself. Even if you’re moving to a new house in the same city to be closer to your work, you may need to hire movers or rent a truck, buy boxes, and get help packing. Plus there are those unexpected moving costs, such as replacing little things like shower curtains and cleaning products that seem to always get lost in the move.

The average cost of moving locally is $1,500, and a long-distance move can be $4,000 or more. That’s a significant chunk of change.

•   Even if you follow moving tips to economize during the process, guess what? The expense of settling into a new city can be even higher. You will likely need to put down a security deposit if you are renting, as well as possibly update your furniture and equip your new place with essentials like trash cans, towels, and cooking supplies.

•   Another thing to include in your budget: the costs of exploring a new city and eating out while you set up your kitchen. And don’t forget any expenses you may have to incur for your new job, like clothes, or potentially even transportation costs.

Plus the cost of living may be higher than what you are used to. Those little expenses can add up to a major headache if you’re not prepared.

If you’re feeling the pinch, there are a few loans specially designed for medical residents that may be worth considering. They could help make your transition a lot smoother.


💡 Quick Tip: Some personal loan lenders can release your funds as quickly as the same day your loan is approved.

Medical Residency Relocation Loans

Here are some options that can help you out financially when you relocate for a residency:

•   One loan new doctors may choose to take out is a medical residency relocation loan. You can take out a residency loan from a private lender — for example, a Sallie Mae Medical Residency and Relocation Loan.

•   Or it could be as simple as taking out a personal loan. Some private lenders may offer student loan-type benefits for loans to be used for medical residency relocation, such as a longer loan payoff term (though you may pay more in interest over the life of the loan if you opt for an extended term).

Residency loans may be specifically geared toward new doctors who are beginning their residencies and need to pay for essentials while settling into a new job and a new city. These loans can allow medical residents to fill the financial gap between graduation and your first residency paycheck.

They can help new residents cover the cost of moving and getting settled in a new city, including providing for your family while you adjust to a new job. For instance, if you’re making a move for residency and bringing your family along, it is likely that your spouse will also need to look for a job in your new city, which means that they may be giving up a paycheck temporarily as well.

Recommended: How to Qualify for a Personal Loan

Home Loans for Medical Residents

Another aspect of your finances to consider is whether you rent or buy the next place you live. Here are a few important points to consider as you embark on your career.

•   As a medical resident, you might qualify for a home loan designed specifically for doctors. These loans can have some big benefits, like low down payments, no requirement for private mortgage insurance, and no rate increases on jumbo loans. It’s important to do some research to see how you can qualify for these loans.

•   Of course, there are things to consider before buying a home during your residency. Even if you qualify for a home loan for medical residents, you might not be ready to buy a home just yet. This is especially true if you’re moving to a new city or state and you want to settle in, find your favorite neighborhood, and make sure you really like the city before deciding to buy a home.

•   If you do decide to start the home buying process, it’s probably a good idea to check out both traditional mortgages and loans designed specifically for doctors. You won’t know which one is right for you until you compare the benefits of each.

When both partners transition to new jobs at the same time, there can be a significant gap in income. A medical residency relocation loan can help you maintain your lifestyle while you and your spouse acclimate to new jobs.

Getting Ready to Get a Loan

If you’re thinking of getting a loan for relocation costs or to purchase a home, you may want to do some financial housekeeping. Here are a few moves to make:

•   Check your credit score, and see if there may be ways to build it, if necessary. A higher score can earn you the best (meaning lower) interest rates.

•   Determine exactly how much money you may need to borrow. Like all loans, consider only borrowing the amount you actually need to tide you over until your residency starts paying.

You can get a good idea of how much you may need to borrow by taking a look at your monthly expenses and then adding any additional cost-of-living increases based on your new city and the cost of moving. Don’t forget to list one-time expenses like a security deposit for a new apartment.

•   When you’ve figured out how much you want to borrow, take some time to shop around for a loan whose terms work for you. Each lender has different terms and benefits, so make sure to understand them fully before making a decision on if a personal loan is right for you.

Recommended: Can I Take Out a Personal Loan When Unemployed?

The Takeaway

Becoming a doctor can be a challenging and rewarding path. As you embark on your residency, you may find that there are significant relocation and housing expenses. Depending on your situation, you may want to review your loan options to see if there’s a good fit. For instance, a personal loan might allow you to cover the cost of setting yourself up in a new place for your medical residency.

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

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

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 .

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

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

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

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

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Whether you’re buying a home or getting a college education, taking on debt can allow you to invest in your future. The downside? Whatever you borrow will eventually need to be repaid, and that can add up to a considerable portion of your monthly expenses. Add in credit card bills or an unexpected financial emergency, and getting out of debt could start to feel like an overwhelming task.

Fortunately, it’s possible to break the debt cycle. Here are some steps you can take now to help get your finances in order.

Review Your Credit Card Statements

Credit card debt prevents many people from breaking the debt cycle. Reviewing your credit card statements closely can be a great first step.

Make note of your expenses and see exactly where all of your money is going. Are you spending hundreds of dollars a month on take-out? Are there a few subscriptions you enrolled in but have since stopped using? Be honest with yourself as you assess your spending, and note any areas where you can adjust or cut back.

Set a Budget

After you’ve reviewed your spending, consider making a budget. You can start by tallying your monthly income and monthly expenses. Don’t forget to include savings goals, and be sure to set up new limits for your discretionary spending.

If you’re new to budgeting, there are several different methods to consider. The 50/30/20 budget rule, zero-based budget, and the envelope budget system are three common examples. Whatever method you decide to use is up to you — what really matters is that you find a system that works for you.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Accelerate Your Repayments

If you’re paying off debt, one way to speed up your repayment is paying more than the monthly minimum. Making additional payments on your debt each month could not only help you eliminate your debt more quickly, it could also potentially reduce the money you spend in interest in the long term. Even just $25 a week could have an impact on your repayment.

There are a couple of debt repayment strategies that could help get you back on track. One is the debt snowball method, which prioritizes paying off the smallest debt first while making the monthly minimum payment on all other debts. Once the smallest balance is paid off, you’d focus on the next-smallest debt.

While this method may not reduce the money you spend in interest, the rewarding feeling of seeing your debt dwindle could encourage you to stick with your repayment plan.

Another debt repayment strategy is the debt avalanche, or debt-stacking method. Here, you’d make a list of all your debts by order of interest rate, highest to lowest. While making your minimum monthly payments on all the debts, “attack” the highest interest rate loan with as many extra payments as you can.

Unlike the snowball method, the avalanche method is about streamlining your debt repayment so that you save the most money on interest. It can require more discipline, but keeping track of how much you are saving in interest can be a great motivator.

Establish an Emergency Fund

You can’t predict the future, but you can do your best to prepare for it. Having an emergency fund can help cover unexpected costs and avoid having to use a credit card, which could send you deeper into debt.

Using a windfall, like a bonus at work or your tax refund, is a good way to start an emergency fund. You can put this money in a dedicated savings account or another cash equivalent, if you prefer.

Then each week, aim to save a specified amount of money in your emergency fund. Even saving just $10, $15, or $20 a week can help you be more prepared when a financial emergency strikes. If possible, plan to save somewhere between three and six months’ worth of living expenses.

Recommended: How Much Money Should Be in Your Emergency Fund?

Pay For Things With Cash or Check

While you’re paying down debt, consider storing your credit cards somewhere safe and instead paying for purchases in cash or by check. Doing so can help you keep tabs on how much you’re spending and spot areas where you may be able to cut back.

If you must use a credit card to make a purchase, consider what it might cost you in interest if you aren’t able to pay off your balance at the end of the month. A credit card interest calculator can help you estimate how much interest you will pay on the debt.

Live Within (or Below) Your Means

It can be easy to get swept up in having the best of everything, but living in debt to sustain that lifestyle can ultimately add stress. You can rise above this by living within or below your means. This means spending less money than you make, which in turn can allow you to focus on preparing for a rainy day, building wealth, and achieving financial freedom.

Recommended: Living Below Your Means: Tips and Benefits

Determine Needs vs. Wants

Is that new pair of shoes or the latest video game really a must-have?

As you’re trying to break your debt cycle, it’s a smart move to evaluate your wants against your needs. For example, before you make a purchase, carefully think about whether you need it or simply want to have it. If it’s something you can live without, consider holding off until you’re on firmer financial ground.

Breaking out of a debt cycle requires discipline and determination. While skipping out on wardrobe upgrades or the newest tech gadgets now can seem like a huge sacrifice, when you start making headway on paying down what you owe, odds are you’ll feel the reward.

Get a Side Hustle

Another great way to help end the debt cycle: find some extra income by getting a side hustle. You could use money you earn from your new gig to make extra payments on your debts.

Not sure where to look for work? Take a look at your skills and interests and see where you may be able to find an extra job or make some passive income.

Consolidate Debt with a Personal Loan

If you’re juggling multiple high-interest debts, you may want to explore a debt consolidation loan. Typically, this involves using a new loan or line of credit to pay off existing debts, consolidating several payments into one.

By consolidating those debts into a single loan — ideally one with a lower interest rate — you can streamline payments and potentially reduce your monthly payments or save on interest.


💡 Quick Tip: With average interest rates lower than credit cards, a personal loan for credit card debt can substantially decrease your monthly bills.

The Takeaway

It can feel overwhelming and frustrating to feel stuck in a debt cycle. But the good news is, there are strategies that can help you get ahead of your debt and regain control over your finances.

Being more mindful about where your money goes, building up savings so you’re prepared for unexpected expenses, and paying for things with cash instead of credit cards are all good steps you can take now. And if you’re trying to pay down multiple high-interest debts, you may want to explore whether a debt consolidation loan is right for you.

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

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

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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There are plenty of times when, in life, you may want to take out a personal loan. Say, you are getting married (and can’t get the guest list below 150 people), are finally renovating your dated bathroom, or got hit with some unexpected bills that took your credit card debt uncomfortably high.

Taking out a personal loan can be a smart financial move, but you may want to get out of debt faster than the usual five-year term. One strategy is to accelerate the repayment of your loan. You may be able to do that in a variety of ways. Read on to learn the details of how this works so you can decide if it’s the right path for you.

Paying More than Your Minimum Loan Payment

If you’re looking for ways to manage your debt, exceeding your minimum loan payments on a regular basis may improve your financial outlook. It could also potentially build your credit score. Ultimately, getting out of debt sooner may give you greater financial freedom to do the things you want to do with your money.

But before you start prepaying your loan, be sure to check with your loan holder to confirm their policies regarding loan repayment. Some lenders charge additional fees for paying extra each month or paying your loan off earlier than planned.

There are a couple of ways you might look at paying off a personal loan sooner:

•   You can pay more than your minimum payment each month (again, checking if this will trigger fees) to get out of debt sooner.

•   If you receive a financial windfall, such as a bonus at work, a gift, or a tax refund, you could see about putting that money towards your loan.

•   If you make biweekly payments instead of monthly payments, you will wind up making an extra payment per year, which can help you get out of debt faster.

One option, if you currently have a loan that comes with prepayment fees or penalties, is to consider looking for an alternative lender. While you’re at it, maybe you can find a loan with a lower rate and better terms. In other words, you would refinance your loan.

If your current personal loan has prepayment penalties, check out our personal loan payment calculator to see if you might benefit from making a switch.

💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

Rethinking Your Debts

One of the biggest challenges that comes with exceeding your minimum loan payment is budgeting that extra money to pay toward your loan. Once you’ve decided that this is your goal, take the time to review your finances and look at your overall debt. If you are carrying a few loans with different rates and terms, it could be time to reevaluate them.

Think of this as an opportunity to simplify and align all of your debt and optimize your monthly payments. If you’re trying to consolidate credit card debt, a personal loan might be the right solution. Ideally, you would be looking for a personal loan with a low-interest rate and reasonable repayment terms. Before you commit to a new loan, it’s a good idea to consider the agreement in its entirety, including fees, penalties, and terms.

In addition, you may want to review a few of the different budgeting methods available. You may want to look for ways to unlock more funds to put towards debt repayment and speed up your repayment schedule.

Your Long-Term Financial Strategy

While debt consolidation is one piece of the puzzle, your long-term financial strategy could also include bigger goals like saving for retirement or perhaps buying a home.

It’s also a good idea to put extra money aside in an emergency fund for unexpected expenses.

As your earning power increases, it can be wise to avoid lifestyle creep. Instead, you can pay more than the minimum on your debt and start to move closer to debt freedom. In turn, this may allow you to then reallocate funds to other areas of your financial life, such as financing your child’s education or saving for retirement. And just like that, you could be on your way to building the financial life you truly want.

Recommended: Can You Refinance a Personal Loan?

The Takeaway

Paying off a personal loan more quickly can have a positive impact on your financial situation. You can potentially do this by putting a lump sum toward your loan, paying biweekly instead of monthly, or paying more than your minimum due. Just check to find out if your loan has prepayment fees. Another option could be to refinance your loan.

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

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

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 .

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

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

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The median home size in the US is currently about 2,014 square feet, but there’s lots of interest in tiny houses these days. How big is that? A typical definition of a tiny house is that it’s smaller than 500 or 600 square feet. Some people pride themselves on living in a mere 225 square feet or even under 100 square feet.

Living in a tiny house can be affordable, eco-smart, and part of a minimalist ethos, whether your tastes run towards cottage charm or contemporary. But how much does it cost? And what if you’re in a small home and want to remodel it; is that even possible?

Read on to learn more about tiny houses and the related costs to decide if this style of living is right for you.

Creative Tiny House Designs

Sixty-three percent of Millennials said they’d consider living in a tiny home, according to a survey by Technovio. That’s a lot of people, with a lot of different tastes and preferences when it comes to home styles.

There are small houses that look like classic woodsy cabins, A-frames, treehouses, charming Victorian structures, ultra-modern boxes, and more.

Some are built on site; others are fabricated wholly or partially elsewhere and brought to your site. You may see terms like prebuilt or prefabricated used.

House Beautiful, Country Living, and other design publications often highlight inspiring tiny house designs, and you can also find ideas on Pinterest, Instagram, and other social media platforms.

Typically, tiny houses are all about flexibility and functionality. Just as you budget your money, the square footage in a small home must be allocated. Some are one open room with different zones for living. Others may be divided into separate spaces with privacy, but there is usually an element of multifunctionality to allow the house to serve whatever the resident’s needs are, from working to relaxing, from sleeping to entertaining.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Downsizing into a Tiny House

If you’ve recently purchased a home that’s tiny and are seriously considering doing so, you will probably need to downsize more first. If you’re the kind of person who has drawers’ full of workout wear, hundreds of books, and/or a growing art collection, you may need to do some pruning. Here are some tips:

•   In a tiny house, virtually everything needs a purpose—and ideally, can have multiple purposes. Dishes that are purely decorative, for example, are less likely to have a place in your home than beautiful ones that are also functional. Have an adorable cup that you love? Great, but will it double as a pencil holder?

•   Most people who downsize their home quickly realize that a good percentage of their belongings have been kept for sentimental reasons. Some people moving into tiny houses have found that, if they carefully photograph these items and then find an excellent new home for them, then a scrapbook containing these photos provides pleasure without taking up much space.

•   It can help gamify the process of downsizing to challenge yourself to toss, regift, or give away an item a day.

•   Do consult the works of Marie Kondo, of the “KonMari” method fame, for guidance on deciding how to keep what truly sparks joy and jettison the rest.

•   Hold a “take it or pack it” party. Set up a table full of stuff you don’t want for friends to take as they help you box up what you do want to take with you when you move.

•   Sell your stuff that you no longer want or need to raise funds for your new home.

•   Keep furniture that has multiple purposes. A sofa, for example, may be what the family uses during the day and a guest sleeps on at night.

Recommended: How to Lower Credit Card Debt Without Ruining Your Credit

Tiny House Design Tips

As you move towards tiny house living, consider these design pointers to help ensure that your little kingdom works as well as possible for you. This advice can also help if you are remodeling a tiny house.

•   Prioritize your needs so the space can accommodate what is truly important. Do you need to be able to work from home and be on Zoom calls regularly? Or is this a place where you want to carve out room to cook with your best friend? Be ultra-clear about your top priorities because there is no room for error in these compact homes.

•   If you are renovating a tiny home, don’t forget to consider how your remodel can impact your house’s value. You likely want to add value to your home vs. invest money that can’t be recouped. Using a home project value estimator can help you understand your project’s potential return.

•   Think storage, storage, storage. For instance, consider adding a sleeping loft and then using the space beneath the stairs leading to the loft for more storage. Drawers can be built into loft stairs and there can be a space reserved for hanging your clothes. You can store plenty beneath your bed, or even try drawers under your couch.

In your kitchen, you can hang appliances beneath cabinets (which can extend right up to the ceiling) to keep counter space free, add drawers to the kick plates of your cabinets—and even choose plug-in kitchen appliances (including a stovetop) that can be put away, as needed, for extra space.

💡 Quick Tip: Home improvement loans typically offer lower interest rates than credit cards. Consider a loan to fund your next renovation.

Costs to Expect with a Tiny House

The cost of a tiny home can vary tremendously, as you might imagine. Here are some guidelines to get you started:

•   Overall, tiny houses tend to be less expensive to build and own than a larger home, due to economies of scale. However, the per-square-foot costs are typically higher. To build a tiny house may run $300 per square foot vs. $150 per square foot for a standard-size home.

•   Prebuilt tiny homes can cost around $75,000 (this doesn’t include the land they are on), and purchasing a pre-owned one can be as little as $30,000. Building your own can easily cost $100,000 or more, depending on the complexity and detailing. However, when you compare this to the average home value of $410,200 mid-2023, you see that the savings can be significant.

•   Tiny homes can use a fraction of the energy (even less than 10%) vs. a typical-size home. This is due to the smaller size, certainly, as well as there may be other efficiencies in terms of their design.

Using a Personal Loan for Your Tiny House Expenses

If you already own a tiny home but want to renovate it or are buying one and want to remodel your home right away, it may be tempting to put the costs on your credit card. After all, a small home means small expenses, right?

Not necessarily. Even if the costs are low, by putting them on a credit card, which probably charges a high interest rate, you can wind up with debt that is hard to pay off. That interest can have a way of accumulating quickly.

A better solution might be a personal loan vs. a credit card, which can offer a significantly lower interest rate. You’ll have a fixed, predictable monthly payment instead of potentially multiple fluctuating credit card bills.

If you think a personal loan could be the right move for you and your tiny home plans, shop around to see what offers are available.

Picking a Personal Loan

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

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

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 .

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

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

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

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There is no waiting period for borrowers who want to refinance an FHA loan and switch to a conventional loan. But that doesn’t mean it’s automatically a good idea. When you refinance a mortgage, you want to benefit — maybe enjoy lower monthly payments, or perhaps save money on interest over the loan term.

To decide whether or not to refinance, it first helps to understand the difference between an FHA loan and a conventional mortgage. An FHA loan is a home loan backed by the Federal Housing Administration. The FHA doesn’t directly loan to borrowers; instead, it insures loans for lenders to alleviate some of the risk the lender takes on when lending money. Borrowers can usually meet FHA loan requirements with a lower credit score, and can provide a lower down payment than would be necessary with some conventional loans. For this reason, FHA loans are popular with first-time homebuyers.

A conventional loan, on the other hand, is a home mortgage loan not backed by the federal government. Borrowers with less-than-stellar credit ratings or minimal down payments aren’t always able to get a conventional loan. Or if they do, a conventional loan might have a higher interest rate than an FHA loan.

You don’t have to wait to make the switch from FHA loan to conventional. But why would you want to refinance, should you do it, and what are the pros and cons? Let’s have a look at these questions.

💡 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.

Can You Refinance an FHA Loan to a Conventional Loan?

Yes, you can refinance an FHA loan to a conventional loan. However, a lender won’t just approve you for a refinance immediately. If you currently have an FHA loan, you must qualify to refinance to a conventional loan.

Why Should You Refinance From an FHA to a Conventional Loan?

One reason you might refinance from an FHA to a conventional loan is that FHA loans require you to pay a mortgage insurance premium (MIP). First, there is a required upfront mortgage insurance premium that you make when you purchase your home. You also pay an additional mortgage insurance premium on top of your mortgage payments each month. The ongoing annual MIP of 0.45% to 1.05% is divided by 12 and added to your monthly mortgage payment.

FHA borrowers must pay MIP for either 11 years or throughout the loan term, depending on the amount you put down. Getting rid of MIP is one of the top reasons to refinance to a conventional loan.

You may also find that you can get a lower interest rate by refinancing to a conventional loan. If that’s the case, a refinance could save you thousands of dollars over your home mortgage loan term.

It’s also possible that you can increase or lower your mortgage payment with a refinance. If you find it difficult to make your monthly payments, a refinance may help you lower them. But note that a lower payment often comes with a longer loan term. On the other hand, you may decide you can pay off your mortgage faster, and so you refinance to decrease your loan term from 20 to 15 years, saving time and money.

Ultimately, you want a refinance to benefit you, so learn more from lenders and use an FHA loan mortgage calculator.

Recommended: How Do Low-income Home Loans Work

Requirements to Refinance From an FHA Loan to Conventional

You must qualify for a refinance through your credit score and debt-to-income ratio (DTI):

•   Credit score: Many lenders look for at least a 620 credit score for a conventional mortgage refinance.

•   DTI: Your DTI refers to the amount of debt you have relative to your income. There are no hard-and-fast requirements for DTI, but many lenders like to see a DTI of at least 43%. You can calculate your DTI by dividing your monthly debt payments by your gross income and converting that figure into a percentage.

Once you think you have your ducks in a row with your credit score and DTI, you must fill out applications with several lenders. Consider checking out the same type of interest rate and loan term so you can compare apples to apples among several lenders.

Get ready to submit your documents to prove your income and assets — pay stubs, tax returns, bank statements, proof of investments — to show underwriters that you indeed have those assets at your disposal.

Not sure you’ll qualify? A lender can walk you through all the requirements and help you determine whether a refinance to a conventional loan makes sense for you.


💡 Quick Tip: You can use money you get with a cash-out refi for any purpose, including home renovations, consolidating other high-interest debts, funding a child’s education, or buying another property.

Pros of Refinancing From an FHA to Conventional Loan

Refinancing from an FHA to a conventional loan has some definite benefits. Let’s look at a few reasons:

•   Get a lower interest rate: Many lenders require a minimum 580 credit score (or 500 with a larger down payment). You may qualify for a lower interest rate if your credit score has increased from the 500s.

•   Get rid of MIP: As noted above, lenders charge MIP to compensate for an FHA loan’s lower credit and down payment requirements. Getting rid of MIP will save you money.

•   Save on interest: Qualifying for a lower interest rate could save you thousands of dollars over your loan term.

Cons of Refinancing From an FHA to Conventional Loan

There are downsides of refinancing from an FHA to a conventional loan.

•   Tougher qualifications: You must meet stiffer requirements to qualify for a conventional loan than an FHA loan. Again, there are no hard-and-fast rules governing qualifications, but so your best bet is to talk to lenders about your situation.

•   Private mortgage insurance (PMI): You may not be off the hook for mortgage insurance. If you don’t have at least 20% equity in your home, you must pay PMI, which automatically cancels once you reach 22% equity. Consider how much you’d pay in MIP vs. PMI over time before you refinance your home.

•   Closing costs: Refinancing requires you to pay closing costs, typically between 2% and 5% of the full loan amount.

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Alternatives to Refinancing Your FHA Loan to a Conventional Loan

Instead of a conventional loan, you can choose to refinance your existing FHA loan to another FHA loan using a few options:

•   FHA streamline refinance: A streamline refinance allows for limited documentation and underwriting. In order to obtain a streamline refinance, you may not be delinquent on your current loan, and refinancing must confer a net tangible benefit, meaning it must save you money. Some lenders offer “no cost refinances” by charging a higher interest rate in lieu of closing costs.

•   FHA simple refinance: A simple refinance replaces your existing FHA loan, just like a streamline refinance. You get a new fixed- or adjustable-rate loan faster than when you received your original loan. A fixed-rate loan stays the same throughout a loan term, while an adjustable-rate loan interest rate changes over the loan term. One difference between the simple and streamline refinance is that the simple version typically requires a credit check and an appraisal of your home.

•   FHA cash-out refinance: A cash-out refinance allows you to refinance with a larger loan amount and take the difference out in a lump sum. A cash-out refi could make sense if you need cash for a home project, education, or other reasons. The amount you can take out depends on how much your home is worth.

•   FHA 203(k) refinance: How do FHA loans 203k work? An FHA 203(k) refinance allows you to roll any home improvement or renovations you want to make into your home loan. You can choose from a limited 203(k) refinance or a standard 203(k) refinance. The standard doesn’t have a ceiling on the amount you can spend, while the limited refinance supplies up to $35,000.

You may face time and payment restrictions when replacing an existing FHA with an FHA refinance. For example, an FHA streamline refinance requires you to have an FHA loan for at least 210 days and make on-time mortgage payments for six months.

The Takeaway

You don’t have to wait to refinance from an FHA to a conventional loan. Still, it’s essential to consider all the ramifications of refinancing — especially the costs and savings. You may have qualified as a first-time homebuyer for your original FHA loan. The process looks different when you refinance. If you plan to refinance to a conventional loan, check your credit report, debt-to-income ratio (DTI), and other factors, and talk through what you need to present to a lender to get a conventional loan. Ultimately, you want to ensure that you will benefit from a switch before you make your move.

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

FAQ

Can you refinance an FHA loan within 6 months?

Yes, you can refinance from an FHA loan to a conventional loan within six months. However, you would first want to consider whether doing so would save you money.

How long do you have to wait to refi a conventional loan?

In most situations, you can refinance a conventional loan immediately. However, you might have to wait six months before refinancing with the same lender. Check with your lender for more information about how long you’ll have to wait for a conventional loan refinance.

Can you have an FHA loan and a conventional loan at the same time?

You might find it difficult to qualify for a conventional loan with an FHA loan because FHA loans typically go to borrowers who have less financial stability. Lenders will want to ensure that you can make payments on both your first and second home before they approve you for a conventional loan. Talk to your lender for more information about your options.

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^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
*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.

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

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