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The cost to replace a chimney ranges from $1,000 to $15,000, depending on the type and size of the chimney. You can install a smaller or prefabricated chimney for $1,000 to $5,000, but a full masonry chimney replacement cost can reach $15,000.

Below, we’ll explain new chimney cost factors, break down labor and materials expenses, discuss financing options, and help you determine if you might be able to replace the chimney yourself.

Chimney Replacement Costs: An Overview

How much does a chimney replacement cost? Anywhere from $1,000 to $15,000. A full chimney replacement is on the higher end of that range while a partial replacement — or a basic prefab chimney installation — is on the lower end.

In some cases, it might be possible to repair the chimney instead of replacing it. Chimney repair costs typically range between $1,000 and $3,000, though it varies depending on the extent of the damage.

Recommended: The Ultimate Home Maintenance Checklist

Full Chimney Replacement

A full chimney replacement costs between $5,000 and $10,000 — or up to $15,000 in some cases. Prefabricated chimneys are the lowest-cost option. You’ll pay moderate prices for a metal chimney and the highest prices for a brick chimney.

Partial Chimney Replacement (Rebuild)

You may only need to replace part of a chimney, like the stack, which extends above the roof. In other cases, you may need to pay for the repair of specific elements, like collapsing mortar, a damaged chimney crown, or a cracked flue.

Partial chimney replacement costs may top out at $5,000 while repair typically ranges between $1,000 and $3,000 per job.

Recommended: Home Improvement Calculator

Chimney Installation Labor Cost

Labor makes up a large portion of the cost to replace a chimney. Depending on your geographic location, if you can reach the chimney by ladder or you need scaffolding, and the type of chimney being installed, labor rates may range from $50 to $150 an hour for an experienced mason.

You will usually need to hire a structural engineer before the mason can begin their work, which adds to your overall labor costs. Depending on where you live, that can cost around $500.

Chimney Installation Material Costs

Material costs vary depending on the type of chimney being replaced, rebuilt, or repaired. Prefab chimneys have lower material costs while masonry chimneys require more expensive materials like bricks and mortar.

Chimney Installation Cost Financing

Paying for a new chimney — or even a more basic chimney repair — can be difficult on a tight budget. If you don’t have the money in emergency savings, you can explore other options like:

•  A payment plan with the contractor: Ask the contractor if they can set you up with a payment plan over a set number of months, rather than requiring the full payment all at once. Costs may be higher if you go this route.

•  A credit card: Some contractors will let you pay with a credit card but be careful. Your credit card may have a high APR, and if you can’t afford to pay the full bill at the end of the month, you could end up paying a lot of interest, which will make the new chimney even more expensive.

•  A home improvement loan: Home improvement loans are a low-cost option for homeowners. These personal loans typically have a lower interest rate than your credit card, and you can choose repayment terms — often three to five years — that make sense for your budget. A personal loan can be a cost-effective way to pay for common home repair costs.

•  Home equity loans: Homeowners can also tap into their home equity with a home equity loan or home equity line of credit (HELOC).

Before you decide on the best financing option, you will want to compare the difference between home equity loans vs. home improvement loans.

Can I Replace the Chimney Myself?

A chimney replacement requires special skills and training. A lot can go wrong if you install or repair a chimney incorrectly. It could become a fire hazard or potentially collapse. No matter your DIY skills, we highly recommend hiring a qualified mason to tackle all repairs and replacements.

Recommended: How to Keep Inflation From Blowing Your Home Reno Budget

What Factors Impact a Chimney Replacement Price?

Several factors can impact your overall chimney replacement cost, including:

•  Permits needed: You’ll almost always need to get a permit for larger chimney replacement projects. Permit costs vary depending on your state and municipality.

•  Level of work required: Wholesale chimney replacements cost significantly more than minor work. For example, chimneys may just require some repointing or tuckpointing to keep them in good shape, or you may need to replace the crown or cap or only rebuild the stack. If you have to replace the whole chimney, it may require demolition, which can be expensive. Talk with your contractor about the extent of the work to get a better idea of the total chimney installation cost.

•  Type of chimney: Prefab chimneys are the most affordable to install. You’ll spend more to replace a metal chimney, but the most expensive type of chimney to replace is a brick one.

•  Size and location: Larger chimneys will cost more to replace than small ones. Chimneys that are easy to access (by ladder, for example) are also more affordable to repair or replace. If the positioning of the chimney makes it harder for the contractor to access, labor costs will be higher.

Signs Your Chimney Needs to Be Replaced

How do you know when it’s time to replace your chimney? Here are a few signs to watch for:

1.   Crumbling brick: If the brick is visibly crumbling or deteriorating, call a mason quickly to determine the extent of the damage and begin the repair or replacement work.

2.   Leaks: If your chimney is the source of leaks (look for water damage to the surrounding walls and ceiling), it’s time to call a contractor to look at it.

3.   Cracks: It’s good practice to have your chimney inspected each year. During the inspection, the contractor will look for large cracks. These could be a sign that it’s time to repair or replace the chimney.

The Takeaway

Chimney replacement costs can range from $1,000 to $15,000 — it’s not a cheap project, but luckily, it’s also not a common one. Get your chimney inspected every year, and keep up with regular maintenance and cleaning. Unless there’s unexpected storm damage or the chimney is old, you may not have to replace the chimney the entire time you live in your home.

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.

FAQ

How long does it take to replace a chimney?

Basic chimney repairs can be quick: A professional should be able to repair a partially damaged chimney in one to four days. Significant damage may lead to longer timelines — in some cases, it might take weeks or even months to repair and rebuild a chimney.

Can I replace my chimney myself, or do I need to hire a professional?

Replacing and repairing a chimney requires specialized knowledge, skills, and equipment, not to mention physical strength. If you make even a small mistake when replacing your chimney, you might accidentally cause a leak, inadvertently create a fire hazard, or build a structurally unsound chimney that could collapse. Always hire a professional for this work.

What qualifications should I look for in a chimney replacement contractor?

When looking for a contractor to work on your chimney, always confirm that they are licensed and insured. You should also verify that they’re certified by the Chimney Safety Institute of America.

Ask the contractors if they offer warranties or guarantees for their work and read reviews online to make sure they provide quality services. You can also ask them for references.

How do I compare quotes from different chimney replacement contractors?

Before getting quotes from any chimney replacement contractors, read online reviews and ask the contractors about their licenses, insurance, and certifications. Only get quotes from qualified contractors.

When comparing quotes, look not just at the overall cost but also the timeline to ensure they can replace your chimney quickly, if needed. Also verify what is and isn’t covered in the quote. For example, has the contractor included the necessary permits, or is that a separate cost not part of the estimate?

You’ll also want to ask about their payment schedule and how they prefer to be paid (cash, check, or credit card, for example).

Are there permits or inspections required for chimney replacement, and how much do they cost?

When replacing a chimney, you almost always will need to get a permit and an inspection. The costs will vary depending on where you live, but you might pay up to $500 for an inspection by a structural engineer, and permits can reach $150.

How often should I replace my chimney, and what factors affect its lifespan?

A well-built chimney should last several generations of homeowners. In theory, you may never need to replace your chimney (but regular inspections are a good idea). If you do replace your chimney, you likely won’t need to replace it again as long as you’re in that house.

That said, certain elements may need to be repaired or replaced more frequently. Chimney liners, for instance, last 15 to 20 years, and mortar lasts 25 to 30 years.

Extreme weather, like high and low temperatures, hail, and earthquakes, may shorten a chimney’s lifespan, as can exposure to water. As your home settles over time, it may also lead to premature cracks in your chimney.

What are the risks of not replacing a chimney that is in disrepair?

If you ignore the signs that it’s time to replace or repair your chimney, you’re exposing your home to a lot of risk. Water could more easily get into your home, leading to mold and mildew. Walls, ceilings, and floors could deteriorate over time, and the inner workings of your chimney would be exposed to rust. Eventually, your chimney might collapse, leading to much more expensive and extensive structural damage to your home.

Photo credit: iStock/AntonioSolano
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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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If you’re like many Americans, you may have student loans, and you may also hope to own your home at some point. You may worry that carrying student debt and buying your own place are mutually exclusive, but that’s not necessarily the case.

Yes, it can be true those with higher student loan balances may be less likely to be homeowners than peers with lower amounts of debt. However, understanding your debt-to-income ratio and other aspects of your financial profile can be vital. This insight can both inform how much room there is in your budget for a home loan payment and highlight how to improve your odds of being approved for a mortgage.

With this guide, you’ll learn the ropes, such as:

•   Understanding how mortgage lenders evaluate your finances

•   How your student loans impact your profile

•   Steps you can take that may boost your chances of getting a home loan application approved when you have student debt.

Getting a Mortgage When You Have Student Loans

Student loans are a familiar financial burden. Currently, Americans hold in excess of $1.7 trillion in student loan debt. A significant 70% of undergraduates finish school with an average sum of $37,000 or more in student loans.

You may wonder how having student loans can impact your eligibility for a mortgage. Here’s what you should know: When a lender is considering offering you a home loan, they want to feel confident that you will pay them back on time. A key factor is whether they think you can afford the mortgage payment with everything else on your plate. To assess this, a lender will consider your debt-to-income (or DTI) ratio, or how high your total monthly debt payments are relative to your income.

For the debt component, the institution will look at all your liabilities. These can include:

•   Car loans

•   Credit card payments

•   Student loans.

In the case of student loans (other than those forgiven by Biden administration), banks know that you’re likely to be responsible for that debt. It usually can’t be discharged in a bankruptcy and it’s not secured to an asset that a lender can recover.

Many industry professionals say that your debt-to-income ratio should ideally be below 36%, with 43% the maximum. If you have a high student loan payment or a relatively low income, that can affect your debt-to-income ratio and your chances of qualifying for a mortgage.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Can You Get a Mortgage With Student Loan Debts?

Are you wondering, “How much house can I afford with student loans?” Here are some important facts. Having student loan debt doesn’t disqualify you from getting a mortgage, but it can make it harder. So here’s how student loans are calculated for a mortgage: That student loan debt will increase your DTI ratio, which can make it harder to qualify for funds from lenders.

For example, here’s a hypothetical situation: Say you earn an annual salary of $60,000, making your gross monthly income $5,000. Say you owe $650 per month on a car loan and have a credit card balance with a $500 monthly minimum payment.

And let’s say you have student loans with a minimum payment of $650 a month. All your debt payments add up to $1,800 a month. So your debt-to-income ratio is $1,800/$5,000 = 0.36, or 36%. That’s right at the limit that some conventional lenders allow. So you can see how having a high student loan payment can affect your ability to qualify for a mortgage.

Another way that student loans can affect your chances of buying a home is if you have a history of missed payments. If you don’t make your minimum student loan payments each month, that gets recorded in your credit history.

When you fail to make payments consistently, your loans can become delinquent or go into default. Skipping payments is a red flag to your potential mortgage lender: Since you haven’t met your obligations on other loans in the past, they may fear you’re at risk of failing to pay a new one as well.

That said, if you have an acceptable DTI ratio and a history of on-time payments on your student loans, you likely have a good shot at being approved for a mortgage. It’s not a matter of having to make a choice between paying off student loans or buying a house.

Estimate How Much House You Can Afford

Taking into account the debt-to-income ratio you just learned about, use this home affordability calculator to get a general idea of how much you can afford. This tool is one you can use to help estimate the cost of purchasing a home and the monthly payment.

How Student Loan Debt Affects Your DTI Ratio

As mentioned above, student loan debt can increase your DTI ratio. How much it will increase your DTI number will depend on how big your loan debt is. Currently, the average federal student loan debt is $37,338 per borrower. The figure for private student loan debt is $54,921.

Obviously, to get that average figure, many different amounts are factored in. Consider these two scenarios:

•   Person A earns $120,000 and has $80,000 in student loan debt, plus a car payment, plus $15,00 in credit card debt.

•   Person B earns $80,000, and has $10,000 in student loan debt, no car payment, and $3,000 in credit card debt.

It’s likely that Person B will have an easier time qualifying for a home loan than Person A. It boils down to one having a higher DTI ratio.

Recommended: Strategies to Pay Off Student Debt

Improving Your Chances of Qualifying for a Mortgage

Are you wondering how to buy a house with student debt? Your student loan debt is just one part of the picture when you go shopping for a home loan. Lenders look at many other aspects of your financial situation to assess your trustworthiness as a borrower. By focusing on improving these factors, you may be able to increase your chances of getting a mortgage.

•   Credit score: One of the most important things to address is your credit score, since this is a key measure lenders use to evaluate how risky it would be to lend to you. Your credit score is determined by many factors, including whether you’ve missed payments on bills in the past, how much debt you have relative to your credit limits, the length of your credit history, and whether you’ve declared bankruptcy.

If your credit score is below 650 or 700, you may want to work on building it. Starting by consistently making your payments on time, paying off debt, or responsibly opening a new credit line may help.

•   Automate your payments. If keeping up with payments has been challenging in the past, setting up automatic payments to your credit card. You might also establish automatic payments to, say, your utilities through your providers or your bank to help you stay on track without having to memorize due dates. In the case of a bankruptcy, you’ll typically have to wait 10 years for it to disappear from your record.

•   Strengthen your work history. Your employment matters to a lender because, if you’re at risk of losing your job, your ability to pay back the loan could change as well. Gaps in employment, frequent job changes, or lack of work experience can all be red flags for a financial institution.

If employment history is a weakness in your application, perhaps you can focus on finding a more stable role than you’ve had in the past as you are saving for a house. This could also be a matter of waiting until you’ve been in a new job for a couple of years before applying for a mortgage.

•   Save up for a bigger down payment. Another way to improve your prospects is to save more money for your down payment. If you have enough to put at least 20% down on a home, your student loans may become less of a factor for the lender.

You can save for a down payment by putting funds in an interest-bearing savings account or CD, asking wedding guests (if you’re getting hitched) to contribute to a “house fund,” earning more income, or even asking a family member for a gift or loan.

•   Focus on your DTI ratio. Another key area you could focus on is your debt-to-income ratio. Tackling some of your debts — whether student loans, credit card balances, or a car loan — could help lower that ratio. Another strategy is to increase your income, perhaps by asking for a raise, getting a new job, or taking on a side hustle. This can help you pay down debt and improve your DTI ratio.

How Student Loan Refinancing May Help

If you’re buying a home with student loans, another way to potentially improve your debt-to-income ratio is to look into student loan refinancing. When you refinance your student loans with a private lender, you replace your existing loans — whether federal, private, or a mix of the two — with a new one that comes with fresh terms.

Refinancing can help borrowers obtain a lower interest rate than they previously had, which may translate to meaningful savings over the life of the loan. You may also be able to lower your monthly payments through refinancing, which can reduce your debt-to-income ratio.

Refinancing isn’t for everyone, since you can lose benefits associated with federal loans, such as access to deferment, forbearance, loan forgiveness, and income-based repayment plans.

But for many borrowers, especially those with a solid credit and employment history, it can be an effective way to reduce debt more quickly and improve the chances of getting a mortgage.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Don’t Let Student Loans Hold You Back

With many Americans holding student loan debt, it’s understandable that this financial burden could pose a hurdle for some would-be homeowners. But can you get a mortgage with student loans? Yes, student loans and a mortgage aren’t mutually exclusive. Paying for your education doesn’t have to cost you your dream of owning a home.

If you’ve been making payments on time and your debt is manageable relative to your income, your loans might not be an issue at all. If your student loans do become a factor, you can take steps to get them under control, potentially improving your chances of qualifying for a mortgage. One option could be refinancing those loans.

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.

FAQ

Can I refinance student loans to improve my mortgage eligibility?

Refinancing student loans might improve your mortgage eligibility. If you obtain a lower rate, you could potentially pay down your student loans more quickly, which could lower your debt-to-income (DTI) ratio. However, refinancing federal loans can mean you are no longer eligible for loan forgiveness and other programs.

Can a cosigner help if I have student loans and want to buy a house?

Having a cosigner on your student loans could help with your mortgage qualification if you are “on the bubble” in terms of qualifying. A cosigner with a strong financial profile and credit history could help tip you into the approval zone.

Will a history of on-time student loan payments positively impact my mortgage application?

A history of on-time loan payments is an asset. It can help build your credit score, which is one of the factors lenders use to assess whether to approve your mortgage application.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Graduating from college and starting a career is exciting. But for many people, graduation also triggers new financial obligations, including paying off student loans.

With the average student loan debt at $37,338, it’s no wonder many people have trouble staying on top of their student loans.

There are a number of repayment options for those with federal student loans, including the Standard Repayment Plan, which gives borrowers up to 10 years to pay off their student debt, and the Extended Repayment Plan, which lengthens the repayment term for eligible borrowers up to 25 years.

Extended Repayment Plans reduce the dollar amount of monthly payments because they spread the cost out over a much longer time period.

For some individuals, these longer-term loans might be a helpful way to balance their financial obligations and their other expenses, such as rent or mortgage, food, and savings.

How Does the Extended Repayment Plan Work?

Under the Extended Repayment Plan, eligible borrowers can spread out the repayment of their federal student loans over a 25-year period, compared to the Standard Repayment Plan’s 10 years.

Because student loans are subject to interest, the borrower will also pay more interest on their loan over a longer period of time. So the monthly payments may be lower, but the borrower will end up paying more over the full term of the student loan.

To see what this looks like in action, compare the costs of two repayment plans for paying back a hypothetical, but typical, federal student loan after receiving a four-year degree from a for-profit private college.

Let’s say you borrowed $34,722 four years ago at an average interest rate of 3.9%.

•   Under the Standard Repayment Plan, monthly payments would total $350 over a 10-year term, for a total cost of $41,988.

•   Under the Extended Repayment Plan, the borrower would only have to repay $181 a month — but over a 25-year term, the total cost would be $54,409.

There is also an Extended Graduated Repayment Plan in which monthly payments start low after the borrower leaves school but then gradually increase every two years over the lifetime of the loan.

Like the Extended Repayment Plan, the loan payments are spread out over up to 25 years instead of 10. Using the above loan example, payments would start at $143 a month in the first two years after graduation and slowly increase to $251 by the end of the loan term. The total amount paid back would add up to $57,026.

Eligibility for Extended Repayment Plans

If the reduced monthly cost of an Extended Repayment Plan sounds appealing, the first step is to assess eligibility. Not all student loans or borrowers qualify for the program.

The federal student loans eligible for the Extended Repayment Plan are:

•   Direct Subsidized Loans

•   Direct Unsubsidized Loans

•   Direct PLUS Loans

•   Direct Consolidation Loans

•   Subsidized Federal Stafford Loans

•   Unsubsidized Federal Stafford Loans

•   FFEL PLUS Loans

•   FFEL Consolidation Loans

Qualifying loans must have been obtained after October 7, 1998, and the outstanding loan balance must be more than $30,000 in either Direct Loans or FFEL program loans to be eligible.

Eligibility can’t be pooled across loan types, so if, for example, a student has $35,000 in Direct Loans and an additional $10,000 in FFEL program loans, the Direct Loan portion would qualify for the Extended Repayment Plan but the FFEL loan would not.

Weighing the Pros and Cons of Extended Repayments

The Extended Repayment Plan might be appealing to some federal student loan borrowers. After all, who wouldn’t want a lower payment each month?

But it’s not actually that simple. There are benefits and drawbacks to longer student loan repayment terms.

Pros of the Extended Repayment Plan

One benefit of the Extended Repayment Plan is an obvious one — lower monthly payments.

Typical monthly student loan payments, which are generally between $200 and $300 on average, can eat up a significant amount of take-home pay for lower earners. The smaller monthly loan payments associated with the Extended Repayment Plan might free up vital funds for other essential expenditures.

This benefit can be even more pronounced with the Extended Graduated Repayment Plan, in which monthly payments slowly increase over the life of the loan. This means borrowers pay the least in the first years after graduating, corresponding with lower entry-level salaries, and more later on when they may be better able to afford it.

Cons of the Extended Repayment Plan

Although monthly payments may be lower, there are some cons to the Extended Repayment Plan.

For starters, the loan term can be more than twice as long as the Standard Repayment Plan, meaning borrowers have to keep making monthly payments for 15 years longer.

Not only does the Extended Repayment Plan mean more years of making student loan payments, those payments will also add up to more money paid over the lifetime of the loan term.

For example, based on the example described above, for a $34,722 student loan at 3.9% annual interest, the borrower would pay an additional $12,421 over the lifetime of the student loan under the 25-year Extended Repayment Plan than they would on the 10-year Standard Repayment Plan.

The Extended Graduated Repayment Plan costs even more over the life of the loan. Deferring the bulk of repayment to later in the loan term in order to allow for lower payments earlier on means borrowers carry a higher level of educational debt for a longer period of time.

Alternatives to Extended Repayment Plans

While the monthly savings may make the Extended Repayment Plan sound appealing, for some borrowers the added total cost may outweigh this benefit. But there are alternatives that can help meet various financial needs.

Income-Driven Repayment Plans

Monthly payments for income-driven repayment plans are based on a percentage of the federal student loan borrower’s discretionary income, and the amount increases or decreases as their income and family size changes during the lifetime of the student loan. This helps to ensure that payments remain affordable, even as the borrower’s income changes.

Some income-driven repayment plans have slightly shorter terms than the Extended Repayment Plan (20 years vs. 25), which may also reduce the total interest paid over the life of the loan. The SAVE Plan, the newest addition to the income-driven repayment plan lineup, will provide the lowest payments for low-income borrowers, who may see their loan balances forgiven after as little as ten years in the program. Borrowers who plan to apply for the Public Service Loan Forgiveness Program (PSLF) will want to consider income-driven repayment plans, as they are one of the requirements for qualifying for the program.

Student Loan Refinancing

Some borrowers may choose to refinance student loans with a new loan from a private lender. Eligible student loan borrowers may qualify for lower interest rates or more favorable terms.

One benefit of student loan refinancing is that it could reduce monthly payments for some borrowers. However, refinancing means forfeiting benefits and protections that come with federal student loans — like income-driven repayment. And you may pay more interest over the life of the loan if you refinance with an extended term.)

The Takeaway

With potentially lower rates and flexible repayment terms, refinancing your student loan can be an attractive option that could save you money each month — or allow you to pay off your loan faster. SoFi offers loans with low fixed or variable rates, flexible terms, and no fees. And you can find out if you prequalify in just two minutes.

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

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

When shopping around for lending options for a major project or immediate financial need, a personal loan might be on your list. And besides the interest rates and terms, the loan amount is a large determining factor in which option you decide to go with.

So how much can you get for a personal loan? Whether you’re looking for a large personal loan or a small one, the lending criteria is the same. Let’s take a look at how much lenders typically offer, what factors play into the size of a personal loan that you can get, and when it makes sense to get a personal loan.

How Much Do Lenders Offer?

How much can you get for a personal loan? Amounts vary by lender, but typically start as low as $600 and go as high as $50,000. Some lenders, including SoFi, offer personal loans up to $100,000.

The amount you actually get approved for depends on a handful of criteria, which we’ll dig into below.

Recommended: Can I Increase My Personal Loan Amount?

What Determines How Big of a Personal Loan You Can Get?

The amount a lender offers and the amount you qualify for aren’t always one and the same. There’s a handful of financial and credit criteria that can impact the loan amount, rates, and terms. Let’s look at the main factors:

Credit Score

In general, the higher your credit score, the larger the loan amount, the more favorable the terms and interest rates. On the flip side, the lower your credit score, the smaller the loan amount, and the less favorable your terms and interest rates.

Lenders usually have credit score requirements. The minimum required credit score for a personal loan varies but can start at 580. To get the best terms and rates, you usually need a credit score of at least 640.

Recommended: Can a Personal Loan Hurt Your Credit?

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is your monthly debt payments divided by your gross monthly income. It’s expressed as a percentage. For example, let’s say your monthly income (before taxes, withdrawals, and other deductions are taken out) is $5,000, and your total debt obligations are $2,000. In that case, your DTI is 40%.

For the most part, lenders would like to see a DTI no higher than 35% to 40%. But if you have a high credit score, you might get approved with a slightly higher DTI.

Lender Amount Limits

The amount you can borrow may be limited by how much funding you can receive from your lender. Let’s say your credit is stellar, you have low DTI, steady employment, and a good income. But if the lender’s max personal loan amount is $50,000, then the most you can potentially borrow is $50,000.

Applying as An Individual or Jointly

If you’re applying for a personal loan with another applicant and their credit is strong, you might be eligible to borrow more money. However, not all lenders let you apply jointly, so you’ll want to check beforehand.

Income and Employment History

How much you can borrow also depends on your income and employment history. If you bring in a certain amount of money and have steady work for the last few years, that could boost the approval amount.

Some lenders may give more weight to your income and employment history. In turn, you might be able to get a higher loan amount with a lower credit score and a higher debt-to-income ratio.

Collateral

Not all personal loans require you to provide a valuable asset, such as your home or car, to back up the loan. But if you’re looking into a secured loan, you might be able to get a higher max amount on your personal loan than if you went the unsecured loan route.

Offering collateral and getting a secured loan means you could get a bump in your personal loan amount. Remember, not all lenders offer secured personal loans. If a lender does offer both secured and unsecured loans, you can compare quotes from the same lender for either option.

Loan Purpose

A lender might only allow you to use the loan for certain purposes. For instance, some lenders specialize in credit card debt consolidation loans. Lenders that offer greater flexibility might have limits on how much you can borrow depending on the loan purpose.

For example, the limit on using the loan proceeds for childcare expenses and large purchases might be different than if you’re planning to use the funds toward a major home improvement project.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi Personal Loans come with no-fee options, and no surprises.

Calculating How Much You Can Borrow

Determining how much you can borrow requires you to know your financial situation, how much you’d like to borrow, and what you can reasonably afford to pay off on a regular basis.

To start, jot down the repayment term and rate you anticipate receiving. If you get prequalified, that can give you a fair estimate on your loan amount.

Next, you’ll want to figure out the following numbers:

•   Income before taxes.

•   Additional income you get on a regular basis (i.e., rental property income, alimony, disability benefits).

•   If you’re filing jointly, you’ll also need to include the other applicant’s income.

•   Tally up your existing debt. This might include credit card debt, other personal loans, a car loan, or student loan debt.

That can help you figure out how much you can afford for your monthly payment.

How to calculate your borrowing power

If you’re mulling over the possibility of debt consolidation, you can use a handy personal loan calculator to gauge how much you’d save on interest or how much your monthly payment will be lowered by rolling over your existing debt to a new one.

Otherwise, you can punch in basic numbers, such as the loan amount, interest rate, and repayment term, to figure out what your monthly payment shakes out to.

Recommended: Pros and Cons of Personal Loans

Does a Personal Loan Make Sense?

Personal loans do have the word “personal” in them. So whether it makes sense for you to take out a personal loan depends on your unique situation and circumstances.

Here are some scenarios where getting a personal loan might be a good idea:

•   You need a large sum upfront. If you need a chunk of cash for a big-ticket purchase or to fund a home improvement project, a large personal loan can provide you with the money to cover a purchase.

•   You have a good credit score. The higher your score, the higher the loan amounts, and the better your rates and terms will most likely be.

•   You’re using the funds for something you really need. If you need the money to cover a financial shortfall, unexpected emergency, or much-needed home remodeling project, it could be a sound move to take out a personal loan.

•   You need the money quickly. The processing and funding times for a personal loan can be a lot faster than other funding choices, such as a home equity loan or HELOC.

•   You want to consolidate high-interest debt. If you qualify for a lower interest rate, lower monthly payments, and more flexible repayment terms, it could make financial sense to take out a debt consolidation loan.

Now, let’s walk through instances when a personal loan may not make sound financial sense:

•   You can’t keep up with monthly payments. If you’ve looked at your situation, do the math, and realize that you’ll have a hard time staying on top of your monthly payments, then a personal loan might not be the right choice for you at the time.

•   You have time to save for your major purchases and goals. If you aren’t in a financial pinch and don’t need the money right away, you might be better off saving instead.

•   You don’t need to take out a large amount of money. Unless you have good reason to take out a sizable amount of cash, then it probably doesn’t make financial sense to get a personal loan. Other options, such as a personal line of credit, might be a better move.

Alternatives to Personal Loans

If you’re on the fence about taking out a certain type of personal loan, know that other options exist. Here are other routes to take:

Credit card. If you’re already shouldering a lot of credit card debt and are paying a lot in interest fees, this might not be the best choice for you. But if you need to borrow a small amount — and can reasonably pay off your balance in a short amount of time — then a credit card provides easy access to funding.

Personal line of credit. Don’t need a lump sum upfront and anticipate needing to tap into funds for different purposes? Then a personal line of credit, which is similar to a credit card, might be a better fit.

Peer–to-peer loan. If you’re struggling to qualify for a personal loan with a traditional lender, you might have better odds of getting approved for a peer-to-peer (P2P) loan. Instead of being funded by a financial institution, P2P loans are funded by individuals who serve as investors and are loaning the money. The lending criteria for P2P loans tend to be less stringent than traditional loans.

Home equity loan or home equity line of credit (HELOC). If you’re a homeowner who has built equity in your home, you could qualify for a home equity loan or home equity line of credit (HELOC). Because you are offering your home as collateral, you typically can qualify for higher loan amounts. Plus, home equity loans or HELOCs tend to have less stringent lending criteria.

If possible, consider waiting to take out a personal loan until you’ve worked on building your credit, reduced your debt loan, are earning a higher income, or have a more stable employment history.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

How much of a personal loan you can get depends on a handful of factors, such as what’s available from the lender, your credit score, debt-to-income ratio, and employment history. Plus, it’s important to get your head around what you can reasonably afford to pay each month.

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.

FAQ

What is considered a large personal loan?

Most lenders offer a maximum personal loan amount of $40,000 to $50,000, and some lenders, including SoFi, offer lending amounts of up to $100,000. But just because a lender offers that doesn’t mean you’ll get approved for it. You’ll also want to be mindful about not taking on more than you need.

How much is too much to ask for a personal loan?

There’s no specific number that constitutes “too much” for a personal loan. That said, an amount might be considered too high if you don’t have a good reason to take out that much money and if you aren’t able to afford the monthly payments.

Does the size of a personal loan affect a credit score?

As your personal loan payments are reported to the three major credit bureau agencies, the size of your personal loan can impact your credit. Your payment history is the largest contributing factor, but loan size can also influence your score.

Photo credit: iStock/Ridofranz

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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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As part of your Diversity, Equity, and Inclusion (DE&I) strategy, your organization, like many others, is likely developing a plan to attract and retain veteran talent. Many organizations have adopted dedicated veteran employee relations groups, specialized talent acquisition teams, or tailored onboarding programs. Perhaps overlooked, the financial well-being benefits you offer can add significantly to the success of these efforts.

Financial health is an important subject for everyone, but it can have some unique aspects for veterans. Despite the dedicated financial resources available to service members while serving, the transition to civilian life after years in the service can affect their short and long-term financial stability.

There are several noted reasons this may occur. Veterans have likely dealt with relocations, deployments, a lack of employment opportunities for their spouses, and, of course, war-related trauma. All of that can leave them vulnerable in certain aspects of their financial health.

That’s why veteran employees can use your help. Research published in 2020 by the research and advisory company Gartner, Inc. shows that veterans want three main workforce financial benefits — financial planning, financial education, and debt management.

With that in mind, SoFi at Work has published our Guidebook: “Are your financial well-being benefits veteran-ready?” to help HR and Total Rewards leaders design a meaningful and impactful program to support your veteran workforce.

The complete guide is available for download from our website, but here are the core components that we recommend be included in a veteran-ready financial well-being program.

Student Loan Employer Contributions

Despite having access to significant federal veterans’ education benefits, more than a quarter of veteran undergraduate students have taken out private and federal student loans (with a median amount of $8,000) to complete their education, according to The Pew Charitable Trusts. The fact of the matter is the cost of education has outpaced the support of programs that the GI Bill and SCRA Interest Cap offer service members, resulting in the need for additional funding. And veterans, who are often working and raising families while going to school, may take longer to finish degrees, meaning certain benefits will have expired before their coursework has been completed.

This is why well-designed employer-sponsored student loan offerings are critical for a successful veteran-ready financial well-being program. While there are several military student loan repayment and forgiveness programs, try to avoid the mistaken thinking that your veteran employee’s needs are fully met. Many of these programs are for fully disabled veterans only. Others have other specific and sometimes complicated restrictions.

Fortunately, recent legislation makes it easier for employers to help veterans — as well as all employees — pay down student debt. Thanks to the CARES act of 2020, employers can now support workers with direct student loan payments in the same tax-advantaged way they have supported tuition reimbursement for years. These changes allow employers to provide up to $5,250 tax-exempt annually toward a qualified employee’s student loan repayment through 2025.

In addition, the SECURE 2.0 Act (passed in the House on March 29, 2022) allows employers to address student debt in another way — by making matching contributions to retirement plans based on employees’ student loan payments.

The purpose of the law is to assist employees who may, because of their student loan debt, decide against making elective contributions by payroll reduction and as a result, miss out on employer matching contributions. The SECURE 2.0 student loan provision goes into effect on January 1, 2024.

Recommended: How Does an HR Team Implement a Student Loan Matching or Direct Repayment Benefit?

Emergency Savings Programs

Veteran financial wellness also suffers among those who have less in liquid savings or feel they could not absorb an unexpected financial shock. In a 2021 Military Family Advisory Network survey, 38.4% of veteran families reported that they have less than $500 in an emergency savings fund, or no fund at all. This suggests that employers can help relieve financial stress among veteran employees through automatic emergency savings programs.

These plans allow employees to contribute after-tax payroll deductions automatically into a customized savings account. Many employers also make matching contributions, much as they might with a 401(k). Depending on plan design, these funds can be available at any time and for any reason. In addition, most Emergency Savings Accounts (ESAs) are portable, meaning that veterans and other employees can take advantage of the program and retain its benefits even when they have a change in employment.

These programs gained popularity during the pandemic when it became painfully evident that many employees were not financially ready for an emergency. The same may hold for veterans transitioning to civilian life. When employers offer a trusted and easy way to save, they can help veterans with this transition.

Help With Debt and Negative Credit Events

Another factor that impacts veteran (and all) employee financial well-being is high-interest debt. While the intention might have been to keep this for a short period, many Americans face challenges with paying down that debt over time. The Military Family Advisory Network survey found that over three quarters (75.8%) of veteran families carry current debt.

High debt levels and other factors can have a negative effect on an employee’s credit rating, increasing the chances that they will be rejected for a variety of credit instruments. Research suggests that this type of adverse credit event can result in a significant drop in veteran financial-wellness perception. Here are some ways employers can help support employees facing negative credit events:

•   Debt and Financial Coaching: Offer one-on-one debt repayment and budgeting counseling, including budget and spend tracking programs to help balance monthly necessities, debt repayment, and discretionary spending.

•   Some Early Paycheck Programs: Not all of these plans are created equally, but a well-designed early paycheck program can help employees meet short-term financial needs without having to take out debt with excessive fees or interest rates.

•   Credit Score Monitoring: Provide free credit score monitoring services and counseling to help veterans rebuild damaged credit scores or build new credit.

Recommended: How Financial and Mental Health Can Collide With Work

Balance Short-Term Needs and Long-Term Financial Goals

While we have mostly discussed programs that are designed to support the shorter-term financial needs of veteran talent, it is important that your overall program also helps veterans get ready for their top financial goal: retirement readiness. As Gartner found, veterans are 48% more likely to list getting ready for retirement as a personal goal than their nonveteran counterparts. Since they may be eligible for additional benefits, like pensions, this is another reason to include professional financial coaching or planning in your overall financial well-being strategy. This can help veteran talent navigate the increasingly complex retirement landscape.

The Takeaway

It’s essential to analyze your workforce — and the talent you’re looking to hire — to understand what programs will best serve your veteran employees’ needs. But implementing a few hallmark veteran-ready financial well-being programs can help you improve the overall financial wellness of your veteran workforce and help you attract and retain talent in this competitive landscape.

Photo credit: iStock/SDI Productions

Products available from SoFi on the Dashboard may vary depending on your employer preferences.

Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.

SoFi Student Loan Refinance Loans, Personal Loans, Private Student Loans, and Mortgage Loans are originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org ). The 529 Savings and Selection Tool is provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. 2750 E. Cottonwood Parkway #300 Cottonwood Heights, UT 84121. ©2024 Social Finance, LLC. All rights reserved. Information as of November 2024 and is subject to change.


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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