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You’ve likely heard that the most important aspect of real estate is “location, location, location.” If that’s true, then the second most important consideration may be size or square footage.

At its most basic, square footage tells you the size of a property. It can also determine whether you’ll be able to squeeze a king-size bed plus your home office into the primary bedroom or your beloved baby grand piano in the family room.

Square footage also plays a major role in how a home that is for sale is priced. Getting square footage wrong when you are buying or selling can be a big headache and an expensive mistake. For instance, you don’t want to pay too much for a home that’s smaller than you thought it was.

Here, you’ll learn more about how square footage is correctly calculated.

Why Measure Square Footage of a House?

Here are some reasons why you may need to know the square footage of a house:

•   When selling a house, square footage plays a big role in determining the asking price.

Real estate agents will look at comps in the neighborhood — houses of similar size and style — that have sold recently to help them gauge demand for this new listing and set a price.

Square footage isn’t the only factor in pricing a home. An agent will also look at things like condition and building materials when determining value.

•   For those who are buying a home, square footage will play a big part in the price. It’s important that buyers verify that the listed square footage is correct so they know they are getting the space they’re paying for.

When you’re securing a mortgage loan, the lender will need to verify square footage as well, to make sure the house is worth the price the buyer and seller have settled on.

Lenders send an appraiser to conduct a real estate appraisal. This looks at the house to spot anything else that will adversely affect the value of the home, such as cracked walls, leaky foundations, and roofs that need repair.

If a lender’s appraiser finds discrepancies in square footage, there may be issues with a mortgage going through. Lenders may be unwilling to underwrite a loan for a house they think is overvalued for its size.

To save time, buyers should consider doing their due diligence and measure square footage before putting in an offer. Because the size of a house helps determine its value, it also influences property tax assessments.

•   You may also need to know the square footage if you want to dispute a high tax assessment or apply for permits to add on to your house.

Homeowners who think their property is overvalued for tax purposes can dispute the assessment. Confirming square footage is a good place to start. If a home is actually smaller than the recorded size, that may put a homeowner in a favorable position to have their property taxes reduced.

There are a number of reasons the assessed size of your home could be off. Assessors may have used an estimate for their initial assessment, builders may have made a calculation error when they were filing for building permits, or a portion of the house in the initial plans may never have been finished.

If you think the square footage in the public record isn’t correct, contact your city’s assessment department and ask for a review. The city may ask you to file an appeal or a grievance.

Finally, if you’re planning on hiring someone to remodel your home or put on an addition, you may need to know your square footage in order to pull a building permit for the work you want to do.

💡 Quick Tip: Mortgage loans are available with flexible term options and down payments as low as 3%.*

How to Measure Square Footage

There are no hard and fast rules about what parts of your house should be included in a square footage measurement.

The American National Standards Institute provides the generally accepted guidelines about how to calculate square footage, but there are no laws governing the issue, and standards may vary by region or even by listing agent. These discrepancies are another good reason to double-check square footage yourself.

That said, the gross living area is what most people mean when they discuss square footage. Here’s an easy way to calculate it yourself.

•   First, get prepared to brush off your drawing skills, and bust out a pen and paper — preferably graph paper. Each square of the graph paper can represent one square foot.

•   Next, moving one room at a time, measure the walls with a tape measure or laser measure, rounding to the nearest half-linear foot. As you measure each wall, draw it out on your paper and write the measurement next to the line.

•   For regular rectangular rooms, you will be able to calculate the square footage by multiplying the length of the room by its width.

•   If the room you are measuring is an irregular shape, break it down into small rectangles, triangles, or other shapes and measure those separately. Add up the square footage of these small areas to get the room total.

•   Add on to your floor plan room by room, and don’t forget to include hallways and closet spaces that may be between rooms. Stairways are also usually counted in gross living area.

•   Do this for every floor of the house, and once you have a complete floor plan, tally the square footage of all the rooms in the house to get total square footage. Round the result to the nearest square foot.

•   If you have a two-story house, you may be tempted to simply measure the square footage of one floor and multiply that by two. The danger with this approach is that not every floor will have the same footage.

For example, if you have any double-height rooms, you can’t count that square footage as part of the second floor.

Note: ANSI guidelines measure square footage from the exterior of the house. This method does not subtract interior walls from the square footage, so it may not give a completely accurate sense of a home’s living space.

Recommended: Things to Budget for After Buying a House

What to Leave Out

Living space that is above the land line and has heating, lighting, and ventilation is included in the gross living area. Garage space does not make the cut. In general, neither do basements, even if they’re finished (although appraisers will include the space in their appraisal valuation).

A good rule of thumb is that anything that is built below grade, i.e. underground, does not count toward gross living area. Other buildings, including guesthouses and pool houses, that require you to go outside to them can’t be included in the gross living area either.

Finished attic space may be included in the gross living area as long as it has enough clearance — generally a ceiling of at least seven feet. Enclosed porches can be included if they are heated by the same unit that heats the rest of the house.

That said, it can be helpful to measure the square footage of these areas for your records, and they can be included separately in a sales listing

💡 Recommended: First-Time Homeowner Guide

Other Considerations Before Buying

If you’re in the market for a new home, the first thing you can do to verify square footage is take a look at the city’s building department records.

When homes or condominiums are built, plans submitted for a building permit include square footage.

Many of these records are available online and provide a way to check whether the listed square footage is at least in the ballpark of city records.

Note that houses that have unpermitted additions will not have that extra space show up in official records.

In fact, add-ons built without going through the proper city channels can add uncertainty to the real estate process, and may not even be included in the gross living area advertised in a real estate listing. And appraisers may not include these additions in the value of the home.

If it’s hard for you to get information on the home you’re interested in from the city and you don’t have the opportunity to measure the home yourself, you can hire an appraiser who can do the measuring for you.

Real estate agents also have a lot of experience determining the square footage of houses. They can give a quick estimate of size or help you measure the square footage more carefully.

There is a lot to think about when buying a house, and square footage is just one factor. There are other things to consider when buying a home.

Would you prefer a smaller house in tip-top condition or a larger one that needs some TLC? Do you like the design and layout or would you be looking at major renovation work to have it be your dream home? Is the location right? Is it near schools, your work, businesses you like to go to, or parks? Is it in your price range?

Recommended: Housing Market Trends by Location

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

*SoFi 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.

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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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Instead of carrying around wads of cash or stuffing your life savings under your floorboards, a savings account gives you a safe place to store your money. Opening a savings account is a great way to start building healthy savings habits to help you save toward your goals, build an emergency fund, or plan for retirement. Plus, many savings accounts are interest-bearing, so you can help your money grow.

Whether this is your first savings account or you’re switching from another financial institution, you’ll learn how to open a savings account and what you need to know before you open one.

4 Steps to Opening a Savings Account

Here are the steps you need to take when you open a savings account.

1. Compare Banks and Accounts

Fees, interest rates, minimum balance requirements, and other benefits like mobile banking can vary by the bank you choose. So, exploring your options before deciding where to open a savings account can help you determine the most suitable savings solution for your needs.

You’ll also want to explore the different saving account options available. For example, looking at high-interest savings accounts might be an attractive option for people wanting to grow their money.

2. Gather Personal Information and Documentation

Next, you’ll want to gather all of the necessary information. Doing this beforehand will streamline the application process. Here’s what you’ll need to open up a savings account:

•   Government-Issued ID, likely with a photograph, such as a passport or driver’s license

•   Date of birth

•   Social Security number

•   Proof of address, such as a utility bill or bank statement

•   Phone number and email address

If you’re opening a joint account, ensure the co-account owner provides the same information and documentation. Remember, requirements vary by bank, so check with your financial institutions to verify the necessary information.

3. Check Eligibility

Credit unions and banks may have eligibility requirements for specific accounts. For example, account holders must be over 18 to open a savings account. Also, some savings accounts may have a minimum balance requirement to open the account. Understanding the requirement beforehand will ensure you’re prepared when completing your application.

4. Complete the Application

Here’s the next step in how to open a savings account: You can complete the application now that you have your personal information. Some brick–and-mortar banks and credit unions may require you to visit a bank branch to open an account, while others let you complete the application online.

If your bank requires a minimum balance deposit, ensure you have the cash in hand or the account to which you want to transfer the money.

Choosing the Right Savings Account for You

Here is a snapshot of how the different savings accounts stack up.

•   Traditional savings account. This type of account is a simple savings option. Usually, basic savings accounts don’t have the highest interest rates, and the bank or credit union may charge a monthly fee.

•   High-yield savings accounts. This type of account usually offers a higher interest rate than traditional savings accounts. While you can find these accounts as brick-and-mortar banks, they are most common with online banks. If you choose to open a savings account with an online bank, you may have to pay fewer fees.

•   Kids’ and student savings account. Just like the name suggests, these accounts are tailored to kids and students so they can start building healthy savings habits. Some of these accounts are interest-bearing. However, there are usually age cut-offs, and there may be parental involvement.

•   Specialized savings accounts. This type of savings account helps you save for a specific goal, like a down payment on a home. However, it’s important to note that this type of account may come with restrictions. For example, if the account is designed to save for the cost of the winter holidays, you might only be able to pull money out once a year, like right before the holidays.

•   Money market account. This type of account lets you earn interest and withdraw up to the bank or credit union’s limits. Usually, the interest rates on money market accounts are higher than those on a traditional savings account.

💡 Learn more about money market accounts.

Understanding Savings Accounts

A savings account is a deposit account that lets you park your cash to save toward short-term goals and savings objectives. For example, you may use your savings account to save money for your dream vacation or to start building an emergency fund. Unlike a checking account, savings accounts are not meant to be used for everyday transactions.

In fact, in the past, Federal Reserve Board Regulation D limited the number of withdrawal transactions you could complete in a month. While restrictions were lifted in April 2020, banks still have the right to limit the number of withdrawals you can take in a month. Examples of withdrawal transactions include overdraft transfers to checking accounts, wire transfers, debit card withdrawals, check withdrawals, and phone or computer transfers.

How Savings Accounts Work

Savings accounts work like this:

•   You open a savings account.

•   You deposit money into the savings account.

•   You earn interest on the balance in the savings account.

•   Then you can continue to accumulate interest as you contribute to your balance.

If you’re using the savings account to save for a specific goal, you’ll likely withdraw funds once you have reached that objective. So, if you’re saving money for a new car, you will take the money out when it’s time to pay for your new ride.

The interest rate and annual percentage yield (APY) attached to a savings account depends on the bank and type of account. The higher the APY, the more interest you’ll earn and your account will grow faster.

For example, let’s say your savings account has a $2,000 balance, you contribute $100 monthly, and have 4.00% APY. At the end of the first year your account balance will be $3,303.73. That’s a little over $100 worth of interest.

Pros and Cons of Opening Up a Savings Account

While savings accounts are a great place to park your money to save for the future, they also have some downsides. Here are the pros and cons of opening a savings account.

Can You Be Denied a Savings Account?

Banks or credit unions may deny you a savings account if you have a track record of misusing bank accounts. Some examples of misuse include:

•   Leaving an account with an unpaid overdraft fee

•   Applying for many accounts in a short amount of time

•   Bouncing checks

•   Misusing debit cards or ATMs.

You may also get denied if you were a victim of fraud.

Once you apply for a bank account, banks use the ChexSystems report, which is a consumer reporting agency for financial institutions, to spot any red flags that demonstrate you wouldn’t be a suitable account holder. If the bank uncovers harmful activities and denies opening an account, it must provide a reason for the denial.

Here’s what to do if you’re denied:

•   Ask the bank to reconsider. It never hurts to ask the bank or credit union to reconsider their decision.

•   Request the ChexSystems report. If the bank or credit union holds firm on their decision, request a copy of the ChexSystems report. All consumers are entitled to a complimentary copy of the report every 12 months. You can visit ChexSystems’ website or call 800-428-9623 to request a report.

•   Review the report for discrepancies or errors. Closely review the ChexSystems report. Look for errors or discrepancies, such as an incorrect Social Security number. If you spot an error, you can contact the reporting agency. Make sure to provide all supporting documentation to validate your claim.

•   Clean up your report. If you didn’t spot any errors, you’d want to start fixing any negative actions in the report. For example, if you have an unpaid overdraft fee, contact the bank and pay it off. Once you resolve any issues, they are removed from the report. On the other hand, if you have unresolved issues lurking, they will remain on your report.

•   Explore second-chance accounts. Some banks offer second-chance bank accounts, which don’t review the ChexSystems report. However, since these accounts cater to those with less than ideal banking backgrounds, they may charge higher fees or have more restrictions. So, look into the account requirements before moving forward with one.

Opening a SoFi Savings Account

So, if you’re wondering should I open a savings account, the answer is likely “yes.” Opening a savings account is a great way to build strong saving habits and earn interest. Then, when you need the money later, you can access your cash effortlessly. Furthermore, opening a savings account is simple; you only need to compare accounts and banks, gather the correct information, and fill out the application.

If you’re looking for a new savings account, see what SoFi offers. When you open an online bank account with SoFi, you get benefits that help simplify money management. Plus, you can grow your money with a competitive APY and no account fees.

SoFi Checking and Savings: Helping you bank better and smarter.

FAQ

What do you need to open a savings account?

You must usually provide personal information like your Social Security number, date of birth, and home address. You will also need supporting documentation like a government-issued ID and a utility bill to prove your address. Additionally, depending on the bank account, you may need to deposit the minimum balance requirement to open the account.

How much money do you need to open a savings account?

Usually you’ll need between $25 and $100 to open a savings account at a bank or credit union. However, once the account is open, the institution may require you to maintain a minimum account balance. So, make sure to check the requirements.

Can you just open a savings account without a checking account?

Yes, you can open a savings account without a checking account at most institutions. However, having both can help you better manage your money since each account has different functionality.

Photo credit: iStock/AntonioGuillem

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

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

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

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

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

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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