Mar
25
2025
Is Inflation a Good or Bad Thing for Consumers?

Is Inflation a Good or Bad Thing for Consumers?

By | Growing Wealth, invest, Investing | Comments Off on Is Inflation a Good or Bad Thing for Consumers?

There are two sides to inflation for consumers: The rising cost of goods and services means that the basic cost of living rises for most people. But the right amount of inflation can spur production and economic growth.

Deciding whether inflation is good or bad therefore depends on how various factors might play out in different economic sectors.

What Is Inflation?

Inflation is an economic trend in which prices for goods and services rise over time. The Federal Reserve uses different price indexes to track inflation and determine how to shape monetary policy.

Generally speaking, the Fed targets a 2% annual inflation rate as measured by pricing indexes, including the Consumer Price Index. Historically, though, the inflation rate has been about 3.3%.

Rising demand for goods and services can trigger inflation when there’s an imbalance in supply. This is known as demand-pull inflation.

Cost-push inflation occurs when the price of commodities rises, pushing up the price of goods or services that rely on those commodities.

Asking whether inflation is bad isn’t the right lens for this economic factor. Inflation can have both pros and cons for consumers and investors. Understanding the potential effects of inflation can maximize the positives while minimizing the negatives.


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Is Inflation Good or Bad?

Answering the question of whether inflation is good or bad means understanding why inflation matters so much. The Federal Reserve takes an interest in inflation because it relates to broader economic and monetary policy.

Some level of inflation in an economy is normal, and an indication that the economy is continuing to grow. While inflation has remained relatively low over the past decade, it has historically seen the most change during or right after recessions.

The Fed believes that its 2% target inflation rate encourages price stability and maximum employment.

Recommended: 7 Factors That Cause Inflation

Broadly speaking, high inflation can make it difficult for households to afford basic necessities, such as food and shelter. When inflation is too low, that can lead to economic weakening. If inflation trends too low for an extended period of time, consumers may come to expect that to continue, which can create a cycle of low inflation rates.

That sounds good, as lower inflation means prices are not increasing over time for goods and services. So consumers may not struggle to afford the things they need to maintain their standard of living. But prolonged low inflation can impact interest rate policy.

The Federal Reserve uses interest rate cuts and hikes to keep the economy on an even keel. For example, if the economy is in danger of overheating because it’s growing too rapidly, or inflation is increasing too quickly, the Fed may raise rates to encourage a pullback in borrowing and spending.

Conversely, when the economy is in a downturn, the Fed may cut rates to try to promote spending and borrowing.

When both inflation and interest rates are low, that may not leave much room for further rate cuts in an economic crisis, which may spur higher employment rates. If prices for goods and services continue to decline, that could lead to a period of deflation or even a recession.

So, is inflation good or bad? The answer is that it can be a little of both. How deeply inflation affects consumers or investors — and who it affects most — depends on what’s behind rising prices, how long inflation lasts, and how the Fed manages interest rates.

What Is Core Inflation?

Core inflation measures the rising cost of goods and services in the economy, but excludes food and energy costs. Food and energy prices are notoriously volatile, even though demand for these staples tends to remain steady.

Both food and energy prices are partly driven by the price of commodities — which also tend to fluctuate, owing to speculation in the commodities markets. So the short-term price changes in these two markets make it difficult to include them in a long-term reading of inflationary trends: hence the core inflation metric.

The Consumer Price Index and the core personal consumption expenditures index (PCE) are the two main ways to measure underlying inflation that’s long term.

Who Benefits from Inflation?

The Federal Reserve believes some inflation is good and even necessary to maintain a healthy economy. The key is keeping inflation rates at acceptable levels, such as the 2% annual inflation rate target. Staying within this proverbial Goldilocks zone can result in numerous positive impacts for consumers and the economy in general.

That said, the core inflation rate began to climb out of that range in Q1 of 2021, and reached a peak of about 9.02% in June 2022. As of Q3 2023, the inflation rate has eased down in the 4.0% range, according to data from the Consumer Price Index.

Inflation Pros

Sustainable inflation can yield these benefits:

•   Higher employment rates

•   Continued economic growth

•   Potential for higher wages if employers offer cost-of-living pay raises

•   Cost-of-living adjustments for those receiving Social Security retirement benefits

The danger, of course, is that inflation escalates too rapidly, requiring the Federal Reserve to raise interest rates as a result. This increases the overall cost of borrowing for consumers and businesses.

Who Is Inflation Good For?

Inflation can benefit certain groups, depending on how it impacts Fed shapes monetary policy. Some of the people who can benefit from inflation include:

•   Savers, if an interest rate hike results in higher rates on savings accounts, money market accounts or certificates of deposit

•   Debtors, if they’re repaying loans with money that’s worth less than the money they borrowed

•   Homeowners who have a low, fixed-rate mortgage

•   People who hold investments that appreciate in value as inflation rises


💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

Who Does Inflation Hurt the Most?

Some of the negative effects of inflation are more obvious than others. And there may be different consequences for consumers versus investors.

Inflation Cons

In terms of what’s bad about inflation, here are some of the biggest cons:

•   Higher inflation means goods and services cost more, potentially straining consumer paychecks

•   Investors may see their return on investment erode if higher inflation diminishes purchasing power, or if they’re holding low-interest bonds

•   Unemployment rates may climb if employers lay off staff to cope with rising overhead costs

•   Rising inflation can weaken currency values

Inflation can be particularly bad if it leads to hyperinflation. This phenomenon occurs when prices for goods and services increase uncontrolled over an extended period of time. Generally, this would mean an inflation growth rate of 50% or more per month. While hyperinflation has never happened in the United States, there are many examples from different time periods around the world: For example, Zimbabwe experienced a daily inflation rate of 98% in 2007-2008, when prices doubled every day.

Recommended: How to Protect Yourself From Inflation

Who Is Inflation Bad For?

The negative impacts of inflation can affect some more than others. In general, inflation may be bad for:

•   Consumers who live on a fixed income

•   People who plan to borrow money, if higher interest rates accompany the inflation

•   Homeowners with an adjustable-rate mortgage

•   Individuals who aren’t investing in the market as a hedge against inflation

Inflation and higher prices can be detrimental to retirees whose savings may not stretch as far, particularly when health care becomes more expensive.

If the cost of living increases but wages stagnate, that can also be problematic for workers because they end up spending more for the same things.

Recommended: Cost of Living by State Comparison (2023)

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How to Invest During Times of Inflation

While inflation is an investment risk to consider, some investing strategies can help minimize its impact on your portfolio.

How to Protect Your Money From Inflation

The first step is to understand that inflation rates may be variable from year to year, but the upward trend in the cost of goods and services is typically a factor investors must contend with. Essentially, if inflation is historically about 2% per year, it’s ideal to look for returns above that.

For example, while savings accounts may yield more interest if the Fed raises interest rates, investing in stocks, exchange-traded funds (ETFs) or mutual funds could generate higher returns, though these investments also come with a higher degree of risk.

•   Diversification. Having a diversified portfolio that includes a mix of stock and bonds and other asset classes may help mitigate the impact of inflation.

•   Always be aware of investment costs and the impact of taxes and fees. Minimizing investment costs is a time-honored way to keep more of what you earn.

•   Investing in Treasury-Inflation Protected Securities (TIPS). TIPS are government-issued securities designed to generate consistent returns regardless of inflationary changes.

•   If prices are rising, that can increase rental property incomes. You could benefit from that by investing in real estate ETFs or real estate investment trusts (REITs) if you’d rather not own property directly.

•   Compounding interest allows you to earn interest on your interest, which is key to building wealth.

•   Dollar-cost averaging means investing continuously, whether stock prices are low or high. When inflationary changes are part of a larger shift in the economic cycle, investors who dollar-cost average can still reap long term benefits, despite rising prices.

The Takeaway

Inflation is unavoidable, but you can take steps to minimize the impact to your personal financial situation. Building a well-rounded portfolio of stocks, ETFs and other investments is one strategy for keeping pace with rising inflation. Being aware of how taxes and fees can impact your returns is another way to keep more of what you earn.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


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FAQ

How is economic deflation different from inflation?

Deflation is when the cost of goods and services trends downward rather than upward (the sign of inflation). Deflation can be positive for consumers, as their money goes further, but prolonged deflation can also be a sign of a contraction.

How do homeowners benefit from inflation?

Typically tangible assets like real estate tend to increase in value over time, even in the face of inflation. Currency, on the other hand, tends to lose value.

How does the government measure inflation?

The Bureau of Labor Statistics produces the Consumer Price Index (CPI), based on the change in cost for a range of goods and services. The CPI is the most common measure of inflation.

About the author

Rebecca Lake

Rebecca Lake

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


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

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

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Mar
24
2025

What Is FICO Score vs. Experian?

By | Credit, Financial Independence, relay | Comments Off on What Is FICO Score vs. Experian?

You may have heard of both FICO® and Experian, but the two companies serve different purposes.

FICO is a credit scoring model developed by the Fair Isaac Corporation (FICO) that lenders often use when assessing a borrower’s creditworthiness, or how likely they are to repay debts.

Experian, on the other hand, is one of the three major credit bureaus (along with Equifax and TransUnion) that collects credit and debt information and uses it to create individual credit reports. These credit reports offer more details about an individual’s credit history than FICO’s three-digit score.

Let’s take a closer look at what separates FICO vs. Experian, which credit score is the most accurate, and how to keep tabs on your credit score.

Key Points

•   FICO is a credit scoring model, while Experian is a credit bureau.

•   Experian provides credit scores using both FICO and VantageScore models.

•   Lenders often use FICO Scores to assess creditworthiness.

•   Scores from different models may vary slightly.

•   Good financial habits, like timely payments and low credit utilization, can improve credit scores.

What Is the Difference Between Experian Score vs. FICO?

As we mentioned, Experian is a major credit reporting agency. It does not have its own credit scoring model. However, in 2006, it partnered with Equifax and TransUnion to create the VantageScore credit score model. Like FICO, VantageScore provides three-digit credit scores for consumers, though it uses slightly different factors and weightings.

The credit score Experian provides — sometimes called an “Experian score” — relies on both VantageScore and FICO Score.

FICO works differently. As a credit scoring model, it uses a proprietary algorithm to evaluate your credit risk. Specifically, the following factors affect your credit score:

•   Your payment history

•   The amounts you owe

•   The length of your credit history

•   How much new credit you have

•   The diversity of your credit mix

While FICO is used in the majority of lending decisions, some lenders use VantageScore.

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Which Credit Report Is Most Accurate?

It’s common to have multiple credit reports, including ones with Experian, Equifax, and TransUnion. It’s also common to have minor differences in your credit file from bureau to bureau. That’s because lenders don’t always report the same information at the same time to every bureau. But rest assured, credit reports from all three credit bureaus are widely considered to be accurate.

That said, it’s a good idea to regularly review your credit report. You can access yours for free via AnnualCreditReport.com or through tools like a money tracker app.

If you find any errors or inconsistencies in your credit report, be sure to dispute them with the relevant credit bureau so the incorrect information can be removed.

Why Is My Experian Credit Score Different From FICO?

You may notice that your so-called Experian score is slightly different from your FICO Score. That’s because both scores are based on different scoring models. FICO uses its own algorithm, while Experian’s score uses both FICO and VantageScore.

While some variations are to be expected, if one score is drastically higher or lower than the other, it’s a good idea to review your credit reports and address inaccuracies.

Is Experian Better Than FICO?

No credit score is better than another. Some lenders prefer FICO, white others rely on VantageScore. Each model can provide lenders with different insights about a person’s financial habits.

The good news is that FICO and VantageScore generally calculate their scores with similar information, which means you can improve both scores simultaneously. Smart strategies include paying bills on time, keeping credit utilization low, and paying down balances.

Recommended: How Long Does It Take to Build Credit?

Is a FICO Score the Same as a Credit Score?

When comparing a FICO Score vs. a credit score, it’s important to understand that a FICO Score is a type of credit score. But of course, it’s not the only type of credit score.

VantageScore, for example, issues credit score models such as VantageScore 4.0 and VantageScore 4plus™. Experian, Equifax, and TransUnion also provide credit scores based on data in your credit report.

What Is My Real Credit Score?

There is no one true credit score. Instead, banks, lenders, and other companies may use different credit scores when they check your credit. And they could see different figures, depending on which credit score they use.

Fortunately it’s relatively straightforward to check your credit score without paying. That way, you can get an idea of what your credit score is and what lenders might see when they check your credit.

What Score Do Lenders Use?

Lenders can and do consider a variety of credit scores, depending on which scoring model works the best for their specific lending criteria. Unfortunately, it’s often difficult or even impossible to know which model a particular lender uses. However, the factors that impact your credit score generally hold true regardless of the credit score model used.

Understanding Various Credit Score Models

While most credit score models start with some of the same basic data, each one uses different information and weighs credit history information differently. This can mean that the different credit score models, such as FICO and VantageScore, come up with different credit scores, even for the same consumer.

Recommended: What Is the Starting Credit Score?

How Can You Check Your Credit Score?

Keep in mind that your credit score updates every 30 to 45 days, as new information comes rolling in from lenders. If you’re working on boosting your three-digit number, you may want to check on your progress every so often.

There are a few different ways that you can keep tabs on your credit score. You can sign up for a credit score monitoring service, which can provide regular credit score updates.

Another way is by using a spending app or credit card that provides access to your credit score as a feature or benefit. You may also have free access to it through your bank.

The Takeaway

FICO and Experian may be common names, but that’s where the similarities end. FICO is a widely used credit scoring model that creates a three-digit score based on reports provided by credit bureaus, including Experian. In addition to creating those detailed credit reports, Experian generates a credit score using data from FICO and another scoring model, VantageScore. Lenders may use both VantageScore and FICO when determining an individual’s creditworthiness.

Credit scoring models usually rely on a similar set of information, which means you can take the same actions to boost both scores. Making on-time payments, paying down what you owe, and diversifying your credit mix are all ways to help build up your credit score.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Is Experian or FICO more reliable?

Your VantageScore and your FICO Score are two different credit scores that use two different credit models. Both are considered to be reliable. But lenders may prefer to use one model over the other, depending on which one best fits their needs.

Why is my FICO Score different on Experian?

Though it does not have its own credit scoring model, Experian generates a score using data from VantageScore and FICO. FICO, on the other hand, creates its score using only its own calculations.

How close is your FICO Score to your credit score?

People have multiple credit scores. Your FICO Score is just one of them. Most credit scores use a similar set of data, which means credit scores usually vary by only a few points. If you spot a large discrepancy between your scores, take a look at your credit report and dispute any errors or inaccuracies you see.

Which credit score is most accurate?

No one credit score is considered more accurate than the others. Rather, different credit scores may provide lenders with different insights on spending or borrowing habits.

What is a good FICO Score?

FICO Scores are generally divided into five different categories, from Poor to Exceptional. A “good” FICO Score falls between 670 and 739. Having a FICO Score that is Very Good (740 to 799) or Exceptional (800 to 850) is even better.

Why is my FICO Score higher than my credit score?

Your FICO Score is just one of many credit scores that you may have. It may be higher or lower than other credit scores depending on the calculations used, including how the information in your credit report was weighed. As long as your various scores are within a few points of each other, there is usually no cause for alarm.

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


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

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

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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Mar
24
2025

What Are the Tax Brackets for 2025 Married Filing Jointly?

By | Budgeting & Goals, Family Finances, Financial Topics, Life & Career, Life Stages, Terminology | Comments Off on What Are the Tax Brackets for 2025 Married Filing Jointly?

The Internal Revenue Service (IRS) uses seven different tax brackets to determine how much you owe when married filing jointly or any other status. In the U.S., taxpayers are subject to a progressive tax system which means that as your income increases, so does your tax rate. Tax brackets determine which tax rate is assigned to each layer of income you have.

The IRS takes your filing status into account when establishing tax brackets, which is important for couples to know. What are the 2024 tax brackets for married filing jointly? Here’s what you need to know.

Key Points

•   The 2024-2025 tax brackets for married couples filing jointly include seven rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

•   The 10% tax rate applies to income up to $23,200, while income over $731,200 is assessed at the tax rate of 37% for married couples filing jointly.

•   These rates apply to the amount of income that enters the higher bracket, so a couple making $23,201 in 2024 would pay 10% on $23,200, and 12% on the additional dollar of income.

•   The seven tax rate categories have not changed between tax year 2024 and 2025, but the amount of income within the brackets has.

•   Understanding tax brackets for married couples filing jointly is important to filing your taxes accurately and paying the appropriate amount.

2024 Tax Brackets

If you’re wondering what tax bracket you’re in, that’s a good question to ask, especially if you’re filing taxes for the first time or your filing status has changed because you’ve gotten married.

Married filing jointly 2024 tax brackets correspond to seven federal income tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Income ranges used for 2024 tax brackets apply to returns filed in 2025.

What are the tax brackets for 2024 married filing jointly? The table below breaks it down.

2024 Tax Brackets

To find out what tax bracket you are in, check the following table. It illustrates 2024 federal tax brackets and tax rates, based on your filing status.

2024 Married Filing Jointly Tax Brackets

Tax Rate Single Married Filing Jointly or Qualifying Widow(er) Married Filing Separately Head of Household
10% $0 to $11,600 $0 to $23,200 $0 to $11,600 $0 to $16,550
12% $11,601 to $47,150 $23,201 to $94,300 $11,601 to $47,150 $16,550 to $63,100
22% $47,151 to $100,525 $94,301 to $201,050 $47,151 to $100,525 $63,100 to $100,500
24% $100,526 to $191,950 $201,051 to $383,900 $100,526 to $191,950 $100,500 to $191,950
32% $191,951 to $243,725 $383,901 to $487,450 $191,951 to $243,725 $191,950 to $243,700
35% $243,726 to $609,350 $487,451 to $731,200 $243,726 to $365,600 $243,700 to $609,350
37% $609,351 or more $731,201 or more $365,601 or more $609,351 or more

Recommended: How Much Do You Have to Make to File Taxes?

2025 Tax Brackets

While tax rates are the same for 2024 and 2025, the income ranges for each tax bracket are higher. Here’s a look at how 2025 tax brackets compare to 2024 tax brackets for married jointly filing and all other filing statuses. This information can be helpful as you track your finances.

2025 Tax Brackets

Tax Rate Single Married Filing Jointly or Qualifying Widow(er) Married Filing Separately Head of Household
10% $0 to $11,925 $0 to $23,850 $0 to $11,925 $0 to $17,000
12% $11,926 to $48,475 $23,851 to $96,950 $11,926 to $48,475 $17,001 to $64,850
22% $48,476 to $103,350 $96,951 to $206,700 $48,476 to $103,350 $64,851 to $103,350
24% $103,351 to $197,300 $206,701 to $394,600 $103,351 to $197,300 $103,351 to $197,300
32% $197,301 to $250,525 $394,601 to $501,050 $197,301 to $250,525 $197,301 to $250,500
35% $250,526 to $626,350 $501,051 to $751,600 $250,526 to $375,800 $250,501 to $626,350
37% $626,351 or more $751,601 or more $375,801 or more $626,351 or more

How Federal Tax Brackets and Tax Rates Work

In the U.S., the tax code operates on a progressive system that takes into account your income and filing status to determine how much tax you’ll owe. In a progressive system, the highest-income earners are subject to the highest tax rates. This is based on a concept called ability to pay, which reasons that if you earn more, you can afford to pay more in taxes.

Federal tax brackets assign a tax rate to individual income ranges. There are seven tax rates and seven corresponding income ranges. Tax rates, which run from 10% to 37%, are the same for the 2024 and 2025 tax years and apply to these individual income tax filing statuses:

•  Single

•  Married filing jointly

•  Married filing separately

•  Head of household

•  Qualifying widow(er)

Tax rates may be the same from year to year, but income ranges can change. For instance, the tax brackets for 2023 married jointly filing are different from the tax brackets for 2024 married jointly.

If you look at the income ranges, you’ll see that they’re largely the same for most filing statuses. The exception is married couples filing jointly. Couples have higher income ranges since it’s assumed that both parties earn income.

Curious about what are the tax brackets for 2024 married filing jointly at the state level? It depends on where you live and file state income taxes.

Forty-three states and the District of Columbia assess an income tax. Fourteen states use a flat tax rate that applies to all income levels, while the remaining 27 use graduated tax rates assigned to different tax brackets.

Keep in mind that there are different types of taxes. Tax brackets and tax rates for individuals are not the same as tax rates for corporations.

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What Is a Marginal Tax Rate?

A marginal tax rate is the tax rate you pay on the highest dollar of taxable income you have. Your marginal tax rate doesn’t apply to all your income; just to the last dollar earned.

For example, say that you take a new job with a higher salary and move from the 22% to the 24% marginal tax rate. That doesn’t mean that your entire salary is now taxed at the 24% rate. Only the amount that goes over the income threshold into the 24% bracket would be assessed at that rate.

Marginal tax rates apply to all your taxable income for the year. Taxable income is any income you receive that isn’t legally exempt from tax, including:

•  Wages (pay that’s typically based on the hours worked)

•  Salaries (pay that’s typically a fixed amount that’s paid regularly)

•  Tips

•  Business income

•  Royalties

•  Fringe benefits

•  Self-employment earnings

•  Side hustle or gig work earnings

•  Interest on savings accounts

•  Profits from the sale of virtual currencies

You’ll also pay taxes on investment property if you own a rental unit. It’s important to accurately report to the IRS all income you and your spouse have for the year to avoid issues.

Underreporting and misrepresenting income are some of the biggest tax filing mistakes people make.

What Is an Effective Tax Rate?

Your effective tax rate is your average tax rate based on how your income is taxed in different brackets. It’s common for your effective tax rate to be lower than your marginal tax rate.

If you and your spouse file jointly with $250,000 in income (meaning you each earn more than the average salary in the U.S.), your marginal tax rate would be 24%. But your effective tax rate would be 14.58%. That assumes that you claim the standard deduction.

Standard deductions are amounts you can subtract from your taxable income. The standard deduction amount for married filing jointly in 2024 is $29,200.

Recommended: Online Budget Planner

How to Reduce Taxes Owed

Reducing your tax liability as a couple starts with understanding what kind of tax breaks you might qualify for. It can also involve some strategizing regarding your income.

•  Claim credits. Tax credits reduce your taxes owed on a dollar-for-dollar basis. So if you owe $500 in taxes you could use a $500 tax credit to reduce that to $0. Some of the most common tax credits for couples include the Child Tax Credit (CTC), the Child and Dependent Care Credit, and the Retirement Savers’ Credit.

•  Consider itemizing. Couples can claim the standard deduction, but you might itemize if you have significant deductible expenses. Some of the expenses you might deduct include mortgage interest if you own a home, student loan interest, and charitable contributions.

•  Open a spousal IRA. Individual retirement accounts (IRAs) let you save money for retirement on a tax-advantaged basis. Contributions to traditional IRAs are tax-deductible for most people. If you’re married but only one of you works, you could open a spousal IRA and make deductible contributions to it on behalf of your nonworking spouse.

•  Contribute to other retirement accounts. If you both work, you can still fund traditional IRAs for a tax deduction, or sock money into your 401(k) plans at work. Contributions to a 401(k) can reduce your taxable income for the year, which could help you owe less in taxes.

•  Check your withholding. Your withholding is the amount of money you tell your employer to hold back for taxes. Getting a refund can feel like a nice windfall, but that just means you’ve loaned the government your money for a year interest-free. You can adjust your withholding to pay the right amount of tax instead.

You may also defer year-end bonuses or other compensation until the beginning of the new year so you have less taxable income to report. As you start preparing for tax season, consider talking to a financial advisor or tax pro about the best strategies to minimize your taxes owed.

The Takeaway

Knowing how tax brackets work (and which one you’re in as a married couple filing jointly) can help you get your tax return completed accurately with fewer headaches. It also helps to keep a record of your deductible expenses throughout the year if you plan to itemize when you file. That’s something a money tracker can help with.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

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FAQ

What is the standard deduction for married filing jointly in 2024?

The standard deduction for married couples filing jointly is $29,200 for the 2024 tax year. That amount increases to $30,000 for the 2025 tax year.

What are the federal tax brackets for married couples?

The federal tax brackets for married couples filing joint returns assign seven tax rates ranging from 10% to 37%. For tax year 2024, the lowest tax rate applies to the first $23,200 in income while the highest tax rate applies to income above $731,200.

Will tax refunds be bigger for 2024?

As of March 2025, the average tax refund for the 2024 tax year was 32% lower. Taxpayers collected a refund of $2,169 on average, compared to $3,207 for the previous year.

What is the tax offset for 2024?

Tax offsets occur when the federal government holds back part or all of your tax refund to satisfy a delinquent debt. Tax offsets can happen if you owe federal income taxes or federal student loan debts.

How will tax brackets change for 2024?

The 2024 tax brackets are subject to the same tax rates that applied in 2023 and will apply in 2025; the difference is the range of incomes subject to each tax rate. The IRS periodically adjusts tax brackets as well as standard deduction limits to account for inflation.

At what age is social security no longer taxed?

There is no minimum or maximum age at which Social Security benefits cannot be taxed. Whether you must pay tax on Social Security benefits depends on whether you have other taxable income to report for the year.

photo credit: PonyWang
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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.


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

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Mar
24
2025

How Is HELOC Interest Calculated?

By | Growing Wealth, mortgage, Tools & Calculators | Comments Off on How Is HELOC Interest Calculated?

The interest you’ll pay on a home equity line of credit (HELOC) is typically calculated by multiplying the daily interest rate by the average daily balance for the billing cycle. (This is called the average daily balance method.) The lower your daily balance, the less interest you’ll pay.

The variable nature of a HELOC interest rate is a big factor in this equation. Many HELOCs allow for interest rate adjustments once a month — so the amount of interest you pay varies from month to month, based on both your balance owed and your rate.

U.S. households had more than $396 billion in outstanding HELOC balances at last count, so plenty of homeowners are looking to minimize the amount of interest they pay. If you’re one of them, here’s a rundown of how interest is calculated on a home equity line of credit so you can take steps to minimize your costs whenever possible.

Key Points

•   HELOC interest is usually calculated using the average daily balance method.

•   The HELOC interest rate is determined by adding a lender margin to the prime rate.

•   Interest rates on HELOCs are variable and often change monthly.

•   Early payments and additional payments can reduce overall interest paid.

•   Interest is charged only on the amount borrowed from the credit line.

Basics of HELOC Interest Rates

To understand how does HELOC interest work and how much interest you’re being charged, it’s helpful to know the basics of how HELOC interest is calculated. Home equity line of credit interest rates are usually variable, so they can move up or down based on market conditions. Your monthly payment changes as a result. There is usually an interest rate ceiling and floor on a HELOC, which govern the highest and lowest the interest rate can go on your loan — so there are some controls built into this process.

How are HELOC rates calculated? The interest rate you pay is made up of two parts: the prime rate and a lender’s profit margin.

Your HELOC Interest Rate = Prime Rate + Lender Margin

The lender’s margin stays the same throughout the life of your loan, but the prime rate can fluctuate based on market conditions.

HELOC Interest Calculation Methods

There are a few different ways your lender can calculate interest, though the average daily balance method is the one you’ll most likely see.

Average daily balance: An average daily balance calculation involves finding the average daily balance for the month and then multiplying it by the interest rate. This is the most common HELOC interest calculation method.

Adjusted balance method: The adjusted balance is where the lender subtracts any payments you made during the period to calculate interest charges from the “adjusted balance.”

Previous balance method: In this method, the lender uses the amount owed at the beginning of the period to calculate interest charges.

Recommended: What Is a HELOC?

Factors Affecting HELOC Interest Calculations

Several factors affect HELOC interest calculations. These include your annual percentage rate (APR), the extent to which you use your credit line, and whether you’re in the HELOC’s draw or repayment period.

APR

As mentioned previously, one of the defining characteristics of a HELOC is the variable APR, which can change over the course of the term. For many HELOC lenders, the interest rate can be adjusted once per month. But you still want to obtain the lowest possible interest rate at the outset of your line of credit.

Your personal qualifications and the attributes of your property and loan are the biggest factors in determining your APR. Some of these include:

•   Credit history: Your credit score and credit history factor into the interest rate your lender will offer you. A better credit score translates into a better interest rate on your loan.

•   Line amount: How large your HELOC credit line is will affect your interest rate.

•   Equity: Generally, the more equity you leave in your home, the better interest rate you’re eligible for.

•   Occupancy: An owner-occupied property typically gets a lower HELOC interest rate than an investment property, although some people do use HELOCs to fund investment properties because they think they can use a HELOC to build wealth.

Of course, it’s recommended to always shop around for a HELOC to ensure you find your best available rate.

Recommended: HELOC vs. Home Equity Loan

Credit Utilization

Lower charges on your HELOC create lower interest charges because with a HELOC, you only pay interest on what you borrow. A HELOC payment calculator can help you estimate what your monthly payment would be on your HELOC based on how much of the credit line you have used and your interest rate.

Draw vs. Repayment Period

With many HELOCs, there is a draw period and a repayment period. The draw period is where your minimum payment covers the interest charged on the loan. The repayment period is where you pay principal and interest in installment payments.

When it comes to the interest charges during the draw vs. the repayment period, the calculation is the same, but the interest rate may be different. The main difference is the principal doesn’t go down if you’re making interest-only payments during the draw period. Some borrowers may also have a fixed interest rate when they enter the repayment period.

Sample HELOC Interest Calculations

It’s helpful to look at the process of calculating HELOC interest rates and see a couple examples to understand how it works. Here’s a complete breakdown of the most common method for calculating HELOC interest, the average daily balance. Yes, it’s a lot of math — but if you have a HELOC, your lender runs the numbers for you and sends you a monthly bill.

Step 1: Find the Average Daily Balance

Add each day’s balance together, then divide by the number of days in the billing cycle.

Average daily balance = Total of daily balances / Days in the billing cycle

Example 1: You have a $10,000 balance for each of the 30 days of the billing cycle.
Average daily balance = ($10,000 X 30 days) / 30 days
Average daily balance = $10,000

Example 2: You have a $10,000 balance for two days into the billing cycle and then pay it off. Average daily balance = ($10,000 + $10,000) / 30 days
Average daily balance = ($20,000) / 30 days
Average daily balance = $666.67

Step 2: Find the Daily Periodic Rate of Your HELOC

To find the daily periodic rate of your HELOC, divide the APR on your statement by 365.

Daily periodic rate = APR/365

Example: Your APR is 9.49%
Daily periodic rate = 9.49%/365
Daily periodic rate = .026%

Step 3: Find the Daily Interest Charge

You’ll find the daily interest charge by multiplying the average daily balance by the daily periodic rate.

Daily interest charge = Average daily balance X daily periodic rate

Example 1: $10,000 average daily balance with a .026% daily periodic rate.
Daily interest charge = $10,000 X .026%
Daily interest charge = $2.60

Example 2: $666.67 average daily balance with a .026% daily periodic rate.
Daily interest charge = $666.67 X .026%
Daily interest charge = $.17

Step 4: Find the Total Interest Charges for the Billing Cycle

Multiply the daily interest charge by the number of days in the billing cycle. For this example, we’ll use 30.

Total interest charges = Daily interest charge X Days in the billing cycle

Example 1: $10,000 average daily balance
Total interest charges = $2.60 X 30
Total interest charges = $78

Example 2: $667.67 average daily balance
Total interest charges = $.17 X 30
Total interest charges = $5.10

In this side-by-side comparison, the borrower who paid off the balance after two days saved over $70 in interest costs for the month.

Strategies to Minimize HELOC Interest Costs

Paying less interest is a smart move if you can swing it. If you need to use your HELOC to finance a large expense, keep these tips in mind to help you save on interest.

Make purchases toward the end of the billing cycle. With the daily balance interest calculation, you want to minimize the number of days you’re paying interest on a purchase. If possible, make purchases with your HELOC toward the end of your billing cycle and make payments shortly thereafter.

Pay earlier in the billing cycle. Since the interest is calculated daily based on the money you still owe, paying it earlier in the billing cycle can reduce the amount of interest you’ll pay. And if you can pay down the principal (as in example 2, above), even better.

Make extra payments. Extra payments reduce the principal, which reduces how much interest you’ll pay.

Convert to a fixed-rate loan. Converting your HELOC into a fixed-rate loan could lower your interest costs if you can lock in a lower interest rate. And even if you can’t, converting to a fixed rate protects you from further rate increases and ensures you have a predictable payment amount from month to month going forward.

Recommended: How HELOCs Affect Your Taxes

Comparing HELOC Interest to Other Borrowing Options

Here’s how a HELOC stacks up against home equity loans, personal loans, and credit cards.

Home Equity Loan

This is a different type of home equity loan that offers a fixed interest rate. Like a HELOC, it uses your home’s equity as collateral, but unlike a HELOC, with a home equity loan you receive your funds in a lump sum upfront and start repaying the principal, plus interest, immediately.

If you’re comparing interest rates on a HELOC vs. home equity loan, you’ll typically see lower interest rates in HELOCs initially, but over the years, a HELOC can adjust many times, whereas a home equity loan will always have the same interest rate.

Personal Loan

A personal loan usually has a higher interest rate than either HELOCs or home equity loans. However, your home isn’t used as collateral on the loan, which is a big upside. In early 2025, the average interest rate for personal loans was over 12%.

Credit Cards

Credit cards have significantly higher interest rates than either HELOCs or personal loans. Average credit card interest rates in early 2025 are over 21%. They’re very flexible, but shouldn’t be relied on as a lending tool because of the high interest rates.

The Takeaway

Paying less interest on your HELOC is a smart move for your finances. If you know how is a home equity line of credit interest calculated, you’ll understand how much you’re paying for borrowing money on a HELOC and use smart strategies to pay less. You might also give yourself a head start by paying more than the interest-only payment during the draw period, so that by the time you enter the repayment period, you’ve chipped away at your balance and lowered your payment amount.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

FAQ

How often does a HELOC interest rate change?

HELOCs are typically variable-rate loans, and while it’s up to the lender to determine how often they change, the rate can change each month. Some HELOCs offer the option to lock in a certain amount borrowed, and the portion you’ve locked becomes a fixed-rate loan with a repayment schedule.

Can I deduct HELOC interest on my taxes?

There are a few scenarios where you can deduct HELOC interest on your taxes. If you use the funds to buy, build, or improve your residence, the interest is tax deductible. However, you would need to itemize your deductions, so consult with a tax advisor. This deduction may change after the 2025 tax year — another good reason to speak with an advisor.

What’s the difference between simple and compound interest for HELOCs?

The daily balance method used by HELOCs is considered simple interest. Compound interest is where interest is charged on top of interest, which isn’t a common way of computing interest for HELOCs. All of the specifics about your HELOC — including your interest rate, how often the variable rate may change, and your rate floor and ceiling, among other things — should be spelled out in your HELOC agreement.

Photo credit: iStock/Prostock-Studio

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


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



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

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


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.


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

²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
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24
2025

How Long Does It Take to Get a HELOC?

By | Home Ownership, mortgage | Comments Off on How Long Does It Take to Get a HELOC?

A home equity line of credit (HELOC) offers flexible access to funds, using your home as collateral. You might use a HELOC to cover home improvements, large planned expenses, or financial emergencies. But how long does it take to get a HELOC?

The typical HELOC processing time is usually anywhere from two to six weeks, though every borrower’s situation is different. If you’re interested in a HELOC, it’s helpful to know what kind of timing you can expect.

Key Points

•   The typical timeline for obtaining a home equity line of credit is two to six weeks.

•   Key stages include research, preapproval, application, document submission, property appraisal, underwriting, closing, and funding.

•   Preparing documentation in advance can expedite the HELOC process.

•   Ensuring the property is ready for appraisal can help speed up the timeline.

•   Selecting a responsive lender with good customer service can smooth the application process.

Understanding the HELOC Application Timeline

First, what is a home equity line of credit? A HELOC is a line of credit that’s secured by your home; that’s the standard HELOC definition.

Applying for a HELOC is a multi-step process, and some stages may take longer than others. Here’s an estimate of how long to get a HELOC from start to finish.

•   Research (1-3 hours). Before you apply for a HELOC, it’s helpful to spend some time comparing mortgage rates and terms from different lenders. Looking at three lenders at least can give you an idea of typical HELOC rates for people with your credit scores. You can also use a HELOC repayment calculator to estimate your monthly payments. Note: If you have an FHA loan, your current lender may not offer a HELOC, but you can get one through another lender.

•   Preapproval (<10 minutes). Mortgage preapproval means a lender performs a soft credit check to conditionally approve you for a HELOC. Preapproval doesn’t guarantee that you’ll get a home equity line of credit.

•   Application (<15 minutes). Many HELOC lenders offer online applications which may take just a few minutes to complete. Some offer initial approval in minutes.

•   Submit documents (<30 minutes). Your lender will likely ask for supporting documentation to go with your application. You may upload them when you submit your application or later on. If you don’t have financial details such as your current mortgage statement, latest tax filing, or pay stubs easily at hand, you’ll need to budget another hour or two to pull your documents together.

•   Appraisal (1 to 2 weeks). Your lender will need an appraisal to know what your home is worth. The appraisal itself should only take a few hours, but you might be waiting a couple weeks for the appraiser to finalize the report and submit it to the lender.

•   Underwriting (2 to 4 weeks). During underwriting, the lender reviews your financial details, the appraisal report, and information about your home to finalize your loan.

•   Closing (1 to 2 hours). If all goes well with underwriting, your lender will schedule a closing date. You’ll sign all the required paperwork, either online or in person, and pay your closing costs.

•   Funding (1 to 14 days). After closing, your lender will make your HELOC available to you. You may get a debit card, ATM card, or paper checks, which can take a couple of weeks to arrive by mail.

This isn’t an exact timeline, but it’s designed to give you an idea of how quickly each phase of the process may move.

Factors Influencing HELOC Approval Time

How long does it take to get a HELOC approved once you’ve submitted your application? You’ll usually need to wait a few weeks, though it may be a shorter or longer wait, depending on your situation and the lender you’re working with.

Lender’s Processing Speed

Every lender is different with regard to processing speeds, and it’s important to understand how lenders measure them. For example, a lender may tell you that you can get approved in five minutes but you’ll still need to go through income and credit verification, which takes time.

How long does a HELOC take at a traditional bank vs. an online lender? It depends, but traditional banks can sometimes move slower than online lenders if their process is more involved. Some online lenders guarantee funding access within five business days after closing.

Documentation Preparedness

The documents you’ll need to apply for a HELOC are the same documents your lender asked for when you bought the home. The list of documents you’ll need includes:

•   Pay stubs

•   W-2s

•   Tax returns

•   Bank account and/or investment account statements

•   Profit and loss statements and cash flow statements (if you’re self-employed)

How long it takes you to get these documents together ultimately hinges on your organizational skills. If you’ve got your documents prepared in advance, you won’t have to go hunting for them when you apply, which could slow the process down.

Property Appraisal

Lenders use an appraisal to estimate what your home is worth. That’s a requirement for any home loan. This is a nonnegotiable step for a HELOC, and how long it takes depends on your lender’s policies.

Some lenders offer what’s called a desktop appraisal, which is completed using property valuation software. An appraiser (or the lender) uses the software to pull data from public records and tax records to calculate an approximate value for the home.

Other lenders may require an in-person appraisal, which involves someone visiting your home to take pictures and measurements. A hybrid approach combines an in-person visit with valuation software. It may take a week for the appraisal to happen, and then you may be waiting another week or two for the appraisal report.

What if the appraisal comes in under your valuation expectations — how long does a home equity line of credit take then? There’s no set answer, since what happens next is usually up to you. You could ask the lender to reconsider the appraisal, or get a second opinion, which would involve scheduling another appraisal. Either option could add days or weeks to your HELOC timeline.

Underwriting Process

Underwriting is usually the most time-consuming step in the HELOC application process. This is when the lender will:

•   Review your application

•   Perform a credit check

•   Verify your income and employment

•   Review the appraisal report

•   Calculate your loan-to-value (LTV) ratio, which measures how much equity you have in your home

•   Calculate your debt-to-income (DTI) ratio, which measures how much of your monthly income goes to cover debt

•   Perform a title search to see if there are any liens or legal claims against the property

•   Request additional documentation from you or ask for clarification about information you’ve provided

•   Draw up the final loan documents and schedule a closing date

How long does it take to get HELOC approval once you reach this stage? If there are no issues with your application and the home appraises the way you expect it to, underwriting can move fairly quickly. Some lenders may be able to get you to a closing in as little as two weeks.

Steps to Expedite Your HELOC Application

If you need access to HELOC funds sooner rather than later, there are some things you can do to try and speed up the process. These tips can help you avoid snags that could eat up more time.

Gather Necessary Documentation in Advance

A little preparation can go a long way where your documents are concerned. Rounding up all of the documents the lender needs to process your application beforehand means you don’t have to waste time tracking them down later.

Check the lender’s requirements to see exactly what you’ll need before you start your application.

•   Ask your employer for copies of your pay stubs if you don’t have them.

•   Download a transcript of your most recent tax return from the IRS.

•   Download your bank statements and/or investment account statements from your bank or brokerage.

•   Use a spreadsheet to create a simple profit and loss statement if you’re self-employed.

Each of these tasks may take a little time, but once you’ve got it all together, you should be set for a smooth application experience. Read our detailed HELOC guide to learn more about how HELOCs work so you’re fully prepared.

Choose a Responsive Lender

One thing that can slow a HELOC application down every time is a lender that drags its feet. You can avoid that situation by researching lenders to see how quickly they return approval decisions, complete underwriting, and fund a HELOC once it’s approved.

Also, consider how responsive the lender is if you have questions. For instance, do you have multiple ways to contact the lender? Does it offer 24/7 phone or chat support? How long does it take a lender to get back to you if you have to leave a message?

All of those things can make a difference when it comes to how long it takes to get a HELOC.

Ensure Property Readiness for Appraisal

If your lender requires an in-person appraisal, make sure your home is ready in advance. You can do that by:

•   Cleaning and clearing away clutter

•   Touching up paint and tackling minor repairs if necessary

•   Sprucing up your curb appeal

It’s also helpful to make a list of all repairs or improvements you’ve made since you bought the home. If you’ve replaced your HVAC system or roof, for instance, that could have a significant impact on your home’s appraisal value.

The Takeaway

How long does it take to get a HELOC? In a perfect world, it’s a speedy process — but the reality is that HELOCs usually take at least a few weeks. If you know you’ll need a HELOC for future expenses, it’s important to get an early start on planning so you don’t have a long wait once you apply.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

FAQ

What is the average time frame to get a HELOC?

An average time frame to get a HELOC is usually anywhere from two to six weeks. The actual timing will largely depend on your lender and whether any issues arrive during underwriting that could push back your closing date.

Can I speed up the HELOC approval process?

You can’t force a lender to move faster, but you can save time on your end by organizing your documents beforehand and making sure your home is appraisal-ready. Choosing a lender that offers fast approval and rapid funding can also make a difference.

Does the property appraisal affect the HELOC timeline?

The property appraisal affects your HELOC timeline, since you have to wait for it to be completed, then wait for the lender to receive the final appraisal report. If the lender uses a desk appraisal (where no in-person visit is needed), it may go a little faster. An in-person appraisal, on the other hand, could take one to two weeks to complete.

What documents are typically required for a HELOC application?

Lenders usually ask for documents that show proof of income and assets. So you may need to provide copies of recent pay stubs, W-2s, tax returns, and bank statements. If you’re self-employed, you can substitute a profit and loss statement and cash flow statement for W-2s.

Does my credit score impact the HELOC approval time?

A good credit score could potentially help you get approved for a HELOC faster, though the lender will still need to verify your income and review the appraisal. “Good” credit is a FICO® score ranging from 670 to 739.

Photo credit: iStock/miniseries

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


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



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

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


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.


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

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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.


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

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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

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

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