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A duplex or townhouse can be a more affordable alternative to a detached single-family home, yet offer a taste of that residential lifestyle. These medium-density housing choices are sandwiched between suburban and high-density development.

When deciding on a duplex vs. townhouse, consider the amount of space you need, the amount of maintenance you want to do, your budget, and whether the rental component of a duplex — or Aunt Jill, Cousin Joe, or Mom next door — appeals to you.

Let’s take a deep dive into the differences between a duplex and townhouse.

What Is a Duplex?

A duplex is a single structure with two conjoined units on one plot of land. Each unit has its own entrance, kitchen, beds and baths. The two units often share the yard, laundry area, and garage space, but that isn’t always the case.

A duplex shouldn’t be confused with a “twin home,” which is two homes that share a wall, but each unit and the land it sits on is individually owned. The lot line actually runs through the common wall.

Buying a duplex is often touted as a good investment because owners can rent out one side while living in the other.

Types of Duplexes

There are two common configurations when it comes to duplex living:

•   Side by side. The shared wall is in the middle.

•   Up and down. When the units are in an upstairs and downstairs arrangement, the dividing wall is the floor/ceiling.

What Are the Pros and Cons of Duplex Living?

Duplexes are in demand, often by first-time homebuyers.

Owner-occupants have a big financing advantage: If you buy a multifamily property of four or fewer units and plan to live onsite, you can use an FHA loan with a low down payment or a VA loan, if you’re eligible, with no down payment at all.

There are other upsides, and potential downsides, you may want to consider before deciding on a townhouse vs. duplex.

Duplex Pros	Duplex Cons
May be more affordable than a traditional single-family home	Shared wall and yard means limited privacy
Usually less maintenance than a single- family home	Owners still have some maintenance responsibilities
More residential feel than an apartment	Usually more expensive than a condo
Half or all can be rented out	The neighbor sharing your wall may be loud, or a relative next door could be intrusive
Usually has a washer and dryer	If both units will be rented out, an investment property loan typically calls for 25% down and has a higher mortgage rate

What Is a Townhouse?

You get the idea about duplexes, but what is a townhouse? A townhouse is an individually owned home with two or more stories and at least one shared wall.

You own the inside and outside of your unit and the land it rests on, whereas a condo owner owns the interior of the condo. A townhouse has a separate entrance but may share communal spaces.

Townhouses are often found where land is in short supply. This is particularly true in areas that transition from dense, urban cities to the suburbs. They make good use of the space with their vertical nature and shared walls.

They are typically lower priced than detached single-family homes. By the way, the U.S. Census Bureau, which tracks residential construction, considers townhouses and duplexes single-family homes.

Townhome ownership has been rising, and the National Association of Home Builders (NAHB) says the long-term prospects for townhouse construction remain positive as homebuyers seek medium-density residential neighborhoods such as urban villages.

The NAHB expects townhouses to comprise more than 15% of all single-family homes in the coming years.

What Are the Pros and Cons of Townhouse Living?

As the prices of traditional single-family homes have gone through the roof in most markets, townhomes have become popular as starter homes.

And downsizers may be attracted to townhouses, whose cost may be lower than their detached counterparts.

Townhouses make great use of space, but they also have less privacy, and you may need to follow the rules of a homeowners association, if one exists. (In the condo vs. townhouse comparison, condos come with an HOA, but not all townhouse communities do.)

Financing a townhouse works just like financing any single-family home. Here are pros and cons of buying a townhouse compared with a detached single-family home.

Townhouse Pros	Townhouse Cons
Typically more affordable	May not appreciate as much
May share cost of maintenance in the development	Less privacy
Townhomes may have amenities attractive to residents	Owners may need to pay dues each month as well as special assessments
Full ownership of a property	Neighbors are closer together
Small yard or patio requires less maintenance	Yard or patio tends to be small

Recommended: Visit the Home Loan Help Center

Weighing the Differences Between Duplexes and Townhouse

Taking a look at living in a duplex vs. a townhouse side by side, they have commonalities but also differences. Here are some.

Structure and Design

A townhome typically is in a planned unit development where the homes share walls and community spaces. A duplex is structured to share a yard and a wall with only one neighbor.

Purchase Price

Cost will vary based on square footage, neighborhood, amenities, lot size, and other factors. A duplex will usually cost more than buying a townhouse, but the tradeoff is that you can rent out one side.

Maintenance Cost

A townhouse may have HOA dues, though they might not be ample because owners are responsible for much of their own maintenance. A duplex owner will need to maintain both units and the yard. A comparison will depend on the size and age of the properties and more.

Rental Income

If you plan to rent out a townhouse you buy, it’s a single unit. A duplex has two units, so it may be easier to make the financials work.

Privacy

With a townhome, you’ll be living in a community. Compare that with a duplex, where you’re sharing space with one neighbor.

Then again, having a single neighbor might feel less private than if you had many.

Investment Value

The ability to rent at least one side of a duplex holds more investment value than a townhome. The townhome may also have HOA rules about renting that may not jibe with your idea of how to use your property.

The Takeaway

The difference between a townhouse and a duplex is what fits your lifestyle. A duplex can offer a larger yard and rental potential, but a townhouse may bring that single-family home vibe at a lower price point than a duplex.

3 Home Loan Tips

1. Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.
2. Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.
3. Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

FAQ

Are townhomes becoming more popular?

The market share of townhomes is rising. According to the National Association of Home Builders, more townhomes were built in 2022 (152,000) than the previous year (122,000), representing 13.4% of all new single-family starts.

Which is a better investment: a duplex or a townhouse?

A duplex may be the better investment because you have the potential to rent out both units or live in one and collect rent from the other.

Is it faster to build a duplex or a townhouse?

A lot of factors affect how long it takes to build your new home: size, location, materials, weather, subcontractors, the city or county building department, and the complexity of your building plans. Many townhomes are built at once and may become available more quickly. Construction of a duplex is more like a house.

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Photo credit: iStock/peterspiro

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

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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Can a person on disability buy a house? Yes, if that aspiring homeowner’s income, debt, and credit qualify them for the house they want to buy. Lenders look at those factors for all applicants.

Income can come from Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), long-term disability from an employer or insurer, or veterans disability compensation.

Let’s take a look at housing rights, how to qualify to buy a house on disability, and home loans that make sense.

Legal Protections for People With Disabilities

The Fair Housing Act prohibits housing discrimination when people are buying or renting a home, applying for a mortgage, or finding housing assistance. That shields people with disabilities, among many others.

Mortgage lenders are not to:

•   Approve or deny loans based on an applicant’s disability

•   Refuse to provide a mortgage or information about a mortgage to a person with a disability

•   Create different terms, rates, or fees for a disabled person

•   Appraise a property differently for a disabled person

•   Modify homeowners insurance for a person with a disability

•   Discriminate in a home loan modification

Section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act (ADA) also stipulate that people with disabilities should not be excluded from federal housing programs offering financial assistance and do require accommodation in the construction and modification of public and commercial spaces.

How to Buy a Home on Disability

If you receive disability pay and want to buy a house, you might start by seeking prequalification and preapproval for a mortgage.

Prequalifying is quick and provides a ballpark figure of how much of a mortgage you can afford.

This mortgage calculator can also give you an idea.

Preapproval begins with a mortgage loan application, which can be made for many different types of mortgage loans. A lender will look at your credit scores, income, debt, and assets.

If you’re preapproved for a mortgage, the lender will issue a letter with a maximum amount you can likely borrow. Buying a home under this amount gives your loan a good chance of closing because it’s based on hard credit inquiries and documentation you provided.

You may have a chance to buy a house from a family member. If so, a gift of equity is a wonderful one: The relative sells the home to you for less than full market value.

Credit Scores

Your credit scores and history are a big part of qualifying for a mortgage. Your median credit score of three represents your risk to the lender. A higher credit score means you pay your bills on time and are less likely to default.

Lenders often offer the most favorable interest rates to borrowers with credit scores above 740, but a government home loan like an FHA loan is available to people with credit scores as low as 500.

If you have past medical bills or an imperfect credit history as a result of your disability, you can focus on factors that affect your credit score and make improvements as needed. Making on-time payments and paying down debt can go a long way toward helping your credit.

Income Requirements

Income and debts help determine home affordability.

Your disability income counts as long as there is no expiration date on your benefits in the next three years (or you have a guaranteed job waiting with the same pay once you’ve recovered, as can be the case with a maternity leave).

General guidelines suggest looking for a home with a monthly payment that is around 28% of your gross monthly income, or three to five times your yearly income.

See also: How Much House Can I Afford Based on My Income?

Debt Requirements

Your debt also plays a large factor when your lender determines how much you’re able to borrow.

Lenders will look at your debt-to-income ratio, which is your debt payments each month relative to your monthly income. This number is recommended by lenders to be 43% or less, though the exact ratio will depend on the mortgage loan you’re applying for.

Generally, the lower the number, the better your chances of being approved for the mortgage you want.

To find your DTI ratio, add up your monthly bills (not including groceries, utilities, cellphone bill, car insurance, or health insurance) and divide that sum by your monthly gross income. Then turn it into a percentage.

Sometimes qualifying for a mortgage with your own income isn’t enough. There are assistance programs worth looking into.

Financial Assistance in Your State

One of the first places you can look for homeownership assistance is your individual state. Once you click on your state, you’ll see a link for “homeownership assistance” or “homebuying programs.” From there, you’ll be directed to programs in your area that offer down payment assistance and other help.

Are you a first-time homebuyer, meaning you haven’t owned a principal residence in the past three years? If so, you may qualify for more housing perks than others.

Another reference is the National Council of State Housing Agencies, which has a state-by-state list of housing finance agencies, which cater to low- and middle-income households.

Recommended: Short-Term vs Long-Term Disability Insurance

Home Loan Programs for People With Disabilities

There may be a specialized program to fit your needs. Take a look at some of these options.

Section 8 Housing Choice Voucher Homeownership Program

Most know the Section 8 housing program as providing rental assistance for the elderly, very low-income families, and people with disabilities. But did you know that low-income families may be able to use the vouchers to buy a home and assist with mortgage payments?

The conditions are up to the public housing agencies in your area. Contact information for each state can be found on HUD’s website.

General qualifications may include:

•   Be eligible for the Housing Choice Voucher program

•   Be a first-time homebuyer

•   Family cannot pay more than 40% of monthly income for housing expenses and utilities

•   Must meet minimum income standard

•   Full-time employment

•   Applicant cannot have defaulted on a previous mortgage

•   Complete homeownership counseling sessions

VA Loans

Whether you receive Veterans Affairs disability compensation or not, if you’re a veteran, VA home loans make a lot of sense. There’s no down payment and no minimum credit score requirement (although many lenders require a FICO® score of at least 580 to 620). Most borrowers pay a one-time funding fee.

Disabled Veteran Housing Assistance

Veterans who have service-related or aging-related disabilities may be able to qualify for grants through the VA. Three types of grants can be used to modify a home for your needs.

•   Specially Adapted Housing or a Special Housing Adaptation grant. This grant allows disabled veterans to buy, build, or modify a home to help them live independently.

•   Temporary Residence Adaptation grant. If you’re living with a family member or in another temporary living situation, you may be able to qualify for grant money to modify the home to meet your needs.

•   Home Improvements and Structural Alterations grant. This grant allows you to make structural or medically necessary improvements to your home. Veterans may not need to have a service-connected disability to qualify.

FHA Loans

Credit scores of at least 500 are required for an FHA loan. If your credit score is between 500 and 579, you’ll need a 10% down payment. A score above 580 earns the privilege of putting as little as 3.5% down.

Conventional Loans

If you have good credit and a decent down payment, a conventional loan may be a more inexpensive option than an FHA loan.

A Fannie Mae “family opportunity mortgage” can also make sense for a parent who wants to buy a home for an adult disabled child and retain owner-occupant status, even if the parent won’t be living in the home.

A Fannie Mae HomeReady® Mortgage is ideal for low-income borrowers who may need down payment assistance. It allows for a down payment as low as 3% to come from various sources, such as grants, gifts, and “Community Seconds” second mortgages. Borrowers must have a FICO score of at least 620, but a credit score above 680 gets the best pricing.

USDA Loans

The U.S. Department of Agriculture (USDA) has nothing-down options to buy a home through its Rural Development office. Low- and moderate-income buyers in rural areas may apply for a USDA loan through approved lenders. Low- and very-low-income buyers may apply directly to the USDA for a subsidy to lower mortgage payments for a period of time.

Note: SoFi does not offer USDA loans at this time. However, SoFi does offer FHA, VA, and conventional loan options.

The Takeaway

A person who receives disability benefits may be able to buy a house if they qualify based on income, debts, and credit score. There are also programs to help buyers qualify for a mortgage.

If you need a reliable partner in your home-buying journey, give SoFi a look. SoFi offers low-fixed-rate mortgages, and qualifying first-time buyers may put just 3% down.

Take a look at home mortgage loans with SoFi today.

FAQ

Can you get preapproved for a mortgage while on disability?

Yes, it is possible to get preapproved for a mortgage while on disability. You’ll submit an application to one or more lenders, which will look at your income, debt, assets, and credit history.

Is it possible to buy a house on disability?

Yes. You will need to show that your disability income will continue for at least three years or that you have a comparable job waiting once you’ve recovered.

Can I buy a house on SSI?

Yes, you can use Supplemental Security Income to qualify for a home as long as there’s no documented expiration date in the next three years. SSI payments alone usually aren’t enough to pay mortgage payments, but it might be possible to buy a house with help from family members.

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Photo credit: iStock/baona

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

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

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

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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The average length of a mortgage is 30 years, but that’s not the amount of time that most borrowers will keep the loan. Homeowners only stay in a home for eight years on average, and many refinance their home loans.

So most folks will sign up for a 30-year mortgage but keep it for a far shorter time. Why 30 years? It tends to keep monthly payments affordable.

Let’s review mortgage terms to help you decide what’s best for your situation.

What Is a Mortgage Loan Term?

The term is the number of years that a borrower agrees to repay the total amount borrowed on a mortgage.

When choosing a mortgage term, a homebuyer or refinancer picks a term of, for example, 30, 20, 15, or 10 years, divided into monthly payments. A 30-year loan is divided into 360 monthly payments, and a 15-year loan is divided into 180 monthly payments.

Choosing a loan term is one of the most important considerations you’ll make during your home purchase or refinance. It will help determine the monthly payments and how much interest you’ll pay over the life of the loan.

Understanding how mortgage amortization works is a key part of this. A loan with a shorter term will result in a much lower overall interest cost but higher monthly payment.

An online mortgage payment calculator can help you find your desired monthly payment number.

30-Year Mortgage Term

A 30-year mortgage term is the most common mortgage term by far. More than 70% of mortgages have a 30-year term, according to data collected from the Home Mortgage Disclosure Act.

Five years earlier, a Bureau of Labor Statistics survey found that 30-year mortgages represented 61% of mortgages.

The increase in the number of 30-year mortgages could be an indication of home affordability as buyers look to qualify for a mortgage.

With average 30-year monthly payments of nearly $1,950 nationwide in 2022, it’s no wonder borrowers usually choose the 30-year term over others. The National Association of Realtors® reported that statistic and that June’s affordability index figure was the lowest since June 1989.

Aspiring homeowners, even with first-time homebuyer programs, have faced sky-high home prices in a hot housing market whose future temperature remained uncertain.

20-Year Mortgage Term

The 20-year mortgage is far less common than a 30-year mortgage, and even less common than a 15-year mortgage, but could be considered the sweet spot between the two, offering substantial savings on interest costs compared with the 30-year loan.

After all, a mortgage loan that you’re not paying interest on for 10 years is bound to cost less. As a bonus, shorter-term mortgages tend to have lower interest rates.

Recommended: Mortgage Lender vs Servicer

15-Year Mortgage Term

With 9% of the market share, according to Home Mortgage Disclosure Act data, a 15-year mortgage is the second most common mortgage term.

Like 20-year mortgages, 15-year mortgages offer substantial savings on interest costs. The catch is you have a much higher monthly mortgage payment.

10-Year Mortgage Term

The 10-year mortgage term is found in both fixed- and adjustable-rate mortgages.

A fixed-rate 10-year mortgage is an accelerated mortgage that allows borrowers to build equity fast. Someone choosing traditional refinancing or cash-out refinancing might opt to pair a lower rate with a faster loan payoff.

A 10/1 adjustable-rate mortgage (ARM) is actually a 30-year loan most of the time, but the introductory period, when the rate may be lower than fixed-rate loans, is what holds appeal. A 10/1 has a fixed rate for 10 years, after which the rate will adjust every year.

More and more, you’ll see ARMs whose rates will adjust every six months (so a 10-year ARM will be offered as a 10/6), thanks to a new benchmark index.

The teaser rate for a 10/1 ARM is higher than that of other ARMs.

5-Year Mortgage Term? Not Exactly, but …

A 5/1 ARM is actually a 30-year loan most of the time, but the intro rate is the star attraction. A 5/1 ARM features a low rate for five years, after which the rate will adjust every year according to an index.

You’ll also see 5/6 ARMs, whose rate adjustments are based on the Secured Overnight Financing Rate, or SOFR, which replaced the London Interbank Offered Rate, or LIBOR. A 5/6 ARM rate can go up or down by one percentage point every six months. A 5/1 ARM rate can rise or fall by up to two percentage points each year.

For borrowers who are not planning to keep their home for long or for those hoping to refinance before the initial rate adjustment, a five-year ARM may make sense.

Recommended: Home Loan Help Center

The Takeaway

The average length of a mortgage is 30 years, which keeps monthly payments affordable. The savings on a loan with a shorter term are substantial, but many homebuyers and refinancers can’t abide the higher payments that come with a faster loan payoff.

Need a mortgage? SoFi offers a variety of terms. Scroll through the features of SoFi Mortgages for each category.

And just for kicks (there’s no obligation), get a personal rate quote.

FAQ

What is the most common mortgage term?

The most common mortgage term is 30 years, according to Home Mortgage Disclosure Act data.

What is the longest mortgage term?

It may be possible to obtain a 40-year mortgage. Any mortgage with a term longer than 30 years is not considered a “qualified mortgage,” which means few lenders will offer a loan that risky.

Forty-year loan modification options for borrowers in distress are more common.

Are there 40-year mortgages?

Forty-year mortgages do exist, but they’re not considered qualified mortgages, which is a requirement for a mortgage to be sold on the secondary mortgage market to investors. This is ultimately what makes a mortgage affordable.

You can only get a 40-year mortgage from a portfolio lender, which is a lender that keeps the loan on its books.

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Photo credit: iStock/Elena Katkova

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

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

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

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For those who love living near the water, or really near, a floating home may be the perfect fit. These unique dwellings provide rooms with a view, a community vibe, and more.

Isn’t this another name for a houseboat? No. Floating homes almost always stay put.

Read on to find out what a floating home is and what type of person might be the best fit for one.

Characteristics of a Floating Home

Floating homes have the following features:

•   Permanently docked. Floating homes sit on the water like houseboats, but they are anchored and permanently connected to land-based utilities. Unlike houseboats, floating homes have no engine.

•   HOA membership. Floating home residents pay homeowners association or moorage fees to maintain the docks and slips and cover common utility bills like water, sewer, and garbage service.

•   Slip might be included. Floating homes are often sold with their slip.

•   What lies beneath. The hull is often made of concrete, although it could be wood, metal, or foam. A houseboat hull is likely made of fiberglass, aluminum, or steel.

Pros and Cons of a Floating House

For water lovers, floating houses offer a unique lifestyle that might fit the bill. But they come with their fair share of drawbacks as well.

Benefits

•   Close community. Floating homes typically are very close to their neighbors. This can mean a tight-knit community.

•   No engine maintenance. Unlike houseboat owners, floating home owners don’t have to worry about the upkeep of an engine.

•   Water, water, everywhere. Forget waterfront homes; floating homes are in the water. For the homebuyer with a love of the outdoors and watersports, the location is unbeatable.

•   Possibly less expensive housing. In certain cities in California, Washington state, and Florida where homes on terra firma might be sky-high, a floating home could cost less. Look into the cost of living by state if you’re thinking about a move.

•   Tend to hold their value. Whereas houseboats tend to depreciate, floating homes may appreciate.

•   Potential for property tax breaks. A floating home might be classified as personal property, not “real property,” so owners may not not have to pay property taxes. Instead, they would pay an annual personal-property tax. (Tax laws pertaining to floating homes differ by state, county, and even water body, so it’s important to know the applicable law where the floating home exists.)

Drawbacks

•   Fees. Floating home owners typically pay HOA or moorage fees. They can be sizable and keep rising.

•   Limited locations. Floating homes are pretty rare. That means limited opportunities to purchase one or limited space in moorages to build one.

•   Seasickness or motion sickness. While floating homes aren’t mobile (unless they are, in rare instances, towed), owners will still experience some rocking and rolling, which might not be the best for those with sensitivity toward motion sickness.

•   Weather and water damage. If there’s inclement weather on the body of water, floating home owners may face expenses for repairs. And being on the water all the time can take a toll on wood and metal.

•   Harder to finance. Securing a loan can be a challenge. Some lenders do offer long-term loans (but not FHA or VA loans) for floating houses. They usually require at least 20% down and have a higher rate than traditional mortgage rates. A personal loan might be another option.

Moorage Rules

The moorage is the community where a floating home stays, usually permanently.

A slip in a moorage may be part of a floating house purchase. Other owners rent a slip. The price of a floating home with slip will be much more but cost less in monthly fees.

Like any neighborhood, moorages will have their own personality based on the residents. As floating homes tend to be close together, the communal spirit may come into play more than in a traditional neighborhood.

Similar to an HOA, moorages have community rules, which could include:

•   Stipulations on renting out floating homes

•   Standards of exterior upkeep of floating homes

•   Quiet hours

•   Share community spaces or equipment

Buyers may want to shop around for a moorage that suits their personalities.

Finding a Floating Home to Buy vs Building One

Because many floating homes are sold along with the slip, buyers don’t have to seek out a new moorage for the property.

Homebuyers in the market for a floating home will have to refine their search to areas where floating homes are popular and communities are established.

The benefit of building a floating home is the technology available today. Modern floating homes typically use different foundations than older floating homes, which could translate to lower maintenance costs down the line.

But a drawback to building a floating home is the stress of finding a moorage that can accommodate it. Float home builders may have to wait for an opening.

Recommended: How to Build a House

Maintaining a Floating House

When it comes to upkeep, floating homes have most of the maintenance of single-family homes, with the added challenge of keeping them afloat.

Floating home owners should keep a close eye on their home’s foundation and reach out to specialists whenever a crack or issue emerges.

Even basic repairs such as plumbing or electrical may require a contractor. Not all plumbers are certified scuba divers, but they may have to be to work on a floating home. That means even basic repairs could cost much more than they would for a land-based home.

Floating houses need ongoing maintenance thanks to exposure to the elements. To keep siding and other exterior parts in good condition may require constant maintenance and more frequent replacement.

Who Should Get a Floating House?

Floating homes can be expensive and fees can add up, so buyers will have to weigh whether this unusual choice among the different types of homes is worth its salt. Floating home buyers may be interested in some or all of the following:

•   A love of water and proximity to nature. With waterfront views around the entire property, floating homes are a great fit for those who love activity on the water and unbeatable sunsets.

•   A sense of community. If a buyer is looking for neighbors nearby and with similar interests, a floating community could be a great fit.

•   Minimalism. When everything has to be hauled from the dock onto a property, it can be exhausting. Floating homes and downsizing may go hand in hand.

•   A go-with-the-flow mentality. This style of living comes with some day-to-day inconveniences. Plumbing and electrical outages are more common in floating homes because of the nature of the hookups. If the moorage is in a remote area, cellphone service and internet access may be limited.

The Takeaway

Floating homes aren’t for everyone, but water lovers may feel the urge to say ahoy to this lifestyle steeped in nature. A floating house has benefits, but inconveniences and fees make this way of living best for a unique type of buyer.

3 Personal Loan Tips

1. Before agreeing to take out a personal loan from a lender, you should know if there are origination, prepayment, or other kinds of fees. If you get a personal loan from SoFi, there are no fees required.
2. In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.
3. Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is a floating house, and what is the difference between a floating house and a houseboat?

A floating home is permanently docked with a floating foundation. Houseboats have an engine and can move to different locations.

What is the cost of maintaining a floating home?

Maintaining a floating home may be similar to the upkeep on a waterfront or beachfront property. Basic repairs, including plumbing and electric, will likely require a specialist with experience in floating homes, which could be more expensive.

Can you get a loan to buy a floating home?

You could use a floating-home loan, personal loan, or home equity line of credit to buy a floating house, but floating homes are not eligible for a traditional mortgage.

Are floating homes safe?

Most are. Most floating home communities have standards in order to maintain property values. And the homes are usually subject to inspection and enforcement of regulations of the moorage and jurisdiction.

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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.

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If you’re applying for a mortgage, you’ll want to know what credit score mortgage lenders use when they’re looking at your credit. It’s more complex than it sounds.

More than 90% of mortgage lenders use scores generated by FICO® models — but each of the three major credit reporting agencies uses a different version of the FICO software.

How Mortgage Credit Scores Work

When you apply for a mortgage and your credit is pulled, the lender will see scores from credit reporting agencies Experian, Equifax, and Transunion.

Which FICO score do mortgage lenders use? The middle number. If two of the three scores are the same, lenders will use that number.

If you’re applying for a mortgage with another person, the lender typically will look at the middle score of both parties and use the lower of the two. Fannie Mae calls for things to be done differently: Lenders of conventional conforming loans are to average the middle credit scores of all applicants.

Experian uses FICO Score 2, Equifax uses FICO Score 5, and Transunion uses FICO Score 4. If your middle credit score comes from Equifax, then your credit will have been scored on FICO Score 5. If your middle score comes from Transunion, your credit will have been evaluated using FICO Score 4, and so on.

Most mortgage lenders only consider FICO scores, but some also will look at a VantageScore® typically gleaned from one of the two latest scoring models.

Both FICO and VantageScore calculate credit scores in a range between 300 to 850, and both put the most weight on payment history and credit utilization (the amount of credit a cardholder is using compared with the person’s credit limits).

It might be mind-blowing to hear, but you have multiple credit scores.

And the scores you see on a credit card statement or in your credit monitoring app are likely higher than the score your lender will see.

Commonly Used Scoring Model in Mortgage Applications

Why do the three credit reporting agencies each use a different FICO scoring model for mortgages?

FICO designed the different versions specifically for each credit bureau because of the way the credit bureaus store and report information in a credit report. These legacy models have been used for years because until recently they were required by Fannie Mae and Freddie Mac for conventional conforming loans.

Despite each credit bureau using a different scoring model, the scores generated should be the same or similar.

Recommended: What Credit Score Is Needed to Buy a House?

Other Factors Mortgage Lenders Consider to Determine Mortgage Terms

Beyond knowing which credit score is used to buy a house, you may also want to know what other factors mortgage lenders consider when deciding whether or not to offer mortgage preapproval on your way to a loan.

Mortgage lenders also consider the following:

•  Steady income. Stable employment is one of the key indicators of a low-risk borrower who is able to repay the loan.

•  A low amount of debt. Lenders look at how much debt you have relative to your income. This is also called your debt-to-income ratio. If you have too much debt, you may not qualify for a new mortgage.

•  Assets. Though not as important as your income or debt, lenders will also look for high-value assets. This includes cash in your checking and savings accounts, investments, retirement accounts, and other property. Assets help a borrower appear less risky to a lender since the money could be used for a large down payment or to cover monthly expenses.

•  Down payment. Your down payment will affect your loan-to-value ratio, which will also affect your interest rate. With a higher down payment, the risk to the lender decreases, which is why you’ll pay a lower interest rate. This calculator for mortgages can help you find a mortgage amount that may work for your situation.

How Your Credit Score Affects Your Interest Rates

Simply put, a better credit score gives you a better interest rate on most mortgages.

An FHA loan is an outlier: Your rate and mortgage insurance premium will be the same no matter what your FICO score is. FHA loans are especially popular with first-time homebuyers in part because of the lenient credit score requirements.

Your options, terms, and interest rates are often more favorable when you have a good credit score.

Recommended: Stop by the Mortgage Help Center

What Factors Go Into a Credit Score?

Improving your credit score before you apply for a mortgage could pay off. It’s helpful to know what to work on that could help you.

•  Payment history. Paying on time every time may be the single most important thing you can do to improve your credit score. It shows that you’re a reliable borrower.

•  Credit utilization. Using most of the credit available to you shows a lender you may be overleveraged and unable to repay your loans. Keeping your credit utilization under 30% is preferred by many lenders.

•  Recent applications. Applying for a lot of credit in a short amount of time can be seen as risky by a lender. It may be wise to limit credit applications leading up to your mortgage application. However, this is different from shopping for a mortgage, when your application at different lenders within 14 or 45 days, depending on the scoring model used, is only considered one hard pull. (Also, be sure not to open any new lines of credit while your mortgage is being processed.)

•  Derogatory marks. A bankruptcy, delinquent account, judgment, charge-off, or accounts in collections are looked upon negatively. It may be best to take care of any issues on your credit report before applying for a mortgage.

Free credit reports are available from annualcreditreport.com. If you find an error, contact the business that issued the account or the credit reporting agency that issued the report. The Consumer Financial Protection Bureau also will assist with complaints.

What Is a Good Credit Score to Buy a House?

To qualify for the best rates on a conventional mortgage, aim for a score above 740. Higher scores reflect a lower credit risk, which is usually rewarded by lenders with more favorable terms.

Can you buy a house with a bad credit score? Possibly. Someone with a credit score as low as 500 (a “poor” FICO score) may qualify for an FHA loan or, with sufficient residual income, a VA loan.

Minimum Credit Score Required by Mortgage Loan Type

Different mortgage types have different minimum score requirements.

•  FHA: 500 if you can put down 10%. 580 if you want to put down 3.5%.

•  Conventional: 620

•  Jumbo loan: 700

•  USDA: No minimum, but scores above 640 are most successful with lenders

•  VA: No minimum, but it is advisable to have a score above 620

A lower credit score may be offset by compensating factors like a 20% down payment or substantial cash reserves.

The Takeaway

Your credit score is the key to unlocking great rates and terms from the lender of your choice. Knowing which credit score is used for a mortgage is a great first step to getting mortgage terms that can work for you.

If you need a home mortgage loan, getting a mortgage with SoFi could be a great option. SoFi has a range of mortgages with competitive rates, flexible terms, and low down payment options.

A mortgage loan officer can answer your mortgage questions and help you find a loan for your unique situation.

Look at the SoFi mortgage menu and then get a quick rate quote.

FAQ

What does “A” credit mean?

“A” credit is the grade equivalent of a credit score. It’s also called a credit rating and can be assigned to individuals, businesses, or even governments, though it’s usually reserved for . higher credit scores. Credit ratings can range from AAA to a C or D, with AAA being excellent. Credit with an “A” grade represents a desirable borrower.

Which FICO score do mortgage lenders use?

Of the three FICO credit scores pulled from the three credit bureaus, lenders will home in on the middle number.

Can I get a home loan with bad credit?

There are options for borrowers with poor credit. FHA, for example, backs loans with 10% down when a borrower’s credit score is between 500 and 579. Borrowers with scores of 580 and above are eligible to put 3.5% down on FHA loans.

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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 .

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

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

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

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