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If you’re preparing to join the ranks of homeowners, whether you are just starting to daydream about it or are actively scanning listings, it’s important to understand the costs involved. You’ll probably hear a lot of talk about mortgage rates as you enter this realm, and, while your home loan will certainly be a critical expense, it’s just one of the things to budget for.

Here, you’ll learn about all the expenses involved in owning a home, from that mortgage to home maintenance; from homeowners insurance to utilities. Equipped with this intel, you’ll be better prepared for the true cost of having your very own place and making sure you’re ready for your big purchase.

Costs of Purchasing Your Home

When you think of buying a home, you may well be focused on accumulating that bundle of cash known as the down payment. But there are more costs associated with buying your home than simply that expense.

The down payment is probably the largest initial cost you’ll take on, but don’t be blindsided by the additional fees you’ll need to pay. You can find out how much home you can afford with a home affordability calculator or keep reading to learn about the typical costs associated with owning a home.


💡 Quick Tip: Don’t overpay for your mortgage. Get a competitive rate by shopping around for a home loan.

Down Payment

Historically, the magic number for a down payment has been 20% of the home’s value. If you’re thinking that’s impossibly steep, take a deep breath. The median down payment on a conventional loan recently clocked in at about 6% among first-time homebuyers. And conventional home loans can be had with as little as 3% to 5% down.

So 20% may no longer be standard, but, if you put down anything less, you may pay private mortgage insurance (PMI) on top of your monthly mortgage.

PMI can make it possible for many buyers to put down a more affordable down payment while protecting the bank’s investment if you were to default on the loan. The downside of PMI is the additional payments you’ll need to make each month until you are eligible to remove this insurance from your mortgage payment. Typically, PMI is canceled when your principal balance reaches 78% of the home’s original value (meaning the purchase price).

As you think about how much of a down payment to make, it could be tempting to make as large a payment as possible to help minimize your monthly mortgage payment and avoid PMI. Keep in mind that doing so can leave you little wiggle room financially for the additional costs associated with your home down the line. If you make a large down payment, it can help to have money reserved as an emergency fund and for unexpected home repairs.

Closing Costs

Your down payment won’t be the only thing due on closing day. In addition to the down payment, you’ll be expected to cover closing costs. Closing costs typically cover things like:

•  Title insurance

•  Title search fees

•  Appraisal costs

•  Escrow or attorney fees

•  Surveying

•  Lender fees

Closing costs can vary based on factors such as the purchase price of your property, but you can expect to pay an estimated amount somewhere between 3% to 6% of your loan amount in closing costs.

Home Ownership Costs

You may think that being a homeowner involves affording the down payment on a house and the monthly payment of principal and interest on your mortgage, but there’s more to be prepared for. Here are some extra costs you may want to save and budget for.

Mortgage Payment

Your monthly mortgage payment could be just the funds paid to the bank, a combination of principal and interest, or it could be a few different payments rolled into one single bill. Your mortgage payment might include some or all of the following:

•  Principal: This is the repayment of the initial loan you took out to purchase the home. Paying the principal is paying off the remaining balance of what you owe on your home to your lender.

•  Interest: Depending on the terms of your mortgage, the interest could be fixed or variable. You are paying this every month for the privilege of borrowing the funds to buy your home. It’s one of the ways banks make money.

•  Property Tax: If your mortgage has an escrow account, a portion of your mortgage payment may go towards your annual property tax bill. Property tax is paid to your local government and usually goes towards funding public schools, public works, libraries, parks, city government, and maintenance. The amount of property tax you’ll pay is calculated as a percentage of the value of your property. The percentage varies by location. Some homeowners may pay this separately, directly to their town.

•  Insurance: If you’re paying into escrow, you’ll probably pay a portion of your homeowners insurance policy each month instead of a lump sum once a year. You’ll work with your insurance provider to determine the coverage of the policy, but standard home insurance typically provides protection against certain unexpected events, like damage caused by a fire or a break-in. Policy specifics will vary.

•  PMI: If your initial down payment was under 20%, you may be responsible for PMI, as described above. This payment can be anywhere from 0.2% to 2% of your loan amount per year.

💡 Quick Tip: One answer to rising house prices is a jumbo loan. Apply for a jumbo loan online with SoFi, and you could finance up to $2.5 million with as little as 10% down. Get preapproved and you’ll be prepared to compete in a hot market.

Utilities

Unlike a rental where you may only pay for gas and electricity, when you own a home, you’re on the hook for all utilities, which can include water, gas, heat, electricity, sewer, and trash/recycling. Utilities will vary based on your location, as well as the size of your home, but the national monthly averages are as follows:

•  Electricity: $117.46

•  Water: $45.44

•  Broadband internet: $59.99

•  Gas: $61.69

•  Waste services: $66.20

•  Phone: $114.

These figures vary based on area and activity, but taking steps to save energy on heating and cooling could lower your monthly bills. Depending on where you live, utility providers might offer an option to set a fixed rate for the year, so you’ll pay the same amount each month instead of paying a bill that varies with the change in the seasons (say, soaring in the summer as people switch on the air conditioning).

Improvements & Repairs

Your dream home might just be a few renovation projects away, but remember to factor the cost of those updates into the true cost of owning your home. Not only that, but strategic improvements can greatly increase the resale value of your home.

The cost of home improvement projects vary widely based on what you’re working on. A recent survey by Houzz found that the median cost for a home renovation was $22,000 in 2022.

Maintenance

Home maintenance entails the general upkeep of things like your property’s systems, structures, and appliances.

Upkeep costs can be more predictable than some repairs. One rule of thumb says to budget 1% to 4% of your home’s value for annual maintenance. A variety of these projects might be DIY-ed, but you’ll want to budget in the cost of tools and supplies.

You can’t predict the exact lifespan of your appliances and home systems, but a general idea can make it easier to anticipate future costs. When you buy your home, take note of how old the appliances and other systems are, so you can have a better idea of when you’ll need to replace them.

For example, a refrigerator could last between 10 and 18 years, but you might benefit in terms of energy efficiency by replacing an old power-guzzling appliance sooner. Consider the outside structure of the house as well, such as the roof, siding, and gutters. It may be helpful to get a quote from a contractor for any larger repairs or renovations you plan to complete so you can factor that into the costs of owning a home.

Recommended: The Cost of Buying a Fixer-Upper

The Takeaway

The time and money required to own and maintain a home can be considerable. There are the monthly costs, which can involve mortgage, insurance, property taxes, and utilities, as well as annual maintenance. Plus, sooner or later, you are likely going to have to replace an appliance, repair a roof, or otherwise update your home.

Understanding and estimating the costs of owning a home can be an important step before joining the ranks of homebuyers. It can also impact what size and sort of mortgage you get and from which lender. That’s an important area to wrangle your costs as you think about your overall budget.

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

SoFi Mortgages: simple, smart, and so affordable.

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*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.

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 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.

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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An FHA loan is a type of government home loan program that the Federal Housing Administration insures. It’s a popular mortgage choice, especially for first-time homebuyers, because an FHA loan has lower down payment requirements than conventional loans.

But there are extra costs related to these loans that you might not be aware of. You can use an FHA loan calculator. to help figure out what your monthly mortgage payment and total cost might be.

Why Use a FHA Loan Mortgage Calculator Table

An FHA loan mortgage calculator table has several benefits for homebuyers. These include:

•   Cost estimations: The calculator table can provide estimates of monthly mortgage payments. It helps borrowers plan their budget by showing the expenses involved in buying a home.

•   Time-saving: Mortgage calculations can be confusing and complicated for first-time homebuyers. The calculator table helps simplify and speed up this process.

•   Comparison tool: Buyers can compare options by entering different scenarios into the calculator table. A different interest rate or purchase price will change the monthly payment amounts. A buyer can compare homes and even different types of mortgage loans to help decide which property and loan to move forward with.

•   Informed decision-making: An aspiring homebuyer can use the table to determine the various costs involved in an FHA loan. They can plug in different numbers, such as a lower or higher down payment or a different loan term to see how that might change their monthly payments.

•   Financial planning: Overall, the calculator could help borrowers figure out what they can afford now and how to plan for future payments.

💡 Quick Tip: With SoFi, it takes just minutes to view your rate for a home loan online.

How to Calculate Your FHA Loan Mortgage Costs

Calculating a government home loan like an FHA loan mortgage involves several steps. These include:

1.    Determining the loan’s principal amount and interest. The principal is the amount of money the homebuyer borrows from the lender. The interest is the cost of borrowing the money.

2.    Adding property taxes and homeowners insurance. Homebuyers typically pay state and local property taxes. And you’ll also need homeowner’s insurance to insure the house against theft, damage, or loss, among other things.

3.    Including the Mortgage Insurance Premium (MIP). The MIP protects lenders in case the borrower defaults on their mortgage payments. Borrowers pay an upfront MIP of 1.75% of the loan amount, and then they pay an annual MIP that’s typically charged in monthly installments as part of the mortgage payment.

4.    Adding the loan term. This is the length of the loan, which is usually 15 to 30 years for an FHA loan.

5.    Finally, plugging all the information listed above into an FHA mortgage loan calculator table to estimate the total monthly mortgage cost.

This is what the table for a mortgage calculator for an FHA loan might look like. You can use the table as a template or starting point to fill in the information, adjusting as needed, and then make your calculations.

2024 FHA Loan Mortgage Calculator Table
Purchase Price
Down Payment
Interest Rates
Property Tax
MIP
30-year vs 15-year Term
Total Interest Paid

Recommended: How do FHA 203(k) Home Loans Work?

Examples of FHA Loan Mortgage Calculations

Here are two examples of FHA loan calculations to give you an idea of how the process works. Keep in mind that there might be additional costs to consider, such as closing costs.

Example #1

•   Loan amount: $200,000

•   Interest rate: 3.5%

•   Loan term: 30 years

•   Annual property taxes: $2,500

•   Annual homeowners insurance: $800

•   Mortgage Insurance Premium (MIP) rate: 0.85%

First, calculate the monthly interest rate:
Monthly Interest Rate = 3.5% / 12 = 0.0029167

Next, calculate the monthly principal and interest:
Monthly Payment = ($200,000 * 0.0029167) / (1 – (1 + 0.0029167)^(-360)) Monthly Payment = $898.09

Then, calculate the annual and monthly Mortgage Insurance Premium (MIP):
Annual MIP = $200,000 * 0.0085 = $1,700. Monthly MIP = $1,700 / 12 = $141.67

Add property taxes and homeowners insurance:
Monthly Property Taxes = $2,500 / 12 = $208.33
Monthly Homeowners Insurance = $800 / 12 = $66.67

Calculate the total monthly mortgage costs:
Total Monthly Mortgage Costs = $898.09 (Principal & Interest) + $141.67 (MIP) + $208.33 (Property Taxes) + $66.67 (Homeowners Insurance) = $1,314.76


The total monthly mortgage cost per month is $1,314.76.

Example #2

•   Loan amount: $150,000

•   Interest rate: 4.0%

•   Loan term: 15 years

•   Annual property taxes: $3,000

•   Annual homeowners insurance: $900

•   Mortgage Insurance Premium (MIP) rate: 0.75%

First, calculate the monthly interest rate:
Monthly Interest Rate = 4.0% / 12 = 0.0033333

Next, calculate the monthly principal and interest:
Monthly Payment = ($150,000 * 0.0033333) / (1 – (1 + 0.0033333)^(-180)) Monthly Payment = $1,081.03

Then, calculate the annual and monthly Mortgage Insurance Premium (MIP):
Annual MIP = $150,000 * 0.0075 = $1,125. Monthly MIP = $1,125 / 12 = $93.75

Add property taxes and homeowners insurance:
Monthly Property Taxes = $3,000 / 12 = $250
Monthly Homeowners Insurance = $900 / 12 = $75

Calculate the total monthly mortgage costs:
Total Monthly Mortgage Costs = $1,081.03 (Principal & Interest) + $93.75 (MIP) + $250 (Property Taxes) + $75 (Homeowners Insurance) = $1,500.78


The total monthly mortgage cost per month is $1,500.78.

💡 Quick Tip: Don’t have a lot of cash on hand for a down payment? The minimum down payment for an FHA mortgage loan is just 3.5%.

Reasons to Calculate Your FHA Loan Mortgage First

There are a number of reasons why it makes sense to calculate an FHA mortgage before you move forward with such a mortgage. Here are five ways calculating your mortgage can be helpful.

•   Determining what’s affordable: Determining the cost of the mortgage can help borrowers search for a home within their price range.

•   Financial preparation: Buyers can see how much money they should plan to spend each month. They can then create a budget and financial plan in order to be prepared to meet the monthly payments.

•   Comparing loan options: Buyers can look at different loan options to choose the one that works best for them. They can also see how a different interest rate, home price, or down payment amount will affect their monthly cost.

•   Preventing surprises: Using the calculator helps borrowers understand what the loan costs will be so they don’t get hit with expenses they weren’t expecting.

•   Helping with negotiation: The more informed a buyer is about the various costs associated with the loan and the terms, the better they may be at negotiating the best terms.

Recommended: Home Loan Help Center

Tips on How to Save on Your FHA Loan Mortgage

If you’re interested in getting an FHA mortgage, there are a few things you can do to help get the best deal for your situation.

Build your credit score. This is one of the tips to qualify for a mortgage that it’s good to know. Strengthening your credit may help you get better interest rate terms. Pay off your debts if you can, and pay your bills on time to help build your score.

Shop around for the best interest rate. Different lenders offer varying interest rates for FHA loans. See what you may qualify for. A higher credit score may help you get a better rate.

Consider making a higher down payment. This could potentially help make your overall mortgage amount and monthly payments lower.

Negotiate closing costs. Closing costs are typically 4% to 5% of the home’s purchase price. You may be able to negotiate with the lender to try to lower some of those costs.

Take advantage of down payment assistance programs. Many states and cities offer down payment assistance programs for first-time homebuyers.

Consider mortgage refinance when interest rates drop. If you get a lower rate when you refinance, you can typically reduce your monthly mortgage monthly payments.

The Takeaway

If you’re interested in an FHA loan, an FHA loan calculator can help you figure out the total costs of your loan and your monthly loan payments, which in turn can help you budget and plan for them. For instance, you’ll factor in such costs as homeowner’s insurance and Mortgage Insurance Premium.

Shopping around for the best interest rate and comparing different loan options may also help you save money on an FHA loan.

SoFi offers a wide range of FHA loan options that are easier to qualify for and may have a lower interest rate than a conventional mortgage. You can down as little as 3.5%. Plus, the Biden-Harris Administration has reduced monthly mortgage insurance premiums for new homebuyers to help offset higher interest rates.

Another perk: FHA loans are assumable mortgages!

FAQ

What are the new FHA limits for 2023?

The FHA’s nationwide limit “floor” and “ceiling” for a one-unit property in 2023 are $472,030 and $1,089,300, respectively.

What is the minimum credit score for FHA in 2023?

For an FHA loan, a minimum credit score of 580 and a down payment of 3.5 percent are required. You can still qualify with a credit score as low as 500 if you can increase your down payment to at least 10%.

How is an FHA loan amount calculated?

The FHA loan amount is calculated by determining the maximum loan size that a borrower qualifies for, which is typically based on the borrower’s income, creditworthiness, and the specific FHA loan program’s guidelines. The loan amount is further influenced by factors such as the property’s appraised value and the FHA’s required loan-to-value ratio.

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Photo credit: iStock/ridvan_celik

^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.
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.

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

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

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.

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Lenders who provide VA home loans often offer better terms than a borrower might get with a conventional mortgage. Private mortgage insurance (PMI) isn’t required, interest rates may be lower than with other types of mortgages, and most VA-backed loans (90%) are made with no down payment.

Still, when you’re shopping for any type of mortgage, it can be helpful to have a good idea of where you stand and what your monthly payments might be. And that’s why a VA loan calculator table can be instrumental. By plugging in a few key numbers, you can feel better informed, whether you’re planning to buy a home or considering refinancing your current mortgage.

Why Use a VA Home Loan Mortgage Calculator Table?

If you’re a veteran, service member, or eligible survivor interested in learning about a VA loan — which is one of the different types of mortgage loans available — a VA home loan calculator can help you estimate what your monthly payments might be based on data you provide.

You can see how a 15-year mortgage might differ from a 30-year mortgage, for example, or what different interest rates might mean for your monthly payments. You also can get an idea of how much you might pay in interest over the life of your VA home loan.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you throughout the process.

How to Calculate Your VA Home Mortgage Loan Payment

To calculate your monthly VA mortgage payment with a VA loan calculator table, you’ll need to gather up a few key pieces of information, including:

Home Purchase Price

This can be the actual cost of a home you hope to buy, or what you’ve budgeted for your home purchase.

Down Payment Amount

For most eligible veterans and service members, this amount will be $0.

Loan Term

This is the expected length of your loan, usually 15 or 30 years.

Interest Rate

You won’t know your exact interest rate until you lock it in with your lender, so this will be an estimate. Lenders base their rates on current market rates, a borrower’s credit profile, and other factors.)

Property Tax Rate

If you have a particular home in mind to purchase, the tax rate may appear on the listing. You also can look for property tax rates on county websites.

The formula used to calculate a mortgage payment can be complicated, so it may be easier to use a VA home loan calculator to check how changing various numbers might affect your loan. Our VA Loan Mortgage Calculator Table, with averages used below in various fields, also can help you see what your payments might look like.

2024 VA Home Loan Mortgage Calculator Table
Purchase Price	$210,000	$375,000	$675,000
Down Payment	$0	$0	$0
Avg. Property Tax Rate*	1.45% (St. Louis)	1.15% (Tampa)	.82% (Los Angeles)
PMI:	$0	$0	$0
Interest Rate	9%	7%	5%
Loan Term	15-year/30-year	15-year/30-year	15-year/30-year
Estimated Payment	$2,384/$1,943	$3,730/$2,854	$5,799/$4,085
Principal & Interest Monthly	$2,130/$1,690	$3,370/$2,495	$5,338/$3,624
Taxes Monthly	$254	$359	$461
Total Interest Paid	$173,393/$398,290	$231,709/$523,162	$285,814/$629,475

*Property tax exemptions and special tax districts may apply

Examples from the VA Home Mortgage Calculator Table

Because VA-backed loans don’t require mortgage insurance, and most don’t require a down payment, the main factors that will influence your monthly mortgage payment are the amount of the loan, the interest rate you pay, and the length of the loan.

As you can see from the VA loan affordability calculator table above, borrowers can get a smaller, more manageable monthly payment if they opt for a longer loan term. But they’ll pay more in interest than they would if they had a shorter term. Using the Tampa home as an example, the estimated monthly payment would be $2,854 with a 30-year term, vs. $3,730 with a 15-year loan. But the total amount of interest paid for the 30-year loan could end up being more than twice as much: $523,162 vs. $231,709.

And, of course, the cost of the home you choose to buy can also be an important factor. As shown in the table, even with a much higher interest rate, both the monthly payment and total interest paid for the home in St. Louis would be lower than for the home in Los Angeles — simply because the cost of living in California is high and the St. Louis home is less expensive.

It can be helpful to check the cost of living by state if you’re deliberating between two different locations for your next home.


💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†

Other Costs to Consider

Most VA loan mortgage calculators stick to the basics, but there are other costs you may want to consider when you’re trying to determine the monthly loan payment you can afford, including:

VA Funding Fee

Though borrowers don’t pay mortgage insurance on a VA loan, most will pay a one-time funding fee. (Some borrowers are exempt.) The fee, which can be paid upfront or rolled into the loan, is a percentage of the loan, and is based on the type of loan and other factors.

Homeowners Insurance

Homeowners insurance can help protect your home and property in case of expensive damage and other potential costs. Your lender will likely require that you buy homeowners insurance before you close on your home purchase.

HOA Fees

If the home you purchase is part of a homeowner’s association (HOA), you may have to pay a monthly or annual fee. The HOA may use this money to cover maintenance costs and amenities.

VA Home Loan Limits

Typically, the VA guarantees that it will repay the lender up to 25% of your loan amount if you should fail to make your payments. But if you’re still paying off another VA loan, your VA guarantee may be limited, and the lender may ask you for a down payment to make up the difference. Your lender can help you determine how VA home loan limits might affect your new loan.

Recommended: 2024 Home Loan Help Center

Reasons to Calculate Your VA Home Mortgage Loan First

You may want to calculate the monthly payment and interest costs for your VA loan first, then compare those numbers to other types of loans – especially if you’re a first-time buyer who’s struggling to come up with a down payment. Your VA loan may come with a lower interest rate, and you won’t have to pay private mortgage insurance, which can keep your payments lower. Your lender also may accept a lower credit score if you’re applying for a VA loan vs. a conventional loan.

Still, it can be a good idea to compare all the different types of mortgage loans for which you might be eligible. If you can afford to make a 20% down payment on a conventional loan, for example, you can avoid the VA funding fee, and you’ll have some equity in your home right away. It doesn’t hurt to keep your options open, whether you’re buying a home or refinancing your mortgage.

Tips on How to Save on Your VA Home Mortgage Loan

To get the best VA loan payment, these are a few strategies that could help you save money.

Work on Your Credit

There isn’t a required minimum credit score for VA loans. Instead, the VA asks approved lenders to review the borrower’s “entire loan profile,” which could include your credit history, debt-to-income (DTI) ratio, employment history, and assets.

Individual lenders also may have their own approval criteria you should be aware of when you’re ready to apply for a loan. The more you can do to improve your financial health, the better the chances that you’ll get the loan terms you want.

Consider Making a Down Payment

Most borrowers don’t have to make a down payment on their VA home loan, but that doesn’t mean you can’t. Putting a down payment on your loan could show the lender that you’re a serious buyer, which may help you get a lower interest rate or reduce the VA funding fee on your loan.

Roll Your VA Funding Fee into Your Loan

If you’re a first-time homebuyer or low on cash for closing, the VA’s one-time funding fee may seem like a daunting amount. But you don’t have to pay the entire fee upfront. You can ask your lender to include that amount in your loan, and it will be added to your monthly payments. Your payments will be a bit more, but it may make the difference in being able to buy a home of your own.

Recommended: Tips to Qualify for a Mortgage

The Takeaway

Because VA home loans have some different requirements and benefits than other mortgages, it can be helpful to get an idea of what those differences might mean for your monthly payment and overall loan by using a VA loan calculator table.

If you’re preparing to buy or refinance a home, a VA mortgage loan calculator table can give you a useful estimate of what your new loan might look like, depending on your loan amount, length, interest rate and other factors.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Will VA home loan limits increase in 2023?

Yes, VA home loan limits increased significantly in 2023. The baseline limit for VA loans in 2023 is $726,200, compared to $647,200 in 2022.

How much do I need to make to buy a $300,000 house with a VA loan?

Your income is only one factor that goes into deciding how much you can afford to borrow. Lenders also will look at your debt-to-income (DTI) ratio, which is the amount of your monthly debt payments compared to your monthly gross income. The VA doesn’t have a required DTI ratio for borrowers, but a maximum DTI of 41% is preferred.

What is the VA benefit increase for 2023?

Military retirees and disabled veterans got an 8.7% increase in their monthly checks in 2023, thanks to the annual adjustment to the federal cost of living allowance.

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Photo credit: iStock/joel-t

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

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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.

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.

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 .

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It’s not news that FHA (Federal Housing Administration) loans can be a great way for first-time homebuyers to break into the market. They’re government-backed and tend to come with lower costs and less-stringent eligibility requirements.

But like any mortgage, FHA loans do still come with closing costs — expenses due at the time the mortgage is signed — which can add up to a pretty penny. It’s a good idea to know what you’re getting into ahead of time with closing costs to avoid sticker shock, which is exactly why you’re here.

Keep reading to learn such intel as:

•   How to figure out your FHA loan closing costs

•   What is an FHA loan closing cost calculator

•   How to use a calculator table to determine your FHA loan closing costs

•   How to lower your FHA loan closing costs.

Why Use an FHA Loan Closing Costs Calculator Table?

Closing costs for FHA loans (a kind of government loan) are made up of several different expenses, including lender fees, third-party fees, and prepaid items. Each of these categories of expenses is composed of smaller costs.

For example:

•   Lender fees might include an origination fee, underwriting fee, document preparation fee, and other charges.
Third-party fees might include an appraisal fee and real estate attorney fees, just to name a couple.

•   That is a lot of instances of the word “fee.” And that’s before you factor in the mandatory FHA mortgage insurance premium, or MIP — which is basically the FHA version of private mortgage insurance (PMI).

That’s why using an FHA loan closing costs calculator table can be an efficient way to see, at a glance, a ballpark range of what you might expect to plunk down on the closing table. Of course, the best way to know exactly what to expect is to calculate all of your FHA loan closing costs by hand. Or to ask your lender to share the expected or actual fees involved.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you throughout the process.

How to Calculate Your FHA Loan Closing Costs

To calculate your specific FHA loan closing costs, you’ll need to add up all the smaller costs — which means ascertaining exactly what they are. Asking your lender is a great way to do this for these government-backed mortgages, whether you’re a first-time homebuyer or beyond. Your lender should even be able to tell you the overall cost without your needing to calculate it yourself.

As a general rule of thumb, closing costs tend to amount to about 3% to 6% of the amount you borrow. In other words, if you were buying a million dollar home and putting down $700,000, your mortgage would be $300,000, and your closing costs would be between $9,000 and $18,000.

If you were buying a home that costs $330,000 and putting down $30,000, your home loan would again be $300,000, and your closing costs would be similar to the range above.

Calculating MIP

Now, here are more details about the MIP portion:

•   With an FHA loan, you can expect to pay 1.75% of the loan amount in MIP upfront.

•   It may be possible to finance your upfront MIP by adding it to your overall loan, but doing so will likely increase the amount you pay in interest over time.

•   In addition, you will pay an ongoing premium as part of your monthly payment that ranges from 0.15% to 0.75% of your home’s outstanding loan balance annually.

Below, you’ll find a chart that shows a range of possible down payments and closing costs on FHA loans.

Recommended: Cost of Living by State

2024 FHA Loan Closing Costs Calculator Table

Here’s a basic guide to approximately how much you can expect to pay in closing costs if you take out an FHA loan in 2024, depending on the cost of your home. (Actual figures may vary, but this serves as an overall FHA loan closing cost calculator.)

Home Price	3.5% Down payment	10% Down payment	MIP due at closing (1.75%) with 3.5% down	MIP due at closing (1.75%) with 10% down	Overall Closing Costs (3% to 6%, including MIP) with 3.5% down	Overall closing costs (3% to 6%, including MIP) with 10% down
$200,000	$7,000	$20,000	$3,377.50	$3,150	$5,790 – $11,580	$5,400 – $10,800
$350,000	$12,250	$35,000	$5,910.63	$5,512.50	$10,125 – $20,250	$9,450 – $18,900
$500,000	$17,500	$50,000	$8,443.75	$7,875	$14,475 – $28,950	$13,500 – $27,000

As you see, when you put more money down, your home loan is smaller, and closing costs can be reduced somewhat.

Recommended: Guide to FHA 203(k) Home Loans

Examples of FHA Loan Closing Cost Calculations

So, how do such seemingly small percentages add up so quickly?

Here are some examples of the types of fees that add up to that 3% to 6% in closing costs. This percentage tends to apply to different kinds of home loans, including FHA ones:

•   Lender fees. Your lender is in business to make money, and may charge various fees associated with the service of originating, writing, and maintaining the loan, such as:

◦   Loan origination fee: 0.5% to 1% of your home loan total

◦   Underwriting fee: $300 to $900+

◦   Document preparation fee: Up to $100

•   Third-party fees. From getting your property appraised to finding and insuring your title, there are plenty of third-party fees that crank up your closing cost total.

◦   Appraisal fee: $600 to $2,000

◦   Survey fee: $500

◦   Real estate attorney fee: $500 to $1,500

◦   Title search fee: $75 to $200

◦   Title insurance: 0.5% to 1% of your home purchase price

◦   Recording fees: $125

•   Prepaid items. As part of signing, you’ll also need to pay a certain number of items upfront, such as your first year’s worth of homeowners insurance to be held in escrow. These costs vary depending on your home’s location and overall value, but they can be substantial. They can include:

◦   Real estate taxes

◦   Tax and insurance escrow deposits

◦   Flood, earthquake, or hazard insurance premiums

•   MIP: As mentioned above, this will be 1.75% of the loan amount, though some borrowers may roll it into the loan amount).

As you can see, FHA loan closing costs can really add up — but it can be worth it to have a home to call you very own.


💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.

Reasons to Calculate Your FHA Loan Closing Costs First

If you’re searching for your dream house and accessing a home loan help center, that’s terrific. Be sure to also focus on understanding how much you may pay in closing costs. This can help you know how much house you can really afford to buy.

Often, buyers get so caught up in trying to save up for their down payment that they forget about closing costs entirely. This lump sum, which is often five figures, could be a pretty upsetting thing to be surprised by as you move towards signing.

Calculating your closing costs ahead of time will help ensure you’ve actually saved up enough to comfortably make your home purchase. Your lender is required to offer you a closing statement before it’s time to sign the deal.

That said, the more preplanning you can achieve when it comes to these amounts of money, the better. You may want to use a closing cost FHA loan calculator (look online for tools that can help) so you can get a feel for these numbers.

Tips on How to Save on Your FHA Loan Closing Costs

If you are planning on buying a home, you are probably researching tips to qualify for a mortgage. In addition, you may want to consider ways to lower the overall expense of closing costs.

Yes, closing costs can be a hefty chunk of change. Fortunately, there are a few ways to help lower your closing costs and usher you over the threshold into homeownership.

•   Negotiate with the seller. If the person you’re buying the house from is eager to let it go, they may be willing to pay some — or even all — of your closing costs on their end.

•   Ask for a gift. Not all mortgages allow gift funds to be used for closing costs, but FHA loans do. If you have a friend or family member who is willing to offer a sum of money, you could consider using gift funds to lower your costs.

•   Roll them into the mortgage. As with MIP, it can be possible to roll some of the remainder of your closing costs into your mortgage. Keep in mind that doing so can raise your monthly payment and mean you pay more in interest overall.

The Takeaway

FHA loans do come with closing costs, and most buyers can expect to pay about 3% to 6% of the loan amount at signing. This type of mortgage in particular requires a mortgage insurance premium (MIP) of 1.75% of the loan amount closing, which can drive up the overall price of FHA loans upfront.
Despite these charges, FHA loans can be an important option for many borrowers as they move along the path to homeownership.

SoFi offers a wide range of FHA loan options that are easier to qualify for and may have a lower interest rate than a conventional mortgage. You can down as little as 3.5%. Plus, the Biden-Harris Administration has reduced monthly mortgage insurance premiums for new homebuyers to help offset higher interest rates.

Another perk: FHA loans are assumable mortgages!

FAQ

Who pays the closing costs on an FHA loan?

Traditionally, closing costs are the responsibility of the buyer. However, it is possible to ask the seller to pay closing costs as part of your negotiation. (Keep in mind that this probably won’t work in a highly competitive seller’s market, though.)

How much FHA loan can I qualify for?

The amount you qualify for will depend on personal financial data like your income and credit score. That said, it’s also important to understand that the FHA does impose loan limits that cap the maximum amount borrowers can take out. In 2023, the FHA loan limits for a single-family housing unit are $472,030 in most areas of the country, and up to $1,089,300 in specific, high-cost counties.

Can closing costs be included in an FHA loan?

Some of your FHA loan closing costs, including the upfront MIP, can be rolled into your mortgage, but keep in mind doing so will increase your monthly payment and also mean spending more in interest over time. And note that you can’t include your down payment in the loan. The minimum FHA loan down payment is 3.5%. Using a closing cost FHA loan calculator can help you estimate your expenses.

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Photo credit: iStock/ridvan_celik

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

SOHL0723012

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If you’re trying to pay down debt and you own a home, you may be wondering whether it makes sense to use a cash-out refinance to pay off debt.

There are pros and cons to going this route, and it’s important to understand how the process works to help decide if it’s the right option for you.

Read on to find out how to use a cash-out refinance to pay off debt, the costs involved, the benefits and drawbacks, and other options for repaying debt you owe.

Using a Cash-Out Refi to Pay Off Debt

In mid 2023, household debt (not including mortgages) in the U.S. exceeded $4.7 trillion dollars, according to a report released by the Federal Reserve Bank of New York. It’s no wonder then that individuals are looking for ways to get out from under the debt they owe.

A cash-out refinance for debt consolidation allows you to use the equity in your home to pay off debt by taking on a new mortgage. The new mortgage pays off your old mortgage and it comes with new terms, including a new interest rate that’s potentially lower, and length of time to repay the loan. The new mortgage terms may be better than your original mortgage, but it’s also possible they may not be as favorable.

Here’s a quick course in cash-out refinancing 101 and how it works:

Determine How Much Cash You Need

When you’re considering a cash-out refinance to pay off debt, first figure out how much money you’ll need. To do this, add up all the debts you want to pay off. Include things like credit card and personal loan debt and medical bills.

Determine How Much You Can Borrow

The amount you can borrow with a cash-out refinance depends on how much equity you have in your home. Equity is how much your home is worth compared to how much you owe. Typically, you can borrow up to 80% of your home’s market value.

Here’s an example of how cash-out refinancing works: Let’s say your home is worth $500,000 and you owe $300,000 on your current mortgage. That means your home equity is $200,000. With a cash-out refinance loan, a lender might let you borrow up to 80% of your equity (as long as you qualify for that amount), which is $400,000.

You’ll need to use that $400,000 to pay off the $300,000 you owe on your mortgage and also closing costs. That leaves you with about $100,000 in a cash out refinance for debt consolidation.

Prepare Your Cash-Out Refinance Application

Your cash-out refinance application is much like the mortgage application you filled out when you bought your house. Lenders will look at and evaluate such factors as your:

•   Credit score: Many lenders look for a minimum credit score of 620 for a cash-out refinance

•   Debt-to-income (DTI) Ratio: DTI compares your monthly debts to your gross monthly income. In order to qualify for a cash-out refinance, lenders typically look for a DTI of less than 50%.

•   Home equity: As mentioned above, you’ll likely need at least 80% equity in your home.

You may need to provide the lender with documents such as bank statements and W-2s.


💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

Complete the Closing and Pay Closing Costs

If the cost to refinance a mortgage makes sense for you, and you qualify with a lender, you’ll pay closing costs to cover such fees as credit reports and appraisals. Closing costs may be wrapped into the refinanced loan amount. After you close on the loan you’ll receive your funds.

If You’re Consolidating Debts, Let The Lender Know

It’s possible that your debts may be high enough to preclude you from qualifying for a cash-out refinance. However, if the lender knows you’ll be consolidating debts, they can include those debts in your loan amount for consolidation.

That way you’ll be paying off the debts in one payment with the new interest rate (ideally, a lower one) you received with your cash-out refinance.

Benefits of Cash-Out Refinancing to Pay Off Debt

When you consolidate debts with a cash-out refi, you have just one monthly payment to make. That’s usually more manageable than trying to pay multiple bills all at once.

There are other potential benefits as well.

Consolidating Debts Can Lead to Savings

High-interest debt can be difficult to pay back. Credit card APRs can reach 29.99% or higher, which adds to the amount you need to pay each month. When you consolidate debt with a cash-out refinance, you may save money on interest costs.

Cash-Out Refinancing Can Pay Debts Quickly

When you take out a cash-out refi to tackle the debt you owe, you may be able to pay off certain debts faster than you would have otherwise. You’ll likely be paying less in interest, which could allow you to put more money toward the debt balance.

Impact On Credit Score

Paying off high-interest debts with a cash-out refi could lower your credit utilization rate, which is the amount of credit you’re using. Credit utilization is an important factor in your credit score.

Should You Use a Cash-Out Refinance to Pay Off Credit Card Debt?

Interest rates on credit cards are typically high, and can be more than 30%. The interest rate on a mortgage tends to be much lower. If you can get a lower interest rate to repay your debt, a cash-out refinance could be worth it. However, if you choose this method, be careful to avoid overspending and running up credit card debt again. Changing your spending habits can be critical to staying out of debt.

Drawbacks of Using a Cash-Out Refinance to Pay Off Debt

A cash-out refinance also has some significant disadvantages to consider. These include:

Increased Monthly Mortgage Payment

When you take out a bigger loan amount, you may also end up with a higher monthly mortgage payment. You’ll be responsible for paying that higher amount each month.

Turning Unsecured Debt Into Secured Debt

Another factor to consider is that if you can’t pay back everything you borrow with a cash-out refinance, you could be in danger of losing your home. That’s because a mortgage is secured debt, and your home is collateral for the loan. While that’s true with any mortgage, with a cash-out refinance you are likely borrowing even more money since you’re using the extra cash to tackle debt, which means there’s more for you to repay.

Closing Costs

When you refinance a mortgage, including a cash-out refinance, you need to pay closing costs. These costs can be around $5,000 according to Freddie Mac. However, the size of your loan and where you live can affect how much your closing costs may be.

Cash-Out Refinance vs. Debt Consolidation

With a cash-out refinance, you take out a new mortgage to repay your old mortgage and also get cash you can use for a variety of purposes, including paying debt. With debt consolidation, you combine all your debts into one loan. A debt consolidation loan is not secured by your home; a cash-out refinance loan is.


💡 Quick Tip: Because a cash-out refi is a refinance, you’ll be dealing with one loan payment per month. Other ways of leveraging home equity (such as a home equity loan) require a second mortgage.

Alternatives to Cash-Out Refinance Loans

A cash-out refi isn’t your only option for paying off debt. Here are some other methods to consider.

Home Equity Line of Credit (HELOC)

A home equity line of credit is secured by the equity in your house. It’s similar to a line of credit, so you borrow just what you need when you need it, and you only pay interest on what you borrow. However, if you don’t pay off a HELOC you may be in danger of foreclosure.

Home Equity Loan

With a home equity loan, you receive a lump sum of money and make regular fixed payments. Interest rates tend to be higher than they are for a cash-out refinance, and you will need to pay closing costs.

Personal Loan

A personal loan is an unsecured loan that you can use for almost any purpose, including debt consolidation. These loans generally come with higher interest rates than a cash-out refinance, HELOC, or home equity loan. They also have a shorter term, which means you’ll need to make higher monthly payments. But that also means the loan will be paid off sooner.

Balance Transfer Credit Card

A balance transfer credit card typically offers a 0% introductory rate for a number of months (up to about 21 months) on debt you transfer from another source, which is usually another credit card. There is a balance transfer fee of around 3%, but you won’t won’t owe interest on the balance you transfer. If you have a lower debt amount that you can pay off in a relatively short amount of time, this option might make sense. However, to qualify for the 0% rate, you’ll typically need a strong credit score.

The Takeaway

If you need to pay off high-interest debt and you have sufficient equity in your home, a cash-out refinance can be an option worth exploring. It can give you a lower interest rate, as long as you qualify, which could help you save money. However, keep in mind that you will need to pay closing costs when refinancing, and the terms of the loan, including the length of the loan, will change.

Turn your home equity into cash with a cash-out refi. Pay down high-interest debt, or increase your home’s value with a remodel. Get your rate in a matter of minutes, without affecting your credit score.*

Our Mortgage Loan Officers are ready to guide you through the cash-out refinance process step by step.

FAQ

Can I use a cash-out refinance to pay off both secured and unsecured debts?

Yes. A cash-out refinance can be used to pay off a variety of debts, including secured debts as well as unsecured debts, like credit cards.

Are there any tax implications of using a cash-out refinance for debt repayment?

If you use a cash-out refinance for debt repayment, you won’t owe taxes on the money you receive from the cash-out refi. That’s because the money is considered a loan that needs to be paid back, and not income. At the same time, per IRS guidelines, you typically can’t deduct the interest on a cash-out refinance if you use the money to pay off debt.

What factors should I consider when deciding whether to use a cash-out refinance for debt repayment?

If you have high-interest credit card debt, and you can get a lower interest rate to repay your debt with a cash-out refinance, it may be worth it for you. But first make sure you can change your spending habits to avoid overspending and running up credit card debt all over again.

Also, consider the fact that your monthly mortgage payment will likely be higher with a cash-out refinance. Can you afford that higher amount? And you’ll also have to pay closing costs. Calculate to be sure that the amount of cash you’ll get from the cash-out refi is sufficiently more than what you’ll spend on closing costs.

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Photo credit: iStock/fizkes

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.

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.

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.

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 .

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

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

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

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