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If you’re like many Americans, your home is the single most valuable asset in your portfolio. That six-figure investment doesn’t just keep a roof over your head — it can provide a source of wealth and stability for years, and potentially generations, to come.

But sometimes, you need access to that wealth now — preferably in the form of cold, hard cash. And while refinancing can be one way to access your home’s value, you may not want to change your interest rate or other mortgage terms. Fortunately, there are ways to take equity out of your house without refinancing — though many of them do come with their own costs and risks. Below, we’ll dive into all the details so you can make an informed decision.

Can You Pull Equity Out of Your Home Without Refinancing?

The short answer: Yes, there are ways to get equity out of your home without refinancing (though cash-out refinancing is also a way to do so). From home equity loans to a home equity line of credit (HELOC) and reverse mortgages, there are a lot of ways to turn your home’s value into cash money — though they all come with their own pros and cons to consider. Let’s take a closer look.

Ways to Get Equity Out of Your Home Without Refinancing

Here are five ways to get equity out of your home without refinancing.

1. Home Equity Loan

A home equity loan is, as its name suggests, a loan that draws from the value of your home equity — which is the amount of your home’s value that you actually own (i.e., what you have paid back to your mortgage lender). You can take out a home equity loan without refinancing, and if you’ve been building equity for a while, doing so can be a relatively low-cost way to access a large lump sum of money in one fell swoop.

A home equity loan is sometimes known as a “second mortgage,” since it’s secured by the same asset as your original mortgage — your home. And just like your mortgage (and many other types of loans), a home equity loan is usually repaid in regular, fixed installments over a predetermined period of time, or term. This might be 10 or 20 years long.

Of course, home equity loans do come with drawbacks to consider. For one thing, your home will be at risk of foreclosure if you fail to repay the “second” mortgage, just as it is with the first. And although interest rates may be relatively low, closing costs apply, which can amount to thousands of dollars.

2. Home Equity Line of Credit (HELOC)

A home equity line of credit, or HELOC, works in a similar way to a home equity loan — but instead of a lump sum payment, you’ll get access to a flexible line of credit based on your home equity, which you can tap into as needed. You can think of it a little bit like a credit card, except your “credit limit” will be based on the equity you’ve built in your home.

HELOCs may be offered at a fixed or variable interest rate and usually consist of a draw period followed by a repayment period — so you’ll have a certain amount of time to draw from the HELOC and then a certain amount of time to pay it back. Most HELOCs allow borrowers to take out up to 80% or even 85% of their home’s value, minus whatever they owe on their mortgage — in other words, up to 80% of their home equity. Keep in mind that HELOCs may also be subject to origination fees and other upfront costs that can increase their overall expense.

3. Reverse Mortgage

A reverse mortgage is similar to a home equity line of credit. One type, a Home Equity Conversion Mortgage (HECM), is backed by the Federal Housing Administration (FHA) and is specifically for homeowners age 62 and over. Rather than making regular monthly repayments on the loan, the total doesn’t come due until you no longer live in the home.

Since interest and fees are added each month, the loan total goes up over time, while your home equity in turn goes down — and if you (and any coborrowers) die, the reverse mortgage is due immediately. Thus, this option might not be the right choice for those hoping to leave their home to their surviving family members. If the idea of an HECM appeals to you, you can meet with an HECM counselor to learn more.

Home Equity Investment

Otherwise known as Home Equity Agreements (HEAs), a home equity investment allows an investor to essentially buy some of your home’s future equity. This gives you access to cash up front without requiring you to pay back a loan over time — which many would call a win-win situation. Of course, in the long run, if your home appreciates substantially in value, you may end up paying a high rate of return to the investing company — and having less of your home’s value to create long-standing wealth for you and your family. Furthermore, not everyone can qualify for this relatively new financial arrangement.

Personal Loan

You might already know about personal loans — which, yes, can be taken out even by non-homeowners. But if you do own your home, you may be able to put down the deed as collateral, which could reduce the cost of the loan (since a secured loan is less risky to lenders) while also offering you the flexibility to use the borrowed money in just about any way you want.

Pros and Cons of Refinancing to Pull Out Home Equity

Of course, even with all the options described above, refinancing is still an option for those hoping to pull equity out of their homes. Here are some of the drawbacks and benefits of refinancing to pull out home equity, at a glance.

When Is It Worth Refinancing?

If your financial situation and market conditions have changed such that you’d likely qualify for a lower overall interest rate and better loan terms, refinancing a mortgage may be worthwhile — and if you need short-term cash, a cash-out refinance might be an option worth considering. That’s especially true if you plan to use the money for home improvements, in which case you may qualify for additional tax deductions.

The Takeaway

While cash-out refinancing offers a readily available way for many homeowners to access their home’s equity value as cash, there are plenty of other options worth considering. A home equity line of credit (HELOC), secured personal loan, and even a reverse mortgage can all help homeowners put some extra money in their pockets — so long as they know the potential drawbacks of each method.

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

FAQ

Is it possible to withdraw home equity without refinancing?

Yes! There are many ways to take equity out of your home without refinancing. Some of the most popular options include home equity loans, home equity lines of credit (HELOCs), and reverse mortgages. It’s important to understand that each of these options comes with its own costs and associated risks, however.

What is the best way to take equity out of your home without refinancing?

There’s no one easy answer to this question, because the “best” way depends on your personal financial situation and how much cash you need access to. That said, Home Equity Lines of Credit (HELOCs) offer unparalleled flexibility when it comes to the amount you withdraw, which could save you from paying back money you didn’t need to borrow in the first place. Personal loans secured with your home’s deed may also be a relatively inexpensive and very flexible option.

Is taking equity out of your house a good idea?

Like any debt, taking equity out of your home could be a good decision or a bad one, depending on what you’re planning to use the funds for and how that action will shape your future finances. For instance, if you plan to use your home equity loan to make home improvements that might increase the property’s value substantially, doing so might be a smart investment. On the other hand, taking out a reverse mortgage — which will decrease your home’s equity over time — to go on a lavish vacation might be less advisable.

Photo credit: iStock/boggy22

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

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

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

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

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

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.

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

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

Anyone can use a money order to send or receive money. While money orders aren’t the most common tool, they’re usually simple to obtain and cash. To cash a money order at no charge, visit your local post office branch and present your money order at the window.

In this article, we outline where to cash postal money orders and what the process looks like.

What Is a Postal Money Order?

A postal money order is a type of financial certificate issued on paper by the post office. Similar to a paper check, the document is worth the amount of money determined by the person or company that purchased it. While you can obtain a regular money order from almost any bank, only the United States Postal Service (USPS) issues postal money orders.

Unlike a check, a postal money order is prepaid by the party sending it, so it can’t bounce. Money orders also never expire. A receipt is provided to the purchaser in case the money order is lost, stolen, or damaged. As a result, you can use a postal money order to securely send a payment through the mail.

Another advantage of money orders is that they are difficult to counterfeit. You can make a payment of up to $1,000 with a single order.

To send a money order, you must pay for it ahead of time using cash, a debit card, or a traveler’s check. Although it is possible to buy a regular money order with a credit card, you cannot put postal money orders on a credit card.

Recommended: What Is a Niche Bank?

How to Cash a Postal Money Order Step by Step

If you receive a postal money order, you can redeem its face value by cashing it. There is no advantage in keeping a postal money order long-term, since it doesn’t earn interest and cannot be used directly to make a purchase.

Here’s how to cash a money order at the post office for free:

1.    Bring the money order and a photo ID to a post office service counter.

2.    Sign the money order in view of the postal worker (do not sign it ahead of time).

3.    You will immediately receive the cash value of the money order.

Where to Cash a Postal Money Order

You can cash a postal money order in certain places outside the post office. Many banks will cash postal money orders, as long as you have an account there. Some grocery stores and retailers will cash money orders, too.

Because proof of ID is required, you cannot deposit money orders via a mobile banking app.

List of Places That Cash Money Orders

Here are some locations that may cash a postal money order:

•   Most banks. Check with your local branch.

•   Check-cashing retailer. Consumers without a bank account or nearby post office may cash money orders here for a fee.

•   International postal office. The post office offers special international money orders that can be cashed at banks and post offices in some other countries.

•   Rural mail carrier. Some mail carriers may cash money orders for rural customers if they have enough cash on hand.

•   Some supermarkets and major retailers. Search online for “places to cash a money order near me.”

Recommended: Alternative to Traditional Banks

How to Identify a Fake Postal Money Order

You’ll want to examine your money order before attempting to deposit it in order to ensure it’s authentic. Here are a few ways to spot a fraudulent postal money order:

•   Look closely at the paper. Valid postal money orders have special markings and designs to prevent fraud. Visit USPS.com to view a sample money order.

•   Review sum amount. If the dollar amount is faded, too large, or not printed twice on the paper, it could be fraudulent. All postal money orders must be under $1,000 and have the sum printed twice on the paper. International postal money orders cannot exceed $700, or $500 for El Salvador and Guyana.

If you think your postal money order is fake, contact the U.S. Postal Inspection Service at 1-877-876-2455.

Recommended: 7 Ways to Cash a Check Without a Bank Account

The Takeaway

Cashing a USPS money order is a straightforward process. Your local post office can cash a postal money order at no cost to you. You may also be able to cash a postal money order at a bank branch if you have an account there, or at your local supermarket.

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

FAQ

Can you mobile deposit a USPS money order?

Unfortunately, you cannot use mobile deposit for USPS money orders. Instead, you must deposit it in person with a valid ID.

Where can I cash a money order for free?

You can cash a postal money order for free at your local post office. You may also be able to cash it at your local bank branch.

Can you cash a money order online?

Since you need proof of ID to deposit a postal money order, you usually can’t deposit it online.

Photo credit: iStock/Delpixart

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

SORL-Q224-1945540-V1

A reverse mortgage allows older homeowners to tap into a portion of their home equity as cash — either a lump-sum payment, monthly payments, or a line of credit. As with any mortgage, the lender charges interest — and reverse mortgage interest rates tend to be higher than those on a typical home loan. There are also fees involved.

Most lenders offer a reverse mortgage only to those age 62 or older, although a few companies permit those 55 and over to obtain one. This type of mortgage can be useful for retired seniors who need additional income to cover rising medical costs, home renovations, debt consolidation, and general living expenses. But what is the interest rate on a reverse mortgage? We’ll explore current rates and how they work below.

Comparing Current Interest Rates for Reverse Mortgages

Reverse mortgage rates can be either fixed or adjustable, and available rates change frequently. The table below shows reverse mortgage interest rates for the most common type of reverse mortgage — a home equity conversion mortgage (HECM) — as of June 7, 2024. During that week, the average rate on a 30-year fixed rate home loan was 6.95%.

The margin is the number of percentage points added to the interest rate by the lender to set the interest rate you will pay on an adjustable-rate mortgage after the initial rate period ends. The margin is set and shouldn’t change after closing.

What Is a Reverse Mortgage?

To understand whether a reverse mortgage, with its higher interest rate, is right for you, it helps to understand how exactly reverse mortgages work. A reverse mortgage is a type of loan available specifically to homeowners (usually those 62 or older) who have built up significant equity in their property. They can access that equity as a lump sum, monthly payments, or line of credit and use it for various purposes, like funding expenses in retirement, renovating their home, or paying down debt. For older Americans, it’s an alternative to another type of loan, such as a home equity line of credit or a personal loan.

Reverse mortgages have several fees, including mortgage insurance premiums, an origination fee, a servicing fee, third-party charges (appraisal, title search, etc.), and of course interest.

Recommended: Can a Reverse Mortgage Take Your Home?

Types of Reverse Mortgages

There are two main types of reverse mortgages: federally overseen HECMs and proprietary reverse mortgages. Most homeowners will get an HECM when applying for a reverse mortgage.

Home Equity Conversion Mortgage (HECM)

An HECM is a reverse mortgage that is governed by the Department of Housing and Urban Development (HUD). These reverse mortgages are only available through private lenders approved by the Federal Housing Administration (FHA). Borrowers must go through counseling before getting approved for the loan; the HECM counselor will discuss eligibility, risks, and how the reverse mortgage works. HECMs have a borrowing limit. For 2025, it is capped at $1,209,750.

Proprietary Reverse Mortgage

If your home appraisal exceeds the HUD limit for HECMs, you’re not out of luck. Instead, you can look for a proprietary reverse mortgage. However, you can generally only get a proprietary reverse mortgage as a lump sum. In addition, loan costs are usually higher — as are the interest rates. And because proprietary mortgages aren’t federally insured, lenders typically limit loan amounts to a smaller percentage of the value of your property.

How Reverse Mortgages Work

To get an HECM reverse mortgage, you must:

•   Be 62 or older

•   Have significant equity in your home (or have paid it off completely)

•   Go through formal counseling

•   Use the home in question as a primary residence (or live in one of the units if it’s a multi-unit home)

•   Have no delinquent federal debt

And as with a typical mortgage, lenders will also review your credit history, income, assets, and other financial information to determine if you qualify for the loan. The amount the lender gives you depends on the value of your home (and the equity you’ve built), your age, loan fees and interest, and how you choose to receive the money.

Unlike a traditional mortgage, borrowers don’t make payments each month. Instead, the full loan balance is due when you sell the home, move out, or pass away. (If there is more than one person on the loan, the balance is due when the last person passes away.) After the last person on the reverse mortgage dies, the estate must settle the balance due — meaning it’s possible you may not leave behind any inheritance to your loved ones.

Because you still own the home when you have a reverse mortgage, you’re responsible for paying property taxes and insurance and keeping up with maintenance. If you don’t keep up with these costs, the lender can use the loan funds to pay them or require you to repay your reverse mortgage in full.

Rate Types for Reverse Mortgages

How does interest work on a reverse mortgage? That depends on the type of rate you go with. You can either get a reverse mortgage with a fixed rate or an adjustable rate.

Fixed Rate

A fixed-rate reverse mortgage is one in which the interest rate stays constant over the life of the loan. This can make it easier to estimate how much the loan balance will grow over time, but lenders typically require you to take the payment as a lump sum when you go this route.

Adjustable Rate

Also known as a variable-rate reverse mortgage, an adjustable-rate reverse mortgage usually starts with a lower interest rate to attract borrowers, but these can change over time based on the state of the market. Rates are tied to a specific index; as that index increases or decreases, so too does the interest rate.

Factors Impacting Reverse Mortgage Rates

Several factors can impact the interest rate of a reverse mortgage, including:

•   Current market rates

•   The value (and location) of the home

•   Your age

•   How you choose to access the funds

•   The market (if adjustable rate)

The Takeaway

Reverse mortgages are one way for older Americans to tap into the equity they’ve built in their homes, but there are some risks with going this route. That’s why counseling is required before getting a reverse mortgage. Costs can also be high for reverse mortgages, largely due to their interest rates. If you explore a reverse mortgage but decide it’s not for you, you can consider alternatives, such as a home equity line of credit.

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

FAQ

Are reverse mortgage rates higher than regular mortgages?

Reverse mortgage rates tend to be higher than regular mortgages, but a number of factors can impact the rate you get. Rates are more comparable to home equity loans and home equity lines of credit.

Can I negotiate a lower reverse mortgage rate?

You can always try to negotiate your reverse mortgage interest rate before signing. However, understand that the lender can back out until closing, just like you.

When do reverse mortgage rates adjust?

Reverse mortgage rates adjust when the index they’re tied to goes up or down. This only applies to adjustable-rate reverse mortgages. Fixed-rate reverse mortgages are constant for the duration of the loan.

Photo credit: iStock/andreswd

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

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

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

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

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

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.

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

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

SOHL-Q224-1917723-V1

The average homebuyer needs an annual salary of about $150,000 to afford a $500,000 mortgage. However, if you have a lot of debt to your name, such as student loans or credit card debt, you may need to lower your max home price.

Several factors beyond income affect how much home you can afford and how much lenders are willing to let you borrow. These include your debt-to-income (DTI) ratio, your employment, your credit score, and the size of your down payment. Below, we’ll analyze the income needed for a $500,000 mortgage and help you determine how much house you can afford.

Income Needed for a $500,000 Mortgage

Mortgage lenders examine more than just your income when approving you for a mortgage. For instance, they’ll also review how much money you have saved to ensure you can cover closing costs, which generally range from 3% to 6% of the loan amount. Assuming no down payment, closing costs for a $500,000 home would amount to $15,000 to $30,000.

Mortgage lenders will also consider:

•   How big your down payment is

•   Your credit score

•   Your employment history

•   Your current debts

Lenders will also want to ensure you make enough money (and have low enough debts) to afford your monthly payments. So how much income do you need for a $500,000 home mortgage loan? Experts often recommend using the 28/36 rule to figure this out. According to this rule:

•   Your annual housing costs should be no more than 28% of your annual income. Someone who earns $150,000 a year could spend up to $3,500 per month on housing costs before hitting the 28% mark.

•   Your total debts — the mortgage plus any other debts, such as student loans, car loans, and personal loans — should not exceed 36% of your annual income. So if you’re drowning in credit card debt, you may need to lower your expectations on how much house you can afford, even if you make $150,000.

Having trouble determining if you make enough money for a $500,000 home? Use our home affordability calculator to figure it out.

How Much Do You Need to Make to Get a $500K Mortgage?

By the 28/36 rule, you need to make $150,000 a year to afford a $500,000 mortgage. However, if you have a significant amount of debt, you may need to aim for a lower mortgage amount to keep your total debt below 36%.

Other factors can impact how much you need to make to get a $500,000 mortgage, including:

•   Property taxes in that city and state

•   The cost of homeowners insurance

•   Current interest rates

•   The type of mortgage loan you’re getting

•   The amount of money you have for a down payment

What Is a Good Debt-to-Income Ratio?

In general, the max debt-to-income (DTI) ratio for buying a house is 36%. Debt should account for no more than 36% of your monthly income. That said, there are scenarios where lenders will allow a higher DTI. For instance, DTI ratios can go as high as 43% for a qualified mortgage. In some cases, Fannie Mae might allow for a mortgage loan that would put a borrower at a 50% DTI ratio.

What Determines How Much House You Can Afford?

Calculating the mortgage that you can afford involves a lot of factors, such as:

•   Income: No surprises here. How much money you make has a major impact on how much you can spend on a mortgage. Don’t forget: It’s not only the cost of the house itself. You also need to factor in the interest rate, private mortgage insurance (usually required if your down payment is less than 20%), homeowners insurance, and property taxes.

•   Debt: In addition, you need to factor in how much you spend each month on debt, such as credit cards, student loans, and car loans. On top of debt, factor in other monthly expenses, such as health care costs, grocery bills, and utilities.

•   Credit score: If you have a low credit score, it will be harder to get approved for a mortgage, regardless of your income. If you are approved for a mortgage with bad credit, you’ll likely have a high interest rate, which means larger monthly payments. This might mean you need to aim for a less expensive home.

•   Where you live: Your location also impacts how much house you can afford. A $500,000 home in an area with a low cost of living is likely to be much larger and well cared for than a home in an urban or coastal area, where housing costs are much higher. Use our guide to the most affordable places to live in the U.S. to help keep housing costs down.

What Mortgage Lenders Look For

During the mortgage preapproval process, lenders will consider a number of factors. The review is typically more intense than the process of getting a credit card or personal loan. For instance, mortgage lenders will want to review:

•   Your income (they typically want to see stable, predictable income, though it is possible to get a mortgage without regular income) and assets

•   Your credit history (the credit score needed to buy a house is 620 for most mortgage types)

•   The size of your down payment (the larger the down payment, the lower your monthly payments over the loan term)

•   Any existing debts, such as personal loans, car loans, student loans, and credit cards

$500,000 Mortgage Breakdown Examples

There are a number of factors that impact how a $500,000 mortgage breaks down, including the interest rate (fixed or adjustable) and loan term (15 or 30 years, for example). The cost of property taxes and homeowners insurance where you live also impact your mortgage; in fact, we advise using a mortgage calculator with taxes and insurance factored in when determining how much you can afford.

To understand how monthly payments on a $500,000 mortgage can vary based on interest rate and loan term, consider the following examples:

•   A $500,000 loan with an interest rate of 6.00% over 30 years would cost $2,998 per month before taxes and insurance.

•   A $500,000 loan with an interest rate of 7.00% over 30 years, would cost $3,327 per month before taxes and insurance.

•   A $500,000 loan with an interest rate of 6.00% over 15 years would cost $4,219 per month before taxes and insurance.

•   A $500,000 loan with an interest rate of 7.00% over 15 years would cost $4,494 per month before taxes and insurance.

As you can see, the monthly payments for a 15-year loan at these interest rates would require that you earn more than $150,000 in order to keep your payments below 28% of gross income.

Pros and Cons of a $500,000 Mortgage

A $500,000 mortgage has both pros and cons to consider.

Pros:

•   You can afford a larger home, ideal if you have multiple children.

•   A $500,000 home is likely to require fewer renovations and updates.

Cons:

•   It can be harder to qualify for a mortgage of this size.

•   Monthly payments are much higher than a smaller mortgage.

How Much Will You Need for a Down Payment?

Previously, families strived to save 20% for a down payment on a house, but that’s not always a practical approach in today’s housing market. You can get a conventional mortgage loan with much less down, depending on the lender.

You can also consider alternative mortgage loan types, which have different down payment requirements.

•   FHA loans only require 3.5% down; for a $500,000 house, that’s $17,500. However, FHA limits are just below $500,000 for most parts of the country ($524,225 for 2025), so you’d need to put enough down to keep the borrowed amount below that threshold.

•   VA loans (from the U.S. Veterans Administration) and USDA loans (from the U.S. Department of Agriculture) allow you to get a mortgage with no money down, but these loans are only available to select borrowers.

Can You Buy a $500K Home With No Money Down?

It’s possible to buy a $500,000 home with no money down if you qualify for a VA loan or USDA loan. However, only veterans, certain service members, reservists, and surviving spouses can qualify for a VA loan, and USDA loans are limited to certain properties in rural and some suburban areas.

Can You Buy a $500K Home With a Small Down Payment?

You may be able to buy a $500,000 home with a small down payment through an FHA loan (assuming you put down enough to borrow below the FHA limit). Some conventional mortgage lenders will allow qualified first-time homebuyers for as little as 3% down.

Recommended: Home Loan Help Center

Is a $500K Mortgage With No Down Payment a Good Idea?

If you don’t have the money saved up for a down payment or want some liquid funds in your savings account for emergencies, it might be OK to get a $500,000 mortgage with no down payment. Keep in mind, however, that you’ll have no equity in the house at the start of the term. You may also be required to carry private mortgage insurance when you make a small down payment (or no down payment at all).

Can’t Afford a $500K Mortgage With No Down Payment?

Here’s how to work toward making your monthly mortgage payment more manageable.

Pay Off Debt

Wait to take on a mortgage loan until you’ve wiped out some of your bigger debts. For example, getting rid of a monthly student loan payment or credit card payment can free up more funds to put toward a higher monthly mortgage payment.

Look Into First-Time Homebuyer Programs

Research various first-time homebuyer programs if this is the first time you’re buying a house. For instance, if you can come up with a 3.5% down payment, you can possibly get an FHA loan for (nearly) $500,000.

Build Up Credit

You can qualify for a lower interest rate on your mortgage if you take care of your credit score. Focus on making on-time bill payments, reducing your credit utilization, and paying down debts. Remember: A lower interest rate means lower monthly payments.

Start Budgeting

If the monthly payment for a $500K mortgage with 0% down seems too tight right now, find ways to add more flexibility to your budget. Take up a side hustle to increase your income or cut unnecessary expenses from your spending, such as streaming services or dining out.

Mortgage Tips

Hoping to buy a $500,000 home this year? We’ve got several mortgage qualification tips to help.

For instance, make sure you know the difference between fixed- and adjustable-rate mortgages and when it might make sense to refinance your mortgage, and always shop around by getting prequalified with various lenders to ensure you get the best deals. Focus on your credit score before applying, but once you’re approved for a mortgage, don’t open any new credit accounts until after you close on the house.

The Takeaway

The income needed for a $500,000 mortgage depends on several factors, including your debt, down payment, and credit score. That said, adhering to the 28/36 rule means you’d need to make about $150,000 a year to get a $500,000 home.

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.

FAQ

How much income do I need for a $500K mortgage?

By following the 28/36 rule, you’d need an annual income of $150,000 for a $500,000 mortgage. However, if you have significant debts, you may need to aim for a lower home price, even with a high household income.

Can I afford a $500K house on $100K?

It would be hard to afford a $500K house on an annual income of $100,000. The only way it might be doable is to make a very large down payment, thereby reducing the amount of money you need to borrow and, as a result, your monthly payments.

Can I afford a $500K house if I make $200K?

A $200,000 salary should be more than enough for a $500,000 home, unless you have significant debt.

Photo credit: iStock/cofotoisme

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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.

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

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

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

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

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