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FHA loans, which are backed by the Federal Housing Administration, are popular with first-time homebuyers for their more flexible qualifications and lower down payment requirements. Though FHA loans are more accessible, there’s still potential for mortgage denial during the underwriting process.

Here’s a look at how often FHA loans are denied in underwriting, plus some of the leading reasons for mortgage denial — plus strategies to improve your chances of loan approval.

Understanding FHA Loan Underwriting

When you apply for an FHA loan to finance the purchase of a home, the lender will evaluate your ability to repay the loan to decide whether to approve or deny the application. This is known as the mortgage underwriting process, which involves reviewing a borrower’s financial information, such as credit history, income, debts, and the mortgage amount.

Getting preapproved for a home loan is an initial step in the FHA loan process that can give prospective homebuyers an indication of how much they can potentially borrow with the loan. After receiving preapproval, buyers get a letter from the lender that they can include when making an offer on a home.

If an offer is accepted, buyers can apply for an FHA loan, prompting another review of a borrower’s credit, employment, income, debts, and assets by the underwriter to reach a final decision: conditionally approved, suspended, or denied. This process may take a few days or more than a week to complete.

Common FHA Loan Denial Statistics

How common is it to have a mortgage loan denied in underwriting? In short, it depends on the type of mortgage loan. Below are some key statistics to keep in mind as you prepare to apply for an FHA loan.

Denial Rates Compared to Conventional Loans

When comparing FHA vs. conventional mortgages, the latter have a lower rate of denial. In 2023, the most recent year for which full data is available, 7.9% of conventional home loan applications were denied, which is the lowest among all types of home loans.

Meanwhile, applications for FHA loans, which accounted for 17% of mortgages in 2023, had a 13.6% denial rate for applications to purchase a home in the same year. The denial rate for FHA refinance loans was 41.7% for 2023.

Trends in FHA Loan Approvals

In 2023, 86.7% of applicants were approved for FHA loans. To better understand how you compare to typical borrowers, here are some key trends on FHA loan approvals. The median credit score was 673 for borrowers taking out FHA loans in 2023. And the median loan amount was $294,000 for FHA mortgages approved in 2023.

Keep in mind that getting approved for an FHA loan depends on multiple factors, including economic conditions and individual lender practices — not just a borrower’s qualifications.

Recommended: A Guide to FHA Loans

Top Reasons FHA Loans Get Denied in Underwriting

Here are a few of the main reasons for having an FHA mortgage loan denied in underwriting.

Credit Score Issues

Lenders look at a borrower’s credit history to help determine their ability to repay debt. Having a high credit utilization, a history of late payments, or recent bankruptcies could lead to an FHA loan getting denied.

The credit score needed to buy a house varies by loan type, with FHA loans being more lenient. Borrowers with credit scores of at least 500 could qualify for an FHA loan. However, a credit score below 580 requires a 10% down payment versus a 3.5% down payment for borrowers who can hit the 580 number.

If you meet the credit score requirements for an FHA loan, it’s important to ensure you stay on top of monthly payments and avoid opening new lines of credit to maintain your credit score.

Debt-to-Income Ratio Problems

When applying for an FHA loan, lenders also consider your existing debt. Having a debt-to-income (DTI) ratio over 50% could be a problem for getting approved. Note that lenders typically prefer a DTI ratio of 43% or less when applying for home mortgage loans. To assess your DTI, add up all your monthly debts and divide by your gross monthly income; multiply the result by 100.

Lenders evaluate your DTI ratio when you apply for mortgage preapproval. But a change in your DTI could arise between then and the underwriting process if there are issues with any cosigned debt or you take on new debt.

Recommended: Why Your Debt-to-Income Ratio Matters

Property Appraisal Challenges

Unless you’re a cash buyer, an appraisal is a necessary step to determine the home’s value. So it’s important to understand how FHA appraisals work. Underwriters could deny an FHA loan application if the appraised value falls short of the purchase price. This can be remedied if the seller agrees to lower the price or the buyer can make up the difference in cash.

FHA appraisals also assess whether a home meets the minimum health and safety standards set by the U.S. Department of Housing and Urban Development (HUD). If any health and safety hazards are identified, such as a broken HVAC system or leaky roof, these could result in an FHA loan being denied unless it’s resolved before closing.

How to Improve Your Chances of FHA Loan Approval

Borrowers can plan ahead to improve their chances of getting approved for an FHA loan.

Having enough money saved for a down payment and closing costs prior to applying is key, as lenders typically ask for two or more months of bank statements. As noted above, the minimum down payment on FHA loans depends on your credit score. Borrowers with credit scores of 580 or above can put just 3.5% down, while those with credit scores between 500 and 579 need to put 10% down.

Paying off debt to improve your credit and DTI ratio is another strategy to consider, especially if your credit score is hovering near 580.

When it comes time to submit the mortgage application, taking the time to review all your information for accuracy can help reduce the likelihood of getting denied due to an error.

What to Do If Your FHA Loan Is Denied

Having your FHA loan denied in underwriting can be unwelcome news, but it’s not the end of the road for buying a home. First, you can talk to your lender to determine if there were any application errors and what other options are available. Adding a cosigner to your mortgage could help secure approval, though this would mean finding someone who agrees to be financially responsible if you are unable to make loan payments.

There are also other types of mortgage loans to consider. Homebuyers who meet income limits and are buying in areas designated as eligible by the United States Department of Agriculture could qualify for a USDA loan, a type of mortgage with no down payment requirement. Alternatively, VA loans, which are available to eligible veterans, active-duty military, reservists, and surviving spouses, have no minimum credit score or down payment requirements. (Note: SoFi does not offer USDA loans at this time, but we do offer FHA and VA loans.)

Working with the Right Lender for FHA Loans

As a first-time homebuyer, you likely have questions. For instance, “which mortgage products do you recommend?” and “should I be worried about underwriting?.” Working with the right lender for FHA loans can help answer questions and address concerns to streamline the homebuying process.

Many banks and mortgage companies offer FHA loans, and HUD maintains a database of FHA-approved lenders. Comparing offers from multiple lenders is recommended to find more favorable loan terms.

The Takeaway

How often are FHA loans denied in underwriting? In 2023, just under 14% of FHA loans were denied, which is a higher rate than conventional home loans. Some of the main reasons for FHA loan denial stem from a borrower’s credit history, their debt-to-income ratio, and the appraisal. An FHA loan can be a good solution for many borrowers, however.

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 put down as little as 3.5%, making an FHA loan a great option for first-time homebuyers.

FAQ

What is the current denial rate for FHA loans in underwriting?

The denial rate for FHA loans in underwriting was 13.6% in 2023. This is nearly double the denial rate for conventional mortgages for the same year.

What minimum credit score is needed to avoid FHA loan denial?

Having a credit score of 500 meets the minimum requirements and can help avoid FHA loan denial. Note that borrowers with a credit score of 580 or more can make a 3.5% down payment instead of 10%.

Can I reapply for an FHA loan after being denied?

Yes, you can reapply, but it’s important to understand the reasons for mortgage denial and address those issues before submitting a second FHA loan application.

How long should I wait to apply again after an FHA loan denial?

How long you should wait depends on your reason for FHA loan denial, as there isn’t a mandatory waiting period for reapplying. For example, it may take several months for your credit score to improve before you can then reapply.

Are certain property types more likely to cause FHA loan denials?

Certain property types, such as manufactured homes and condos, have stricter requirements, making them more likely to cause FHA loan denials.

Photo credit: iStock/Milan Markovic

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.

SOHL-Q225-041

The cost of turning your house into a “smart home” could range from about $100 to $4,500 or more, depending on what type of upgrades you might be considering.

According to 2025 data from the home improvement site Angi.com, the typical cost of a smart home ranges from $204 to $1,653. But several factors could affect how much you end up paying, including the size of your home and whether you DIY the install or hire a professional to take charge.

As you’re thinking about how to upgrade your home to a smart home, read on for a look at what it might cost, whether the return on investment could be worth the price, and how you might choose to pay for those cool new devices.

Understanding Smart Home Technology in 2025

Way back in 1962, the animated TV show The Jetsons and other sci-fi classics gave viewers an aspirational look at what life might be like 100 years in the future — when a home filled with computerized gadgets would make life so much easier for moms, dads, the kids, and even the family dog.

Who knew, even as you watched those old shows as reruns decades later, that so much of what they predicted would come true? OK, maybe we don’t have flying cars yet. But in 2025, smart home technology, or home automation, is a reality … and getting smarter all the time.

You can see who’s at your door from 1,000 miles away. Or program your robot vacuum to clean your floors when and where you want. You can use your smartphone, tablet, laptop, or a smart home assistant like Google or Alexa to turn lights on and off, turn the thermostat up or down, open and close the blinds, and more. Many of today’s devices can be operated separately or linked together to act as a cohesive network. And besides the obvious convenience, smart tech can also help reduce some costs and your carbon footprint.

Recommended: 4 Ways to Upgrade Your Home

Smart Home Cost Breakdown by Category

The cost of turning your house into a smart home will depend on which devices you choose to install or upgrade, and how connected you want those various devices to be. If you install one or two gadgets yourself — like a new smart thermostat or a doorbell camera — you can probably keep the cost to a minimum. But if you have a professional come in and connect your whole home, the price could be much higher.
Here’s a breakdown of what a few of the more popular smart devices could run you:

Smart Home Cost: Security Systems

Because they can allow you to better monitor your property when you’re away, home safety systems are among the most popular automated setups offered. And there’s a wide range of options available. You can choose between a wired or wireless (Bluetooth or Wi-Fi) system, for example, or between a professionally installed and monitored system and one that you set up and monitor yourself using your phone. Depending on your choice, and how elaborate the setup of sensors and cameras is, you could spend anywhere from $300 to $5,000 or more on installation, with an additional charge for external monitoring for some systems.

Smart Home Cost: Automated Lighting and Electrical

We’ve come a long way since clapping to turn a lamp on and off was considered high-tech. Today’s smart lighting can be controlled remotely or set up to go on and off automatically, so you can keep your home safer and use your electricity more efficiently. You also may be able to adjust the brightness and color of your lights. Fully outfitting your home with smart lighting could cost from $1,000 to $5,000. Or you can start out a little smaller and buy smart bulbs (about $15 each or less) that wirelessly connect to your home’s hub (think Alexa or Google Nest) or your smartphone.

Smart Home Cost: HVAC and Climate Control

A smart thermostat offers another way to control your home environment from afar and potentially lower your power bills. You can program it to turn on or turn up the air conditioner or heater before you get home so the temp is just the way you like it. Or you can make adjustments any time remotely using your smartphone. Some smart thermostats also can “learn” your temperature preferences and automatically create a heating and cooling schedule based on your habits. The price of a smart thermostat can range from about $70 to $280. A fully automated HVAC system, on the other hand, could cost from $800 to $2,000 or more.

Recommended: What Does an HVAC Replacement Cost?

Entry-Level vs. Premium Smart Home Setups

There are smart home options to fit just about any budget. But when you compare entry-level vs. premium smart home setups, you’ll likely find differences in performance, design, functionality, and support.
Professional installation, customization, and the brand you buy can all factor into the price you’ll ultimately pay to transition to a smart home. (Of course, you could also buy a new home that’s already outfitted with a state-of-the-art smart system.)

If your budget is a factor, you may want to start small, with a few essentials that you can install yourself. You might have to invest quite a bit more (thousands of dollars vs. hundreds) to get a top-tier whole-house system that seamlessly integrates all the electronics inside and outside your home.

Hidden Costs of Smart Home Implementation

When you’re budgeting for any smart home upgrade, it can be a good idea to prepare for extra costs, including:

Subscription Costs

Some smart devices come with monthly fees that can add to your overall cost. If you want 24/7 security system monitoring, for example, you could pay $30 to $60 or more each month for that service. (Some self-monitored video doorbells also require a subscription — especially if you want to customize your setup.) Your smart home system may also charge a monthly subscription ($10 to $50 or more, depending on the level of service) to cover ongoing maintenance, software and equipment updates, and general support.

Stronger Wi-Fi Requirements

If your smart home system requires a stronger signal than you currently have, you may have to get an upgrade and pay more each month to your wireless company.

Repairs and Replacements

If your smart appliance (refrigerator, dishwasher, microwave, etc.) breaks down, the cost of repairing or replacing it will likely be higher than what you’d pay for basic appliances. And you may not be able to take certain larger appliances or your security system with you if you move.

Packages vs. Individual Pieces

Depending on how big you think you might want to go with your smart home tech, you may want to compare the cost of buying a comprehensive system of integrated smart components vs. buying one device at a time. You might be able to save some money by purchasing a package that includes professional installation, service, and other features. (If you’re considering a renovation or remodel, it may make sense to include the costs of a smart home upgrade in your budget.)

Financing Your Smart Home Upgrade

While some smart home devices can be relatively low in cost, others may require a more significant investment. So besides researching the various costs, it can also make sense to consider how you might pay for any smart tech improvements.

If you have some equity built up in your home, you may want to look into the pros and cons of using a home equity loan vs. a home equity line of credit (HELOC) to help finance your project. Both allow those who qualify to borrow a large sum of money at a relatively low interest rate and with lower fees than a mortgage refinance. But each works a bit differently.

•   A home equity loan is disbursed in a lump sum that you’ll begin repaying immediately, with interest, usually at a fixed rate. This might be a good solution if outfitting your home with smart technology is part of a larger renovation project that you undertake with a contractor who can give you a bid for the total costs to remodel or renovate a home in advance, so you know, roughly, what your total spend will be.

•   A HELOC is a revolving line of credit that works more like a credit card. You can take out money as you need it, up to your approved limit, during the draw period, which typically lasts 10 years. Usually, you’ll be required to make interest-only payments on the amount you borrow during that time. When the draw period ends, you’ll enter the repayment period, which is usually 20 years; and at that time, you must begin repaying the principal balance with interest, usually at a variable rate. A HELOC could be a good solution if you aren’t sure exactly how large a project you’re taking on and what it might cost — if it’s a few rolling renovations vs. a big remodel, for example.

It might be tempting to go to the lender that provided your home mortgage loan for financing, but it’s always a good idea to look around and check rates with several lenders before making a commitment.

If you don’t have enough equity in your home, or if you prefer not to use your home as collateral, another possibility might be an unsecured home improvement loan. With this type of personal loan, the funding may be faster (there’s no appraisal required), and your home isn’t on the line if you fall behind on your payments. As for a fixed interest rate for easier budgeting.

Any of these borrowing options can be used to cover the costs of upgrading to a smart home, so it’s really about finding the right fit for your needs.

ROI of Smart Home Investments

Is a smart home worth the cost? Even if your focus is primarily on comfort and convenience when you invest in smart home technology, you’ll likely notice other benefits as well.

You can use devices that control your home’s temperature, appliances, and lights, for example, to help you reduce your monthly energy bills. And installing a security system may help you reduce your insurance costs.

Adding smart home components or a whole system can also help you increase or maintain the value of your home. Is a smart home worth it? According to Forbes.com, most sellers of smart homes realize a 50% return on their investment. And because buyers are increasingly looking for smart home features, the right upgrades also may help you sell your home faster.

The Takeaway

Technology that can make your home life simpler, safer, and more comfortable is no longer a fantasy. Upgrading your home to a smart home isn’t even really considered a luxury anymore.
How much is a smart home? These days, there are devices and packages designed to fit just about any budget, from individual components that may cost less than $100, to whole-home systems that can run into the thousands. If you’re spending big on smart tech or wrapping smart home technology into a larger renovation, a home equity line of credit could help you cover the bills.

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

FAQ

What’s the average cost of a basic smart home setup in 2025?

The typical cost of a smart home can range from about $200 to $2,000 or more. But several factors can affect how much you end up paying, including the size of the upgrade and whether you DIY the job or hire a professional to take charge.

Which smart home features offer the best return on investment?

Smart thermostats, lighting, and security systems are currently in high demand and generally offer the best return on investment.

Can I finance smart home upgrades through SoFi?

Absolutely. SoFi offers several financing options for homeowners who want to upgrade their tech, including a home equity loan, a home equity line of credit (HELOC), and an unsecured home improvement loan.

How much should I budget for ongoing smart home maintenance and subscriptions?

Depending on the type of system you plan to purchase, it may make sense to budget at least $50 a month for maintenance and subscriptions.

Are there tax incentives or rebates available for energy-efficient smart home implementations?

Tax laws that apply to energy-efficient upgrades are complicated and can change from year to year. Keep your receipts (documenting your costs is key), and talk to your tax preparer about potential tax breaks, but don’t count on them when you’re planning your project.

Photo credit: iStock/Srdjanns74

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.

SOHL-Q225-040

As you sort through the many details that go into buying a home, have you wondered if there’s a best or worst day to schedule the closing? The answer is yes: Choosing the right date and/or day of the week to finalize your home purchase could help lower your stress — and potentially save you some money.

Read on for a look at how carefully timing your closing could have benefits for you as a homebuyer.

Who Chooses the Closing Date?

Generally, buyers suggest a tentative closing date when they make an offer on a home, but there may be some negotiations before this important day is finalized on the purchase contract. It’s also not unusual for the established closing date to be moved if the buyers or the sellers request a change.

It can be hard to predict how long it will take to close on a house. It may take the buyers longer than expected to get the home they hope to purchase inspected, for example, or to pull together all the necessary paperwork for their approval. Or the sellers may ask to modify the date to accommodate the purchase of their next home. The day also has to work for the mortgage lender, the title company, any cosigners, and others involved in the transaction.

Still, as the buyer, you can expect to have a say as to when you’ll head to the closing table. So it can make sense to be prepared to propose a day that works best for your needs.

Worst Day to Close on a House

Because the logistics can get complicated when you’re trying to find a closing date that works for everyone, you may want to focus first on avoiding what might be the worst day to close on a house. And surprisingly, that could be a Friday.

It might be tempting to schedule your closing for the end of the week — especially if there’s a holiday weekend coming up — so you can take advantage of those days off to move into your new home. But it can be a risk. If there’s a delay such as missing paperwork or a complication during the final walk-through, you may have to push the closing to the following Monday or even later in order to resolve the trouble and get back on track.

Mondays can also be problematic. Even if everything is in order for your closing, the professionals you’re dealing with may be swamped with a backlog of issues left over from the week before. Your experience may be more pleasant if you pick a day that’s not as busy.

If you can manage it, a Tuesday, Wednesday, or Thursday may be a better choice. Closing midweek can give you more time to overcome any last-minute hiccups and still get the transaction finalized without having to shift it to the next week.

Recommended: When Is the Best Time to Buy a House?

Best Day to Close on a House

The best day to close on a house for the buyer is the one that’s the right fit for your schedule as a busy employee, parent, etc. — and it must work for everyone else who plans to participate. You’ll also want to be sure to give yourself plenty of time to accomplish all the steps in the home-buying process, from getting an appraisal and inspection to arranging for homeowner’s insurance and planning and packing for your move.

Your financial needs can also play a significant role in choosing the right closing day. And getting that right can be more about finding the best day of the month to close than the best day of the week.

If you want the maximum breathing room between your closing and your first mortgage payment, for example, you may want to pick a day that’s early in the month. A buyer’s first mortgage payment is usually due on the first day of the month after a 30-day period following the closing. So if your closing is on, say, Sept. 3, you’d have nearly two months before your first payment was due on Nov. 1. But if you closed on Sept. 28, you’d only have about a month before the first mortgage payment was due, also on Nov. 1.

If you’re trying to save money on closing costs, however, you might want to avoid the start of the month. As the buyer, you can expect your lender to add any interest that will accrue between your closing date and the end of the month to your closing costs. With a date that’s later in the month, your first mortgage payment will come sooner, but you could substantially reduce the amount of interest you’ll have to prepay at your closing. Some lenders will roll closing costs into your home loan, but you will still pay them, perhaps by paying a higher interest rate on the loan.

You could also decide to compromise and shoot for a closing date in the middle of the month. With this option, you’ll pay less interest than if you’d closed at the start of the month and you’ll still have a month and a half before your first mortgage payment is due.

Recommended: VA Loan Closing Costs

Other Things to Consider When Choosing a Closing Date

Along with the money you could save on prepaid accrued interest by scheduling your closing toward the end of the month, here are a few other financial factors to consider:

Do You Have an Existing Lease?

If you’re a first-time homebuyer and you’re currently renting, you may want to time your closing so that you can avoid making another rent payment before you move into your new home. For example, if your rent is due on the first day of the month, your best closing date may be at the end of the month prior. (This could also allow you to reduce the amount of prepaid interest due at closing.)

Is the Home in an HOA?

Buyers often overlook the cost of Homeowners Association (HOA) fees when they prepare for a closing — but it’s possible those fees could rise or fall depending on the date you close. The difference in what you’ll pay might not be enough to make you want to change your closing date, but it’s worth checking out ahead of time.

Are You Asking for Seller Concessions?

Are you dealing with eager home sellers? You might be able to ask for some seller concessions as part of your home purchase. If the sellers agree to pay some or all of your closing costs, for instance, that amount could include the accrued interest the lender will charge. If that’s the case, you could close at the start of the month and enjoy a longer period of time before you must make your first mortgage payment without having to make a larger interest payment at closing. (Just be sure to check that the accrued interest will be included in the costs covered by the sellers.)

The Takeaway

So many decisions go into buying a home, it might not even occur to you to put some thought into choosing the best closing date. But picking the best day to close on a house as a buyer can have several benefits — including providing opportunities to save some money at a time when that can be so important.

The closing date is negotiable, and of course you’ll want to be open to finding a day that works for all involved. But as a buyer, you’ll have a chance to propose the best closing date for you when you make an offer on a home. So why not check your calendar, run the numbers, consult with your real estate agent and mortgage lender, and come prepared with a day in mind?

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

Does the buyer or seller choose the closing date?

Both buyers and sellers may have some input into the closing date, but typically, the buyer first proposes a closing date on the purchase contract when making an offer on a home.

Is it better to close on a house at the beginning or end of the month?

There are several factors that may go into deciding the best timing for a closing. For example, If the buyer wants to pay less toward accrued interest, a closing date at the end of the month is generally better. But if the buyer wants to maximize the time between the closing and the first mortgage payment, closing at the start of the month may be the better choice.

Does it matter if I close on my house before a holiday?

You may want to avoid scheduling your closing right before a holiday weekend. The professionals who are working on your closing may be busier at this time of year, and if an issue comes up that can’t be resolved quickly, the closing might have to be delayed until after the holiday.

How does the closing date affect the first mortgage payment?

A buyer’s first mortgage payment is typically due on the first day of the month after a 30-day period following the closing.

Is there an optimal day of the week to close on a house?

Tuesdays, Wednesdays, and Thursdays are generally considered to be the best days of the week for a closing. If something goes wrong and the closing is early in the week, it’s more likely there will be time to fix the problem and get things back on track before the weekend.

Photo credit: iStock/gorodenkoff

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.

SOHL-Q225-037

Buying a home is a big milestone, but with hefty housing prices and high mortgage rates, homeownership can feel out of reach for many Americans. And even if you can afford the down payment and monthly mortgage for your dream home, you may not have strong enough credit to qualify for the loan. So what can you do?

Adding a qualified cosigner to your mortgage is a great way to improve your approval odds when buying a house, but there are several risks the cosigner takes on when they help you out. Below, we’ll walk you through how cosigning a mortgage works, what the requirements are, and the pros and cons.

What Is a Mortgage Cosigner?

A mortgage loan cosigner is someone (usually a relative or close friend) who signs the mortgage alongside the primary borrower but has no ownership interest in the home (and does not live in the same home). Instead, the cosigner simply agrees to take full financial responsibility for the mortgage should the primary borrower miss payments or stop paying entirely.

This is a big deal: The lender has every right to come after the cosigner if the borrower defaults on the mortgage. The cosigner may have to pay missed payments and late fees, and in most cases, the lender is able to use debt collection methods (such as a lawsuit or garnishing wages) on the cosigner without first trying to collect from the borrower.

Having a mortgage cosigner can make a big difference in your approval odds if you don’t have a strong enough credit score to qualify for a mortgage otherwise. However, there are clearly tremendous risks to the cosigner that you should take seriously as the borrower.

How Cosigning a Home Loan Works

Whether your credit score is so low that you can only qualify for a mortgage with an extremely high interest rate — or so low that it precludes you from qualifying for a mortgage altogether — you can get a cosigner on your mortgage loan to help smooth your path.

A well-qualified cosigner should have a strong credit score and a low debt-to-income ratio (DTI); that is, they should make significantly more money than they pay in debts each month. Adding this person, such as a parent, spouse, grandparent, or sibling, can suddenly make your application way more attractive to a mortgage lender. After all, the lender knows that if you fall behind on payments, your cosigner is well within their means to take over.

Assuming you are approved for a mortgage with a cosigner and close on the home, the mortgage will proceed as usual. You’ll move into the house, and the cosigner will continue living separately. They have no further responsibility — unless you stop making payments.

Because your failure to pay can negatively impact your loved one’s credit score and finances — and thus your relationship with that relative or friend — it’s imperative that you do everything within your power to stay on top of mortgage payments. Communicate with your cosigner regularly about the mortgage, and let them know the instant you suspect you’ll struggle to make a payment.

Conventional Mortgage Cosigner Requirements

If you’re using a cosigner to get a conventional mortgage, you’ll still need to meet basic conventional loan requirements. For instance, you’ll still need a minimum credit score for a mortgage with a cosigner of 620 — but if your credit score isn’t strong enough, you can rely on your cosigner’s high credit score to increase your approval odds.

There are a few other conventional mortgage cosigner requirements to keep in mind:

•   Down payment: If you’re using a cosigner, you still must use your own funds to make at least 5% of the down payment (in most circumstances).

•   DTI: Using only your income (but the debt of both you and your cosigner), your DTI must be no greater than 43%.

•   Loan-to-value ratio: When using a cosigner, the loan-to-value ratio (LTV), combined loan-to-value ratio (CLTV), and home equity combined loan-to-value ratio (HCLTV) usually cannot exceed 90%.

FHA Loan Cosigner Requirements

Similarly, FHA loans, backed by the Federal Housing Administration, have special cosigner requirements for a mortgage to bear in mind. FHA loans are ideal because you only have to put 3.5% down, which makes them great for first-time homebuyers who have limited savings to rely on.

However, if you’re adding an FHA loan cosigner, the down payment requirement jumps to 25% — unless the cosigner is a family member. In that case, the down payment remains at 3.5%.

Can parents cosign an FHA loan? Yes. But fortunately, the FHA is pretty liberal with the term “family member,” and also allows it to include:

•   A child or grandparent (including step and foster)

•   A spouse or domestic partner

•   An adopted child or foster child

•   A sibling (including step)

•   An aunt or uncle

•   An in-law (son, daughter, mother, father, brother, or sister)

The cosigner (which the FHA calls a “nonoccupying co-borrower”) must be a U.S. citizen or have a principal residence in the country.

Recommended: Guarantor vs. Cosigner: What Are the Differences?

Benefits of Mortgage Cosigners

The benefits of a mortgage with a cosigner belong primarily to the borrower. Here are a few pros of mortgage cosigners to consider:

•   Improved approval odds: Adding a qualified cosigner to your mortgage increases your approval odds, assuming the cosigner has a healthy credit score and stable income. This can be especially helpful for borrowers with low credit scores or unconventional income (such as self-employment income).

•   Lower interest rate: Even if you can qualify for a mortgage without a cosigner, you might face high interest rates. Adding a well-qualified cosigner could help you secure a lower mortgage interest rate, which means less money spent over the life of the loan and a lower, more manageable monthly payment.

•   Larger loan: You may be able to qualify for a more expensive house with the help of a cosigner. This could be crucial if you live in an area with a high cost of living (and thus more expensive real estate).

Drawbacks of Mortgage Cosigners

As you’d imagine, the cons primarily apply to the cosigner, not to the borrower. Here a few cons of mortgage cosigners to consider:

•   Huge financial risk: Cosigning a mortgage poses a huge financial risk. If the borrower stops making payments, you’re on the hook. The lender could potentially sue you or garnish your wages to cover the payments. Plus, late payments by the borrower don’t only impact their credit score; the cosigner’s credit score will take a hit, too.

•   Difficulty getting other loans: The mortgage you cosign will impact your debt-to-income ratio. Until that mortgage is paid off (which could take three decades), your DTI might be too high for you to qualify for your own loans, such as a mortgage on a new house, a personal loan, or a car loan.

•   Relationship issues: If the borrower isn’t taking enough responsibility for their home loan, you’ll have to have some difficult conversations. Disputes over money could even end your relationship (and yes, you’ll still be on the hook for the mortgage, even if you and the borrower no longer speak).

Recommended: Refinance Your Mortgage and Save

Other Factors to Consider When Cosigning a Mortgage

Planning to cosign a mortgage? Here are a few things to consider:

•   Cosigner release: Read the contract carefully to understand what your options are for eventual cosigner release. Some lenders may include a clause outlining cosigner liability release; if the primary borrower meets the lender’s strict requirements (credit score, income, history of on-time payments), you may be able to request to be released from the loan.

•   Credit monitoring: Regularly check your credit report for missed payments. While you can communicate with the borrower about how the payments are going, it’s always good to verify with an unbiased resource.

•   Long-term commitment: Remember, mortgages typically last between 15 and 30 years. Cosigning one is a long-term commitment. Make sure cosigning won’t impede any of your financial goals during that time period, and think carefully about whether the borrower is responsible enough to manage a loan of this magnitude for that long.

The Takeaway

Adding a cosigner to a mortgage loan can improve the approval odds if your credit score isn’t strong enough to get approved on your own. A cosigner can also help you secure a larger loan and/or a lower interest rate. However, cosigners assume a major financial risk when getting involved — and disagreements over money can easily end even the strongest of relationships. Proceed with caution.

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

Who can be a cosigner on a mortgage?

Technically, anyone can cosign on a mortgage, but because it’s a big financial risk, people usually rely on family members or very close friends. For FHA loans, cosigning with a family member is ideal; using a cosigner who is not a relative means you have to put 25% down, instead of 3.5%.

Do I need my parents to cosign a home loan for me as a first-time homebuyer?

You do not need your parents to cosign a home loan as a first-time homebuyer. If you have a strong credit score and enough income to handle the loan on your own, you can proceed without a cosigner. But if you need help with your first home purchase, asking a parent to cosign is an option.

Can retired parents cosign a mortgage?

Yes, retired parents can cosign a mortgage. Lenders analyze cosigners’ credit scores, debts, and incomes when making an approval decision. A retired parent’s income will simply look different from a working parent’s income; for instance, a retired parent’s income might include Social Security payments, investment income, a retirement account distribution, or a pension.

Does having a mortgage cosigner affect my home loan approval chances?

Adding a mortgage cosigner can and should affect your home loan approval chances. The whole reason to add a cosigner is to use their stronger credit score and higher income to make you a more attractive applicant and thus improve your approval odds — perhaps at a lower interest rate or for a larger loan amount.

Is it possible to remove a cosigner from a mortgage in the future?

While challenging, it’s technically possible to remove a cosigner from a mortgage in a few ways. Assuming your own credit and income are strong, you can just ask the lender to remove the cosigner. But they won’t always say yes. Your next move, then, is to refinance the mortgage without the cosigner or wait until you sell the property, at which point you can buy your next home without a cosigner.

How do cosigners on home loans affect taxes?

Borrowers get to deduct mortgage interest and property taxes when filing their tax returns, but you as the cosigner don’t reap these benefits. Plus, if you help the borrower by giving them money for the down payment, it may be subject to the gift tax on your tax return.

Can you have a cosigner on a VA mortgage?

Yes, you can have a cosigner on a U.S. Department of Veterans Affairs loan, but unlike other types of mortgage cosigners, the cosigner must live with the borrower in the home. In addition, the cosigner needs to be another qualifying veteran, service member, or a spouse of a qualifying buyer.

What’s the difference between a cosigner and a co-borrower?

Both cosigners and co-borrowers sign a mortgage with the primary borrower to help strengthen the application; they’re also both on the hook financially should the primary borrower not keep up with payments. However, cosigners only guarantee the loan, but they do not live in the home, nor do they have any ownership in the home; co-borrowers on a mortgage share ownership of the home, and their name appears on the title.

Photo credit: iStock/tonefotografia

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.

SOHL-Q225-036

Cosigning a mortgage is a tremendous thing to do for a loved one. Your income and credit history can help someone whose finances aren’t on solid footing still get the house they want (or need). But being a cosigner can also be disastrous for your finances: Any missteps by the borrower could impact your credit score and ultimately leave you on the hook for paying the mortgage.

So once the paperwork is signed and the borrower is making progress on repayment, can the cosigner be removed from the mortgage? The path isn’t easy, but there are ways of doing it. Below, we’ll walk you through how to remove a cosigner from a mortgage in a few different ways.

Ways to Remove a Cosigner from a Mortgage

It’s a common scenario: At one point in time, you cosigned a mortgage but no longer wish to be on it. Maybe you helped out a loved one who was a first-time homebuyer and who needed assistance getting a loan. And now, perhaps to more easily secure a loan for yourself, or maybe just for financial peace of mind, you want to be relieved of your responsibilities. Here’s how to remove yourself as a cosigner from a mortgage — but fair warning, it’s not easy. (Before following any of these steps, make sure you are in fact a cosigner vs. a guarantor; the two are somewhat different.)

1. Mortgage Refinancing

The easiest way to remove a cosigner from a mortgage is to have the primary borrower refinance it. As the cosigner, you can’t force this; the borrower is the only one who can choose to refinance, and they have to meet mortgage refinancing eligibility requirements to do so.

When can a cosigner be removed from a mortgage? The timing is right if the borrower:

•   Needs a strong enough credit score to qualify on their own

•   Needs a steady enough (and high enough) income to qualify on their own

•   Must be willing to refinance — including paying mortgage refinance fees, such as closing costs

If the borrower is unable, or unwilling, to get a mortgage refinance, you won’t be able to remove yourself as cosigner using this strategy.

Recommended: Cosigner Responsibilities on a Loan

2. Mortgage Loan Assumption

How to get a cosigner off a mortgage loan without refinancing? If a mortgage is assumable, it means you can sign it over to another qualified borrower, with the same terms and interest rates. This is a potential tactic when selling your home during times of high mortgage interest rates; if you have a low interest rate, you can make your home more attractive to buyers by letting them assume the loan rather than get a new loan at a higher rate. (The buyer will also likely have to take out a separate loan to pay the difference between the remaining mortgage balance and the sale price.)

But assumable mortgages can also be a handy tool for mortgages with co-borrowers and cosigners. For instance, spouses or domestic partners who plan to separate but are co-borrowers on a loan might be able to use an assumable mortgage to simply put the mortgage fully in one person’s name. If the borrower on a cosigned loan is willing, this could also be a way to get the cosigner off a mortgage.

Not all mortgages are assumable, but government-backed loans, such as FHA loans or VA loans are. Even so, the lender has to approve the mortgage assumption, and the borrower for whom you cosigned has to be on board, so it’s not a done deal.

3. Requesting a Mortgage Cosigner Release

In some instances, a loan may have language in the agreement about a “cosigner release,” which simply means the cosigner can ask to be removed if certain conditions are met (though the lender can still say no). This is more common for other types of loans, such as student loans, but you can absolutely ask the mortgage lender if they’d include a cosigner release in the contract before signing on the dotted line.

Even if there’s nothing in the mortgage agreement about cosigner release, you can always reach out to the mortgage lender and ask to be removed. While it’s a long shot (there’s really no benefit to the lender), it could work if the borrower has strong credit, few debts, and a lot of income.

Even if there’s nothing in the mortgage agreement about cosigner release, you can always reach out to the mortgage lender and ask to be removed. While it’s a long shot (there’s really no benefit to the lender), it could work if the borrower has strong credit, few debts, and a lot of income.

4. Selling the House

Finally, at any point, the borrower can sell the home. The proceeds from the sale first go toward the existing mortgage to pay it off before they can pocket any profit. And as soon as that mortgage is paid off, you’re home free (or home-loan free, rather).

How to Remove Yourself as a Cosigner on a Mortgage

No matter which tactic you take — refinancing, loan assumption, cosigner release, or selling the house — you as the cosigner have little control over the process. Instead, the borrower has to take action, and in most cases, the lender has to agree.

Here are some tips if you want to be removed from a mortgage you cosigned:

•   Help the borrower improve their credit score: You could help the borrower make a budget and set up automatic payments so they can stay on top of on-time payments for all their bills.

•   Help the borrower increase their income: Tailor your help to where the borrower is on their career journey. If the borrower is fresh out of college, help them improve their resume or make connections that could lead to a job. If the borrower is already established in a career, provide coaching for how they might negotiate a raise, or help them find a side hustle or part-time job.

•   Have a frank discussion: Because the borrower essentially holds all the power, make sure they understand why you want to be removed from the loan. Help them understand the financial pressures you may be facing. If your relationship is solid, the borrower should hopefully want to do what they can to remove you from the loan.

Recommended: Does Being a Cosigner Show Up on Your Credit Report

Factors to Consider Before Removing a Cosigner from a Mortgage

Before you attempt to remove yourself as a cosigner from the mortgage, consider a few factors:

•   The borrower’s situation: As much as you may want to take your name off the mortgage, you won’t get very far if the borrower doesn’t have a good credit score and steady income. In addition, if the borrower has no interest in removing the cosigner, there’s very little you can do.

•   Lender policies: Some mortgage lenders may not allow cosigner release. While it doesn’t hurt to ask, this is not a common practice among lenders.

•   Assumable mortgages: Not all mortgages are assumable. While a government-backed loan is typically assumable, most conventional mortgages are not.

•   Costs: If the primary borrower could theoretically refinance the mortgage on their own (and is willing), keep in mind there will be closing costs. You may need to step in and help the borrower cover these costs if that’s the only thing preventing them from moving forward.

The Takeaway

Cosigning a mortgage is a generous act for a loved one, but it also puts your finances in jeopardy. Luckily, there are ways to remove yourself, as long as the borrower is willing and able. And if you’re a homeowner wondering can you remove a cosigner from a mortgage, the answer is yes. The easiest path forward is refinancing the mortgage, but you can also explore strategies such as cosigner release, mortgage assumption, and when all else fails, selling the house.

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

What is a cosigner release on a mortgage?

A cosigner release is an option in the mortgage agreement that allows a cosigner to request to be removed from the mortgage, usually once the borrower has improved their credit score, increased their income, and made a series of on-time payments. Cosigner releases are uncommon for mortgages; it’s more likely to find a cosigner release on a student loan.

Is it easy to remove a cosigner from a mortgage?

Releasing a cosigner from a mortgage is not easy. The borrower must be willing to take action, and they’ll need to have strong credit and steady income. Even then, not all lenders will allow for the cosigner to be released or the mortgage to be assumed by the primary borrower. The easiest path forward is for the primary borrower to refinance the mortgage, if they can qualify on their own.

Can a cosigner be removed from a mortgage without refinancing?

Yes, a cosigner can be removed from a mortgage without refinancing, though refinancing is the easiest path forward. Alternate options include asking for a cosigner release; having the primary borrower assume the mortgage; and selling the house to pay off the mortgage

When can a cosigner be removed from a mortgage loan?

A cosigner can be removed from a mortgage loan when the borrower meets all the requirements to qualify on their own. Even if a borrower can qualify, however, lenders can reject requests for cosigner release and mortgage assumption. Borrowers and cosigners may have more luck by having the borrower refinance on their own.

Are there any fees associated with removing a cosigner from a mortgage?

There may be fees associated with removing a cosigner from a mortgage, depending on the route you take. The easiest way to remove a cosigner is to refinance the mortgage without them. However, there are mortgage refinance costs to consider, including closing costs, which are usually 2% to 5% of the new mortgage; loan application fees; title search; and a home appraisal. Similarly, assuming a mortgage may include a one-time funding fee.

Photo credit: iStock/RealPeopleGroup

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.

SOHL-Q225-035