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When it comes to managing your finances, hiring a financial advisor can be a wise decision. But with all the different types of financial pros out there, how do you find one that will work for your specific needs?

Asking questions is a good way to learn more about what an advisor does, understand their approach, and determine if they are the best fit for your situation and goals. In fact, it’s a good idea to interview at least two or three different advisors before choosing one you want to work with. These essential questions to ask an advisor can help you find the right fit.

Qualifications and Experience

If you plan to trust your finances to an advisor, selecting someone with the right qualifications and relevant experience is important. Here’s what to ask a financial advisor about their professional background.

What Certifications Do You Hold?

Two meaningful credentials are Certified Financial Planner (CFP®) and chartered financial consultant (ChFC). To earn either designation, an advisor must pass a certification exam, complete coursework, and have a certain level of experience in the field. They must also submit to a background check and adhere to a set of ethical standards. An advisor with tax expertise will typically be a certified public accountant (CPA) or personal financial specialists (PFS), which are CPAs who also offer more comprehensive planning.

Do You Have Any Disclosures on Your Record?

It’s important to know if an advisor has faced any regulatory, criminal, or disciplinary actions in the past. You can also verify this information by typing the advisor’s or firm’s name into the Securities and Exchange Commission’s (SEC’s) Investment Adviser Public Disclosure search tool. There, you can find out about the professional’s licenses and any disciplinary history they may have.

Services and Approach

Financial advisors vary in terms of the services they offer, the type of clients they work with, and their approach to financial planning. These questions can help you choose a financial advisor who will be a good match for your needs.

What Are Your Areas of Expertise?

Some advisors specialize in retirement planning, tax strategies, or estate planning. Others will help you create a comprehensive financial plan that could cover general money management, the types of accounts you need, the kinds of insurance you should have, and estate and tax planning. You’ll want to make sure that their expertise aligns with your needs and goals.

What Types of Clients Do You Typically Serve?

Certain financial advisors work exclusively with high-net-worth individuals, while others focus on small business owners, pre-retirees, or people in certain professions like physicians or artists. Choosing someone who has experience serving clients similar to you can help ensure they’ll be able to offer the guidance and financial advice you need.

What Is Your Investment Philosophy?

You’ll want to make sure how your money is invested aligns with your preferences, risk tolerance, needs, and financial goals. So when speaking with a potential advisor, you’ll want to get a sense of how they typically balance risk and return, if they concentrate on specific industries or types of investments, whether they prefer active or passive investment strategies, and how they tailor portfolios to client goals.

Fees and Compensation Structure

Financial advisors are compensated in different ways, and it’s important to understand their fee structure to avoid surprises.

How Do You Make Money?

Fee-only advisors charge a flat rate, hourly rate, and/or a percentage of assets managed for their services. Fee-based advisors, on the other hand, charge fees to clients directly for financial planning or portfolio management, while also earning commissions by selling financial products. Commission-based advisors primarily earn income by selling financial products. Fee-only advisors tend to have fewer conflicts of interest (more on that below). Ensure you understand how you will be charged.

Are There Any Extra Costs I Should Be Aware of?

A financial advisor’s fees may not cover all of your expenses. They might, for example, charge one fee for creating a financial plan, but charge more for putting that plan into action. Once your financial plan is in place, you may also have to pay trading, fund, and brokerage fees. Make sure you understand what your all-in costs are going to look like.

Do You Have a Minimum Account Size?

Some advisors work only with clients who have a certain level of assets. This might be a relatively low threshold, like $25,000, but it could be significantly more, such as $500,000 or $1 million, and possibly more. You’ll want to confirm whether this aligns with your financial situation.

Recommended: Who Are Wealth Management Advisors?

Potential Conflicts of Interest

Conflicts of interest can be problematic as it can cloud the advice you receive. These questions for financial advisors can help you suss out whether their goals could potentially clash with your goals.

Do You Receive Any Compensation From Third Parties?

As mentioned above, fee-based and commission-based advisors receive payments from sales of specific investment and financial products, such as mutual funds or insurance policies, which could potentially cause a conflict of interest. It’s important to know if their recommendations could potentially be influenced by outside compensation.

Are You a Fiduciary?

Certain professional designations, such as a CFP®, are legally held to the fiduciary standard. As a fiduciary, an advisor is legally and ethically bound to put their clients’ interests ahead of their own (or their firm’s) interests and have a duty to preserve good faith and trust. If an advisor is not a fiduciary, ask how they address potential conflicts.

faith and trust. If an advisor is not a fiduciary, ask how they address potential conflicts.

Performance and Benchmarks

If you’re working with an advisor to grow wealth, you’ll want to have some way to measure your progress. Consider asking these questions about performance tracking and benchmarking.

What Investment Benchmarks Do You Use?

A financial advisor should be able to speak to the benchmarks that they will be reporting to you, as well as how they will measure your progress and determine whether adjustments need to be made in your portfolio. It’s also a good idea to find out if you will be able to track your portfolio’s performance and view financial reports online. Tools like client portals and mobile apps can improve your experience and provide transparency.

How Will You Consider Assets You Aren’t Directly Managing?

Your net worth may include assets that are not managed by a particular finance firm or advisor, such as an employee-sponsored 401(k) or any rental properties you may own. It’s important that a financial advisor look at your full financial picture when advising you on how to diversify, manage risk, and reach your goals.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Communication and Availability

Advisors can approach communication differently and it helps to have realistic expectations going in. Poor communication or misaligned expectations can put a damper on your experience in working with an advisor.

How Often Will We Meet or Communicate?

At the minimum, you’ll want to speak with your financial advisor once a year to review your financial strategies as your life and circumstances change. Some advisors offer quarterly or semiannual meetings, however, which you might prefer. Find out how often you’ll meet, whether it will be virtually or in-person, and if the advisor will be available for phone calls or emails outside of scheduled appointments. Consider if their communication frequency and style meets your expectations.

Will I Work Directly With You or Someone on Your Team?

Some firms assign a primary advisor, while others use a team-based approach. When deciding which financial advisor you want to work with, you’ll want to clarify who your main point of contact will be.

The Takeaway

Choosing a financial advisor is a significant decision that can impact your financial future. By asking the right questions, you can get a good sense of their qualifications, approach, and ability to meet your needs.

Don’t hesitate to interview multiple advisors and compare their answers to ensure you find the best match for your financial goals. A well-chosen advisor can provide valuable guidance, helping you navigate the complexities of financial planning and achieve long-term success.

One smart money move you can take right away (and on your own) is to make sure your bank account offers minimal or no account fees and a competitive interest rate.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What should I look for in a financial advisor’s credentials and experience?

When choosing a financial advisor, you might look for credentials such as Certified Financial Planner (CFP®) or chartered financial consultant (ChFC). These designations mean that the advisor has passed a certification exam, has a certain level of experience in the field, and is legally required to adhere to a set of ethical standards. If you’re looking for an advisor with tax expertise, consider a certified public accountant (CPA) or personal financial specialists (PFS), which are CPAs who also offer more comprehensive planning.

What are the different types of financial advisors?

The term “financial advisor” is broad and can refer to any professional who offers financial advice. Common certifications include Certified Financial Planner (CFP®), chartered financial consultant (ChFC), certified public accountant (CPA), and personal financial specialist (PFSs). There are also specialized advisors, such as investment advisors (who focus on portfolio management), retirement planners (who help with retirement strategies), and wealth management advisors (who offer comprehensive services for high-net-worth clients). Robo-advisors provide automated investment solutions at a lower cost.

How can I evaluate the fees and services provided by a financial advisor?

Start by understanding the advisor’s fee structure — whether it’s fee-only, fee-based, or commission-based. Fee-only advisors charge flat fees or percentages and don’t earn commissions. Fee-based advisors charge fees but may also earn commissions on products they recommend. Commission-based advisors primarily earn income by selling financial products. Also ask about the scope of services they provide, such as retirement planning, tax strategies, or investment management, to ensure they align with your needs.

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SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

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While enjoying more protections in recent years, LGBTQ+ couples may face unique legal situations and other scenarios that can leave them financially vulnerable. Taking a proactive approach can help ensure that you and your partner are prepared for the future.

Here are essential financial tips to help LGBTQ+ couples make informed decisions and develop a plan that supports their personal and financial goals.

Unique Financial Challenges

Due to discrimination, legal limitations, and varying access to financial benefits, LGBTQ+ couples (which encompasses those who are lesbian, gay, bisexual, transgender, and queer or questioning) can encounter a number of financial hurdles. These issues may impact savings, career advancement, and even financial security, making proactive financial planning particularly crucial.

Legal Considerations

Legally speaking, LGBTQ+ couples have reasons to celebrate as well as causes for concern. Amid the legal landscape for LGBTQ+ rights, the Supreme Court’s legalization of same-sex marriage in 2015 is often noted as a highlight. This ruling gave LGBTQ+ couples access to legal protections and financial benefits that are only available for legally married couples.

Other key milestones include:

•   In 2020, the high court barred discrimination in employment decisions in relation to a person’s sexual orientation or gender identity. A 2021 executive order from President Biden further expanded these protections.

•   In 2021, the Consumer Financial Protection Bureau (CFPB) clarified that the Equal Credit Opportunity Act (ECOA) includes protections for LGBTQ+ people, making it illegal for lenders to discriminate on the basis of gender identity or sexual orientation.

Despite progress, there is still a lot of work to be done to safeguard LGBTQ+ couples’ economic security. Many states have not put antidiscrimination laws in place that affect health care, housing, and access to credit, according to the Movement Advance Project (MAP), an independent, nonprofit think tank. And some fear that existing protections might be rolled back in the future.

Discrimination and Financial Impact

Because certain LGBTQ+ rights, like marriage and workplace protections, have only been granted in recent years, many members of the community have likely been disadvantaged from decades of living without them. LGBTQ+ individuals may also face barriers to career advancement, which can limit their earning potential.

Indeed, LGBTQ+ workers earn, on average, 90 cents for every dollar a non-queer worker earns, according to a recent analysis by the Human Rights Campaign. The gap widens further for LGBTQ+ people of color, transgender women and men, and non-binary individuals, who earn even less when compared to the typical worker.

Data also indicates that LGBTQ+ people generally carry more student loan debt and have saved less for retirement compared to their cisgender/heterosexual peers.

At the same time, LGBTQ+ couples often face higher living expenses, due to a desire to live in welcoming communities (often cities with a high cost of living). They also tend to face higher health care costs, particularly if they or someone in their family seeks gender-affirming medical care.

Creating a Solid Financial Foundation

Establishing a strong, shared financial base can be the first step toward long-term security. This process involves open communication, assessing your bank accounts, setting goals, and establishing a budget that can help you achieve your shared objectives.

Setting Joint Financial Goals

As with any partnership, it’s important to sit down as a couple and consider goals that reflect your values and aspirations. These could include saving for a home, planning for retirement, starting a family (and a college fund), or preparing for potential health care costs.

Once you have a list of goals, you’ll want to discuss how much money you will need, a timeline, and steps you’ll take to achieve your goals. Strategies might include cutting back on nonessential expenses and/or transferring a set amount into a joint savings account each month.

Since your goals, as well as your income and expenses, will likely change over time, it’s a smart move to have regular check-ins. This allows you to assess your savings, budget, and cash flow and make any necessary adjustments in how you manage your money to help stay on track. Find a cadence that suits you: Monthly or quarterly might work well, but no less than annually. It’s a good idea to reassess your situation when there are any big life changes, such as a new job, a new baby, or buying a home, as all of these can impact your budgeting.

Legal Protections and Documentation

Securing proper legal protections and documentation can be essential for LGBTQ+ couples, as laws around partnership rights can vary. The documents listed below can protect both partners.

•   Wills: A will ensures that your assets are distributed according to your wishes. If you die without one, your assets will likely be distributed according to the state’s default plan, which usually directs the assets to a legal spouse or, if none exists, to your blood heirs.

•   Financial power of attorney: This document enables your partner to make financial decisions on your behalf if you’re incapacitated. Without it, they would need to obtain a court order in order to take over your financial accounts in an emergency. This is the case even if you are married — without a power of attorney, spouses can only control joint bank accounts and joint brokerage accounts.

•   Health care directives: A health care directive (also known as a medical power of attorney) specifies your wishes regarding medical treatment if you cannot communicate them. It ensures your partner can make decisions aligned with your preferences. This document is particularly important for unmarried LGBTQ+ couples. Should one of you experience a medical emergency, your partner could be bypassed at the hospital and a relative would be contacted instead about what could potentially be life-or-death decisions.

Marriage and Domestic Partnership Considerations

While LGBTQ+ couples are now legally able to get married, some may choose not to. This is a personal decision that also has implications on financial planning. Here’s a look at how marriage vs. domestic partnership impact your finances.

Marriage: Getting married can provide access to numerous financial, tax, and legal benefits, including spousal benefits through Social Security, pensions, and work. Marriage also allows partners to pass money and assets back and forth without worrying about gifting limits, and it gives each partner inheritance rights. One downside, however, is the so-called “marriage penalty.” This is the tax increase that many couples face once they combine their incomes and file as married filing jointly. (However, as noted above, there are tax benefits to marriage, such as additional deductions, which may offset this.)

Domestic partnership: A domestic partnership is an alternative to marriage and may provide you with some of the benefits that married couples receive. For example, your employer may allow your partner to receive benefits like health insurance. However, domestic partners are not considered “family” by law and are not recognized by most states. Also, while married couples automatically inherit each other’s assets upon death (and without incurring taxes), this is not the case for domestic partners. You can inherit your partner’s assets through a will, but you’ll be subject to taxes.

Retirement Planning for LGBTQ+ Couples

Members of LGBTQ+ community often have unique needs in retirement. Many look to retire in more accepting parts of the country, which tend to be cities with high housing and other costs, making retirement generally more expensive. Here are some factors to keep in mind as you plan for retirement.

•   Social Security benefits: Married couples in which one spouse earned significantly more than the other may be able to use spousal benefits to maximize their combined Social Security income. Married or not, it’s important for LGBTQ+ couples to understand how Social Security benefits work and consider the timing of their claims. You can get an estimate of your monthly payout and how it’s impacted by the age you start to claim your benefits at SSA.gov.

•   Pension plans: A pension plan is a retirement account provided by an employer that pays out a fixed amount of money to the employee after they retire, providing a steady stream of passive income for life. Certain pensions provide spousal benefits upon death, but these may only be accessible to married couples. Check with your employer to understand the details and consider how this might impact your retirement savings strategy.

•   IRAs and 401(k)s: Individual retirement accounts and employer-sponsored retirement plans are critical components of retirement planning. Both partners will want to contribute as much as possible to their retirement accounts, and at least enough to get the full employer match (if offered). Once you’ve maxed out your 401(k), you might each consider contributing to a Roth IRA, if you’re eligible.

Recommended: Savings Goal Calculator

Family Planning and Financial Preparation

For LGBTQ+ couples, family planning may involve additional costs, especially if it includes adoption, surrogacy, or fertility treatments. For example, adoption can run anywhere from $20,000 to $70,000, depending on whether it’s done domestically or internationally. IVF can cost $13,500 to $21,000 or more, while surrogacy can range between $60,000 to $250,000-plus.

Since insurance often does not cover most of these costs, creating a financial plan that accounts for these expenses can be crucial. This plan should include saving for baby costs, as well as the ongoing expenses related to raising children.

Insurance Needs for LGBTQ+ Couples

Insurance provides an essential financial safety net for couples. Below are three kinds of insurance that can help protect your family.

•   Health insurance: Health insurance is vital for all couples, so you’ll want to make sure you are both covered either through employer plans, the Affordable Care Act marketplace, Medicare, Medicaid, or private options. When choosing a health care plan, carefully review coverage details, including any potential limits for LGBTQ+-specific health care needs. Though most health insurers cover medically necessary gender-affirming care, some states allow private health plans to deny coverage to transgender people for certain health care services.

•   Life insurance: Life insurance protects your partner in case of your untimely death by replacing lost income. This can be particularly important if you have children. Life insurance offers a safety net by ensuring the loss of income doesn’t disrupt your children’s daily life, education, and future opportunities. Keep in mind that you don’t have to be married to get life insurance — you can each purchase an individual policy and name the other as the beneficiary.

•   Long-term care insurance: This type of insurance helps cover expenses for long-term care that aren’t typically covered by health insurance or Medicare. LGBTQ+ seniors may face added costs if they lack family support (as can be the case for any couple that doesn’t have children). Long-term care insurance can be a worthwhile investment in this scenario. An alternative option is to self-fund your future needs.

Estate Planning Strategies

Estate planning is essential for LGBTQ+ couples to ensure assets are transferred to the right individuals and that financial protections are in place for the surviving partner. This is particularly important if you are not married, as your assets would not likely go to your partner without a well-defined estate plan. The following protections can help.

•   Trusts: Unlike wills (which can be successfully challenged), trusts cannot be contested by others. Putting some assets into a trust can be especially helpful for LGBTQ+ couples, as it can help you to avoid potential legal disputes with non-supportive family members. Assets in a trust may also be able to pass outside of probate, which can save time, court fees, and (potentially) estate taxes.

•   Beneficiary designations: Certain assets, like savings accounts and life insurance policies, can pass to the beneficiary on file without the need for a will and without going through probate. Whoever is listed as beneficiary will get those assets regardless of what a will might state. For this reason, it’s important to regularly review and update beneficiary designations on your accounts, especially if you set these accounts up years ago.

•   Titling: Another way to protect your estate is to make sure the title to your assets, particularly property, is coordinated with your will. For example, if your shared home is titled “joint tenants with rights of survivorship,” it will pass directly to the surviving owner when an owner dies, rather than through your will. Assets titled in an individual’s name (absent a beneficiary designation) or as “tenants in common,” on the other hand, will pass according to your will. You may want to discuss asset protection options with an estate planning attorney who understands the specific needs of LGBTQ+ couples to ensure you are both protected.

Recommended: Financial Planning for Young Adults

Building a Support Network

A strong support network can be invaluable for LGBTQ+ couples navigating unique financial and personal challenges. Community support can provide resources and guidance, along with a sense of belonging.

Community Resources and Support Groups

Many LGBTQ+ organizations and support groups offer financial assistance programs, legal resources, and planning guidance. Consider seeking out organizations or LGBTQ+-friendly financial advisors who understand the needs and challenges faced by LGBTQ+ couples.

A sampling of resources you might tap:

•   The Center for LGBTQ Economic Advancement & Research provides access to financial workshops, counseling, and self-help resources targeted to LGBTQ+ individuals and couples.

•   CenterLink focuses on strengthening, supporting, and connecting LGBTQ+ community centers nationwide.

•   Rainbow Families offers education, resources, and peer support groups for LGBTQ+ parents, families, and parents-to-be.

•   SAGE offers supportive services and consumer resources to older LGBTQ+ people and their caregivers.

The Takeaway

Financial planning is essential for everyone, but LGBTQ+ couples often face unique challenges and considerations. From navigating legal protections to managing potentially higher family-planning costs, these complexities can make proactive financial planning even more critical. By delving into these issues, LGBTQ+ couples can create a plan that protects their rights, and helps them build wealth over time.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How does marriage equality affect financial planning for LGBTQ+ couples?

Marriage equality gives LGBTQ+ couples access to financial benefits that are limited to legally married couples, which can simplify and enhance financial planning. This access can include spousal Social Security benefits, joint tax filing, inheritance rights, and health insurance coverage through a partner’s employer. These benefits can help reduce taxes, provide more retirement benefits, and offer financial security if one partner passes away. However, marriage can also come with new tax considerations, so couples might want to consult a financial advisor to optimize financial planning.

Are there specific estate planning considerations for LGBTQ+ couples?

Yes, estate planning is particularly important for LGBTQ+ couples to ensure their wishes are honored and to avoid potential family disputes. This may involve creating or updating wills, establishing durable powers of attorney, and designating health care directives to protect each partner’s wishes. In addition, they may want to establish trusts (for added control over asset distribution and to protect their estate from taxes) and update beneficiary designations on financial accounts.

What financial resources are available specifically for LGBTQ+ individuals and couples?

LGBTQ+ individuals and couples can access a number of specialized financial resources, including LGBTQ+-friendly financial advisors, legal services, and community-based support organizations. Organizations like the Center for LGBTQ Economic Advancement & Research provide access to financial workshops, counseling, and self-help resources targeted to LGBTQ+ individuals and couples, while SAGE offers resources for LGBTQ+ seniors. There are also a number of nonprofit groups and community centers that offer financial assistance to LGBTQ+ individuals and families facing financial challenges.

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Photo credit: iStock/MStudioImages

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Investing in single-family homes is often a good way to build wealth and generate monthly cash flow.

Real estate has proven to be an economic bulwark when stocks and bonds experience downturns. Even in late 2024, with the average sales price of homes in the U.S. slightly down from its 2022 historic high, the average price is almost $100,000 above where it stood at the start of this decade, according to the Federal Reserve Bank of St. Louis, which tracks the data.

Single-family rental homes have lots of upsides for an investor, but there are also a few reasons to look before you leap.

What Is a Single-Family Home?

The popular image of a single-family home is a stand-alone, one-dwelling structure with its own utilities, entrance, exit, and access to the street. The owners own both the building and land it sits on, so condos do not count.

Some government agencies expand this definition to include properties of up to four units, such as duplexes, as well as townhouses.

Why Invest in Single-Family Homes?

Buying investment property offers two key benefits to long-term investors:

•   the potential for capital appreciation

•   immediate cash flow

Let’s walk through some of the key motivators for investing in single-family homes.

Financing

Single-family homes are typically easier to obtain financing for than multifamily homes of five or more units.

A multifamily property meeting that criterion requires a commercial loan, which usually has a higher interest rate and shorter term than a residential mortgage. (Note: SoFi does not offer commercial loans; it does provide loans for residential investment properties of four or fewer units.)

Lenders often require at least 20% down for an investment property. It could be higher, depending on the borrower’s credit score and savings. Then again, there are creative ways to buy a multifamily property with no money down.

Less Volatility

The market for single-family homes is relatively stable and tends to grow more smoothly over the long run compared with other types of homes.

Unlike commercial real estate and apartments, the demand for single-family homes tends to remain relatively strong at all stages of the economic cycle.

Steady Income

Single-family homes may be rented out for longer terms than apartments and usually sit vacant for less time thanks to the steady demand for single-family housing.

Some contend that single-family rentals feel more like proper homes for tenants and therefore are better cared for than apartments.

You’re also more likely to find more families renting single-family homes than individuals. Families may be more likely to extend the lease if they end up loving the neighborhood and schools, as in a coveted suburb.

Tangible Asset

Many people seek to diversify portfolios with different types of investments. Unlike stocks and bonds, which represent shares of ownership and rights to dividend payments from a company, real estate is a tangible asset.

The tangible factor gives you something physical to hold on to that’s unlikely to disintegrate over the long term. Stocks, bonds, and other intangible investments require the underlying company to remain a going concern.

Inflation Hedge

Inflation is the creeping impact of price increases, and when there are concentrated bouts of it over a short period of time, it can rapidly erode the purchasing power of your assets.

Housing has often been touted as an inflation hedge because it has historically held its real value during inflationary markets. This could be because of the following reasons:

1.    Most homebuyers lock in their purchase price through a mortgage.

2.    Rental agreements typically last one or two years, which allows homeowners to gradually raise rents to keep pace with inflation.

3.    Home values typically appreciate over the long run thanks to the intrinsic value of the house and land.

Return on Investment

Thanks to steady demand, single-family homes can match or even exceed the return on investment (ROI) of bigger multifamily properties, with lower volatility than stocks or bonds.

Potential ROI across different real estate properties can be compared using a capitalization rate (cap rate) calculation: net operating income divided by current market value.

Net operating income is your gross annual income from the property minus operating expenses (like repair costs, groundskeeping, property taxes, insurance, utilities not paid by tenants, and any property management fees). Home mortgage loan payments are not included in the net operating income formula.

Diversification

Single-family homes could be a good addition to a portfolio of stocks and bonds, but why does portfolio diversification matter anyway? Because by diversifying assets, you may offset a certain amount of risk and improve returns. When stocks or bonds fall, real estate prices can take much longer to follow.

Things to Know Before Investing in Single-Family Rentals

Because of the high acquisition cost of single-family homes, you’ll want to conduct proper due diligence on your local housing market and target property before you buy. As with all investments, be cautious when investing a significant portion of your cash in one place.

Your Numbers

While the projected rental income on a property looks attractive at a glance, bear in mind that maintenance costs and surprises should be factored in. Vacancy rates, legal issues with tenants, and unexpected repairs can sap your returns over time.

It’s smart to factor in a cash buffer to ensure that money is available on short notice.

Your Target Rental and Housing Market

While the rental income streams of New York and California offer much higher revenue potential, keep in mind that the costs of owning real estate in those areas is enormous as well.

Income is only one side of the rate of return calculation, so make sure you have a good handle on the expenses as well. You can only do that by thoroughly investigating your target housing market and relying on the home appraisal.

The local job market, its dominant industries, and the dependability and growth of local businesses also will shed light on how stable a given market will be over time. Good schools, safe cities, and proximity to workplaces and attractions matter to many renters.

If you’re looking to use the property as a short-term rental, check out the local ordinances, which may prohibit you from doing so.

The 1% and 50% Rules

The 1% rule is a back-of-the-envelope calculation to estimate whether your rental income strategy will be profitable. If the estimated rental income on the property is at least 1% of its purchase price, you should theoretically be able to generate cash flow. If your purchase price was $300,000, for example, the monthly rent should be at least $3,000, according to the rule.

The 50% rule states that you should expect the expenses on your real estate investment to make up approximately 50% of the gross income generated. That’ll give you a quick and dirty estimate to help you start ballparking your net returns.

Obviously, the exact numbers are more complicated. When you have time, you’ll want to run a full comparison of revenues vs. potential costs of your venture.

Your Strategy

This one’s a little more nuanced, as it depends on your goal amount, the time horizon, and your risk tolerance.

Are you looking to build a rental home empire or are you just looking for a little extra income to supplement your retirement?

Do you intend to tap home equity to buy one or more investment properties? Do you plan to flip or hold the home?

How to Invest in Single-Family Homes

If you’re confident that buying a single-family home is the right choice for you, there are a few ways you can invest:

Buy It Yourself

This is the most capital intensive and least liquid route. Buying a single-family home in the neighborhood of your choice will net you reward as well as the risk that comes with any property.

If you’re handy, you can buy a fixer-upper or a HUD home (bidding opens to investors after owner-occupants are given a chance) and renovate it into turnkey condition.

The expense of any contractors or property managers will need to be factored in.

Invest Through a Crowdfunding Platform

If you don’t have copious amounts of capital, you can still fund real estate investment projects through online crowdfunding platforms like Fundrise. These allow you to diffuse risk while taking part in more aggressive investments than you might have been willing to by yourself.

Keep in mind that you’ll need to share the benefits with all investors who partake in the process. Another shortcoming is that your funds may be tied up for an extended period of time, which varies by project.

Invest in a Real Estate Investment Trust

REITs are corporate entities that specialize in purchasing and financing pools of real estate investments on behalf of their clients. They sell shares that are publicly traded and can specialize in any number of sectors or strategies.

The big benefit of REITs is that they’re one of the most liquid real estate investments out there, as you can buy or sell your shares at almost any time on the open market. However, the market value of each share will fluctuate daily.

In the realm of investment opportunities, REITs often provide better returns than fixed-income assets like bonds, but REITs carry higher risk.

There are REITs that specialize in buying and operating single-family rentals. These REITs pay out a major portion of their cash earnings to shareholders.

The Takeaway

When done right, your single-family home investment can offer growth and income and diversify your portfolio. You can start with lower levels of capital by investing in REITs or crowdfunding platforms, but any gains will be diluted. It may be easier to obtain a mortgage for a one-family home, or a property that is four units or fewer, than for a larger multiunit property.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is renting out a single-family home worth it?

It can be. Appreciation and rental income have made single-family homes attractive to investors. Multifamily properties provide more rental income streams but also require more property and tenant management.

How do you value a single-family home rental?

There are a few ways. One is to look at recent comparable sales. Another is to calculate the capitalization rate (net operating income divided by property price or value). A third is to use the gross rent multiplier approach (property price divided by gross rental income).

How fast does the value of single-family homes appreciate?

It depends on the market. Lately, appreciation has decelerated. But the median sales price of a house in the last quarter of 2024 was still about $100,000 more than it was five years before.

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Photo credit: iStock/Phynart Studio

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

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

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

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

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

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

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

SOHL-Q125-022

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Before signing your closing documents and walking away with the keys to your new home, it’s important to reexamine the final details of the mortgage. Your lender is required to provide this information ahead of closing in the form of a mortgage closing disclosure.

Paperwork fatigue aside, the closing disclosure deserves careful review, as it outlines the mortgage terms and conditions you’re agreeing to.

What Is a Closing Disclosure?

You may have weighed the different mortgage types and then homed in on one that suited you best.

Maybe you got mortgage preapproval before zeroing in on a property you couldn’t live without (for a while, at least). Now the deal is almost buttoned up.

Here comes the closing disclosure, a five-page form from your lender outlining the home mortgage loans terms, including the loan principal, interest rate, and estimated monthly payment. It also lays out how much money is owed for closing costs and the down payment.

Lenders are required by federal law to provide the mortgage closing disclosure at least three business days ahead of the closing date.

Recommended: Understanding Mortgage Basics

Why the Closing Disclosure Is Important

The mortgage closing disclosure contains all the final terms of your home loan, like how much you pay each month and over the life of the loan. You probably had many mortgage questions for your lender, but all the conditions of your loan, such as your ability to refinance or pay off the loan early, are detailed here.

These specifics can have a significant impact on your personal finances. Just one percentage point difference in the interest rate can cost you thousands in the long run.

When you receive the closing disclosure from your lender, this is a final chance to review the fine print and compare everything with the loan estimate, the three-page document with the loan amount, interest rate, and other key information provided by your lender after you applied for a mortgage.

You may have obtained multiple loan estimates when shopping for a mortgage, but you’ll only get a closing disclosure from the lender you chose to finance with.

Recommended: Mortgage Help Center

What’s in the Closing Disclosure?

Visual learners, rejoice: The U.S. government’s Consumer Financial Protection Bureau maintains a sample closing disclosure with an accompanying checklist and tips on how to read a closing disclosure.

Here’s a breakdown of the components in the closing disclosure.

Loan Terms

The terms include the loan amount, interest rate, and the monthly principal and interest you’ll pay. This section notes if the loan has a prepayment penalty for paying off the mortgage early (a rarity these days) or a balloon payment, a one-time fee due at the end of the loan (ditto).

The closing disclosure will note with a “yes” or “no” whether the amount for any of these items can increase after closing.

Projected Payments

This section shows the factors used for the payment calculation, including the principal and interest, any mortgage insurance, and estimated escrow to pay property taxes, homeowners insurance, and any flood insurance. These add up to estimated total monthly payment for the mortgage.

If you don’t use an escrow account, the bottom of this section will show the monthly costs for property taxes, homeowners insurance, and homeowners association (HOA) dues, if applicable.

Checking these numbers against the original loan estimate from your lender is good practice.

Costs at Closing

Top of mind for many borrowers is the amount of cash needed to close. Usually, you can expect closing costs to be 2% to 5% of the home purchase price.

This section identifies the “cash to close,” which represents the closing costs plus the down payment owed by the borrower.

Loan Costs

Flipping to Page 2, this section provides a summary of expenses associated with taking out the loan. The costs consist of the origination fee, application fee, underwriting fee, and mortgage points if you’ve chosen to purchase any.

Additional costs are categorized under “services borrower did not shop for” and “services borrower did shop for.” The former includes services arranged by the lender, like the appraisal fee, while the latter refers to services the borrower had a choice in procuring, such as the title search and pest inspection fee.

Other Costs

There are other costs that may be due at signing, such as taxes and government fees, prepaids, escrow payments, and HOA fees.

Ensure that each amount is accurate and correctly entered as either borrow-paid or seller-paid.

Calculating Cash to Close

The table in this section shows a side-by-side comparison between the loan estimate and final dollar amount needed to close.

The calculation will account for any deposits paid by the borrower and seller credits negotiated as part of the deal.

Summaries of Transactions

This section provides a detailed look at what the borrower and seller are paying at closing. Costs prepaid by the seller, such as property taxes and HOA fees, may be adjusted to show what portion is owed by the borrower.

Loan Disclosures

Your mortgage comes with conditions, which are outlined on Page 4 of the closing disclosure. You’ll see which apply based on the box that’s checked for each.

Loan Calculations

On the final page, there are loan calculations showing the total amount you’ll pay over the life of the loan, as well as the finance charge, amount financed, annual percentage rate, and total interest percentage.

If you’re just looking into home loans, a mortgage calculator can estimate your monthly payments and total interest paid over the loan term.

Other Disclosures

The lender must disclose other characteristics of the mortgage, if applicable. They include the appraisal, contract details, liability after foreclosure, ability to refinance, and tax deductions.

Contact Information

Refer to this section if you need to contact the lender, brokers, or settlement agent involved with your mortgage.

Confirm Receipt

Signing the mortgage closing disclosure indicates that you received the form, not that you agree to the terms and accept the loan.

What Is the Three-Day Waiting Period?

As of 2015, the Consumer Financial Protection Bureau’s “Know Before You Owe” mortgage rule requires lenders to provide the mortgage closing disclosure at least three business days before closing.

This aims to give borrowers plenty of time to review the final loan terms, ask their lender any clarifying questions, and prevent unexpected costs at closing.

There are a few scenarios that could change the closing disclosure timeline. Your lender must provide another closing disclosure, thus granting three more days, if one of the following issues occurs:

•  A change in the loan APR (one-eighth of a percentage point or more for a fixed-rate loan or one-quarter of a percentage point for an adjustable-rate mortgage)

•  Addition of a prepayment penalty

•  A change in the loan product

How to Check Your Closing Disclosure

All five pages of the closing disclosure contain key information for the borrower to review. It may be helpful to go line by line with your loan estimate in hand to compare the final terms against what the lender previously provided.

Here are a few important items to pay attention to:

•  Review your name and the property information.

•  Check that the loan description and amount match the loan estimate.

•  Make sure that the interest rate is unchanged if you locked it.

•  Ensure you understand all the fees and any changes to them.

What Can and Can’t Change on the Closing Disclosure

There are some costs that can’t be changed on the closing disclosure, while others may increase by a certain percentage or by any amount.

Unless there’s a change in circumstances on the loan, changes can’t be made to the following:

•  Transfer taxes

•  Fees paid to the lender for a required service

•  Fees paid for a required service that the borrower wasn’t allowed to shop separately for

Recording fees and costs for required services from a lender’s written list of providers may not increase by more than 10%.

There are other costs that can change by any amount at any time, including:

•  Prepaid interest, property insurance premiums, or initial escrow deposits

•  Fees for required services by the lender that the borrower shopped separately for

•  Fees for optional third-party services

•  Note that your interest rate can fluctuate if it’s not locked or due to changes on your mortgage application.

What to Do if There’s an Error on the Closing Disclosure

It’s important to notify your lender or settlement agent of any errors on the closing disclosure.

Redoing the closing disclosure could delay the closing and affect your interest rate if your mortgage rate lock expires.

The Takeaway

The mortgage closing disclosure gives a detailed overview of your loan terms and closing costs. Review it promptly with your loan estimate at hand. If you’re uncertain of any information, reach out to your lender to go over the closing disclosure as soon as possible.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Does a closing disclosure mean I’m approved?

The loan is approved before you receive the closing disclosure, but a significant change to your credit, income, or debt before closing could affect your approval.

Can you waive the three-day closing disclosure?

You can waive the three-day closing disclosure in the case of a personal financial emergency, such as losing the home if the mortgage doesn’t close in time.

How long after the closing disclosure do you close?

You can close three business days at the earliest after receiving the closing disclosure. Errors on the closing disclosure could delay the process.

Can you be denied after the closing disclosure?

Yes. A dramatic change in your personal finances could cause a lender to reject your mortgage. It’s a good idea to try to avoid changing jobs or taking on new debt near the end zone.

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Photo credit: iStock/Khosrork

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.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOHL-Q125-025

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

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

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

Characteristics of a Floating Home

Floating homes have the following features:

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

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

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

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

Pros and Cons of a Floating House

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

Benefits

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

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

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

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

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

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

Drawbacks

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

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

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

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

•   Harder to finance. Securing a loan can be a challenge. Some lenders do offer long-term loans (but not FHA or VA loans) for floating houses. They usually require at least 20% down and have a higher rate than traditional mortgage rates. A personal loan might be another option, and a personal loan may streamline the process of closing on your purchase as it could have a shorter timeline.

Recommended: Applying for a Personal Loan with a Co-Borrower

Moorage Rules

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

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

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

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

•   Stipulations on renting out floating homes

•   Standards of exterior upkeep of floating homes

•   Quiet hours

•   Share community spaces or equipment

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

Finding a Floating Home to Buy vs. Building One

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

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

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

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

Recommended: How to Build a House

Maintaining a Floating House

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

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

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

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

Who Should Get a Floating House?

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

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

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

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

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

The Takeaway

Floating homes aren’t for everyone, but water lovers may feel the urge to say ahoy to this lifestyle steeped in nature. A floating house has benefits, but inconveniences and fees make this way of living best for a unique type of buyer.
Floating house buyers often need special financing options too, such as a personal loan. Buying at the waterfront but not actually on the water? A conventional home loan is an option if you’re staying on terra firma.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

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

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

What is the cost of maintaining a floating home?

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

Can you get a loan to buy a floating home?

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

Are floating homes safe?

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

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Photo credit: iStock/DR pics24

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

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

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.
^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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q125-017

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