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How to Qualify for a Mortgage: 9 Requirements for a Mortgage Loan

Many first-time house hunters lie awake at night worrying, Will I qualify for a mortgage? With the wide variety of loan programs, down payment requirements, and credit thresholds out there, qualifying for a mortgage can feel like a bad choose-your-own-adventure story: “Didn’t prequalify? Return to page 1.”

Let’s take some of the mystery out of how to qualify for a mortgage.

9 Mortgage Qualification Factors

What goes into qualifying for a home loan can be especially confusing. Here are some things that may come into play when qualifying for a home loan.

Key Points

•   A down payment of 18% is typical, though first-time buyers often pay 9%.

•   A credit score of 620 is needed for conventional loans, 500 for FHA.

•   Income stability is essential, with no set minimum income.

•   Debt-to-income ratio should stay below 45% for conventional loans.

•   Assets can bolster loan qualification if income is lower.

1. Down Payment

Down payment requirements vary based on the type of home mortgage loan you’re applying for.

Conventional Loan Down Payment

You may have heard that 20% down is the ideal. But in 2024, the median down payment across all homebuyers is 18%, and for first-time homebuyers, it’s 9%, according to research by the National Association of Realtors®. And some conventional loans require just 3% down for first-time homebuyers.

The 20% figure is cited as a goal because putting down 20% helps buyers avoid the added cost of private mortgage insurance (PMI), which is required if your down payment is less than 20%. But you can also avoid PMI by seeking a “piggyback” mortgage or lender-paid mortgage insurance.

If you’re getting help from loved ones for your down payment, you’ll need to document that with a gift letter.

FHA Loan Down Payments

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. FHA loans are popular with first-time homebuyers. Over 80% of FHA mortgages are issued to first-time buyers each year.

If your credit score is at least 580, you may qualify for a down payment of 3.5% on an FHA loan. (FHA 203(k) loans for fixer-uppers also ask for 3.5% down.) With a score between 500 and 579, you’ll need at least 10% down.

Upfront and annual mortgage insurance is required for FHA loans, usually for the entire term.

USDA Loan Down Payment

A loan insured by the U.S. Department of Agriculture is aimed at moderate-income households that purchase or build in eligible rural areas. Incredibly, no down payment is required. The USDA also directly issues loans to low- and very-low-income buyers in eligible rural areas and provides payment assistance.

USDA loans require an upfront guarantee fee and an annual premium for the life of the loan, but it’s lower than FHA loan mortgage insurance rates.

VA Loan Down Payment

The great perk of VA loans is that no down payment is usually required, but a sizable one-time funding fee is. (You may be exempt from the funding fee if you’re eligible for VA disability compensation for a service-connected disability or meet other conditions.)

Recommended: First-Time Homebuyer Programs

2. Credit Score

Credit scores attempt to distill an individual’s financial history down to a single number that indicates their worthiness to lenders.

The FICO® Score range of 300 to 850 is categorized like this:

•   Exceptional: 800 to 850

•   Very Good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Poor: 300 to 579

Borrowers seeking a conventional loan will likely need a credit score of at least 620. For an FHA loan, applicants with a score as low as 500 may be considered. But 580 is the minimum credit score to qualify for the 3.5% down payment advantage.

A USDA loan usually requires a score of 640; a VA loan, a minimum of 580 to 620. In some cases, you don’t have to have a FICO Score to qualify for a home loan. Fannie Mae’s nontraditional credit program and government loan programs allow for a credit profile to be built based on things like rent payments and utility bills.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


3. Income

Technically, there’s no minimum income required to apply for a mortgage. But your income can limit the amount you’ll qualify for. Lenders also like to see evidence that your income is stable, and will look at an applicant’s last two years of employment. That means you’ll need to provide pay stubs, W-2s or 1099s, and tax returns.

Many types of income count toward a mortgage application: overtime, commissions, bonuses, dividends, Social Security, alimony, and child support. Lenders may ask for documentation (such as a letter from your employer) that such income is expected to continue for the next several years.

Self-employed homebuyers should keep in mind that lenders look at your income after deductions. Taking too many deductions, however deserved, can lower the size of the loan you’ll qualify for.

For some types of loans, there can be upper income limits. Conventional, FHA, and VA loans have no upper limits. But with USDA loans, your income must not exceed 115% of the median income in your area. You can evaluate your eligibility for a USDA loan on the agency’s website.

4. Debt-to-Income Ratio

Typically, your income doesn’t matter as much as your debt-to-income ratio. Your DTI is calculated by dividing your total monthly debt, including your proposed house payment, by your gross monthly income, and is expressed as a percentage.

For example, say you pay $1,500 a month for a mortgage, $100 a month for a car loan, and $400 a month on a student loan. Your total monthly debt comes to $2,000. If you make $6,000 a month before taxes and deductions, your debt-to-income ratio is 33% ($2000 divided by $6000, multiplied by 100).

“If you have multiple debts, you want to make your minimum payments so you don’t hurt your credit score,” Kendall Meade, a Certified Financial Planner at SoFi said. “If you have cash left over after that, you should develop a strategy for which debts to pay off first,” she suggested.

Depending on your credit score, down payment, and cash reserves, your DTI ratio may weigh heavier or lighter in the qualification process.

•   Conventional Loan DTI: The maximum DTI for a conventional loan is 45%, but exceptions can be made for strong compensating factors.

•   FHA DTI: FHA guidelines allow for a DTI of 43%, but higher ratios are allowed with compensating factors.

•   USDA Loan DTI: The USDA usually allows a maximum DTI of 41% but may make exceptions for those with higher credit scores and stable employment.

•   VA Loan DTI: VA guidelines call for a maximum DTI of 41%, but lenders set their own limits based on an applicant’s financial health.

Recommended: How to Afford a Down Payment on Your First Home

5. Assets

Lenders will want to know about any valuable assets you hold. The idea is that these assets can be converted to cash in the event you face financial hardship down the road. Assets can include cash accounts, retirement accounts, stocks and bonds, cars, boats, RVs, jewelry, artwork, and collectibles. You’ll be asked to provide proof of ownership and value, such as appraisal letters.

6. Documentation

Not having the proper documentation in the mortgage loan process can hold things up. As noted above, lenders usually ask for:

•   Tax returns from the past two years.

•   Two years’ worth of W-2s or year-end pay stubs. If you are self-employed, other evidence of income.

•   Child support or divorce documents.

•   Bank statements.

•   Statements from additional assets.

•   Gift letters.

•   Photo ID.

•   Rental history and contact information.

7. Property Type and Purpose

Up to now, we’ve discussed mortgage qualification factors that are based on the buyer’s financial history. But lenders also consider the purpose of the property you want to buy. A “primary residence,” meaning a home that a buyer purchases with the intention of living in it, will usually qualify for a lower interest rate and better terms than a vacation home or investment property.

The type of home you purchase also makes a difference. Single-family houses secure the best rates. Other types of housing that may incur special fees include condos, co-ops, manufactured houses, log homes, mixed-use developments, and nontraditional architecture. Homes shaped like dinosaurs or flying saucers just make lenders a little nervous.

8. Mortgage Type

The type of mortgage you may want to seek will depend on your credit scores, income, the lender’s loan menu, and more. Government-backed mortgages (FHA, VA, and USDA loans) are acquired through approved lenders, and conventional home loans are issued by a bank, credit union, or other private lender.

•   FHA loan: Mortgages backed by the Federal Housing Administration have lower credit requirements than conventional loans. For borrowers with good credit and a medium down payment, a conventional loan may actually be less costly.

•   VA loan: Loans insured by the Department of Veterans Affairs are for active-duty service members, veterans, and some surviving spouses. The VA also has a Native American Direct Loan program, which allows Native Americans to buy, build, or improve a home on federal trust land.

•   USDA loan: Loans backed by the U.S. Department of Agriculture are for moderate-income buyers who choose a home in a designated rural area. The USDA also offers direct loans for low-income households.

Most mortgages come with a fixed interest rate, but a variable rate can be an option for some conventional loans, as can a variety of mortgage terms or lengths. The fixed-rate 30-year mortgage dominates the U.S. landscape.

One last wrinkle: There are conforming loans and nonconforming loans. By meeting loan limits, a conventional conforming loan is eligible for purchase by Fannie Mae and Freddie Mac. If it isn’t eligible, it’s a nonconforming mortgage — like the government loans or a jumbo loan.

9. Other Mortgage Qualification Considerations

When browsing for a home, you might consider loan prequalification or preapproval.

Prequalification is a simpler process. You’ll provide basic information, which can be by phone or online, and a lender will estimate what size loan you might be approved for. No information is verified at this point.

For preapproval, you’re required to give a lender access to your financial history. After reviewing your credit, income, and assets, the lender will offer a loan up to a specific amount. It doesn’t guarantee that you’ll be approved when you formally apply, though.

Prequalification and preapproval can be great ways to dip your toe into the home-buying waters. Then you may apply with more than one lender. Comparing loan estimates can help you determine which option is best for you financially.

Do I Qualify For a Mortgage?

To help you determine how big a home loan you might qualify for, there are a variety of online mortgage calculators to help get you started:

•   Mortgage Calculator

•   Home Affordability Calculator

Dream Home Quiz

The Takeaway

Many factors that can help or hurt your chances of getting approved for a mortgage loan. Your down payment, credit score, income, debt-to-income ratio, assets, documentation, property type and purpose, mortgage type, and prequalification or preapproval status all play a role. Some of these factors can compensate for weaknesses in other areas. For instance, a lower income is less of a problem if you have plenty of valuable assets to draw on. And a high down payment can counter a middling credit score.

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 are the four things you need to qualify for a mortgage loan?

To qualify for a mortgage loan, you’ll need a stable income, strong credit score, modest debt-to-income ratio, and documentation of your employment and assets. Believe it or not, some loan programs do not require a down payment!

What is the lowest income needed to qualify for a mortgage?

There is no minimum income required to apply for a mortgage. However, your income will determine how large a loan you’ll qualify for. Sometimes, your assets can compensate for a lower income. And there are government-backed programs, especially for low-income borrowers.

At what age do you not qualify for a mortgage?

There is no maximum age limit to qualify for a mortgage loan. In fact, lenders legally cannot deny someone a loan term based on their age. For instance, a 70-year-old can still qualify for a 30-year mortgage term.

What do banks check before giving a mortgage?

Just about everything. Banks check your credit history and score, proof of employment and income (W-2s, 1099s, tax returns), your assets (bank statements), your debts (credit card bills), and anything else that will give them a picture of your overall financial health and future prospects.

Do mortgage lenders look at your spending?

Yes, mortgage lenders may look at your bank and credit card statements for the last two years to see whether your spending habits are consistent and where your money goes.

Is everyone eligible for a mortgage?

Pretty much anyone who can afford to carry a mortgage can qualify for one. However, it’s possible that someone who earns money under the table or holds their assets in offshore accounts wouldn’t be able to document their financial qualifications to satisfy a lender.


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.

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

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

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
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.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

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

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What Is a House Deed?

No matter which side of the home buying process you’re on, it’s important to understand all the real estate terms and documents you’ll come across.

While you may be familiar with mortgages and contracts, one document that tends to be greeted with uncertainty is the house deed.

What is a house deed? Does it prove that you own your house? This guide will explain what a house deed is, why you may need one, and the role it plays in the home buying and selling process.

What Is a House Deed and Why Do I Need One?

A house deed, sometimes referred to as a property deed, is a written and signed legal document used to transfer ownership of real property. Real property is land and any property attached directly to it, like a house.

In other words, a house deed is very important to the buying and selling process.

In fact, a home transaction can’t take place without a deed. It’s one of the things you need to buy a house. Both the buyer and seller of a property must sign the document for a transfer of ownership to take place. Every state requires that this be done in front of a notary and, in some states, before other signature witnesses as well.

Is a House Deed Different From a Title?

Though the two terms are often used interchangeably, a house deed and a title are very different.

It’s often assumed that a title refers to a document, but it’s actually more of a concept referring to your legal ownership of a home. A title grants you ownership rights, including possession, control, exclusion, enjoyment, and disposition.

Put simply, a title refers to your ownership of the property, your ability to use your property as you please, to choose who enters your property, to enjoy your property as you see fit, and to decide when and to whom you transfer ownership of your property to.

But because you can’t transfer a concept, a physical document is needed to symbolize and confirm a change in ownership. This is where a house deed comes into play. Closings can take time, but without a deed they can’t happen at all.

What Is On a House Deed?

Deed requirements vary by state. But generally speaking, a house deed should include:

•   Description of the attached property.
•   Details of the grantors (sellers).
•   Details of the grantees (buyers).

Once all parties are in agreement, a deed should also include the signatures of both grantors and grantees. The deed must then be delivered to the grantee by handing the document over and accepted.

Recommended: How to Get a Mortgage in 2023

Types of House Deeds

There are different types of house deeds to be aware of. They offer different benefits, and even a few risks, to buyers and sellers.

Here’s what you need to know about the most common types.

General Warranty Deed

A general warranty deed is designed to offer premium protection to the grantee (buyer). This type of deed involves the grantor (seller) making covenants, or a series of legally binding promises, to the grantee.

Such promises could include what’s called the covenant of seisin. This covenant guarantees that the grantor is allowed by law to transfer the property in question. Another is the covenant of quiet enjoyment, which guarantees that the new owner will not be disturbed on their property, even if the grantor had a defective title, such as a previous lien or judgment.

Quitclaim Deed

Unlike a general warranty deed, a quitclaim deed is designed to offer maximum protection to the seller.

Also known as a non-warranty deed, this type of deed does not include covenants for the buyer. Should the seller unknowingly have a defective title, the buyer will have no legal recourse should the deed be challenged.

Special Purpose Deeds

Though not as common as a general warranty or quitclaim deeds, there are several types of special purpose deeds you may come across, especially if a seller has someone acting on their behalf.

Similar to quitclaim deeds, there is often little protection for the buyer but in some situations, a special purpose deed is the only legal option. Special purpose deeds include:

•  Gift Deed. A gift deed is used to convey a real property title that is given for no consideration, or without money exchanging hands. In some states, there is a time limit to record a gift deed or it becomes void. And despite money not being exchanged, transfer, records, and/or gift taxes are sometimes still required.
•  Tax Deed. If a property has fallen to delinquent taxes, a tax deed will be issued for the property transfer.
•  Administrator’s Deed. If the seller passes away without a will, an administrator’s deed may be used by the appointed administrator of the estate.
•  Executor’s Deed. If a seller passes with a will, an executor’s deed may be used by the estate’s executor to transfer the property.
•  Sheriff’s Deed. When property is seized by public office, an execution sale often takes place. A sheriff’s deed is then provided to the winning bidder to complete the transfer.

Obtaining or Transferring a House Deed

As a buyer, you’re not responsible for tracking down a house deed (though it is a critical factor in your house-buying timeline). But if you’re selling or taking out a second mortgage on your home, you’ll have to locate the document before moving forward.

Luckily, you can track down a house deed with just a few simple steps.

1. Determine your jurisdiction. A search for a house deed should always start by confirming your county recorder’s website .
2. Search the database. Once you’ve found the correct database according to the location of your property, search for the record of your house deed. You may need your property index number, but the address of your home may be enough to track it down.
3. Conduct an accuracy check. Assuming you find a record of your house deed, take a few minutes to ensure that it’s accurate. If you do spot an error, call the recorder’s office to determine how the issue can be resolved.
4. Request a copy. If everything with your house deed is accurate, you can request a copy from the recorder. You may need to submit proof of your identity or pay a fee for both the copy and certification. But once you’ve met all the criteria of the office, you’ll have a physical copy of your house deed.

If you’re struggling to track down your house deed, you always have the option of hiring a third party to handle the process for you.

Once you have the deed, you can start the transfer process. Because this is necessary in every home-buying transaction, your real estate agent should be able to walk you through the following steps.

1. Prepare the deed. Even if you’re not using a real estate agent, it’s a good idea to hire a real estate attorney to prepare the deed. An honest mistake on your part could void the transfer or lead to serious legal issues down the road.
2. Review the deed. Both parties should review the deed for any inaccuracies. This includes full legal names, addresses, and the description of property. No one should sign until both parties verify all information.
3. Sign the deed. Both parties need to sign in front of a notary. Check with your state law to see if other witnesses are required .
4. Record the deed. A signed deed should be presented to the local county recorder’s office where it will be filed and stored in their database. Be prepared to pay any associated fees and taxes at this point.

Recommended: Guide to Buying, Selling, and Updating Your Home

Knowledge is Power

Though legal requirements can vary, and different house deeds provide unique protections for sellers and buyers, a house deed is generally one of the most important documents to know about in real estate.

If you feel confident in your understanding of the home-buying process and you’re ready to start your journey to home ownership, SoFi offers home mortgage loans with flexible terms, an online application, and mortgage loan officers who are available to guide you through the process. It takes just a few minutes to find out if you pre-qualify. Then you can choose the mortgage that’s right for you and your financial situation.

SoFi can help you realize your dream of owning a home.



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.

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.


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

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What Is a Single-Family Home? Should You Consider Owning One?

What Is a Single-Family Home? Should You Consider Owning One?

If you’re in the market for a home, you may have come across the term “single-family home” and wondered what it means and if that is what you are looking to buy.

Generally, a single-family home refers to a freestanding home set on its own piece of property. It can be occupied by a single individual or a large family, as long as it’s occupied by a single household.

Owning a single family home comes with a number of benefits, including more privacy and space than other types of residential properties. However, this type of home also tends to come with a higher price tag and more responsibility. Here’s a closer look at what single family homes are and the pros and cons of buying one.

What Is a Single-Family Home?

Generally speaking, the term single-family home refers to a home that is designed for, occupied by, and maintained by one person or household. When you buy a single-family home, you will own both the home and the property it sits on. This is in contrast to other types of properties, such as condominiums (condos), where you only own the interior of your unit and share ownership of common areas with other homeowners in the complex.

In most cases, a single-family home is defined as one that is freestanding and not attached to homes owned by other individuals. However, the government has a broader definition. According to the U.S. Census Bureau, a single-family home includes fully detached homes, as well as semi-detached row houses and townhouses. In the case of attached units, the units must be separated by a ground-to-roof wall in order to be classified as a single-family structure. Also, these units must not share heating/air-conditioning systems or utilities.

In some places, a single-family home is defined in part by how many kitchens it has. Depending on zoning laws, adding a second full kitchen to an in-law’s apartment, for example, can cause a house to be redefined as a multi-family building. If you’re planning on doing this type of renovation, be sure to check local zoning laws beforehand.

Whether a home is classified as a single-family or multi-family home can have an impact on the type of mortgages you qualify for. Both single-family homes and two- to four-unit properties fall under residential lending guidelines. (A property with five or more units is considered commercial property.) You can use a conventional mortgage to purchase a home with four or fewer units, whether it’s a single- or multi-family home. If you’re buying a multi-family home with five or more units, you must use a commercial mortgage. Commercial mortgages have different terms than residential mortgages do.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


Pros and Cons of a Single-Family Home

As you shop for homes, it’s important to consider the various advantages and disadvantages of a single-family residence.

Some of the advantages are:

•   More space Single-family homes tend to offer more space than other types of housing, and it belongs to you alone. They may have large yards where children and dogs can play or where you can plant a vegetable garden. They may also have storage in attics, garages, or basements, which aren’t shared between multiple units.

•   Privacy Single-family units that don’t share walls with neighbors offer more privacy. You are less likely to hear neighbors’ activities, and they are less likely to be bothered by yours.

•   More design features Single-family homes may be available in a broader range of designs and layouts, from Cape Cods or colonials to ranch homes and contemporary designs. You can also make changes to the building or landscape design without input from neighbors with a shared interest in the space.

•   Room to grow Single-family homes may offer you more options for additions if you have a growing family or if aging parents may come to live with you. For example, single family detached homes with larger plots of land may allow additions that wouldn’t be possible in condo units.

•   May offer higher appreciation Single-family homes tend to appreciate in value more than condos and townhouses.

•   Option to rent As the sole owner of a single-family home, you have the option to rent out the house if you decide to move and wish to hang on to the property.

While these factors are attractive, it’s important to weigh potential disadvantages of buying a single-family home as well. Here are some to keep in mind:

•   More expensive Single-family homes tend to be more expensive than other types of homes. That can mean a larger down payment and higher closing costs, and your mortgage payments may be higher.

•   More maintenance Unless your single-family home is part of a homeowner association (HOA) that provides basic services, you’ll be in charge of all home maintenance like lawn mowing and roof repairs. You’ll either have to take the time to do it yourself or hire help.

•   Possible HOA fees Planned developments usually require HOA fees to cover the upkeep of common areas and shared structures.

•   Less income potential With multi-family homes, you have the option to live in one unit while renting out the others. This allows you to bring in regular income to cover the cost of the mortgage and maintenance expenses.

Finding a Single-Family Home

Before you start looking for a single-family home, you’ll want to first determine how much home you can afford. You might start by calculating mortgage costs and getting prequalified for a home loan; prequalification often only takes a few minutes and provides an estimate of how much you might be able to borrow and at what rate (without impacting your credit).

You’re probably already searching real estate listings online and noting the property types. You might also want to do some research on housing market trends, especially if you live in one of the nation’s real estate hot spots.

You may also want to engage a real estate agent. They have expertise in local housing and zoning laws, know whether a list price is fair or above or below average, and can help you negotiate the price of a home you’re interested in buying.

If there’s any question about how a house is zoned, you can often look up zoning information through a particular city’s website.

Recommended: First-Time Home Buyer’s Guide

Who Should Get a Single-Family Home?

Single-family homes are a good fit for people who can cover the higher price tag, want privacy and flexibility, and are willing to take on a lot of responsibility.

If you qualify as a first-time homebuyer, there may be help available to buy a single-family home in the form of down payment assistance and low- or no-interest loans.

If you’re looking for a more affordable home and don’t mind giving up some privacy, you might want to consider a condo or townhouse.

A condo is like an apartment but is available for purchase. These units share walls with neighboring units, but you generally won’t have to worry about maintaining the property.

A townhouse, on the other hand, has multiple stories and will share one or two walls with other units. Like condos, townhouses are typically less expensive than single-family homes. Unlike a condo, you’ll own the property that the townhouse sits on.

If you’re looking to invest in real estate, you might consider buying a multi-family home. While this will likely cost more than a single-family home, you may be able to recoup the added cost (and, over time, earn even more) by collecting rent from tenants.


💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

If You’re Thinking of Purchasing a Single-Family Home, SoFi Home Loans Can Help

Single-family homes are one of the most popular real estate options and often what people envision when they think about achieving the dream of home ownership.

This type of property typically sits on a parcel of private property and doesn’t share walls with neighbors, affording you a high level of privacy. You generally have more control over making enhancements to your home than you have with other types of properties, and usually have access to extra storage, including exterior storage space like a shed or garage.

However, don’t forget to consider the added responsibilities and costs when deciding on the right type of home for you and your family.

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

How much does a single-family home cost?

The median price for an existing single-family home — one that’s already standing, not new construction — was $387,600 as of November 2023, according to the National Association of Realtors.

How much do I need to build a single-family home?

The cost of building a single-family home (not including land) can range anywhere from $42,000 to $900,000-plus depending on the home’s type and size and where you build. On average, the cost to build a house in the U.S. is about $329,000.

Can you get a loan to build a single-family home?

If you’re planning to build a single-family home from scratch, you can apply for a construction loan. With this type of loan, money is usually advanced incrementally during construction, as the home-building project progresses. Typically, you only pay interest during the construction period. Once the construction is over, the loan amount becomes due, and it is converted into a regular mortgage.


Photo credit: iStock/Dean Mitchell

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.

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Are Kit Homes Worth the Investment: You can order anything on the internet these days—even a house.

What Is a Modular Home? Should You Consider Owning One?

Modular homes are often misunderstood, but these homes are built to the standards of their site-built brethren, are typically more affordable, and go up faster.

Just like other homes, they may appreciate in value.

Read on to learn whether or not a modular home might tick all your boxes.

Characteristics of a Modular Home

Remember the Sears mail-order kit homes? The catalog, debuting in 1908, offered all the materials and blueprints to build a house. Sears had sold an estimated 75,000 kit houses by the time the catalog was discontinued in 1940.

They were prefabricated homes, meaning some or all of the home was built in a factory. The term still applies to modular, panelized, and manufactured homes. (Kit homes are still sold, and appeal to DIYers who don’t need a general contractor to handle everything.)

Modular homes are born almost entirely in a factory. Boxlike modules — complete with walls, floor, ceiling, wiring, light fixtures, cabinets, and HVAC system — are trucked to the homesite, lifted by crane, and put together.

Manufactured homes, formerly called mobile homes, also are built in a factory and meet a federal code, but modular homes must meet the same state and local building codes as stick-built homes. They’re permanently attached to a standard foundation and are real property.

Modular houses come in a huge variety of designs and styles, from accessory dwelling units, or ADUs, to three-bedroom homes with sleek, contemporary designs. Many companies offer a menu of layout options, and buyers may be able to customize features.

Recommended: Guide to Buying, Selling, and Updating Your Home

Pros and Cons of a Modular Home

Here are some upsides and downsides of modular construction.

Pros

Speed: A modular home or apartment building can go up in as little as half the time of similar site-built residential buildings, whose construction averages around 10 months, according to the U.S. Census Bureau’s most recent data. Or even faster: Some modular home factories can finish a house in a few months. The modules are built offsite while the foundation is being prepared. Weather delays are far less of a concern.

Cost: Modular homes are typically cheaper than stick-built homes. The climate-controlled factories are specialized, and production processes are streamlined.

Greener: Modular construction results in fewer carbon emissions than traditional building methods: It requires less transport of workers and materials and fewer carbon-intensive products like concrete and steel. Producing buildings in a factory setting promotes recycling and reuse. In addition, modular buildings can be designed to achieve LEED certification.

Homes may appreciate: A well-built modular home, like any stick-built home, will tend to appreciate. The value holds up better in communities where modular homes are not uncommon.

A way to ease the housing crisis: Urban cities are looking at prefab housing to mitigate the U.S. housing shortage, and prefab-housing startups have sprouted nationwide. MiTek, a startup owned by Warren Buffett’s Berkshire Hathaway is, it says, “making modular mainstream.” It plans to ship kits of manufactured building parts to be assembled by general contractors. President Joe Biden and Vice President Kamala Harris updated a plan to increase the housing supply in August 2023, pledging the construction of more than 2 million new homes. That plan included modular housing.

And a smarter way of doing business: PulteGroup, the country’s third-largest home construction company, is investing in offsite manufacturing of parts for a percentage of the homes the company builds each year. A lack of labor has been contractors’ biggest challenge. Modular construction can help a company do more with fewer workers.

Recommended: Home Affordability Calculator

Now for the not-so-great news.

Cons

Zoning hurdles: Modular builders face pushback from many cities, as offsite construction isn’t mainstream and each city has its own zoning laws.

Financing: If modular homebuyers can’t pay cash, many will have to finance the build with a construction-only or construction-to-permanent loan (aka one-time-close loan). The down payment on land and the home for a construction loan will often be up to 30%, unless it’s one of the government-backed loans described below. A modular-home buyer who already owns the land can use the land as equity and may be able to borrow all of the construction cost if they meet the criteria for the loan.

You and the contractor usually need to be approved for the loan. Money is disbursed based on a draw schedule. Payments are typically interest only and start out small.

With the construction-to-permanent loan, some lenders, for a fee, will let you lock in a fixed rate with a “float down” option if rates have fallen. If you choose a variable rate, you’ll pay the current rate when the mortgage converts.

A two-time-close loan is composed of a short-term loan for the construction phase and a permanent mortgage for the completed home. You’re essentially refinancing when your home is complete; you’ll need to be approved and pay closing costs again, but the rate could be better. In most cases you can compare other lenders’ offers to get the best rate and terms on the permanent mortgage.

An FHA One-Time Close Loan is a government-backed home loan program that applies for modular homes and the land. The minimum down payment is 3.5%.

A VA One-Time Close Loan allows eligible service members to finance modular construction, lot purchase, and permanent mortgage with no money down.

A personal loan, sometimes for up to $100,000, could fund part of the modular construction or the purchase of the land. Keep in mind that unsecured loan rates are higher than rates on secured loans.

Qualified homeowners may be able to use a home equity line of credit (HELOC), home equity loan, or cash-out refinance to give rise to their modular aspirations.

HOA blockage: Some homeowners associations may not allow modular construction in the neighborhood.

Contractor expertise: Unless you have construction chops yourself, you still have to find a contractor. You’ll also need to secure a piece of land if you don’t own the land already.

All the extras: Among the disadvantages of modular homes is the difficulty of determining the total price. Buyers pay not only for the home but also the land, foundation prep, and transportation.

Possibly a big upfront payment: A builder may want payment in full before construction begins.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


Finding a Modular Home

You may want to search for “modular home companies by state” or “prefab homes by state.” Of course there are Facebook and Reddit modular discussions. Word of mouth is another avenue to find a modular home builder.

Some modular home manufacturers sell directly to homeowners, and others work through a network of retailers.

At least one modular company has developed factory relationships across the United States.

Keep in mind that this style of construction is still pretty rare, in this country at least. In 2022, only 26,000 U.S. homes were built offsite. That’s about 2% of all homes completed that year.

Who Should Get a Modular Home?

People who want a new home up and ready more quickly and less expensively than a stick-built home might be smart to think modular.

Environmentally conscious buyers might find modular construction a breath of fresh air. Folks who want a modern ADU or primary or vacation home might want to go modular.

People who appreciate efficiency and innovation might be drawn to modular construction.

It helps to already own the land. If you don’t, and this will not be a cash deal, it’s important to understand the pros and cons of construction loans and other financing options.

The Takeaway

Modular homes are faster to complete and less expensive than site-built homes, but perceptions and financing can be challenges. If you do plan to build even an ADU out back, check your local zoning, compare modular vs. stick-built construction, and know your terms (manufactured vs. modular, real property vs. personal property). It all can be confusing.

SoFi can lend a hand. Do you plan to use a construction-only loan and need a permanent mortgage after the build is done? SoFi offers mortgages with competitive rates and a variety of repayment terms.

SoFi also offers personal loans of $5,000 to $100,000, which could fund the land or more, and brokers a HELOC that may allow you to access up to 95% of your home equity to fund your modular vision.

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


SoFi Mortgages: simple, smart, and so affordable.


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


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


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

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

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What Is a Houseboat? Pros & Cons of Owning a Houseboat

Guide to Houseboats: Definition and Key Characteristics

If you’re interested in living on a houseboat or just pleasure cruising, you’ll want to know the advantages and disadvantages of owning a houseboat.

Here’s a deep dive into the world of houseboats to help you understand what they are, how they work, and whether buying one is the right choice for you.

Key Points

•   Houseboats are designed primarily as dwellings on water, equipped with home-like features such as bathrooms, kitchens, and sleeping quarters.

•   They are generally less seaworthy than regular boats and are meant for enclosed waters like lakes and rivers.

•   Floating homes differ from houseboats in that they are stationary, lack mobility features, and are often larger and more expensive.

•   Houseboats offer unique advantages such as reduced living costs and scenic views, but also have downsides like limited space and ongoing maintenance needs.

•   Financing a houseboat is different from traditional home loans, with options including personal loans, marine loans, and using home equity products.

What Is a Houseboat?

A houseboat is a vessel built or modified to function primarily as a dwelling rather than just transportation.
When comparing houseboats to traditional boats, you can expect houseboats to have the features of a home, including one or more bathrooms, sleeping quarters, and a kitchen.

Houseboats, among the common types of homes, are distinguished by their intended use as a dwelling.

Depending on how large the houseboat is and how much the owner is willing to invest, houseboats can range from barebones to luxurious.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


Characteristics of a Houseboat

A houseboat stands out in the fleet of traditional boats.

Houseboats Regular boats
Built or modified to function primarily as a residence Built primarily for transportation or recreational purposes
Intended to function as a permanent shelter Generally designed for transport or temporary accommodations
Less maneuverable than regular boats Maneuverable and self-propelled in most cases

Expect houseboats to be less seaworthy than boats specifically designed for transportation. The vast majority of houseboats are intended to be confined to lakes, rivers, and small bodies of water, not the open seas.

Houseboat vs Floating Home

A houseboat and a “floating home” are different. Floating homes are meant to stay in one place, lacking an engine or navigation system. They usually have a floating concrete foundation.They’re generally much bigger than houseboats and cost more.

Even though some houseboats also dock in one place, most can motor to another location when needed or desired.

Houseboat Design

Houseboats may stretch from 20 feet to over 90 feet. A veranda or flybridge may help occupants make the most of outdoor views.

Hull design and materials vary. Here are some styles.

Pontoon: Flat-bottomed boat that’s supported by two to three floats, or pontoons, for buoyancy. This is common houseboat construction.

Full hull: Conventional boat hull with a large bilge that sits partly in the water and offers more space below deck.

Planing hull: Similar design to full hull but is designed to glide on top of the water at speed.

Catamaran hull: Parallel twin-hulled design that joins two hulls of equal size with a solid frame. The wide beam gives it better stability and handling.

Barge: Large flat-bottomed boat designed to handle heavy loads and operate in rivers and canals.

When researching the type of houseboat you want, you’ll want to make an informed choice when weighing livability and seaworthiness.

Pros and Cons of a Houseboat

It takes a special type of person to live on a houseboat. Here are some of the pros and cons of houseboat living to help you decide if you fall into this category.

Pros

•   Reduced living costs: The lack of land to maintain means you won’t have to worry about shoveling snow or mowing the lawn. You can also expect lower utility costs due to the square footage, which could be enticing to people wanting to downsize their home.

•   Nice views: You can’t get closer to waterfront living. Houseboat living offers the possibility of gorgeous lakeside or riverside views every day you wake up and go to bed.

•   Water activities: Depending on the season and local ordinances, you may be able to fish, canoe, and enjoy all the perks of life on the water without having to take extra time off for a vacation.

•   Lower rent or mortgage: Compared with the average stand-alone house, a houseboat may cost less to buy or rent.

•   Possible tax advantages: Houseboat owners may not have to pay property taxes (although a deeded slip in some areas is considered real property), but they may live in a state, county, or city that imposes personal-property taxes. Also, the IRS says a boat can be your main or secondary residence, entitling you to take advantage of the same tax deductions as the owner of a typical house.

Cons

•   Reduced living space: A modest houseboat may be smaller than most traditional homes.

•   Marina or HOA fees: If you want to remain moored and plugged into the grid, you’ll need to pay slip fees or homeowners association fees.

•   Maintenance: Expect to trade land maintenance expenses for boat maintenance costs. In some cases, you’ll need to find a contractor for repairs or an inspection.

•   Lack of permanence: If you intend to sail from dock to dock, you’ll need to make compromises when it comes to having a permanent mailing address or regular friends and neighbors.

How to Finance a Houseboat

Used houseboats start at a few thousand dollars. New houseboats may range from $250,000 to $750,000.

Can you get a mortgage loan for a houseboat? No. But you may be able to get another kind of loan if you have a credit score in at least the “good” range on the FICO® credit rating scale and meet other lender criteria.

Some banks, credit unions, and online lenders offer boat loans.

A personal loan is another option. Personal loans of up to $100,000 are offered by a few lenders. Most are unsecured, meaning no collateral is needed.

A marine loan broker can help you find and negotiate financing, but the broker fee is often 10% or more of the houseboat purchase price. The loan might require 10% to 20% down.

If mortgage rates are ebbing, a cash-out refinance can work for some homeowners.

Other homeowners with sufficient home equity can apply for a home equity line of credit (HELOC) or home equity loan and use that money to buy a houseboat. The rate will typically be lower for an equity product using your home as collateral than that of an unsecured personal loan.

What if your credit isn’t good? So-called bad credit boat loans are afloat out there. They come with a high interest rate.

Just as you would shop around for the best mortgage loan offer, you will want to compare a number of houseboat financing options.

Finding a Houseboat to Buy vs Building One

Just as the cost of buying vs building a house depends on size, location, the cost of labor and materials, and your taste, the same holds true of houseboats.

Clearly, buying a used houseboat is almost always quicker and more convenient than trying to build one from scratch. However, if you have the knowhow to build your own houseboat, you’ll have much more freedom when it comes to how you want to design things.

If you’re deciding whether to buy or build a houseboat, you’ll want to consider your budget, time, availability, expertise, facilities, and tools.

Also consider how you would transport the houseboat from land to water when it’s done.

As for the question of time, most custom houseboat builds take months, if not years, to complete. It’ll be much faster and easier to jump into houseboat living with an existing houseboat.

The Takeaway

Houseboats are a novel option for water lovers, including downsizers, retirees, and free spirits. Living on a houseboat can be cheaper than in a traditional home, but you’ll want to make sure you understand the advantages and disadvantages of living on a houseboat before committing.

If you are ready to take the plunge, SoFi may be able to finance your houseboat. SoFi personal loans have no fees and provide fast cash.

And a generous SoFi-brokered HELOC may unlock the door to a houseboat that you can create memories on and in. Access up to 95%, or $500,000, of your home equity.

Climb aboard that houseboat you’ve always wanted.

FAQ

Can you live on a houseboat year-round?

Yes, but you’ll need to compensate for changes in the weather, particularly if the waters where you’re docked tend to freeze during the winter months. This includes ensuring that your houseboat is insulated and heated through the winter.

How long does it take to build a houseboat?

Construction could take 12 to 18 months to complete, depending on whether you’re building a custom houseboat on your own or enlisting the help of professionals.

Can you get a loan for a houseboat?

Yes, but not a traditional mortgage. Options include a boat loan, a personal loan, a home equity loan, and a HELOC.

How does a toilet work on a houseboat?

A marine toilet usually empties into a black-water holding tank until the boat reaches a marina pumping station, or the tank treats the waste and it’s eventually released in a designated discharge area. Noncruising houseboats usually have a hookup that takes out waste through a sewage line.


Photo credit: iStock/wayra

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


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

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

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.

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