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The decision to adopt a child is an exciting milestone in life, but it’s also one that takes a considerable amount of planning and effort. Future adoptive parents can opt for either a domestic adoption or international adoption, but there are many differentiating factors that may influence the decision.

If you’re thinking about adoption, you’ll want to understand the distinctions between domestic and international adoptions, from the process and timeline to the costs involved, so you can decide what’s best for you.

The Domestic Adoption Process

One of the major advantages of choosing a domestic adoption is that you have the potential to adopt a newborn. However, the timeline is not set in stone (it’s usually between two and seven years to adopt a newborn) and may depend on whether you opt for an open, semi-open, or closed adoption. Most domestic adoptions are considered at least “semi-open.”

Depending on the agency you work with, you may need to be chosen by a birth mother based on your profile. Once you’re selected, the timing depends on the expected (and actual) due date. The process usually takes at least a few months. Typically, you get access to the child’s medical records as well as the birth mother’s family history.

An open adoption also allows some contact and conversations with the birth mother before the baby is born. In a semi-open adoption, personally revealing information is withheld between the adoptive parents and the birth mother.

Once the baby is born and you officially adopt the child, the adoption agency may facilitate sending updates to the birth mother, as well as pictures so she can see the baby is well taken care of.

Domestic Adoption Eligibility Requirements

American adoption requirements vary by state and by the adoption agency you choose to work with. Generally, you must be at least 18 years old, and there’s often a minimum age difference required between you and the child.

Most states allow domestic adoptions regardless of marital status; parents can be married, single, divorced, or widowed and still qualify.

Explore your state and city adoption websites for more details on additional requirements unique to your area.

The International Adoption Process

International adoption, due to rules and clearances, typically will not involve a newborn, so you’ll need to be open to welcoming an older baby or toddler (or a child) to your home.

With international adoption, there are issues that could affect your ability to adopt, even in the middle of the process. New international laws and relations between the United States and other countries have the potential to derail families who are in the middle of an adoption. The process varies by country but typically takes between 1.5 and 6 years or longer.

While you can find out about the child’s medical history, you likely won’t know anything about the family history. Once you adopt a child from abroad, you won’t have any contact with the birth family.

International Adoption Eligibility Requirements

Each country has its own eligibility requirements for adoptive parents, which are typically much stricter than domestic requirements. Often you’ll need to meet income requirements, which may include a higher amount if you already have children. Some countries also have net worth requirements.

In addition, you may discover that some countries restrict the type of families that are allowed to adopt from there. For example, some only offer adoption to married couples or single women.

These rules vary by country, and there are some countries, such as Colombia, that allow single men and same-sex partners to adopt.

International vs Domestic Adoption Costs

The costs vary greatly with both international and domestic adoptions, but the common thread is that it can be expensive if you’re not adopting a foster child.

For international adoptions, expect to pay anywhere from $25,000 to $70,000 or more, depending on the country.

In South Korea, for example, adoptions may cost between $30,000 – $40,000. In China, the range is $25,000 to $40,000. Adoptions from India may span $38,000 to $52,000.

Choosing an international adoption also requires you to travel to the country (often more than once) in advance of actually adopting your child.

Domestic adoptions through a private agency may cost between $20,000 and $45,000, though costs of $60,000 or higher are also possible.

It is much less expensive, and potentially even free, to adopt through foster care. However, as a foster parent, your goal is to help reunite the child with the existing family. Adoption may become an option, but it is not the primary objective.

Recommended: Common Financial Mistakes First-Time Parents Make

Funding Options for Adoptions

Adoption costs are often out of reach for many U.S. families. But even if you can’t tap into your savings (or don’t want to), you can explore other options for funding your adoption.

Recommended: 5 Tips for Saving for a Baby

Employer Benefits

Some companies offer adoption assistance funds as part of their employee benefits packages. In addition, about 33% of employers offer paid adoption leave. This can provide flexibility to transition when a new family member arrives.

You may want to check with your HR department to make sure you don’t miss out any adoption benefits offered by your company.

Adoption Federal Tax Credit

The federal government provides some tax benefits for adoptions. First, if you use employer benefit funds to pay for the adoption, that money is excluded from your income so you don’t have to pay federal taxes on it.

The tax code also offers an adoption tax credit that can help offset some of the costs involved in adoption, whether you adopt for a domestic or international adoption. Qualified adoption expenses include things like adoption fees, legal costs, and travel expenses.

The tax credit amount changes every year, so it’s a good idea to do your research or talk to an accountant for more specifics.

There are income limits for qualifying for both the tax exclusion and credit.

Friends and Family

Many adoptive parents ask friends and family members for financial support when starting the adoption process. You could even start a crowdfunding campaign as a way for your broader community to donate to your adoption fund.

Hopeful parents may want to include a compelling personal story about the path to adoption to help draw in potential donors from their community.

Just remember that if you use a crowdfunding platform, you generally have to pay fees taken out of the money you’ve raised. This usually ranges from 3% to 18% when including both fundraising fees and processing fees.

Recommended: New Parent’s Guide to Setting Up a Will

Personal Loan

Another option for financing your domestic or international adoption is with an unsecured personal loan.

This type of loan typically comes with a fixed interest rate and repayment period, which allows you to make a set monthly payment over a set number of years.

You’ll need good credit to qualify for the best interest rates. Lenders may also take your debt-to-income ratio into consideration. You may qualify for a larger loan amount if your existing debt is low compared to your monthly income.

Sometimes referred to as an adoption loan, the proceeds from this type of loan can be used for just about anything. That means not just the agency and legal fees but also costs like travel and meals, which can get expensive if you’re adopting from abroad.

The Takeaway

Choosing to adopt a child can be life-changing, but an international or domestic adoption usually carries a high price tag. Fortunately, with tax benefits and funding options available, you can worry less about how to pay for all of the costs associated with the process and focus more on the joy of growing your family. Crowd-funding and personal loans are two sources to consider to help finance an adoption.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What are the disadvantages of international adoption?

International adoption has its upsides, but in terms of disadvantages, the challenges of international travel and social adjustment, the expense of this kind of adoption, and the complexities of foreign laws and requirements are among the downsides. Also, those who want full knowledge of the biological parents’ medical records may not be able to access the information they are seeking.

What are the benefits of international adoption?

One of the key benefits of international adoption is that it promotes cross-cultural exchange and understanding. It allows families to create multicultural households.

What is the most common kind of adoption in the U.S.?

The most popular type of adoption in the U.S. is newborn adoption. This accounts for about 60% of adoptions in America.

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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.

SOPL-Q225-055

An underwater mortgage, also known as an upside-down mortgage, occurs when your mortgage has a higher principal balance than the current fair market value of your home. In other words, you owe more on your loan than your home is actually worth. This can happen if housing prices in your area have dropped since you purchased your home.

Having a mortgage underwater can make it challenging to refinance your mortgage, take out a second mortgage, or sell your home. Fortunately, there are a number of ways you can manage the problem and get out from under an upside-down mortgage. Here’s what you need to know.

What Does it Mean to Have an Underwater Mortgage?

An underwater mortgage is defined as a mortgage in which the principal balance is higher than the home’s fair market value, resulting in negative equity. An underwater (or upside-down) mortgage can happen when property values fall but you still need to repay a large portion of your original loan balance.

Having a mortgage underwater can make refinancing difficult, since lenders generally won’t give you a loan for more than what the home is worth (in fact, they typically will only give you up to 80% of a home’s current value). It can also stand in the way of selling your home, since the proceeds from the sale likely won’t be enough to pay off your mortgage.

What Causes an Underwater Mortgage?

One of the most common reasons for an underwater mortgage is a decline in property value after the borrower purchases a home.

Homeowners who are most at risk of ending up underwater are those who bought their home recently with a very low down payment. Some lenders and types of mortgage allow you to put as little as 3% or even 0% down. If, for example, a home costs $300,000 and you put down 3%, you start with just $9,000 in equity in your home. If your home’s market value drops by $9,200, you’d be underwater by $200.

As you pay off your mortgage, you gradually chip away at the principal balance and end up with more and more equity. You also build equity as your home (ideally) grows in value over time. This helps protect you from becoming underwater due to any downward fluctuation in housing prices.

Missing payments on your mortgage also puts you at risk of going underwater. When you miss payments, your principal balance doesn’t decrease as fast as it should. As a result, you’re more likely to owe more than your home is worth.

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

How Do I Know If I Have an Underwater House?

To find out if your home is underwater, you can follow a few simple steps:

1.   Check your loan balance. You can typically find your balance on a recent mortgage statement or by logging into your online account. If you can’t find it, you can always call the company that holds your loan and ask how much you still owe on your principal.

2.   Determine how much your home is worth. You can get a good estimate of your home’s current value using online tools from websites like Zillow and Redfin. For a more accurate valuation, you would need to get a professional home appraisal, which may not be worth it unless you absolutely need to know if you are underwater.

3.   See how the numbers compare. By subtracting how much you still owe on your principal from your home’s current value, you’ll end up with either a positive number (you’re not underwater) or a negative number (you are underwater).

What Are My Options If My Mortgage Is Underwater?

While you can’t control falling home prices, there are other things you can do to get an underwater mortgage back on dry land. Here are some to consider.

Stay and Keep Paying Down Your Principal

It’s not uncommon to be underwater on a mortgage if you haven’t owned your home for a very long time. If you don’t have an immediate need to sell (such as job relocation), your best bet may be to sit tight and keep on making your mortgage payments. Over time, your equity will increase and home prices may rebound.

If your budget allows, you might also want to make additional payments toward the principal balance in order to get back on track faster.

Explore Refinancing

Generally, you can’t refinance a mortgage that is underwater. However, there are some exceptions. If you have a government-backed loan (such as an FHA, USDA, or VA loan) and you qualify for a streamline refinance, you can refinance without a home appraisal. This allows you to get a new loan even if your current mortgage is underwater. It may be possible to use a streamline refinance to lower your interest rate or shorten your repayment term, which can help you pay down your principal (and get out from being underwater) faster.

In the past, Freddie Mac and Fannie Mae offered special refinancing programs for underwater mortgages, but they’ve temporarily stopped taking applications due to low volume.

Work With Your Lender

If you’re having trouble keeping up with your monthly payments, or you need to relocate and sell your home, it can be worth reaching out to your lender to discuss your options. You may be able to do one of the following:

Modify Your Loan

Your lender might agree to loan modification, which involves changing one or more terms of the loan. For example, you may be able to lower your monthly payment by extending your repayment term or reducing your interest rate. A lender might even agree to lower your principal balance. Just keep in mind that any amount of negative equity forgiven by your mortgage lender can count as income, so you’ll want to factor that in come tax time.

Short Sale

In a short sale, the lender agrees to accept a sales price that is less than the amount owed on the mortgage, effectively taking a loss. Typically, a lender will only consider a short sale as a final option before foreclosure. A short sale is typically preferable to a foreclosure for both parties involved — it costs less for the lender and is less damaging to the borrower’s credit history.

Deed in Lieu of Foreclosure

A deed in lieu allows you to forfeit ownership of your home to the lender, typically as a way to avoid the foreclosure process. If you go with this option, you’ll want to make sure you get all the details of the agreement in writing, so you are not liable for any remaining amount owed on the mortgage down the line.

Note: SoFi does not offer Deed in Lieu at this time. However, SoFi does offer mortgage refinance options.

File for Bankruptcy

A last resort option that you would only want to pursue if you’ve tried everything else, is to file for bankruptcy. There are two different types:

•  Chapter 13 With this type of bankruptcy, the court will put you on a plan to repay some or all of your debt. You won’t lose your home and will have time to work on getting your mortgage current. The court will monitor your budget, and your repayment plan will typically last for three to five years.

•  Chapter 7 This means all (or most) of your assets will be sold by the court to repay your debt. As a result, you could lose your home, car, or other assets. Any remaining debt is forgiven.

Filing for any type of bankruptcy is expensive, distressing, and can have serious and long-lasting consequences on your credit. However, it may provide much-needed relief if you’re deeply underwater on your mortgage.

Foreclose on Your Home

Foreclosure is another last resort option. In foreclosure, the lender will take control of your home, and, if you’re still living there, you’ll be evicted. The lender will typically then sell the house as quickly as possible to try to recoup as much money as they can. You’ll have your debt wiped away clean but your credit will be badly damaged and you’ll likely have to wait seven years before getting another mortgage. In addition, the canceled mortgage amount may count as taxable income.

The Takeaway

If you owe more on your home than it’s currently worth, you’re underwater (or upside down) on your mortgage. This can happen if property values drop and you don’t have a lot of equity built in your home. While it’s not an ideal situation to be in, there are options, including waiting it out, exploring possible refinancing options, and working with your lender to modify your loan.

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

FAQ

What to do if your mortgage is underwater?

If your mortgage is underwater, meaning your loan balance is more than the house is worth, there are still things you can do. You could opt to wait things out and keep making mortgage payments till you’re no longer underwater. Or you can consider refinancing your mortgage, working with your lender to modify your loan, or selling short.

Can a bank foreclose on an underwater mortgage?

Your lender can’t foreclose on you just because your property is underwater, as long as you’re making your payments on time. But you may be slightly more at risk of foreclosure, simply because you may have fewer options for refinancing or selling your home if you do start having trouble paying your mortgage.

Can you refinance a mortgage if you’re underwater?

Refinancing is likely to be more difficult if you have an underwater mortgage, but it may still be possible. If you have a government-backed loan – like an FHA loan, VA loan, or USDA loan – you may be able to refinance.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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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.

SOHL-Q225-070

The desire to help your child pay for college so they can focus on their studies is a strong one, but it’s important to consider your options when it comes to borrowing money.

Parents have a couple of options for borrowing to help pay for their child’s college education. They can borrow a Parent PLUS Loan — a type of federal loan — or a private student loan to help their child pay for college. Though, it may not always make sense for parents to take on debt on behalf of their child’s education.

Read on for a high-level overview of which types of student loans parents can apply for, as well as some advantages and disadvantages of taking out those loans in your name.

What Are Parent Student Loan Options?

As mentioned, parents interested in borrowing a loan to help their students pay for college have two main options. The first is a Parent PLUS Loan, a federal loan available through the Direct Loan Program. The other is borrowing a parent loan from a private lender.

Parent PLUS Federal Student Loans

Parent PLUS Loans are a type of federal student loan that can be borrowed by the parent of an undergraduate student to help their child pay for college education costs. The benefits of a Parent PLUS Loan can include:

•   A fixed interest rate

•   Deferment under certain conditions

•   Flexible repayment options

•   Possible eligibility for Public Service Loan Forgiveness

To apply for a Parent PLUS Loan, your child must first file the Free Application for Federal Student Aid, also known as FAFSA®. Then, eligible parents of undergraduate students can fill out the Direct PLUS Loan application online.

It’s not possible to transfer a Parent PLUS Loan to your child. However, Parent PLUS refinancing with a private lender may allow your child to refinance a Parent PLUS Loan in their name.

Keep in mind that your child may be eligible for federal student aid including federal loans, scholarships, and grants too. If your child is taking out federal student loans, they may be eligible for:

•   Direct Subsidized Loans. Direct Subsidized Loans are subsidized by the federal government and students are not responsible for paying accrued interest while they are enrolled, during the loan’s grace period, or during qualifying terms of deferment.

•   Direct Unsubsidized Loans. Direct Unsubsidized Loans are not subsidized by the federal government and student borrowers are responsible for accrued interest costs on the loan while they are enrolled in school.

•   Direct PLUS Loans (for graduate school). Direct PLUS Loans are available for graduate students. These loans are unsubsidized, meaning they begin accruing interest immediately upon disbursement.

Depending on demonstrated financial need, your child may qualify for a combination of these loan types in addition to scholarships, grants, or work-study. However, if all other federal aid is exhausted, the Parent PLUS Loan might be an option to supplement your child’s tuition payments after federal aid, scholarships, or grants.

Private Student Loans for Parents

When federal student loan options are exhausted, some students and parents may turn to private student loans to help fund their education. Parents can take out a private loan in their own name to pay for college for their student. If you have a strong credit history, you might consider a private loan over the PLUS Loan — there’s a chance you could potentially qualify for a lower interest rate.

With a private student loan, you may have the option of a fixed- or variable-rate loan, potentially giving you more flexibility on repayment. You can also choose the term length of a loan, as well.

Your child can also apply for private loans, but in many cases, they’ll require a cosigner.

Private Student Loans for Parents vs Parent PLUS Loans

This table provides a high-level overview of the differences between private student loans for parents and Parent PLUS loans.

Pros and Cons of Taking the Loan Out in Your Name

Taking out a student loan for your child in your name — federal or private — could mean less of a financial burden on your child as they enter college. Since the loans are in your name, it’s not up to your child to pay them, even after a degree is earned.

Pros of Taking Out a Loan for Your Child

Borrowing can be a tool to help you pay for your child’s education. If you can afford to make the loan payments without sacrificing your own financial security, this could be a helpful move for your child.

Another pro is that the loan payments will be made in your name — that means they’ll count toward your credit history. If you’re able to make all of the loan payments on time, it could prove to have a beneficial impact on your credit score.

If you have a strong credit history, you could potentially qualify for a more competitive interest rate than your child could.

Cons of Taking Out a Loan for Your Child

The most obvious con is that while you’ll be able to help your child pay for college, you’ll need to repay the money with interest. Other types of aid like scholarships, grants, and Direct Subsidized or Unsubsidized Loans borrowed by your child are generally prioritized over a parent loan.

Again, because the loan is in your name, any late payments or issues will be attributed to your personal credit history. Things like late payments have the potential to impact your credit score.

There’s nothing wrong with wanting to borrow for your child’s future, just consider all your options and think about what you, or they, can afford to pay back. It’s almost always a good idea to maximize federal aid and scholarships before resorting to loans of any kind.

The following table provides an overview of some of the pros and cons for borrowing as a parent to help your student pay for college.

The Takeaway

Parent PLUS Loans are federal loans that allow parents of undergraduate students to help pay for their child’s education. These loans have a fixed interest rate and are eligible for most federal repayment plans.

Another option parents can consider is a private loan. Parents with a strong credit history may be able to qualify for more competitive interest rates through a private student loan.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Which type of student loans can parents take out on behalf of the student?

Parents with undergraduate students have two options for borrowing to help their child pay for college. They can borrow a Direct PLUS Loan through the federal government or a private loan from a private lender.

Who is responsible for paying back Parent PLUS Loans?

Parent PLUS Loans are in the parent’s name. The parent is solely responsible for repaying the loan.

What can you do if you aren’t able to take out a Parent PLUS Loan?

If you aren’t able to borrow a Parent PLUS Loan, you can consider adding a cosigner to your PLUS Loan application. This may help your chances of getting approved. Additionally, if you are applying for a private loan, you may have the option of adding a cosigner which could potentially improve your chances of gaining approval or securing a more competitive interest rate.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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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.