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The government generally can’t take money out of your bank account unless you have an unpaid tax bill (and before they go to that extreme, they will send you several notifications and offer you multiple opportunities to pay your outstanding taxes). If you’re late on a debt or child support payment, on the other hand, the government can’t directly tap your bank account. What they can do, however, is permit other parties to remove the funds. Keep reading for more insight into when and how this can happen.

Times When the Government Can Legally Take Money From Your Account

There are certain situations where the government allows money to be removed from a bank account without the account owner’s permission. Let’s look at a few ways this can happen.

Right of Offset

The “right of offset” is a term that refers to the fact that both banks and credit unions are allowed to take money from an account holder’s checking account, savings account, or certificate of deposit in order to pay off a debt on another account held at the same financial institution. While the government isn’t the one directly taking the money out of a bank account, they do legally allow this to happen.

For example, if you have a checking account and a student loan through a single bank and you fail to pay your student loan, the bank has the right to take money from your checking account to pay for missed loan payments. If you have a bank account with a different financial institution, however, the bank looking for your student loan payments cannot withdraw funds from that account.

Financial institutions don’t have to give account holders advanced warning before exercising the right of offset. This is legally allowed as long as they follow all rules surrounding this practice.

Appeasing Both Sides

Taking funds from your account typically only happens in situations such as a student loan being about to go into default when the person holding the loan has money sitting in checking that could cover the debt. To know whether your funds could be tapped in this way, take a look at the fine print. Financial institutions like banks and credit unions usually have language surrounding this right of offset in the agreement that an account holder signs when they open a savings account, checking account, or a certificate of deposit (CD).

Different financial institutions will have different policies as to how they handle their right of offset process. Typically, credit unions have a bit more leeway when it comes to right of offset, while banks need to stick to stricter standards. For instance, it’s usually illegal for a bank to seize money from an account to pay a credit card debt. However, credit unions may be able to do this.

Which Accounts Can Be Tapped

Here’s another reason why it’s really important to pay close attention to this language: Sometimes a bank or credit union has the ability to access the funds in any joint accounts that the main account holder shares with someone else (like a spouse). So if, say, you had a joint checking account at a bank with funds in it, and the bank also held your student loan which was close to default, both you and your spouse could wind up having your money withdrawn to go towards that overdue loan. Luckily, the right of offset isn’t eligible for tax-deferred retirement accounts (such as IRAs), so the money in those accounts can’t be touched.

Garnishment of Wages

Garnishment of wages is another example of when the government permits taking money from someone without their permission. This is a legal procedure that requires an employer to withhold part of a person’s earnings in order to repay a debt such as child support or a loan. Wage garnishment requires a court order.

Fortunately, Title III of the Consumer Credit Protection Act (CCPA) protects the person who needs to repay their debt. It says that an employer can’t discharge an employee for having their wages garnished for a single source of debt. However, employees with earnings subject to garnishment for a second or subsequent debts do not receive this protection.

Personal earnings such as wages, salaries, commissions, bonuses, and retirement income all qualify for wage garnishment, but tips usually don’t.

Does the Government Take Money From Accounts Often?

Having funds removed from a bank account without the account holder’s permission doesn’t happen all that often. When it does, the account holder can generally anticipate that this scenario is going to unfold, with the exception of it being a right of offset situation and they didn’t read their account holder agreement carefully. Garnishment of wages, however, requires a court mandate and won’t catch anyone off guard.

Let’s look at an example of how these situations can occur. If someone has debt and they don’t respond to a debt collector’s suit against them, the judge usually rules against the person who owes money. The judge may rule that the debt collector can garnish their wages, take a lien out on their property, or take money from their bank accounts.

Are Any Funds Exempt?

You may wonder if any kinds of funds are exempt from right of offset and wage garnishment. Let’s take a look at the guidelines in this situation. If the documents you signed when you opened a checking account, savings account, or CD included a right of offset agreement, then you’ve permitted the financial institution to take your money to pay a debt under the terms outlined in the agreement. The agreement is a legal contract, and you’re subject to it as long as you’re an account holder.

In some cases, you might not even learn that your bank or credit union has exercised its right of offset until after the fact. The agreement doesn’t, however, open the door for a financial institution to pull money from your account whenever it wants. For instance, federal law prohibits a federally chartered bank from using the right of offset to pay your overdue credit card bill at another bank. Again, it is used to repay a loan that is overdue at the same financial institution.

State laws might also limit a bank’s or credit union’s right of offset. This is the case in California, where a financial institution can’t push your balance below $1,000 when it pulls money from your account to cover a debt. Some states also prohibit draining government benefits like Social Security or unemployment in a right of offset action.

When thinking about wage garnishment, let’s take a look at what the law says. What kinds of funds can be garnished? Title III applies to all individuals who receive personal earnings and to their employers. Personal earnings include wages, salaries, commissions, bonuses, and income from a pension or retirement program, but does not ordinarily include tips.

Ways to Avoid Government Withdrawals

None of these withdrawals are ideal, and there are steps you can take to avoid them. You can avoid the internal revenue service (IRS) from withdrawing money from your bank account by paying all taxes owed each year.

When it comes to right of offset, it’s possible to avoid having this happening with a little communication. If you’re worried you won’t be able to make a debt payment to your bank or credit union, you may be able to connect with your financial institution to work out a repayment plan. Being upfront won’t make the situation worse and can lead to a potential solution. If you lose your job, you can talk to your bank about how to manage your debt until you find a new job.

The best way to avoid wage garnishment is to make the required payments, such as child support, on time. Again, if you’re struggling to make a payment because of financial hardship, it’s best to communicate that upfront and to make a plan for recovery instead of falling behind on payments.

The Takeaway

So can the government take money out of your bank account? The answer is yes if you fail to pay your taxes. In addition, the government permita an employer or financial institution to do so in certain situations.

If you plan for debt and other required payments properly, chances are that money won’t ever have to be removed from your account without your permission. Even though funds can be unexpectedly withdrawn via right of offset and garnishment of wages, a person usually knows they have debt that’s past due and may not be totally surprised by this turn of events. When falling behind in payments, it’s often a good idea to talk directly with creditors and explain the situation. Your lender may be willing to set up a new repayment plan that allows you to avoid these two scenarios we’ve just explored.

A New Way to Bank With SoFi

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.

FAQ

What is it called when the government takes money from your bank account?

When the government seizes money in a bank account to cover unpaid taxes, it’s called a tax levy.

You can also have money removed from your bank account through a process known as “right of offset” or garnishment of wages (which is money taken directly from a paycheck). These processes don’t involve the government directly taking money out of your bank account, but laws allow a financial institution or employer to do so under certain circumstances.

Can the government take money from your checking account?

Through the “right of offset,” banks and credit unions are legally allowed to remove funds from a checking account. They can do this to pay a debt on another account that the consumer has with that same financial institution.

The internal revenue service (IRS) also has the power to seize assets, including bank accounts, when a taxpayer fails to satisfy their tax obligations.

Can a government take your savings?

Through “right of offset,” the government allows banks and credit unions to access the savings of their account holders under certain circumstances. This is allowed when the consumer misses a debt payment owed to that same financial institution.

In addition, the internal revenue service (IRS) has the power to seize assets, including bank accounts, when a taxpayer fails to satisfy their tax obligations.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SOBNK-Q324-055

A quinceañera, the celebration of a girl’s 15th birthday, is a rite of passage that many young women and their families look forward to for years. These parties can be lavish and, therefore, expensive to host, so understandably many parents tend to budget for them far in advance.

If you’re planning one, whether it’s coming right up or years away, it’s typical to wonder: How much does a quinceañera cost? How can I make it affordable? How do I budget for a quinceañera? Read on for answers.

What Is a Quinceañera?

A quinceañera is a unique type of party that celebrates a girl’s 15th birthday in certain Latin American cultures. The term “quinceañera” translates to “the girl who is 15,” but it represents something much larger than that. A quinceañera signifies when a young girl becomes a woman who is mature, capable, and independent. This event also serves as a symbolic gesture that reaffirms her religious beliefs and commitment to the church.

Usually, a quinceañera involves hosting a religious ceremony and then following that ceremony with a party. When it comes to planning a quinceañera, many people take it as seriously as a wedding, and the expense can be similar to how much a wedding costs.

Average Cost of a Quinceañera

The cost of a quinceañera can vary greatly depending on where the party takes place, how many people are invited, and what kind of event is hosted.

In terms of ballpark figures, how much a quinceañera costs usually ranges from $5,000 to $20,000. To sock away that much cash, it’s a good idea to start putting aside some money every month in a high-yield savings account, starting well ahead of the event.

Common Expenses for a Quinceañera

To set and stick to a budget, it can be wise to look at the different components of a quinceañera. How much this party costs will depend on what is spent on things like food, decorations, and clothing. When creating a budget for a quinceañera, it can be helpful to plan for the usual expenses and to determine where it’s a good idea to splurge and where to save.

What follows is a quinceañera budget list with some of the key expenses to keep in mind.

Recommended: How Much Money Should I Save A Month?

Venue

Similar to hosting a wedding, the venue can be one of the more expensive aspects of throwing a quinceañera. It typically accounts for at least 10% of one’s budget but can go much higher. The more people invited, the larger the event space will need to be, and the more this cost can rise. Also consider whether the location you are interested in comes with tables and chairs or whether you will also need to rent those, adding to the price tag.

Recommended: Affordable Wedding Venue Ideas

Food

How much food is required and the type of food and service style can affect the cost of food for a quinceañera. Whatever the case, this is typically among the big-ticket items in a budget, often accounting for 35% of the total expense.

Having a buffet where guests serve themselves tends to cost less than hiring servers to bring the food to each individual table. Choosing to serve late-night snacks and to have an open bar for the adults can also affect the price of food.

Recommended: How to Set and Reach Savings Goals

Attire

The birthday girl normally wears a dress similar to a wedding dress, which can be costly, and close family members may also require formalwear for the event. This typically is a celebration that involves some serious wardrobe shopping that can easily cost around 10% of the total budget.

Photo and Video

Many families choose to hire a professional photographer, videographer, or both to capture special moments from the event. If you are among their ranks, then you need to include that expense in your party planning and plan how you want to stick to that budget. This can take about 12% of your total funds for the celebration.

Entertainment

Some parents will want to hire a DJ, live band, or other form of entertainment for the quinceañera. Mariachi bands and photo booths are other popular features of these celebrations.

Decorations

Decorations are a good example of a quinceañera expense that can vary greatly depending on how much someone wants to spend on flowers, linens, flatware, and other decorations.

Recommended: 20 Ways to Celebrate the Holidays Affordably

Party Planner

Because planning a quinceañera can be a lot of work, some families may choose to hire a party planner to help them out. This person will typically have an extensive network of resources and can take the time and stress of planning off the hands of the parents.

Tips for Budgeting for a Quinceañera

After crunching the numbers on the expenses mentioned above, some families may find they need to scale back on their plans. Saving money is important, and no one should be saddled with major debt for a celebration. Let’s look at a few ways to make planning a quinceañera on a budget easier.

Planning the Date in Advance

The closer it gets to the event date, the more venues and other vendors are likely to charge. Planning the event far in advance can make it easier to select less expensive dates for the party and to have a top pick of vendors. The less expensive vendors may book up faster than the pricier ones.

Renting Attire

The clothes for this big celebration are likely to be worn only once. Why pay a steep price and then have them gathering dust? Renting formal dresses, shoes, tuxedos, or suits instead of buying them can help lower the cost of clothing for the event.

Finding a Reasonable Venue

Another reason it helps to plan the event far in advance is because it gives parents and their daughter time to look for different venus. Community centers, churches, or a family home may all present affordable options for a quinceañera.

DIY Decorations

It’s time to get crafty. Instead of buying expensive decorations, have some fun by planning some DIY projects and save some cash at the same time. Arranging your own store-bought flowers, for instance, can save a bundle.

Recommended: 9 Cheap Birthday Party Ideas

Limiting the Number of Guests

As tempting as it can be to invite tons of family and friends to such an important event, the more people invited to a quinceañera, the more the party will cost. Limiting the guest list to just nearest and dearest friends and family can make it easier to find a smaller and more affordable venue. It can also mean that you will spend less on food, drinks, and decor.

Sending E-invites

Paper invites and stamps add up surprisingly fast, especially when you have a long guest list. Consider keeping things low-cost and environmentally friendly by sending out e-invites instead. This is a quick way to cut a major cost from a quinceañera budget.

Tapping a Talented Friend for Videos and Photos

As noted briefly earlier, hiring a professional photographer or videographer can be expensive. Asking a friend or family member who enjoys photography or videography to capture the event can help cut down on this expense or even make it free.

Recommended: 15 Creative Ways to Save Money

Banking With SoFi

Working towards a big financial goal like hosting a quinceañera? SoFi can help. When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How much does a typical quinceañera dress cost?

While quinceañera dresses tend to cost around $200 to $300, they can be much more expensive. Renting a dress or buying a used one can help save money here. Don’t forget to budget for alterations and accessories like shoes and jewelry.

Who traditionally pays for a quinceañera?

The parents of the birthday girl are the ones who usually pay for a quinceañera. That’s why it’s important they have a quinceañera budget so they can save accordingly.

How long should you plan for a quinceañera in advance?

It can be helpful to plan for a quinceañera at least a year in advance, especially if the parents hosting the event need to save money for it. Depending on the scale of the event, parents may want to start saving even sooner. Parents can create a quinceañera cost breakdown so they know what to save for and where to cut back.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SOBNK-Q324-018

Bank guarantees are often used in real estate contracts and infrastructure projects, while letters of credit are primarily used in global transactions. But a bank guarantee and a letter of credit are quite similar.

With both instruments, the issuing bank accepts a customer’s liability if the customer defaults on the money it owes, and they both, effectively, are a show of good faith from a lending institution that ensures the bank will step up if a debtor can’t cover a debt.

What Is a Bank Guarantee?

Bank guarantees represent a more significant contractual obligation for banks than letters of credit do. With a guarantee, the seller’s claim goes first to the buyer, and if the buyer defaults, then the claim goes to the bank.

Bank guarantees serve a key purpose for businesses. The bank, through their due diligence of the applicant, provides credibility to them as a viable business partner in a particular business dealing. In essence, the bank puts its seal of approval on the applicant’s creditworthiness, co-signing on behalf of the applicant as it relates to the specific contract the two external parties are undertaking.

A bank guarantee is an assurance from a bank regarding a contract between a buyer and a seller. Essentially, the bank guarantee acts as a risk management tool. A bank guarantee provides support and assurance to the beneficiary of the payment, as the bank guarantee means that the bank is assuming liability for completion of the contract.

This means that if the buyer defaults on their debt or obligation, the bank makes sure the beneficiary receives their payment.

Any business may benefit from a bank guarantee, but especially small businesses that would be more affected if a payment from a business partner or customer falls through.

Bank guarantees only apply to a certain monetary amount and last for a set period of time. There will be a contract in place that dictates in which scenarios and at what point in time the guarantee is applicable.

Before taking on a bank guarantee, the bank does research on the applicant to make sure they are credible and will act as a reliable business partner. In a way, a bank guarantee serves as a seal of approval as the bank has good reason (they’re on the hook for the money) to only accept creditworthy applicants.

Types of Bank Guarantees

There are a few different types of bank agreements, here’s a closer look at the main ones.

Financial Bank Guarantee

With a financial bank guarantee the bank guarantees that the buyer repays all debts they owe to the seller and if they fail to pay those various types of debts, the bank has to assume responsibility for the money owed. The buyer will need to pay a small initial fee when the guarantee is issued.

Performance-Based Bank Guarantee

When it comes to a performance-based guarantee, the beneficiary has the right to seek reparations from the bank if contractual obligations aren’t met due to non-performance. If the counterparty doesn’t deliver on promised services, then the beneficiary will have the choice to claim resulting losses caused by the lack of performance.

Foreign Bank Guarantee

Foreign bank guarantees can apply to unique scenarios such as international export situations. In this case, there may be a fourth party involved — a correspondent bank operating where the beneficiary resides.

What Is a Letter of Credit?

A letter of credit (sometimes referred to as a credit letter) is a document provided by a financial institution such as a bank or credit union that guarantees a payment will be made during a business transaction. The bank acts as an impartial third party throughout the transaction.

When the bank issues a letter of credit, they are assuring that the purchaser will in fact pay for any goods or services on time and in full. If the buyer doesn’t make their payment on time and in full, the bank that issued the letter of credit will guarantee that they will make the payment instead. The bank will cover any remaining overdue balance as long as it doesn’t surpass the full purchase amount.

Letters of credit are commonly used in international trade (but can be used domestically as well) where, understandably, companies require more certainty when making deals across borders. A letter of credit can provide security and confidence to importers and exporters since they know the issuing bank guarantees the payment.

Applicants for letters of credit need to work with a lender in order to secure this backing. The applicant will need to provide a purchase contract, and a copy of the purchase order or export contract (among other documents) during the application process. Applicants will pay a fee to obtain the letter of credit and it usually equates to a percentage of the amount the letter of credit backs.

Types of Letters of Credit

There are multiple types of letters of credit, with some being more common than others, and some applying to unique situations. Here’s a look at the main types.

Commercial Letter of Credit

This type of letter of credit applies to commercial transactions and is commonly used for international trade deals. In this case the bank makes a direct payment to the beneficiary.

Standby Letter of Credit

A standby letter of credit acts as a secondary payment method. The bank will pay the beneficiary if they are able to prove they didn’t receive the promised product or service from the seller.

Revolving Letter of Credit

A revolving letter of credit can help secure multiple transactions when two parties anticipate doing multiple deals.

Traveler’s Letter of Credit

With a traveler’s letter of credit, the issuing bank guarantees to honor letters of credit signed at certain foreign banks.

Confirmed Letter of Credit

This type of letter of credit specifies that the seller’s bank will be the party to ensure that the seller receives payment if the buyer and their issuing bank default on the agreement.

Special Considerations

Bank guarantees and letters of credit differ slightly, but both serve the same purpose: to give confidence and protection during transactions.

Because the financial institutions that back these guarantees confirm that the buyer is creditworthy in the case of a bank guarantee or a letter of credit, the seller can be confident that the transaction should go through as planned if they have one of these agreements in place. If it does not, they know they’ll still receive payment from the institution that backed the agreement.

Key Differences between a Bank Guarantee and Letter of Credit

These are the most important differences to know about a bank guarantee vs. a letter of credit.

Liability

With some letters of credit the bank pays the seller directly so they take on the primary liability.

With a bank guarantee they only pay if the buyer fails to do so, so they take on a secondary liability.

Risk

The bank takes on more risk with a letter of credit as they take on the primary liability, but that means the seller and customer take on more risk with a bank guarantee.

Number of Parties Involved

At least three parties are involved in letters of credit and bank guarantee transactions. To start there is the buyer, seller, and a bank or other type of financial institution. With a letter of credit, a lender also gets involved. Sometimes two banks (more common in foreign transactions) are involved in a letter of credit or bank guarantee.

Payment

With a bank guarantee, the bank only makes payment if the buyer fails to do so. With a letter of credit this is also usually the case, but the bank can be more involved in the transaction, so disputes tend to be resolved faster.

The Takeaway

When considering a letter of credit versus bank guarantee, both can help two parties involved in a transaction feel more confident that the seller will be paid and the buyer will receive the goods or services promised — or they will be reimbursed by the bank that issued the agreement. Each type of agreement may be especially helpful when conducting business across borders.

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.

FAQ

How is a letter of credit different from a bank guarantee?

When it comes to a bank guarantee vs. a letter of credit, both letters of credit and bank guarantees function very similarly. The main difference is that with a letter of credit the bank takes on more risk than they do with a bank guarantee.

What is a bank guarantee and how does it work?

A bank guarantee is an assurance from a bank that a contract between a buyer and a seller will be executed or they will reimburse the wronged party accordingly.

What is the primary difference between a standby letter of credit and a bank guarantee?

The main difference between a letter of credit and a bank guarantee is risk level. With a bank guarantee the bank takes on less risk than they do with a letter of credit.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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

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SOBK-Q224-1945853-V1

Closing costs average 2% to 5% of your mortgage loan principal. So even if you’ve saved for a down payment on a new place, you are likely going to have to dig somewhat deeper to afford to seal the deal. How deep, you ask? For buyers, closing costs can add up to a significant sum.

Whether you are a first-time homebuyer or a seasoned property purchaser, it’s wise to know what to expect, in terms of both money and process, when it’s time to gather at the closing table. Payments will be due from both the buyer and the seller.

Get ready to delve into this important home-buying topic and learn:

•   What are closing costs?

•   How much are closing costs on a house?

•   Who pays closing costs?

•   How much are closing costs for the buyer and the seller?

•   How can you lower closing costs?

What Are Closing Costs?

Closing costs are the fees needed to pay the professionals and businesses involved in securing a new home. These range from fees charged by appraisers, real estate agents, and title companies, to lender and home warranty fees.

Here are some key points to know:

•   When you apply for a mortgage loan, each lender must provide a loan estimate within three business days. This will give you information such as closing costs, interest rate, and monthly payment. Review those closing costs carefully.

•   Your closing costs will depend on the sale price of the home, the fees the chosen lender charges, the type of loan and property, and your credit score.

•   Closing costs are traditionally divided between the buyer and seller, so you won’t necessarily be on the hook for the whole bill. That said, the exact division between buyer and seller will depend on your individual circumstances and can even be a point of negotiation when you make an offer on a house.

How Much Are Closing Costs?

As noted above, average closing costs on a house typically range from 2% to 5% of the mortgage principal. Let’s say you take out a $300,000 mortgage loan to buy a house with an agreed-upon sale price of $350,000. Your closing costs could be between $6,000 and $15,000, or 2% and 5%.

Be aware that a “no closing cost mortgage” often means a higher rate and a lot more interest paid over the life of the loan. The lender will pay for many of the initial closing costs and fees but charge a higher interest rate.

Good news if you are buying a HUD home: HUD will pay some of the closing costs as well as the real estate commission fee usually paid by the seller.

Recommended: First-Time Homebuyer Guide

Calculate Closing Costs

The tool below is a home affordability calculator, and it’s a great way to also see what the potential closing costs and additional monthly costs would be based on how much home you can afford.

Who Pays Closing Costs?

Typically, closing costs are paid by both the buyer and the seller. Each has their own responsibilities to uphold.

Some fees are specific to the purchase and are payable by the buyer. These include title search, prepaid interest on the mortgage loan, and more.

Other costs are the seller’s responsibility: paying the real estate agent and so forth. Read on to learn more about who pays for what when closing on a home sale.

How Much Are Closing Costs for a Buyer?

Typically, the buyer pays the following closing costs:

•   Abstract and recording fees: These fees relate to summarizing the title search (more on that below) and then filing deeds and documentation with the local department of public records. You may find that abstract fees can cost anywhere from $200 to $1,000, and recording fees in the range of $125.

•   Application fee: Your lender may charge you to process your application for a mortgage loan. This could cost up to $500.

•   Appraisal and survey fees: It is easy to be wooed by pristine wood floors and dining room walls covered in vintage wallpaper, but surface good looks will only get you so far. You and your lender want to make sure that your potential new home is actually worth the purchase price. This means paying professionals to delve more deeply and provide a current market value. These home appraisal and survey fees are typically due at closing. This is usually in the $300 to $600 range, but could be considerably higher, depending on the home, its location, and other factors.

•   Attorney costs: Working with a real estate attorney to review and vet documents may be an hourly rate (typically $150 to $500 per hour) or a project fee (such as $750 or $1,500). The specifics will vary depending on the individual professional you use, your location, and how complex your purchase is.

•   Credit reporting, underwriting, and origination fees: The lender may charge anywhere from $10 to $100 per applicant to check their credit score; underwriting fees (often in the $300 to $750 range) may also be added to closing costs. Origination fees can be about 0.5% to 1% of your loan’s value and cover the costs of the lender creating your loan documents.

•   Flood certification fee: The lender may require a flood certification, which states the flood zone status of the property. This could cost anywhere from $170 to $2,000, depending on your state.

•   Home inspection fee: This will likely cost between $187 and $510, but it could go higher. This is paid by the buyer, who is commissioning the work to learn about the home’s condition. In some cases, it may be paid at the time of service rather than at closing.

•   Homeowners insurance: Your lender may require you to take out homeowners insurance. The first payment may be due at closing. The exact amount will depend on your home value and other specifics of your policy.

•   Home warranty: A home warranty is optional and can be purchased to protect against major mechanical problems. A warranty plan may be offered by the seller as part of the deal, or a buyer can purchase one from a private company. Your lender, however, will not require a home warranty.

•   Mortgage points: Each mortgage point you choose to buy costs 1% of your mortgage amount and typically lowers your mortgage rate by 0.25% per point. That point money you are paying upfront is due at closing. All the mortgage fees will be spelled out in the mortgage note at the closing.

•   Prepaid interest: Some interest on your mortgage is probably going to accrue between your closing date and when the first payment is due on your loan. That will vary with your principal and interest rate, but will be due at closing.

•   Private mortgage insurance: Often lenders require PMI if you make a down payment that is less than 20% of the purchase price. Putting less money down can make a buyer look less reliable when it comes to repaying debt in the eyes of lenders. They require this premium to protect themselves. This is usually a fee that you pay monthly, but the first year’s premium can also be paid at the time of closing. Expect a full year to cost between .5% and 2% of the original loan amount. Expect to pay between $3o and $70 a month for every $100,000 you are borrowing.

•   Title search and title insurance fees: When a title search is done to see if there are any other claims on the property in question, the buyer typically pays the fee, which is usually in the $75 to $200 range. The lender often requires title insurance as a protection. This is likely a one-time fee that costs between 0.1% and 2% of the sale price. If your house costs $400,000, the title insurance could be between $4,000 and $8,000.

As you see, some of these fees will vary greatly depending on your specific situation, but they do add up. You’ll want to be sure to estimate how much closing costs are for a buyer and then budget for them before you head to your closing.

Recommended: How Long Does It Take to Close on a House

How Much Are Closing Costs for a Seller?

You may also wonder what closing costs are if you are selling your home. Here are some of the fees you are likely liable for at closing:

•   Real estate agent commission: Typically, the seller pays the agent a percentage of the sale price of the home at closing, often out of the proceeds from the sale. The commission is likely to be in the 3% to 6% range, and may be equally split between the buyer’s and seller’s agents.

•   Homeowners association fees: If the home being sold is in a location with a homeowners association (HOA), any unpaid fees must be taken care of by the seller at closing. The actual cost will depend upon the home being sold and the HOA’s charges.

•   Property taxes: The seller must keep these fees current at closing and not leave the buyer with any unpaid charges. These charges will vary depending on the property and location.

•   Title fees: The seller will probably pay for the costs associated with transferring the title for the property.

It’s important for sellers to anticipate these costs in order to know just how much they will walk away with after selling a home.

How to Reduce Closing Costs

Closing costs can certainly add up. Here are some ways to potentially lower your costs.

•   Shop around. Compare lenders not just on the basis of interest rates but also the fees they charge. Not every mortgage lender will charge, say, an application, rate lock, loan processing, and underwriting fee. See where you can get a competitive rate and avoid excess fees.

•   Schedule your closing for the end of the month. This can lower your prepaid interest charges.

•   Seek help from your seller. You might be able to get the seller to pay some of your closing costs if they are motivated to push the deal through. For instance, if the property has sat for a while, they might be open to covering some fees to nudge the sale along.

•   Transfer some costs into your mortgage payments. You may be able to roll some costs into the mortgage loan. But beware: You’ll be raising your principal and interest payments, and might even get stuck with a higher interest rate. Proceed with caution.

Other Costs of Buying a Home

In addition to your down payment and closing costs, you also need to make sure that you can afford the full monthly costs of your new home. That means figuring out not only your monthly mortgage payment but all the ancillary costs that go along with it.

Understanding and preparing for these costs can help ensure that you are in sound financial shape for your first few years of homeownership:

Principal and interest. Your principal and interest payment is the amount that you are paying on your home loan. This can be estimated by plugging your sales price, down payment, and interest rate into a mortgage calculator. This number is likely to be the biggest monthly expense of homeownership.

Insurance. Your homeowners insurance cost should be factored into your monthly ownership expenses. Your insurance agent can provide you with details on what this policy will cover.

Property taxes. Property tax rates vary throughout the country. The rates are typically set by the local taxing authorities and may include county and city taxes. It’s important to factor in these costs as you think about your ongoing home-related expenses.

Private mortgage insurance. As mentioned, PMI may be required with a down payment of less than 20%. PMI is usually required until you have at least 20% equity in your home based on your original loan terms.

Homeowners association fees. If you live in a condo or planned community, you may also be responsible for a monthly homeowners association fee for upkeep in the common areas in your community.

Of course, these are just some of the things to budget for after buying a home. Your needs will depend on whether you are moving a long distance, whether you have owned a home before, and other factors. It’s a lot to think about, but it’s an exciting time.

The Takeaway

Before buyers can close the door to their new home behind them and exhale, they must be able to afford their down payment, qualify for a mortgage loan, and pay the closing costs — usually 2% to 5% of the loan amount. A home loan hunter may want to compare estimated closing costs in addition to rates when choosing a lender. It can be a smart way to keep expenses down.

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

FAQ

How can I estimate closing costs?

Typically, closing costs will cost between 2% and 5% of your home loan’s amount.

When do I pay closing costs?

Your closing costs are typically paid at your closing. That is when you take ownership of the property and when your home mortgage officially begins.

*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.

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.

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If you’re working hard at your job and being reasonable with your spending, you may still find it’s hard to make ends meet and hit your savings goals.

One question to ask yourself is whether you’re making enough money. Can you really afford to keep plugging along at your current salary? Here, you’ll learn some helpful ways to tell if you should be making more money and, if you should, how to get there.

10 Red Flags That Signal That Your Income Is Too Low

Do you frequently ask yourself whether you should be making more money — or feel as if you’re not making money work for you? If so, it’s possible you aren’t making enough or managing it optimally. Here are some signs that you need to be earning more in order to thrive financially.

1. Not Being Able to Pay Your Bills

As long as you aren’t renting a luxurious penthouse or leasing a fancy car you truly can’t afford, you should be making enough to pay your basic bills. Yes, it can be difficult to save money with a low income. But if you’re working full-time to cover things like rent, car payment, health care, and utilities, without any shot at saving for your future, that’s a sign you need to earn more money.

2. Using Your Credit Card for All Expenses

There’s nothing wrong with using a credit card to pay for expenses if you can afford to pay your credit card bill off in full when your monthly statement arrives. That’s a great way to earn cash back and credit card rewards.

A problem arises if you need to use a credit card in order to cover expenses because you don’t earn enough to buy essentials, like food and personal care items.

3. Not Being Able to Have an Emergency Fund

Having an emergency fund can help you be prepared for the unexpected, such as a major medical or dental bill or getting laid off. Ideally, you would have three to six months’ worth of basic living expenses covered by the money in an emergency fund. If you’re living paycheck to paycheck, however, and can’t even start building a fund with perhaps $25 per pay period, you likely need to earn more.

4. Paying Only the Minimum on Debts

As mentioned, turning to a credit card to cover essential purchases can be a sign of not making enough money. This can lead to high-interest credit card debt, which can be hard to pay down without making extra payments.

If you can’t afford to make extra payments on a credit card or other form of debt, increasing your income can make it possible to minimize how much you owe and those interest payments.

5. Not Being Able to Cut Anything Else

If you take a cold, hard look at your budget and realize you can’t cut any more expenses because you are only paying for essentials, then that’s a sign you need an income increase. Living on such a tight budget isn’t sustainable long-term, and there should ideally be room in a budget for some small fun purchases, too.

Recommended: 7 Different Types of Budgeting Methods

6. Not Being Able to Build Savings

Even if you are motivated to save money, if you’re not able to save for retirement or other long-term goals, it could be a sign that you’re not earning enough.

7. Making the Same Wage Despite Company Growing

If your company is growing and flourishing, in part because of contributions made by you and other workers, you may deserve to earn more than you’re currently making.

8. Not Being Able to Reach Financial Goals

If you are earning enough money and sticking to a budget, then in theory you should be able to make slow but steady progress toward your financial goals. Failing to do so could mean you’re coming up short on salary.

9. Consistently Struggling to Make Ends Meet at the Beginning of the Month

Many people start to run out of spending money at the end of the month. That’s because they’ve paid all their bills and are waiting for the next cash infusion from their paycheck. If, however, you are consistently struggling to make ends meet at the beginning of the month, when payday has arrived, this indicates you aren’t making enough to pay your essential bills.

10. Worrying About Money Consistently

Everyone deserves a good night’s rest, not lying awake worrying about how to pay the bills. If you are consistently worrying about money and trying to figure out how to tackle financial anxiety and stress, that can be a major sign you aren’t earning enough money.

Tips for Negotiating a Higher Wage With Your Employer

If you feel you need and merit more money, it can be wise to have a conversation about a raise. These tips can help.

•   Research salary data. Before an employee asks for a raise, they need to get an idea of how much workers in similar roles at other companies earn. Luckily, there are tons of online resources where workers share their job titles and salaries. It can also help to look at the salaries listed on current job postings similar to your position.

•   Make a list of accomplishments. Workers should approach the boss with the facts about how good they are at their jobs and why they deserve to earn more. Make a list that specifies some of your major contributions and use that to back up your ask for higher pay.

•   Have an alternate ask. Sometimes a company truly can’t afford to give a good employee a raise. In that case, is there something they can do to make your life easier? Can they make it possible to work remotely and save on commuting? Can they give you more PTO or a flexible schedule to help cut down on daycare costs?

Recommended: Good Paying Jobs Without a College Degree

The Takeaway

If you are working hard and watching your spending but are living paycheck to paycheck and are unable to save, you may not be earning enough money. Asking for a raise, with documentation of why you are worth it, is one path forward. Or you might decide to change jobs or career paths or even move somewhere more affordable.

It can also be a smart move to ensure the funds already in your bank account are working hard for you.

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.

FAQ

How do I know if I’m being underpaid?

Do salary research online to see what workers in similar roles and industries are earning. You can likely find this information everywhere from the Bureau of Labor Statistics to job search sites.

How much money must I earn to feel it is enough?

Having “enough” money depends on your unique perspective. That being said, you need to be able to comfortably pay your bills and cover essential expenses without having to worry that you’re running out of money each month. Also, being able to save for long-term goals (such as a down payment on a house or retirement) is also important.

How can I save if I don’t make enough money?

It can be hard to save money if you don’t earn much more income than you require to get by. Consumers can always scrutinize their budget to see where they can cut back spending in order to save more. Too many streaming services? Or pricey lunches? Try starting there.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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.

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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