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Oct

2024

How Much Money Do Banks Insure?

By Rebecca Lake | Financial Independence, money | Comments Off

With the recent turmoil in the banking industry, many people are wondering if their deposits are insured (typically, yes), and for how much. When you open and deposit money in a bank account, the Federal Deposit Insurance Corporation (FDIC) will insure your funds up to $250,000 in the rare event that your bank fails.

When it comes to how much money banks insure, that standard FDIC coverage limit can be more specifically stated as $250,000 per depositor, per account ownership type, per financial institution. Some banks participate in programs that extend this FDIC insurance to cover millions¹.

The National Credit Union Administration (NCUA) provides similar $250,000 coverage for accounts held at member credit unions.

It’s possible, however, to insure larger amounts of money at your bank. If you’re wondering how you can insure more than $250,000, here’s a closer look at how insuring sizable deposits works.

Key Points

• The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for bank deposits up to $250,000 per depositor, per account ownership type, and per institution.

• Some banks offer programs that extend FDIC insurance coverage beyond the standard limit, allowing for higher amounts to be insured.

• The FDIC protects various account types, including checking and savings accounts, while investment products like stocks and bonds are not covered.

• In the event of a bank failure, depositors receive their insured funds quickly, often by the next business day, up to the insured limit.

• Strategies for insuring excess deposits include using multiple banks, participating in CDARS programs, or opening accounts at NCUA-insured credit unions.

What Does It Mean for Your Money to Be Insured?

When money at a bank is insured, it’s protected against potential losses. Bank insurance works similarly to other types of insurance. If you have a covered loss, then your insurance will make you whole — replacing lost funds up to $250,000. So even if your bank were to go out of business, you would still be able to claim your money up to the $250,000 amount. (As briefly noted above, some banks participate in programs that extend this coverage to higher levels.)

Bank insurance is designed to provide consumers with peace of mind so that they’ll feel confident about depositing money into their accounts. Banks rely on deposits to stay in business.

Here’s a brief look at how banks make money: Funds that are on deposit are then used to make loans to other customers. Those borrowers pay their loans back with interest. That interest can be used by banks in a variety of ways: They can pass it onto customers who make deposits in the form of interest on savings, money market, and certificate of deposit (CD) accounts.

Without a steady flow of deposits, banks would have difficulty making loans to other customers. Insuring deposits can help consumers feel safer about keeping their money in the bank, which can indirectly help banks to continue doing business as usual.

How Do Banks Insure Money?

Banks insure money through the Federal Deposit Insurance Corporation. Banks that are interested in being insured by the FDIC must apply for this coverage. Not all banks are members of the FDIC.

If you manage your money via a credit union, it likely insures its money separately through the National Credit Union Administration (NCUA).

What Is the FDIC?

The FDIC is an independent federal agency that was created by Congress in 1933 following the rash of bank failures that marked the late 1920s and early 1930s. The FDIC’s primary mission is to maintain stability and public confidence in the nation’s banking system. The FDIC does that by:

• Insuring deposits at member banks

• Examining and supervising financial institutions for safety and consumer protection

• Managing receiverships

• Working to make large, complex financial institutions resolvable

The FDIC boasts an impressive track record. To date, no insured depositor has lost any insured funds as the result of a bank failure.

Recommended: What is the FDIC and Why Does it Exist?

What Are the FDIC Limits?

The FDIC insures bank accounts at member institutions but only up to certain limits. The standard coverage limit is $250,000 per depositor, per account ownership type, per financial institution. No consumer has to purchase this deposit insurance. As long as your accounts are held at an FDIC member bank, you’re automatically covered.

The $250,000 limit applies to all the deposit accounts you hold at a single bank. So if you have a checking account, savings account, and a CD account, for example, that are all owned by you and you alone, your combined deposits would be covered up to $250,000.

The FDIC coverage limit applies at each bank you have accounts with and each category of accounts you have with the bank.

That said, some banks do participate in programs that extend this typical $250,000 coverage into the millions; check at your financial institution to see if this is available if you want to keep large sums of money on deposit.

What Does FDIC Insurance Extend To?

There are different ways to deposit money into a bank account, and it’s important to know which accounts fall under the FDIC insurance umbrella. The types of deposit accounts the FDIC insures include checking accounts, savings accounts, money market accounts, and CD accounts. The FDIC can also insure prepaid debit cards when certain conditions are met.

The FDIC does not insure investment products even when purchased at member banks. Deposits the FDIC does not cover include annuities, mutual funds, stocks, bonds, and government securities.

What Happens if a Bank Fails and My Money Is Fully Insured?

When a bank fails, which is an infrequent occurrence, the FDIC’s primary duty is to pay depositors their money, up to the insured limit. So if you have $200,000 in insured deposits, you wouldn’t lose any of that money. The FDIC would either open an account for you with an equivalent amount of money at a new insured bank or cut you a check for the full amount.

The timeline for receiving funds after a bank failure is typically the next business day. It’s common for the FDIC to shut down a failed bank on Friday and reopen depositor accounts elsewhere on the following Monday. If the FDIC cannot find another insured bank to acquire the failed bank’s accounts, then you’d receive a check instead.

Special rules apply for deposit accounts that exceed $250,000 and are linked to trust documents or deposits established by a third-party broker. In that case, the FDIC may need extra time to determine how much of those deposits are covered before any funds are released to the account owner.

What Happens if a Bank Fails and My Money Is Not Fully Insured?

If you have deposits that exceed the $250,000 coverage limit, the FDIC would follow the same process as outlined above. You’d receive funds up to the entirety of the insured amount you had at the bank.

But what about the excess deposits? Of course, that would likely be an urgent question. You’d receive a claim against the estate of the closed bank for any amounts that were not insured by the FDIC. You’d get a Receiver’s Certificate as proof of the claim, which would allow you to receive payments from the bank’s assets as they’re liquidated.

That doesn’t mean, however, that you’re guaranteed to get all of your money back (unless your bank participates in a program that extends coverage to a higher number). For example, if you had $300,000 in your accounts, you’d be able to get the $250,000 that’s covered by FDIC insurance. But whether you’d be able to get the other $50,000 back would depend on how much the failed bank has in assets and how many other creditors are set to be paid out ahead of you.

Tips to Insure Excess Deposits

If you maintain higher balances in your bank accounts, you may be wondering, “Can I insure more than $250,000?” The answer is yes. You may have to do a little more legwork to make sure that your deposits are covered, but it could pay off if your bank fails. And it would probably enhance your peace of mind.

Here are several options for how to insure excess deposits and keep your funds safe.

Using a Bank That Offers More Than $250,000 Insurance

As mentioned above, there are some banks that participate in programs that allow them to extend the FDIC insurance to cover millions. If this feature is important to you, it would be wise to seek out a bank with this option.

Using Multiple FDIC-Insured Banks

Another option: You can spread your money out across deposit accounts at different banks. So if you have $300,000 in deposits at Bank A, you could move $100,000 of that to an account at Bank B.

The FDIC applies the $250,000 coverage limit at each bank where you maintain accounts. Managing accounts at multiple banks may require you to be a little more organized to keep track of funds. But you can simplify things by using a personal finance app to sync account data. With that kind of tech tool, you can view balances and transactions in one place.

Using the CDARS Network

What is CDARs? CDARS stands for Certificate of Deposit Account Registry Service. Recently renamed IntraFi Network Deposits, this program makes it possible for consumers to insure excess deposits using demand deposit accounts, money market accounts, and CD accounts at participating financial institutions.

Here’s a simple overview of how it works. Say you want to place $1 million on deposit at your bank. Since your bank participates in the IntraFi Network, they can take that $1 million and split it up, depositing it into accounts at other network banks. Each new account is covered up to the FDIC limit, as applied to both principal and interest.

Using the IntraFi Network (or CDARs, if you still call it that) could make sense if you have a larger amount of cash you’d like to keep on deposit and earn interest. You’d still maintain your primary account at your current bank, but you’d be able to track deposits across other banks in the network.

Using an NCUA-Protected Credit Union

Another option for insuring excess deposits is opening an account at an NCUA member credit union. The National Credit Union Share Insurance Fund was created in 1970 by Congress to protect deposits at federally insured credit unions. The current coverage limit is $250,000 per member, per credit union. The same $250,000 limit applies to joint accounts.

You’re not required to choose between coverage with NCUA vs. FDIC insurance. You can have NCUA-insured accounts at credit unions and FDIC-insured accounts at member banks at the same time. This can allow you to divide your funds up into $250K or lower amounts and distribute them among multiple insured banks and credit unions to get the coverage you seek.

Using Banks That Insure With DIF Insurance

The Depositors Insurance Fund (DIF) is a private, industry-sponsored insurance fund that insures deposits at member banks. DIF covers all deposits above the $250,000 FDIC coverage limit. In addition, all DIF member banks are also FDIC member banks.

There’s one caveat, however. DIF insurance is only available at member banks in the state of Massachusetts. What if you don’t live in Massachusetts or are unable to open an account online at a member bank? Then you may not be able to take advantage of this option for insuring excess deposits.

Using a Cash Management Account

Cash management accounts are similar to checking accounts and savings accounts, but they’re offered by brokerages rather than banks. For example, if you open an IRA or taxable investing account, you might be offered a cash management account. It could serve as a place to hold money that you plan to invest or settlement funds from the sale of securities.

One interesting feature of cash management accounts is that some of them offer a sweep feature which makes it possible to insure excess deposits. They do this by moving some of the funds in your cash account into deposit accounts at FDIC member banks. This is done for you automatically so you don’t have to worry about keeping your account balances within FDIC limits.

It’s important to check with the brokerage house or other entity to find out if your account would have this feature when you are considering this way of holding and securing your money.

What if My Current Bank Is Not FDIC-Insured?

Understanding how much money a bank will insure matters because you don’t want to be left in the lurch if your bank fails. Not all banks are covered, however, and while non-FDIC banks are rare, they do exist.

If your current bank is not a member of the FDIC, then you may want to consider moving your accounts to a different financial institution. Doing so can provide peace of mind, particularly if you maintain larger balances in your accounts.

You can use the FDIC BankFind tool to locate member banks in your area. Keep in mind that you’re not limited to branch banking either. There are a number of online banks that are members of the FDIC. You can likely get the benefit of deposit insurance along with low fees and competitive rates on these bank accounts.

Banking With SoFi

Knowing whether your bank deposits are protected against failure can help you feel more comfortable about where you keep your money. While the odds of your bank failing are low, it’s important to know what the FDIC or another organization would do to protect you in that scenario. You probably worked hard for your money and want to know it’s secure.

SoFi offers a Checking and Savings account in one convenient place. You can get a great rate on deposits while paying no account fees. And SoFi security measures ensure that your accounts stay safe when you’re accessing them online or through the SoFi mobile app. Plus, SoFi recently announced that deposits may be insured up to $2 million through participation in the SoFi Insured Deposit Program, which may add to your peace of mind.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Are there banks that insure more than $250K?

Banks that are FDIC members follow the $250,000 coverage limit. It’s possible, however, to insure excess deposits over that amount through banks that participate in programs that extend FDIC coverage or ones that belong to IntraFi Network Deposits (formerly CDARS). You may also be able to increase your coverage limit by using cash management accounts with an FDIC sweep feature offered at a brokerage.

How do millionaires insure their money?

Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds. However, they might not worry as much about insurance and choose to keep their money in stocks, real estate, or other vehicles. It’s a very personal decision.

Are joint accounts FDIC-insured to $500,000?

Joint accounts are insured up to $250,000 per owner. So if you own a joint bank account with your spouse, for example, you’d each be covered up to that amount for a combined limit of $500,000. Joint accounts are insured separately. Your coverage limit does not affect the limit that applies to single-ownership accounts.

Photo credit: iStock/PeopleImages

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

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.

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Oct

2024

What Is Cost of Living?

By Rebecca Lake | Budgeting & Goals, money | Comments Off

When planning a move to a new city or state, the cost of living is an important consideration. Here’s why: Cost of living tells you how much money it takes to maintain a basic standard of living in a given place. If you were offered your dream job in a city 1,000 miles away, you’d want to know whether the salary would allow you to live well…or whether you’d have to be on a super tight budget.

Location typically plays a major role in determining the level of income needed to finance your lifestyle. For instance, a dollar doesn’t buy as much in New York as it would in Des Moines. If the cost of living is higher because you live in a major city, you’ll likely have to allocate more of your budget toward everyday expenses, such as housing, food, and transportation.

It’s important to understand the factors that affect cost of living calculations and what a higher or lower cost of living means for your finances. Otherwise, you could wind up with an uncomfortable level of “sticker shock” if you relocate.

Key Points

• Cost of living refers to the expenses required to maintain a basic standard of living and varies significantly across different cities and states.

• Calculating the cost of living involves assessing essential expenses like housing, food, transportation, and healthcare, which can fluctuate over time.

• The cost of living index helps compare the affordability of living in different locations, indicating how much income is needed to sustain a particular lifestyle.

• Regions with higher demand for housing and services often experience increased living costs, affecting purchasing power and lifestyle choices.

• Strategies to lower the cost of living include reducing unnecessary spending, refinancing debts, and potentially relocating to more affordable areas.

What Is the Cost of Living?

The cost of living is the cost to cover basic household expenses. The cost of living can vary from state to state and city to city. As you might guess, renting a 1,500-square-foot home is likely to be much more affordable in a small town in the middle of the country than doing so in a hip neighborhood in San Francisco.

That said, you can also have different costs of living within the same metro area. For example, someone who owns a home in the suburbs of a major city may have higher or lower expenses compared to someone who lives downtown.

In terms of what the cost of living is used for, it’s a gauge for determining affordability. Before moving to a new location, you might look at the cost of living in that area to help you decide if it’s realistic for your budget.

Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

How Does the Cost of Living Work?

Cost of living calculations work by measuring how much it costs to live in a specific location, using basic living expenses as a guide. The cost of living is not static; it can go up or down over time. Looking at cost of living trends for a certain city, region, or state can give you an idea which way consumer prices are trending.

There are a number of entities that perform cost of living calculations. The Council for Community and Economic Research, for example, maintains a cost of living index for participating cities across the U.S. Other organizations calculate cost of living for locations around the world.

On a personal level, the most important question to ask is, “What does the cost of living mean for me?” The simple answer is that cost of living can determine how far your income is able to go toward funding your lifestyle.

Factors That Determine Cost of Living

When discussing cost of living and expenses, you’re talking about necessities. In other words, the things you need to spend money on to live each month. According to the Economic Policy Institute, that includes:

• Housing

• Food

• Childcare

• Transportation

• Healthcare

• Taxes

• Other necessities, such as clothing, household supplies, and personal care items

Cost of living calculators use prices for those types of expenditures in a particular area to determine how much it costs to live there on average. Consumer prices for goods and services are largely a product of supply and demand, and what’s happening with inflation. Inflation is a general upward trend in prices over time.

When inflation is higher, prices tend to rise across the board, which brings a higher cost of living. Even when inflation is lower, prices may still be higher in some areas than others if there’s higher demand for goods and services.

Calculating Cost of Living

Cost of living indexes collect information about various costs for different cities and locations, then use average prices to determine how much it costs to live there. If you’re comparing two cities, you can use a cost of living index to see which one is less expensive.

If you’d like to calculate your personal cost of living, you’d use your spending history to determine your average monthly expenses for these categories:

• Housing

• Food

• Transportation

• Utilities

• Childcare, if applicable

• Healthcare

• Taxes

• Other necessary expenses

Using those numbers can tell you how much it costs to maintain your basic standard of living each month. You can also add in your average monthly spending for debt repayment or non-essentials or discretionary expenses, like dining out, travel, or recreation, to get a sense of what your actual cost of living adds up to.

What Is the Cost of Living Index?

Generally speaking, a cost of living index is a measurement of average prices. Similar to a stock market index, a cost living index is meant to provide a benchmark for comparison. The Consumer Price Index (CPI) is often referred to as a cost of living index, though that description isn’t entirely accurate.

The CPI measures the average change in prices over time for a market basket of consumer goods and services. That’s how the U.S. Bureau of Labor Statistics (BLS) defines the Consumer Price Index. The CPI isn’t a true cost of living index but an inflation index. Changes to the CPI can be an indicator of how inflation is changing; whether it is rising, falling, or remaining flat.

Does Cost of Living Vary State by State?

The cost of living by state is not uniform and what you might pay to live in one state could be very different from what you’d pay to live in another. That’s important to keep in mind if you’re considering moving across state lines to a new location. The more expensive a state is, the less purchasing power your money holds.

For example, the California cost of living index is much higher than the Texas cost of living index. So why do some states have a higher cost of living? Again, it depends largely on things like supply and demand, though taxes and average incomes can also play a part.

When the average income in a state is higher and job opportunities abound, that can lead to an increase in people moving to the state. That means more demand for housing, which can send home and rental prices soaring. More people can also mean more demand for everyday goods and services, such as food or utilities. As demand rises, prices can follow suit.

So, in our example above, if you were living in Texas in a two-bedroom rental apartment and were offered a job at the same salary in California, you’d face a higher cost of living. If you moved there, you might have to rent a smaller home. Your groceries would likely be more expensive as well as your other monthly necessities. You might find you couldn’t eat out or go to concerts as often since prices are higher.

Which State Has the Lowest Cost of Living?

As of 2024, West Virginia had the lowest cost of living in the U.S., with a cost of living index of 84.3. For perspective, cost of living indexes are generally based on 100 as an average. So an index of 84.3 means that the cost of living in West Virginia is 15.7% less than the national average.

Housing, which is typically the biggest expense most people have, is nearly 40% cheaper in West Virginia compared to the U.S. average. The median sale price for a home there was $284,000 as of January 2024.

Which State Has the Highest Cost of Living?

Hawaii is the most expensive place to live in the U.S., with a cost of living index of 188.4. Housing is more expensive there than in any other state in the country, with a median list price of $714,100 as of January 2024. A home buyer would have to shell out considerably more to live in Hawaii’s natural paradise than elsewhere in America.

But housing demand isn’t the only factor. Higher taxes and higher costs for transporting goods and materials to the state are some of the other factors that drive up the cost of living in Hawaii. Other states that rank among the most expensive include New York, California, and Massachusetts.

How Much Should Your Cost of Living Be?

Your cost of living should be a figure that, given your income, you can reasonably afford to pay. When your expenses exceed your income, that can cause shortfalls in your budget each month. You may need to use credit cards or loans to fill the gap, which can leave you with a pile of bills, wondering how to pay off high-interest debt.

When calculating your ideal cost of living, start with your income. Then work your way backwards to determine how much you should be spending on things like housing, food, transportation, utilities, and other necessities. If your income comfortably covers those things, you can then decide how much to allocate to savings, debt repayment, or “wants” like travel and entertainment.

Also, consider your household size. The cost of living for a single person can be very different from the cost of living for a family of four. So you may need to allocate more of your budget for necessities if you have a spouse, partner, or children in your household.

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

Tips to Improve Cost of Living

If you’ve run the numbers and your cost of living is higher than you’d like it to be, you aren’t necessarily out of luck. There are some things you can do to try and bring it down. Here are some ideas for ways to reduce your cost of living:

• Eliminate unnecessary spending from your budget.

• Move your money to a different financial institution to avoid bank fees and/or earn higher interest.

• Plan meals at home, and cut down on restaurant meals.

• Consider refinancing student loans or your mortgage to lower your interest rate.

• Consolidate credit card debt using a 0% balance transfer offer.

• Shop around for better rates on auto, homeowners, or renters insurance.

• Aggressively pay off debt.

• Consider moving to a cheaper area.

• Take on a roommate to share expenses.

• Downsize into a smaller home.

• Sell a vehicle if you own more than one.

Some of these money-saving ideas are relatively easy to implement; others may seem a bit more extreme. But the more you can cut your expenses, the easier it may be to improve your cost of living.

You can also research different ways to make more money. That might mean taking a different job, getting a part-time gig, or starting a side hustle. If you’re contemplating a move for a higher-paying role, remember to factor in the cost of living in a new location to see how far a higher salary might go. A higher cost of living could eat up the salary boost you’ll receive, and so you’d want to be prepared for that.

Managing Finances With SoFi

Achieving a manageable cost of living starts with keeping a close eye on your budget and spending. Even making small changes, such as cutting out high banking fees and earning more interest, can free up more cash that you can use to save and fund your financial goals.

Interested in opening an online bank account? 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, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

https://www.sofi.com/signup/banking/v1“>

FAQ

What is a cost of living adjustment?

The Social Security Administration (SSA) applies a cost of living adjustment to Social Security benefits, based on changes to the Consumer Price Index. That means benefits can rise as the cost of living does. In other words, these adjustments are designed to ensure that recipients’ benefit payments are able to keep pace with inflation.

How can I compare the cost of living between two cities?

The easiest way to compare the cost of living between two cities is to use a cost of living index, which measures the relative cost of living in different areas of the U.S. You can subtract the cost of living index for the city that’s lower from the one that’s higher to figure out how much cheaper it is.

Which country has the highest cost of living?

Monaco is the most expensive country to live in. The average monthly cost of living there, as of 2024, is $6,538.

Photo credit: iStock/artisteer

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found 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.

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

SOBNK-Q324-097

Oct

2024

Can the Government Take Money Out of Your Account?

Can the Government Legally Take Money Out of Your Bank Account?

By Jacqueline DeMarco | Budgeting & Goals, Financial Independence, money | Comments Off

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.

Key Points

• The government generally cannot withdraw money directly from bank accounts unless there are unpaid tax obligations, which come after multiple notifications.

• Financial institutions can exercise the “right of offset,” allowing them to withdraw funds from an account to cover debts owed to the same institution without prior notice.

• Wage garnishment is another legal method that enables employers to withhold part of an employee’s earnings to satisfy debts, requiring a court order to enact.

• Certain funds, such as those from tax-deferred retirement accounts, are exempt from being seized under the right of offset or wage garnishment laws.

• Open communication with financial institutions regarding debts can help avoid unexpected withdrawals, and timely payments can prevent wage garnishment situations.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

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.

Photo credit: iStock/Douglas Rissing
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found 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.

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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.

SOBNK-Q324-055

Oct

2024

What Is the Average Down Payment on a House?

By Jody McMaster | Home Ownership, mortgage | No Comments

You may have heard that 20% is the ideal down payment on a house, but that doesn’t mean you must pony up that amount to become a homeowner. In truth, the average house down payment is considerably smaller. Currently, the median down payment for a house is 15%, according to data from the National Association of Realtors® (NAR).

Here, you’ll learn more about down payments so you can house-hunt like an insider. Getting a sense of what others are paying and how that differs based on geographic area is helpful. We’ll also share how you might access help if you can’t come up with 20%. Armed with this intel, you’ll be better prepared to navigate that major rite of passage: purchasing a home.

Table of Contents

Average Down Payment Statistics
Down Payment Requirements by Mortgage Loan Types
Average Down Payment by Age Group
Average Down Payment by State
Source of Down Payment
How Does Your Down Payment Affect Your Monthly Payments?
Should You Aim for 20% Down?

Key Points

• The median down payment for a house in the US ranges widely from 10% to 35% of the purchase price.

• The amount of the down payment can vary based on factors like loan type, credit score, and lender requirements.

• A larger down payment can result in lower monthly mortgage payments and potentially better loan terms.

• Down payment assistance programs and gifts from family members can help with affordability.

• It’s important to save and plan for a down payment to achieve homeownership goals.

Average Down Payment Statistics

As of 2023, the median down payment for a house was 15%, or $63,908 if you consider that the median national home price in 2023 was $426,056, according to Redfin. This was up slightly from 13% in 2022, according to the NAR. (The median means half of buyers put down less and half put down more; it’s generally considered a better barometer than an average, because the latter can be thrown off by outliers — people who spend wildly more or less than usual.)

This 15% figure shows that the conventional wisdom that you need 20% down to purchase a home is, to a large extent, untrue. In fact, in an April 2024 SoFi survey of prospective homebuyers, many planned to put down far less than 20%. Almost a third of respondents (29%) said they planned to put down 10% or less, and 7% of those surveyed were exploring zero-down-payment options.

A 20% down payment will lower your mortgage amount and monthly payments vs. a smaller down payment, and will allow you to avoid private mortgage insurance (PMI), but it’s not the only game in town.

Average Down Payment on a House for First-Time Buyers

First-time buyers make about a third of all home purchases, and the typical down payment for first-time buyers in the NAR survey was 8%, while repeat buyers’ typical down payment was 19%. (Repeat buyers often have money from the sale of their first residence to put toward the purchase of their next one.)

Down Payment Requirements by Mortgage Loan Type

The amount of money you put down on a home may be governed in part by the type of mortgage loan you choose (and conversely, how much money you have saved for a down payment could dictate the type of mortgage you qualify for). Let’s take a look at the different loan types and their down payment requirements.

Remember that if you are buying your first home or you haven’t purchased a residence in three or more years, you may qualify as a first-time homebuyer and be eligible for special first-time homebuyer programs.

Conventional Loan

This is the kind of loan favored by most buyers, and for first-time homebuyers some conventional home loans can allow for as little as 3% down on a home purchase. A repeat homebuyer might need to put down a bit more — say 5%.

FHA Loan

An FHA loan, acquired through private lenders but guaranteed by the Federal Housing Administration, allows for a 3.5% minimum down payment if the borrower’s credit score is at least 580.

VA Loan and USDA Loan

These loans usually require no down payment, although there are still other hoops to jump through to qualify for one of these loans.

A VA loan backed by the Department of Veterans Affairs, is for eligible veterans, service members, Reservists, National Guard members, and some surviving spouses. The VA also issues direct loans to Native American veterans or non-Native American veterans married to Native Americans. For a typical VA loan borrower, no down payment is required.

A USDA loan backed by the U.S. Department of Agriculture is for households with low to moderate incomes buying homes in eligible rural areas. The USDA also offers direct subsidized loans for households with low and very low incomes. Typically, a credit score of 640 or higher is needed. While borrowers can make a down payment, one is not required.

Jumbo Loan

A jumbo loan is a loan for an amount over the conforming loan limit, which is set by the Federal Housing Finance Agency (FHFA). In most U.S. counties, the conforming loan limit for a single-family home in 2025 is $806,500. Minimum down payment rules for jumbo loans vary by lender but are generally higher than those for conforming loans. Some lenders require a 10% down payment, and others require as much as 20%.

For all of the above loan types, the home being purchased must be a primary residence in order to qualify for the minimum down payment, but a homebuyer can use a conventional or VA loan to purchase a multifamily property with up to four units if one unit will be owner-occupied.

Average Down Payment by Age Group

The latest NAR Home Buyers and Sellers Generational Trends Report breaks down by age the percentage of a home that was financed by homebuyers in 2023.

Older buyers tend to use proceeds from the sale of a previous residence to help fund the new home. Buyers 59 to 68 years old, for instance, put a median of 22% down, the NAR report shows.

Most younger buyers depend on savings for their down payment. Buyers ages 25 to 33 put down a median of 10%, and those ages 34 to 43, 13%. A fortunate 20% of the younger homebuyers (those age 25-33) received down payment help from a friend or relative.

Percentage of Home Financed

	All buyers	Ages 25-33	Ages 34-43	Ages 44-58	Ages 59-68	Ages 69-77	Ages 78-99
< 50%	15%	6%	8%	15%	22%	31%	29%
50-59%	6%	2%	5%	5%	9%	14%	11%
60-69%	6%	2%	5%	6%	9%	11%	9%
71-79%	13%	13%	14%	14%	12%	9%	15%
80-89%	23%	26%	27%	22%	19%	18%	14%
90-94%	13%	19%	14%	12%	10%	4%	8%
95-99%	14%	22%	17%	12%	8%	4%	7%
100% (financed the whole purchase)	12%	9%	11%	13%	9%	9%	6%

Average Down Payment by State

The average house down payment in any given state is tied to home prices in that location. You can look into the cost of living by state for an overview and then find the median home value in a particular state at a given point in time and estimate what your down payment might be.

The least expensive states in which to buy a home? Iowa, Oklahoma, Ohio, Mississippi, and Louisiana are among them, according to Redfin.

Average Down Payment On a House in California

California, the most populous state and one of the largest by area, is joined by Hawaii and Colorado on many lists of the most expensive states in which to buy a house. Redfin shows a median sales price of $859,300 in California in spring of 2024. A 3% down payment would be $25,779; 10% down, $85,930; and 20% down, $152,260. The Los Angeles housing market is among the toughest in California, with the median sale price up more than 10% in the last year to $1,050,000. You might want to check out housing market trends by city as well if you are interested in finding out where owning a home could be more or less expensive.

Hawaii comes out near the top with a median home price of $754,800. Three percent down would be $22,644; 10% down, $75,480; and 20%, $150,960. In Hawaii, the conforming loan limit is $1,209,750, a reflection of the state’s high home prices. If you need a mortgage for more than that amount in Hawaii, you’ll be in the market for a jumbo loan.

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

Source of Down Payment

You’re probably wondering where homebuyers get the money to afford a down payment, especially first-time homebuyers. NAR has polled buyers to probe that question. Not surprisingly, more than half of buyers (53%) simply say they have saved up the money — which of course isn’t simple at all.

Savings is especially likely to fund a home purchase for those ages 25-33. Almost three-quarters of younger buyers rely on it for their down payment. Older buyers also use savings but are more likely to draw on the sale of a primary residence. This is especially true after age 59.

Other down payment sources include gifts from relatives or friends, sale of stock, a loan or draw from a 401K or pension, or an inheritance. For those who don’t have generational wealth or savings to rely on, first-time homebuyer programs can make home ownership possible.

City, county, and state down payment assistance programs are also out there. They may take the form of grants or second mortgages, some with deferred payments or a forgivable balance.

How Does Your Down Payment Affect Your Monthly Payments?

Curious to see what your potential mortgage would look like based on different down payments? Start with a home affordability calculator (like the one below) to get a feel for how much you’ll need to put down and other expenses.

Or use this mortgage calculator to estimate how much your mortgage payments would be, depending on property value, down payment, interest rate, and repayment term.

Should You Aim for 20% Down?

You’re probably wondering if you should try to put 20% down to get a mortgage loan? Not necessarily. It’s an individual decision. Here are some things to consider:

If Your Down Payment Is 20% or More

Putting down at least 20% has benefits:

• You won’t have to pay for mortgage insurance: If you put down 20% or more with a conventional loan, you won’t be required to pay for PMI, which protects the lender if you were to stop making payments.

• Your loan terms may be better: Lenders look at an applicant’s credit history, employment stability, income, debt-to-income ratio, and savings. They’ll calculate the loan-to-value (LTV) ratio, or what percentage of the home’s purchase price will be covered by the mortgage.

Lenders often provide a better rate to borrowers who have an LTV ratio of 80% or lower — in other words, at least a 20% down payment — because they consider them a better risk.

• You have instant equity in the property: You borrowed less than you could have, which translates to a lower mortgage payment, less interest paid over the life of the loan, and the potential later to take out a home equity loan.

Recommended: What Do I Need to Buy a House?

If Your Down Payment Is Less Than 20%

If your down payment will be less than 20%, you now know that you’ll have plenty of company. (In SoFi’s survey, 14% of would-be buyers said not having an adequate down payment was their primary challenge.) Consider these ways to optimize the situation:

• A government loan could be the answer: FHA loans are popular with some first-time buyers because of the lenient credit requirements. The down payment for an FHA loan is just 3.5% if you have a credit score of 580 or more. Just know that upfront and monthly mortgage insurance premiums (MIP) always accompany FHA loans, and remain for the life of the loan if the down payment is under 10%. If you put 10% or more down, you’ll pay MIP for 11 years.

• You may be able to improve your loan terms: If you can’t pull together 20% for a down payment, you can still help yourself by showing lenders that you’re a good risk. You’ll likely need a FICO® score of at least 620 for a conventional loan. If you have that and other positive factors, you may qualify for a more attractive interest rate or better terms.

• You can eventually cancel PMI: Lenders are required to automatically cancel PMI when the loan balance gets to 78% LTV of the original value of the home. You also can ask your lender to cancel PMI on the date when the principal balance of your mortgage falls to 80% of the original home value.

You may be able to find down payment assistance: City, county, and state down payment assistance programs are out there, and SoFi’s survey suggests they don’t get enough attention: About half (49%) of the homebuyers who said they were challenged to come up with a down payment hadn’t looked into city or state down payment assistance programs. The assistance may take the form of grants or second mortgages, some with deferred payments or a forgivable balance.

Dream Home Quiz

The Takeaway

What is the average down payment on a house? Currently, it’s about 15% of the home’s purchase price, which usually means mortgage insurance and higher payments for the buyer. But buyers who put less than 20% down on a house unlock the door to homeownership every day. If you want to join them, you can be helped along by low down payments for first-time homebuyers, as well as government loans, down payment assistance, and other programs.

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

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is 10% down payment enough for a house?

Yes. More than a third of all buyers put down 10% or even less to buy a home. Lower down payments are especially common among younger and/or first-time homebuyers.

What is the minimum you should put down on a house?

Conventional wisdom says the minimum down payment is 20%, but most buyers put down less — 15% is far more common. Younger buyers and first-time homebuyers, especially, often put down far less and some home loans allow you to finance 97% or even 100% of the home’s cost.

What factors can affect my down payment requirements?

The amount of down payment you’ll need to come up with depends on your loan type, credit history and credit score, the cost of the property you’re buying, and whether you are a first-time homebuyer.

What are the pros and cons of putting down less than 20% on a house?

Putting down less than 20% on a house might allow you to buy a home sooner. It might also permit you to set aside money for renovations or to pay off other debts. The disadvantage is that those who put down less than 20% usually have to pay for private mortgage insurance which adds to their monthly costs. (Those with FHA loans who put down less than 20% will pay a mortgage insurance premium.)

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

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

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

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

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

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

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

^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.

SOHL-Q324-107

Oct

2024

What Do You Need to Buy a House?

By Janet Siroto | Home Ownership, mortgage | No Comments

There are a lot of myths about buying a house: that you need at least a 20% down payment, perfect credit (or close to it), and a specific income level.

But the truth is, you don’t need a particular down payment amount, salary, or a credit score over 700 to become a homeowner. What you do need is insight into the process, preparation, and a game plan.

To help you move ahead with your home-owning dreams, read this guide. You’ll learn answers to these and other questions:

• What are the requirements to buy a house?

• How much of a down payment do you need to buy a house?

• What credit score do you need to buy a house?

• What documents are needed to buy a home?

Table of Contents

Requirements to Buy a House
Dream Home Quiz
The Takeaway
FAQ

Key Points

• Understanding credit score requirements is crucial; a score of 620 may be needed for conventional loans, while government-backed loans might accept lower scores.

• Debt-to-income ratio significantly influences loan eligibility, ideally being 36% or less.

• Proof of income through documents like W-2s and tax returns is essential for mortgage preapproval.

• Savings for down payments and closing costs are necessary, with many buyers putting down around 13%.

• Gathering necessary documentation early can facilitate the mortgage application process.

8 Requirements to Buy a House

Here’s the scoop on the items you need to line up in order to buy a home. Consider this your checklist to achieving that dream; it can be an especially valuable first-time homebuyer guide:

1. Credit

Your credit score is one of the primary factors lenders will consider when reviewing your mortgage application. It helps a lender evaluate how well you have managed debt and made timely payments in the past.

Being aware of your current score might help you understand what loan programs you may be eligible for.

So what credit score is needed to buy a house, given the possible range of scores from 300 to 850?

• If you’re aiming for a conventional (nongovernment) loan, you’ll likely need a credit score of at least 620. However, most homebuyers have a score that’s higher than that, and if you have a brag-worthy credit score (say, 740 or above), you may qualify for better loan terms.

• But what if your score is not so lofty? Don’t fret — you’re not alone. In fact, more than one in 10 buyers in the home market are concerned about an insufficient credit score, according to an April 2024 SoFi survey of 500 people. For a government-backed loan (these include FHA, VA, and USDA loans), you may be able to qualify with a credit score in the 500s. For an FHA loan, 580 is the minimum score to qualify for the 3.5% down payment advantage. Applicants with a score as low as 500 must put down 10%. Lenders may require a minimum score of 580 for a VA loan; and for a USDA loan, 640.

The government offers periodic free credit reports so consumers can review their credit history, but the reports do not give a credit score. However, seeing your credit report can allow you to recognize and remedy any errors or delinquent accounts.

You can monitor your credit score with a paid service as well. You may find these third-party services are available for free from some banks and credit card issuers, and use one at no cost with this money tracker.

2. Debt-to-Income (DTI) Ratio

Your debt-to-income ratio, or DTI, matters when determining the mortgage amount and the type of loan program you qualify for.

The DTI ratio equates to your monthly minimum debt payments divided by your gross monthly income. To find it, you would add up your monthly payments towards an existing mortgage (or rent) and related expenses (say, property taxes and insurance), plus any credit card debt and student, car, or other loans. Then you would divide that by your monthly salary, before taxes and other deductions are taken out.

Mortgage lenders usually like to see a DTI ratio of 36% or less for conventional loans. However, some will accept up to 45% and possibly even 50%. There is some flexibility out there, but it may require a bit of shopping around if you have a relatively high DTI.

3. Proof of Income

Even if you have a stellar credit score, for the majority of loan programs, you still have to prove your income to the lender to gain loan approval. This helps the lender verify that you have the means to pay the mortgage back.

For mortgage preapproval, you’ll typically need to submit W-2s, your two most recent pay stubs, and your two most recent federal tax returns for the lender to verify your income. (Self-employed applicants will need to submit a year-to-date profit and loss statement and two years of records.)

If you are currently unemployed or have changed jobs recently, it’s wise to know that this may create a hurdle when seeking a mortgage. You might want to delay your home-buying plans until you have a more consistent employment record, or search for a lender that is less rigid in terms of this qualification.

4. Savings for a Down Payment and Closing Costs

As you think about how much house you can afford and consequently how much of a down payment you will need, you will likely want to run some numbers. You might start with a home affordability calculator to help you know your target range.

Now, about that down payment: Perhaps you’ve cobbled together a few thousand, but wonder about what is the average down payment on a house. Many people have heard you need at least 20% down, which can be an intimidatingly high number.

You can breathe a bit easier: Many homebuyers put 13% down — that’s $39,000 on a $300,000 home. Nothing to sneeze at. But 29% of would-be buyers in SoFi’s survey were planning to put down 10% or less — and 7% were exploring zero-down-payment financing options.

The more you can put down, the more likely it is that you could get a lower interest rate. In most cases, you’ll need a 20% down payment to avoid private mortgage insurance or a mortgage insurance premium.

Here’s a glimpse of loan types and down payments of each:

• Conventional conforming loan. This is the most common type of home mortgage loan and typically has a minimum down payment requirement of 3%.

• FHA loan. This loan, among a few kinds of government home loans, requires as little as 3.5% down for those who qualify.

• VA loan. If you qualify for a VA loan, you can usually buy a home with no money down.

• USDA loan. This income-restricted loan, geared toward rural properties, requires no down payment.

If you are a first-time homebuyer, you can also look into down payment assistance programs. (In the SoFi survey, among people who said having a down payment was their top homebuying concern, 49% had not explored these programs.) An online search for these programs from the Department of Housing and Urban Development (HUD), state and local housing authorities, nonprofits, and other organizations can help you reach your homeownership aspirations. They can offer grants and loans.

The other aspect of buying a house that may require cash: closing costs. These typically add up to between 3% and 6% of your loan. They include items like bank processing costs, title search, appraisal costs, and more. It’s worth noting that some lenders may offer credits toward closing costs; that can be something to keep in mind when you are searching for a lender.

Gain home-buying insights
with the latest housing
market trends.

5. Documentation

There are a couple more answers to “What do I need to buy a house?” When preparing to buy a home, you will likely need documents; a lot of documents, in fact. Assembling a file of what’s required can be an important step in getting organized. Here is some paperwork you may want to gather as you begin thinking about working with a mortgage lender:

• Recent tax returns and W-2 forms as well as proof of other income

• A letter from your employer verifying your employment

• For those who are self-employed, a business tax returns and P&L statements

• Recent bank account, brokerage account, and retirement account statements

• Student loan, car loan, and credit card statements, to show how much debt you have

• Titles to your assets, such as a current home or your car

• A gift letter, if appropriate (a statement that, say, a family member gave you funds toward your down payment)

• Photo ID

Yes, it can feel like a lot, but starting sooner rather than later and chipping away at the list can make it easier.

6. Preapproved Mortgage

Before you go home shopping, it can be wise to get a preapproval letter from a lender or a few lenders. You submit some credentials that share financial information, and the lender says that you likely qualify for a loan of a certain amount.

While not a guarantee of mortgage approval, this will give you insight into what kind of loan you qualify for. It can also show homeowners that you are a serious shopper who is ready to buy.

7. Mortgage Loan

When you find a property you love and work your way to an accepted offer and contract, you will probably be ready to apply for your mortgage. You will likely have to make decisions about the term of the mortgage (30 years is common, but shorter terms with higher monthly payments are possible, too), the rate (both the percent you’ll pay and whether you go with a fixed or adjustable rate), and other details.

When you submit your application, you will provide documentation of your financial qualifications. You will likely work your way through questions as your file goes through underwriting and you move toward your final approval and closing date. Getting a mortgage isn’t a slam dunk 100% of the time, and in fact in SoFi’s survey of home-shoppers, 11% of would-be homeowners said difficulty securing a mortgage was the biggest challenge they were facing. Here again, going through the mortgage preapproval process can help head problems off early on.

8. Real Estate Agent (Probably)

The vast majority of buyers use the services of a real estate agent or broker, according to the National Association of Realtors® (NAR). In 2022, 86% of homebuyers worked with one.

You can go it alone, but finding a real estate agent who is experienced and knowledgeable can be key to, well, getting you a new set of house keys.

Agents have access to the multiple listing service, which is a comprehensive list of homes for sale by a real estate agent or broker in your desired location.

A buyer’s agent can help you:

• Build your wishlist and hunt for homes that fit your needs

• Check out listings in person

• Write offers and counteroffers, including putting an offer on a contingent house

• Negotiate with the seller

• Navigate the complexities of the purchase contract.

Using a real estate agent might also relieve some of the stress that comes with purchasing a home, especially when buying in a hot house market.

Dream Home Quiz

The Takeaway

What do you need to buy a house or condo? First, you’ll want to be on pretty solid financial footing, typically with a good credit score, income history, and DTI, as well as some money saved toward a down payment and closing costs. You may also want to have a good agent and the right documentation in your corner.

If, like many buyers, you are hunting for a mortgage, check out what SoFi Mortgage Loans can offer you. You’ll find competitive rates and access to a host of SoFi perks. Plus, first-time homebuyers who qualify can put as little as 3% down.

Let SoFi Mortgage Loans simplify your path to becoming a homeowner.

FAQ

What are the basic needs to buy a house?

To buy a house, you will likely need documentation of your finances, a reasonable credit score and debt-to-income ratio, a mortgage preapproval, and probably funds for a down payment and closing costs, as well as a real estate agent to help you manage the process. And you’ll need to find a house you can afford: In an April 2024 SoFi survey of 500 would-be homeowners, 42% said finding a home within their price range was the largest challenge they were facing.

How much money should you have before buying a house?

Lenders will likely want to see that you are financially stable and can afford the costs associated with owning a home. In terms of a down payment, the typical amount is 13% of the home’s price, but there are ways to buy a home with less or perhaps with no money down. A down payment of 20% or more will allow you to avoid paying for private mortgage insurance (PMI).

What credit score is good to buy a house?

The credit score needed to buy a house will vary, with 620 being the usual minimum for a conventional loan, though most buyers have a score of 650 or higher. Those with scores of 740 or higher will usually get the best loan terms. There are also programs to help those people with credit scores in the 500s become homeowners.

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.

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.

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 .

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.

SOHL-Q324-107

How Much Money Do Banks Insure?

What Does It Mean for Your Money to Be Insured?

How Do Banks Insure Money?

What Is the FDIC?

What Are the FDIC Limits?

What Does FDIC Insurance Extend To?

Get up to $300 when you bank with SoFi.

What Happens if a Bank Fails and My Money Is Fully Insured?

What Happens if a Bank Fails and My Money Is Not Fully Insured?

Tips to Insure Excess Deposits

Using a Bank That Offers More Than $250,000 Insurance

Using Multiple FDIC-Insured Banks

Using the CDARS Network

Using an NCUA-Protected Credit Union

Using Banks That Insure With DIF Insurance

Using a Cash Management Account

What if My Current Bank Is Not FDIC-Insured?

Banking With SoFi

FAQ

Are there banks that insure more than $250K?

How do millionaires insure their money?

Are joint accounts FDIC-insured to $500,000?

What Is Cost of Living?

What Is the Cost of Living?

How Does the Cost of Living Work?

Get up to $300 when you bank with SoFi.

Factors That Determine Cost of Living

Calculating Cost of Living

What Is the Cost of Living Index?

Does Cost of Living Vary State by State?

Which State Has the Lowest Cost of Living?

Which State Has the Highest Cost of Living?

How Much Should Your Cost of Living Be?

Tips to Improve Cost of Living

Managing Finances With SoFi

FAQ

What is a cost of living adjustment?

How can I compare the cost of living between two cities?

Which country has the highest cost of living?

Can the Government Legally Take Money Out of Your Bank Account?

Times When the Government Can Legally Take Money From Your Account

Right of Offset

Appeasing Both Sides

Which Accounts Can Be Tapped

Garnishment of Wages

Does the Government Take Money From Accounts Often?

Get up to $300 when you bank with SoFi.

Are Any Funds Exempt?

Ways to Avoid Government Withdrawals

The Takeaway

A New Way to Bank With SoFi

FAQ

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

Can the government take money from your checking account?

Can a government take your savings?

What Is the Average Down Payment on a House?

Average Down Payment Statistics

Average Down Payment on a House for First-Time Buyers

Down Payment Requirements by Mortgage Loan Type

Conventional Loan

FHA Loan

VA Loan and USDA Loan

Jumbo Loan

Average Down Payment by Age Group

Average Down Payment by State

Average Down Payment On a House in California

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

Source of Down Payment

How Does Your Down Payment Affect Your Monthly Payments?

Should You Aim for 20% Down?

If Your Down Payment Is 20% or More

If Your Down Payment Is Less Than 20%

Dream Home Quiz

The Takeaway

FAQ

Is 10% down payment enough for a house?

What is the minimum you should put down on a house?

What factors can affect my down payment requirements?

What are the pros and cons of putting down less than 20% on a house?

What Do You Need to Buy a House?

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

Gain home-buying insights
with the latest housing
market trends.

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