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There are many reasons to pursue homeownership, from obtaining a yard for your dog to painting the bathroom whatever darn color you want. But one of the biggest financial reasons to own your own home is to start building home equity.

Home equity is considered one of the most common and accessible ways to build wealth over time, thanks in large part to the appreciation of real estate over time. You can even leverage your home equity to take out loans and fund your retirement. But what, exactly, is home equity, and how does it work?

What Is Home Equity?

Home equity is the amount of your home value that you actually own. It’s calculated by subtracting your mortgage balance from the market value of your property.For example, if your home is worth $350,000, and you’ve paid enough toward your down payment and home loan that your mortgage balance is $250,000, you have $100,000 in home equity. (Keep in mind that the $350,000 value might not be what you initially purchase your home for — that figure may have increased over time, which is part of how equity is built!) Once you have home equity, you can borrow against it. If you sell the home, your equity is the amount of cash you will walk away with (minus any costs associated with the sale).

In short, home equity is pretty great to have. But how is it built?

Building Home Equity

Home equity is primarily built in two ways: paying down your mortgage and seeing the value of your home appreciate over time. Both of these can be nudged a bit to help you build equity faster. Here’s how.

Putting Down a Larger Down Payment

Many buyers, especially first-time homebuyers, take advantage of programs that allow small down payments — sometimes as little as 3% of the home purchase price. But when it comes to building equity, a higher down payment could help. The more you put down when you’re first purchasing your house, the more equity you have right out of the gate — and if you put down more than 20%, you’ll be able to avoid the additional cost of private mortgage insurance, commonly called PMI.

When calculating mortgages, you’ll also see that the higher the down payment you can afford, the lower your monthly mortgage bill. That said, substantial down payments can be prohibitive for many buyers, and it may make more sense to get in with a lower down payment and start building equity rather than waiting a long time to save up tens of thousands of dollars.

Paying Off Your Mortgage

If making a larger down payment isn’t possible, you might also be able to speed up your equity earnings — and save money on interest over time — by paying off a mortgage early. Of course, you’ll need to consult your mortgage documentation to ensure that your lender doesn’t charge a prepayment penalty, or if it does, that it would still be a cost-efficient decision to make. Only some lenders charge a prepayment penalty, and of those that do, only within the first few years (usually three to five).

Paying More Than the Minimum on Your Mortgage

If you can’t afford to pay off your mortgage early in its entirety all at once, you can chip away at the loan over time by making more than the minimum monthly payment. It’s a good idea to ensure that the additional funding is going directly toward your principal balance (the amount of money you borrowed in the first place). That way, you’re dialing down the amount of interest you’ll pay before it can even accrue.

Staying in Your Home for Five or More Years

Along with chipping away at the amount you owe, the other function that increases equity is allowing your home to appreciate. Although that rise in value isn’t guaranteed, if it’s going to happen, it takes time. Thus, staying in your home for a longer amount of time (at least five years) gives you a better chance at building enough equity for all the other costs of homeownership to be worth it.

Renovating

Allowing your home to naturally increase in value over time is one thing, but you can also take matters into your own hands and help drive up the value by renovating or remodeling. (Not sure about renovations vs. remodels? Essentially, remodels are more extensive — and expensive.)

While even lower-cost renovations, like painting, can increase the home value a little, major repairs may have major costs associated with them. Sometimes, though, the equity increase you’d gain makes it worth going to the expense in the short term; home improvement loans can help make these efforts more accessible (but again, always look ahead to ensure that debt won’t eclipse the equity you’d stand to build).


💡 Quick Tip: A reverse mortgages, don’t require repayment until the borrower moves out or dies.

That said, it’s important to think through the pros and cons of reverse mortgages, as borrowing against your home equity comes with risk. (For example, if the loan total ends up being more than the value of the home, heirs might lose the house, or need to refinance, if they can’t pay off the reverse mortgage in full.)

Home Equity to Purchase a New Home

Even if you end up moving, your home equity value can be borrowed against to help purchase a new home. In fact, some people end up taking out home equity loans to purchase a second or investment home.

Borrowing Against Home Equity

Along with the above-mentioned ways to use home equity, there are many other equity home loan types that can be used to liquify the cash wrapped up in your home and make it spendable. Just be aware that these loans come with costs and risks. For example, if the housing market suddenly shifts and your home’s value decreases substantially, you may find yourself in a hole. In fact, if you can’t make the payments, you could even lose your home. Your home, after all, is the collateral for these loans.

Here are a few of the most common ways to borrow against your home equity:

•   A home equity loan offers a borrower a lump sum of cash up front in return for fixed payments on a regular basis throughout the life of the loan.

•   A home equity line of credit (HELOC), on the other hand, works kind of like a credit card: Those who take out HELOCs have the opportunity to tap into their equity and convert it to spendable cash as needed, up to a certain limit. Neither interest rates nor payments are usually fixed. Closing costs may be lower than those for a home equity loan, and sometimes waived entirely if you keep the credit line open for a number of years.

   💡 For more info on HELOCs, check out our Guide to Home Equity Lines of Credit.

•   With a cash-out refinance, a borrower takes out an entirely new mortgage while borrowing a portion of their existing home equity in cash. Closing costs are involved. (Deciding between different loan types can be dizzying. Look carefully at differences between home equity loans, HELOCs, and cash-out refinance options.)


💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.

Calculating Home Equity

Phew! That’s a lot of information. To recap, here’s how to calculate your home equity:

Total home value – remaining mortgage balance = home equity

Keep in mind, again, that “home value” isn’t the same as “purchase price.” To know for sure what your home value is in the current market, you’d need an up-to-date appraisal, but you can use estimates from your favorite real estate site or agent.

The Takeaway

While nothing is a surefire ticket to wealth, building home equity is one of the most historically reliable ways to grow your net worth. And down the line, home equity can be leveraged for a variety of loans.

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.

Photo credit: iStock/PC Photography

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

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

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It has long been the norm in real estate transactions for the buyer’s and seller’s agents to be paid with a commission fee — typically 5% to 6% of the house price — that was split between the two agents and paid by the seller. But in early 2024, the National Association of Realtors®, a real estate trade association, agreed to settle a group of lawsuits that challenged this commission structure for violating antitrust laws and contended that commissions were artificially inflated.

NAR will pay out $418 million in damages. But more importantly for homebuyers, the fallout could trigger big changes in how homebuyers work with real estate agents to make their purchase — and maybe even save buyers and sellers a little money. NAR Realtors handle the majority of sales in the U.S., so this settlement could have a significant impact on real estate transactions going forward.

How might real estate agent fees work in this new environment? If you plan to buy or sell a home, it’s important to understand. Let’s take a closer look at how homebuyers and sellers might be affected.

What’s Changing About Real Estate Commissions?

The NAR settlement, which was preliminarily approved by a judge in April 2024, means that as of August 2024, sellers’ agents will no longer be required to offer to share commissions with buyers’ agents. If a commission (paid by the seller) is compensating the seller’s agent but not the buyer’s agent, homebuyers will likely be responsible for paying their own agent.

This isn’t all bad news for buyers. Sellers might reduce home prices if their costs associated with paying a broker are lower. It’s also possible that buyers’ brokers will compete for customers by keeping their fees low. But it’s too soon to say what exactly will happen.

What Does a Buyer’s Real Estate Agent Do?

If you’re a homebuyer, especially a first-time homebuyer, you may be wondering what services you would be paying for when you hire a real estate agent. Agents can perform a variety of services on behalf of their clients. If you’re buying a home, an agent can help you:

•   Narrow your search to the most desirable properties for your budget

•   View the homes in person or virtually

•   Make an offer on a property

•   Navigate the home inspection process

•   Negotiate any contingencies you’d like to include in the home contract

•   Prepare for closing

Who Pays the Agents’ Commissions?

It remains to be seen whether real estate agents will charge by the hour or bill customers a flat rate — or if some agents will continue to work on commission that is perhaps paid by the buyer.

Buyer’s real estate agents might begin to charge a fee (vs. a commission) for showing homes and shepherding clients through the purchase process. For buyers, this would add to the cost of a home purchase. Buyers have long suspected that sellers baked the commission fees into a property’s price, so that, in effect, buyers were already paying the commission. But while buyers could cover those baked-in costs out of their home mortgage loan, new fees paid by the buyer to the agent would come from the buyer’s pocket.

And they aren’t the only fees a buyer has to pay to finalize the purchase of a home. Closing costs can include:

•   Attorney fees

•   Title search and title insurance fees

•   Credit check fees

•   Upfront costs paid to cover homeowners insurance and/or property taxes

•   Home mortgage loan origination fees

•   Mortgage points, if you choose to purchase them

•   Recording fees

Closing costs typically run between 3% and 6% of the home’s purchase price. So if you’re buying a $300,000 home, you might pay anywhere from $6,000 to $15,000 at closing, not including the down payment.

Closing costs are usually the buyer’s responsibility, but it’s not unusual for buyers to persuade sellers to share some expenses that are paid in advance.

All this may lead some buyers to consider shopping for a home without the help of an agent. If you’re thinking of going this route, be prepared to spend lots more time researching potential properties, reaching out to schedule viewings, and vigorously advocating for yourself if you’re in a seller’s market. And be ready to be your own best representative in negotiations.

Recommended: Cost of Living By State

What Does a Seller’s Agent Commission Cover?

Real estate commissions compensate a seller’s agent for the work the agent puts into helping sell the home. What this specifically entails can depend on the agent you’re working with and your needs. But again, this often involves researching listings, preparing comparative analyses, guiding home viewings, and helping to negotiate offers.

Here is how the commission fee has typically worked in the past: Say a home sells for $366,000 (the average home price in Fresno, California) and the commission is 6%, or $21,960.

If the sellers owe $250,000 on the home’s mortgage, they’d be poised to pocket $116,000 in profit. But first they have to subtract $21,960 to cover the commission fee. It’s likely that the commission fees will be lower now that the commission is not shared between the buyer’s and seller’s agents. But exactly what percentage a seller’s commission fee will be is up in the air.

Commissions are paid out once the transaction is complete. This typically happens after the buyer and seller have signed their closing paperwork. The seller will receive a check for any profits due to them from the sale, while the agent receives a check for the commission. Exact amounts of commissions, like home sale prices, vary widely by state.

It’s worth noting that there are still other costs involved in selling a home. You may pay a separate fee for professional staging or photography to get it ready to list, for example.

Recommended: Home Appraisals 101: What You Need to Know

Flat Fee vs Real Estate Commission Fee

There are real estate brokerages that advertise listing services for a flat fee. Usually, the flat fee is very low and may only include a listing with photos on the MLS (the Multiple Listing Service, a list of available properties). Real estate agents who charge a flat fee usually don’t offer to schedule showings or manage the listing in other ways.

Are Real Estate Commissions Negotiable?

More than ever, thanks to the NAR settlement, real estate commission fees may be on the table for negotiations. A seller may be able to ask for a reduced commission if you’re working with an agent to sell multiple properties. The agent may be open to accepting a slightly lower fee per deal if there are multiple deals in play. This, of course, depends on how likely those properties are to sell at your desired price point.

As a buyer, how you might negotiate paying your agent in this new payment structure remains to be seen — and it will be up to you to start that conversation. Remember that you can also still negotiate a house price in other ways, such as by tailoring your offer price and asking the seller for help on closing costs.

Why Even Involve Agents?

You could buy a house without a Realtor® but having a professional’s help can be invaluable, especially if you’re a first-time homebuyer. (Realtors® are real estate agents who are members of the country’s largest trade association, the National Association of Realtors®. They subscribe to a strict code of ethics.)

A real estate agent or Realtor® can help you navigate the ins and outs of the homebuying process so that you can feel confident about your purchase.

Real estate agents are legally obligated to put their clients’ best interests first. They are trained to negotiate price and contingencies, handle legally binding documents, prepare and show properties for sale, and market homes through the MLS.

And if you’re thinking about selling your home on your own, it’s worth considering that homes for sale by owner usually sell for an average of $100,000 less than agent-assisted sales.

The Takeaway

Changes in the way that real estate agents are paid are underway, and while sellers will continue to pay their agents a commission, buyers may increasingly need to pay their agents themselves. Whether buyers come out ahead financially in this changed compensation structure remains to be seen. Bottom line? If you are in the market for a new home, make sure you discuss an agent’s fee structure and payment process before signing on.

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

FAQ

Is commission and flat rate the same?

No. A flat rate is a specific rate negotiated for a certain service, while a commission-based fee is based on a price, such as the sale price of a home. For a seller, a flat rate typically covers only basic real estate agent services such as listing the property in a database.

What fee do most Realtors charge?

Historically, most real estate agents have worked on commission and would split an amount equal to 5%-6% of a home’s price, which was paid by the seller. Now, seller’s agents may still be paid on commission (albeit a smaller percentage) but buyer’s agents will increasingly be paid by the buyer. This means buyers will need to negotiate a fee with a real estate agent before agreeing to be represented by that agent in their home search. The amount of the fee will vary based on factors such as location, services provided, and time spent.

What is the difference between a flat fee and a fixed fee?

Yes, a flat fee and a fixed fee are the same when it comes to how a real estate agent is paid.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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

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

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If you’re attempting to build credit from scratch, a gas credit card can help. That’s because, similar to other types of credit cards, gas credit cards report your payments to the three major credit reporting bureaus. Further, gas cards are good for building credit because they tend to be easier to get approved for than other types of cards.

On top of that, a gas credit card can allow you to save on gas by earning discounts and fuel credits when you fill up your tank and use your card to pay for transactions. Here’s all you need to know about gas credit cards, including how to get a gas card to build credit.

Understanding Gas Credit Cards and How They Work

A gas credit card works similarly as other types of credit cards in that it offers access to a revolving line of credit. In other words, you have a credit limit that’s set ahead of time. You can borrow up to that limit, and then repay the debt over time through monthly payments. If you carry a balance from month to month, you’ll pay interest.

There are two main types of gas credit cards:

•   Gas station cobranded credit cards: Also known as a single-purpose or closed-loop card, a gas station cobranded credit card is a card that you can only use to make purchases from a single company. In this case, you could only use the card when you pump gas from a particular gas or oil company, which the card will usually bear the logo of.

•   General-purpose gas credit cards: A traditional gas credit card can be used when you fill up at any gas station, rather than only with one particular brand — marking the difference between gas cards vs. gas station credit cards.

As mentioned, gas credit cards can be a good way to build credit from scratch. Keep in mind that the best rates, terms, and rewards offerings generally are reserved for consumers with strong credit. That being said, some gas cards are easier to get approved for, especially those from a particular oil company or brand.

Another benefit of gas credit cards is that they can offer discounts per gallon or an introductory promotional period where you can receive additional discounts at the pump. For instance, a cobranded gas credit card might offer 30 cents back on each gallon for the first two months after you open an account, and then 10 cents back per gallon after that.

Some general-purpose gas credit cards might also feature rewards, like cash back on everyday purchases up to a certain amount per year.

Tips for Building Credit with a Gas Credit Card

A gas card can build credit because they report your activity and payment history to the three major consumer credit bureaus — Equifax®, Experian®, and TransUnion®. Using one can be a good way to help you establish credit when you’re starting out on your credit journey.

For a gas card to build credit, however, you’ll need to stick to the following credit best practices.

Choose a Card Carefully

If you decide to open a gas credit card, carefully review the terms, rates, and fees. Gas credit cards typically have high interest rates compared to other types of cards, so if you anticipate carrying a balance, you could end up paying a considerable amount on interest charges.

While many gas credit cards don’t carry an annual fee, you might get hit with late fees, balance transfer fees, and returned payment fees. Make sure you’re aware of what fees a gas credit card may charge so you can avoid them.

Pay on Time Each Month

Your payment history is the largest contributing factor to your FICO® credit score. As such, it’s important to make your payments on time, each and every month.

You can keep track of when credit card payments are due with reminders or else set up autopay. You might also aim to pay off your balance in full each month, which will allow you to avoid paying interest on your gas credit card. To do this, set a limit for how much you want to spend on your gas credit card each month and stick to it.

Don’t Spend Up to the Credit Limit

Another factor that influences your credit score is your credit utilization, which is how much of your overall credit limit you’re currently using. It’s generally suggested to keep this credit utilization ratio at no more than 30% to avoid adverse effects to your credit score. If you were to spend up to your credit limit, that would likely drive up your credit utilization well about that recommended threshold.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Keep Track of Your Credit Score

Monitoring your credit score can help you pinpoint behaviors that can impact your credit score, as well as notice any red flags. By keeping an eye on your credit, you can better make adjustments to your habits and spending to ensure you’re making progress on building your credit score.

You can keep track of your credit score in a handful of ways, including by signing up for a free credit monitoring service or possibly through your credit card issuer.

Advantages of Building Credit With Gas Cards

Gas cards absolutely can be good for building credit, and here are the benefits of using one to do so:

•   Savings on gas: A major perk — and the one that is most apparent — is that you can receive discounts at the pump by using a gas credit card.

•   Potentially easier approval: A gas credit card can have easier approval requirements than other types of cards, such as rewards credit cards. This can make it easier to get credit, and therefore start building your credit.

•   Rewards and sign-up bonuses: Gas credit cards might offer rewards, perhaps just on your spending at the pump or more generally across purchases, depending on the type of gas credit card. Some gas credit cards offer a sign-up bonus if you meet a minimum spending requirement within the first few months.

Drawbacks of Building Credit With Gas Cards

There are downsides to using gas cards to build credit as well, including:

•   Potentially restricted use: If you get approved for a credit card that you can only use when you fill up at a gas station from a single gas or oil company, it might take you a bit more work and planning to use your card. That being said, there are some more general use gas cards available.

•   Higher interest rates: If you’re building your credit from scratch and are approved for a card with less stringent financial or credit criteria, this can mean higher credit card interest rates and less generous or attractive card perks.

•   Limits on earnings and rewards programs: While some gas cards do offer rewards, they’re usually not as robust as they would be with other types of credit cards. Plus, many gas cards have a cap on how much you can earn in rewards in a given year.

Recommended: What Is the Average Credit Card Limit?

The Takeaway

A gas credit card could be a strong option if you are looking for a credit card with easier approval requirements to take a step toward building credit. Before deciding, consider the advantages and drawbacks of getting a gas card to build credit.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Are gas cards worth it?

Gas cards can be worth it if you are looking for a credit card with less stringent approval criteria and are trying to establish or build credit. Many don’t have annual fees, so if you’re able to pay the balance in full each month, it could be worth opening. Plus, you might be able to save at the pump.

Are gas cards good for building credit?

Gas cards can be good for building credit as they do report your activity and payment history to the credit bureaus. However, in order for them to help with your credit, you must maintain responsible credit habits, like making on-time payments and maintaining a reasonable credit utilization ratio.

Is it better to use a fuel card or a credit card?

Whether a fuel card or credit card is better depends on what you typically use your credit card for, as well as what cards you’re able to get approved for. If you would like a card that you can use only for gas and would like to rack up gas savings, then a fuel could be a good fit. Another type of credit card, such as a cash-back or travel rewards credit card, could offer you different perks. However, they might be harder to get approved for.

Do gas cards save you money?

Gas credit cards can shave a few dollars at the gas pump in the way of discounts and promotions. Some cards offer cash back rewards, usually up to a certain amount per year.

Photo credit: iStock/Talaj

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.

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

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 .


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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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If you need expensive dental work, you’re likely wondering how to pay for it. After getting a quote from your dentist and learning how little your insurance will cover, you may be thinking, I must be missing a way to afford this.

There’s good news and bad news when it comes to how to finance expensive dental work. Bad news first: Despite insurance, dental work can cost a lot out-of-pocket. The good news: While there’s probably not an easy solution to covering the whole bill, there are many tricks you can use to make your dollar stretch farther (and possibly even get a tax break while you’re at it).
Here, learn smart strategies about how to pay for dental work. Altogether, these ideas can add up to quite a discount off your dentist’s quote.

10 Ways to Pay for Dental Work

Many people cover their dental work by combining several of the strategies below. It’s tough to avoid paying out-of-pocket entirely, but you can often get a hefty discount off the original quote. Here, how to pay for dental work:

1. Dental Insurance

You should know that there’s a difference between a dental office that takes your insurance and a dental office that is in-network. A dentist may take your insurance even though they are out-of-network.
When a dentist says that they take your insurance, that likely means that they will file an insurance claim for you. But if your insurance doesn’t cover a procedure or service, the price will generally be set at your dentist’s discretion — and you’ll typically be responsible for paying the costs out-of-pocket.

Generally, using an out-of-network dentist means your insurance will cover less so you’ll pay more. Being in-network, on the other hand, usually means that your insurance company has prenegotiated the fees with the dentist, and they generally can’t charge more than that. So you’ll usually pay less with an in-network dentist.

Recommended: Does Cosigning Build Credit?

2. Medical Insurance

Dental work isn’t typically covered by medical insurance, but certain procedures may be covered if they’re deemed medically necessary. For instance, some kinds of oral surgery potentially can be billed as a medical procedure. Before you move forward with any dental work, it’s a smart idea to talk to your medical insurance company to find out what may be covered. This could help you afford a major dental bill.

Recommended: Guarantor vs. Cosigner: What Are the Differences?

3. Payment Plans

Paying a bill on a weekly or monthly basis can be much more manageable than paying it in a lump sum. That’s why many dental offices offer payment plans for procedures not covered by insurance.
Payment plans can be offered directly through your dentist’s office, or by third-party services like CareCredit. Ask about the specific terms of any payment plan offered. For example:

•   What procedures qualify for a payment plan?

•   Will they charge interest? And if so, how much?

•   Are other fees involved?

•   Do they have to check your credit first? If so, will it be a hard or soft inquiry?

Asking these questions beforehand can help keep you from getting blindsided by unexpected costs.

4. Flexible Spending Account

A Flexible Spending Account (FSA) is a special savings account offered through some employer benefit plans. FSAs allow employees to pay for certain out-of-pocket medical and dental costs with tax-free money.

The typical taxpayer saves about 30% in federal, state, Social Security, Medicare, and Unemployment taxes. That translates to a 30% discount off all eligible medical and dental expenses, which could be an idea for how to pay for expensive dental work.

FSA rules cap the amount of money that can be placed in the account each year ($3,300 for 2025 per the Internal Revenue Service, or IRS) and also dictate which types of expenses are FSA-eligible. Most routine dental work and orthodontia qualify: cleanings, X-rays, fillings, crowns, extractions, implants, and Invisalign.

FSAs can’t be used for any procedure that is considered cosmetic, including teeth whitening and veneers. But in some instances, if a typically cosmetic procedure is deemed medically necessary — as with some veneers — you may be able to use your FSA. Talk to your dental insurance company for more information.

One drawback of FSAs is that any funds that are unused at the end of the plan year are forfeited — so make sure you don’t leave any money on the table. In the plus column, because FSAs are funded with pretax dollars, they reduce your taxable income, which is always nice.

5. Health Savings Account

A Health Savings Account (HSA) is similar to an FSA in several ways:

•   Both are funded with pretax dollars

•   Both are used to cover health care expenses

•   Both can be established through your employer, and funded with payroll deductions

But there are also key differences between an FSA and HSA:

•   HSAs must be used with a High Deductible Health Plan (HDHP)

•   The 2025 HSA funding cap is $4,300 for individuals, $8,550 for families

•   HSA funds roll over from year to year

•   You can set up an HSA through some health insurance companies and banks, making them a good option for the self-employed

If you don’t have access to an FSA — and you are currently covered by a high-deductible health plan — you can open an HSA at any time.

6. Negotiate With Your Dentist

The cost of dental work can actually be negotiable, depending on your dentist and your situation. First, have your dentist walk you through the treatment plan. Ask lots of questions, including:

•   Are all the procedures they’re suggesting equally urgent? Can some be postponed?

•   Can you get a discount by paying cash or the entire cost upfront? Some dentists give a percentage off for this.

•   If you don’t have insurance, ask if you can score an uninsured rate.

Some dentists will be flexible, and the worst that can happen is they say no. Another thing you can do is to have an honest conversation with your dentist about your financial situation. If your budget has no breathing room, see if they are open to giving you a discount or if they are willing to push out your bill for a few months.

If the planned dental work is important but not super urgent, you may be able to schedule your appointments so they straddle two plan years. For example, if your plan year is January-December, you might schedule half the appointments for December, and half for the following January. That way, you can take advantage of two annual benefit maximums for insurance and two years’ worth of FSA or HSA funds.

7. Get Work Done at a Dental School

Having work done at a well-regarded dental school may be an option to make expensive dental work more affordable. Search online to see if you live within easy distance of a dental school that offers discounted services. Some schools may provide lower-cost exams and procedures as a way of training their students and giving them real-world experience, under the supervision of skilled, highly trained dentists. The cost can be up to 50% lower than what you might find elsewhere.

If you have access to this and want to go this route, it can be wise to carefully check online reviews to hear how others’ experiences went and feel confident in your decision.

Recommended: Applying for a Loan With a Cosigner

8. Credit Card

In some circumstances, a credit card can be a suitable payment option for dental bills. If you have a card that offers rewards or cash back, it can also provide some benefits in return.

You might also consider looking for a medical credit card. These cards are issued by banks, credit unions, and other lenders and can only be used for health care and within a specific provider network.

Some medical credit cards defer interest for a period of time after your health care charges are incurred — much like 0%-interest cards. No interest is charged so long as those charges are paid off in full before the interest-free period expires. Late payments or balances that have not been fully paid before the deferment period ends can incur interest charges. Make sure you read the fine print and are comfortable with the fees involved before signing up for one of these cards.

Speaking of 0%-interest cards, they’re another option to finance expensive dental work. By law, these interest-free promotional financing offers must last at least six months. But the most competitive offers go well beyond this to offer 0% introductory APR financing for 18 months or longer.

Before you commit to a new card, it’s a good idea to shop around for the best terms and make sure dental work meets the requirements for any rewards. Credit card debt can be a significant financial issue, so it’s wise to know the exact benefits and downsides of this kind of card. You might want to consider getting a personal loan or borrowing from family instead.

9. Personal Loan

Because of this flexibility, many people use personal loans to pay for out-of-pocket medical expenses or to consolidate high-interest debts through a debt consolidation loan

Using a personal loan to finance dental work might be a better option than a credit card. The lower the interest rate, the lower your monthly payment. And personal loans tend to have lower interest rates than credit cards. As of December 2024, credit cards have an average interest rate of more than 20%, but online lenders may offer significantly lower personal loan interest rates (even less than half that percentage) to qualified borrowers.

By using a personal loan calculator, you can compare this option to, say, using a credit card or dipping into your savings.

How much you can borrow is also flexible, and getting approved for a personal loan can be done entirely online. In short, a dental loan might be a good option to cover additional dental needs, from basic fillings to more complex, high-cost procedures.

10. Emergency Fund

Tapping your emergency fund won’t offer a discount on your dental bill, but it can provide a way to pay it. One of the cornerstones of good financial management is to build an emergency fund, typically holding three to six months’ worth of living expenses. The typical scenarios for withdrawing funds from your emergency savings account include paying bills if you lose your income or taking care of an unexpected large medical, dental, or car repair bill. So if you receive a major dental bill and need cash, your emergency fund could be an answer.

Remember, emergency funds aren’t built in a day. Setting up automatic payments into this account from your checking can be a smart move; it’s fine if it’s a small sum like $25 per paycheck to start. And don’t forget to keep the money in a high-yield savings account so it can grow until you need to use it.

The Takeaway

When it comes to how to pay for expensive dental work, there is no one perfect solution. But there are a number of resources and tricks you can call upon to stretch your dollar. Discuss your options with your dentist to find out what discounts and payment plans they may offer. Avail yourself of an FSA or HSA to pay with pretax dollars, if possible, or pay your bill with a 0% interest credit card, rewards card, or medical credit card, among other tactics.

Another option is to finance your dental work with a personal loan.

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

FAQ

What can I use as financial assistance for dental work?

To finance expensive dental work, you may have to employ a few different tricks. First, if you have an FSA or HSA, paying your bills with pretax funds will net you an effective 30% discount. You can also schedule work to straddle two plan years so that your dental insurance and FSA/HSA cover twice the annual amount. If you’re uninsured, explain your financial situation to your dentist to see if they’ll offer a discount. And consider taking out an unsecured personal loan.

Can I use a personal loan as financial assistance for dental work?

Yes, a personal loan can be a great option for covering expensive dental work, compared to high-interest revolving credit. Shop around for the best rate and terms, and read the fine print to make sure you fully understand the fees involved for any option you are considering.

Is it hard to get financial assistance for dental work?

It will take some work on your part, but financial assistance is available for low-income patients through dental schools, clinical trials, United Way, Medicare, and Medicaid. Find out what kind of assistance you may be eligible for on the U.S. Department Health & Human Services website at HHS.gov.

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.

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“Mortgagor” is just another word for someone who is borrowing money from a mortgage lender (the “mortgagee”) to purchase real estate. It’s not every day that you see the term “mortgagor” and it doesn’t roll off the tongue easily. You might even think perhaps it’s misspelled. But when it comes to financial matters, half the battle is understanding the jargon. In this case, the good news is that even if you have never heard of a mortgagor, it’s just another word for being the borrower on a home loan.

The Function of a Mortgagor

The mortgage universe can be a bit complex and it’s helpful to understand the basics of mortgages. So let’s take a closer look at the mortgagor’s role. The mortgagor makes monthly payments to the mortgagee as specified in the loan agreement. The terms of a mortgage can vary widely. For example, depending on the applicant’s credit history, the interest rate may be higher or lower than the average.

A mortgagor may choose from different types of mortgage loans. Some loans have a fixed interest rate and a term of 30 years, though many lenders offer loan lengths of 20, 15, or 10 years. A fixed-rate mortgage has an interest rate that remains the same during the life of the loan. A variable-rate mortgage is one in which the interest rate moves up and down with the market.

The bottom line: Mortgagors must pay back the loan in a timely fashion. If not, mortgagees can force foreclosure of the home or other real estate — the collateral for the loan.


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

How a Mortgagor Gets a Mortgage Loan

A mortgagor applies to a mortgagee for a mortgage. Conventional mortgage loans are originated by private lenders like banks, credit unions, and mortgage companies. Certain private lenders also originate FHA, VA, and USDA loans; those loans are insured by the Federal Housing Administration, Department of Veterans Affairs, and U.S. Department of Agriculture. Government-backed loans are often easier to qualify for and may have more lenient terms and lower interest rates.

No matter what kind of mortgage loan you seek, expect to jump through some hoops and produce much documentation to prove you are creditworthy and have the means to pay back what you borrow. A prospective lender will do a hard credit inquiry into your credit scores and credit history. So it’s helpful to understand what makes up your credit scores. Important factors include your credit history, how long you’ve had your lines of credit open, your payment history, and debt-to-income ratio, which is the total amount of your monthly debt payments divided by your gross monthly income. If your debt-to-income ratio is high, that may be a no-go in the eyes of a lender, who may see you as tapped out with no real wiggle room to take on a mortgage.

To purchase a home, buyers often take on a mortgage loan for the price minus any money they put forth as a down payment. While you may be able to get an FHA loan with 3.5% down, or a VA loan with no down payment at all, the median down payment is around 13% of the value of the home.

Contractual Obligations of Mortgagors

A deal is a deal is a legally binding deal. Once the ink dries on that mortgage, you’re locked into your commitment to pay as you said you would. If you veer off course, you’re at risk of losing the home, as there is a lien on the real property as collateral for the loan. At the very least, late or missed payments will cause your credit score to dip, which could be problematic the next time you need to show your credit score, be it for a car loan or maybe even to a potential employer.

Equity of Redemption

If this phrase sounds important, it is. You’ll be thankful for it if you have gotten behind on your mortgage. Equity of redemption, also called right of redemption, will give you a chance to get caught up and keep your home before a foreclosure sale.

When you miss payments, the mortgagee can start the foreclosure process. The lender can take back the house and sell it at auction to pay off the debts. If this process has begun, you may be able to redeem the mortgage using equity of redemption. Understand that you’ll need to come up with the money to pay off the principal, interest, and expenses under equity of redemption. Realistically, if you’re in financial trouble, a funding source to pay off the loan is unlikely.

Some states have a law that gives mortgagors the right to redeem the home for a period of time after the foreclosure sale. With the statutory right of redemption, usually the borrower must pay the bid price, plus interest and fees, to the buyer of the property at the foreclosure sale.

Rights of Mortgagors

While it doesn’t have to be a battle royal, when it comes to mortgagee vs. mortgagor, the mortgagee holds the keys to the kingdom. The lender puts up the money, and if the borrower can’t make the mortgage payments, the lender has the right to take the house. That’s not to say you are without a few good things in your back pocket, like the aforementioned rights of redemption. You can also ask that your mortgage be transferred to a third party, but only if the mortgagee is not in possession of the property.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Mortgagors vs Mortgagees

To lessen any confusion, here’s a quick look at who does what.

The Takeaway

Understanding the lingo can help you be more confident as you embark on your homebuying journey. Do your research, pull together your financial documents, find a home you love and soon you, too, could become a mortgagor.

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.

Photo credit: iStock/fizkes

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

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

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