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On a salary of $100,000 per year, as long as you have minimal debt, you can afford a house priced at around $311,000 with a monthly payment of $2,333. This number assumes a 6.5% interest rate and a down payment of around $30,000.

The 28/36 rule is often used as a guide when deciding how much house you can afford. The rule stipulates that you should not spend more than 28 percent of your salary on overall housing costs and no more than 36 percent on housing costs and your debt. On a salary of $100K with debts of about $250 per month, a house costing $311,000 just fits in your budget.

However, how much home you can afford depends on other factors also, such as where you intend to live and how much you have saved as a down payment.

This article looks at how all of these factors affect your home purchase and gives some examples of how much home you can realistically afford on a salary of $100,000.

What Kind of House Can I Afford With $100K a Year?

Another rule of thumb often applied when buying a home is to not spend more than three times your annual income on a home. If you earn $100,000 a year, that would be $300,000.

A salary of $100,000 is well above the national median income (according to Census data, the national median income was $74,580 in 2022). That puts you in a good position if you want to buy a home, particularly if the cost of living is low in the area that you are targeting. If you have substantial savings for a down payment and little debt, you’re even better positioned. Debt is important because lenders look at how much debt you have when they qualify you for a mortgage.

Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is the amount of income you receive relative to the amount of payments you make each month to cover your debt. You’ll get better loan terms, and your monthly mortgage loan payments will be less, if you have less debt.

That’s why many experts also recommend the 28/36 rule. So, if you earn $100K, your housing costs should be less than $28,000, $2,333 a month, and your debt and housing costs should not exceed $36,000, or $3,000 a month.

Your Down Payment

Unless you qualify for a zero-down USDA or VA loan, most lenders will expect a down payment of between 3% and 20%. The more you put down, the more house you can afford, but as you think about your down payment amount, make sure you reserve funds for closing costs, moving costs, and an emergency fund for unexpected expenses.

Home Affordability

Homes are more affordable in certain areas. Some areas have a higher cost of living and higher property taxes.

Your credit score will also affect how much home you can afford. If you have a high credit score, you will qualify for a lower interest rate loan. If you pay less interest, you can borrow more and still meet your monthly payments.

Depending on where you want to live, the housing market might dictate how big a home you can afford. House prices are affected by the economic conditions, and low unemployment rates and healthy economic growth gives buyers more purchasing power. If buyers have more purchasing power, they can afford bigger loans, and this will push up house prices.


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

How to Afford More House with Down Payment Assistance

Some people, such as first-time buyers or certain professionals like nurses and teachers, can qualify for down payment assistance from federal, state, and local government, private entities, and charitable organizations. Assistance might be in the form of a low-rate loan, cash grant, tax credit, or a reduced interest rate.

Applying for down payment assistance can add weeks or months to your home buying timeline, but for more information, the U.S. Department of Housing and Urban Development (HUD) keeps a list of programs listed by state, county, and city.

Here are typical down payment amounts for various types of mortgages.

•   Conventional mortgages require a 3% down payment for first-time buyers

•   FHA mortgages require 3.5% down

•   VA mortgages require 0% down

•   USDA: These zero down payment loans serve low-income borrowers in rural areas.

Home Affordability Examples

Let’s take a look at some hypothetical examples for those wondering, “If I make $100K how much home can I afford?” These examples assume an interest rate of 6.5% and average property taxes.

Example #1: Low Down Payment and Significant Debt

Gross annual income: $100,000
Down payment: $10,000
Monthly debt: $1000

Home budget: $238,441

Monthly mortgage payment: $2,000

Payment breakdown:

•   Principal and interest: $1,444

•   Property taxes: $208

•   Private mortgage insurance: $264

•   Homeowner’s insurance: $83

Example #2: Bigger Down Payment, Less Debt

Gross annual income: $100,000
Down payment: $40,000
Monthly debt: $300

Home budget: $333,212

Monthly mortgage payment: $2,333

Payment breakdown:

•   Principal and interest: $1,853

•   Property taxes: $208

•   Private mortgage insurance: $188

•   Homeowner’s insurance: $83

How to Calculate How Much House You Can Afford

You need a budget to find out how much house you can afford. Keeping a budget will show you how much you are spending each month versus how much income you have. Whatever you have leftover after paying essentials like food, clothing, and utilities is how much you can afford to spend on housing.

You can also use a mortgage calculator to help you. Just plug in your own numbers to find out what your monthly payments would be.


💡 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.

How Your Monthly Payment Affects Your Price Range

The more you can afford to pay each month for your mortgage and other housing expenses, the more house you can afford. However if you have significant debt payments each month, or you have a poor credit score that results in a higher interest rate for your loan, that will reduce the amount of loan you can afford and the price range.

Types of Home Loans Available to $100K Households

Four types of loans are the most common. These are conventional loans, FHA loans, USDA, and VA loans.

Conventional loans typically require a credit score of 620 or more, but the down payment can be as low as 3 percent. Remember that a lower down payment means higher monthly payments because you will have to borrow more.

FHA loans. With an FHA loan, home buyers with a credit score over 580 can borrow up to 96.5% of a home’s value. Home buyers with a lower credit score, between 500 to 579, can still qualify for a loan as long as they have a 10% down payment.

USDA: USDA loans are zero down payment financing for low-income borrowers in designated rural areas.

VA: VA loans also require no down payment and are available to qualified military service members, veterans, and their spouses.

The Takeaway

If you are looking to buy a home and would like a more realistic idea of what you can afford, first find out how much you are spending on necessities like food, clothing, transportation, and, most importantly, debt. What you have leftover is how much you can spend each month on housing expenses.

Once you have a grasp on your finances, you can use an affordability calculator to see how much of a house you can afford. The size of home that the amount will buy depends on the local housing market and the cost of living where you want to live.

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 $100K a good salary for a single person?

A salary of $100k is above the national median income (according to Census data, the national median income was $74,580 in 2022). This is a good salary, but you still might struggle to buy a home in areas with a high cost of living. The larger down payment you have, and the better your credit score, the bigger house you can buy.

What is a comfortable income for a single person?

A comfortable income for a single person is dependent upon where that person lives. The findings from a study using data from the Bureau of Labor Statistics to calculate the cost of necessities to determine a living wage shows wide variance existing among states. According to the study, Hawaii is the most expensive state, and singles require an annual salary of $112,411 to live comfortably. In Mississippi, you can live comfortably on $45,906 a year.

What is a liveable wage in 2023?

A liveable wage will vary depending on where you live. However, the Massachusetts Institute of Technology determined that $104,07 per year was a liveable wage before taxes in 2022. This was for a family of four with two working adults and two children.

What salary is considered rich for a single person?

According to Internal Revenue Service data, an income of $540,009 per year puts a person in the top 1% earnings category.

Photo credit: iStock/Prostock-Studio

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

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

*SoFi 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.

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⁺Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 91 calendar days at the time of preapproval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

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.

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When considering higher education, you have options. Some might include applying to a four-year college or considering community college. Everyone’s path is different, just know that you can chart your own course.

If you’re wondering, “Should I go to community college?”, let’s take a look at some important factors to think about first.

What is Community College?

Community colleges typically offer two-year degrees known as an associate’s degree. Students often attend community colleges for two years before transferring to a four-year university to gain their bachelor’s degree.

Working with a counselor can help you solidify your academic goals and work towards them, from choosing a major to earning the right credits that can be transferred to your bachelor’s degree.

This can be an exciting time in your life, but also an overwhelming one. Let’s take a look at the pros and cons of attending community college, in addition to other factors you should consider when choosing a college.

Pros and Cons of Community College

Attending community college can have some upsides, but like anything, it may not be the right option for everyone. Just remember — your own experience is going to be unique and what might be best for you might not be the same case for your classmates or friends. No need to feel pressured by what might be the “right” or “wrong” path.

Read on for more pros and cons of community college.

Pros of Going to Community College

Some benefits of attending a community college include affordability, increased flexibility in classes, and the opportunity to stay local.

Affordability

Because community college can be less expensive than their four-year counterparts, attending a community college before a university could help you cut tuition costs significantly. According to Education Data Initiative, the average cost of tuition at a two-year college in 2023 was $3,501, as compared to $9,678 at a four-year public institution with in-state tuition.

Students attending community college may also be able to live at home, which can cut down on living expenses, too. Living at home while taking community college classes can also offer you some transitional time to get accustomed to a new schedule and new academic expectations before committing to a four-year university.

Easier Admissions Requirements

It’s also relatively easy to gain admission into community college. Some community colleges even have open admission policies, which generally means that there are limited academic requirements needed for admission, so most students who apply are accepted.

Note that even if a community college has an open admission policy, certain more competitive programs, like a nursing program, might have more stringent academic requirements.

Flexibility with Classes

Another major benefit of community college is that students have flexibility with classes and the opportunity to explore a variety of academic interests before committing to a major at a four-year university. Class times also may be more suitable for students that work full-time or have other commitments outside of school.

In addition, community colleges can offer you the chance to experience smaller class sizes (instead of large lecture hall classes that can be common at universities).

Recommended: Financial Benefits of Community College

Cons of Going to Community College

While there are many pros to attending a community college before transferring to a four-year university, there are some cons to consider, as well.

Possible Limited Academic Offerings

While community college can offer the opportunity to explore courses, the academic offerings may be more limited at a community college than at a four-year institution. Consider finding out which classes are available at each community college you are interested in so you can make sure they have exactly what you need. Not all community colleges might include the classes you are interested in taking.

Generally, community colleges are limited to associate degrees, so if you are interested in obtaining a bachelor’s, you’ll need to eventually transfer to another institution. It can be helpful to talk to a counselor at the community college about what classes you might choose so that you don’t end up earning too many credits that can’t be transferred.

Missing Out on Social Benefits

Another potential downside to attending community college is that students may miss out on some of the social benefits of attending a four-year college, including friendships, extracurriculars, and enjoying campus life. While you can experience all of these things if you transfer, it can be challenging to make friends as a transfer student.

Choosing Which College to Go To

If you know for sure that you want to attend community college, now it’s time to see what options are available near you. According to The Princeton Review, 90% of the U.S. population is within commuting distance of a community college.

Due to one life situation or another, many students attend colleges as commuter students, trading a fully on-campus experience for greater flexibility. As a commuter student, you can choose to live somewhere more affordable and create a schedule that works with your work hours.

Commuter student life can also include a mix of on-campus classes and online work. Some community colleges offer a variety of online classes. Taking advantage of these resources can help if you find yourself with a complicated schedule, or if you just want more flexibility.

Other Factors to Consider When Choosing a College

Your academic goals will guide which college you choose. As you evaluate colleges, take a look at which colleges offer the major you want to pursue. If you are in the process of choosing your major, see if you can find out more about the programs that the community college near you offers. You could talk to current students or professors and evaluate whether it seems like a good school for your interests.

If you are applying for a mix of community colleges and public universities, creating a list of all your potential applications can be helpful.

You can organize this list by “match,” “reach,” and “safety” schools in order to help you consider all your options.

Thinking About the Cost of Community College

While the cost of community college is less than a four-year university, it’s still an expense that should not be taken lightly. You might consider a combination of scholarships, grants, and loans to help offset the total costs of college.

To start, students can fill out the Free Application for Federal Student Aid (FAFSA®) each year. This application is used to determine aid including work-study, federal student loans, scholarships, and grants.

Once you start tackling the process of paying for community college, keep in mind that the financial aid offices can be a great resource if you have any questions about finding aid for college. You can find more information on whether or not the college offers its own scholarships and how to apply.

There may also be state-specific financial aid available, and it’s recommended to use a scholarship search tool to find scholarships you may qualify for.

If these resources aren’t enough, it is possible to borrow private student loans for community college. While private loans can be helpful, they’re generally considered after other options have been exhausted. That’s because they don’t have to offer the same benefits to borrowers as federal student loans do — things like income-driven repayment plans and student loan forgiveness.

Financing Your Education

Whether you decide to attend a community college first or head straight to a four-year institution, you’ll need to find a way to pay for your education. A few options may include federal student loans, scholarships, and grants.

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

FAQ

Is going to community college worth it?

Going to community college can be a worthwhile experience, offering students an opportunity to take college-level coursework at an affordable price. Other benefits include increased flexibility in scheduling and the possibility to live at home while taking classes. Students also have the opportunity to transfer to a four-year college.

Does community college look bad on a resume?

Including your time at community college does not look bad on a resume. If you earned a professional certificate or other degree at the community college, feel free to include it.

Is it hard to get a job after community college?

The ease of finding employment after community college may be influenced by the field you studied. For example, students graduating with a certificate in a high-demand field such as nursing or dental hygiene may find it is relatively easy to secure employment.

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

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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.

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

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

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With the average annual cost of college now $36,435, figuring out how to pay for college as a low-income student can be daunting. It’s important to keep in mind, however, that students from low-income backgrounds often qualify for grants and scholarships (which you don’t have to pay back), as well as student loans.

Federal student loans are available to all college students, regardless of income, and don’t require a credit check. If you still have gaps in funding after tapping financial aid and federal loans, you may also be able to qualify for private student loans, even with a low income.

Read on to learn more about the financial aid options available to you if you qualify as a low-income student and how to apply for student loans.

What Are Student Loans?

Student loans are an often-used option to help pay for college. In fact, nearly 52% of students who complete their undergraduate programs take out federal loans at some point during their college years, according to the Education Data Initiative.

Student loans can be used to pay for tuition, room and board, and other fees, as well as other associated costs of college like books and rent.

Students can use either federal or private student loans to pay for college. Students who take out federal student loans borrow money from the government, through the U.S. Department of Education. Federal student loans typically offer low, fixed interest rates and other benefits, such as income-driven repayment plans and access to forgiveness programs.

Private student loans, by contrast, are available from banks, credit unions, and other private lenders. These lenders set their own interest rates and conditions for their student loans. To qualify for a private student loan, you need to fill out an application and disclose personal financial information, such as your income and credit score.

Since students typically don’t have well-established credit histories, many private student loans require a cosigner. A cosigner is someone who agrees to pay back the loan if the primary borrower is unable to do so. Because private student loans don’t offer the same borrower protections that come with federal student loans, you generally only want to consider them after you’ve depleted all of your federal student aid options.


💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

Can You Get Student Loans With a Low Income?

Yes, you can get student loans if you have a low income. If you can’t cover the full cost of college with scholarships and grants, student loans can help you take care of the remaining costs of college.

You can access federal student loans no matter your income level, but you do need to meet specific qualifications. You must:

•   Have a high school diploma or a recognized equivalency, such as a GED, or have completed a state-approved home-school high school education.

•   Be a U.S. citizen or an eligible noncitizen

•   Have a valid Social Security Number

•   Be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program

•   Maintain satisfactory academic progress in college

You may also be able to qualify for some private student loans if you have a low income (more on that below).

Recommended: Finding Free Money for College

Low-Income Financial Aid Options

Students and their families pay for college in a variety of ways, including savings, scholarships, grants, work-study, and student loans. Indeed, paying for college often looks like a puzzle — all the pieces fit together in different ways to make everything “fit.”

Here’s a look at how to access low-income student aid options.

FAFSA

Every student (whether they’re low-income students or not) can file the Free Application for Federal Student Aid (FAFSA). The FAFSA is the free form you can fill out to apply for financial aid for undergraduate or graduate school, and is one of the most important steps students and their families can take to pay for college.

In conjunction with the school you plan to attend, the FAFSA determines your eligibility for need-based and non-need-based financial aid. The FAFSA results determine the amounts you receive for federal grants, scholarships, work-study, and/or federal student loans. In addition to subsidized federal student loan (which are need-based) and unsubsidized federal student loans (which are not need-based), there are two other types of federal aid low-income students may qualify for based on the FAFSA:

•   Federal grants Students who demonstrate financial need may qualify for federal grants, which you do not need to pay back. Some examples of federal grants include Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Iraq and Afghanistan Service Grants, and Teacher Education Assistance for College and Higher Education (TEACH) Grants. Each grant has its own eligibility requirements. Some, like the TEACH Grant, even have requirements you must fulfill after you attend school. Look at each grant’s eligibility requirements to determine whether you qualify.

•   Work-study Colleges and universities offer part-time work-study opportunities through the Federal Work-Study program. Graduate and undergraduate students who demonstrate financial need can get it whether they are part- or full-time students, as long as your school participates in the Federal Work-Study Program.

How Do You File the FAFSA?

Typically, the FAFSA becomes available on October 1 for the following academic year. The 2025-2026 academic year, however, is an exception. Due to upcoming changes to the FAFSA (and some adjustments to how student aid will be calculated), the application will be available some time in December 2023.

Since some aid is distributed on a first-come, first-served basis, it’s a good idea to complete the FAFSA as soon after its release as possible. Here’s how:

1.    Create your Federal Student Aid ID, also called an FSA ID. You can do this in advance of getting your materials ready and filing the FAFSA.

2.    Make a list of schools you’d like to attend. You can add up to 20 schools on the 2025-2026 FAFSA.

3.    Gather financial documents you’ll need. You’ll need information for both yourself and your parents, such as your Social Security numbers, Alien Registration numbers (if you’re not a U.S. citizen), most recent federal income tax return, W-2s, details of any untaxed income you’ve received, current bank statements, records of any investments you have.

4.    Complete the FAFSA. Using your FSA ID, log in to the website, read the directions, and submit your information.

5.    Review your FAFSA Submission Summary to make sure your information looks correct. The FAFSA Submission Summary, formerly known as the Student Aid Report (SAR), is a document that summarizes the information you provided when filling out the FAFSA. It includes your Student Aid Index (SAI), previously called Expected Family Contribution (EFC). Colleges and universities receive your SAI to determine your eligibility for federal and nonfederal student aid.

Federal Pell Grant

Your SAI will determine your eligibility for a Federal Pell Grant, so you have to file the FAFSA in order to qualify.

Undergraduate students who qualify for a Federal Pell Grant must show exceptional financial need. These grants are usually reserved only for undergraduate students, though some students enrolled in a post-baccalaureate teacher certification program might qualify.

How much can you receive from a Pell Grant? The amount varies, depending on your SAI, the cost of attendance of your school, whether you are a part-time or full-time student, and whether you will attend for a full academic year or not. The maximum Pell Grant award for the 2023-2024 academic year is $7,395. (The amount for 2025-2026 has not been announced yet.)

Scholarships for Low-Income Students

Colleges and universities may offer need-based scholarships. The money is yours to use for education — you do not need to pay it back. The results of the FAFSA help colleges and universities determine your eligibility for need-based scholarships and scholarships for low-income students.

You can also find need-based scholarships through employers, individuals, private companies, nonprofit organizations, religious groups, and professional and/or social organizations. There are a number of online scholarship search tools that can help you find scholarships you might qualify for.

Student Loans for Low-Income Families

As mentioned above, you can tap into either federal or private student loans for low-income students. Here’s a closer look at both.

Federal Student Loans

Based on the results of the FAFSA, you may qualify for a few types of federal student loans. Subsidized federal loans are need-based, while unsubsidized federal student loans are available to all students regardless of income or financial need.

Here’s a quick overview of three main types of federal loans:

•   Direct Unsubsidized Loans can go to undergraduate, graduate, and professional students. They are not need-based but you are responsible for paying all interest, which begins accruing as soon as the loan is dispersed.

•   Direct Subsidized Loans are for undergraduate students who demonstrate financial need. The government pays the interest on these loans while you’re in school, during any deferment, and during the six-month grace period after you graduate.

•   Direct Plus Loans are available for graduate or professional students or parents of undergraduate students and are not need-based or subsidized. Borrowers must undergo a credit check to look for adverse events, but eligibility does not depend on your credit scores.

Private Student Loans

Federal student loans don’t fully cover the cost of attendance for many students, and some students may consider tapping into private student loans as well.

Private lenders set their own requirements, however, and some students may find it challenging to qualify for a private loan if they have:

•   Little to no income

•   A negative credit history

•   A bankruptcy on file

•   A low credit score

How do you get around these issues? You may need to get a job while in school to prove you have some income. You may also want to work on building your credit before you apply for a private student loan. While you may be able to qualify with low income and low credit, you may make up for it by paying more in interest.

Another way to qualify for a private student loan with a low income and/or poor (or limited) credit is to apply with a cosigner. A student loan cosigner is a creditworthy adult who signs for a loan along with you. It’s a legally binding agreement stating that they’re willing to share the responsibility of repaying the loan on time and in full. Many borrowers turn to a family member for cosigning.

Recommended: Income Based Student Loan Repayment

How to Apply for Student Loans

How to apply for student loans will differ depending on whether you are interested in federal or private student loans.

To apply for federal student loans, the first step is to fill out the FAFSA. Once you’ve filed the FAFSA, you basically sit back and wait to see what the school you’re planning to attend will offer you in federal aid, which may include a mix of grants, scholarships, and federal student loans. Your school will tell you how to accept all or a part of the loan.

Before you receive your loan funds, you will be required to complete entrance counseling, a tool to ensure you understand your obligation to repay the loan, and also sign a Master Promissory Note, agreeing to the terms of the loan.

Applying for private student loans involves directly going to a lender website or simply talking to your college or university’s financial aid office. Many institutions put together what they call “preferred lenders.”

Even if your school makes it easy for you to apply for a private student loan, it’s a good idea to do your research outside of the preferred lender list to find low interest rates and compare interest rate types (fixed or variable), repayment schedules, and fees. You want to find the terms and conditions that best fit your needs.

As you are researching private student loans, you’ll want to make sure that you (or your cosigner) meets the requirements to qualify for the loan.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

The Takeaway

Even if you’re a low-income student, you can access student loans. To find out what federal student loans you are eligible for, you’ll need to fill out the FAFSA. As a low-income student, you may qualify for subsidized federal student loans, which won’t accrue any interest while you’re in school and for six months after you graduate. This makes them more affordable than unsubsidized federal student loans and private student loans.

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

FAQ

What qualifies as a low-income student?

The U.S. Department of Education defines a low-income student as an individual whose family’s taxable income for the preceding year did not exceed 150% of the poverty income level established by the Census Bureau. For example, a student from a family of four living in the contiguous U.S. with a household income of $45,000 or less is considered low-income.

Do low-income students get free college?

Some low-income students are able to go to college for free through financial aid or merit scholarships. But even without a full ride, low income students can often pay for college through a combination of scholarships, grants, and loans.

Does FAFSA help low-income students?

Yes. Filling out the Free Application for Federal Student Aid, better known as the FAFSA, gives low-income students access to financial aid, including grants, scholarships, work-study programs, and federal student loans.

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

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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 .

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

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